‘Hardcore’ Ultimatum Spurs Exodus

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube and now also on Bloomberg Quick Take. We talked about volume being light in terms of the trade here, and that makes maybe some sense as we get ready for a holiday week next week and get into the weekend. But I will say when it comes to news, I

can't almost every day. I think this week when I would look at the most right on the Bloomberg where it was in the past eight hours or past one hour, it was all about f t X and Sam Bank been freed. And I gotta say this includes this next story which today which I it's a story I love and it's a must read. It is a most read on the Bloomberg. It is about what f t X is, Sam Bankman, Freed said when we asked him, our Bloomberg team asked him about some different things and the red

flags that were raised over the summer. So delighted to have back with us, Bloomberg News investing reporter Annimal. So she's been all over this story. She's back in our Bloomberg Interactive broker's studio. Love this story, feel like it's so important right when we like kind of are now looking back. So first of all, tell us about the

story and how you guys laid it out. So um back in August, um I was working with Hannah Miller and Anna Arera here at Bloomberg and we were just kind of talking about how something was fishy with f t X, and at the time, SPF was on this mega buying spree. He was buying up all these bankrupt companies and just throwing money left and right, and we just sort of started to like, the more we looked into f t X, the more we we were like, where is he getting all this money? What's going on here?

And what on earth is this company Alameda that's operating on the side that he also owns, and none of this was like, you know, it was known that Alameda existed and was out there, but like there seemed to be some pretty glaring conflicts of interest. So we thought that we could write a story about how in traditional finance, um, that that's not that's not really kosher, it's not really copacetic to have a market maker kind of operating under

the same umbrella as an exchange. Sure enough, here we are after interviewing him about it in August, and uh, it's all over the news. In the hindsight, I mean, this was just the tip of the iceberg, this hunch, this kind of fishiness, that's right. Um, so in hot yeah, hindsight, it was it was really just the tip of the iceberg.

Um what was actually happening? So okay, So it raises the question Annie about you know, if you're a company, if you very better capital firm, and you go out and you're looking for investments, you have certain types of due diligence, and oftentimes what you do is you look at the makeup of the board, for example, or you look at balance sheets and you'd get you know, you'd dig under the hood. Journalists don't necessarily get to do that when they're interviewing subjects unless they get access to

those things. Um, what adventure capitals miss? Why did venture capitals miss this? I mean, one big thing venture capital missed was that you know, the audit, the auditor that first of all, not all pieces of this empire were audited, but a piece that was was audited by Like, this was a thirty two billion dollar company and they had an auditor that was like so far from anyone's radar,

that was like the first auditor in the metaverse. Like you know, I mean, no matter what you think of the metaverse, that should send up a red flag to you. If you're a venture capital, Zuckerberg would come out and say, hey, we're still working this exactly, like you're like, come out exactly. So that's a red flag. But then, I mean, digging a little bit deeper, the relationship between Alameda and f t X should have been a red flag, and it

was out there. It was in the white paper that f t X put out of it's exchange that it has Alameda in the background. And by the way, Alameda was founded before f t X, um there was a clear linkage there. So I mean, these are all things like you'd at least at a minimum want to know, like what kind of access does Alameda have to your exchange data, like information on your customers and what they're doing. I mean to say, nothing of like sending money from

f t X to Alameda, UM, which is outlandish. Well, it's kind of amazing. I do love this story. Everybody should read it just got to Bler dot com. But it's interesting, Like you say on ft X is relationship with Alameda Bank, Ben Freed said over the summer, as of today, there wasn't that much of one there, so maybe who knows, maybe at that point it wasn't I don't know. No, I think basically at this point we like cannot believe anything he ever said on the record

or ever um. But looking back on his comments, it was kind of like it was astonishing because we asked him very specific questions about the relationship between these two firms and where he lived for example, and like he wasn't a to answer anything. Will help me out with her because going back to what Tim says, and we've been talking about this all week, that you know, venture

capitalists tend to love these crazy people. You know that often look a little bit offbeat and are seen as geniuses and brilliant, right and and are okay with it and the quirkiness. And yet as you guys lay out the living arrangements for f t X and Alamedia employees like that, he couldn't really answer where he lived or slept like you looking back, is it just like, wait a minute, this is a simple question. Yeah, there are pretty simple questions that I don't think people were really

like asking him um or they didn't care. And to your point about how he looked and acted, I think sometimes there's a group think that goes on with vcs or anyone. But like you think, like, oh, well, I've seen genius look like this before, in for example, like a Mark Zuckerberg, like someone who's like not like flashy, like handsome, dashing, like you know, good like media gets into it too. Yeah, yeah, of course we love a story correct. But but I will say any to your point,

I think you're spot on someone like Mark Zuckerberg. Think about Facebook's origin story. Right, A bunch of folks drop out of Harvard, they moved to California. They all lived together like there, you know, college roommates of some sort Apple, right, and a garage and Cooper Tino, those sorts of things. So it's it makes sense in hindsight, but at the

time it's not necessarily glaring. That's true. I mean, yeah, A more charitable interpretation is like any startup begins from you know, humble origins by definition, and I think what maybe broke down along the way is how fast, how

rapidly this thing was growing? Right, So it took many years for Apple to become Apple, it took many years for Amazon to become Amazon, and this crypto thing, and maybe there was no frame of reference on how fast something could grow, but um, but things were moving, progressing really fast. F t X started in right, and now now it's as of this year, it was a thirty two billion dollar company, you know, just throwing out cash on all these um, all these various types of investments.

So I mean that rapid growth maybe they thought was the new normal for crypto or something that they couldn't miss. But um, it does kind of give you pause looking back, Ednie, looking back, and of course, you know Monday morning quarterbacking, what would you have maybe pushed him further on or our team should have pushed him further on, or just media in general, an investors should have pushed him further on, or what would you have asked differently. That's a really

good question. I mean, I think that all journalists are thinking. So many journalists had exposure to him or gave him exposure to the world, and it's a bit of a soul searching moment for the industry about the exposure that he got. Um, I'm proud of the questions we asked him. I never interviewed SPF other than this interview to ask about alany. But of course I wish I hadn't figured out that he was siphoning funds perhaps like or or you know, even some of the even some of the

like dicier stuff under the hood. Um. Of course, you know, even looking back at what we printed, like we took certain things to be true that he said about like how the business was doing right. We you know, we said that he said that it earned a certain amount

of money. And now in the bankruptcy filings, even even John Ray says, I don't know if any of the financials I have in charge formerly oversaw the liquidation of Enron and is now overseeing the same like liquidation of f t X said, I've never seen like a situation like this. I'm not sure if I can trust the financials that I have in front of me, so knowing knowing what we know now, and and all the reporting that you've done and that others have done, what you've

read about what what Sam Bateman Freed has said? What are some I don't want to use the term lie, because you know they're there are different there are different things associated with lying. But I mean, what are some things that you saw that he said that We're definitely not true? I mean, definitely not true. He told us on the record that there wasn't there wasn't really a relationship between FTX and Alameda. We know that that's absolutely

unequivocally false. No way was that true? Um he talked about his living arrangements. He couldn't really answer, um, so it's hard to know. I mean, I don't think at all anymore that he like quickly had changed his living arrangements like no way, he said, I mean, this is one of the funny ones. He said that by some measures, like they are the most regulated exchange in the world,

which is hilarious. I mean, it was even hilarious. Then like to suggest that this this offshore exchange crypto exchange in the Bahamas, like has any level of Like I've covered exchanges, they have a lot of roles. And that's a feature, not a bug of putting in a certain place. I mean, if you wanted to be regulated. He moved the whole operationally, moved Alameda from California to Hong Kong and then to the Bahamas. All right, Annie, thank you

so much. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, nothing like a hardcore ultimatum to get people to get off the fence. In this case, we're talking about the Twitter fence, and we're talking about Elon Muskin what he gave Twitter employees and ultimatum to either commit to the

company's new hardcore work environment or get it out. And also most recently, he's saying that all of the social media platform software engineers must come to its headquarters for a meeting this afternoon, even urging employees to fly to San Francisco to be there in person. Does everyone have a private jet? I don't think the question. Kurt Wagner wrote that piece along with Maxwell Adler, and Kurt Wagner joins us now Viasm from San Francisco's technology reporter for

Bloomberg News. He has been all over this story, Kurt. Good to have you back with us. I want to start with the fact that I can still use Twitter right now. And last night before I went to bed, it was like Twitter was on death row awaiting to be executed. And I wake up this morning and there it is. It still works. What's going on? Yeah, I mean last night Twitter was like a very sad place if you if you like the product and use it, because you're right, it felt like everyone was just you know,

the night before the world ending or something like that. Um,

but Twitter is working. You know. Everything we are hearing in in in uh you know reporting is that there was a lot of concern that because there's been so many people who have left, that eventually there's going to be this you know, um technical kind of cascade, right that maybe one part of the service is going to have a bug and you know it's going to lead to other features not working, and that eventually we're going to start to see like long outages or it's certainly

gonna be hard for them to ship any new teachers because they're going to be just in maintenance mode this whole time. But for today, of course, it seems to still be working, and I certainly hope that's the case going forward. It does feel though, like this is going to be something that that slowly starts to happen over

the next couple of weeks. I mean, how do we mean not a publicly held company, so it's kind of weird now we don't have perhaps the transparency, visibility and right ealing can kind of say whatever he wants, it feels like about this company. But what are you hearing from folks who are inside the company and for those of us who use Twitter, you know about kind of

the reliability of this platform. Yeah, I mean, these these concerns, the ones that I just shared with you, are are coming from those people, right, Like these are people who are much smarter about the engineering and about the tech than I am. Right, and they're leaving the company, and they're saying we're not sure who's left, right, Like, Hey, I'm I was on a team that helped, you know,

keep the timeline running, and everyone on my team is gone. Right, Like, that's the kind those are the kinds of stories that we're starting to hear from people, right. And I think the argument from you know, supporters of Evan has been well, Twitter used to be much smaller than it is now and it was still abled to operate, And that's of

course very true. I think it's very different to you know, build up to let's say two thousand employees versus start at seven thousand and then ripped five thousand of those people out within a two week stretch, right. It just creates a lot of chaos and uncertainty and so um, you know, this is where the concern lies that maybe the product isn't going to be as stable as it should be. And there's a really kind of an a side story was that Jaguar land rover to recruit fire,

Twitter and Facebook workers. I mean there's companies out there saying, you know, on a city of San Francisco's coming out and saying, hey, we've got positions. I would imagine, though, Kurt, that those positions don't pay what you know Twitter would pay for engineers. Uh, Kurt, I don't know how everyone's supposed to go to the office today. If the office is closed. Yeah, you you and me both right. So last night there was a company wide email that said, uh,

we're closing the offices, were restricting badge access. And the explanation I got from some folks who received that em know was the feeling was that they don't exactly know who still works at Twitter right now because so many people, um, you know it didn't accept the muskus asked to be hardcore, and so they're sort of sifting through, like, Okay, who actually still works here? So, for example, folks who are not planning to work at Twitter any longer still have

access to their email. It's still have access to Slack things like that, and so thinking once they closed the office in order to sort of figure out, okay, you know, who should still have access to this so we don't have rogue employees kind of coming in. But you know, then he says, today, hey, everyone needs to show up on the tenth floor to uh have an in person meeting. And it's like, well, which one is it is the office closing, badge access is revoked or is everyone's supposed

to be there in person today. It's just it's so confusing and chaotic right now, guys and it's people who work at Twitter are really frustrated, as you can imagine with everything that's been going on. Well, and you have to wonder what listen. I know Ellen is a smart dude, but you have to wonder he paid forty a billion dollars with this company, right, and it feels like the value potentially it was a publicly held company would be, you know, continuing to go to the downside. Just twenty seconds.

I mean, do we have any idea of what his longer term thinking is here? Just quickly, no quick cancers, Now, I don't I really don't. I mean you to talk a lot about maybe building payments into Twitter. That's about as as detailed as I could Right now. I'm just chuckling, Kirk, because I'm thinking about your weekend that's going to be doing a lot of work. What weekend, weekend or their weekends or holidays anymore. I don't think not for your

Twitter employees or Elon Musk, Kurt. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. We know wrapping up in Egypt, A lot of headlines came out of that and with that as a backdrop, Um, there's a story you'll find in the new issue Bloomberg business Week magazine that's now out on news stands, online, and on the Bloomberg. It is about the nation caught in the cross hairs of climate change.

It's getting rich and here's the kick on oil, It's getting rich on coil. This story happens to also be the Bloomberg Big Take today. The story written by Monte Real, senior investigations reporter at Bloomberg News. He joins us via zoom from Chicago. Also with us this afternoon is Joel Webber. He's the editor of Bloomberg business Week. He's with us in the Bloomberg Interactive Broker's studio. Joel, I want to start off with you, um, because it is today's Big Take.

It's in the upcoming issue or the current issue of Bloomberg Business Week magazine. Um, it's the nation is between a rock and a hard place right now, because so drill for oil and hope for the best. And that's basically what the I think the story really boils under. And that is an incredible paradox. And as Monty writes, the coastline of the city of this country is is actually below sea level, so rising sees present obviously a huge challenge. It is historically one of the poorest countries

the world. Um. And yet with this deal with x On, they find themselves like potentially uh you know, with uh kind of a one shot at at an anormous amount of wealth and could pull themselves out of that, um poverty. But to do so also means that here we are in the world of climate change, and it puts the whole country at jeopardy to to walk this path. So,

so Monty incredible story. Uh. How is this country, uh, which we call the last petro state, how is how is it uh navigating this challenge because this has been a long time in the making and only now have they really started to accelerate how much oil they're extracting from the country. Yeah. Um, so this discovery of all this oils came in so it's been about seven years now, um. And I think just to put this in a little bit of contact, Guyana is really really small. There's only

about eight hundred thousand people in the whole country. And to put its economy in perspective, the size of its economy and the economic output traditionally has been about you know, one tenth of an average American mid size city. So it's a very very small economy we're talking about. And this is a huge, you know windfall of oil. It's

billions of barrels of it. And so the leaders of Guyana, you know, looked at this potential windfall, which is you know, potentially worth hundreds of billions of dollars, and politically they could not pass up the chance to drill this, and so they began drilling about three years ago. And since then, Guyana has become the fastest growing economy in the world. Um. It's capital budget just in the last year, I think

grew more than and um. So with all of this road of though, there are critics who are saying that the oil drilling has kind of spun out of control already. There's a lot of complaints that environmental regulations have kind of been tossed to the wayside um, and there's a lot of criticism of the contract itself with Excellent Mobil, which is drilling new at all um. A lot of people say that in terms of that contract were lopsided in favor of the of the company at the expense

of the residents of the country. Hey, Monty, I was pretty struck when you wrote about the ecology of the island and what what there is in the rainforest where people don't live. Talk a little bit about what you see there and and and really this area of the world and what it has to offer. Yeah, So Guyana is you know, it is one of the most sparsely

populated countries in the Western Hemisphere. And you know, part of the reason for that is of those eight hundred thousand people, not them live right along the coast in a narrow strip, and so a lot of the interior of the country is forested. It's about eight covered in forest. And so there are just the unbelievably beautiful parts of Guyana and there are these you know, big plateaus with waterfalls. Um, you know, there's all sorts of endangered species there. So

it's really this kind of ecological treasure. And one of the ironies of the story is that Guyana, before they embraced drilling oil, they were seen as a country that was really leading UM efforts at conservation and ecological confservation particularly. So want to help me out here, because in your report you say that Guyana's leaders have promised to create a different kind of petro state, an environmentally sustainable one that uses oil revenue to build a more adorable infrastructure

powered by renewable energy. Are they not doing that or is that ultimately where they're going? Well, that's where they say they're going. They've they've how do they plan? What's that? How do they do that? Well, so they have a plan that's um called the Low Carbon Development Strategy, and so what they want to do is use much of the oil revenue to build one infrastructure to kind of protect against climate change. And that would include things like

reinforcing the sea wall. There's a sea wall right now that runs along two miles of coastline and that that needs to be reinforced and expanded because the Caribbean is projected to rise, um, you know, up to six feet by the century if if things stay on the course as they are. So part of the money would go to infrastructure like that, part of it would go to bill um building basically a new energy grid that would

be a post oil energy grid. So the leaders say that they want to use this money, basically use oil money to finance the transition away from one and it sounds paradoxical and um, you know it sounds you know, on first blushed, I guess like something that goes against most you know, kind of environmental thinking, like to embrace oil production. Um you know this comes. Yeah, it comes years after the developed countries of the world have promised

to wean themselves off of the oil. The Guyana will will make the argument that it's not fair to a developing country, um to not be able to have some of the benefits from the oil industry when the developed world has benefited from industrialisay Asian and the benefits of fossil fuels and contributed to line shared climate change, which countries like Guyana right stuck with the Well, I have

to say so much in this story. Um, it's a really great deep breed and I'm thinking even for this weekend of the upcoming holiday weekend, UM, really worth getting into. And this is the quandry that you find any developing nations um in Uh, thank you so much. Monte Real, Senior investigations reporter at Bloomberg News. Joining us via zoom in Chicago. Joe Weber, editor of Bloomberg Business Week, joining us right here in our studio of the new wi sho of Bloomberg Business Week. Check it out. It is

out on newsstands, online, and on the Bloomberg terminal. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. It's really all about crypto. Kind of perfect considering the last couple of weeks in the collapse of f t X and the undoing, if you will, of SPF and his empire. And in our weekly crypto segment, we've got an entrepreneur in Trench

to in the crypto world. Yeah, we're talking to Alexander Dreyfus, the founder and CEO of it's a global blockchain company, it's called Chili's and then also the CEO of the sports app socio dot Com. Alexander joins us via zoom from Malta this afternoon. Alexander, good to have you with us. Um. First of all, Malta. Why are you in Malta? Very

much for the invitation. I've been in Malta for sixteen years, even though you public guess that I have a French accent, and I've been there just because I was working in the online gaming industry for fifteen years before cryptos. So that was the place where I moved and I'm happy to be here. Well, tell us a little bit about your companies, because from what I understand is as to mention your founder and CEO of the global blockchain company Chills,

and I hope we're saying it correctly. Are we actually do it perfectly? Okay, we're all worried. We did practice a lot. And then you've got um your CEO of socios dot com and Socios is powered by chilis our chill is UM. So help me out and and forgive me because the past two weeks and f t X and SBF, you know, we are realizing that there's not always so much transparency when it comes to things in

the crypto world. So explain if you were the relationships within those two companies that you are CEO both CEO of Yes, it's pretty easy. So first of all, uh, we are a blockchain. ChIL is a blockchain number thirtiest today thing in the in the rankings. And what we provide is an infrastructure for the sports industry to create a concept that we invented called fanto Kinds and these fantokends are used on a consumer app called socials dot com which has like one point eight million users something

like that. And our business is to try to help sports property all over the world to engage and monitors their fan base. And the idea is that a fund can buy a fanto can that gives them the right to vote on some decision of the club and get some like membership benefits um provided by the team of like by us. That's how it started for a half years ago and now we are like we work with a hundred seventy teams all over the world, three hundred employees, etcetera.

And how how many have you sold a lot? We have seventy teams launched, I will say, and it generated a few hundred millions of dollar probably for the last two years. Actually, why Alexander, does it have to be on the blockchain? Why can't teams do this without blockchain technology? I love that question. So the reality is that sports fan or not in the stadium, not in the city, not even in the country of the team they were supporting. So we were looking to create something that was both

valuable for a fun and scalable for a team. And what is valuable for a fun is to have a voice to be recognized. So the fact that you can vote on the blockchain, unlike the sms that you send, you know, on the TV show a Saturday night, where you have absolutely zero transparency about who's gonna be voted out on the TV show. Here the voting of you deciding as a fun something related to your team is on the blockshin And that was actually the foundation of

what we've done. So these fan tokens that you said you've sold and generated a few hundred million dollars, I guess in revenue. I'm assuming those fan coins. Can they be bought back by fans. Yes, because they're they're on the blockchain, because there are digital assets, they are treadible, and therefore they are available to the market where more or less anywhere in the world. So and in terms of and again forgive me, because we're dealing with the

backtrap of the last two weeks. So those coins, do you keep fifty of the like? Do you do you leverage them? Do you do something with those coins? I'm just curious if all of a sudden everybody that has fan coins came in and said I want to buy them back, could you do it? No, you cannot readem them. It's you know, it's like a membership program. Wants you buy it, it's yours. If you want to sell it to someone else, you can see that a little bit

as a collectible. There is nothing that is it's not redeemable, there is no collateral. Is just a digital membership that has scarcity where fans can trade it against each other if they want. And so how many members do you have? One point eight million? One point eight million? Okay, hey Alexander. Again, with the context of everything that's happened the last two weeks, I mean, this has certainly been a momentous time when it comes to web three, when it comes to everything

that's even tertiarily related to crypto. I'm just wondering what that does to your business, the way that you're watching this news unfold from f t X, from finance and the like. Does it damage the reputation of the industry and to to the extent that it hits you, It's disappointing for me as an entrepreneur because I met some actually have been in Bahamas, so I know them very well. I like to say to our and that's what I said to our colleagues, it doesn't impact us, but it

affects us. It doesn't impact us as a business because we have no relationship we have we we had zero exposure. But it affects us obviously as an industry because of course we are in a crypto space. Having said so, we are not that, we are not an ex change. We're not in a business of lending money. We're on a sports space. Could go to zero tomorrow morning, we will still have a business. And that's a big difference.

And what I think is gonna we're gonna realize in the next hopefully six six months to one year, is blockchain sascripto is not just about finance. There are other utility or their application and offully one of us is this, Hey, Alexander, just got about thirty seconds. Have you talked to SPF? Definitely? Not definitely. Are you a little angry though, as someone who's also kind of in this world to see what has happened just quickly, I'm frustrated and disappointed because it

damaged an industry that didn't need it. That alright, we're gonna we're gonna leave it there. Look forward to hearing more about your business going forward. Alexander Dreyfus, founder and CEO of the global blockchain company Chill is Uh. He's also CEO of the blockchain platform for fan engagement and fan monetization of sports team at socio dot Com Socios, as we mentioned, is powered by Chills. Just so that we understand that relationship. And Alexander joining us via zoom

in Malta. I'm broom journal. Yeah, but you let me drive? No, no, no, who's please gravels? I want to drive. It's a good question. Good drive. This is the drive to the clothes on Bloomberg Radio. All right, everybody, just about ten minutes left in today's trading session. We are getting ready to wrap up the day as well as the trading week. And uh we've seen some buying once again into uh these

last few minutes. That means everything in terms of those major equity averages were now in the green so as Charlie mentioned, um, not at our highs, although it looks like the down the SNP getting close, SMP though up seven tents of a percent. Same story for the Dow Jones Industrial Average and the NASA just eating out a little bit of a game and it's gonna be for the week, Carol, The doubt more than one tenth of

one percent if it sticks right here, barely barely. Let's get into with Aaron Kennon, co founder and CEO of Clear Harbor Asset Management. They've out of over a billion dollars in assets under management. Aaron joined us this afternoon once again from Stanford, Connecticut. You can see him if you're watching on quick Take or on YouTube. Aaron, good to have you with us this afternoon. How are you doing? Just great, Tim, Thanks for having me back. So what's

going on with the markets right now? Because Carol mentioned volatility today. Throughout much of the day, we saw stocks moving between gains and losses. But we're seeing a little bit of conviction right now. What's your take? Yeah, I mean, clearly, we've don't take much away from a low voalt volume

day ahead of ahead of Thanksgiving on a Friday. But um, you know, if you look at just sort of on a quarter to date basis just taking a taking a slightly higher level view, clearly, you know, we've seen the dollar finally depreciate about seven percent from the peak from late September, and on the heels of that we saw a nice risk trade occur over over that period. So equities are up ten eleven twelve percent depending on the index of the global indices are up about eleven almost

twelve percent. US smps up a little over ten percent over that period, and and even the bond markets called a reasonable bit the broad sort of Bloomberg aggregate up one point one. So, um, you know, we think that's that that sort of augurs reasonably well. The Fed did a lot of job owning this week, Tim and Carroll, as we saw, you know, trying to keep it's even hard to job owning. Yeah, that's right, I mean, trying to keep the sort of hawkish tone embedded in the market.

But you know, the market is currently pricing another hundred basis points. They've already done four hundred and so we're the latter innings of of a tightening cycle, and we're starting to see incipient levels of deceleration on inflation, and so, you know, I think that bodes well for you know, the Fed to get out of our way for at least the back half of two thousand and twenty three. I do feel the narrative has definitely changed from Fed Fed officials um, Aaron, even if they're not using the

word pivot there of talking around it. And I laughed at when we've got a most read story by our Scott excuse me, by our Steve Matthews and Serena you where it's talking about Wall Street economist split on whether FED cuts rates. That we're starting to think about a FED cut next year as a possibility. That to me is a real big shift in the narrative. Yeah, I agree, Carol, And I think there's also, you know, an anticipation that the FEDS policies do in fact work with that that

lag and we're gonna start to see employment. We're certainly seeing the anecdotal evidence of employment employment softening that the

jolt statu hasitly softened on the margin. Um. And so maybe the FED does move that aggregate demand curve to such a degree after let's say, hitting that five terminal rate, that we start to see the economic deceleration that they anticipated and and I suspect over the next two quarters we'll see a reasonably significant change in in the data set and that that'll set up for an interesting two

thousand and twenty three. But we have earnings to to really think about and we have the gridlock in Congress, we don't have that fiscal stimulus that that we had over the last couple of years to sort of serves that tail wind for growth. Uh. And we have a demographic picture that every year just looks a little worse. And then we have debt levels that spits during COVID

and are not getting much better. And so we'll probably have a debt looad in this country of three and a half times public debtload, three and a half times where we were the last time we had an inflation crisis in the seventies. So it doesn't bode well for sort of growth trending back or above trend above let's say, a two percent trend. It seems to suggest that we're going to be in a in a below two percent world for for a long while here in the US.

You know, kind of glad you went there, Aer, And I do think it's important that we watched the debt loads overall, and certainly, you know, we talked a lot about specifically consumer spending and how they're spending and where they putting it. And I think that's going to be a great indicator possibly to the downside of of what happens. You did say, and I want to go back to you expect over the next two quarters to see a

very different data set. Well, that data set I'm assuming mean recession or not necessarily or just kind of an extreme slowing down. Well, I think the market is trying to sort that out. As we know, the equity markets at discounting UH instrument and and certainly the volatility that we've seen of late is sort of this uncertainty around one will we will we actually enter a true recession. Maybe we already did. The nb R hasn't come out and indicated whether the prior to quarters were in fact

an official recession. We'll find that out next year, I guess. But um, you know, I think that maybe the more important question is whether or not the recession is shallow or deep. If it's shallow, I think a great deal of that is sort of was was priced in at the end of September into the market. One reason why

I was seen the rally it's a deeper recession. Well, this may be a sort of a false done for equities having having rallied nicely off of off of those levels, and so we're certainly being you know, extraordinary, extraordinarily mindful of that. Certainly the stickiness factor in CPI as wages and with higher wages, you tend to see margins contract. And so we're we're certainly going to keep vigilance on on that trend going into two thousand and twenty three.

What do margins do in a slower growth world when wages haven't corrected and normalized and certainly an important factor. And of course globally we have, you know, another pivot, which is the zero COVID policy in China, and whether or not President She's pivot is real or not, because that has huge repercussions for global demand, demand for copper, demand for oil, uh and demand for just generally goods

and services. Well, that that commodity space that we talked about that earlier and I think it's going back to China too, is so interesting. We have a ton of stories on the Bloomberg this week that even as they seem to be easing that COVID zero thinking, people are afraid to go out in the public because they're just a free They're going to get COVID And this is over in China and that's gonna impact growth over in the Chinese economy for a while. It'll impact growth, but

it's also as huge global repercussions. I mean, Chinese growth is expected to be around three percent next year. It was only a few years ago we were talking seven eight type of growth. The idea that they could switch off the zero COVID switch probably increases oil demand immediately by about a million and a half barrels a day

by most estimates. So as huge global repercussions. And of course the war in Ukraine is having massive negative repercussions for the price of natural gas in Europe's largest economy, in Germany. I mean that that's that's the largest economy in Europe. They need cheap natural gas to be able to do what they do, to be that industrial powerhouse they don't have, and it looks like they won't have it next year either, and maybe the year after that too. Alright, well,

I monopolized monopolize of time with you. Tim's mad at me, but that's because we love talking with you. We're gonna God to get you back on soon because it's okay. You had good questions, Carol, Yeah, you know, Aaron, have a great great thanksgive and these founders CEO Clear Harbor Asset Management. Thanks for listening to Bloomberg Business Week. Download

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