Lyft Earnings Hit the Skids

just fell off a cliff here, Katie. I know, and I know that there's this duopoly between Uber and Lift. It seems like it's increasingly in favor of Uber when you look at some of those ridership numbers, but different models. Lift right now though, down about thirty six percent. So let's get to it with Bloomberg News technology reporter Jackie Devlos. She's writing about it. She joins us from our nine one studio in Washington. Jackie, Happy Friday. Good to have

you here with us. You're happy if you are shorting Lift on this Friday. Um, talk to us about the quarter and kind of what it wrong and why everybody's so pessimistic here. It was a rough day yesterday, But to be honest, I think Wall Street was somewhat expecting a version of a slowdown, but that profit outlook completely missed estimates. Uh. Lift said that they would make anywhere between five to fifteen million and adjusted earnings, while Street

was expecting closer to eighty millions. That's a huge miss. Revenue also missed that problem that outlook um. But really what's lying underneath the surface here is that their ridership just is not coming back. You still saw that active rider growth below pre pandemic levels. That's all the second quarter that lived has lagged Uber Uber as well. You know, beyond their recovery there, their bookings for mobility excluding delivery

is already back to where it used to be. So when you think about what Lift has uh to, what lever they have to pull on pricing is really the only thing they have left to keep some of those consumers coming back. Well, Jackie, that was going to be my question. I mean, we know that Lift reduced based prices for rides in January, That of course followed a move by Uber. If that's the lever, haven't they already

pulled in? How much more is there to cut? Well, if you remember this time around last year, all of us were graping about how expensive Uber and Lift rides were, and you saw some of that pricing come down because that driver shortage that we were talking about last year has really eased. And so what you're seeing is Uber is starting to kind of pull back on some on how much it's extracting from um some of those higher fares.

It just has a better balance. It's demand and supplies and equalibrium a little bit more so than what you're seeing with Lift. So when you think about how many customers are coming onto the platform, now, Lift is kind of seeing, well, we have pretty good driver supply, We're just not seeing those numbers really cover on the writer side.

So they need to either attract more riders, and the way they're going to do that is basically sacrificing that profit and saying, you know what, we don't want to deter customers from coming onto our app versus Uber, so we're going to give you a cheaper ride. Hey, Jackie checking with our Bloomberg intelligence team yesterday. I mean, one of the things that jumps out here, Lift and Uber

are not exactly the same companies. Yes, they both are in ride sharing, but Uber, you know, there's food there's other deliveries. They are really kind of building out a little bit of a different and bigger and broader model here, and I wonder how that impacts performance. That's absolutely right, Carrol. When you think about how much Uber has built out that food delivery business, the advantages it gets is that cross selling component. It's able to attract new rides share

customers from its food delivery business and vice versa. Lift does not have that advantage. They basically have to just rely on UM pulling that pricing lever. Uber also has an international business, and what that does is that helps its algorithms get better at matching and batching drivers to rides and orders so much more efficiently. Another key differentiator is that Lift has a scooter and bike business that makes up a greater portion of its revenue, and in

seasonal months it's going to take a bigger hit. But you couple that with the fact that the West Coast hasn't recovered nearly as much as it has for Uber Uber's other markets. Um, it's just taking a hit on all fronts. And so I mean, tell us about the

path forward. I know that you know, Lift already went through its own rounds of layoffs, but you know, in trying to you know, bring back up the ridership and trying to control costs, I mean, should we expect more news of that type from a lift You beat me to it, Katie. That's really what's going to come next. And management was pretty forthcoming in the call yesterday after results, saying that it is take gain cost cutting measures very seriously. The next step is to you know, wonder where that's

going to come from. They've already said that stock based compensation is going to come down. The way they're doing that is by hiring more overseas where you don't pay so much in stock based compens mostly cash. And so you know, whether that means more layoffs or perhaps hiving off other parts of the business, I think everything is on the table at this point. But that's sort of strategy forward, right. They've got to figure out how to grow the business, right, because you can only cut costs

so much. I mean, I think of the IBM equation right where they were, you know, it wasn't necessarily severally for a long time they weren't growing the organic business, um, but they were doing good cost cutting and different measures. Having said that, UM, you do see Lift partnering up with grubhub. I mean, is this their way forward to compete a little bit better with Uber. That's a great point, gurl.

You know. Even Uber said on their own earnings call that the membership product is going to be an incredibly important way to kind of increase not just the number of people that come onto the app, but just keeping them are even longer. Lift hasn't really leaned into it as much as some of the other gig economy piers, door Dash and instacrat have their own um. You know, it has a partnership with grubhub, but that's not going to be enough to really kind of get the wider

scope of customers that are active in food delivery. So I think it's considering other partnerships there, but it's going to have to ramp that up a little bit more. Uber said they have over twelve million members. Lift hasn't disclosed their membership based so I always wonder when there's no disclosure the ten million um Jackie, thank you so

much of a great weekend. Jackie devil Us. She is our Bloomberg News technology reporter, joining us from our nine and I went studio in Washington, d c I'm mostly an Uber household. Yeah, no, me too. I was just looking at the share prices over the past year. Uber's down nine percent lift is down seal of two cities. Yeah, exactly, And I feel like they're in kind of a makeup

moment in many ways. This is Bloomberg business Week Inside, from the reporters and editors who bring you America's most trusted business magazine, plus global business finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stinebec from Bloomberg Radio. Well. We mentioned the story in our TV simulcast earlier in the week. It's actually the international cover of the new issue of Bloomberg Business Week, now out on newsstands, online at Bloomberg dot com slash

business Week, also on the Bloomberg Terminal. It's written by Bloomberg News Economics reporter Rich Miller, who notes forget about the harder soft economic landing and meet the rolling recession riches with us via zoom in our Washington d c. Bureau, along with the editor of Bloomberg Business Week, Joel Webber. He's here in our Bloomberg Interactive Broker's studio. I feel like we keep trying to figure out how do we describe where we are? Joel, that'd be great if you

could answer that. And that's why I turned to uh, you know, my colleagues, uh not on like Rich Miller to help answer these And you know, the thing that um, you know obviously everybody was was keyed on was you know, the pal uh and and redecision, the FEDS right decision. And then all of a sudden, those job numbers happened, and and we we tacked a little bit, and and that led to, um, you're rich coming back with talking about the rolling recession? So so what is a rolling

recession and what does it potentially look like for the economy? Rich? Yeah, I mean if you're of a certain event vintage, and if you started talking about rolling, you started thinking about, uh, the the old Western rawhide. But anyway, uh, rolling recession basically is um the downturns sort of um goes from one sector to the another, but you never have the entire economy go down all at once. So it's kind

of a hyperd between this hard landing. We've both heard about this hard landing, you know, where we we really enter a full blown recession unemployment goes up, you know too. Three and the soft landing where we sort of steady out and you know, the economy just grows and ice and steady while inflation comes down. The rolling recession is kind of a hybrid. We get recessions, but they're in one sector than another sector. Then those sectors start to pick up a little bit, and then it goes into

another sector. We've We've got to quote in the story from um some one son who's a economics professor out on the West coast. He said, you know, industries and sectors take turns going down, but as opposed to everybody going down all at once. And that's that's what we're talking about. And and I think that's probably the best we can hope for at the moment. Do we have a blueprint for the rolling recession? Have we seen this happened before? And if so, I mean, what does that

tell us about what we could be heading into? Yeah, I mean it has happened a couple of times before. I mean, um uh. The term sort of got coined first, sort of in the mid nineteen eighties. We had a big drop in um oil prices and that really devastated the oil patch in Houston. And we also had sort of a change in tax law that really hit the commercial real estate and everybody thought, oh, here we go,

we're heading into recession. But there were folks like ed Yard Denny was still around analyzing stock markets who said, no, no, let's it's a rolling recession. We're gonna see it in commercial real estate. We're gonna see it in but we're gonna see it in the oil patch. But we're not going to see it the other. The other one people talked. The other rolling recession people talk about is in two thousand sixteen, when we had the manufacturing sector got hit

by a very strong dollar of UM. Agricultural prices were going down, so the farm sector got hit, but the rest of the economy didn't hit. Some some pundits, you know, say the pain though that the heartland of America faced helped get Trump reelected that year. I'll leave that the political pundits. But anyway, but we didn't. But we you know, we didn't get a full blown recession in either of those those um those episodes, and that's what some people

are hoping, We're it's gonna happen this time. Okay, So how are we gonna know if we're in a rolling recession or are we already in one and we just haven't you had well, I mean, we we're sort of in one, like we're in we're in one in the sense that we we've seen housing go down first as the fedruaries interest rates and now and then manufacturing is now kind of going down and tech is going down.

So you do see it rolling and arguably you see the first one who was rolling in, which was housing, is starting to stabilize maybe and there's some hints with mortgage race having come down, you know, maybe that market's going to stabilize, and then the next one to go would be more like the service sector part of the economy. Um, and as that happens, hopefully the other ones are sort

of stabilizing and coming back up. I mean, but you know, I mean, the worst comes to worst is that, you know, the service sector doesn't just just sort of you know, slow, it sort of caves in. Basically, what I'm curious about, So, if it's a rolling recession, does ultimately the National Peer of Economic Research say we were in a recession or because it kind of works its way through, is it

officially still a recession. Well, I mean, if it if it works the way those two other episodes, well those neither of those episodes were classified as as as I love that, sign me up. It's recession. But we're just

not going to use the word right right right. I mean obviously, you know, if you're in the housing market, in the home builders, you know, you know they they say they're in recession, right, you know, and if you ask somebody who who, um, you know, some of the manufacturing companies like we have you know, three M which makes you know pretty much almost everything you can think of, posted notes and computer consoles, et cetera. You know, they are laying off people, so it feels like a recession

to them. But you know, you ask the airlines, and you know everything's hunky door basically, you know, so and so Richard, I wanted to jump in and ask, I mean, it feels like soft landing. It was a dirty word for a little bit. We've sort of wrote it off. Is definitely not happening. Now I'm seeing more people make the argument that we could get it. The counter to that would be that a soft landing is just a precursor to hard landing. A hard landing at the start

looks like a soft landing. I mean, where what's the current thinking on and uh, if if there is a binary outcome, if it's not a rolling recession, which one is more likely, well, I think people were becoming more um sympathetically idea of a swaftland I mean that there's yet another sort of you know, one making the rounds now, which is kind of you know, to further complicate things, which is something called a no landing right right right,

you know, which is basically coming off the very spectacular jobs gains we were reported in January, so that you know, so the economy uh, basically you know has slowed. It definitely has slowed, but like it's like, you know, then it kind of re accelerates, and um, the that that people would think if it re accelerates and inflation re accelerates with it, we'd eventually get a hard landing because the FED would say, you know, enough is enough and

really slam on the brakes. But brishin or I don't know, shoot it down. There's the chat bot recession. I mean, we could just go on, love it, love it, love It's so relevant. Rich Miller, thank you so much Bloomberg News Economics reporter uh the story the upcoming issue. The cover of the issue is on the ADNNI Empire. This is Bloomberg. This is Bloomberg business Week inside from the reporters and editors who bring you America's most trusted business

magazine plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim stinebec from Bloomberg Radio. We wanted to talk a little bit about the crypto world, and in fact for the next half hours, so we're gonna kind of dig deep into the crypto world because there's a bunch of stories out, including SEC Chair Gary Ginsler talking about the settlement with crypto exchange krackin over stalking digital assets and he said it should

put everyone on notice in a smart your place. The SEC Chair catching up with Bloombergs David Weston earlier on Bloomberg TV and Radio. Check it out. These storefronts, these these crypto exchanges, crypto lending platforms, crypto staking as a service. They need to come into compliance and there are generally

non compliant right now. The investing public is not only at risk by the speculative nature of crypto, but their at risk of ending up in line at a bankruptcy court because a lot of these platforms are doing things they're not disclosing. All right, That, of course, was the SEC chair Gary against the earlier on Bloomberg TV and Radio with David Weston. Let's talk about the crypto space more broadly, and especially when it comes to the regulatory up front with our Crypto round up. Let's kick it

off with Stacy Murria Schmall. She's managing editor for Crypto right here at Bloomberg News. Lucky for us, Blush you, Katie. She's in our Interactive Brokers studio. Um, Stacy, thank you so much. We're so excited to have you here. So you heard Gensler, Yes, out there talking big time. UM, what's your takeaway? I think one of the fun things about reporting in crypto is every day you wake up and you're like, what's slightly unexpected thing may happen today?

And for a lot of the folks who've been paying attention, especially in the back half of two after the collapse of FTX, we've sort of been waiting to see when the SEC was going to do the thing that they've hinting they wanted to do for a while, which has come out and say, here are all of the ways that we find the industry to be non compliant. And we have absolutely seen, particularly in January from the SEC from Gensler himself, that they're like, well, okay, here are

all the ways that you have been noncompliant. And we think the crackdown on staking is just the latest example of them trying to remind both the crypto industry but also traditional finance that regulations do exist and they will enforce them. Can you guys both remind us what staking is just for those who do That was going to be my next question for five years old. How would you explain to or you know, if I was in puberty,

how would you do it? Um? Do you like free money? Yes? Excellent, because if you like free money and you happen to have some imaginary money in the form of say ether or bitcoin or another token, you could agree to have a big crypto exchange like a kracking or a coin base hold that money for you that token, and pay you a return of anywhere up to and in exchange. They would use your tokens to validate other transactions in

crypto and that's staking. So how does that work? Because I mean, the sort of the curmudgeon's cry against crypto is that it doesn't have any cash flows, So how does it actually generate that money? It's partly that what staking does is for the folks who are doing the staking.

So if you're cracking or a coin base and you're saying, Okay, we have a bunch of these tokens, we're going to use them to help validate transactions, they also generate returns on those things, so you're sort of participating in a

yield generating ecosystem. This is this is the pitch. But of course the argument from the SEC is exactly like, well, you, as an investor, somebody who likes free money, are looking to these other entities to generate value for you, and something like that starts to look sound and feel like what they would consider a security to be. And of course we did get the news yesterday that crypto Exchange krack in like you mentioned, uh, they made a deal

with the SEC over their staking program. They're going to pay thirty million dollars to settle those allegations that it broke the agency's rules when it comes to staking products. Kracking isn't the only one that does this though, give us a sense of the landscape. So there are different types of players in this ecosystem. The other one that

I mentioned coin Base. You know, in the aftermath of the krack in settlements with the SEC, Brian Armstrong, all of coin Bases lawyers, they're all like here, all of the ways the thing we do is not like the thing that Kraken does. So you know, it's very much in the interest of all of the other crypto players to try to identify how they are either compliant with whatever the rule is, or however the rule doesn't apply

to them. And what we fully expect from the SEC, and especially from the tenor of the comments that you just heard with his interview on TV, is that they're going to say, no, that loophole actually probably does apply to you. And if you think it doesn't, just give us some time. I gotta say to me, it just doesn't even sound like a business, because the whole point is if somebody calls in their steak, what am I'm missing?

I mean, I think this is kind of one of the fun things, is like, okay, so if somebody would have tried to call in their steak. It's it's not like a traditional run on the bank per se, Right, It's not this idea of the exchanges or whoever has this money is necessarily going to run out of the ability to offer this thing to you, which to be clear,

has happened in other circumstances. But the Krakens and the coin basis of the world are very well capitalized and coin based, especially as a US traded, publicly listed company has ordered to financials, they can show you how well capitalized there are they are. So the concern from the SEC is more like other people who do similar things have to play by more rules, and we want to be clear that these rules apply to you, So I

mean coin based. Of course, like you said, they're going to make the argument that ours is different, etcetera, etcetera. But then you look at what's going on in the shares, and of course coin basis had a really great start along with everything else crypto, but it was down four percent yesterday, it was down four today. I look at that, it seems like the thinking is that maybe those arguments

aren't necessarily going to hold water at the SEC. I think there's a lot of jittere jit ter nous right now, because in addition to the comments about staking, you also have as Bloomberg News my colleagues, they are confirmed that the you know, New York regulators are looking into a company called Paxsos which issues a stable coin. The stable coins are the ones that are supposed to be stable, like they're not supposed to move up and down, and

other tokens do that, and that is the thing. And you know, we just published a story a couple of minutes ago that PayPal, which was looking to issue its own stable coin, have been like, ha ha, we may not. Regulatory uncertainty is a little bit stressful, and so you know, you're seeing this real. I wouldn't say shift in sentiment because sentiment hasn't been great, but a pause in the rally that we saw in January as people try to figure out what might be coming next. Stacy in terms

of the regulatory framework that ultimately gets established. Is it going to be piecemeal as things go wrong or as a disaster happens. Is that how it's going to probably develop an evolve. That is one the most common criticism of all regulators that it's like they're regulating the last war And what's been interesting for about the past few months is, you know, folks were jumping up and down to the SEC and saying, what are you doing about

consumer protection? Like how are you going to stop there being another x y Z files for bankruptcy and then like a week later, another x y Z files for bankruptcy, and so they are very much in a position where they got all of this criticism that they weren't fast enough, they weren't aggressive enough, and they're trying to respond, which immediately leads to people saying, no, no, that's too aggressive.

We don't want you to kill the whole industry. Or the common criticism right now is well, you're just going to cause people in the US to try to transact offshore and overseas where they may have even fewer investor productions. Well that's the thing, right, didn't crack and say that they're only this only applies to their US, But that's exactly going to happen overseas. That's exactly right. That's so interesting. So I mean, but is that a solvable problem? Obviously,

the the SEC has jurisdiction over the US. It feels like, you know, if you try, if you think about this as a multi headed beast. They only have there. They can only be responsible for cutting off one head. And this is entirely why, you know, like the Devil's elite, as it were. One of one of the big talking points there from regulators, from central bankers is, hey, we have to have a unified front on cryptoregulation. This is

a global asset class. It's functionally border less. We have to have baseline standards in which we are coordinated and aligned because otherwise, to your point, it's going to be, you know, you try to top off ahead, you play whackam like, pick some kind of frustrating metaphor, and folks will find ways to work around those. To the regulators,

do people do they understand it at this point? Yes, I mean I think there is a very common misconception that it's like, oh, the ft doesn't know what they're doing. Fet knows exactly what they're doing. The various central banks know what they're doing. They have hired from industry, They are doing their own you know, to use the popular crypto phrase, they're doing their own research. They are issuing policy papers, they are doing demos of how you could

run a blockchain. So you're dealing with an increasingly sophisticated regulatory environment in a way that may not have been true two years ago. Does it feel like it's going to be a better year or a smarter year when it comes to crypto? My question, so that would be like what side of defense are you on? Because you know, depending on how your position, this could go very well, very poorly for you as a as a journalist. No position would imagine though that you're you're going to be busy. Yeah,

that seems to be the theme. Um. You know, and I think that we're also seeing the stories evolve, right. We are seeing different types of very traditional financial institutions making their own plays and different types of crypto things. We're seeing tech companies trying to figure out how are they going to compete? You know, if you are an Apple Wallets, you might want to know, like, what's our

crypto strategy? Do we maybe hear more of that blockchain versus crypto just kind of about ten seconds the underlying technology I thought already had. It just feels like I can see the evolution already. Um Stacy, thank you so much, really great deep dive. Stacy. Marishmael I, Managing editor for cryptop Bloomberg News Right here in studio. You're listening to the Bloomberg Business Week podcast. Catch Just Live week days from two to five pm Easter on Bloomberg Radio, the

Bloomberg Business Band You Doo. You can also listen live to our flagship New York station, Just Say Alexa play Bloomberg e Love and Dirty. Can you know kind of want to continue with the crypto world for a little bit. We've got a good guest coming up. Um, we're gonna talk about the energy used when it comes to crypto mining because I don't know, Katie, you know stats really well on this world, but about six global currency mining is fueled by coal and natural gas as opposed to

renewable energy sources. I mean you've done a lot of reporting. This is a big issue. Oh yeah, I mean this has been one of the pain points for the industry. There's a lot of pain points right now. But it's a really it's it's it's makes them vulnerable, the fact

that you're you're wasting some would say this much energy. Uh, it's an easy point to attack, all right, So that is what we do want to kind of attack with our next guest in our weekly crypto segment with us as Kent Halliburton, president and chief operating officer at SAYS Mining, which connects investors to renewable energy mining facilities. He joins us via zoom in Portugal. In Portugal, excuse me, hey, Ken,

good to have you here with Katie and myself. First of all, tell us little bit about your company in your background. Yeah, happy to thanks for having me so um, I've made a pivot in my personal career from the solar electric industry to bitcoin mining because I saw its environmental potential. And here it says mining we're actually transforming the way people relate with money and energy. We actually just launched our first turnkey hydropower data centered Wisconsin to

make bitcoin mining easy and accessible for every person. Just go into our website is easier than Netflix subscription. You can get started with a mining rig of your own and receive rewards directly to your wallet. We never custody

our customers m bitcoin. And on top of that, we've also just picked off a crowdfunding campaign through start Engine, so that anybody that wants to participate with this transformation with us can do so by owning a piece of SAS Mining and um, yeah, we're just making it easy.

So let's talk a little bit more about your business model, because you know, when I hear sustainable bitcoin mining companies, sometimes that simply means that you're buying offsets or using credits somehow, But so are you're actually it's a hydro powered facility. Correct, Correct, we're actually purchasing the power directly

from the damn operator himself. And so you know, you you mentioned, and I've seen in your notes that you just launched a facility in Wisconsin, And a conversation I have around crypto mining all the time is how different states treat it? What about Wisconsin? What led you there? Well, we'll let us there was a combination of the facility itself.

So we've got a clean energy mandate. All the bitcoin mining that we do is carbon neutral, and you know, we we took a step back and said, look, this energy thing is a serious concern, but at the end of the day, we need to have a little bit more of a nuanced conversation to separate electricity from carbon. Carbon is the culprit when it comes to climate change, which I've been a part of, you know, advocating against my entire career being then both solar and now on

bitcoin mining. But UM, we need to figure out ways to to mine bitcoin with carbon neutral sources, and there's quite a few of them out there, and in fact, the network last stats I saw was improving it about four percent per annum uh in its carbon neutrality. So help me out. UM and Katie are crypto expert. Uh, why isn't it just all renewables? Is it just access cost? What is it? And Ken come on in like why

is it? You know, what are the difficulties since this is such as Katie mentioned a pain point, Why isn't it just all all of the mining done through renewable sources. Well, at the end of the day, we first need to kind of take a step back and think about UM the grid itself, right, So when when it comes to the grid, it's kind of surprising I think for some

folks to realize that it's an on demand situation. So it's a complicated UM navigation where you've got power on the grid and it has to be consumed as it's produced. So there's this concept balancing act UM for energy producers and renewables. Hydro is a consistent baseload energy on the grid, but renewables have a lot of variation and fluctuation and form bitcoin mining, what we are looking for as miners is the lowest cost energy, and that's energy that's often

discarded or unused. So actually there's quite a bit that's been going on with renewables. Specifically, hydro has been a major power source, but the coal has actually been an issue primarily in China and has a stand and bitcoin mining has left those places. So if you look at the most recent stats, actually it's growing more renewable actually

quite quickly day or day. Well. Kind something I always wonder about when I have these conversations about how to make crypto mining greener is where this falls on the priority list Because you talked to crypto minors over the past year really and it feels like the focus has just been survival as we've seen the price of bitcoin in particular really plummet and their margins just basically get

eaten up. So when you think about the mining industry as a whole outside of just sas mining, I mean, do you think that it just is in that high of a priority item right now that people are still just trying to survive? No, I think it's absolutely a priority.

I think there's a deep seated worry industry right now for bitcoin miners in the United States, right like we can control what's happening in the rest of the world, but bitcoin mining it is are in the US sees that there's a regulatory risk right now if you're not mining bitcoin in a carbon neutral way, which actually the

White House advocates for. You know, they came out the Office and Science and Technology with the report saying, look, we've got a methane mitigation issue right now, and bitcoin mining is actually one of the few economical opportunities we have to avoid this. And methane is greenhouse gas that has up to an eighty four times more impactful on climate change than carbon. You know, it's interesting and you and you say the hydro power is more reliable. There

isn't kind of some instability in that because of climate change. Well, there is definitely. There's definitely some seasonality with water flows where we are in Wisconsin. We analyze the water flows for the last five years and saw that there was only one month in five years that there could be a potential dip in electricity prices or in electricity output in which case, the beauty of bitcoin mining is it can be curtailed um and we have that arrangement built

in with the damn power producer. Okay, So another question that I have sort of ex essentially is, you know, part of the reason, a big part of the reason why bitcoin mining is so energy intensive is because it's proof of work basically that really just to simplify it for simplicity steak that requires a lot of energy. We saw the Ethereum blockchain go to proof of steak, and I remember at the time, you know, the number that kept getting tossed around was what it was going to

cut energy usage by. Don't quote me on that. It's a simple question, why can't the bitcoin blockchain just go from proof of work to proof of steak. Doesn't that seem like sort of an elegant solution, Well, it would seem like it on this surface, right, but you actually

have to look a little bit more deep. And I don't want to get too bogged down with the technicality, but at the end of the day, proof of work and proof of steak or two different consensus mechanisms, And there's a strong argument to be made that there's a centralizing force within proof of steak over time. And one of the keys that bitcoin has been designed around is decentralization and security, and that's where the proof of warp comes in. Without proof of work, you actually can't really

reliably have decentralization over the long time period. Now we'll see maybe we can, but thus far we haven't seen where proof of stake systems have been able to avoid that outcome. And the reason why people are really investing in bitcoin is because we've had such a long period of stability. Uh that fourteen years really gives investors a lot of confidence that bitcoin is going to be around for the future. So massive change to proof of eight

would undermine that stability that we've developed. Ken just got thirty seconds. The proof is in the pudding. Um, how much is your business growing? Are you guys profitable? And just quickly? So? We are an early stage company, so we're not to profitability yet. However, we have designs that

we should be there within the next year or so. UM. But this industry has so much opportunity and where we come in with our specific niches, we don't think that anybody is designed a great solution for the every person, and so by coming up with a platform that is accessible and easy in the best of web two like customers are used to. We think we're going to break this market wide open. Well, we appreciate your time on

this Friday afternoon, Kent, Thank you so much. Ken Haliburton, President and Chief operating Officer at Says Mining, joining us via Zoom from Portugal. I just think about it's complex computations right there. Want as much power where we can get it right, and that's what makes the industry vulnerable.

This is Bloomberg business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus a business, finance and tech news the Bloomberg Business Week Podcast with Carol Massier and Tim Stinebec from Bloomberg Radio. I'm broom mac Journal. How but you let me drive? Oh no, no, no, no, who's please? I'll do the riding revels. I want to drive. It's good question. This is the drive to the close up on Bloomberg Radio.

All right, everybody, just about seventeen and a half minutes left intod his trading session. Yes, I'm counting down to the Friday closing bell. Are you counting down We're close. We're getting closer right now. Oh sorry, thinking she's been traveling. She's been in Miami, she's been having drinks with that umbrellas or something. I have to keep reminding myself it's Friday. It's not actually Monday. It is Friday. All right, let's get to it with David Dee's. I'm sure he knows

exactly how many minutes until the close. He's managing principal senior portfolio Strategies at Pepack Private Wealth Management ten billion in assets under management. David with us once again on the phone in Summit, New Jersey. Um, David, good to have you here. It's been another interesting week. I do feel like we're looking at a treasury market that's thinking a little bit different, uh, and getting the Fed memo that yep, they're going to keep raising rates, They're going

to stay higher for longer. How do you see the market environment, the investment environment right now? Yeah? Absolutely, uh, Carol. So we basically had a goldilocks month in January, of course, with that inflation indicator starting to come down, interest rate for coming down. Um, we had the job Marcus staying strong, and then all of a sudden we ran smack into the January jobs for for it, and with the much stronger than expected jobs, people had to start recalculating where

the stead o reserver was going. The market for a long time was saying, you know, one or two and then done and coming back down in the second half of the year. Now all bets are off. And so what we've been seeing this week, of course, is that particularly with his tenure treasury backing up, that's really hitting the NASTAC stocks heart. Why because those are the longer so called earnings duration stocks, and as those interest face to go up, the discounting of those earnings to present

value really hits the present value hard. And that's what we're seeing the real weakness. Having said that, though, when we first got our FED decision right, we saw actually a rally, didn't we in terms of the equity market, And I think there was some you know, we were having these questions, are we've seen with this talk of higher rates, we've seen tech rally despite it? Um Are you just saying that traders are finally getting it kind

of thing? Well, you know, I think that's right. So when we first got the FED decisions, I was before the January jobs report, and although the Feds said, you know, we're standing the course, we've got to, you know, manage the job, there was still a doubbish overtone and chaired Jerome Pale's message to investors. Then all bets were off. Jerome Pall, I think made took the best of it, saying we don't want to basically overreact to that January

jobs number. But then we got this florry of additional Fed speak um in this past week, and that has really caused investors to recalculate where they see the centers are going. Of course, let's put it in context. The NAZDAC had its strongest January since two thousand one, up over eleven and so we were due to take a pause, if not a little bit more well David, like Carroll said, I've been in Miami for the past week, but even I knew that there was a lot of Fed speak

this week. It was very hawkish, And as you've laid out, I've gotten some pretty important data points in the last couple of weeks. Chief among them is, of course, that non farm payrolls report. If we look ahead to next week with are you important inflation print coming up on Tuesday, also Valentine's Day. But when you think about I don't know, it feels like a real jitteriness has overtaken the market

in the past couple of days. How high are the stakes heading into Tuesday and that inflation report, Well, I think they're very high because you know we're coming off this. You know, over five thousand jobs created, lowest jobless rate since nineteen sixty nine, and so the concern is that this labor mark is going to get away from us in terms of a wage price spiral, which is going to make the first job exceedingly difficult. Um. So yeah, all eyes are on the eight thirty Eastern Tuesday, the

CPI print. But let's take it in stride here. First of all, we know what eleven of the last twelve months actually are, so we're just looking at the January number. I think the bullish cases. You know, when you look at just the three months of the last quarter of last year, you're only up one per cent. So hopefully we can have something close to the flat I think the flying apaintment right now, and that Wall Street has to get ready for is gas prices. Fish is an

important component of the headline number. Have drifted up in the months of January after after backing off tremendously in Q four, and that could make for a print that doesn't resolve the question as to where inflation is going. Yeah, we talked about energy earlier. Let's get to picks, you know, the macro. I feel like we can go back and forth and so many directions. Uh, you know, any on any given day. But let's get to some names that you think investors should be looking at, and Fightser is

one of them. Stocks down about pays a dividend um. What is it about Fiser that you find interesting? David? It's your quintessential blue chet. And with all the concerns will there be a recession, what type of landing, and so forth. I like the healthcare sector because it's not particularly sensitive to the economy. Now, you know, where would we be in terms of coming out of COVID nineteen if we didn't have Fiser. Here's the problem for the

stock is they made so much money. Now investors are saying, okay, us, you know the encore here, how long will the valley be before you come up with your next blockbuster? But when I look at this company, the size of their labor force, their global diversification, the fact that it's only about eleven times earning three point seven percent dividend and close to off of its you know, fifty two week high.

I think this is a good place to hang out in terms of the volatility that we could have next week. So you like healthcare good place to hang out. Where is not a good place to hang out? Where are you avoiding right now? Well, certainly, you know, one concerning thing about the overall market environment is to return on the speculative phase. So if uh, if it has a I or chat bt in its name, please look up. I mean, it just makes us, it makes no sense.

It reminds me of you know, twenty two years ago when everyone was putting dot com after their names, and now we're trying to figure out a way to put AI into their business model, into their name, and the prices have gotten out of sight. And I mean, you know, the Chinese government and state media have never been a bastion of you know, kind of conservative thinking. But I love the fact that even they warned their people that the whole the stock marketing, as far as a I

was concerned, was getting way overheated. Caution of course, and of course you've got some of the meme stocks are on the rise again, you know, the A M C s UM and you do want to steer clear of that. All right, We're gonna leave it on that note. Um, we really appreciate it, David. Thank you so much. David Diets he's managing principal and senior portfolio strategies at Pepack Private Wealth Management, joining us on the phone from Semit,

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