This is Bloomberg Business Wait Inside from the reporters and editors who bring you America's most trusted business magazine, plus gloom War, Business finance, and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Worldpool and on. I spent the last seventy five years becoming lawn v ex first. But now that make it easy for everybody, all.
Right, who doesn't have a vintage commercial Whirlpool, of course, and they are front and center today we're watching the share price down about fourteen percent here. What we love about these kinds of companies is they can tell us so much about what's going on, certainly in the minds of the US consumer and what's going on in the US economy. And this is a great conversation, especially Tim,
if you think about it. On a day where we got GDP, we expected it to be hot, and it came in even hotter than expected.
In fact, Treasury Secretary Annie Yellen just in the last couple of hours telling Bloomberg exclusively that the surge that we're seeing in longer term body yields in recent months that's a reflection of the strong US economy not of a jump and government borrowing driven by that widening fiscal deficit.
All right, so good to know. And that GDP report for the third quarter, it was fueled by surge and consumer spending. So let's get to our guests. We're Pull Corporation. Mark Bitzer, he is with us. He is chairman, he is president and CEO of Whirlpool, and he joins us on Zoom from Benton Harbor, Michigan. Mark, it is good to have you back with us. Your company. You came out and you trimmed your full year profit outlook, amen,
and uptick in promotions. Investors noticed, and the stock is down the most and to the lowest since twenty twenty. So investors, definitely you are upset about what they heard from you.
Guys.
First of all, let's take the big picture. What's it like operating in today's environment right now?
Yeah, First one, Carolyn, thanks for having me back on the show.
I mean, what would be communicate today is a third quarter which I would still describe as pretty solid results.
That we year the year we grew our business.
We hadn't grown our business for six quarters in a row, and now we grew our business more than three percent revenue growth, we expanded market share, and year year we expanded our margin by about one.
Hundred basis points.
But yes, we trimmed our forecast technically not on the ongoing EPs because we also had some text benefits, but we as opposed to seven point seven and a quarter EBIT margin, we lowered it to six and a quarter to six and a half. So that is trimming the EBIT margin, and the market reacted. You could in many ways argue probably overacted, but it is what it is.
But I think that's the essentially what happened. The underlying results which we had I would still consider very solid and particularly compared to the pre COVID levels and also compared to Q two where we essentially went sideways. But in all transparency, we expected our margins to continue to improve and instead of it by basic move sideways. And I think that's what we see today, a lot of reactions out there.
Underneath that.
That's probably getting to your broader question about the consumer. You know, the consumer right now in our industry, we see strong replacement demand. I even products breakdown and you have more applnes usage post COVID, but the discretionary side of a consumer, which is so much driven by consumer confidence.
That is the soft part of a business.
That is also the inherently more attractive part of a business because it comes with higher margin and higher mix. So we see right now a pretty heavy shift of consumer spending towards replacement side and lesser to a big discretionary purchase.
That's interesting and that that makes sense given you know what else we're hearing with the economy mark. Where else are you seeing when it comes to the consumer in the US weakness when it comes to consumer spending? Is there certain categories that you can out line for us where you're seeing weakness? Are there geographies? Is it the higher end consumer that's that's actually struggling more than a consumer you know, the in the middle or lower end.
Tell us, tell us what you're learning and what you're seeing.
Yeah, and again it comes back to my early comment about replacement demand. You know a replacement demand just put yourself in consumer shoes. If you have a washer or refugeral breaking down, you want to have it replaced with two days. You don't do the big shopping around and the mixed up you want to replace. So that is just a one on one sale, which again is typically
not a very mix or margin tractive business. The discretionary side, where people plan for a new kitchen or remodel house, is the soft part right now, and that's the much richer part of that. So in general terms, you could say, yeah, there's a little bit of a trading down on a consumer landscape. There's a segment of call it a premium consumer, which is pretty resilient, but it's kind of a big mass in between where you just don't see trading up
if at all. Right now, you just see more trading down coupled with you know, a promotion environment which we described as return back to pre COVID levels.
Well, as a consumer, I'm saying, yay promotions, Mark, I'm going to be quite honest with you, but it does say something to kind of move the needle right to get consumers kind of off the thinking area into the actual you know, buying of something. So how aggressive are your promotions and are you anticipating that in terms of maybe some weakness and the need for promotions that this continues into well into twenty twenty four.
Yeah, and in rones called today, what we refer to is we consider a promotion environment as having normalized, ie call it past tense, which AWS implies we expected stabilized going forward. So in terms of the depth of duration of promotion, this is not any different from pre COVID, and frankly it is something which we expected, but it happened and occurred maybe one or two quarters early when
we originally anticipated. And that again comes fully back to the discretionary side of a demand, post mortgage rate increases, post all these horrible world news messages that tumbled pretty much call it in Q two, and consumer confidence ultimately drove that lower discretion of demand, which in turn drove a higher promotional intensity and the environment.
What about the other part of your business, the part about workers attracting and retaining talent costs that you have in terms of buying the equipment necessary to build these machines. How are wages for whirldpool workers right now? Are they up yere over year?
Yeah, So, first of all, to put it in a broader context, as you know, over the last three years, we were not only concerned about cost, we were also concerned about resilience and the strength of our supply chain. The latter part we basically have I would say pretty much fully resolved.
Our supply chain is intact.
We don't have major availability issues, so that make a check mark behind it. On the cost side, over the last couple of years, we saw the biggest increase of cost on basically raw material and transport. Transport has come down quite a bit, and raw materials are starting to trend down and that is a favorable trend which we observe particular second half of this year, and we also expect into next year well wage side, and again that is more driven by of our US factories. One is unionized,
once are non unionized. We basically have every year wage adjustment, and we in phase of a labor shortage, particular in twenty one and twenty two, we did already fairly significant moves on that wage side.
So so I would.
Say this year we're not confronted with a massive wage increase. We still of course do year the year increases and that kind of helps us dealing with a labor shortage. And right now I would say across the board, maybe with some fewer regions option, we're pretty well staffed and beliebor shortage is it's a lot less of initiate than in most for example two years ago.
Hey, Mark, so what do you make of when we get the like the retail sales numbers that come out and it shows a really strong consumer and which kind of surprises everybody because we keep talking about student loan payments or car payments that are going to slow down the consumer. I see what you said about replacement versus discretionary. But do you does that retail sales data sometimes surprise you? Do you when people say resilient consumer, does it kind of just say, well, resilient but maybe.
Not so much.
Yeah, I'm in Carol.
I mean I would say, I think you need to move from a headline into the details. And yeah, with consumer spending, and that's that's confirmed. The question is on what is for consumer spending? And we saw there's a lot of spending on services. Restaurant calls have gone up, travelers gone up quite a bit. Our part of a business consumer durable. And again I'm talking of a discretionary side,
not a replacement site. For most families, buying a washing machine or remodeling kitchen is a very significant part of a disposable income. You only do this expenditure if you have confidence in your economic future and the broader environment and consumer confidence. And you can look at whatever index that is one which kind of call it. April may dropped off pretty sharply. So yes, I do cbover consumer spending. I think more durable categories is a slightly different picture.
They're just on the long term big disposable items or big ticket items. There's some reluctance of the discretionary side. Again, replacement site is very solid, but on a discretionary side is soft.
Do you guys talk a lot about a recession coming? You know, it's been coming for two years, and some would say, listen, we've already had you know, certain parts of the market have seen you know, or certain parts of our economy have seen it. But what's your best guess as someone who runs a company, you've seen some any different. You know, we've gone through a very tough market cycle, certainly coming off the pandemic that was bad, and then it was actually pretty good. People were doing things,
especially on their homes. So do you think a recession is likely in the United States? Your biggest market here certainly by revenue.
Yeah, First of all, I would start with a cabin there's probably a lot more people more confident.
About that subject than I am.
So it's the way I would look at it. Our company, in many ways is a cannery in the coal minor. We see certain trends earlier. What I mean with that, we saw the cost inflation in our business a lot earlier than most companies saw it. The same time, we saw the beginning for cost inflation a little bit earlier. And we probably also see the kind of a normalized
consumer promotion environment that livered early. So most of the broad economy sees we tend to see maybe call it three to six months earlier that in mind, you know, it's kind of I think broader terms, the US economy is more resilient than most people thought. So from that perspective, I personally do not see a scenario for a deep recession.
Cooper be something shallow.
Yes, I think the key element will be going forward to is you know, when when will the Feds signal a kind of a stabilization of a plateau of interest rates?
That is a big element.
And then of course what is a little bit more difficult to answer, when do you when do always horrible world news become a little bit more less or or are we getting numb against it. So that's for consumer confidence part of it. But again from a person perspective, we don't expect a big boom, but we don't expect the scenario for deep recession. We're prepared to very small, modest growth in our industry, but were also prepared to deal with a shallow recession.
Mark on that subject of everything that's happening around the world, are focused certainly not numb. Yeah, and our boocus certainly on the Middle East in addition to other parts of the world. But there's also the business side of this, which is oil prices. And I'm wondering how you're watching energy markets, how you're watching oil prices, and if we do see a spike in oil prices, what that does to your business?
Yeah, And then and let me be maybe a radio cause maybe not a perfect form to comment on this horrific attax and the subjequent subsequent human tragedy coming out of this one. So it's kind of difficult to move from mad to economic impact. Having said that, of course, there's you know, the entire Middle East situation, if it would further escalate, has some risk on the oil prices. Again, there's a big if if it further escalates in an
uncontrolled manner. As you've seen the last two days the oil price from initial spike, they came down a little bit and and right now in our internal forecast, but again there's people who probably know a lot more about it. We expect also stabilization sideway to move off the oil, but it's a lot depends on will there be stability in what is an extremely difficult Middle East environment.
No, absolutely, Mark, We so appreciate your time. You've always been so generous, especially throughout the pandemic coming off of it, trying to help make sense of that cycle. And we really appreciate your time trying to understand what's going on and really appreciate it. Mark Bitzer. He is chairman, president and CEO of Whirlpool, joining us on Zoom from Benton Harbor, Michigan. A great gauge on what's going on in the economy at a time when there is so much heavy news,
so much uncertainty. Really appreciate what's more to come. Right here on.
BusinessWeek, you're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot Com, the iHeartRadio app, and the Bloomberg Business App, or watch us live on YouTube.
As promised, we do have the Mattel's CEO on christ joining us from Elsagundo, California on Zoom.
Hi Carolim, it's great to be with you.
It's so great to be with you. I feel like I have a million questions. I feel like I want to go to a bar, have a drink with you and just sit and talk. I want to start with the Israel Hamas conflict. You're born in Israel, studied at Tel Aviv University before heading to the West coast of the United States of America. I hope your family and friends are safe. I pray that they are safe. How are you thinking about all of this right now and this conflict and is there a way to peace in that region?
Yeah, thank you for asking my family. My family is okay, My immediate family is okay. But and you know, of course, in Israelia, this is very personal to me. And I know too many people who lost loved ones or have relatives that have been kidnapped and are now being held hostage in Gaza. You know, on behalf of Mattel. We condemned the terrorism and atrocities perpetrated by Hamas and stand
against hate and violence in all forms. We express hope for the safety of Israelis and Palestine and children and families part in the Israeli Hamas war. As a company. Since the Hamas attacks on October seventh, the Mattel Children's Foundation has been focused on humanitarian work, including cash and toy donations with shelters and hospitals who support children who are suffering. And we're sitting here all wishing for a swift resolution to the war and more peaceful times in the future.
Well you know, and it's something that you know, people who are wow, gosh, I mean up to eighty years old at this point have dealt with their entire lives in that area of the world. And I'm wondering to you, and not speaking on behalf of Mattel, but just getting your thoughts personally, how this ends. If a two state outcome is the only solution to ending the conflict there once and for all.
You know, it's a complicated conflict, and were now sitting at a time that is very volatile. We see risk of escalation, and we just hope for a swift, swift resolution and wishing peace for everybody as soon as we can.
I want to talk about Mattel. I have one more questions for you. Do you think Prime Minister Benjamin Netanyah who is not going to be the leader that brings lasting peace.
And this is not the time to get into the political discussion right now. Everyone is focused on resolving the situation. Israel articulated its priorities. We're all really looking forward for
the release of the hostages. There are thirty run under the edge of sixteen that are being held at captive right now, about half the hostages of women, and we really believe that this should be a resolved as soon as possible, and we pray for the release, safety and release of all the hostages that are now being held captives.
You are absolutely right, but we do appreciate you weighing in on this because we have talked to you about serious issues in the past, so really appreciate this. No easy segue, but I do want to talk about the business of Mattel. Talked to us about last quarter and the outlook. It was a tough day in the equity market for you guys. You did talk about tougher industry conditions. What are those tougher industry conditions that you guys are worried about.
What they see the industry being soft in the third quarter and near to date, and as a result, we adjusted our expectations and expect and believe the industry will decline mixing a digit for the full year. But don't you need to remember that this is after the industry was up twenty two percent from twenty nineteen to twenty
twenty two, reaching an all time high. So coming off after such a strong increase, especially in a challenging microeconomic environment, we believe that this is a reasonable situation and doesn't reflect on the strength and resilience of the industry long term. The toy industry has been growing for over ten years and it's a growth category, So we feel very good about the industry and it's a growth process. And even in that environment, even in a softer market, Matsel performed
very strongly. Our quarter exceeded, our quarterly result exceeded expectations. We showed meaningful sales groat margin with very strong free cash flow. Intercourse, we saw consumer dement increasing and we continue to outfreitz the industry.
I think a lot of investors today, at least sending shares down about seven percent, were concerned that you guys maintained your full year sales outlook despite all of the success of the Barbie movie. So what would have to happen Eon to bring in more than the one hundred and twenty five million dollars expected from the Barbie movie and related products? What needs to happen at MATEL or in the industry for that to happen or for the consumer.
I should say, while we maintained the top line expectations, we increase our outpook for a ghost margin for our EPs and EBIDA, and still expect a very strong free cash flows to float through.
What they change is that relative to our initial expectation at the start of the year is that the industry is we believe will now decline amidst of the digit but the fundamentals are strong. We do expect an accelerated growth rate in the fourth quarter and significant expansion and growth margin compared to the prior year, and for consumer demand to be positive for Mattel in the holiday season, in the fourth quarter and the full year. So we
are performing strongly. We're heading into the fourth quarter, seeing stronger support from retailer, more shelf space, more representation in major holiday catalogs, and overall a strong position with a very broad based offering, a product across a play patterns, crash points, and we believe we have very well positioned competitives.
So just to follow up there, the one hundred and twenty five million that you put out there, the estimate from the Barbie movie and related products, would you say it might be even conservative a little bit?
You know, well, we did say it's at least one hundred and twenty five million dollars revenue at sixty percent operating income margin.
But the.
Takeaway from this is that this is one movie in one year, and as we continue to scale our strategy and have more movies, more executions, and not just in film, but also in television, in location based entertainment, theme parks, consumer products, digital experiences, music, and other verticals in some cases that are actually bigger than the toy industry, we believe that we have an opportunity to capture significant value
from our franchises. And we're not saying that everything let's go there as successful as Barbie, but we absolutely believe that in the aggregate there's a meaningful opportunity for us.
Well, let's go there. And I've got to say, you know, I remember when we start talking to you or you was it the early days of the Barbie Movie or you started filming. So it was kind of fun to be along for that process. But it was a movie that made us laugh, made us cry, and like I said, it appealed to a lot of different ages, which was pretty pretty wild. So what are the key brands that you think have life beyond a kid's toy chest and that you think we should be all kind of waiting for.
I don't know whether it's six months, twelve months, the next couple of years that are going to be brought to life in different ways.
Well, the division of Mattel's Films is to collaborate with leading filmmakers to create stand out quarterly movies based on our iconic brands that will resonate in culture and a field of global audiences. And the Barbie Movie and I'm glad you enjoyed it as much as you did, is a clear showcase it did.
And we have brought me back to the theater for the first time.
I don't have to hear that, and we have fourteen other movies in development right now, different demographics, different genres. We have Hot Wheels in development with jj Abrams as Warner Brothers, Matchbox in development with sky Dams, which, as you know, produced the Mission Impossible movie that did very well, and Top Dan We have a movie in development with Vin Diesel around Rocking Stock and Robots Parley Pocket with
Lena Danham and Lily Collins. We have a Wishbone in development with Pitt Farley, Major Matt Mason with Tom Hanks as a star, Thomas the Tank with Mark Forrester as director, and the list goes on and off, so we really well.
You know, it's very good that you're so close to Hollywood out there. Yeah, it's good that you're so close to Hollywood out there. Nel Segundo, Hey, we only have about thirty seconds left. I'd love to hear comments on the consumer going into the holiday season. Are you seeing signs of weakness in the consumer.
Well, we expect a strong holiday season for Mattel. We believe our retail partners and the industry as a whole is well prepared for the season, and were very excited to be able to care consumers of all ages with a great product for in the holiday.
I'm going to get yelled at, but I'm going to ask twenty seconds, what's the hot toy for Christmas and the holidays and for Hanukah? What is the hot toy?
Well, anything Barbie is a hot toy, especially even before the holiday. For the spirit Halloween Barbie costume, watch out for that. But of course hot Wheels is always the winner. The basic car assortment and the five car pack assortment, and look out for the months the high four dollar assortment, and you know that will will be very will be hot selling toys for the holiday season.
God, you're speaking my language. I love Uno and I love Barbie. En On Chris, thank you so much, truly, your friends and your family are on our minds and our thoughts. Chairman and CEO of Mittel.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa play Bloomberg eleven thirty.
Well, as we reported earlier, we talked about Sam makmin Free taking the stand in his fraud trial earlier downtown in New York City. Some special testimony jury was sent home. It's very fascinating everything it feels like surrounding SBF and FTX. For the latest headlines though on that trial, just head to Bloomberg dot com or check out the Bloomberg terminal. I mean, I've got to say, the rise and fall of SBF it was just tim a few years ago, right, Just go back to twenty nineteen.
Yeah, there was no such thing as ftx's six change. By twenty twenty one, though, it was naming arenas after itself, and by twenty twenty two it had become a force in politics and pop culture. By then. By autumn it was gone, along with much of its customers' money. The question is how did this happen so quickly?
Well.
A new documentary by Bloomberg Originals Ruined the Sam Bank bin Fried's story captures the head spinning frenzy around Crypto. Here's a little piece of it.
I don't think he even had almost a conception at some points that it was wrong or rights.
I think he just had them metality that he has to win.
It was almost like trying to explain like business ethics one oh one to a baby.
Sam has basically become a villain in everyone's minds.
This committee will not stop until we uncovered the bull truth behind the collapse of FTX.
Will this be the last of its kind? No, this is the nature of capitalism.
Get over it, all right, everybody with more on this documentary by Bloomberg Originals ruined the Sam Magmin Freed story. Let's bring in Pat ragne Or, editor of Bloomberg Markets Magazine and also the editor of Bloomberg BusinessWeek, Joel Webber, both back at Bloomberg headquarters in the Bloomberg Interactive Brokers studio.
Hey, Joel Weber. I don't know if you know this, but at a point last year, earlier this year, pat Rick near was so involved in this story. I gave him a new nickname, and it was called Crypto Pat. So whenever he was walking around, I would say Hi to Crypto Pat. And it's good. Didn't know that Pat with us this afternoon. You didn't know that. But there's a reason I gave him that nickname.
Isn't there, Well, look like Pat is Pat is amazing and worked with Matt Levine last year on the Crypto Story, where we went in BusinessWeek cover to cover and we published it and we felt really good about ourselves. And then the biggest story in crypto ever happened, which was the collapse of FTX, like a couple of weeks.
Later, and we were like, thus far, biggest story crypto thus far, Yeah.
Thus far.
So as that was happening, a small group of us started talking about FTX and SBF and I helped basically put what became this documentary in motion. And as we were doing that, I was like, you know, who could take everything that he's learned about crypto from working closely with Matt Levine on the Crypto Story and parlay that into whatever this effort becomes. You want to work with Pat Ragnar And that's basically you know, here we are a year later. Funny enough, the Crypto Story published a
year ago yesterday. I did don't know if you realized that, Pat, Wow, So so here we are and a lot has changed and actually today you cannot just make this stuff up. It's like so perfect. So this documentary comes out and Pat and I have been talking for a while about like, hey, we should you know, write a story for Business Week that sort of takes a step back and like tells us all what it all means. And it's tied to
the documentary. And then oh, by the way, Sam bankman Fried is taking the stand, So it all comes together in elegant ways, sometimes so so pat when you kind of started writing this remarks, and you know, here we are having SBF just taking the stand for the first time. You know what what stands out to you about it all?
You know, in preparing the documentary, we did some interviews with a lot of people, we guys around one hundreds of people. Yeah, but one person I spoke to who is kind of a prominent crypto critic, a guy named David Gerard, said something to me that really stuck in my head. And he said, you know, people in well regulated markets don't really understand what it means for something to be unregulated. We take for granted how finance works, even when we understand that finance is risky and full
of full of opportunities for trouble and plunder. But there are bank compliance departments. Actually, most importantly, when you're deal with traditional financial institutions, there's lots of checks and balances, splitting of roles, and in crypto, you're just kind of like handing your money to a guy and you're kind of hoping, you're hoping that that they're doing the things that they're saying they're gonna do, and you really don't
know what will happen. And FTX was just this like kind of very vivid illustration about like, well, what can happen is is that like everything your your your money can just you know, evaporate into a bankruptcy. And you know, I think that was why people were willing to do that and why regulators weren't able to get a hold of this faster. Is like a puzzle that I've been thinking about almost like every minute that I've ever been looking at crypto. So I was kind of trying to work through that.
So what came what happened at the trial today that you found it trusting? Well it, you know.
So the main thing that happened was is that the judge sent the jury home. Interesting, So what what they're doing now is kind of we're getting a hint of the testimony that he might give in front of a jury. As the judge decides what's relevant, and you know, I'm reading between the lines on the excellent live blog our reporters are doing from the courthouse to.
Yeah.
But but I think the implication is that he's making a case that he had lawyers, and the lawyers were saying, this is fine, this is fine, this is fine, which you know, I think goes to what it always looks like his defense has been, which is that this was an error and just a very big one. You know, I blanked up, as he said more times than his lawyers probably wishes.
That he would.
But that kind of seems to be the defense. And then maybe he's adding that and by the way, my lawyers helped me.
Well, Pats, any time in putting this documentary together, did you at one point think well, maybe they just yeah, it was just a really mega mistake.
You know, I mean, I think, I mean, my point of view is that even if like, let's let's let's have that be the generous interpretation, you don't get to do that, you know, when you're running, when you're running something where you have somebody else's money. At one point, one of his lawyers said, you know, it's like, uh, this company never had a chief risk officer, and you know, it's like you had to find time to find Tom
Brady and Gazelle. You know, maybe you should have like not having a chief risk officer when you are in the risk business is And again I'm just like saying, like, let's let's be generous about it is. It's is its own kind of massive problem. But I mean, look, he's got three of his top lieutenants of gled guilty to front, right.
I mean, I think you know, we can presume, well, we will wait to see what happens with the jury in this case about him, but ft X is I think it's just a legal fact at this point that
FTX was a fraudulent enterprise. And what can be confusing about that is that, you know, there are often these questions sometimes we will write like, well, what happened was was that his trading firm borrowed from FTX and people and I'll hear from people saying you borrow it, he took it, and you know, but that's actually the mechanics of these kinds of things, like well, the mechanics of
how you take it as you borrow it. But that's not it's not really different, you know, And it looks this was a substantially fake business.
Okay, so you got to travel around the world with a really talented crew. We had a lot of Bloembird reporters participate. There are some other people that got to participate in this film Ruined. Like who when you get to and we went through the premiere together last night? Like when you got to watch that?
Like what what sticks with you?
And like who are you so proud of getting a chance to speak with?
Well, let's say I was very interested to speak to Suzuo of of Three Arrows Capital, who, in many ways like that the the the trade that they made that fell apart on Tara Luna was the first string that pulled everything out. It was interesting to listen to him and his business partner Kyle Davies uh talk about their experience of that. I will let viewers judge how they how they how they take that conversation. Uh. Suzu is currently have has his own legal troubles. Uh, but uh,
you know, so that's that that's fascinating. We also spoke to, you know, a commissioner at the CFTC who had met with Sam Bank and Freed Uh several times while he was lobbying to really get the US to open the door to his business. And you really see from that how hard he was pushing to become a h and how close he got, how close he and how close he got, and and I think that's pretty scary. I mean, it seems like in some ways it's like if a series of trades hadn't gone wrong at one hedge fund
and then that hadn't fallen through another hedge fund. I mean, I think at some level this always was going to happen. But if it hadn't happened at that particular time and he had had a little more time to play it out, I think there would have been a lot more mom and pop money at FTX. They were going hard getting.
That money, ay Pat. One thing that I've been thinking a lot about over the last year is what this moment means for crypto. And it's interesting that this is happening at a time where we've actually seen in recent days the price of bitcoin move higher on optimism around a spot bitcoin ETF. But I do wonder, after you spent a year really in this world, just I'm so involved in this world, and now you're on the other side of it, I don't know if you have more
crypto projects planned. I don't know what Joel has planned for you moving forward.
But.
Do you.
I'm just wondering, like, what is what is this as an existential moment for crypto now that we're kind of on the other side of it.
I mean, I I think they've got a lot of work to do. I think you have to be careful not to overinterpret price moves. It's such a you know, it's a it's a pretty opaic market without a lot of liquidity. And actually, even when it was hot, that was always a question was like how many actual people are putting money into this?
You know, I mean it was.
Actually very hard to get a read on, like where where is a lot of this money coming from? You know, classic problem which the documentary kind of talks about is like we always talk about like, well this this tokens worth billions, that token's worth billions on these kind of very thinly traded markets, It's like how many people are actually trading this stuff? And you know it, you do see that there is some institutional interest in this, you know.
I I try not to make predictions about what's what's ahead, but you know, a whole part of crypto really fell away, and it's not I think fully captured by the fall in market value. So I think crypto went from like three trillion at its peak to below a trillion in market value. It's come back up, it's about a trillion and a trillion point three, but but you know that that changed from a trillion to one trillion, is from
three trillion to one trillion, doesn't really capture. Also, you know people who entrusted their money to something like a crypto bank and saw it and saw it go away, people who put their money into exchanges and saw it frozen, people who were trying to get different kinds of yields and had to go away. And it's it's hard for me to see that being an easy sell to anybody for a really long time.
Okay, So one of the things though, like crypto has this, has had this come down, and I think the SBF taking the standard is a really good reminder of that. And yet at the same time, like we've seen this enthusiasm recently again where you know, Bitcoin's continue to like go up up, and it's littal like reminiscent of other moments in time where like bad things are happening, and yet it's like this thing, this thing that nobody quite
understands is going up. And that also made me ask you, like, you know, so you know this ETF, that spot ETF. There seems to be a lot of interest in that is is that is that what it needs? Is that what this industry needs to have a chance that you know, redemption perhaps.
You know, it would provide I think a simpler way to get in. It would get you know, on the one hand, it would bring bitcoin into the regulatory world right like you'd be you would be buying a security when you you know, would be the easiest way to buy bitcoin, you know, And obviously what the regulators are are wrestling with is can you bring this is is this fit for the regulatory world? The fund will be regulated and we'll be treated as regulated. But what's happening
behind the scenes in the bitcoin market. You know, a lot of crypto people will say that you need to make a distinction between bitcoin and other crypto, you know, one of the things, and I would agree with that in so far as the the the the investment case around a lot of the crypto that people were trading was like, you know, it was like a penny stock market blossomed overnight. Bitcoin has kind of a different investment case and a different theory.
But listen, we apologize, we've got to jump in, but it was interesting. We'd had a conversation with the folks over at Wisdom Treaty and they have filed for a spot Bitcoin ETF but waiting on regulatory Pat Ragnar, thank you so much, and of course Joe Webber the documentary Ruined the sam Baquin Free on the Bloomberg and on Bloomberg Originals and APM wull Street Time tonight, do not miss.
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