A Look At Crypto Regulation And The Markets

legal officer at Kraken and Marco. It's interesting, you know, um, a lot of bears, Jamie Diamond among them, are you know, continually ensuring the market. Hey, you know what, the US Government's gonna regulate this space, and it seems like the more it gets regulated, the higher the price climbs. Anyway, is it really a bad thing if crypto is regulated? That's a that's a terrific question, and really like the perfect lens to view crypto regulation as it relates to

the price. Listen, the price of crypto. Are the price of crypto is going to go up. It's just gonna go up, and it's gonna go up and sometimes it's gonna go down. But By and large, the reason why the price of crypto keeps going up is not because of a speculative frenzy. It's not because governments have been laying off and once they do really crack down, it's going to get destroyed. The bottom is going to fall out.

That is completely the wrong ones to view it. The right lens to view it is that this is a technological transformation, technological revolution, and unlike other technological revolution, this one has a price picker. That's the that's the that's the bottom line is that if you could, if you could invest in the in the very early days of arpa net right, the progenitor to the Internet. Gosh, I mean,

of course you would have done that. You know. The early is that the Internet had websites, right, you can buy and sell websites, but it was a highly inefficient market. It happened very slowly, it was largely insecure. The difference between what happened then and what's happening now is not that crmino is any lesson the Internet. Actually it will be, and it will be significantly more. I think it's going

to change every aspect of our financial lives. But the difference is that well, this time, there there's there's there's there's financial opportunity all tied up in it for everyday people because these tokens, many of them work like functional goods. Um. And that's that's a that is not only a generational opportunity. I think it's a historical opportunity. So look, I wouldn't say jump in and by a bunch of crypto because you think that because you think the price is going

to go up. That's that's the wrong lens to view it through. You have to view this through. What's really happening. This this ground swell opportunity. Uh In in terms of technological innovation, Marco, there's a new sheriff on Wall Street, if you will, in SEC chair Gary Gensler. What do you know about him? What do you know about his views on crypto? Gary Densler understands, So I think better

than better than most people. Um. You know, we we we keep open lines of communication with regulators even if they are in our primary functional regulator. The SEC is not our primary functional regulator. They are not the primary functional regulator of any crypto exchanges in the US, UH that I'm aware of. But look, I mean, you don't need a microscope to to figure out that that they

probably want to be. Gensler has said on a number of occasions that he believes that the protections required uh for users of crypto exchanges are investor protections, not just

consumer protections. And that would mean a real shift from the kinds of regulation that applies to crypto exchanges today, which is primarily money transmit a regulation or the kind of regulation that that that you get when you walk into a MoneyGram or a Western unions that he thinks it ought to be something different, something more investor protection regulation.

So all of the investor protector regulations that you talk about on this show every day, the kind of regulation that applies to broker dealers, um, national securities exchanges, investment advisors, that that sort of thing. So UM, I think that's that's where we're headed. Uh. It's not really a legal discussion yet, it's or at least it shouldn't be. It's it's a policy discussion, the question of what kinds of regulation to apply to crypto companies, exchanges, custodians, that sort

of thing. And I don't think it's so easy as as to look at it and say, well it looks, it walks like a duck, it class like a duck. It's got steads. So let's call all these things broker dealers and call it a day. I think that would be throwing the baby out with bath. Moderate in a opportunity to establish a regulatory regime that really works for crypto uses. I wonder what it's like as a lawyer

to deal with. UM. You know, an asset that doesn't have you can't touch, it doesn't exist other than as a line of code, and it doesn't have any um intrinsic value or purpose other than to be you know, worth money. Is it different than other kinds of I P or do you just lump it all in the same kind of baskin. It's absolutely different. It's absolutely different. And I can tell you, as a lawyer who's practiced in this space since late that makes me aged agent

in this industry. UM, let me let me tell you it is. It is. It is the most fantastic opportunity to investigate, to reinvestigate first principles of good regulation, to reinvestigate how, how how these laws were originally crafted to protect people. UM, and I gotta tell you it is a It is a terrific opportunity to to question why we have disclosure regimes, for example, just the most fundamental questions about how we how we protect people and how

we protect investors. You know, today we have these disclosure regimes that require companies who are issuers to tell all the public about what the company is doing so that people aren't caught off guard by by things that could

affect their financial future. Do we need that for crypto? Well, we need something like it maybe, But I mean, you can't ask a digital you can't ask a computer protocol to publish a phase, right, Like that's never going to happen for a bitcoint and it would be folly for government to require it for some companies though, or for for some protocols are actually our companies behind them and for them, Well, I think we to start what what a new disclosure regime looks like? What it really awful?

All right? Thanks so much for joining us. Really interesting stuff, Marco Sentori there from Kraken. Let's get a sense here on this market. We talk about the wall of worry, if you will, and there are many bricks in that wall of worry. Um, let's get a sense. And people are asking themselves. Boys, the next ten percent move gonna

be up or down. I think the camps are. It feels like it's fairly evenly dispersed their Jeff Camarta, Chairman, CEO and portfolio board chair of the Camarda Wealth Advisory Group, is also author of the Financial Storm Warning for investors, How to Prepare and Protect your wealth from taxis and market crashes. Jeff, are you concerned about a significant pullback in this market? I think it's just inevitable. I mean, the market has been soaring, really floated up into space

as the world burns since COVID. COVID presented in early So whether this is the beginning of it or both continuing bill trend for a bit longer, I'm not sure, but I think sooner or later we're in for quite a shock. So how do you especially tax hikes, I'm I'm wondering, how do you protect your wealth from tax hikes? There's a lot of it regional. I notice you're in Florida. Well,

I think I think you know. The biggest pie, certainly is is federal and there are so many dark forces that are really conspiring I think to drive really atrocious wealth stormed conditions, But protecting yourself from tax hikes really is the function of understanding tax law and what the opportunities for legal tax avoidance are. All right, So, Jeff, you're you're really worried, You're concerned about a significant pullback in this market. What would be the catalyst for that

in your mind? It really is hard to say. You know, right now, we're still pretty much in greed mode and folks are buying, you know, it's applying demand and which sellers, you know, um out number buyers, and it flips, and it's it's really hard to tell what the tipping point would be. Could have been an attack in Taiwan, you know it, could it be an acknowledgement that inflation really is insidious and a lot worse than the FED has led us to believe. There are so many different things

that are really could triggered. But when it happens as it did, you know ad mid the third quarter of oh eight, you know, it's pretty rapid. By the way. As a side note, everything lately is reminding me of you know that book by Admiral Turvid so good and uh a Taiwan issue is one of the things that happens I'm more concerned. Um, well, let's say we're more

focused on a daily basis on inflation and growth. What are your views on economic growth, you know, barring something like you know, Grace on black swan issue like an attack on Taiwan. What what are your views on growth and inflation in the US economy right now? Well? I think inflation is a really big factor, right and which is not fully acknowledged by by a lot of players. For instance, deal is up four times in a year,

four times. It's an important industrial input, right, And that's before you look at logistical problems and you know, you get the last count there was sixty five ships anchored off the l A port. You can't move the stuff. Shipping costs have gone through the roof. Um. But to answer your question, you know, the economy still is while some sectors are doing well in some countries have done okay, it's still very much in tatters, you know, and damaged

in really unknowable ways. Um. And uh, eventually I think that that that that financial stress is going to throughput into market prices. Jeff, how long have you had this view of markets here, this negative view of markets? And what do you tell your clients. What's your advice to

your clients? I wrote the book Between Semesters, A George George town Law last last Christmas, and it really began to um, you know, to be unclear to me as the COVID stock bubble floated up into space, right, the world catches fire in early and stock levels just go, you know, incredible record highs, and you're starting to examine. I wrote a piece for Forbes, um uh probably about a year ago that that got a hundred thousand hits,

which is, you know, unusual for me. And I really focus you know on the various uh, the various factors. So what we tell clients, and we've really gone. I've been a died in the wolf fundamentalist old CF A kind of um efficient markets guy well throughout my decades of training. But what happened would COVID really moved me? And why the the world's on fire and stock prices go through the roof didn't make any sense and that's real.

And when we really started to examine what was going on and look at ways to develop countermeasures to protect our clients and to readers, you know, from what we see as an inevitable but really devastating market bull back and that just stops, right, bonds have got some more stresses. Well, you know what, I think it's interesting, um if you look in emerging markets, crypto has long had a draw just because they're bet and sees are you know, can be boxed up and wheelbarrowed out and and and still

be worthless. What do you think though about the bitcoin right now? As from a from a US perspective, it's difficult to justify the value right and also as a as um as a medium of exchange, you know, with a wildly volatile and fluction winning value. Um uh. And they're also significant fraud you know, how do you can be? By its very nature, it's really hard to identify who owns it? So I think that that as part of

the gold sir, not as hard as gold. Yeah. If I throw a gold bar on the floor, who owns that? You know? That's right? Yeah, well it depends to guests do it first? I guess right, that's a good point. I just always, you know, I think it's interesting that people are looking at as a as a hedge or a store of wealth and it has you know, no track record and and really no intrinsic value. I mean, it's worth what someone will pay for it. All right,

interesting stuff, and of course we could go on. I'd love to have you back on the program, So appreciate you joining us. Jeff Jeff Camera out of their chairman and CEO Camerata Wealth Advisory Groups talking to us about how to well. He wrote the book about the Financial Storm, warning for investors how to prepare and protect your wealth from tax hikes and market crashes. Now, let's bring in Shawn Snyder, head of investment strategy at City US Consumer

Wealth Management. Sean great having on the program. What are your biggest concerns looking at this market? Is it? Is it washing in d C um and and tax policy? Is it inflation? Is it the Fed? Is it earning season? What? What? What's keeping you up at night? If anything? First off, thank you for having me. I guess all of those are are a good spot to start. Um. You know, the DC drama continues to kind of be an overhang

on the market. Um. You know, I like to think that you know, this kicking the can down the oone actually gives them more time to um, you know, kind of solidify the party and finalize the details, but it's not clear whether you know, no immediate crisis means no immediate action. Uh, and are we looking at it an awkward Thanksgiving dinner yet again with Congress simply um forcing the deadline issue to December three instead of um, you know,

October eighteen. So I think that's an overhanging uncertainty that weighs on the market. You know, history heavily suggests that they do get it done. I mean, the White House and Congress have acted uh ninety eight times since the end of World War Two to modify the debt limit. They've always done it seems like they will get it

done again. Um, you know. Likewise, as far as the budget reconciliation bills and infrastructure, uh, twenty one out of twenty five reconciliation bills have went on to be signed by the President. So still a very heavy lift to get the Biden agenda off the ground, But you know, I think they should be able to do it. The other thing with d C that's interesting is by delaying it, they actually give the Treasury Department more time to kind

of bolster their extraordinary measures. So um, it's possible that the soft deadline for the debt ceiling is now December three, but if they can bolster those extraordinary measures, then maybe the actual hard that ceiling deadline is maybe well into So I think that's something to keep an eye on

and the other things you mentioned. Probably the biggest thing I'm hearing about on the street is this notion of stag inflation, where we get persistent inflation and weaker than expected economic growth, and there are some signs that supply chain issues are are causing problems. Um. If you look at the Atlanta Fed GDP now tracker, it's at just one point three for the third quarter, and I think that would surprise most investors if that's what actually happens.

And we get that report October, which is of course just before the FED meeting on November three, where it's why they expected that will begin to take bond purchases. I think importantly most of this slowing is probably related to supply chain issues. UM. If you look at leisure and hospitality wages are up ten percent, that still suggests as demand for workers. Just four percent of small businesses

are reporting that poor sales are the most important problem. Uh, And we have ten two point eight million more job openings that unemployed. So it seems to suggest that we're seeing a slowing due to the supply chain issues, but the demand is still there and the economy should snap back. One seases. So we're about to kick off third quarter earning season, Sean, what are you looking for over the next several weeks here as we hear from some of the larger companies. Sure, I think we'll see a pretty

good earning season SMP five hundred. Earnings per share expected advise about twenty eight percent year and year. A couple of things that people will be watching is they'll see probably see norm realization in the earnings of so called value companies. We saw a massive surge in the second quarter for financials and energy and some of those value company earnings rose eighty seven percent in the second quarter. That's unlikely to repeat. It's likely to come down maybe

twenty something. I'm along those lines. We'll be watching that. Uh and then people are gonna be watching very closely any comments about margin pressures, and you're gonna want to see if these companies can pass on uh these increased costs or input costs onto consumers or not. UM. You know, it looks like maybe industrials and retail companies may not be as able to pass on those costs as some of the other ones, so investors will probably be watching

that closely. What do you think about hedges? You know, gold hasn't been performing the way you might have expected it to inflation either, even if you don't, even if you're not afraid of it, you might want to hedge a little bit against it. How do you do that? Well? In some ways, you can actually use the energy sector and the financial sector is a hedge against higher interest rates,

and that's what we've seen almost all year long. Financials is the second top performing sector, energy the number one performing sector. Uh in those two sectors tend to do well when interest rates rise. So if we believe that interest rates are going to rise because we're seeing more persistent inflation, the feed is about to potentially taper on

November three, then then those are good hedges against that trade. UM. Other things you can do is more of like a longer term you know, goal or change in your portfolio is to shift over to higher quality companies, companies that have really strong revenue growth and earnings growth um even in times of more mid cycled type conditions where the economy is kind of slowed down from its initial reopening, and healthcare shares are a great example of that. They're

really really stable revenue growth UM. So we're looking at higher quality companies UM, strong revenue, strong balance sheets, and then also companies with high dividends and their ability to grow dividends. Those types of companies do better as you move into this more mid cycle type conditions. So that's what we're telling our clients to do. Hey, Sean, thanks so much for joining us. We really appreciate you taking

the time here. Shawn Snyder, head of investment strategy for City US Consumer Wealth and Management, giving us his sense of this market. Again. We've got earnings really kicking off in earnest tomorrow. We'll get the banks this week at the big banks, and obviously we always like hearing what the bank management teams are saying about their customers and loan demand and just business conditions. And of course, while full earnings coverage over the next several weeks, this is

Bloomberg all right. Berndia uh said, Home managing partner said. Home Law Group joins us here and a great great timings. We think about just looking at the news this morning. John Gruden, uh, the head coach of Las Vegas. We can't even talk about that, y leaders. I mean you know kind of it's bad. Yeah, it's it's bad. Some bad emails there, and it kind of goes to the you know, the workplace and behavior and what's acceptable what's not acceptable in the toxicity of that workplace. And so Ronnie,

I thank so much for joining us here. Boy, it seems like, you know, you look at some of these big companies like Blue Origin, Amazon, Tesla, some real issues about the workplace and toxicity, toxicity of that workplace in today's environment. Give us a sense of kind of how you think this this situation is developing across corporate America. Thanks so much for having me on the show. I I don't necessarily think this is developing across America. I

think we're hearing about it now. I think these issues have been um sort of swept under the rug previously, and now victims have been finding their voice and going through the process that they need to go through in

order to seek some kind of redress. So what is is there a line you can draw between things that you definitely can't say with colleagues or other people in your in your business or your industry, and things that you say, you know, to your friends in a private group or as you know, President Trump would have said the locker room, for example, where's that line? You know

the line is blurring. On a daily basis, you have to be careful about what you're saying and just ask yourself before you make your comment, what is the rationale behind your comment? Some people say things, uh that are meant to be a joke, and that could be okay depending on the receiving end. Right, does this person with whom you're speaking think it's a joke outside of the workplace. But sometimes people say things and they don't care about

the consequence of what they're saying. For example, in this letter that was written by a blue Origin employees or in former employees, there was someone who actually stated, you should ask my opinion because I'm a man. That type of I guess uh statement should not really be permitted to be said in the workplace at the very least because men and women should be treated equally. And while there are various levels of intellect across the board, men

are not smarter than women. Women are not smarter than men. It is on a you know, individualized basis, and to just insult an entire group of people, it's not just offensive, it's also illegal. You cannot have discriminatory animus in the workplace. It's just that simple, Ronnie. What do you advise your corporate clients to do here? I mean, there are there some best practices that some corporations, or some companies or some entities are doing that perhaps should be adopted by

more others. Yes, that's a great question, Thank you for asking. I don't know how widespread these best practices are. Certainly when I work with my employer clients, we discuss it, and the first thing is to ask yourself, why is this happening? Was it just you know, one bad actor actress. If so, you know, terminating that person is sufficient, But usually it's not just one actor actress. Usually it's a

group of people. So you need to address that in the workplace and figure out why these individuals are being hired. What kind of questions are you asking during the interview to help mitigate misogyny and gender discrimination? What kind of messaging and training are you providing the too employees. After someone that's terminated because of an you know, alleged harassment or actual harassment. It's not enough to simply send out an a p D or a notice company wide that

says so and says no longer with us. Of course, you don't need to delineate this cifics in that communication, but there should be other communications afterwards that tell people, you know, when someone is terminated because of discrimination, we are going to determine whether or not that person was aided and embedded by others in the workplace. We're not going to stop it just simply, you know, giving out hush money to the victim and firing the person who was alleged to have done X or y. That is

normally not enough. And then what measures are you taking to be proactive to protect the confidentiality of those individuals who complain, Because that is also a fear that I, you know, often hear about from others. I didn't want to go to HR because I was worried I would lose my job. I didn't want to go to HR because I was worried that they wouldn't keep it confidential. Well, these are you can train employees in HR on how to maintain confidentiality. Because I think from my practice I

see that they often don't understand what that really means. Right, Well, it's very important stuff and we really appreciate you joining us talk about it. Ronnie I said home. They are managing partner at the Said Home Law Group talking to us about workplace toxicicity. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller. On Ball Sweeney, I'm

on Twitter at pt Sweeney Before the podcast. You can always catch us worldwide at Bloomberg Radio