Amazon, CES, Inflation, and Latino Businesses (Podcast)

Amazon laneoff people. So jobs right, yeah, I mean we don't know. That's right, that's eight jobs. So let's roundtable a little bit here on the retail space. We can do that with Punum Boyle. She covers all the retail stuff. Don't forget intelligence. Yeah, we'll talk about that. John Edwards, the third team leader, covers the US consumer retail luxury space. Um, John, thanks so much for coming here in our Bloomberg and Actor Broker studio. You get a gold Star and my

friend Um talk to us about Bed Bathroom Beyond. This is just there's They have news today about a going concern issue. Um. Is this this poor management or is this some symptom of just greater retail. Do you think, Yeah, it's it's a combination of things. I mean, it's it's definitely. Um, you know, they're they're affected by the things that are affecting retail broadly, but they do have some company specific problems that have been plaguing them for years and if

not really gotten any better. Uh. You know. One of one of the main issues they had was that they made this big push toward private label goods, you know, which in theory, uh, you know, is a positive for a retailer if they can get people buying you know, private label products that they create themselves, that obviously boost their margins by you know, um, reducing the things that they have to buy from others. Are they quality? They Kirkland well products? That's that is that's the issue. They

are not Kirkland levels. Uh. No, they they had just a variety of problems with with introducing these products under a you know, now three CEOs ago. Uh. They brought in uh, guy Mark Tritton from from Target with who had you know, extensive experience, successful experience there with private label, but you know, he had execution problems at bed Bath

and Beyond as well. You know, he in some ways tried to apply too much of the sort of identical target playbook to uh, you know, to bed Bath, which didn't have the internal infrastructure to support a lot of his his goals. So so, Pum, I want to bring you in here, you know, as we're talking about bed Beth and beyond, I love to just pull it back the lens a little bit and just talk about retail in general. Give us your sense of just the consumers

seem strong. We got some good jobs data again today. Um, it seemed like the hollid season was pretty good. I'd love to get your assess. And because you see so many retail companies to talk to so many of those investors, what are you hearing about the environment out there? Yeah, so the environment is still mixed. Really if you think about what we saw were the holiday we did have

a good holiday season. Adobe just came out with their e commerce UM numbers that holiday sales were up three point five percent and that's better than they had estimated. So overall good. But you know, I think when we start to see earnings later this month and into February,

there will be mixed treats. Because remember there was a snowstorm right in the Northeast right ahead of the Christmas season, which probably truncated a lot of the sales that would have been there and may have really prompted more gift card sales well, because people couldn't get out and get to the stores. They couldn't get out and whatever was coming from online probably couldn't make it there because of

the snow storm. So really a double whammy there where you couldn't shop online and you couldn't shop in stores. Outside of that, the consumer, yeah, they're they're holding up, but they're spending where they want to spend. So really you have to be the brand that they're seeking for you to get the bus this and do well. And and there are brands out there that are that are

doing well. You know, we think at Sea is one of them on the online space that continues to drive shoppers to its website because it's unique in what it offers and there's really no one else like them. Yeah, it's you know, this is interesting. I've been looking lately. I've been trying to focus on buying products that are made in America or you know, made in Europe, like a leather jacket. Well, for example, those are handmade in Scotland. But if you look on Amazon, I've noticed nearly everything

on Amazon is made in China. I don't know why I don't just drop the middleman and go straight to Ali Baba because Jeff bezos factory is in China. Um. Then I discovered Etsy, where you can find things that are made by people who get a working wage or at least run their own businesses, which made me happy. But the user experience isn't quite nearly as good. Um is there is there any uh sense that deglobalization is coming to Amazon? Are they? Are they at all affected

by the US China the poor trade relationship? I mean, I think all of retails is affected by that. It's not just Amazon, right, we import. Most of what we consume is imported, and China is a big area where we are dependent on So that doesn't just impact Amazon and impact all of retail. Really, I don't mind importing stuff if if I'm importing it from h a producer that pays a decent wage, maybe uses union labor, you know where I'm not worried about sweatshops or kids making

this stuff. Hey, John, I know in your beat you cover luxury I can't. I'm so surprised how luxury remains so strong cycle in, cycle out. What are we hearing from the luxury brands these days? Uh? Yeah, they continue

to hold up. I mean, I think what we're starting to see is, you know, some of the entry level luxury goods, you know, some of your sort of accessories, your belts, your uh Gucci shower shoes, your things, all that, are you know, starting to weaken a bit, because you know, those are the luxury customers who are most exposed to uh you know, feeling the pinch of inflation. But you know, the rich are still rich and uh you know, still

want what they want. You know. A Astin was saying, they're not going to bed bath and beyond, though, John, they cover both luxury and bed bath and beyond. We cover it all. I was thinking about in in the bigger picture of the whole Wall Street bets phenomenon, the meme stock thing that we covered a couple of years ago. Are there companies out there that should have gone bust but didn't because of buyers of stocks with their with

their stinnies. I mean, I you know, I certainly can't call out any boy name, but yeah, you could probably say that there are some companies who's uh, poor Wormans was papered over for a while by the fact that, yeah, they got, you know, caught in the meme wave the

road that as long as they could. It's funny. The bed bath and beyond near me is right next to the game stop in this little strip mall that you want to kind of avoid it all calls right, you know exactly, there's a harsh fluorescent lighting everywhere if they leave the lights on at all. And alright, some news just crossing the Bloomberg terminal. I want to get it out there. Putin orders. January six, seventh, ceasefire in Ukraine. The Kremlin says, well more reporting on that, but that's

gets your attention there. Put um um In terms of the retail space here is now that we're kind of through the holiday season, give us a sense of kind of how the inventory levels are. I know that was an issue for a lot of retailers, leading them to maybe really be aggressive on some of the promotions. Here, how are inventories looking. Inventories are still a little bloated.

While sales were good, they entered inventories really high. So we think January will be the key month for them to really press on promotions and clear out all that inventory to make room for a spring goods. But this is the This is a clearance month for retail, and we expect retailers to push as much inventory as they can out of their system this month. Is it going to be harder for our is someone like Target who had a difficult time managing inventory, You're gonna be doing

more discounting. There will be more discounting across retail right now, just because the inventories have to get out. And even if you are Lena on inventory, if your neighbor is discounting aggressively, in order for you to get wallet chair, you also need to increase your promotional activity. That's just how retail works. Hey, John. Lastly, are there still too

many stores in the US? Do you think because we've seen so many store closures and Punam has been, you know, writing a lot about that in her research, and we probably had that accelerator in the pandemic. What do you hear from some of the retailers you guys cover, Yeah, well, it's um You know, for one thing, there are still stores being open, but most of them are dollar stores. Okay, that's that's an area where the physical retail is still

expanding rapidly. Um. But yeah, a lot of the you know, sort of mid level and higher end um retailers are becoming more selective about where they place there, uh, their physical locations and uh you know, we also see companies doing things like converting parts of their stores to online fulfillment centers, you know, because there's too much online stuff. I'm looking for pickleball rackets, find them in a physical store.

Follow from who follows fans better than you. You've got to get them from Jeff Bezos, who to get some sources them directly in China. All right, do you wear the leather jacket when you're playing? Probably? John Edwards the third he's a team leader US consumer Retail for Bloomberg News and put them boil covers all things for Bloomberg Intelligence. Out in Las Vegas, Math, there's a little technology conference

called the Consumer Electronics Show. Gets a couple hundred thousand people out there to see all the new cool gadgets and stuff like that. It's really become, i think an automotive conference. They have such a huge presence there. The automotive industry. At the cs UH convention, Martin Fisher board member, z F Group and Bloomberg Technology host ed love. Though he's out in Vegas, he joins us. They both join us to discuss what's going on out there from the

auto perspective. Uh, Martin Fisher, thanks so much for joining us here. ZF Group, the world's largest automotive supplier mobility company. What do you guys doing at CES this year? Why is that and why is this a convention important to you guys? I mean, FS for us has always been the plower place to present our large scale innovations and also some smallest smart ideas, and that's what we're up to this year as well. So we focus on the key trends of automated driving and electrification and I have

good news to present in both areas. So what well? First of all, I gotta say your resume looks awesome from a car guy perspective. You were at vd Siemens Video, you were the CEO at Hella. I was just searching for some of their products online. General manager at Borg Warner, famous for making the turbos. Z F Group makes the best transmissions in the world. Um, what a sweet career, you've had what I mean, what gets boring? Right? What? What gets you excited? What do you what do you have?

What are you showing at CES? Yeah, the whole transformation that we go through is really what keeps me exciting. And we have a couple of highlight topics out here. We are revealing later today our latest generation autonomous shuttle and that's really for me as an engineer. And if that strong automotive background, really a highlight autonomous shovel means we bring up a vehicle that you know, it's about twenty people, it's electrically driven, and it's fully autonomous, so

it's gonna blend nicely and safely into the traffic. And that's how a highlight presentation for today. Who who? Who's your customer? There? Is it like the Walt Disney Disney World so they can shuttle people around? Or is it a corporate campus a college campus? I mean, Vegas seems like a good place you can ferry at Ludlow back and forth from from the fair Grounds to his suite at the Villaggio or yeah, absolutely no, those are already very good use cases. Plus it is also in addition

to the public transportation systems. So when you go into a metro pilotan areus and you have subway systems, conventional bus systems, where we fall short of is typically the last mild transportation solutions. So how do I get from the subway station into my neighborhood? And that's where these shuttles can help. All of the business cases are l You the technology reporter for Bloomberg News, You've seen it all. You you have to be at cees from start to finish.

What's your what's your sense of what's kind of some of the highlights out there. It's it's interesting to have Martin on the program. Good morning to Martin. You know Matt's riot. He is a brilliant cv zs so important in globals. Most White Chaine for me, like the famous series Let's Get Real, guys, Let's get real. And the industry. You know, when I was here in we were talking about robotaxis and we were talking about autonomy, and the

bubbles burst a little bit in that time. But I think what's interesting about theF is that they have a track record with existing shuttles that working very narrowly defined settings, specific lanes in g O fence locations like campuses and Martin correct me if I'm wrong, but I think that

you know, this is kind of an extension of that. Right, we're talking about thousands of shuttles with beef over a number of years, although I'd be interested to know how soon, how many years is this going to happen, because that that's really the conversation here at the S like, let's let's start announcing some things that are actually going to materialize into the real one. Yeah, you're right on its solid scaling, and that's how we approached the whole tubbles.

As you said, we have frost solutions in operations for years now and they are inddicated lanes, controlled environment, but for us to experience the through stuffs and now we go into a traffic operations with the lately announced shuttle. Your question, how is it going to hit the market? Also out in Vegas yesterday we announced a new partnership with Beep Beep as an operator for such autonomous shuttles, and that agreement enables us to deliver a couple of

thousand shuttles into the US market. In terms of timing, we will have first vehicles delivered in and then I'm going to ramp up in Are you talking with any governments? I mean, I know that I'm sitting right here. In Manhattan. There's a bus that just every day goes back and forth along Central Park, doesn't change the route, isn't going

very far, takes about twenty or thirty people. Uh why don't you talk to the m T A. Yeah, no, that's happening, and we do it here and we as through partners through BEEP in this case, UM in Europe where we are home based, we go also straight into these public government discussions. So it's a new avenue for us. And in Vegas, what's the fielder as a crowded is our people back? Is a pre pandemic? Do you think? Yeah? Yeah, I think it is. I think you know, I need

to talk to the organizers about the official number. And actually I'll be honest with you, the c P A a pretty kg about it and have been since. But you know, my sense of being here is that we're back to full sense c S. I think for like r global audience, right, you have to appreciate what it is. It is a lot of fun. You know, this is Las Vegas, right, I won't tell you what I did last night, but I did a lot of work late

into the evening. Yeah, but you know a lot of bankers that there are bankers here, there are investors here, there are there executives, and I bet you Martin won't give us any names. But it's a great chance to speed date everyone that you want to see. You can see in the space of three days. And that's really what it's about. It's about getting all your client meetings in doing some deals. Maybe Martin's done some last night over dinner. I don't know the question for him, but

that's kind of the vibe to alright, good stuff. Martin Fisher, member of the board of Management at ZF Group and at the Low at a Ballooon News in Vegas at the ce S. Natalie Trevor Thick, head of investment grade credit strategy at paid In in in Regal. So, Natalie, how's my analysis? Hold up? It can't be any worse. Is got to be better? What's your outlook? Yeah, you're absolutely right.

We're at a much better starting point here. On bonds, you can buy one year tea bills for four and a half percent, or corporate bonds for five and a half percent. So we think fixed income can go back to be being the safe haven asset class um as people expect and deliver nice positive returns in two thousand and twenty three. So, um, we're talking about treasuries, but what about corporates. Um. Obviously, fixed income is a very

big universe. What do you like the best? Yeah, corporate bonds are very attractive, particularly in the front end of the curve. You can get yields five and a half even six percent in investment grade credit. That's nearly double what you can get in high yield the couple of years ago, and high yield yielding you know, around nine. So given a strong fundamental backdrop, corporations really aren't in trouble.

They may see some margin compression which is hurting their equity performance, but from a bond perspective, they're still quite strong. So we think investing in credit is a nice place for investors to park their money if they're worried about a recession or inflation and volatility and the equity markets well, and as you go further out the risk spectrum, you've got to start to worry about defaults. Apparently covenants have gotten a lot weaker over the past few years investors

search for hunt for yield. Um, what are your concerns in three are defaults? Yeah, we really don't see defaults

moving materially higher off of their current level. Maybe they get up to four per cent, and there are some concerns in the triple B a triple C sector, but for the most part, high yield companies have extended their maturities so they don't really have a hanging debt wall, so it's pretty expensive for them to issue right now, and most companies can hold off to issuing until two thousand twenty four or later, so we don't think the default story is a big story for two thousand twenty three,

and most of these companies can weather mild recession. Natalie, In terms of you know an investment grade side, Um, what are some of the sectors that you guys are are favoring right now? We still favor some of the defensive sectors, such as pharmaceuticals and healthcare utilities, But we also think the banking sector has cheapened up materially and these banks still have strong balance sheets, so we're comfortable that they aren't going to see the kind of uh

financial crisis they saw on the Great recession. Even if we were to go into another recession, and they offer pretty Commumpelly meals in duration, how far are you willing to go out here? Because, as you mentioned, on a two year note, you can get four point four six percent here and a four to your treasury. So on the corporate credit side, how far are you guys willing to go out? We are willing to buy thirty years

typically higher quality bonds. There there is quite an inverted treasury curve, you know, as two years are yielding nearly four and a half percent and thirty years are only at three point eight percent. But investors want to lock in these higher yields because if they think that the Fed's going to pivot eventually, maybe not this year, but and be cutting rates, they want to lock in these longer yields further out the curve. So we are seeing quite a lot of demand for corporates in ten and

thirty years. Yeah, we are hearing more and more people talk about the possibility of a pivot not coming in until what's your view? We agree with that view. But despite how hard the FED tries to deliver a hawkish signal, investors just aren't buying it. They seem to be in the camp that inflation is coming down, the Fed's getting it under control, and we are going to keep rates

higher for longer. So, you know, we had a little bit of a rate reversal today, but what we've seen consistently since, uh the beginning of November, is that rates are moving lower. Not only when you go to talk to your clients. What's kind of some of the big issues that they're asking you? Again, two was such a you know, really difficult year for fixed income investors. They've never seen it before. What are they asking you these days?

Most investors understand what happened in two thousand twenty two given the extreme raise and interest rates, and investors are more looking for opportunities right now, asking where in credit market should they get involved, just because we do expect the volatility to continue, particularly in equity markets, and they arguing it as a safe haven asset class once again.

I'm excited, you know, because for the past by some bonds a couple of decades, I've been thinking my whole future relies on the stock market, and now it seems like I can lock in some real returns and then sleep easier exactly two year treasuries. Four am I am I off base here, Natalie mean, is this the case? I'm you know, I'm forty nine years old, happen to have a young kid, so I gotta I gotta work for the next at least twenty years. But is that the situation people my age are going to be in.

Are they gonna start investing in fixed income and and not have to worry so much about the volatility of the stock market? Exactly, it's sleep at night. You can get five percent just and cupons alone. And if you actually do believe that that's gonna pivot and start cutting rates even next year, then you can have the positive total returns from declining interest rates and price appreciation on

top of that five percent. So I think we're looking at mid single digit returns and credit this year and maybe high single digit to double digits in the years ahead. Are your portfolio managers are they kind of running recession scenarios here where they have to really start thinking about covenants and interest coverage and you know that that kind of thing. Are they running those recession models kind of

right now in case we do have some issues. Absolutely, and we're always looking at those contingencies and evaluating evaluating aiding it on a bond by bond basis. But we really don't think that's going to be a major concern. So we do like having a defensive mix in our portfolios, but we're looking to extend out the respectrum and credits where we feel pretty confident. You gotta want to push on covenants a little bit more, um Am, I right, that they've become a little bit too Uh well, I

guess advantageous to the borrower over the past couple of years. Yes, boards have been getting away with a lot. So that's something our analyst team really focuses on when we meet with management teams, is pushing back from covenants and we're more than happy to not participate in deals where we don't think they're strong enough. Natalie mentioned how often do your analysts meet with analyst teams these days? Posts, you know,

post pandemic management teams. Yeah, with Matt management teams, are they are they traveling to come see you in Los Angeles? Are you going to conferences? How do you interact with management teams these days? Yeah, we're doing both tho. It's picking up again with in person meetings, but They still do a lot of virtual meetings via Zoom, but the in person meetings conferences that management teams to travel into our office is picked up a lot. Alright, good stuff.

Nat the treviorth Thick, head of Investment Grade UH Credit Strategy at Payton and regal Um. They're based on Los Angeles at one of the great office towers in Los Angeles, three thirty three South Grand Avenue. You've got like all the big firms there have been there at various times. Do you know that Katie gray Feld spends her entire weekend slaving away on her cats and Coins newsletter? Is that right? Yeah? Okay, Katie Gryfeld, cross Asset reporter joins

us here in a Bloomberg Interactive Broker studio. First of all, when you do your grsage riding thing on the horse, you have a saddle, right, big time big. But it's not a cowboy John Wayne saddle. No, it's a grsage saddle. It's you can tell it's a gossage shaddle because it has a really high back. It's kind of like sitting in a bucket because you really want to have a firm base ride. Alright, good stuff. We were Matt. Matt and I were just talking about that. We weren't sure

how that out. But when you when you say you rope a calf and you've got to tie tie into your saddle, what do you do if there's a calf in the the grsage? Right, something went wrong. But I would say a Western saddle is like a couch, Like that's a comfortable saddle. But a Grsage saddle took a bucket. You know you're really sitting in there, you're strapped in You guys have fallen off. All right? I want to talk crypto here. Who is Barry Silver? And do I

care who this guy is? Definitely care who Barry Silver? It is. He is the founder of Digital Currency Group. It is. It was once valued at ten billion dollars. It's this huge crypto conglomerate. The reason you're hearing so much about Barry Silver right now is because the companies that dcg owns it has Gray Scale, which has the gray scale Bitcoin Trust exactly, which is in a lot of well you know how much bitcoin does the gray gray scale Bitcoin Trust own. At one point it held

like three percent of all outstanding supply of bitcoin. So it's a. It's a massive amount of money, but the thing about it is it's trading at a massive discount, massive to net asset value. Like if they own out, let's say a billion dollars worth of bitcoin um, the whole thing is only worth okay okay. So and shareholders are upset because they can't get their their bitcoin out because it doesn't have redemptions. There are Gray Skills actually getting sued by a hedge fund right now, for a

Tree Capital is suing Gray Scale over the discount. They're saying that they mismanaged the trust, etcetera, etcetera. So we'll see if that goes anywhere. But there's starting to be some like really long shot activist campaigns to try to oust Gray Scale as the manager of this trust. Again, these are long shots, but we'll see. It just speaks to the fact that there's this bubbling discontent over what's

happening at Gray Scale. One of the DCG companies, the other one that you're hearing a lot about is Genesis. So that's a lending crypto lending company owned by DCG. Actually, I don't know if you guys like we're following over the weekend, but Gemini the winkle vibes, wins. It was just one winkel By. It was Cameron, Yeah, Cameron Winklevoss.

He wrote a really heated letter in open letter to Barry Silbert because Gemini they say that their own nine million dollars in customer assets, uh, basically in limbo at at Genesis and they haven't been able to make satisfying contact with Barry Silbert's So there's a lot you can understand why Cameron's angry, right, because that's not just his money. He's got clients who are probably angry with him. Oh yeah, and actually they have their own lawsuit on their him.

They're being sued by their customs. So the way that Cameron sees it, what he alleges is that Barry Silbert has done some serious co mingling of fun. I've that term before, and we know that co mingling is no way. No, that is a big accusation. That's definitely what I mean. It was a long letter. I read every word well.

Cameron says that Silbert's DCG borrowed one point six seven five billion dollars from Genesis is and uh, Silbert responded, no, we have not borrowed one point six seven five billion dollars from Genesis and we make every interest payment on time, so kind of implying we have borrowed money, but not that much money, or at least not that exact amount. Yeah, that was a little uh like, how much then have you borrowed? Is it one point seven five billion? Is

it only one billion? I would love to know. There's plenty who would love to know, not just reporters, really everyone in the crypto industry would love to know. But they actually gave Silbert a deadline here, Cameron Winklevoss, he said that he wants some sort of public commitment that, uh, Silbird and DCG is going to work together to solve this problem by January eighth, that is three days from now. What happens on January eighth? I don't know, I don't know.

All right, let's bring in Barry Ridholtz. He's a host of Masters in business on Bloomberg Radio, Chairman and chief investment Officervert Hults Wealth Management. Barry, you know we've been talking about crypto. It was certainly am pelling story, broadly defined uh in two Well, you know what, I let's ask Barry about com England. So Barry, how much money do you borrow from the clients that Rittoltz Wealth Management

without telling them about it? You know, it's It's one of the first rules you learn when you get into either a Series seven or sixth Series sixty five. Don't co mingle funds. Never borrow money from clients. That's verboten. You know, you were here to provide a service to the clients. They are not here to provide a line of credit to you. And it's astonishing that we continue to see these same sort of things pop up all over the place. Although to be fair, you know, crypto

is unregulated, it's not arguably a security. A lot of these companies are headquartered outside of the United States. So you know, as much as people want to blame Gary Ginsler, this is out of his jurisdiction. H agree. I mean, um, everyone complains that the SEC hasn't done enough in terms of f t X, but f t x dot Com was located in the Bahamas. The SEC doesn't have jurisdiction

over it. And by the way, even if Gensler did, assuming that there was some kind of fraud, committed that there was money taken from clients, when that that's already illegal. It's not like there's no regulation against that. Um. By the way, in terms of Sam Bankman freed to me, I kind of get it. I mean, he's a little kid. He's clearly different. He's a young person, and he's a

very different kind of person. So if you tell me like he didn't know the rules or whatever, I feel like it's possible someone like John Corzine he knew the rules right. And I still get pulled over in my twenties going seventy over the speed limit. I used to say to the police, Look, I'm a young kid, I don't know the rules. Let me go, And that worked beautifully. Well, look, my dad's a lawyer. He says, if you don't know the law, you're allowed to break it. That doesn't really,

that doesn't really work. Ignorance is no excuse. And the way, thirty one is not a child, he's out of college for a decade, he has attorneys and accountants and CFOs. The fact that he said it'll be okay to you know, borrow some money from from clients, you know, that's just holly an excuse. If that's what happened, right, we don't we still were still that's what appears to have happened,

but we don't know for sure yet. Kenny carries a lawyer two by the way, I know, yep, he's jd Eton That a card Dozo school of Walachu University, one of the goodwins. Um Katie, what's the feeling when you talk to folks in the crypto space. Is this a bump along the road of the evolution of an asset class or is this something more fundamental? When you see sam Bank MN freed a major exchange and maybe even

some more issues within this sector. Well, I mean, it feels like this is almost like a fork in the road. You have all these crypto companies. This is definitely a reckoning for the crypto companies. Then you have the hardcore believers you know, own your keys were all about no duh, right, that's the whole point. Yeah, yeah, so I mean, and that's why you mean for you have to hold your

own private key. You don't leave a whole bunch of crypto on centralized centralized exchange, but which by the way, is located offshore, right so that you don't have jurist your own regulations on jurisdiction over it. So where do you keep so obvious. You keep it in a cold wallet, Yeah, you keep it on a hard drive. On a hard drive, you keep it under your bed or safe for at your sister's house. I don't know, but you clearly don't keep it on an offshore exchange. That is I just

I can't get over that. And that's why you're seeing I mean, coin Base, what a story downgraded again today now at Collen And that's just I mean, I remember if we turned back to early November when all this FTX news was breaking, there was a question out there, wasn't this good for coin base. You have one of their top competitors now out of the market. It there's this sort of migration away from these centralized exchanges by these true believers who maybe weren't even there in the

first place. Now they're definitely not going to be going to a coin base to store up their money. And the normal retail, average sort of crypto trader, they're not

in the market anymore. There are decentralized exchanges. But in terms of you know what this says about crypto, Fortunately for us, there's a market and an asset that's priced, so we can tell what people think about crypto and guess what, Barry, the price of bitcoin hasn't moved since November seven, since the explosion of f t X. What does that tell you that it's still worth sixteen thousand dollars and change. I'll tell you what has moved since then,

and that's been gold. And one of the things that's kind of fascinating. You call the phrase early in in crypto's history millennial gold, that a lot of the anti central bank, anti fea currency, Hey we need hard assets kind of abandoned precious metals and moved into crypto. Well, it looks like over the past you know, three to six months, some frustration with crypto. First the price decrease,

which seems to be a regular occurrence with crypto. But then everything that's been going on with with issues of of you know, criminality and illegality and and potentially theft, seems to have given gold an opportunity to catch a bid. And I just can't help but wonder if if crypto is now stagnant because some of the true believers are going back to the yellow metal. It is wild. I mean, I'm looking at gold's move It's up twelve percent over

twelve since November three. What a coincidence. I think, on the other hand, you could say, uh, well no, I think it's totally fascinating also in regards to bitcoin. But a lot of people do think we're headed into a recession. I love Michael Burry's recent post on Twitter. He said that we're going to see disinflation or deflation in the second half of We're going to be in a recession by any way you measure it, and that not only is the FED going to have to cut but um,

the government's going to have to deploy more fiscal stimulus. Now. To be fair, that's a very uh that seems like an outlier. That's a very outlier and alarmist sensationalist view. But I love alarmist sensationalism. You know it's Twitter. Yeah, that really plays on Twitter. So deflation, I mean, what does well in inflation? Do we have any sort of blueprint? I don't know, Barry, what's the deal with gold as

an inflation hedge? And because it didn't seem to do that well and as we ramped up to ten percent and change on the CPI and do you want to own it? If we're headed into a recession? And where the fed is going to have to cut. So to me, gold seems to trade most correlated or really inversely correlated to the dollar. You know, we had a huge run up in the US dollar last year that peaked and started to fall. That peaked sometime I don't know, around

the beginning of November. And remember the dollar is a measuring stick for commodities, including gold, So as the dollar softens, price of gold goes up. When the measuring stick gets a little smaller, it makes the measured a little a little larger. So uh, to me, golds has always been a trading vehicle. It has never been a investment vehicle because it doesn't produce any sort of cash flow, It doesn't produce any sort of dividend. Arguably, you say the

same thing about crypto. But at your mountain house where you keep like, you know, dozens of gallons of water and some shotguns, you have gold bars there too. Right, Listen, If if you're planning on existing in the post of acalyptic landscape and you're gonna be treating bars of gold for food and water, I think we have lots of other problems that If you're that person, though, I think you probably also have some bitcoin. Doesn't it just fit with that sort of I would think so, although it

doesn't because bitcoin is specifically tied to technology. And so if you have a technology that um only works on the internet, what happens? And when there's no network, no no infrastructure, no electricity, no internet, Bitcoin ain't gonna be a whole lot of anything then So so Barry, at the cocktail party this weekend, somebody comes up to you and says, it's crypto real, it's bitcoin real. Should I invest in this? What do you? What do you tell them?

The same thing I've been saying for for years and years, which is, think of crypto like a large megacap tech stock, like an Amazon or an Apple. It's not quite its own asset class yet, it's not quite um something that has shown a whole lot of ability to diversify. It really seems to be highly correlated to UH two equity prices.

And you know, we always tell people if you want to have a fun account, you want to have a five percent mad money account to just do really dumb things that will not affect your long term quote unquote real money. Well, have at it. But by out of the money call options by bitcoin play around with short tesla, whatever you want to do, but you know that five percent is going to scratch your itch, and if it goes to zero, you're done, You're tapped out, and you

let you leave your real money alone. And that seems to have been a pretty good approach, especially for people who were chasing meme stocks. In thank goodness, it was only five percent of their accounts and not their real money. All right, very great stuff as always, very Ridholtz Narvard Holts Wealth Management, host of Masters in Business and Katie

Raifel Bloomberg News cross asset reporter joining US year. We're talking a little bit of crypto and you know, Sam Bankman freed, he's pled not guilty, So it looks like we're going to trial sometime in October. I believe is

that they they've said to start that travel. We'll see if that happens, but that will be compelling theater if none they nonetheless, I mean, if nothing else would be compelling drama, compelling theater as people try to get a sense of what happened at ft x UH and Sam Bankman freed, the total economic output of US latinos was two point eight trillion dollars in Yet, despite being a key driving force of the US economy, experts say the

capital isn't flowing toward the growth. According to the Latino Business Action Network, Hispanic downed businesses have grown forty four per cent in the last ten years, compared to just a four percent for non Latino but less than two percent of the available venture capital funding in the US goes into this cohort. This is the best economy in the world, the free enterprise system, but it largely excludes

small businesses and minority owned businesses even today. Rameiro Cavaso, says the president and CEO of the United States Hispanic Chamber of Commerce. Then, a big part of it, I think it's just relationships. It's networks, you know, I hate to say it, we're largely invisible. In order to make those connections, Anna Veldez, president and CEO of the Latino Donor Collaborative, says more vcs need to get out of their comfort zone. You need to start reaching out to

places where you actually never reached. People that may not be as well versed, that may not come from your environment, that may not look like you, that may not talk like you. But there are that are making a lot of money. Anthony Alcasar is finding himself in the middle of the struggle. His company, Mr. Tortilla is number one on Amazon. They've expanded their product line and just opened

a second factory. My projections are thirty millions between three sixty million for hundred million, and I can't get a fair shake, he says. The offers he has received include a majority stake in his business. We worked a whole life for this, and so if I lose control ownership now, I can't guarantee that they're going to focusing philosophies and run our business the way we want to run it.

That's why Latino venture capitalists and banking and community lenders and c DFIs community development finance institutions, we've got to get them to step up. Latitude Ventures is doing just that. The company recently launched a one hundred million dollar fund focused on Latino founded early stage businesses. We're looking hard,

We're creating the pipeline. We're creating the visibility so that any Latino and Latino that has been shut out that they can come here and they're gonna get a fair look. Company president, so all through he has his own prediction. My bed is between now and the end of the decade, a trillion dollars a capital should be flowing here so that we can grow GDP at a highly competitive rate versus doing it the same way. Valdez puts that growth

into perspective. If Latino's got the same proportion of credit as whites are given, it would translate into adding three point three trillion of revenue of companies in this country. But it's not only venture capital funding. L B a N reports the odds of loan approval from national banks are sixty percent lower for Latino owned businesses. Industry leaders

say it comes down to diversification. It's a proportionate representation at all levels in the bank, from the board all the way to the C suite, all the way to the executive branch, and then to the branches. Actress, singer and entrepreneur Jennifer Lopez is looking to change the playing

field journey from the one. Lopez launched Limitless Labs to raise funds for Latina entrepreneurs, including a partnership with Goldman Sachs, and this past June, Lopez partnered with Gramina America to help distribute fourteen billion dollars in loans to six hundred thousand Latina business owners by the future of this economy will depend on small businesses and Latino owned businesses because

of share demographics. According to the US Census Bureau, more than half of the total US population growth between came from Hispanics, and with Latino entrepreneurs starting small businesses faster than the rest of the startup population, the rising tide will lift all boats in New York. I'm Lisa Matteo, Bloomberg Radio. All right, that's Bloomberge Business, corresponded Lisa Matteo. She joins us now on our Bloomberg Interactive Broker studio. Lisa,

fascinating story here. I mean, you know, they're the Hispanic population. I know a lot about it from an economic perspective. Haven't done a lot of work with Univision over the years. I know it's a fast growing, uh demographic um. But access to capital has really been a challenge here. So historically, how of Hispanic businesses kind of finance their businesses? Just bootstraps?

I guess yeah, bootstraps. They they relied on family and friends, They've maxed out their credit cards, They've done things like that home equity UM and they've tried those small community banks. The problems that community banks are closing down and being replaced by the national banks. And so Stanford University they you know, they put out this annual report on Latin entrepreneurship.

They have one coming out actually next month, UM, and they just show that latinos typically the trend is is that their income is lower, so so their credit score is lower. So what happens that they're paying higher interest rates for these loans, are at being asked for collateral UM and sometimes not being approved at all for them. So it's kind of this struggle back and forth about how they're going to get their business off the ground. A lot of it is culture role to UM in

this spanic culture. Sometimes you know, you money is something you don't talk about, you know, it's kind of under the table, you know. And it's this it's this common misconception that they say, you know, buddho cash pure cash, like everything is cash. So it's now starting to come around that they need more, which is why I mean the credit scores can be lower just if you're not involved in the system. So if you don't have a

bunch of credit cards, car loans. If you're not borrowing, then you won't have a high grad I think it's interesting because I think of the Latino community as and I don't want to stereotype here as being honest, hard working, and reliable. And I feel like that's the common perceptions

across maybe just my uh, you know, social circle. But um, why wouldn't banks extend more credit to them knowing that they're more likely to pay loans back than say, your typical American white person in the middle of the country, right right, And that's the thing that's the misconception is that, well, they're not going to pay back. Um. And and apparently

that is that is incorrect. You know, there are a lot of studies out there, but talking with different people in the industry that Latinos are the number one people who will pay that back because we're more appreciative to be here. And I say, were my family from Puerto Rico. So so it's a bit. So that's the credit side,

the death side. Um. But a lot of business obviously need growth capital, equity capital, I know, I know, noticing your report, you know there are some people trying to really pull up some venture capital from private equity for latinos. Is that something that's having some traction. It is starting to get some traction. I mean you see more people getting involved UM when you say we talk to Latitude Adventures in the piece and they're getting backing from people

like JP Morgan Chase from Bank of America. Like they're starting to get other people and corporations involved um in this. And you see that a lot now with a lot of foundations. Foundations are starting to come out. There's Hispanics and philanthropies and they're starting to go to these corporations get the money they need and give them out to these communities. And you see it's starting to pick up. I mean with the pandemic, you saw a lot of P P P loans Uh that started to pick up.

You know in the s AB changed the rules there um and they said they're more they want more minority on businesses to be a part of it, and that really helped out UM as well. Alright, great stuff, great report. Lisa Matteo, business correspondent for Bloomberg Radio. Were so fortunate that she's joined at Bloomberg. She has had a heck of a career in New York City media I first came to know where former reporter and anchored Picks eleven, which is a great independent TV station in New York City.

She was there for for many years, so we're glad she's at Bloomberg. 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 three. Put on fall Sweeney I'm on Twitter at pt Sweeney before the podcast. You can always catch us worldwide at Bloomberg Radio