Bitcoin Heading to 11,000 As Adoption Picks Up: McGlone

a while. I'm looking at the chart and it hit a low for this year back around mid March, just under five thousand dollars. Uh, look at it today it is more than doubled over eleven thousand dollars. So Bitcoin just really just rallying here once again. And I kind of in line with gold. We talk a lot about gold, um, but the bitcoin is just pen an extraordinary story. I'm

gonna talk about both gold and bitcoin. We can do that, of course with one Michael mcglow, Bloomberg Intelligence Commodity strategists. So Mike, let's start with bitcoin, because anything I know about this commodity, and I admit it's limited, but whatever I do, it's from reading your research. What's been going on with bitcoin here, Hey, Paul, Well, the key thing was ten thousand resistance. It held for quite a while, basically almost a year, and market finally blew through that

last weekend. And I think the key thing was it's following gold. And also there was notice from the o c C, the Officer of the Controller of the currency, that they're gonna allow banks to custody bitcoin. So bitcoins finally reached that hurdle. And bitcoin is a tendency to stagnate and and just drive people crazy forhil and then jump for big moves. So the next target I really see for bitcoin right now, it's around eleven thousand. I see it really is around four team thousands, which was

last year's high. Interesting, all right, so how do you view I know you were the first one to introduced me to this concept as bitcoin, uh, similar to goal in a store of value. How's your thinking on that these days? The bottom line is the simple way to look at bitcoin is this supply is declining by code is going to be less than two percent next year and and go to near one percent in the next

hundred years. And that's a big difference with gold. Gold is historically been around two percent, but prices go higher, more supply come on. Bigcoin won't do that. So the key thing matters is demand and adoption. Yes, it's a new technology, but all my indicators are for more adoption and more demand, and this little news last week from the occ really kind of picks it up. So that's

at the bottom line. Remember, it's digital currency, and there's more demand for it and limit supply, and people are adopting it. Talk to me about that supply, so you can just explain that a little bit more to me and our listeners. Why there would not be more supply. Why can't I just go get a computer and create some more supply. Well that's the thing. Um. The total amount of bitcoins ever mind will be twenty one million. We're almost nineteen million mind already. So now why why

is that? Where did that twenty one million number come from? It was it was set up by code, by our famous person, so Tosi Documoto. I think you might like that name, but um, you might respond to that one a little bit. But that was set up by code to have limited supply means, so it would be more of a store value. To me. I view it as a collectible, and that's why it's becoming. So that's never gonna go much above there. And it doesn't matter who minds are, how many people mind. There's no more than

nine bitcoins created a day. Last year was eight d and that's it. That's all they can be created so via code unless something breaks down with something I can't predict, it's going that way. And again it's digital money. It's new, it's a new Internet money as people might call it, but supplies limited and demands picking up. Interesting. All right, let's go back to kind of older store of money, and that is gold. We briefly saw a touch two

thousand dollars announced here. What are the drivers behind the moving gold? Mic um? I think we all kind of know the big picture ones. The bottom line is free money. It was a cover of Economist magazine just a week ago.

And that is a concept that we can print as much money as we want, to create as much liquidity as we want by essential banks, and have as much fiscal stimus as we want, yet not have higher bondial And that to me is just a double bullmarket for you know, big big foreign foundation for gold to go higher when you don't have competition from higher yields. Gold must appreciate, and that's what it's doing right now. It's

getting a little expensive around two thousand. I look at a little more technically now above the fifty week average is the most of the decade, so you want to lay low a little bit. But fundamentally it's quite bullish. And until we see something to limit people's ability to print money, which by human nature of the petitions will continue to do, golds to continue appreciate. And you know,

I'm just looking at the chart of silver. There there's another commodity that from that same mid March period has effectively doubled. It is now the best performing commodity on the planet this year. Up about the thing is it's only really catching up to gold. Its cup around twenty five dollars is was really good. Resistance is the key thing to remember about silver. Well, I'll perform gold in a week dour environment, which you're getting a little bit

right now, but you need a strong economy. Demand for silver is from industrial purposes, and right now that's probably not likely. So um I view silver is pretty much locked up in their good distance, probably not gonna get them up much above thirty. But gold can easily get to three thousand briefly in the next thirty seconds or so. Mike, what's the other commodity that maybe we're not focusing on and that we should be all precious metals pladium and platinum.

To me, it's all precious medals, the top performers on the year, and I expect them to continue anything less like on the agricultural or front or I mean my favorite, you know, my favorite pork bellies, um, anything in the egg front. I'm just gonna be doing my outlook. And the problem with agg is just too much supplied. Weather is good, too much corn, and there's just not enough demand for it, most notally from slack demand for ethanal. Well, we need China to come in and buy, right. Is

that does that move the market? Still? They're helping keep it a floor into the market, But the bottom line is there's just so much corn on the market. Because's so much corn coming, weather is good, that will keep a limit in prices. Appreciate so much, Mike McGlone, We really appreciate that commodity update. Mikes, commodity strategist for Bloomberg Intelligence, again giving us his thoughts on the just a commods

have just had a great, great run. Here again you look up, pull up the chart for silver, for gold and as micro was saying, precious medals in general, and you to see uh, you know, this doubling off the March low ands and then some and then that includes bitcoin again more of a double in price off of the March lows. So again with these low UH interest rate environments, weaker dollars starting to see the commodities really trade well, although not so much on the agricultural fronts.

Michael was just saying, just a supply and the demand story just not there for UH commodity agg prices right here, even if with China coming back into the market, well as more and more businesses try to reopen and raises the question if employees get sick with COVID nineteen when they return to work, are employers liable. To try to get the answer to that question, we welcome Ronnie has said Home, managing partner of the said Home Law group. Ronnie,

thanks so much for joining us here. How does this play out? Are the employers loyal liable? What's the law currently? Thank you for having me, you know, I'm going to give you the answer that lawyers what to say, and that is, it depends yes, and it depends upon what measures the employer is taking in order to maintain a safe working environment. And as you know, it depends on which state you're in. The governors are providing employers with

what they perceive as best practices. So let's take in New York, for example, one thing that Governor Cuomo tells us to do is take everybody's temperature every day recorded. If someone has a fever of two degrees or fahrenheit or higher, send them home, make them take the COVID nineteen tests, have themselves quarantine. If they just positive, they

just negative, they can come back to work. And then you're supposed to ask a series of questions related to travel and interacting with individuals in general who may have exposure to the virus. It also includes make workplaces sanitary and maintaining social distance while working, and all of that is fine. The employer can only do so much. If I provide my employees with a questionnaire and they answer truthfully,

that's fine. But I don't know if they're going to answer truthfully because I don't know what they're doing when they go home. I don't know what they're doing over the weekend, and I think it's there where the employer will not be liable due to someone else's fib Yeah, so it seems to me almost impossible for an employer to be held liable assuming they do the basic requirements, because you just don't know. You can't prove where I would think a person got the viber's that is exactly correct.

And some people that I know personally have told me that they did test positive for the virus and they were effectively home most of this entire time since March h mid March, at least a New York City. They're all in New York City and they stay at home, and somehow they um to catch the virus. So you're right, it is impossible. And we're all still waiting for this, you know. I guess it's the fourth stimulus now for

COVID nineteen from the government. But part of what everyone is discussing is a waiver of liability for employers because there's a there's a tug of war right now between coming back to work and refusing to come back to work, and some employers, uh, it's really impossible for them to

function with percent workforce working remotely. So do you think that that virus relief proposal, where there is some liability protection from businesses and schools, is that is that a reasonable thing to have in federal legislation or can the courts kind of take care of it on its own? You know, it's uh, it's to me it's six of one, half dozen, dozen of another. A law is only as

good as the individuals who follow it. So again, I think asking questions seems reasonable on the surface, but everybody knows their employees and they know who is going to give them a straight answer and who is not, and it's impossible to police it. I think as long as the employer is taking some kind of reasonable measure in terms of social distancing, cleanliness, things of that nature, then

the employer should not be held liable. But if you walked into your office and there are a hundred people in an open architecture environment with no not even cubicles and no division and no space, that's that's that's a completely different issue. Do we have any precedent from a legal perspective about you know, employer liability for just having a I guess a clean workplace or one that's that's that's conducive to health, or one that certainly doesn't is

not conducive to spreading disease. Generally speaking, I'm not an expert in this area, but we do have ocean laws occupational safety and health, and there's both federal and state legislation. Its normal is looked at from the perspective of manual labor, making sure individuals, for example, who are on a construction site have proper retires so if God forbid, something falls on their foot, they have steel toe shoes and they

won't lose a toe. Um, but that those ocean laws do extend in general to health and safety, and so those laws have not changed. They're still in place. If anything, the c d C and the e E o C have joined on the ocean bandwagon and now we have specific COVID NINETEAM guideline do business. I wonder, you know, it's just the liability of the uncertainty of the liability. I wonder if that will you know, maybe prod certain employers to say, you know what, you can work from home.

You know, I mean, if you heard any of that that that type of concern coming from employers and until there is a vaccine I'm not sure I want the liability of people coming back into my office. Yes, I have several clients and we've had that exact conversation, and you know, the advice there is really simple. You as a business owner need to do what you think is best for your business and your employees, and the employees

also should play a role in that decision. So, and it also depends upon what it is you're doing, and again, how people are seated. So I'm the managing member of my law firm, but every one of my attorneys has their own office. Nobody shares offices because I know that I get distracted easily, and therefore I like to give everyone their own personal space. So for us, it's there's

less danger right of coming to the office. But depending on how your office is designed, it may be perfectly reasonable for you to tell people to continue to work from home. But as you can imagine, there are some jobs which makes it almost impossible for people. Yeah, it's interesting. We had Google, I guess just announced today that you know, or yesterday, Uh, their folks can stay home till the

end of the calendar year. So um really making Yeah, so that a lot of those opening open space architecture. But about the folks that are you don't have a choice, you're work in a paltry plan or you work in a meat fact, we've already seen issues there. Did those folks have rights? I mean, they do have rights to the extent that they have a valid reason to not come to the office because maybe they have an underlying health condition which makes it more unsafe for them than

the average individual. They have rights. Uh. They also if they have other issues, for example, perhaps they live with someone with a compromised immune system, they have rights there too. There are emergency you know, sick time relief for those individuals, but there's a cap on how much they'll earn, and it may not be enough for some people to live off of because in some instances, I think the federal

cap is two hundred dollars per day. So if you're executive and you're earning a hundred and fifty thousand a year, that's a pretty steep pay cut for you. It may not be sustainable. But for the individual working, yes, inside some kind of plant, perhaps that is in for them. Interesting. I think if we can have shifts, right, I think everyone is just so entrenched in nine five or eight to four or whatever. Everyone, I'm gonna have to have to call it there because we're just out of time.

But thanks so much for joining us. Ronnie I set Home Managing Partners, set Home Law Group joining us about those back to work and protections for employers. Well, we have the FED meeting today tomorrow, the FED decision at two p m. Wall Street time tomorrow. To get a preview of what we might hear from the Fed, we welcome our favorite FED guests, Ira Jersey, chief US interest

rate strategist for Bloomberg Intelligence. So, Ira, I'm guessing you're not expecting anything major to come out of the FED meeting, but give us your thoughts. Yeah, thanks, Paul. It's all

going to be nuanced, I think. And you know, the big thing that we're gonna be looking for is what is the Federal Reserve thinking in terms of forward guidance, because they, you know, they hinted basically early in the crisis that they might try yield curve control, which is buying bonds at a certain yield in unlimited size to keep the long term interest rates low. But they kind of backtracked on that over the last six weeks or so,

and in doing so. They they did say that they were looking for some kind of other enhanced forward guidance. So you know how that's going to work, how long that guidance is going to be for basically saying that we're gonna keep interest rates at zero for you know, at least three years now, but maybe it's a little longer. Um. You know that that's the type of guidance we're going to be looking for in in both the statement and more importantly in the press conference that starts at two

thirty tomorrow. Right. So, I the Fed received some pushback I think on their plans over the last month or so to you know, go into the bond market start buying maybe even corporate bonds, buying even Apple bonds on their list. What actually has the Fed been doing in the open market. Yeah, so they have been buying corporate bonds, but in very small size I mean relative to the size of the market as well as the hum as well as how much is being issued in new issuance.

But you know, basically they're doing it just a fulfill a promise that they made when the Cares Act was was first passed and Congress basically gave them the ability to do that with UH some money from the Treasury Department and taxpayer money UH in the event that they take any losses um. But but they're still buying a lot of treasury bonds and agency agency mortgage debt and that is likely to continue, especially given the size of the deficit and and a little bit of worry that

the FED has. I think that the that the bond market might seize up at different times, especially if the especially in periods when they're issuing so much debt. So you know, we're we're talking about having a four and a half trillion dollar deficit for fiscal year which ends at the end of September UM and and you know, additional stimulus is only to push out how big deficits

are going to be into. So so I think that the FED is worried about market liquidity and they will continue to buy corporate bonds and that means that you know, their balance sheet are just going to keep expanding at least for the time being. Do you expect tomorrow and his prepared to marks end or in a Q and A for FED Chairman pal To a Pine that more fiscal stimulus is needed. Is that what is his role in his commentary on that front. Yeah, so I think he he will mention that. I mean, he hinted at

it in uh in the past. Actually, in at the June meeting, he basically said that you know, there is a there. It's he didn't come out and say it directly that there's a limit to monetary policy because I think that that they're scared that how the markets might react and how the economy economic actors might react if the Fed says that they don't have much more that they can do. But in reality that with the exception of increasing sizes, there's not a whole lot more that

the Federal Reserve can do. So he will not and say that, you know, more school stimulus is needed. This is unprecedented times. The economy is still fragile. You've seen an uptick now in uh in in on insurance claims

over the last couple of weeks. So I think that he'll point to some economic indicators to suggest that there should be additional stimulus, and then of course a reporter will ask him what should that stimulus include, and he'll just say that's not up to me to decide, that's up to Congress, and um, but you know, it should be broad and help all the economic actors across the economy. Right, what do you expect the ira UM in terms of

what else the FED can do? I mean it seems like they've I mean, as as you look back on these past five six months, the FED was early, the FED was active, The Fed was I think transparent. The FED generally gets good remarks. I think for most market participants is its steady issue goes right here and it kind of the the balance point is gonna be fiscal stimulus. Yeah, So I think I think for the FED it's more you know, right sizing the tools that they currently have.

So in the sense, for example, that there is another UM, the significant downturn in the economy, and that it becomes more difficult, for example, for credit to flow through UM, you know, changing things like the main Street program perhaps and and doing some tweaks into who's eligible to that.

They've done a little bit of that. UM certainly helping the municipal bond market and and municipalities fund themselves given the lack of tax revenue is something else that I think can be tweaked a little bit here and there. But there's UM. But but it's probably more about the size that they might need to do in the future as opposed to creating a lot of new programs. Any surprises you're expecting in the Q and A tomorrow, what

what would surprise you? I think what would surprise me is is is if they did announce some type of yield curve control or extent really enhanced forward guidance that was beyond the two time frame that they're currently talking about. That would certainly be a surprise to the market. Um. You know, what would the market reaction be? Well, with

ten year yields at fIF the eight basis point here? Um, you know, it maybe goes back to the lows at fifty four or fifty fifty basis points perhaps, but um, but I don't see a significant market reaction even if they were to enhance that guidance tomorrow. IRA, thanks so much, as always, our Jersey chief US interest rate strategist for

Bloomberg Intelligence. We'll be watching the FED today and tomorrow again. UH. Statement at two pm Wall Street time tomorrow, UH, And as I ever mentioned, the press conference with FED Chairman pal to thirty pm Wall Street time tomorrow, Bloomberg will be covering that clearly will bring that all the important information coming from that meeting, as we always do. Well, we had some numbers Adam McDonald's really weak same store sales that' stock trading off today. We've got Starbucks tomorrow.

Good opportunity to get a sense at how restaurants are dealing in this pandemic right here as we enter into the fifth or six month here, so the way to really get close to the restaurant business. We're pleased to be able to chat with Michael Halen. He covers Stronts for Bluemberg Intelligence. He's a senior analysts there. Mike, let's start with Mickey D's. Uh, what was your takeaway from the numbers today? Uh? You know, Mickey D's kind of

underperformed a little bit early on in the pandemic. I think part of that was the fact that they've they've halted their all day breakfast to kind of help um improve franchising market margins and throughput at the drive through during lunch and dinner times. But they've been able to increase their same store sales in July. Uh, they outperformed

the QUSR competitors of theirs. Uh in May and June, which we knew were going to be weak anyway, So so it looks like, um, when it comes to sales, they're back, uh in in in a mode of kind of taking uh market share again here in the US, which which we've been kind of accustomed to over the last three years. Same source sales came in brutally low. I think it's twenty point nine percent negative. Uh was is that? Was that more than the street I've been

looking for? Worse than the street had been looking for. Yeah, it was slightly worse. Results were kind of mixed. It was slightly worse. US was was uh you know, only maybe thirty basis points worse than than what was the street was expecting. You know that headline total same store sales number was was greatly impacted by uh international store closures. Um. You know some markets were shut down completely, you know, France, uh UK, Spain, Italy. Those were four markets that were

completely closed for for part of the quarter. And McDonald's does the right thing by including store closures in their same store sales estimate. So some of the restaurant peers were going to see reporting the numbers might look a little better, but that's because they leave closed stores out of the compace. So so so I think you know all told you know, what you see out of McDonald's

is that you know, they're recovering. They're recovering a little faster than many of their peers because of a strong drive through business, uh, you know, and sales as sales are getting back to growth, you know, margins however, a little bit of a different story. So top line, you know, I was appreciate the forecast for McDonald's because it truly is a global forecast. What are they seeing in some of the markets going forward? Are they what's their level

of optimism were concerned? I think there's a lot more optimism here in the US, and that's because they have a very strong drive through business. About two thirds of their sales comes through the drive through prior to COVID, and now obviously those numbers are higher. Delivery has seen some growth, and then although even though they only have two thousand dining rooms open, the fact that they're able to generate positive seams our sales uh is a good sign. Uh.

International a little bit different. So those four markets that I mentioned in Europe that had been closed down, they do maybe thirty percent of their sales at the drive through. So, um, that's going to be a big headwind. China also seems to be consumers seem to be continue to be scared of UH coronavirus and it's affecting their consumption behavior. There's very few drive throughs in that country. So so they also pointed out that China they expect UH sluggish sales

to continue through year end. Starbucks reports tomorrow. What's your expectation like, Yeah, so Starbucks has a you know, much bigger issues than McDonald's and I think it's gonna take a lot longer for their sales to recover. So, uh, first of all, on the sales side, don't they have only about of their U S stores have a drive through, So that's problematic. Also, breakfast sales have been hurt hit the hardest in the QSR industry because of increased telecommuting,

less people going to work. Um, so that's obviously going to be very impactful for Starbucks. And they do a big business and there has a lot of people in the store, and you have consumers that still aren't ready to get back to you know, packed cafes. So all for all of those reasons, we expect sales to be down much much more in the quarter, maybe down about

for Starbucks. And then they also have much more margin pressure because they um own and operate about fifty percent of their stores, whereas you know McDonald's is about six percent, So they're gonna have much higher pressure on the margin side as well as Starbucks. So it's interesting just kind of looking at your peer group. In the peer group for Starbucks, I mean, if you're an indoor dining facility, your stocks just obviously kind of gotten hit pretty hard

year to day. But if you're you know, kind of out of home a little bit, Domino's at Chipotle, that's been the play for restaurants and is that kind of the foreseeable future the call Mike, Yeah, we think that's going to continue. I mean, some of these full service dining chains are starting to do better because I think a there was stimulus checks right, there was increased payment in the unemployment. People definitely had a lot of cabin fever.

People were tired of staying home and wanted to get out. Uh, And they're kind of making picking up some of the slack with outdoor dining. Um, but with a lot of you know, with this unemployment, insurance uncertainty. UH. You know, as we move into the fall in the winter and outdoor dining goes away in many of the states in the United States, you know, we expect there to be continued pressure on a full service UH sector. And and you know, right now delivery continues to be the place

to be with with drive through as a close second. Interesting, interesting times in the restaurant business, initially one of the hardest hit sectors, still filling the pain. Michael Halen, senior restaurant analysts for Bloomberg Opinion, giving us his thoughts here. I could just say, for you know, here in New Jersey, we have the outdoor dining and that's generally going pretty well.

I think a lot of the restaurants I talked to say it helps, but it certainly is not the cure all and of course that only works when the weather cooperates, so clearly rest runs looking for some help there. Thanks for listening to Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Bonnie Quinn, I'm on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter at pt Sweeney.

Before the podcast, you can always catch us worldwide at Bloomberg Radio