FTX, Meta, Disney, Midterms, and COP27 (Podcast)

was insane. Don't you bring us in and let me just tell you down here? Okay, September two eight, I'm on a flight from Cologne to New York via Shannon. We had to sort landing. It's no, it's not part of the story, but it just so. We land at JFK and I turned on my BlackBerry right and I see the Leading Brothers news. Everybody on the plane they're like, oh my God, like everyone no one knew. You know,

the same thing happened to me yesterday. I'm coming back from Indonesia via Tokyo, and I turned on my phone and I see the ft X news and I'm just like chills, going down my spine because this is such a big deal. Sam Bankman Freed, I think of him as like the richest, smartest guy in crypto and trustworthy. He's pushing for regulation, he you know, champions transparency and all of a sudden anyway, let's bring in uh. Well, we have Katie Greifeld here in the studio, thrilled to

see her. We have Joanna awesonger Um out in. She's probably closer to where I was yesterday out in Singapore, and I read her work all the time to get to get the latest on crypto, so I'm glad to have her. And then Nick Carter from cass Island Ventures voice that you know, we all listen to this guy's podcast every week on the Brink Baby Brink Nation UM to learn what we can as well about the industry.

So I think a pretty excellent panel. Nick. Let me start with you, UM, were you as shocked I know that this played out over you know, Friday, uh with concerns about liquidity and then on the weekend with c Z just dumping f t T, which is the ft X native token. Um. But man, if anyone had prepared for the crypto winter, I thought it was Sam Bankman freed. Yeah, I was Flabbergas said, I think even the most seasoned industry participants were completely taken aback by the f t

X was considered extremely credible. A lot of my friends had capital on that exchange, including people that had dodged all the previous exchange hacks and solvencies, wrong bulls, etcetera, were stung by this. One. Is really one of the most shocking exchange collapses in the history of the industry, one of the worst days in the history of the industry. Joanna want to bring you in here. I mean, for the skeptics of all things crypto, I just think of

a Jamie Diamond type. Does this give them more ammunition to say this isn't really an asset class, This is just a speculative kind of side to the market. At the very least, it gives people like regulators who say we need more guardrails in the crypto industry a lot of ammunition because it does show that somebody can be flying high one day. I mean, I think Bloomberg wealth did this. He lost of his fortune in one day. I mean, how much money is that in terms billions?

I think sixteen billion dollars he lost in one day. I mean, that's just nuts. And I say I had a pretty good tweet. If you won the powerball, on paper, you're worth more than Sam BigMan freed, which was two billions, but you know, after taxes maybe and also if well, at one point I think he was worth like forty billion all in. And I hope you know, if you're worth forty billion, hopefully you take a billion and bury it somewhere, right, Yeah, you get some liquidity somewhere. Hey, Nick,

so where do you think? I mean, you've been in this space since the beginning. You're one of the trusted voices there. What are you and your colleagues in the space saying today? We're um bracing ourselves for the for the real fallout today. So yesterday sort of events came to a head, but today now we expect to see the knock on effects. We look to see the lenders which are exposed to Alimato, which is a lot of them.

We look for that next light down. Uh, yesterday was kind of the red wedding, but today is we're taking out the bodies. We also, I mean there's a letter of intent for finance to buy f t X, but it's non binding, right, and you said your friends had capital on the ft X platform. I'm assuming they've taken it off. No, I mean, you know, withdrawals were suspended. We don't currently, we don't believe that f t X

can make depositors whole. It appears now that there was some funny business going on with Alameda potentially gambling with deposits on the platform. That's kind of my best explanation for what went on. I believe there's a whole and um, you know, depositors, whether retail or institutional, will not be made whole at this point. Nick, First of all, let me say there's no one I'd rather be talking with right now. You mentioned this was like the red wedding.

Now we're going to see the bodies get taken out. Let's talk about what that fallout looks like. Obviously, some big headlines today from novograts is Galaxy saying that you know they had exposure to ft X. They have somewhere close to fifty million dollars of withdrawals being processed. Salana obviously has really taken a brunt of selling here. When you think about how SPF backed Salana But where else should we look for the contagion for the fallout from here?

Look at the lenders that I mean, alimated was the biggest bar or there's lenders left still after three hours, not for long, not for long. Unfortunately, this is pains me to say this is the death noel for Block five. Believe, Um, I don't. I don't know if Genesis so apparently they didn't have residual exposure here, but there's actual defied lenders to the head exposure. Yeah, this will be the sort of like final blow that basically kills off the crypto

lending space for now. Joanna, is this going to be a period where now regulators will take maybe a more intense review of the kind of they were supposed to be doing that already? Sam bankman Free was a champion of that, right. I mean, the question is are we going to get this is like climate right, there's so much talk and no follow through. Is anybody gonna demand transparency from these big multibillion dollar businesses? Well, the interesting thing is they are kind of trying to do it

themselves to an extent. Finance has talked about actually putting out some numbers publicly, and some other exchanges are now saying that they'll follow that standard, So the industry may start to do some of that itself, but it is hard to do the regulation. This is such a fast moving industry that to try to get ahead of it, to try to work things out about how something should

be regulated is pretty tricky. But it is also true that there aren't a whole lot of jurisdictions at this point that you can point to and say, you know, they really have a solid balance where they're you know, they're kind of helping the industry thrive, but also really you know, regulating solidly. So you know a lot of people in regulations still trying to work this out. Nick, let's put this more firmly into your world and talk

about the crypto venture space. Uh, it feels like just if you look at crypto Twitter, everyone is so shell shocked about this moment that that hasn't really been discussed. But what's your best guess on what happens to crypto venture? I mean, how how do you even go about finding deals in this sort of environment. It'll be an enormous recording for all of the funds that were effectively copy trading Sam bankmun Freed which was a lot of the

successful funds in the last two years. Those those were the best trades f t T, f t X, Slona, Sarah, everything under Sam's nuclear umbrella. That was the trade of the last two years. Those funds will struggle now. Undoubtedly also the growth funds that did that thirty two billion dollar round for f t X last year. Those are some of the best and most respected funds in the world. There's gonna be a huge amount of scrutiny there. The question will be did they fail to do diligence or

did Sam lie to them? Uh? And if actively commit fraud during that round. I don't know what the answer is, but you have to imagine if they knew the truth of FX's business at that point, there's no way they would have done that deal. Again, these are some of the most credible and respected, not just crypto but generalist funds in the world. That round and then the lack

of governance over there will also be severely scrutinized. Now, what about retail traders, I mean, aren't they gonna want to see um some sort of guarantee that these exchanges are going to be able to make them whole or else not leave any money on the platform. Yeah, I mean, retail has been kind of very skeptical the centralized exchanges ever since the events of the summer. This is going to make it worse again. F t X was considered one of the most credible exchanges top three, really most

credible in the world. Now, um, we are seeing some efforts that reform, like joint and mentioned exchanges doing proof of reserve. I'm really hardened to see a lot of exchanges announcing they're going to do that. That's probably not going to be enough to rebuild confidence at this point. F t X, really one of the biggest and most visible public facing exchanges in the world, going down is just gonna shatter industry confidence. Well that's kind of what I wanted to pick up on what I was thinking

about coin Base yesterday. If you're an f t X user and suddenly perhaps if this deal closes, you're going to be a binance user, would maybe you rather be with a coin base. Wouldn't you rather be with the US publicly listed company that's under the purview of the US government. Is that too naive for me to think? And I see coin Base today, it's just down another six percent. The stock has been doing terribly, so maybe no one agrees with me. I have no reason a

question coin basis solvency. I think they've been really well behaved throughout their entire history. But also a lot of these users are offshore. Maybe they you know, don't have access to a lot of ft X users were users because they didn't have access to other exchanges, whether Body and stor point base. Actually, so, yeah, the US exchange is not part of this deal. Also. I mean the other thing I'll say is, since it is non binding, you talked about this deal closing. I mean, I think

that's really up in the air at this point. I mean, I would say that the general feeling is that it probably isn't going to happen. Um. You know, it sounds like CZ has put out some stuff talking about doing the deal and this sort of thing, and they've they're obviously um looking at it. But I think there's a big sentiment that this this may not actually happen just ahead. I just think actually the liability that Finance would be inheriting here is astronomical. I think I would say, very

low probability that the deal actually closes. Wow, alright, real quick, Nick thirty seconds, what happens to Sam Bank ben Free? Do you think in the next day's weeks? I wouldn't want to be in issues, man, Um. I think the question is is whether there's criminal liability. I would say likelihood of yes. Oh boy, alright, and Nicko down in Miami stay safe down there. I know we get a little bit of a weather event come in your way.

But you guys are used to with Nick Carter founding partner Castle Castle Island Adventures, Joanna Osinger, and Katie Greifeld, a cross asset reporter. So we had it just circled here, a big, big day in crypto yesterday. We're gonna be dealing with this for the days and weeks to come. Alright. So the red wave that was kind of expected with his mid term elections coming in more like a red ripple, I think, is what I've read the term I've been

hearing this. I go with that. Um. Nathan Dean, he's a senior policy analyst for the US and Latin America Bloomberg Intelligence for better worse. He's located in d C. He's one of those d C policy wants that you don't necessarily want to go hang out with at a cocked up party. But the man we might like to hang out with Nathan, but boy does he know what's going on down there. So Nathan, We're so lucky to get a couple of minutes of your time. What do you take away from what we know so far about

these mid term elections? So last night was a shock. I mean, I don't think any many people were anticipating that the Democrats were going to perform as most they did in the House. It's almost like the New York Jets beating but the Buffalo bills last week. It was feasible, but you know, it was still a shock. And so, you know, going into the election, there was this anticipation that the Republicans are going to have thirty seats, forty seats.

The latest projection I'm seeing from Bloomberg right now is maybe about two to three seats, and so that's a very tight margin in the House. In the Senate, you know, I think there was more anticipation that the Democrats would perform well there. Uh, if you see what's happening in Georgia, Nevada, and Arizona, it looks like the Georgia runoff is going to be the most important thing to determine in the

Senate control. But you know, I will say the thing that we're telling our clients right now is that if the Democrats win the House and they keep the Senate, it brings back reconciliation, and that brings back the ability to do broad corporate tax increases if they wanted to fiscal stimulus. That's the one scenario that I don't think the markets have really looked at. So that's the one thing that we're telling people to watch for right now. All I care about is the salt deduction? Is it

ever coming back? Nathan? Well, you know there, you know, Carl Smith at Bloomberg Opinion wrote a great calm this week about how tax bipartisanship could play out in three and salt deduction is one of those things. And unfortunately for the people that are living in New York and New Jersey at the moment, you know, the thought is that salt deduction may go away in its entirety. Now, Uh,

you know, it's way too soon to tell. I mean, taxes probably uh one of the two or three top issues they're gonna play out in three no matter the election, because the Trump bear at tax cuts are eventually going to expire for the consumers, and so uh, you know, I'm not feeling very good about it at the moment. But Andrew Silverman, our tax analysts, is certainly looking at it, and it's going to come back up next year. All right, Nathan, your policy geek. We love talking to you to get

to the real details here. Over the next two years, what happens in Washington? Can anything really get done? Or is it the veto pen from the president gonna sty me what could be a Republican controlled Congress. So you know you hear grid luck. Grid luck is going to increase. Well, grid luck is the new normal. I mean, things happen

in gridlock. It's just instead of going through this process where you have big bills and debates and so forth, it all gets bunched up into government shutdown fights or dead sealing fights. It's a perfect opportunity for Republicans to try and use leverage. This happens if the Republicans control the House, now the Senate side, if the Republican if the Democrats control the Senate, you're going to see certain bills move faster through uh and so forth. But Ultimately,

there are a couple of things. One, the president is still the president, which means anything that he signs has to be bipartisan. There's no way the filibuster is going away in the next two years, so again it has to be by partisan. So rather than these broad economic fiscal stimulus bills, the debates and the fights get down

to the sector level. So if you're in things like marijuana or cryptocurrencies or drug pricing, you know, this is where you actually have to start looking at the legislations that maybe don't you know, materially change your portfolio, but certainly would increase sales, increase revenue, increased costs, etcetera. And

it happens. So that reminds me of the Safe Banking Act, which is something that um, I don't think anyone has been particularly optimistic about allowing cannabis, allowing keys companies to bank, and to allowing them to be advised by Wall Street on m and a, etcetera. Is that still not gonna happen anytime soon? Actually we're fairly bullsh on it. I actually think that there is a decent chance that could

pass in the lame Duck. For those of you listening, you know, at State Banking Act allows banks to service marijuana businesses. Now, the potstocks react almost time any time a policymaker mentions this. But the Safe Banking Act is currently attached to the House for the National Defense Authorization Act. And because we think that, you know, the Senate Democrats want this issue done, they want to pass on it and so forth like that, Ultimately I think it will pass.

The most important thing to keep keep in mind is that these potstocks react almost when this news like happens, but then once they realize that decriminalization illegalizations not going occur, they decline the next day. So certainly be careful of watching this in the lame duck period. Nathan, what question are Matt and I not smart enough to ask you that we should be asking you this morning? You know everything, man, what's the most important issue that we're that us layman,

are are missing out on here? So you know, I would just say, just the death ceiling is coming back, and the dead ceiling fight is coming back, and you know what what does that mean? Remind us of what that means, because it's been a while. Okay, so you know, the dead ceiling is essentially the limit that the U. S. Treasury is allowed to borrow up to to pay our debts and so forth like that, and every few years or every six months as it was early or Congress

needs to approve the limit. Now, in the last death ceiling debate, uh, the Democrats were able to unilarially raise the debt ceiling by a dollar amount as opposed to a data amount. And essentially the United States will run out of money to pay its debts sometime in the first half of next year. Now they can use what is known as extraordinary measures to use other funds and the ultimate go no go deadline is probably sometime in the third quarter. That's what Ira Jersey, are chief right strategist,

is is predicting. So the death ceiling is this really bad time for markets in terms of do you see lots of headlines political brickman ship, you know, the end of the world is coming. Fixed income certainly reacts to it, Equity strategy certainly, fixed too reacts to it. But ultimately

Congress kick the can down the road at the last minute. Now, if Kevin McCarthy does become the Speaker of the House, he said he wants to use this as leverage to potentially get in some deficit reductions or something like that, but ultimately we think it's going to just play out the same way, really painful headlines. Folks in the sixth think of market night liking what they're seeing. But ultimately there's a deal and then it gets done. It's just pain for all of us in the markets. Dead ceiling

is a bit like my spending budget at home. I just raise it whenever I need to eat. Why not? You can handle it, Nathan Dean, You are too good at this stuff. I mean, it's serious policy. Geek. We love getting your guy. Oh yeah, cool guy, but again cock part better word, better than geek. He's the senior policy analysts for bloom. I know boiler makers as whear as fast food burgers go, Matt, Wendy's are one of my all time face. Oh dude, Wendy's is the best

in terms of the major change there. I think there's no comparison that if you just put up you know the main burgers of Wendy's, McDonald's and Burger King. Clearly Wendy's is geting away. Yeah, I'm with you there, fresh ingredients, delicious, the numbers just this morning. Soon to check in with that. I want to check in with just what's going on with the fast food bisines in general the restaurant business. We do that with Mike Halen. He's a senior restaurant

analyst at Bloomberg Intelligence. So Mike, uh, Wendy's. I'm all into Wendy's. How did they do with their results here? And I'm with you guys, Wendy's. Wendy's has a great product. Wendy's similar to a lot of the quick service chains and restaurant chains that we covered. They did better than

expected on the sales side. Um, you know, three year trends accelerated, so so the trends in the third quarter were better than they were in the second quarter, but margins took a hit, right, Restaurant level margins contracted again pretty significantly. You know, things we've passed peak inflation, so uh,

they should improve next year. But they're also expecting some some significant Morgin margin pressure in the fourth quarter as well, which I mean from a consumer perspective, that's a good thing because you know that they're not going to skimp on the ingredients, um that make their products so good.

I guess they have to raise prices, right yeah, right now they're running at about ten percent, which is uh, you know, it's typically the high end of what consumers will expect will accept in the quick service realm Um. You know. Uh, they said for next year, looking at more like mid single digit price increases. Um. You know,

inflation should ease to about that level as well. Um. So yeah, I mean what they said on the call, and what a few other companies have mentioned is that the consumers earning seventy thousand a year and less are cutting back on their spending. So they're they're visiting less, they're ordering more off the value menu, uh, and less off the regular menu. Um, you know. And does the lowering I mean, let's say we go into a recession, right, I mean like a real recession, not just the two

quarters of contraction that we've already seen. Um, does the lowering cancome consumer eat less at fast food or does a lower consumer go more to the you know, the value menu because it seems like it is cheaper to get a value menu at a fast food place and it is to make a good healthy meal at home. Yeah. So I mean there's a lot of people doing that now where they're they're doing these fast food diets where they're eating at fast food restaurants, you know, two or

three times a day to try to save money. So, um, you know, customers will do that, but you'll also have few that's not healthy. I'm sure my doctor wouldn't advise that for sure, but you know, so so what we'd expect and what we saw in the last recession, you know, I think is a good good indicator. So what you'll see is you'll see some people falling out of the QSR bucket and into maybe more grocery purchases because it

is cheaper to feedure family that way. Um. But then you'll have some middle and upper uh, some middle and higher income consumers kind of fall into that QSR bucket to kind of save some money. Um. But you know what happened last time was McDonald's got really aggressive with price uh and and push their value menu very very aggressively, and and it definitely hurt hurt some of the smaller QSR chains like you know, Wendy's, Jack in the Box and something. Yeah, so they're not the same, they don't

they don't have the same reach. I mean, I just went to Indonesia via Tokyo, stopped in you know, Tokyo. I was in Jakarta. McDonald's is everywhere their Jersey. They have McDonald's New Jersey as well. But the point being, you know, you don't see Wendy's over there. You don't see Wendy's really in Europe very much. I mean there's I think there's one of heath Throw but otherwise, um, they're not there. Is that better for them? Right now?

They're not affected by they don't close stores in Russia for example, Um, they don't have to get out of places that are getting hit already economically. I wouldn't. I would say that it's not better for them. So and the reason why is that that franchise. Everyone franchises their business internationally, right, so they're not getting hit with the inflation pressures. This is just those those businesses are just um basically paying the franchise or a royalty stream. Right.

So the fact that Wendy's doesn't have that international business, you know, is part of the reason why. That is just it's got that smaller market cap, right, it's just a smaller chain in general. But it also provides them with a pretty good opportunity, right They have a strong

business in Canada. Uh, they're expanding into Europe and they're starting with the u K. And they're really playing the long game, right And you know, it's it's clear that the UK is kind of struggling right now and and European recession is likely going to be worse than what we we experience here in the US. But but Wendy's is definitely playing the long game there in terms of their international expansion. I think it's it's a it's a very good opportunity for them. All right, Folks that are

listening that are Bloomberg terminal users. If you want the best research on a law street, on the restaurant, it's going to be I Eats, a T S Go And that's where you can find all the Mike's work might be I Space, I Space eats, Yes, exactly. So, Mike, I was at Chipotle yesterday on Third Avenue here in Manhattan, and instead of having three people behind the counter making you know, the burritos and the tacos and things like that, there was one. And so the line was crazy long,

and I went up. When I finally got up there, I asked the woman behind and she's like, Yeah, we usually have three people here, but we don't today because they just can't hire enough. So how much is that labor still an issue for the restaurant business? It is, It is an issue. Um, It's not as bad as it was a couple of quarters ago. And you know, if the economy continues as slow, which we expect, we think it should eat some more. But right now Chipotle

is a little bit of a different animal. Um. You know, their sales are up thirty four percent since right so you have they've absolutely crushed it. They're one of the your chains that have you know, traffic games since that time. UM, so they are in more and more in need of labor than a lot of their competitors. Right now, we're probably getting pretty close to that twenty nineteen employment levels in the restaurant industry. We're at that so you know,

the industry was understaffed prior to the pandemic. They're still understaffed. Uh and probably take you know, more technology implicating implementation over the next decade to kind of eventually get to that fully staffed. Do you like them the best, Mike, if you had to pick, if we uh look at all of your research, you know, what's what's the stock

that you're most excited about. Oh wow, Um, you know that I cover a lot of them, so uh, you know, in terms of performance wise, Chapole is really not going to cover off the ball. They have some risk because they're exposed to California, which uh, you know could raise quick service employee minimum wage to twenty two dollars uh at the beginning in next year. Yeah, so that's kind of um, that's kind of a risk to that name. Uh. And they own their stores. So the stocks come down

from thirteen seventy three over the last year. So yeah, it's it's been a pretty pretty good damn move. But you know, that's probably as well run as any restaurant chain I cover. You know. McDonald's is another great name, you know, and they really have the scale to to offer price points that their competitors just can't during a recession. And I will die on this hill the best fries in the business, McDonald's. Mike Klin, Senior restaurant analyst, Bloomberg Intelligence.

If you want all that restaurant research BI Space Eats, go on the Bloomberg terminal. Alright, a recession is either here or it's coming but I can tell you from decades of experience in the media business, advertisers don't like recessions. That's one of the things they pull back on first. And so we're seeing it across the board with these quarterly numbers coming in either wrong enough. And she's a US media analyst, senior analysts Bloomberg Intelligence, one of the

best on the street. Man deeps seeing a fairly decent tech analyst here in our Bloomberg Interactive Broker studio. He covers meta and all those social media things. Keith, let me start with you. Mickey Mouse is down twelve percent today. What did the company say on a conference call last night that spooked people so much? Oh? Well, subscriber numbers were actually very very good, But that's not enough these days, Paul. I mean, we were really looking at some really bad

numbers on the possibility front. So parks came in much much lighter than expected. And really it's the DTC business, the director consumer business that I think is kind of really spooking investors because they already have booked about eight billion dollars in losses at this segment and it's just not going to get much better up until at least maybe another one and a half years, So, um, you know they The main problem really is the guidance that they gave for a fiscal three So uh, consensus was

looking at about operating income guidance for the entire company. They set high single digits and so it's just basically weakness across the board. Um and investors kind of really looking at fiscal three as an extremely cost year. It's about costs, like what what what's costing them so much? What are the blockbuster hits on Disney Plus that are so expensive to produce? It's it's content, Yes, content is very very expensive. It's sports rights. They pay about billion

dollars in sports rights for ESPN. But yes, it's it's thirty two billion dollars that they're going to be spending in content costs, um and um you know that that really kind of crimps of the bottom line. I mean, why do I need Disney Plus? Is it Mandalorian? Am I getting it for encantent? Need? For what you needed for the Little One? For? Yeah? I love one, and you have no choice. You have to get Disney Plus for the Little One? Man deep Unlike eth who covers

real companies, your companies. I mean, profits are you know, maybe you got profits, maybe you will have profits. Maybe there's a dude he covers a company that just is firing eleven thousand employees and that's only pcent of the workforce exactly. So talk to us about Meta. I mean it stocks up seven percent on the news. But this is what happens when a traditional industrial company they announced their cutting their workforce and the stock goes up, not

a high flying growth stock like Meta. What's going on with this company? We're talking about making money. You know, Meta had forty percent free cash flow margin before they jumped into this Meta wors and they're bleeding, you know, over ten billion dollars a year on Meta words and they're spending approximately ten billion dollars on topex to build

a metawors stacks. So I think what really has concerned investors about Meta specifically is, look, you know there is competition from TikTok, but beyond that, you know, if you're spending hundred billion dollars in five years on this new thing, it has to have some commercial viability and it's not proven right now. So that is you know, you could argue roadblocks is the best bed when it comes to

metal Works. But it's a two billion dollar revenue run right company with a very niche audience, and they're building the metaverse. So and then they're letting consumers build it, users build it for free, right, whereas Zuckerberg is spending ten billion dollars a year to build it for us exactly. And they still don't have the same amount of content

that Roadblocks has. So talking about content costs as Geta was alluding to, in this case, he is trying to source more content on the metal Works, but clearly the engagement metrics aren't there, and he keeps doubling down. So you know, that is the reason why the stock fell off so much. The core business is still pretty good, although I would argue, you know, why can't they catch up to TikTok. At the end of the day, TikTok is using an AI based feed, It has a lot

of original content, so one Meta needs to content. Yeah, and and so right now, what Meta is doing is they pivoted to videos and reels, but it doesn't have the original creators creating that on Meta first, and that is what they need to do in terms of pulling those creators. Maybe there has to be a revenue sharing aspect to it. Like YouTube, Meta doesn't pay anything to its creators. So once you bake in the revenue sharing aspect, that will print the gross margins. But they haven't announced

that yet. Man deep, So your universe, unlike eas, is facing real challenges in terms of well just heads are rolling basically right, Facebook and Twitter and um, you know coin based. Everybody in in tech in Silicon Valley is getting fired. Is this the worst you know, pink slip party that we've seen since two thousand? Well, so, I think there was clearly a pull forward and based on what everyone has told us so far, they feel like

they overhired. They thought revenue growth of will continue forever and uh look has it happened before. Yes, in this case, I think there will be a correction. Some of these businesses you know that are based on user metrics and you know AI driven, there are real businesses. It's not as if they're going to disappear or somebody knew will come on the block. It's just a matter of course correcting and revenue for employee was just going down. Businesses.

Business I mean, you got about thirty seconds here, where is a media invest investor to go to hide out here. Tough question. You know, um really really because the goal boasts have kept shifting. You know, we were in for streaming pain with the profit losses, we're in for a lot of linear TV pain. So yeah, that that I

really don't know. There's really nowhere to hide. That's why I'm gonna I mean, that's why nobody picks up Keith's phone when she calls to talk about stock ideas in the media space, like I mean, I think you go to like I mean a New York Times, I mean, go back to some of the sleeping through his paper names or some of the advertising, or you go to a different industry right now. Yeah, but if you're geither on Anath and your media anals, you kind of gotta

stick with media. So Keithan thanks so much. It'll come back. Keithan Wronganath and she's a US media Annalso Bloomberg Intelligence based in Princeton, which I think might be the new headquarters of Bloomberg Intelligence if I'm not I'm not incorrect, Man Deep saying he's still here in New York and our Bloomberg Interactive Broker studio trying to make sense of what's going on with our good friends at Meta Crypto. Boy,

it is ugly out there in the crypto space. Cryptocurrencies extended declines to the lowest level in two years as Binas is seen increasingly unlikely to follow through on us take over of ft X dot Com. Let's just get a reset what's going on in the crypto space. Let's

do a little round table action, if we will. Mike McLane, he's a senior commodity strategist for Bloomberg Intelligence Um Commodities, but he's been our kind of our bitcoin and our crypto kind of market specialist really over the last several years. And Shinnellie Basket Wall Street reporter with Bloomberg News joints us in our Bloomberg Interactive Broker studio. Mike, you down in Miami at the Bloomberg Miami office manning that office.

I know hurricanes coming your way, you guys getting safe down there, Paul, Well, right now, it's just tropical storm rain. I hear it's mostly hitting the Bahamas. Might head north actually your way, and I'll be your next week. So I'm bringing the storm with me. He's gonna hit Sam Bankman Freed first, then, right, isn't the in Sahammas? But that what's the key thing. It's true, it's Bahamas. It's kind of you know, ironic, but that whole thing with him is such a shock we you know, the crypto

space view to him is basically the savior. It turns out he might have been just a fraud. Well I guess, but I mean here's we got the you know, the headline crossing the Bloomberg terminal in the United States probes FTX empire overhandling of client funds and if you would certainly hope so right, I mean, otherwise, what the heck are they doing? Let's get too Shonali really give us. Let's back up a little bit. Tell us what happened

over the last week? What uh caused Sam Bankman Free to go from like the well respected in Washington super billionaire that everybody wanted to get a meeting with, and it was called the John Pierpont Morgan of crypto to a guy who might be investigated for the F word a few thing. I mean, that's not what he's being an investigator force. I do want to make that very clear. That has not been determined yet. But or at all

for that matter. But you know, when you look at what happened here, the coin deaths came out with the story really outlining the relationship between the f t T token issued by f t X and Alameda, which is another entity owned largely by Sam Bankman Freed. These are two different companies, and it drew some concerns about the intersectionality between the two companies and the balance sheets. F t X is the exchange, Alameda is his VC company.

Turned turned out that Alameda had a lot of his f t X token and was you know, doing a bunch of stuff with it in terms of how they were trading and getting into different assets. However, what happened that really started to get a lot of attention here was the Binance the CEO of Binance on Twitter started announcing that they would be selling their f t T tokens.

They had a lot of it, and so saying a billion dollars worth, correct, half a billion dollars worth and saying that they would be selling so many tokens would start to put pressure on the price by other people selling on the back of Binance selling. Then what had happened was you start to see, uh, Sam bank Man freed really saying that there weren't clear liquidity issues in

the company. They were fine, that's a different company, right, So so CZ is like, we're going to dump this f t T token and that dropped sevent in value. So al Meda has a ton of what's now worth less token, worth less than it was a week before. Then people think, okay, well, we are not sure about the connections between al Meda and f t X other than the fact that Sam Bankman fried, We're not even

clear that that's why Finance was selling. But but but it looks like people on the FTX platform or like, listen, we gotta get our money off that platform, right. So that's that is when they finally announced the deal or a potential transaction. It was really just a letter of intent, a non binding one for that matter, and the reason was to seal some of these liquidity issues that Matt

was talking about. The problem now becomes, you know, twenty four hours barely after that, we are now reporting coin Desk has reported as well. They re first with the news here that Finance is strongly leaning towards scrapping that proposed takeover. Okay, so they're actually doing due diligence, unlike some other folks when they buy companies. Mike mcglowan here, what does this mean for the crypto space. You're used to traditional commodities supply and demand, that kind of thing.

How do you think this plays in the crypto space going forward? It's stopped. That's the key thing I learned in training. This is a stop pitting trigger for all cryptos. I mean, I don't see now Bitcoin the next key supports not till about twelve thousand. The theory might hold a thousand, but this is a clear shocker. It means

hitting yourself, stops, get out. I mean just that juxtabitious and has seen sand Bank and Streeing sitting on the stage with Bill Clinton and Tony Blair back at the Salt conference that was at earlier near It's just a shocker how that shifted. So the key thing I want to end is that to me, this is potentially the concasion for all risks because Bitcoin has been one of the best leading gators on the way up and clearly

in the way down, and now we're seeing it. It was a trigger yesterday for people hitting stops and crudeoil and they're hitting stops in stocks now. So to me, this is part of that great reversion of trickling. And what's the best indicator for it that a good old bitcoin and check it out. You look at some of the stocks that are trading either in the US or elsewhere.

Coin Base was down ten percent yesterday, another nine percent today, and even though they said that they didn't have liquidity issues. I want to put on another firm the head not that much exposure to f TX itself, but it did have some exposure. Galaxy Digital. This is billionaire Mike Novergrat's company is down twenty percent today. It trades in Canada. It's trying to listen to the United States, and so to the point that you can see contagion. You are

seeing billionaires lose a lot of money today. All Right, you know, really interesting stuff. I'm glad we've allocated a lot of time during the show to crypto. We will continue to do it going forward. Mike mcglogan's senior Commodity Strategies for Bloomberg. Intelligency is based out of Miami Beach, which is trying to make itself the crypto capital. We're gonna check in with Mike going forward to see how

that is going in Miami. Again, one of the hubs for all things crypto and snelly bastis she covers Wall Street UH and the reaction and fancier markets to what is a meltdown in the crypto UH space. So we will continue to follow up on this story. Alright. So over in Egypt, Matt they're having some of the United Nations is having something called COP twenty seven where they're talking about climate change and what governments need to do

to arrest climate change and it's a big deal. And Bloomberg sending a lot of our smart people over to Egypt H to participate Charmel Shake. Charmel Shake, which is like the that's a diving capital of Egypt. Oh and Shaheen contractor are e s G analyst for Bloomberg Intelligence. She is a diver and she's going over so hopell she sh'll get to dive there. But she you're going over to Egypt Cop twenty seven. Realistically, you're a Wall Street person. You look at s G as an investment theme.

What is Wall Street? What does the e s G community really think may come from COP twenty seven this year? Copy last year and presuming COP twenty eight next year. Thanks Boyd. So I'll tell you what I'm most excited about and at least what I'm looking forward to. I think what happened with Copy Last till and even this hell is that companies are setting these cob and goals at a base we've never seen before. I've never seen it.

It's a big, big karma option, okay. And the question is we have no idea what that actually transitions to, whether actually means in practice, if they execute exactly preparedness to meet goes, what they're doing to meet these goals, rather than just putting out numbers. So I think what I would expect and I'd like to see is actual plans around preparedness, and we are saying that come to light. So first, today is Financi Day at CUFF, so very

very realistic. Um, the UK, I think yesterday came out with this proposal to get every company to disclose on its transition plan. And there was a similar U N report today that sets out standards to judge companies. So I got most excited by that. I can you got a master's in sustainability management at Columbia well, so she can help those companies actually do that, right, the key is here, We're going to hold their feet to the fire.

You can say, we're going to be uh you know, car have been neutral by twenty fifty, which first of all is like a hundred years from now. And second of all, it's just mumbo jumbo if you don't have a real plan to actually achieve it exactly. And I think that's what we're going to hope to get out of it, I mean to be fair. Also, these carbon goals have been set very recently, so I think the transition plans and all that will come, but there's now this urgent need for it to be more realistic. Well,

the last cop you know, in what was it in Glasgow? Right, the US delegation went there and made a whole bunch of promises. Biden held a speech and then on his way out he was on the phone with Saudi Arabia saying please pump more oil. Right, I mean, so it's hard to buy um all of these big promises. I'm sure that Charmel Shake will be a nice place to go, and I'm sure they love rubbing elbows with each other's, these these big wigs, But are they actually gonna do

something about it. As you know, in many countries it costs more to charge your car, your electric car, than it does to fill up the gas tank. Yeah, no, you're right. I mean this year is a particularly challenging one. Right, we have an energy crisis, We have all these things coming in. And you make a good point because China basically has sort of a very high sort of cold pipeline for its for its power generation, for it's mining. So how is that going to be sort of realistic?

How is that going to be fed in all these questions? I think trying to participate in these they do. They do send delegations every country sense delegations. I don't think they're leader is going okay, So I don't. One of the challenges is we think about, you know, implementing these and and really getting stuff done on the ground as opposed to these grand pronouncements, is who regulates this stuff?

Who says whether my country, my company is actually meeting these goals this The SEC doesn't look at this, for example, in the United States doesn't. So first, I think when these things happened at these conferences, a lot of it is self regulated. Actually all of it is self regulated, which is a challenge. You have these un agencies that

basically regulate membership through these things, so that's one. I think there's a lot of just regulation also coming in from the authorities, like the SEC has rules around fun disclosures, around emissions. Europe has a huge pipeline of regulations. So I think that's all to come, but it may be a bit of a meandering on the way there. So last week President Biden said we're gonna be shutting down all the coal plants across America. Yeah, I mean that's

a direct quote I have. We still have plans in response. Obviously, Joe Mansion wasn't pleased. He called those remarks offensive and disgusting. And he's from West Virginia, yes, of course. But the point is, and I think the White House is kind of walked back those comments. It was maybe it was a gaff by the President, which is not unusual, But um, don't we have to figure these things out internally before we can go and make credible promises with other global leaders.

I mean, especially as we see you know how much elections can change the makeup of the House, and maybe in two years Leo of an election that changes the makeup of the or or the sort of the occupant of the White House. How helpful is it to to make these these promises. Yeah, that's something that's interesting. I I don't know. I think a lot of this, A lot of what happens at these conferences is basically debating, basically raising issues on what their country needs, especially for

the emerging markets. I think a lot of what they are bringing to plate is basically complaints that you know, they need the funding for this transitions. I think a lot of it is also just voicing the concerns. All right, So for just E s G in general, if pharm a CEO, I'll comply with E s G whatever, if I'm incentive to do so, yes, if I'll get paid for it, does that happen? Yes, so, CEO, So executive compensation linked to E s G. That is something that's

been growing tremendously. Actually, So if we we actually did this analysis on the Rustle one thousand and we found that, you know, as a CEO is payback JAZELLNK to multiple things, right, financial returns, all that stuff. E s G is one of the factors that's being worked in. And we found that actually I don't know the exact number, but I think it was of the wrestle one thousand have some kind of E s SHE linkages, which I think is interesting.

Diversity and inclusion has seen this huge spike up, which is the most notable out of all the linkage is Yeah, we saw that with the Goldman Sachs. They announced their partner class and it's the most diverse in their history. And that's why there's the biggest Bass Solomon right, big, big, big, biggest class and in an effort to improve the diversity of their partnership ranks. So we'll see how that goes. And we have lots of e s G data, I would argue some of the best e s G data

out on the street. When you go to any company, you're looking down on the Bloomberg triminal, you hit f A for the financial analysis and that will give you the income statement to balance it. All that good stuff. But we also have a big tab of e s G data um ranking all the company, so it's good stuff there. She came contractor, she's an e s G research channel, so Bloomberg Intelligence. She's about to hop on a jet tomorrow head over to Egypt. For COP twenty seven.

That'll be good stuff here. We'll chat with you when you get back. 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. Put on fal Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio