Markets, Eco Data, Crypto, and Tech (Podcast)

Which one crypto? Oh my god, I am living. Am I shell shocked to you? She's like glowing. It's it's a it's a it's a look. I will say that my heart is pounding. Uh. This is pretty enormous news, profound implications for the crypto industry and what it looks like going forward. It should be right, there should be profound implications for the asset class. But I don't really

see bitcoin moving that much. It is amazing that we're looking at bitcoin almost around seventeen thousand and dollars a coin. I don't have a good answer for you, but I see your point. Did I tell you my Lehman Brothers analogy. I want to hear it again. So first of all, I don't know you're probably the only person in the building. I haven't told this, but back in September eight, I got off a plane from Germany and I turned on

my BlackBerry. Everybody on the plane turned on his or her blackberries, and we all were shocked that Lehman Brothers had gone under. Now, the same thing happened to me on Sunday or sorry, on Tuesday. Tuesday night, I got in from I was in Indonesia for a few weeks. I turned on my iPhone this time because you know, my BlackBerry doesn't work anymore, and I find out that

f t X is going down. Shocked again. But the thing is just like back when Lehman Brothers failed, there wasn't a tremendous drop in the value of the dollar. Now f t X is failing, there's not a tremendous drop in the value of bitcoin. You see, we have to separate. Maybe Mattie's stop getting off plane. Yeah exactly. I mean, you even look at the likes of Salona,

which is really the token to watch here. When you think about the Salona blockchain and what a big back or SPF and why f T that token to watch because f T T I mean, if you have brought them down, like the magnitude of the number of people invested Salana, Definitely there's much more wealth at stake in

Salana than there is an FTT at this point. But anyway, my point being that if you look at uh Salana, it's I mean, it's down significantly over nine percent, but it was down much more about half an hour ago, so we'll see. I mean, a lot of bad news is already priced in. I would agree with you that seventeen thousand dollars for bitcoin in the wake of this news does seem a little bit on intuitive, just on

a numbers basis. But again, you think about the tremendous draw down already in the space, there's a lot of bad news in there. Let's bring in our other roundtable guest here, Cameron Christ, also known as Macroman. He writes a Macroman column for for Bloomberg as well as the macro strategists. Cam put this into the perspective of someone who perhaps isn't a crypto fanatic. How much of your

trad fight take Oh my god? Well, actually, though, what is your traditional finance take what is the contagion effect here into the broader markets. I think it's probably relatively limited. I mean, listen, crypto gets a lot of attention and it's full of a lot of loud mouth, but uh listen, at its peak, the market cap of crypto is what about three trillion UM and now it's down to whatever eight million or nine hundred million or whatever it is,

uh billion. Excuse me, um uh you can explain. I mean that basically matches the combined market cap loss of like Amazon, Meta and Tesla over the over the same period, so just three companies have lost as much money for their investors. There's all of this crypto stuff. Now you could argue that crypto is more broadly uh owned by retail who have levered positions, and yeah, that's right. So

obviously for an individual it might matter more. But on a on a on an aggregate basis, um the the only real threat I think it's some sort of transmission from crypto to to the more traditional um uh financial system. And that would be a case if a big bank, for example, had uh massive exposure to fpx uh and it was suddenly looking at a five or a ten

billion dollar hole. Um, I don't think that's the case. So, um, you know, I'm sorry to be skeptical, and I don't mean to dance on on the financial grades of people who have been suffering through this. But you know, when you play stupid games, you win stupid prizes. And if you buy you know, if you buy stuff on a joke because someone tweets out a rocketship emoji, if that's

your investment case, this is kind of natural. Well, I mean you have We should all be skeptical, right, that's our job as journalists, but we also have to differentiate. There's a difference between bitcoin and doge coin, right yeah, yeah, sure, But I mean what's the you know, I'm I'm all enough to remember five years ago people are talking about bitcoin. You know, the the US case for bitcoin was based on blockchain applications, Right, yeah, I think we can all

agree that that that horace has bolted. No one can seriously claim that the bitcoin blockchain is the reason that people buy bitcoin. Well, you would back against you and I are the only ones who are old enough to remember five years ago. Well no, but if you're going to use the blockchain, bitcoin is incredibly uh inefficient. You're right, so people would rather use the blockchain of ethereum, for example, to build unless I mean I've asked people this question

all the time. Why doesn't bitcoin, for example, just go to proof of stake if you're so worried about the energy consumption. It's because the blockchain of bitcoin, the o G, is supposed to be more secure. And I mean no, no, no, proof proof of work is far more secure than proof of sake. The reason is they want to restrict supply because the people who already own it have a vested

interest in seeing the price goes up, go up. I mean, I mean, the most of this stuff, the primary use case is to enrich people who are early adopters end of uh. And that is not a particularly productive use of financial capital or intellectual capital, frankly, um. And you can see the kind of caliber that the people that it's attracted. I mean, I don't know if you've seen this, and I mean, is this a comment on Michael nova Grant specifically? Who are you talking about? I'm talking about

you know, this bankman, freed guy. Have you seen this video clip of this this woman who is the CEO of Alameda basically a couple, couple of people basically saying, stop losses on an effective risk management tool. Oh really, I mean this is from on one who had an experience of what a year and a half is a junior and another hedge fund before she assumed this role of significant responsibility, and she doesn't understand the basic principles

of risk management. I mean, it's a it's a joke, uh, and it it in my opinion, it's the natural outcome of too much free money, too much liquidity that's been pumped into the global financial system for too long, and it's flown to it's flowed to these frankly ludicrous uh endeavors. I mean, you've no doubt seen this, this whole thing about these people at Sequoia being blown away by by by old Sam while he's playing a video game. I mean, give me a break. I think it is an in

fun thought exercise. I think, would this all be happening if the FED weren't hiking our faces off right now? I mean, if the line was going up, I think that the business of f TX perhaps we wouldn't be having But you're saying this happened because the FED was cutting had cut too, so low, and because we were spending trillions and trillions of dollars in fiscal's just sort of passing it out with a helicopter. Yeah, and and and you know, the the genius quote unquote geniuses who

have disrupted things. I mean, I thought this was supposed to be decentralized finance, and yet we, funny enough, end up with a huge concentration of risk and wealth in the hands of a few people and a few institutions who were committing the same mistakes that quote unquote Track five have been making over three or four hundred years, and have not entirely learned their lesson, but learned their lesson to some extent, or at least had regulation to

prevent the most egregious of these, uh of these, you know, these misdeeds, I mean, taking client money and spending it on something else. It's just you can't do it. And I think these that's under investigation right now. Just to be clear, we're not exactly that allegation. But the I mean, the the in my mind, the appropriate analog is not Lehman, because none of this crypto stuff is systemically important enough, as I said, to be to be to be Lehman.

But it it's more like I'm f Global, you know where John Corzine took took client money and bought two year BTPs uh which went horribly wrong and MS global blew up. Yeah. I mean, I don't think the Lehman analogy is not that not that this is a Lehman Brothers moment for the market at large, but just for the crypto industry. Um. The concern is this has shaken confidence so much in what you clearly view as a con game. Um, and now they're going to have to

do something about it to try and get well. Then the irony is that the whole, the whole philosophy behind crypto is trust list finance, right, and yet how much trust was implicitly placed in these centralized exchanges which are actually half exchange and half broker. I mean, I I you know, if if the whole point is that you get get out of traditional finance, and yet you you to introduce counterparty risk to these centralized exchanges, it's kind

of counter to the underlying ethos, isn't it. It's a good question, I mean, to your point that it's supposed to be trust less when you introduce centralization that trustlessness goes away. It's not the same as trusting a piece of code, trusting a smart contract to execute. You actually have to trust other humans. Again, I think you also have to differentiate between the asset itself and the businesses

that now have been built around it. Um. Yeah, But I would say this, to deny the likelihood that you're going to get centralization or a concentration of of ownership and wealth in some large institutions is to deny human nature. And I mean it reminds me a bit of the m m T. People would say, well, uh, if we get inflation because of m m T, WHI all the government has to do is tighten fiscal policy radically and now I'll get rid of the inflation. Okay, fine, but

in what real world is uh? Is a government going to tighten fiscal policy when when inflation becomes problematic and and starts to hit growth. I mean maybe the UK is going to do it, uh, ironically enough after the loose trust budget blew up. But I mean you really think that the US government is going to engage in an explicit and massive fiscal tightening for the sole purpose of controlling inflation. Of course, it's politically. I mean, it's just that's not the way human nature works. Are you

surprised though that? Are you surprised in that case that even after this, um, we've you know, the tide has gone out and we've seen the SPF is not wearing a bathing suit. Nonetheless, one bitcoin is one one bitcoin is still worth seventeen thousand dollars um. It's a lot of money. I mean, it's still it a lot more than it even costs to mind a bitcoin. Uh. Yeah,

although I gather that calculus has narrowed quite quite substantially. Sure, but it's well, just it's a lot of money for a line of code that the only thing really that gives it value is the belief of the group that it has value even beyond something like gold, and certainly

far beyond something like the dollar. Yeah. I mean listen, if, if, if, even after all this, uh, there is a significant cohort of people that collectively agree that the Emperor's new code is actually still pretty stunning, then it is pretty stunning unless you know, a critical mass of people say, actually, he's not wearing it at all. He's got thank you, he's he's wearing you know, he doesn't have the bathing

suit on um to to mix metaphors. UM, but it listens the entire crypto And again I think all comes razor. You know, why do you see crypto doing what it's doing today? Why do you see people saying what they're saying. It's because they benefit UM, and there's invested interest in keeping the ball in the air UH as as high as possible. I mean, like a micro strategy for example. Obviously they've pivoted their entire company to being essentially a bitcoin etf And I mean I've looked at some of

this Sailor guys tweets. It's I mean the guy, the guy spends all day tweeting absolute inanities about about about crypto that sound deep but are actually complete and pain and nonsense. UM. But hey, he's trying to drum up an ongoing narrative that this is where you want to be well and a lot of Wall Street has joined in on that, right, I mean otherwise, absolutely absolutely UM.

But obviously again, anyone what's a passing history of traditional finance can tell you that just because Walls Freed embraces a certain investment trend doesn't mean that it's useful or profitable in the long run. Funny enough, on my YouTube algorithm, I seem to be getting a lot of clips of the big short these days, which, uh, I don't know it is probably says something about karma. I guess in the context of what's going on in the in the cryptospec.

So as an investor, then, I mean, with this kind of skepticism, do you just stay completely out or do you see a way that an investor could get involved in this still for some kind of healthy return. Well, I mean, obviously I'm not the right person to ask which of these little digital tulips is the right one to uh, is the right one to to to purchase?

Or how you should trade that? UM, what I will say is is that there's one sort of universal truth, which is the people that get rich in a gold mine, in a gold rush typically the people that sell the picks and jubbles. Right. Well, I I want to go back to the um, to the blockchain, because that seems to be the beginning, what was the beginning of what drew Wall Street into the crypto area, And it still makes sense that you could build a lot of useful

products on the blockchain. You could keep deeds of ownership on it or UM you know, driver's licenses, etcetera. I've never said why that means you would want to bid up the token though. What do you think about building businesses or products applications on the blockchain? Well, I mean, listen, I I think, again, with with being sort of a moderately informed lay person, I would suggest to you that the vast majority of use cases for the blockchain itself

are simply replicating databases. Uh and uh you can you can achieve just as much with a standard SQL database or whatever as you can with the blockchain. I mean, is it you really need to have a driver's life is on the blockchain rather than a standard database. I mean, what's the marginal what's the marginal utility of that? I was just suggesting that, No, no, no, but you know, we're onions or or what you know whatever. I think there's a pretty limited, uh marginal utility for putting them

in the blockchain rather than current UM database storage. Uh. You know, there are exceptions, and I will I will, I will concede that. But again, if you're going to use it for the express purpose of the blockchain, surely the most efficiently run blockchain is the one you want to use, not the one that just has the little the little widget that goes up the highest and price. But obviously Wallace read makes money from the widget going

up in price rather than the underlying blockchain technology. So naturally that's where grabbing, that's where attention is focused. I jump in here because this is something I think about all the time. To Camp's point that it's just a database, sometimes I think about what the ambition of crypto is this, This is something I thought about all the time while reading at Levine's crypto piece, which came out two weeks ago.

It just feels like if you're trying to recreate a parallel financial system that is more efficient, there is more secure. Uh that is, to get back to what we're talking about trust lists, is can that be enough? Why shouldn't that be enough if we make the financial system a little bit more efficient? I think it's when you get into the extreme speculation that we've seen in the crypto space, when you think about, you know, creating a new world reserve currency that it just feels like we've sort of

lost but could be actually a really cool use case. Yeah, But but again I would say that is sort of an inevitable product of human nature. Right. If you include a a financial instrument that that floats in price, people

are going to speculate on it. And I mean a lot of my old friends from foreign exchange UH over the last decade have pivoted to crypto because frankly, you wanna this year is a slightly different, but you know for years, you know, do you want to trade the euro which trades on a sixth ball and maybe moves thirty pips today, or do you want to trade bitcoin that moves ten percent a day? I mean, where do you think you're going to make more money? Where the

spreads wider um, where the fees bigger? Where is there more juice the thing that moves a lot and is much less efficient. So naturally that's what That's where Wall Street is focused its attention on part of the whole crypto sphere, the bit with the biggest, fattest, juiciest margins. And I mean it is a fascinating market structure experiment. Who knows where it goes from here? But I was actually at crypto Twitter drinks last night in a wine cellar.

There were a lot of sad people in that room, but a lot of them can because of those two products. I mean, you've already heard about the skepticism that Cameron has for crypto, and I can unload on Twitter. I can't believe you're still participating in that. By the way, do you feel like it's in a way it's immoral? Do I feel that Twitter, the social media platform is immoral? Yes? No, I mean most social media platforms are responsible only for

negativity in this world. Feels like a deep seated issue. But I would say that a lot of the people in that room last night came from high frequency traders. They came from Wall Street Wall Street traditional finance roles simply because I mean, like Camp said, there's a lot of juicy spreads there. There's a lot of money to be made. But also it's interesting to a lot of these people to be part of building an asset class in real time. I mean, how often I wasn't around

when junk bond trading became a thing. Where it goes from here is an open question, obviously. I want to Camp Cameron. I want to you to apply your healthy skepticism to social media. What do you think about social media? Just for a second, before I get to cp I and the markets. Oh, I mean, and I think it's the cancer on society by and large. Um, I think it. Uh. It exposes and amplifies the worst of human nature unfortunately. UM. And it's it's it's it enforces what I termed sort

of the the Gresham's law of discourse. Gresham's law of being a sort of a seventeenth century Montary theory back when money was actual coins, that bad money drives out good in the sense, if you've got a clip coin or a real full silver coin, you're gonna spend the

clip coin and keep the silver coin, right. Uh. Social media essentially drives out reasonable opinion, and it encourages the use of outrage, UH, conflict, entrepreneurship, UM, propaganda, this this sort of stuff which I think is not beneficial to a well functioning UH society. I can't disagree outrage gets rewarded. I can't disagree it outrages me. I want to ask you about UM C p I and the incredible run

in markets. Yesterday, Valerie Title, a producer of ours out of London, pointed out that we haven't seen a move that big since the US government dumped two trillion dollars of stimulus into the system. Is that Does that make sense to you that CPI coming in at seven point seven percent instead of seven point nine percent is enough to drive a five and a half percent gain on

the SMPN one day. Um well no, obviously, um we had a similar downside miss on CPI in reported in August and obviously we didn't see anything like that kind of that kind of move. Let's bring in Jay Hatfield right now, CEO and founder over an Infrastructure Capital Advisers. Um G. Great to have you in the studio after an unbelievable rally in stocks yesterday, um all driven by a cp I print that was just barely under expectations. What do you think about it? Thanks for having me

on that. We actually have been a pretty optimistic about inflation and particularly next quarter when we start to lap the energy price spike, so we were not too surprised, but we're worried that it would take a while because CPI does have a pretty big lag. So that's why um uh, you know, we think that the market really took off like a rocket because it's not just this CPI report, but particularly it was we lap through that

energy crisis where CPI is likely to know really decelerate. Well, let's bring in Joe Meyer, the founder CEO at Meyer Capital. I'd like to get your take as well on the By the way, a five point three percent rally yesterday and we're about half a percent today. What's your take. Thank creating Matt, thanks again for having me on Jane

I speech as well. You know, I think that is as you take a look at the rally, mostly in technology stocks, people understand the importance of automation and what technology is going to play for us in the future, and that's that's really what we're excited about and investing

in heavily. And I think that the more you leverage technology, the more you're going to see people getting in from the sidelines and jumping onto the technology bandwagon, which I think is critical to get leverage, which is what's needed to um take advantage of these challenging markets. By the way, before we go any further on the market discussion, I want to say thank you for your service. Joe served in the U. S. Army. He was a major and

I was thinking about this this morning. The bond market honors our veterans with a holiday the New York Stock Exchange and the equities markets days open, it seems almost like they don't care. Do you take offense to that in anyway, Joe, Well, Matt, thank you very much. You know, one of the things I think that's important on Veterans Day is it is great that we honor the veterans. It's up to folks how they want to honor it.

But more importantly, I think it's a families of veterans who also deserve a lot of respect and honor because they put up with a lot of unknowns, and I think we need to remember that on these days too. But more importantly, know whether the bond market honors or the market doesn't. To me, it's it's it's a chance at least say thanks to all the veterans who have served in all their families. So that's kind of my pot process on that. Yeah, I'm being I was being

a little ton of cheek about the market. I do think it's important to honor our veterans. And I come from a family military family, and you know, sometimes um they do things for the country that not everybody else is willing to do. So thank you very much for that. Let's get back to our talk on the markets and JAU some of the e t F you run in for cap Equity Income Fund MLB e t F preferred e t F. The latter to me is pretty interesting right now, especially in this high rate environment, and maybe

they're going to continue to go even higher. How do you think about real estate investment and reads specifically in this in this environment, Well, we think, Matt, that there significantly undervalued. We don't, but you're correct that if rates just keep going higher and higher higher, they valuations will go down. But what a lot of investors gonna appreciate is that's true of all asset classes, not just tech stocks.

All stocks have very long duration. So that's why you really saw this huge down draft in the market when rates went from two RAD to UM to four. But reats have been we think on early punished, and when the capital markets stabilizer think it will see some go private because they're well below UM what would be considered to be normal fair value. Well, talking about normal fair value, it kind of feels like the equity market was primed

for a rebound anyway. And I think there's a lot of questions about whether or not the price action we saw yesterday was indeed a short squeeze or really based on the fundamentals. I feel like there is a camp to say that perhaps it was based on the fundamentals, because this kind of moment of capitulation that the market I think has been waiting for for for nine months, we hit that, and then you kind of saw this

pivot point becoming a everyone by everything right now? What would be the bare case for the markets if the idea is that recession has been priced in for the last nine months or so, and on top of that, inflation has peaked and it's coming down even faster than expected because base effects are finally going to work in its favor. Well, I think there's three over haangs on the market, the FED, the FED, and the Fed. They are going to be the last to know that inflation

is going down. As I started to refer to UM initially, UM, they really have misdead nosed the seventies. It was really driven by two gigantic oil price shocks with some loose monetary policy. So they're focused on the expectations theory. And last time I was on WE we were talking about you know, there's no longer FED poot it's really the FED short So that's really the key. Even yesterday the market came off when there was some Fed commentary, So that's really the opening, is that the Fed is the

last to know. They keep tightening and we have a mild recession. But to your point on that the Fed is the last to know, aren't they already making steps to at least have a step down and to slow down a little bit. This was something that was expected in September where we're supposed to see the last seventy five basis point hike. Now they're still talking about some economists predicting seventy five in December, but ultimately that mean the last really jumbo rate hike that we see from

the federal reserves. So aren't they already kind of accommodating this lag that you're talking about? Well, there seems to be some disagreement within the FED, because you did see that, you know, on Fed Day where the statement was viewed being super bullish, but the press conference is barished. So I think there's a debate between sort of the expectations camp that we have to be the new Paul Boker

crush this entrenched inflation. We don't really believe in entrenched inflation that comes from really two things, um, excessive monetary growth and usually energy price shocks, not expectations, but there is that expectations camp and so they're going to keep pounding on this notion of being hawkish, which could and raise rates more than they need to, so you could

have a mild recession. We're not concerned about that. But in terms of just going all in in the market right now, you just have to be where the Fed at any moment can come out and make a statement and take the market down. So we think next quarter will be more stable than this quarter. Joe, what do you think about rates? I mean it plays in especially to the tech area in which you're more interested. Um, how do you feel about where we're going and how

much does it matter to the stocks that you like? Yeah, I think that the reason why you're seeing such a bounce and technology right now, and you know stocks up three, four, five seven in some cases is because it is stocks

created in place and hedge for you. Basically, what I'm saying is that when you invest in technology, when companies invest in technology, you're basically getting a asset at a at a price that doesn't inflate as quickly as say salaries or oil or other things that are required to bring your product to market. And so by investing in technology, you know companies like Service now, UM, You've got Oracle,

You've got the payment companies. All those investments that you make today are really hedges against the other inflation items that hitch in. So rates do matter, but I think the technology stocks get hammered much more than they should when rates go up, and so if rates drop, people are gonna put more money back to work in technology. And I think when the rates drop that's really more of the trader types that are trying to get leverage on technology, and I think that's one of the reasons

why you're seeing such a bump in technology now. But I really think it's it's an inflation hedge when you invest in technology, which is why we focus on both in public companies and private I wanted to get into UM the investments that you guys are UM specifically interested in. Uh, Jay, let me start with you. I'm gonna get back to Joe and the tech s docs in a moment. Are you focused more on the infrastructure, more on the energy plays,

more on the real estate stuff. Well, we think that all of those sectors are going to continue to do well. We've been super negative out tech stocks throughout the year so far, but um really, if we're correct about inflation decelerating, that means a dollar weekend and tech stocks will do way better because they've been hurt by foreign currency. But we would still be a little bit defensive through the

rest of this year. As I mentioned, we're concerned about um fed speak and potentially taken us into a recession. And all those companies are much lower multiples, have higher dividend yields, more defensive if we have another down draft in the market, So we'd still be pretty defensive and go after dividend yields with preferred stocks reads MLPs, we think are still fairly valued increasing dividends. Joe, what do

you think? Yeah, Look, it's the technology strategy is critical for us because we we fundamentally believe that small and midsize companies are really going to get steamrolled if they can't get into the same level of service that big companies are doing, and the only way you do that is with technology. So to us, what's going to happen in the next two to three months is interesting. But what we're looking at is what companies do we get into now that will give us a long term run

over the next two to three years. And so um, that to us is technology because you have to bring the service level. We've all done it where you've ordered items and you need to change and if you don't get a return merchandise uh component put together and have all that technology connected, you're you're gonna be hurt. And I think that companies like Zebra, which really ties you to the Internet of things, you know, they're at uh

two dollars right now, give or take change. I think they're all time high with five dollars, so you're getting it at almost a discount. UM service now is down. Ui Path is a great automation company that are at eleven dollars that came out at eight. All of those types of companies have found a nice bottom here, and I think that now is the time to start buying into them. And that's what we've been doing for the

last month or so. So you know, I think it's a great opportunity to really start getting back into technology, especially as the dollar weekends. To Jay's point, and um, you know, the rates are going to drop a little bit or at least stay steady, and that allows these companies to invest, both large companies and the smaller medium ones which really need to invest in technology. And you think about it, there, their last major upgrade cycle is y two K and they've got to invest and I

think that's where they're going to do well. Microsoft will do well this in this area as well. When you see these headlines about massive layoffs across the tech based meta, for example, Stripe, even Um, Twitter will put aside because a little bit of a different story. But when you

see these tech layoffs, what camp are you in. Is this the big macro signal that I think lot of people were waiting for when it comes to the labor market or is this a tech specific phenomenon where hiring was kind of on the up and up for so long that this is just the natural reversal of it all. Yeah, Cret, great question. You know there was a race for talent.

I mean you've got, uh these young men and women that are coming out of these universities and they're trying to decide do they want to go into tech and they want to go into consulting, or do they want to go into banking. And so I've got a couple of children that have been out of school for a little while, and so I saw the race for talent, and they just these large technology companies were just hiring as fast as they could because they know they needed

that talent. You also had Crypto hiring or trying to hire a lot of talent, and so that's gonna dampen the race for talent a little bit. And I think now the technology companies believe that they have to pull their horns in. This is a great opportunity to do it, to call the bottom out a little bit and keep the best folks at at the top. And I think that, uh, those layoffs are basically a chance to regroup and this is this is probably the best time to do it

before they have to start figuring out where they go next. Jay, I'd love to get your take on cryptom in a sense, there's kind of infrastructure story here, right. I heard Squarey from American Express talk about the fact that he didn't think they're going to take over the payment rails. Um. When you look at the the industry, um, what do you think first of all about you know, the wild westness of it, and then when you look at the asset class doesn't have any value to you. Well, we've

been kind of super crypto bears. We thought that the big run up in bitcoin was solely driven by the increase in the money supply, and so when a crypto is at forty, we were predicting twenty. But if you really look at it, the bitcoin price before or the big FED liquidity injection was ten thousand, so that would

really be our target. So we've been super negative about the asset class, partly because Article one of the Constitution makes it clear you cannot create your own currency, so it's it's flat out legal in the United States, so it really is an a currency, it's a token, and what apparently has been happening is that it really was a house of cards where the exchanges were propping up

their own tokens and also propping up other exchanges. So we would continue to be bears on it, and also just use it as a lesson that investors should always focus on cash flow, earnings, dividends and be relatively conservative because in down markets you're gonna lose plenty of money anyway without taking that kind of risk. Just got thirty seconds. What do you think? No, I think the blockchain is here to stay. I think that crypto is interesting to me.

I think for folks to have a little bit of it in their portfolio, is A is a high risk component? Is fine? Um? You know, we've we owned a little bit, and I think that there's for example, micro strategies. To me, is A is a simple play to make. They've got their stocks basically price where it has been historically before they even got into crypto. So if you buy a micro strategy right now, you're basically getting their crypto for free and their their Web three strategy for free. So

you know, to me, I think it's a smart play. Um. But I think that the whole technology side is is where the opportunity lies, and it's all about automation. Joe, thanks so much for joining us. Joe Meyer their CEO and founder at Meyer Capital. Jay Hatfield, CEO and founder

Infrastructure Capital Advisor. Is great to have you in the studio. Look, we're talking a lot about the crypto chaos today, but I really think the story on the sun the stock market is really crucial because we had a five point three percent rally yesterday one that we hadn't seen since the depths of the pandemic back in as Matt quotes our producer of Valerie Titele, the last time we saw this kind of rally, two trillion dollars of stimulus was pumped into the American economy. So to see that kind

of reaction really begs the question is it sustainable? Is it real? Is that bear market carnage that we've seen the stock market finally over? Who better to ask? Was it a short squeeze? Oh my gosh, Okay, it was a short squeeze. I don't believe it was a short squeeze, but we are going to ask someone who might just have the answer to that. David Kat's, President, CEO of Matrix Asset Advisers. Rescue us, David, because Matt and I are having a major argument that started at three am

this morning. It's going on for eight hours about whether or not yesterday was a short squeeze or really had a fundamental driver behind it. We think it's a combination of both. Right now, the market you can't say both. It is this Sophie's choice man. Sorry guys, Uh, the market is so negative and you have this sell off an aggregate for the SMP and for a lot of technology companies. Everybody's thinking the market's going to go lower.

So you finally had a bit of good news with the CPI numbers, and you had a lot of people piling in. So you had people who were out of the market fearful they'd missed the rally that jumped in very quickly, and then that accelerated with that short squeeze, So a combination of the two things. We think very importantly. It's impossible to predict the day to day trading, but if you look at a six to twelve month time horizon, we think there's a very good likelihood stocks will be

meaningfully higher. We wouldn't chase rallies like yesterday, but when the next time the market sells off a few percent, we'd be putting money to work. There are a lot of great businesses at great prices. You know, that's a phrase that I picked up in your note. Great businesses and equally great prices in a number of stocks that you don't just recommend, you also own them for yourself. Amazon is one, Google is another. Microsoft. Um have valuations

come down enough, We think they have. You know, surely in Google's case, this is a great growth company. It's the premier search company of the world. Uh yet a week ago was selling it about sixteen times next year's numbers. That's a really good price. Microsoft also dominant franchise at twenty two times earnings. Amazon is a little bit more complicated since they don't earn money. But if you look at them and a on a price to sales or price to eat it off basis, it's selling it. It's

lows for the last ten years. So we think Amazon is a good opportunity. We think the others are compelling in terms of the stock prices on evaluation basis and

as an opportunity. I am fascinated, Matt by the fact that so many tech bowls are coming out of the woodwork when for so long, for ten months, we've literally heard that tech is just not worth the bid anymore for for lack of better term, because of the kind of great strategy, And now you have more of these valuations were so high and now the market head but we had come down. But even with those valuations, they were still the fastest growing companies on the SMP five hundred,

and no one was buying into them. But I think David, to your point, we only have about a minute left. But I have to ask, does this mean if you are bullish on tech? Are you bullish then by association on the entire market, on the entire benchmark, Well, we are bullish on the on the overall market, we think there are lots of opportunities. To your question, we were pretty careful and cautious on technology going into the year, but after this sell up, we like it, but we

think there are other places to make good money. We like the financial group. We think is very well positioned for the upcoming year. We think some medical product companies are in very good valuation territory, so there are lots of places to put money that we think you'll be very profitable twelve months out. UM the chips to me is the most uh interesting and hard to get my head round aspect of text because UM seems like we have way too many chips for PCs and still not

nearly enough for cars. What do you like so Qualcom we think is a great play in the chip area. They the stock has done very poorly this year. Uh, they lowered guidance on their last earning school, but they're still selling at ten times earnings. Based on this lowered guidance, they have a dominant franchise in phones, but interestingly they're expanding that they are going to be the dominant player in automobiles for communications. Very good growth forecast and at

ten eleven times earnings. This is exactly the time to buy it. Visibility very low, long term visibility very high. David always great to get you on UM. Never enough time, David Casts, President, Chief investment Officer over at Matrix Asset Advisors. We have Tritty and I are great friends, and we have one of our best friends in the studio with us, Shinali Vassett, cover Wall Street for Bloomberg News, and she

knows everybody in the crypto world as well. So with the implosion of f t X, Curtin and I thought, who better to invite into the interactive broker studiovengtionality yourself. So f t X has now filed for bankruptcy Sam Bankman Freed has stepped down as CEO. Does this mean no rescue, no bailout, no White Knight correct? Correct? Correct?

So I think what's interesting is UM, you know, we have the CEO of Circle Online tweeting asking are there any other opaque, unregulated offshore entities we need to worry about here? Uh, the answer is probably yes. Like a lot of companies went off shore when it came to cryptocurrencies. When you look at the bankruptcy filing for Sam Bankman Freed's entity, he stepped down as CEO. Uh, they bought in as a new CEO, the person who has brought in to help clean up the Enron scandal and recoup

funds for investors. And in this instance, when it comes to f TSS, you have to ask yourself, it's a hundred and thirty entities across the entire globe, what are the actual assets behind them that can be recouped for clients and for investors? A lot of investors are already

marking down their stakes to nothing. Well, what's fascinating to me here is that on these headlines you had bitcoins, specifically marine US as a poster child for cryptocurrencies broadly just for the sake of this conversation, but it did actually drop i want to say, below seventeen thousand at that point for the headlines, it kind of came back up haired some of the losses there you saw a similar fade on the SMP five hundred in the NASDAC,

but those came back as well. This concept of this is the Lehman moment, but for crypto only is interesting because it kind of feels like the broader market has said there is no systemic risk, there is no contagion, But does that mean that there couldn't be down the road. It's close to us next year. Even somebody I know, a CEO of cryptocompany online, was tweeting saying that we've been asking what's the contagion, what's the contagion? And the

argument he makes is this is the contagion. We have been seeing crypto companies fail all year long, and now we're watching one of the biggest exchanges in the world face bankruptcy. And by the way, they have clients block and they have investments Block five is halting withdrawals. People are just as worried about that. Anthony Scaramucci thirty percent of his firm was recently sold to f t X Ventures, and he owns lots of f t X stock as well as or his firm does, as well as half

of his assets being in cryptocurrencies. So you think about just one by one multiplied that by all of f t X is clients that can't get their money back, and what kind of cash crunch there in because of it. But then you know, you think Mike Wilson and Morgan Stanley, the equity strategist, had made a good point this morning to Jonathan Faraoh on television, which was that this is all a product of tighter financial conditions. That idea is not a contagion. It is just a market reality that

cryptocurrency firms are facing. By the way, musquwarmed about a potential Twitter bankruptcy if they can't be more cash rich in some amount of time. And by the way, this idea that bankruptcies will come more and more. The restructuring advisors that I spoke to Lizard was one of the biggest on the record just a couple of weeks ago. They said, the velocity of restructuring conversations are starting to pick up, meaning you could very well see many more

companies go bankrupt Crypto or not. Um Is everybody mad at c z? Is anyone mad at him because he effectively brought f t X down? Well, well, wait a minute, So if you have by the way, typically on Wall Street Now, if you have a bunch of assets that you want to sell, you don't pre announce that sale

and therefore the price that you would get. Unless if I'm if I'm the Bank of Shinale, I don't go around running around saying the Bank of matt looks like it's got nothing behind it, right like that would cause a bank run. But what happened here according to a lot of reporting, the Journal broke this part yesterday that was incredible that of sixteen billion dollars of consumer assets at f t X, more than half eight billion or so were lent to Alameda, the trading firm run by

Sam big Man Freed. So there's a bigger issue here of what happened to customer funds were The big question for regulators is an authorities at this point, we're investigating the situation where they misused and were they unclear about how customer funds were being used and where they went, And that is an f t X issue and not a finance issue. It just seems to me that c Z could have gone to SPF and said, dude, it looks like there's something not proasting on the fire, is

what you're saying. Before I sink your boat on Twitter? Right, why don't you take care of these? A little bit could happened. Speaking of Twitter, we should bring in our other guests today. Ed Ludlow joins us from San Francisco. We gave a massive, big introductions to Shnali. Uh, we should give one to Ed as well. He's our star West Coast correspondent and my former producer and Matt's former

producer and my bestie. Okay, so just because my company is not imploding as much as yours, well, well, yeah, debatable. Let's go to the Twitter story though, because ft X is not the only one that is dealing with bakermancy. Twitter is not a dealing with bankruptcy, to be super clear, but there is speculation that it might be on the brink ofpeculation from the owner of the CEO. Okay, well take it away. Yes, So yesterday Elon Musk held in

all hands with the staff that are left. Remember he laid off of them almost two weeks ago now, and he told the staff gathered on this virtual meeting that there's a sense of urgency here. Advertising revenue has dropped significantly, either because names that are upset or a cautious have paused advertising. Must said he didn't know what the run

rate for the company was, which is worrying. But remember he tweeted previously that that eLearning four million dollars a day, which is why they had to lay off all the staff. And then to wrap it up, he kind of floated the idea that bankruptcy is a real possibility for Twitter, which sort of two weeks into ownership at a time where you're trying to sell billion dollars of debt or twelve point five billion dollars of debt to the street, is a strange messaging tactic. So why what's going on there?

I think that he's just trying to lay down the law. You know, you look at some of the other things that sources tell me. He told staff, you know that the days of Silicon Valley ethos and culture are over. He's taking away free food, he's taking away other perks. He's already canceled return remote working. And what was interesting, he wouldn't everyone who can quit quit? Yes, yes, So we're hearing that people are resigning of their own volition,

you know, even if they survived the layoffs. Um. He also told, you know, the remaining staff that many of them will have to work eighty hours a week. You remember we only just reported that when he canceled remote working, he said everyone has to be in an office forty hours a week. Now he's telling the staff eight hours. And have you guys been on Twitter in the last twenty four hours? I haven't, but it is live on Twitter. I think it is. It is scary out that. It

is pretty scary out there. I mean, I mean trusted if your feedback, but everybody on there has a blue check. Now. I don't know what your guys experiences, but everyone has a blue check. And then this morning, what happens Twitter, Blue just disappears from the platform. It's not clear what's

going on. You could join me on discord ed. All right, Unfortunately we have to go, but I'm just going to call you up over the weekend to try and least going on at least Ed Ludlow joining us from San Francisco. Hinale Basic joining us from three desks over. That's it for me and Pritty. This is 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 nineteen seventy three. And I'm fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio