Rates, China, Crypto, and Math (Podcast)

unletted gas. It's continues to roll over. There's students, especially if you're at sheets in Newark, Ohio. First exactly, they're giving it away. Practically, we're seeing in other parts of the economy inflation A lot of people tell me has peaked. If that's in fact the case, why doesn't Ira Jersey's feed to reserve just put the brakes on it. Let's ask, right, he's chief US interest rate strategist for Bloomberg Intelligence, and we need to save some time to talk about World

Cup here. Matt remind me on that. I know, but we're not going to talk about Amazon because Ira has such a cushy job. All he focuses on in sector, Ira, why don't you broaden your remit a little bit. I mean, the whole rate space is there for you. Well, my, well, so we have a credit strategist named Noel Hebert who covers corporates, so you can talk to him about what's going on in the text space and all the other

sectors within within the corporate landscape. So also, I think it's fair actually, now that I think about it, considering the amount of FED speak out there, we need one guy that's just focused on that. Like, why did they come out and talk so much? Doesn't that annoy J? Powell? Uh, yeah, it would have annoyed down in Greenspan for sure. Um. Yeah.

You know, the FED over the last twenty years has gotten very democratized and and there's just I think there's just been this push that all the members are um, you know, wanted to say things, and then they when they once they started too, it was hard to kind of put the genie back in the bottle. J. Powell. Certainly, it's still the mouthpiece for the entire Federal Reserve, and I think that his what he says matters obviously the most.

And then um, but every member you know, wants to have their say, and you know from from an analysis perspective, it's a little bit easier for us too to determine things like where the dots are and and maybe who's who's really hawkish and dobbish visa be what you could do before Alan Greenspan or you know, left the Fed Reserve, because back then it was like, okay, it's whatever Alan

Greenspan says. And but every once in a while you had some members that were more hawkish or dovish than him, and they would dissent and we didn't necessarily know in advance if they would. And now it's it's a little bit easier to determine, you know what, what the leaning of a majority or of the or or a significant minority of the Fed Reserve is going to be. Well. And now then to Paul's point, um, it does seem

it's not just him, right. A lot of people think inflation has peaked now, even though we've only gotten a very small set of numbers to corroborate that. But the speakers for the most part are talking about a step down, a reduction in the rate hike increases that we've seen. So have we reached that point? I mean, are we looking at something of a pivot. Yeah, so you know, this is something that actually that J. Powell has been

mentioning since uh since July. Right, So it's not this isn't a new concept, and that this step down in the pace of hikes. They weren't going to hike at seventy five basis points every single meeting forever, right, So at some point they were going to have to slow the pace or just stop. And and I think in December they're only going to go fifty. I think they'll go then after that, And and I mentioned to you guys before you know, they're going to go to the

basis point. UM moved again, probably starting in at the February meeting, the February first meeting, because it allows them just to calibrate just a little bit more like should they go to five on the upper round of the Fed funds target? Should they go to five and a quarter like some people, UM think they should go. So by by going in twenty five, they can just calibrate

towards the end of hikes. But but I think the important point there is that to paulse question is that, yes, inflation seems like it's rolled over, the economy is slowing a bit and because of that that the FED is nearing the end of their hikes. Whether or not they go another another fifty seventy five hundred basis points, it's still the end is still in sight. And I think that that's the important part point for the markets right now. All right, that's enough on the rates market. Let's get

the important stuff. Two pm. Wall Street Time today, US Iran. How do you think this is going to go? Especially in a World Cup where literally anyone can win. Yes, it seems like it. So I think for Iran, given that they they beat Whales, they're gonna probably play pretty defensively against US and try to put you know, nine or ten guys behind the ball and just trying and

try to beat us on on a counter attack. And and historically, if you go look at what the US has done against other countries in North and Central America that they play that that we play in the Gold Cup, we we tend to have a pretty hard time breaking

down very what we call bunker defenses. So um so I think that that you know, I hate to say this, but this is gonna be probably a one goal game, and I think it will be, you know, maybe one nail to the US and in the end, um, but and and if we do score early, I think that that will get that will get I ran out of their bunker, because they're in order for them to continue and actually make it to the next round, they're going to have to then play to to at least draw

the US. And how much does historically matter? I mean, in a in a contest where Saudi Arabia beats Argentina, is that because Saudi Arabia historically is great at soccer and Argentina is horrible? No? Not, not not at all, I think I Well, in rewatching, that's the percentage history, you know, I mean, um, compared to chance. Well, well, let me say this firstly, I think any of these teams could be any any other team on a on

any given day. I mean, that's one of the that's like almost every sport, right, especially when you're talking about high level professional athletes. I think in that Argentina Sordi Arabia game, I think Argentina came out a bit flat. I think that their defense has some holes in it. That um that you know, Saudi Arabia certainly exploited and um, so you know, but that's a one off game. I think, you know, taking the games the afternoon, um as in

a bubble. I think the US has the more talented players, but I Ran does play very compact. They are very organized defensively, and and that's going to create problems for the US. All Right, it's good stuff. I think it's gonna be musty TV for a lot of sports fans today, even if you're not a Soccer World Cup fan. Our Jersey chief US Interest rate strategist and Chief Soccer strategists slash football strategist for Bloomberg Intelligence. Over the last few days,

you know, surprised me. To me, I guess it's just I've really been kind of moving in response to kind of some of the news we're getting out of China, and I guess that goes to the whole global economic you know, reopening, recession risk, all those types of things on global scale is obviously economy. So we wait to talk to people who have got some experience thinking about

investing in that part of the world. Uh Hans Dout is one of those people who's the CEO of Mitchell Madison Group, and I think that his claim to fame as he is an undergraduate from the University of Michigan, who have had a an extraordinarily successful weekend. So Hans, let me get your your thoughts here on the Higher State Michigan game. You guys know what went to Dartmouth, right, Yes, you got your m right, but I thought you got your b A from the university. I did not. I

did not about that, thank god. Okay, so you know we had a Michigan guy coming on, and I will say you know that Michigan played an incredible game on Saturday, and Ohio State simply did not show up. I don't know where our defensive coordinator was. He didn't seem to be working that day, even though I thought that's why we hired him. All of this means nothing to Hans Doll because he didn't go to Michigan. No, but he got his NBA qualified. Alright, let's let's pivot to the

China first. Let's talk about your China bona fides then, because I know that you have made uh substantial contributions to the tang In Song law and um you have helped US government officials understand China and Chinese legal history. How did you get into China going to school in Germany?

And then UM in Vermont. Well, well, we basically a consulting firm, right, so we most of what we did over the last decade or so, it's help American companies established UM production of China, sourcing from China, right, So my main business has been strategic sourcing, helping Western companies established you know, production and uh, you know sourcing agreement all over the world. Of course in China in particular lately, we've actually helped a lot of Chinese companies be more

efficient within China. And of course since COVID, that whole business does nothing going on. I mean, you and I spent a lot of time going to China before COVID. I was actually part of the UM. I was in Hong Kong doing the protests and everything, and I thought that was going to actually result in something, but it didn't.

Right in, the Chinese clearly clamped down on this, And I think we're just living in the world that looks quite different from from the world that you know existed before COVID, because you know, China is on number one too political rival, there's no doubt about that. And you're looking at the zero COVID policies causing you know, lots of issues politically, and you know, the staw, the protests, the markets up a little bit. I guess people are

more optimistic, but still um. You know, you look at at the policy response and it seems to me that they are. There's an element of political obsession, you know, with zero COVID policy, of course, but there's also maybe an element of the fact that China has to flatten the curve more than we had to do, right, because the vaccination rates aren't very good, especially among people, and maybe the hospital capacity and the medical system isn't as good as as they make us believe, right, So that's

going going to continue a thing. Can you help us understand why j and ping Um continues to stick to this COVID zero policy. Why not you know, mass vaccinations. They have the supply chains to make stuff, right, they have the authority to order people to take stuff. Why not deal with it that way rather than this way. I mean they have done to certain extent, right, So you have about ninety ciment population is vaccine it twice the lowest vaccination rates are among people over eighty, which

is very concerning. I think they're old enough to remember the good old base and they don't trust the government. Uh. And and you have the vaccine is you know, far less effective than than than MR and A technology. It's not style vaccine. Um. And I think you have the I mean, you can't really trust the numbers are China, right, I mean, I do not believe that the hospital capacity

is as good as they claim it would be. And if they have a major outbreak with the with the more you infectious variants, um, you know, one to two million people would die and would make the leadership look really bad, right, And I think that's why they're not doing it. They're they're easing us a little bit. I think they're walking this fine line between you know, protests and and and people you know, sense of complaining and

and and all that. But it's the old flatan in the curve that you're going to get it right eventually. So over the long haul, you're gonna get it. Yeah, of course. Well look Miracle said that right at the very beginning of the pandemic before when we all thought it was crazy. She said, I think sixty people are going to end up getting COVID and we thought this is in March of that's nuts. And she turned out there. So, Hans, how do you we we've all recognized that the Chinese

governments in a very difficult position here. How do you actually think this ultimately plays out? It's hard to say. I think we have to understand that China is this ultimate surveillance state, right and with enormous powers, right, and so drawing any parallels from the past, I think it is very dangerous because that's just that's just not how

it was. Right. You might have protests, but the degree to which China is monitoring its population, you know, through the phones and through cameras and all this stuff, makes it pretty very effective at putting any kind of protests down. And I think, you know, you the models we've me have used in the past, and you know, in terms of like German square and even Hong Kong and to US nineteen may not apply, I think that will be

quite successful in keeping the population under control. It's very interesting, indeed, what do you think in terms of you know, Apple, for example, is now UM accelerating its quest to produce more iPhones elsewhere UM. A lot of companies have, as you know at Mitchell Madison UM looked for ways to untangle themselves from the Chinese supply chain web. Is that going to happen or are we gonna all chill out and they're gonna keep making all this stuff by well,

I certainly hope not right. I mean, I think you've seen some some elements of this. You saw you guys reported that Mexico had the absolute largest monthly export to the United States and there were some pretty sophisticated you know, product automotive parts and so forth. I think it's happening. The private sector as usual will drive this shift away

from China. This is not going to be a top down thing, um, And I think there's alternatives, right, Obviously, there's huge capital investment in the country that have to be replicated. I think, you know, Taiwan was probably the most dangerous situation that from the private sector of perspective that could happen. What a dangerous for both parties. I think people will be hopefully be be cool about it, right, cool aheads. But I think the private sector has taken

lead on this, and the name of the game is diversification. Diversisification, diversification. You cannot relye when this thing that's even Apple like the most sophisticated supply Cheam company on the in the history of humanity, you got hit pretty hard, right, Yea, it's a it's an extraordinary situation, seemingly fluid changing by the day there in China, with as you mentioned, Hans, this broad broad implications for the global economy, hansdo CEO

of Weight, Hans Dow. Where did you study? Which university in Germany? You know? I think I studied in Mannheim, which sounded a little bit like Michigan. Maybe that's that's what happened. Oh, that's like a Weinheimer. That's like an engineering school. Right, it's a cool place, you know. Yeah. I love Monheim and we use their used car indexes. Oh we do. That's right, good stuff, all right, exactly.

We're gonna round table a little bit right now. Our topic is going to be this railroad potential strike that's out there. I've got a couple of weeks kind of deal with that. Now, I would have big implications for this economy. So we need to get a couple of smart people on here. Bloomberg Intelligence Senior Transportation analyst Lead class now who joins us on the phone, and Jody Schneider here on O Bloomberg inter actor Broker Studio. She's

a political news director for Bloomberg TV and Radio. So let's start with you. I'd love to get a sense of what you're hearing from the big railroad companies that you talked to. What are they saying here, Hey, Paul, thanks for having me. Um. You know, I think that you know, I think they remain relatively optimistic that that

our agreement can can come before the December ninth deadline. Obviously, the closer you get to that deadline, the rails will have to start shutting down their networks to ensure that um, you know, fraid it's not going to get lost in the system. Uh and also to make sure that their employees are home, um, you know when when the strike happens. Um, So you know, you could see a disruption before the December and ninth deadline. Uh, as as we get closer

to that deadline. If in fact, um, you know, the companies, the railroads feel that they can't get to an agreement. But but obviously noise out of Washington looks like, you know, the federal government, the administration and Congress is working pretty hard to make sure that doesn't happen. Just because of the you know, the impact the economy which the American trucking or is to start the Association of American Railroads

are putting out around two billion dollars a day. Are we still looking at the same problems we were back in August September, where you know, railroad employees can't get a day off to go to the doctor, or where you know one woman or man is in charge of an entire freight train along a route. Yeah, you know, it's it's really not about pay. Uh, you know, the pay aspect, they're getting a pretty nice bump. They're getting raises over a four or four or five year period. Um.

It's really about to your point to work rules. You know, how easy or difficult is it for a rail employee to you know, call and sick to go to a doctor's appointment? You know, are they going to be penalized for that? You know, there's about thirteen groups that are negotiating as part of this National Railway Railway Labor Conference. Four of them have not ratified the agreement. The others, uh, seven have ratified the agreement. Um. And so it's really

those those score holdouts that could really snag things up. Now, what's what's the problem here on the side of the railroad operators. I mean, why not give your employees um days off to deal with healthcare issues. I mean, you wouldn't insist that a locomotive work every day. If it's broken down, you're not gonna put it in service, right right. And I'm not definitely here to defend the railroads any stretch of imagination, but you know, this is something that's

typically negotiated at the local level. That's what the rails are saying. So they're not necessarily saying that we're mean and we don't want our employees to take off. We're saying that this is typically dealt at the local level, and that's where it should be a negotiated opposed to this national broad contract for all the railroads. Um, you know.

And the problem also becomes, you know a lot of railroads are operating a lot more efficiently because they've implemented precision scheduling railroading, which is pretty much six stigma for the rail industry. Uh. And you know they're trying to operate lean and mean, and you know, when if if if, if you're scheduled to work and someone's calling out, that put a wrench in the whole system. Uh. But the rails need to probably realize, well, maybe we need to

resource our systems a little more. Uh. And you know, if that's going to cost tend basis in operating ratio, so be it. But you know, that's that's an argument that the railroads will have to have, uh, not only you know, discussion with the unions, but also discussions with the shareholder as well, because you know, because rail investors are probably myopically focused on the operating ratio, which is an inverse of an EVA margin, So lower the better. Hey, Jody,

want to bring you in here. What can this administration do? What should they do? What do you think they can get done? Well? President Biden says, now he was going to go to Congress. Uh, and yesterday in his statement expressing concern about this potential strike now that it's coming closer, that he said lawmakers should immediately codify the agreement that he helped of course broker in September between the unions

and the railroads. Uh. It looks like then the House they're getting ready to do that, outgoing Speaker Nancy Pelosi, so she will move to do that to codify that this week. The Senate is a little trickier because they have other things on the agenda, and the Senate always takes longer to do things. Things like the intervening day pop up, so it's unclear whether that will happen. There By the way Congress has acted, we went and looked.

They've acted eighteen times to prevent strikes. Um. They but the last time they did this was so Um, it's been a while. You could say that again. Yes, it's been twenty six years, eight years. Um. So hey, while we have you here, Jody, when are we gonna know the full composition of the Senate? Yeah? So next Tuesday we have a big runoff between Herchel Walker and the Republican side and sitting Senator Raphael Warnock on the Democratic side. Early voting has been a record in that so a

lot of people have already gotten out there. Uh, it's still polls and there are a ton of polls, but the polls are showing them pretty neck and neck. Uh. It won't determine obviously, the majority in the Senate, because we already knew that. Um, the Democrats have picked that up. But it will give them a little bit of breathing room the Democrats if they do win that seat. And so it looks neck and neck. Lots of you know issues there, And of course herschel Walker was somebody who

Donald Trump had supported. Brian Kemp, the governor who just was reelected, is now supporting uh Walker. He hadn't done a whole lot for him in the general campaign, but is now appearing on the stage with him. Interesting fact and another fun fact here, two hundred thousand voters voted for Kemp who did not vote for Walker in the general election. So the question is are they are those people likely to show up or some who voted for

him likely to show up. It's all going to be about turn out, all right, Jody, great stuff, Thanks so much for joining us here in our Bloomberg and Director Broker studio, Lee Glasgow. He's a senior transportation analyst focusing on the rails and the trucks and all that logistics stuff, so certainly the perfect guy to get on the phone here and talk to us about what could be a strike for the nation's railroads beginning December ninth. So that's a big issue. We will keep on top of that.

I got the argument why the Amazons and the Microsoft would come to the debt market to race that even though they don't need it because interest rates are zero. But interest rates aren't zero anymore yet, Amazon coming to the market with maybe a seven billion dollar deal. Matt Miller's deal. It's a big deal, Matt. It's like a huge deal in a year where there's nothing going on for a lot of these investment banks. So we got to bring in, Matt says, we gotta get the uh

somebody in here, and we do. We have our friend here to talk to us about what is going on here from Bloomberg Intelligence. What is going on here? Why is Amazon rob Why are they coming to market? Now? Well, listen, others might take credit for this phrase, but I think I created it. You borrow when you can, not when you need to. It sounds like Jack Reacher. I think Jack Reacher said that. So listen. The ten years rallied fifty basis points. In the last two months, spreads are just,

you know, really haven't moved that much. The cost of capital for Amazon isn't that much. And by the way, they've spent a lot of money over the last couple years. Their cash numbers are down thirty odd billion dollars, their free cash flow negative for the year UM, so they're just fortifying their balance sheet. I think it could be

two things. UM. One is there could be more M and A coming or two as they could be joining their large cap brethren UM and start start to participating in this capitol return game and start buying a back a lot more stock. You know, they've pretty much stayed out of the capital return market. So all right, rob

Shift and bloomber Intelligence. My question is, is this just like I don't know on the M and A front, It feels like there's a lot of places they could go, but and they do do some smaller deals, but is there any call out there that they could do a big, big, big deal. You know, it's pretty hard to make transformation on trades these days. One is Amazon is so big, there's nothing that they could actually buy that would they would meaningfully change their their top or bottom line. It's

like regulatory issues. And the secondly, listen, you've got guys like Microsoft going after activision UM and they might not be able to get get away with it, and they're willing to spend you know, close to seventy billion dollars in cash, So Listen, there's a lot of things Amazon can buy. Um, they can get much deeper into the movie, uh, TV production, theatrical businesses. You know, there could be more in terms of of um, you know, health and healthcare.

You know, there's always a peloton sitting out there. Listen. In theory, maybe they want to buy a Netflix, but it's it's probably unlikely. I think, you know, M and A for a name like this is really around the edges. What matters to Amazon is growth in aws and people buying a lot of stuff online, and that's ultimately what's going to drive the business. And they have the might to command a decent rate in markets, right, I mean I was looking at the story. It said they're going

for a hundred fifteen basis points over treasuries. That's pretty good. Is that good for Amazon? Listen? They actually trade meaningfully tighter than their and above tech comparables. But they do trade wider, uh than they're real they're the biggest comps Apple, Microsoft, Alphabet, so they surely not wider than Netflix, Disney, no Or

or Meta. UM. But are are they? Are they attractive to people because one, they offer incremental yield versus the super high quality names, and because credit quality is still actually on the rise. I mean, even though this is a double A name, they could be high double A. I don't think anyone really is concerned about Amazon's credit quality going forward. And in fact, sort of all the noise that you've seen in the equity market really hasn't

played into Amazon. You know, when I talked to clients and most of them say to me, I'm surprised they haven't widened out a lot more. And and the reason why they haven't is that, you know, most people know what Amazon is. It's very easy to pick through this bouncy and think, you know, over the long term, the cash flow trajectory for this name is going to be enormous. They have also the ability to control what their free

cash flow. It looks like we pretty much know what the man is going to be plus or minus certain amounts regardless of a recession. So what's gonna drive free cash flow is going to be spending. And what you've heard them say recently is, hey, you know what, we're taking the pedal off of our spending. We're gonna fire a bunch of people ten thousand. It's not it's not that much relative to a million and a half employs

that they have. But they if they if they take the pedal off and they spend ten or fifteen billion dollars less next year, that'll go right to the to the bottom line and free cash. Unlike Meta who constantly said we're just gonna spend more, We're gonna blow another ten or fifteen billion dollars on the metals because because Zuckerberg can do that, Amazon is not acting that way. So they have in the past. But but Bezos has

in the past, right they can turn off. Yeah, well, listen, they haven't had to turn it off in the past. You know, they've they've only spent money. And as we went both as we went into COVID for instance, you know, they spent a lot more. The demand for Amazon products went way up eight h asked was still was still printing cash, but the demand for for delivery of products

went way way up. So they build out a ton more in terms of distribution facilities um uh, the the actual distribution and buying more trucks um and they hired a ton more people. So they're just slowing down as the economy slows down a little bit. So they really haven't had to take their foot off the pedal. They're gonna do it now for a little bit. They'll protect their bountet, and then as soon as things picked up again, I think that they could, They'll be able to meet

demand whenever they right, I'm a salesperson. Isn't Barclays or Bank of America one of the other underwriters who am I calling today to buy this issue? Well, listen, he really wants to know. Yeah, you know, listen, Mom and pops are not the ones who are buying seventy billion dollars worth Amazon. Pension funds, mutual funds, and insurance companies. Those those who have you know, long want long lived assets. They've got long lived obligation. You know. This bond deal,

in fact, is actually reasonably short duration. It's two to ten years, and it sort of goes to show that. Listen, Amazon's much more comfortable about short dated rates than they are necessarily about long dated rates. But this is an institutional bond. You know, if if for those who are looking for yield, you're not necessarily buying Amazon. So it's all the largest buyers that buy all this, All the

rest of these high quality buys good stuff. Rob Schiffman. Uh. He covers all things technology from the credit perspective, and he's in the office, and he's in the Bloomberg Interactive Brooker studio in the office. So that means you get a gold star. I know that's big for you. Uh, it's big for us here to get folks in the studio. I want to bring into Vek Rama Swamy. You know him as the co founder and executive chairman of Strive Asset Management. He's also the author of the book Woke Inc.

Inside Corporate America's Social Justice Scam. But he also has recently penned an op ed in The Wall Street Journal with Mark Lury about the fall the actacular collapse of f t X, and so we wanted to get his thoughts on this story. Um, that seems to just keep on giving. Vek you know that Block five has just filed for bankruptcy. We're all watching to see what happens with Genesis and Gemini. Anyone who knows about this space realizes that other shoes were waiting for other shoes to drop.

I guess, um, what do you think about the root of the problem. Why did we all trust Sam Bankman Freed? And what went wrong. Well, I think that there are a lot of parallels to the two thousand eight financial crisis, which I, um, you know, had the privilege of seeing from a front row seat when I graduated from from college in two thousand and seven college crisis. I graduate from college, I went from Harvard for college, and then

I worked at a hedge fund in that fall. That actually got an honorable mention just say I graduated from college. If you went to Harvard, you should say I graduated from Harvard, or I went to school in Cambridge. You know, I think I got over that around my sophomore year. That's that was my experience of that. But you know, there's it turns out that it is a separate discussion another day. I'm a little bit disappointed that Harvard isn't really the place it was when I went there, But

that's a that's a topic for now. F TX certainly isn't the place it was two months ago. What happened exactly. So so look, I think that it's worth separating what's specific to this being a crypto exchange versus what's actually not at all specific to this being a crypto exchange,

but just a centralized exchange at all. And this is the point I made in the piece in the Wall Street Journal that I co authored, which is that this was a centralized exchange, and a fundamental feature of a centralized exchange is that you have to trust someone else, another human being, with your money, to take custody over your funds. A centralized exchange cannot work unless someone, someone else, a human being, take control of your funds. That lends

itself to fraud. That fraud is illegal, whether or not you're operating a cryptocurrency exchange or an exchange that trades different securities. Fraud is illegal. Taking someone else's money, customers funds, and using it for a different purpose without the permission is fraud. I will note that's exactly what happened about a decade ago in the MF Global scandal. People lost their money because someone broke the law and committed fraud

gold New Jersey Governor John Corzine exactly. And so it's worth seeing with clear eyes that this wasn't that feature of this wasn't necessarily specific to cryptocurrencies. It was specific to a fraudulent bad actor who used customer funds to advance his own hands. Now you ask why wasn't this

detected earlier? And I think a big underappreciated part of the story is that he presented himself to the public effectively, quite effectively, I may say, as one of the good guys, as the guy who was calling for so called responsible regulation of cryptocurrencies, as the guy who was winning good E s G scores and saying things that the E s G Friendly crowd wanted him to say, making tens of millions of dollars I think thirty million dollars plus

in this cycle alone to Democratic candidates doing the kinds of things that the good guys are supposed to do, just like by the way, Ralph Wintercoorts or CEO winter Corn, I think his name is Ralph Wintercorn Winter Corners, the last name the CEO Volkswagen who was caught in the emissions cheating only after exactly Martin winter Corn excuse me, is, shortly after they had actually won multiple E s G awards, Shortly after he had spent years waxing eloquent about the

climate transition. Guess who turns out to be the bad, the worst of the actors of all. It's actually the company that pretended to be one of the good guys, and so I think we learned this lesson time and again that human beings and markets and customers and citizens are pretty good at holding bad actors accountable as long as you don't throw a trip wire in the system,

as long as you don't tamper with the smoke detector. Okay, but one of the ways some of these guys, be from from winter Corn to SBF now, managed to tamper with the smoke detector is that they presented this smoke screen of virtue that I think otherwise turned off the public's radar to picking up on the signal that otherwise would have caused them to pick up on on the fraud much sooner the vect does crypto broadly defined need

to be regulated. So I think that a knee jerk regulatory response on the back of this, and a catch all regulatory approach that did not draw distinctions between centralized and decentralized exchanges would be a bad idea. That being said, I think the legal regime as it exists in ways that prevent fraud for non cryptocurrency based securities non cryptocurrency based assets absolutely should and does already apply to cryptocurrency as well, it just is a question of the ability

to enforce those standards evenly. You can't steal someone else's funds, that's illegal. If you're a fiduciary, or if you're a custodian of someone else's funds, you cannot misuse those for your own purposes. So in a certain sense, that's not

new regulation. That's just the application of basic legal principles of trust, principles of fiduciary, principles of non theft, principles of non misappropriation, principles that exist in the law for assets, have existed in the common law for hundreds of years that need to be applied in the same way to

cryptocurrencies as they are to any other assets. And so my view is that crypto doesn't get a special pass from those rules just because people call it crypto, But nor should we overreact to create a crypto specific regime. That's it. That's actually, ironically what SPF was exactly calling for. He might make his own wish come true. All right, vac, thank you so much once again for joining has always

learned something there. Ramaswanna, co founder and executive chairman of Strive Asset Management, you know that it is Giving Tuesday, although I know for you every day is giving twos a giar a giver. But we want to talk about education, UM, nonprofits things like that, because the pandemic has really done a job on the educational UH environment out there and particularly for for younger children. So we want to kind of break that down and get a little sense of

what's going on out there. What are some of the good stories, what are some of the challenges for that. We can get an excellent roundtable here in our Bloomberg Interactive Broker studio. Angela Williams c you have Common Denominator joins us as well as Marian Scordell with Bourgeville Consulting. Close enough, good, awesome, Awesome, I did that again, two for two UM. Alright, so angel let's start with you. Just talk to us about Common Denominator. What are you

guys doing at Common Denominator. Well, I think a Common Denominator we give the gift that keeps on giving UM, and that's the gift of of of math numeracy UH. Common Denominator is a nonprofit organization that provides free, holistic math tutoring to middle school students who are really struggling with basic numeracy, math numeracy UM and and really struggling

UM in their maths class. You know, our mission is to help underserved middle school students improve their math skills, build confidence, and enjoy doing So how did it evolve devolve during the past two and a half three years? Okay, Well, you know, prior to the pandemic, we knew that our middle school students were having a significant problem in in math, and we knew the causes, and so we were diligent about providing a place where we were going to provide

the resources and tools for them. Of course, unfortunately, the COVID nineteen pandemic landed more underserved students on the vulnerable side of an even larger achievement gap. So, you know, it has been incredible for our organization because as we pivoted from in person to online, we've been able to open up our program to a wider uh swath of students across New York City um and and it has been very effective for our students as well as for

our organization. So, Marian, how do you come into this discussion? How did you and Angela meet? How have you got involved? Well, we I we met through my neighbors really, but it was probably listening to us actually, but I hope so, but I shout out your neighbor Andrew, Thanks Andrew. So no I came. I came to comment the dominator because I have a background in financial services. I worked in investment bank. I'm running my own business, and I know

what education did for me. So I don't come from from a private edge background at all, and yet I was able to go talk so that I I was able to now that I teach sometimes at Yale and at other universities, and I know what education can do for you. I know how it can get you out of you know, it can brought on your horizons, it can open up careers, it can open up a future, and then in turn you have to help others. So that's that's where I

fit in. And can I also point out, um, I don't want it to be overlooked that it can be very helpful for the bank or the organization to have a more diverse group of mimes working on problem. Absolutely when I was in bank, and even now when I we know if I have to recruit, I'm like all the candidates come from exactly the same background that or exactly all the same, and we're you know, we are

pushed to bring more diversity into organizations. But the thing is, if all the candidates come from the same place, there's a very narrow pool of candidates to choose from. So I think the problem has to be addressed a lot earlier, by the time you know, the past middle school. I'm not saying it's too late, because it's never too late, but it would help you at an earlier stage. We would help students instead of helping them just at university stage.

So Angela, when when you get these students at a young age and you're focusing on maths, it's all part of this the stem focus that we hear so much about in education. What are some of the key challenges for math? Is math just harder for some students than others uh skills or other subjects, or is it more on the on the instruction side. What's kind of some

of the challenges. I think the key challenge is that, you know, we are all math people, and if we start to understand that and gravitate towards that, we won't have the challenges that we do imagine being seen as part of a group taught to believe that they could not excel in math. Uh, imagine the repercussions of believing that false notion your entire life, um and and really imagine having an additional impediment, you know, to your own

upward mobility. You're you know, we're potentially from middle school students who prior to the pandemic only about thirty six percent of them were even fluent in math by eighth grade. Now add on the troubles of the pandemic, and we're talking about you know, students of color and those in low income brackets who are suffering even more from the

from the inequities and the education gap. So potentially, according to to what Mary Anne said, they are not identifying with math, and therefore they're cutting off an entire industry that could really allow them to become upwardly mobile jobs like you know, medical scientists, financial and analysts, the statisticians, actuary economists, not even considering them, not considering banking um and that is critical, that's critical and some thing that

we have to really work towards so that our students can understand and hoards and sometimes the barriers are really psychological. So sometimes they wouldn't even think of an industry that is so remote that nobody in their families work in. So we are also as part of common denominator, we're organizing bank visits. So we're bringing small groups of middle school children. We're bringing them to see what the trading floor is, you know what. So because in their minds,

this is just not for them. So that's why they wouldn't consider these careers that they feel from the start excluded. Um, So that that's one of one of the things we're doing. It's not just the education, is also the psychological barriers. And I mean I imagine that mentoring would be important as well. Right, a lot of these kids, you know, their parents are unlikely to be involved in the financial industry. Maybe they don't even know anybody in the neighborhood who's

involved in the financial industry. So I'm sure it would help to connect them with Angela was someone like Mary Anne. Absolutely, that's exactly what we're doing. So what's what's it like in a a New York City public school today? From a math perspective? I mean, what are I know when other schools, maybe some you know, math is really a focus? Is it focus? Does it get the proper you know

weight do you think you know? That's a great question. UM. I actually have the results from the New York State Department of Education recently released assessment, and some of their key findings UH state that less than half of all students in grades three through eight are proficient in math proficiency. Rates for students from low income backgrounds continue to lack the rates of their more affluent peers. UM. Across all the racial groups, there were losses in math proficiency. However,

the proficiency gaps between racial groups were alarmingly wide. UM. And and you know there there's there's year to year decline in math preferences proficiency for all students including eighth grade. Yeah, so the data is not too supportive at the moment. I'm sure the pandemic just made the challenge is more pronounced. But four trained. There's good folks out there like YouTube kind of doing your best to kind of help out.

Angela Williams, CEO of Common Denominator and Mary Anne Scoordell with Bougeville Consulting, both joining us here boats kind of joining powers, if you will, joining resources and trying to make a big impact on this issue and about ten seconds left. Yeah. Absolutely, this Giving Tuesday, give the gift that keeps on giving. Absolutely, thank you very much. Matthcy absolutely good, absolutely correct and financial literacy right also very key at a young age. Yep, very good stuff. Thanks

for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller, three pen on Fall Sweeney I'm on Twitter at pt Sweeney before the podcast. You can always catch us worldwide at Bloomberg Radio