Rates, Earnings, Goldman, and Crypto (Podcast)

we're calling out a trend. This FED can cool its jets. What's the market telling you? Yeah, well, the market is

certainly thinking that. You know, we're fully priced now for only fifty basis points without much chance of a of a seventy five at all at four December, and then you know one or two basis point hikes after that, and and and you know this idea that whether or not this is a trend, if you look at the month over month numbers for both CPI and pp I, this is now four months in a row that we've been at significant a lower month of month prince than

the previous eight months. So so if if we think about this from just from a time perspective, if we stay at this kind of level, UM, inflation will come down to almost where where inflation break evens are currently pricing, So where one year inflation swaps are pricing UM basically in the year in the next eight months. So so so it makes perfect sense, you know. I I think you know the idea that inflation has peaked. People were

looking for confirmation of that. Now that again, now that we have four months of uh, you know prints that are are pretty reasonable for both CPI and pp I, it seems that, you know, we have turned a corner here. So what are you expecting now in terms of a terminal rate? I mean, um, when I was on sabbatical UM in the Maldives or wherever you were, seemed like I was in raja Ampat in Indonesia, but I was reading the news from Afar and I saw that, you know,

expectations were climbing over six percent. Are they had they come back down? Oh yeah, yeah, there's come way back down. UM. So you know, when we when we look at what um uh, what FED funds futures are now pricing, we're we're talking more about a five percent top end terminal rate is what's currently being priced. I think that that's reasonable. Maybe, you know, if if we do get more prints like this on inflation over the next couple of months, maybe the Fed doesn't hike in um uh in in March.

And if they don't, then you might even have a slightly lower terminal rate, which was more what our expectations were for for quite a long time, of of a top end of four point seven five percent. But you know, we're we're playing semantics here. We we're talking about one hike more, one hike less. We're certainly not going to six percent, and we're probably not only going to four and a half percent. We're going to go somewhere in

between there. So you're talking about um you know, at at the upper bound at four and three quarters or five percent. I think either way, the Fed has obviously taken a lot of liquidity out of the market, still doing quantitative tightening, so they're shrinking the size of their balance sheet overall, and all of those things are having

an effect on financial conditions. And and you know, you you heard a lot of Fed speakers, you know, Lyle brainerd On on Bloomberg Television and Radio yesterday mentioned the same thing Um, you know about financial conditions being much tighter. But these things don't don't These things work with a leg, right, And it's not it doesn't happen immediately, right. So housing we know has fallen, right, Housing activity has fallen, So that has knock on effects that don't take a month

or two or three. It takes six months, nine months too for that the filter through the economy. So so so I think we are going to see a slowing not a not only of inflation, but also of just economic activity in general. And that's gonna be quite frankly for the market that I look at. That's gonna be good for treasuries and and I think we've seen a peak and treasury yields well, I mean for investors. Timing is so key, right, These things work with a lag.

It kind of reminds me of shooting skee. You gotta you're not gonna shoot where what You're not gonna shoot where the pigeon is. Now you're gonna shoot what you gotta shoot where the pigeon is gonna be When you're um, when you're uh, babies get there. So I saw a note yesterday from Matthew miss at Ubs. He says Um in his Global Credit out, Like he says, once in a decade opportunity. Nice. But timing is everything. So what

do you think are we looking at? For example, on the long end, you know, we're seeing Mom and pop in e t s start to go after um uh long duration debt right now because they think they're locking

in peak rates. Yeah. I don't disagree with that. I mean I I put out a note two weeks ago saying that that we were at peak rates and and uh, you know that was a little bit pre s and on my on my part, but it's, you know, we're I think the idea that you get a bigger sell off, what you would need in order for the bond market to sell off significantly more than it already has is really for another uptick in inflation and better economic activity.

And it's hard to see how things get better from here, right It's you know, things might stay the same, which would be the great scenario and the soft landing scenario for for the Federal Reserve, but it's hard to see how they improve significantly with financial conditions right enough on the rates side, enough on the rates. Sunday, the World Cup starts ira As you know, I have Holland as my sleeper pick. Where else should I be looking for value? I don't want to go Spain or Germany or France

or any of that kind of stuff. Okay, sleeper pick. So I am gonna so I said Germany when you asked me this question last week. Well, I am going to go with Taylor Rockwell sleeper pick from the Total Soccer Show. Give him a shout out from from the podcast that I listened to. He thinks Japan is going to get out of a group that includes Germany and Spain, and if Japan does get through there, then they can

make a bit of a run. I don't know. I don't think that they could win the whole thing, but you know, could they make a run to the semifinals for the first time. Maybe? You know, they have a really good they played really well against the US last month, and they're you know, they have some really talented players. So so maybe Japan. Let me ask, in a day and age where a lot of the players on a team don't really come from that country, doesn't matter as much. Well,

I think, well, Japan. They're almost all were born in Japan for sure, and now they play in the Premier League and the bundes League in Spain. Right, but they're they're mostly Japanese crash, all right, Next time we talked to you, it's all soccer, all the time, and we're going to ignore that Federal Reserve because the World Cup is coming up, folks, that's our jersey. He does it off the Bloomberg Intelligence So we got one of those creamy things. Street not a rogy, and he's a senior

reporter of Bloomberg News. Joins us here, uh at you and your partner crime Max table. So you guys have a story out there on a Bloomberg trmina about Goldman Sachs. What do you guys find, Well, something that's allowing on two levels. Very rarely do you have someone who has risen to the level of a Goldman partner airing their ugliest experiences, even if it is in an internal complaint

at the film. And then when you look at how the process went and the fact that Goldman Sachs settled with the complaining to a tune of more than well more than two million dollars an eight figure payout, tells you that a what was in the complaint wasn't the most pleasing reading and the price they were willing to

pay to avoid embarrassment. And that's why this is important. Correct, Correct, this is a former government partner around two years ago settled with the bank after finding what was what we understand to be able Aluminous complained that detailed a sexist culture at the bank, including senior managing making crude and dismissive remarks, paid disparities, the lack of promotions for women.

Some of these issues have been things that Goldman and everyone else on Wall Street have been dealing with and have been trying to get past and make real progress. But the fact that this happened, in the fact that most of the issues an incidents described in the complaint were from twenty eighteen and nineteen tell you that this is not from a Wall Street long, long, long ago.

This is very much the now in present. So are we talking about the kind of paid disparities that we don't see elsewhere or are these kind of paid disparities

common across Wall Street? Unclear? Right, it's it's it's it's very I mean, I'm assuming the complaining in this case would only have had access to internal compensation figure and an understanding of what pay was like at Goldman Sex would would would we be right in saying that Goldman Sachs for somehow is an outlier and the rest of the Wall Streets can be absolved of some of these sins,

perhaps not in fact most definitely. No, this is this is a threat that runs across Wall Street and across many other industries, and Wall Street in particular has maybe just because you know, their high profile company names, their high profile people, they make a lot of money, they're they're always a target of you know, a lot of activists. But Wall Street has been an industry that's tried to put this front and center and tried to, at least

from external perspectives, deal with this issue aggressively. Yet it's another setback here, you know, your story suggesting that they got a lot of work to do as an industry. That's a very interesting point because when you think of the post me to reckoning, we've seen a lot of troubling things emerged from many other industry, not so much

from the highest ranks of Wall Street. One theory has been that Wall Street's go go days, or perhaps in the seventies and eighties, and I was well darn good time. I I will still stick to the fact that I just mentioned Wall Streets go Go days, or perhaps in the seventies and eighties and uh raunchy remarks, lude behavior wasn't all that uncommon. So maybe there's one theory is Wald Street has cleaned up a little bit and has

managed to get past that. But at the same time, you also remember these are firms with very deep pockets. These are firms that have a process in their employment contracts where a lot of the claims are handled in secretive arbitration. In fact, for the longest time, even sexual harassment complaints had to go through the forced arbitration process.

So there is some validity to the theory that some of the worst things never got aired because they were able to dip into their wallets and pay a big time to score some of these settlements and keep these things private and secret well. And also it's seems from your reporting that some of the alleged bad behavior wasn't typical, right, And you describe a situation where David Solomon made a comment and then you say that his colleagues were surprised

because it was so out of character. So it's as if he let something slip and now and now he's paying like twenty million dollars to cover it up. I mean, let's be very clear all the understanding we have that

CEO of Goldman Sectavis Solomon, wasn't central to the complaint. Yes, there is an incident described that looks to quote something that David Solomon did say to a gathering of male colleagues that was scrude, to put it mildly, But there were many other managers that were sort of allegedly implicated here,

many other managers who were quoted. And that's one of the things that rattled the top rungs of the bank is the broad institutional issue that this problem tried to sketch out, the scope for public embarrassment because of that and the need for them to try and make it go away. Alright, three good stuff. We appreciate it. Shrieta Rogen, senior reporter with Bloomberg News, joinings here in our Bloomberg

Interactive Brokers studio. Hey, when you want to get a handle on how the retailers doing out there, how the consumers doing out there, you really can look at some of the results from the big retailers, and we got a couple of big ones. Today Walmart reported numbers some good numbs home depot. I thought the numbers were good. They have some inventory issues. We're gonna get to the latest there, but we're gonna break it on down. We're gonna roundtable this stuff we do with Jen Bartashes. She

covers all things retail for Bloomberg Intelligence. He's based in Princeton. Uh. And Drew Reading, he covers the home builders for Bloomberg Intelligence. We got both of those folks on the line here. Um, Jen, let's talk with you. Start with you, Uh, Walmart. I mean people are still spending money, aren't they? They are, Um, and I think that's actually you know, the bright spot

here is that the consumer is holding up relatively well. Um. They are shifting where they're spending and what they're spending on, but they are still spending money. And that is very important. And as we're looking at the economic environment and heading into that very important holiday season. So the holiday season important, But I mean, how is it going to roll out? Um? This year, We've gotten so much bad news from shippers. You know, if that Exit just said they're gonna furlough workers, Um,

we're gonna get DHL tomorrow Thursday. I believe I'm looking forward to that. It's German, but it's a very big, you know, global shipper. And then Amazon cutting jobs going into holiday season. I was shocked, Yeah, what is up with that? Jen? Well, you know, when you're you're looking at cutting jobs, a lot of the jobs are more corporate type jobs as opposed to jobs that are in distribution centers. UM. And we started off with people going into the holiday planning to hire fewer people this year

than they have in prior years. And I think we're seeing that come through, and then we're seeing this additional round of layoffs that are more in the in the

product development, in the corporate side. UM. But it does it does indicate that that could be a really big boon for retailers like Target and Walmart that have store bases, because if there are delays in shipping and you're worried that your gifts aren't going to get there, they have great alternatives in terms of people either going to the store or being able to pick things up at the store to make sure that they have those gifts. So it could actually be a positive for these retailers. Drew

right and let me bring you in. What's the differentiation

differentiation here? I mean, um, I feel like Lowe's and Home Depot is going to be a very different story than necessarily um, well even Amazon, right, yeah, I mean, it was certainly certally a good quarter for Home Depot, and you're right, they do have a different customer base than than much of, um, the rest of the retail environment, and I think it speaks to the resiliency of the market despite you know what we're seeing in housing with

transactions down at maybe down another ten next year. I do think it's important to point out though that growth this quarter really for the last several quarters, has been driven exclusively by higher average tickets. So a lot of that is the result of product inflation. Um You've got some commodity inflation from from earlier in the quarter. And then you know, particularly for Home Depot, there's there's relative strength due to their exposure to professional customers, which tend

to be a little bit higher spending. Uh. You know. On the flip side, though, customer transactions UM have declined for for several quarters now. We think that's gonna probably remain a head wind, you know, as we go to next year. Just given our expectations for housing for many weeks. Hey drew talking about the home depot, the inventory number grew kind of really jumped out of me. It seems like the retail industry has had plenty of quarters to deal with the inventory issues, and a lot of them

have kind of done it very well. What's what's different a depot. Yeah, so it's it's actually down a little bit from last quarter, but inventories relative to last year higher because you've got a lot of product inflation due to costs. There's also something interesting they pointed out, is a mix up in a mixshift higher to high value products and what they're selling there hasn't been a trade down among consumers. Um. They've also made a lot of

investments in inventory for the holidays. They pointed out that they had the best UM year for Halloween sales on records, so we think there's probably some investments being made ahead of the Christmas season. And then they also pointed out that the higher inventories are result of some of the

supply chain challenges that we've seen over the last year. So, I mean, part of that's probably the fact that they were ordering ahead of anticipated challenges and now you're starting to see demand slow a little bit relative to when they made these purchases. True, just gets since we got you here, the home market here, the builders, I mean, are they gonna build stuff here? I mean, you've got an interesting more more mortgage rates is seven percent here?

I mean, are they gonna build houses over the next year? So it's it's a good question. We think there's probably gonna be a pretty severe poolback and housing starts. We've already started to see it. Um. You know, we're thinking that from you know, the peak of last year to where we eventually trot could be somewhere around the percent declient, just based on what we've seen in prior housing downturns. So builders have certainly taken their their foot off the

gas pedal. They're not spending as much on land, and they're taking a degree of caution. You know. That being said, I think I think the group as a whole is in a much better position relative to the last downturn, which is, you know where everybody tends tends to look. Jen, how does inflation play into a factor into this holiday season, Because at the same time as we're looking at you know, seven point seven pc CP I prints. UM. We're also telling consumers that these big box stores have to cut

prices because they have too much inventory. So as the consumer reacting, well, it's it's a delicate balance for the retailers because they want to have a compelling value proposition and consumers are seeking that that you know, low price, but they also need to not completely blow up their

margins UM. And so as you know, as we look forward through the holiday season, we're expecting to see a much higher rate of promotions UM because it is going to be competitive for the dollars that people are willing to spend UM, So the promotion rate will be up there. UM. But we we are expecting that as inflation comes down, these are the retailers that pivot very quickly and try to bring prices down as quickly as they can UM.

And Walmart alluded to that on their call today, and so UM it'll be it'll be an interesting challenge to see how they manage through the inventory without needing and still can meet that value proposition. Have some discounts, but they may not be UM crazy huge discounts in order to preserve a little bit of margin. It it will help to see how the the season unfolds, and if

sales are slow, the council go up. Hey, Jen, just about twenty seconds if I go into a Walmart and shop from my g I Joe with the Kung Fu grip, is it gonna be on the shelves house of supply chain? Supply chain is much better. Um So, they've worked very hard at inventory being you know, and having in stocks. Um So this year they brought they brought product in earlier. There seems to be at this point plenty of product on the shelves. Um And we'll see how long that

last to the holiday season. But right now it's at a healthy level. All right, Jen, Great stuff, appreciated Jen Bartashes. She covers all things retail for Bloomberg Intelligence and drew reading our housing analysts. We got the round table. That's great stuff. You can bring these real smart people together get perspectives on the retails. We've got another roundtable coming up, do we Oh, we've got this guy Eli Manning coming up. All right, we'll talk to him in a couple minutes.

Were We love talking to the b I folks. They're wicked smart as well as the best quarterbacks and some of the best analysts on Wall Street, Walmart, home depot reporting numbers and retailers put up some good numbs here. Does that bode well for the holiday shopping season? Let's talk private equity here, Private equity and a sports biz?

How can that go wrong? Former New York Giant quarterback and partner with the investment firm Brand Velocity, Eli Manning joined us here in our Bloomberg Interactive Broker studio along with Brand Velocity founding and managing partner Steve Liebowitz. Um. Eli, Steve, thanks so much for joining us here in our Bloomberg Interactive broker. So let's talk about sports first. I'm a I'm a Wall Street guy. For last, I'm a Wall Street guy. All these aheads, I want to talk sports.

I want to talk to Wall Street. So, Eli, private equity. You've now step back from football a few years. You and your brother are doing all kinds of crazy TV stuff Manning cast, which is very fun. Um, but talk just about kind of what you're thinking about in the private equity space. Well, I'm excited. I've excited to join with the Brand Velocity group. We've been with them about a year and just really have had a kind of a private equity one on one uh and learning about

the business and UH. Just I've been a part of one acquisition and it was in the sports world. It was Score Sports, which is a designer, manufacturer seller of youth sports uniforms, which uh, I'm passionate about. I have four kids and they're playing every sport. I think that's one I think business and area that so many people are familiar with. They love they love their kids playing sports.

But it's also in a in a part of this where it is the cost of reasonable you know, you can get your jersey and your kid for eighteen to twenty dollars, and so for me, it's promoting families to get your kids outside, get them playing sports, get them in and different things. It's the life lessons that are taught through sports, and so you know, the cost of a uniform shouldn't be something holding your back from from getting your your your kids out there and get them active.

Steve talked to us about your view, your private equity view of sports. I was just mentioned that. ELI just seems like like I've been following the media industry for thirty years and my big media companies, whether it's Disney, your Votico. They spend more and more and more in sports rights every year. It seems like a natural spot for Privamly, you're not in the big ten rights, Like, what are you buying? How do you screen for companies? Yeah,

good questions. Sports. It really is the media, as you mentioned that that under underpins all the growth with the media rights, and there's just a scarcity with all the entertainment options that people have out there nowadays, live sports still is the king. And as long as live sports is the king, there's gonna be insatiable demand for it, and that demand leads to the media rights, which in turn leads to the growth of the franchises. So we

think it's a great industry. I mean, it's a broad industry. If you take sports sports adjacent you're talking, you know, five hundred billion dollar plus global industry. And it maybe arguably one of the only industries that really is recession proof. Because people always say recession resistant, recession proof sports, really the data backs it up. So what kind of companies are you looking at? What are the sizes? How long do you want to stay involved? Um, what's your plan?

So we're looking at companies typically with ten million or greater of IBATA. We're looking at all sort of businesses, consumer sports adjacent businesses as well as you know, potentially minority interest in sports teams or you know, controlling interests in sports teams in Europe. So those are all sorts of different things. I mean, like any other investment, you can't just rely on the greater fool theory. You've got to do your homework. You've got to look at the valuation.

Sports clearly fetches more because of the growth, but you've got to be cognizant of it. And we will only swing at the pitch if we think it's the right pitch. That doesn't guarantee will be right. But you have to be super patient and super careful. You're lucky not to get into the whole crypto thing because some of your rivals have been deeply involved with f t X. I don't know if you noticed that, yes, stories other than bone coin, which you are shielding with Al Roker, Right,

wasn't that? It was like Frank's red Hoots. If you eat the most buffalo wings, you can get it n f t UM. But how did you avoid that? I mean, so many uh people were sucked in I guess it was big money. It's an exciting story as well. Um, were you just too busy with other stuff? Yeah, And I think just the idea that I just didn't quite understand it, like you know, there's something that comes, you know,

to that. And I didn't quite understand private equity a year ago also, but it made sense, like you buy a company that's has doing well, they're making revenue, they're making money, there's real growth, there's a profit there, and we can come in and and make it better with crypto. Uh you kind of heard these stories and people making jazillions of dollars and great, you know, but I just kind ofn't know like where is going house is gonna workout? So I had a great team of people just saying,

you know, let's just learn more. Let's learn more, and we just kind of kept trying to learn more, but never never pulled the trigger on it. So no crypto, but yes to private equity. And the cool thing is, you know, um, a skeptic or a cynics view of private equity is you know, these locusts that come in and eat up the company, borrowing tons of debt with the brand and then destroying the value of what the employees have built. You guys are doing it in a

very different way. You were ship airing the gains. I think that's like your mantra, right, and you're letting the employees in on the deal. Yeah, and that's the idea, and that's why I got involved and Steve started this BBG and got involved just could change the culture of private equity. And he truly cares and we care about the people. I mean, the people are the most important thing with these companies that we're looking at and the

culture of these businesses. And we have a program called Share the Gains where we're giving ten percent of our carried interests back to the employees that are not part of the upper management. They're getting taken care of in different ways. But we want the people who are working at these companies to be a part of the success. You know, when we sell it and we make a profit, we want them to kind of be a part of that.

Note that they can you know, if we do well, and they're gonna do well also, and they're gonna be a part of this and it really creates a team environment. Steve, what do you think you know? Partning up with with a guy as accomplished as Eli is a many walks of life. What does that bring to your firm too, and kind of how do you look to kind of

leverage that. Well, the first thing I'll say is that Eli is an incredibly humble person and he is the same person in private that he is in public, which that's critical because for us, like culture is everything, and um, Eli is just perfect fit with our culture. Like Eli his passion for for for for the culture of the companies, for for um. You know, everybody loves Eli. Um. So when Eli believes in Yeah, Tom Brady's parents probably as well.

A few super Bowls taken away there between Eli and Payton. But but we love um you know, his connectivity, I mean, and everybody loves him. And when he says it, he's saying what the truth and what he believes. So it just really fits well with what we want to do and getting our message out with share the gains, you know,

we do that as very important. We think private equity often um, you know, companies aren't made of spreadsheets, They're made of people in private equity often loses sight of that. And Eli is as a big believer in the message, he really can get that message out, and our hope is to really make an impact through that message. Talk about the Manning cast because all my buddies, uh, the

man everybody loves to watch it. Um, it's a new format and it's something that I thought this was gonna something like this was gonna happen ten years ago, and nobody ever really did it right until you guys have done it. What's your what's been your experience? How do you get into it? Yeah, I mean I think you know, we got into it just the idea. We we saw you know, Kurt herb Street broadcasting game because he had COVID and so he couldn't be at the game, so

he didn't. He's often at the Ohio State University, so he just did it from home. And kind of talking with Payton to say, well, we could I want a broadcast game from that sounds pretty good, Like sitting on my couchs watching football making fun of my brother Like that sounds like a good job, and you're like paying me for it, Like yeah, I mean, I know, I went to Old Miss, but I know a good deal

when I see one. And so that was the idea, and really, you know, just saying Hey, what would it be like if Peyton and I were in your living room watching the game? How would we watch it? You know, we're not going to talk about the first and tent run for two yards and tell you where the running back went to college? Like, we don't know that answer. We don't know where he went to college, and you probably don't care either. So let's bring in some guests.

Have it fun. We'll talk some XS and knows. Tell you what's going through the quarterbacks mind right now? What you know, how should they handle this situation? Have Peyton calls sixty seven time outs? You know when different needs to call it time out? And so you know, it's really just kind of uh having fun and in a different way to watch the game. And you guys got a great list of guests, the committed. I mean, it's

super eclectic. How does that all come about? Well, I think you just you realize there's so many people that have a passion for sports and have a passion for football and they grew up with a certain team and we used so we try to bring in people that are associated with one of the two teams playing that night, and whether it's Barack Obama or Snoop Dogg, and I'm talking about the eighties Chicago Bears, eighty five Chicago Bears, or the Steelers of the seventies with Snoop Dogg. And

he's listing players that he grew up watching. So you know, Conda Lisa Rice talking about the Browns, and you have so many people that have a passion for their hometown football team and for them to kind of talk about that and get it out, it's natural for them. And we have fun and we we don't ask any hardball questions like you guys are asking today. We try to keep it pretty simple. So you guys, you guys, you've

been so busy since leaving the the NFL. You have a job, like a day job with the Giants and you're doing the manning cast and the private equity. I mean yeah, I mean exactly. So how how's the Elis places gonna play out? Are you gonna keep doing those? We got to decide. I gotta talk with Big Bro and and I'm up, I'm up for a contract, so I'll have to, you know, have some some tough discussions with him. But you, I mean, you really have in Peyton as well, Um developed a knack for broadcasting and

you know a way that a lot of athletes can't. Um, are you gonna be appearing in how Hollywood movies? What's your I don't consider myself a broadcaster, by the way, just I don't I think they have a I don't think I would have been good at broadcasting in the typical way of being in studio and booth and and doing those things. I think the fact that I could sit on my couch, you know, just talk football, keep it very casual, uh fits more um you know style

for me. And so I'm enjoying what I'm doing. I enjoy the football part, staying involved in the game I enjoy, but also learning and learning about private equity. And you know, each each day and each deal we look at and company we look at, I'm learning something new and and just understanding how businesses work. And you know, just the timeframe of how you decide whether you want to buy a company, like looking at the profit loss, looking at statements,

looking you know, do do do diligence? You know, given a pitch. All these things were new to me, exciting for me, and I'm enjoying the process. Hey, Steve, You're know slout yourself. I mean, you know, went to some trade school up in Cambridge, Massachusetts. I think, uh, New York State High School, chess champion and old Miss really yeah, at the end of the day, I mean, you got to take englnch you gotta take math. What's what's what's

the big called Harvard the Old Miss of the North exactly. Well, we interview every Thursday coach Murphy from Harvard because we carry the Harvard football games up in Boston on our radio station. Your Bills fan, tough two weeks, dude, But you've got a great you got a great quarterback doing about it. But this is the story I want to get. You're a family farmer supplying this year's Rockefeller Christmas tree. Yeah, that's just that's just nuts. Yeah. Basically, so my family did,

like your great grandfather planted or something. I mean I asked. It was like ninety years old. I don't even know who planted it. But our family owned, my father's generation owns the property, and the head gardener at Rockefeller Center was actually and they get hundreds of submissions for the tree. And so he was going to drive to see another tree in Glenn's Falls and he was driving down the street, happened to drive by a bacon lot which had the tree,

and he's like, that is the tree. The tree was like discovered like a starlet or something. Right, So it's just like a wild experience, you know, for you gotta be the tree family trees. He like, give me thirty seconds on the Giants seven and two. Yeah, I mean these guys are good. I think we've got a quarterback too. By the way, he went to Duke, so he's with me, what do you think? Yeah, Daniel Jones is playing great. Se Kwon is running, running hard, defense is playing well.

So in the most important thing, they're finding ways to win close games. And they're finding ways to close games out and that's something we haven't been able to do for a while. And and what that does it also this prepares you for late in the year, you're gonna have these close games. Can you win them? They're they're they're kind of tried and tested, and I think it's gonna be a good run if you ever get tired of having Barack Obama or Condoleeza Rice over. You know,

Paul and I are exactly down the good stuff. Eli Manning he plays football I don't know what he does. He's doing a ton of stuff. He's doing private equity, doing broadcast. Yes, I mean no sitting on the couch for this guy, Steve Leebwitz. He's managing partner founder of the firm is known as brand Velocity. And they joined us here in a Bloomberg and Actor. They're doing some good, good stuff. We appreciate them stopping by. We are they come back to earth a little bit. That was exciting,

little fun. Yeah, it's always fun, you know. I took my mom for sixtieth birthday. I took her to the Super Bowl when Eli and the Giants played Tom Brady and what is that team called the Patriots out in Luke Oil Stadium? Where's that Luke Oil State? Indian Alis, Indianapolisanapolis? Was pretty cool. I also got to see Jane's addiction before the game, and I got to meet Anna Ferris. Oh pretty pretty sweet. Good weekend. Take care of your mom,

good Jane and my mom especially. But we want to get back to UH finance right now, and we're gonna do that with the Automated Liquidity Exchange. We're gonna talk to the CEO of Alex chin Zoo Sue Um. She joins us down the line right now and Chin talk to me first about the collapse of f t X. What does that mean? Ken Griffin said, it's a problem for the entire industry, the entire financial world, not just crypto. What do you read into it? Hi, Met Paul m

thank you for having me today on your show. I mean, then the collapse of the ft exchange was so devastating. I think the crypto industry has experienced the most shocking event since mounts. I don't know if you remember the Mount Goog that was around the mt g o X right, it stands for Magic the Gathering Online Exchange. It was the first big bust in crypto. Yeah, I think up

to fifty tho bitcoins was stolen. That's about hundred six thirty six billion worth of bitcoin were stolen, and many many people in the cryptal industry is in the same opinions mean that the collapse of this epting ex exchange is pretty much as bad as that one. So can you imagine just in one week, the third largest cryptural change of TX, they experienced a bank around, they halted customer withdraw, they enter into a failed talk to be

acquired by the competitive bideness. They discover that they are short between eight to ten billion customer funds. They got hacked about half a billion. The file chapter PHAPS wasn't maybe an inside job who took those coins? What do you think about how it happened, Shinzo, Yeah, it really started with is really interesting. Started with with the coin deesk article, right, it featured a breakdown of the league

Alameda Research balance sheet. Now Alameda is the hedge found is a trade in firm that also started uh founded by sand Banking Tree. And what happened was that as of June thirties, you could see that the Alameters essay mounted to about fourteen point six billion. However, this single beings access was three point six six billions of a lack ft T and f CT is the f T s own token. And then the third largest entry was to a bit more than two billions of this collecter.

So basically the majority of Alameters egty is actually f T s own token um f t T. And this is obviously you know the completely runway west risk and I crediting Ouden on the treature. She she used this example. She said, imagine McDonald makes its own money and called clown bucks, right, it keeps most of it and then it's still some of it to the market, and then McDonald then stand their remaining clumb box to its trading arm, which is Alameda, which then use it as a collateral

for the actual loves from McDonald. Exactly. That's the problem with SPF told The New York Times yesterday that UM Alameda had a large margin position at f t X, which is another way of saying they had all of f t X his money and the eventually essentially lost it. What do you do with ALEX? What does the automated liquidity exchange do? Because liquidity was one of the big problems here, right, so ALEX Central Automatic Change. We are at if I built on bitcoin, what it means that

all the transactions are settled on bitcoin. UM. I really like this. I really appreciate this opportunity to come on the air today to really to UM say that out loud, that there's really a huge difference between fight and ce fight right, And I want to stress that c F I should not be confused with defect. So if we look back to what happened with the f t X, right, who caught bank Man Free. It's not sec, it's not set.

It was cryptography and crypto community SPF could influence regulators legally bright politicians with donations and show faith balance and due to the opaquness or c fact, but it could not be bitcoins verification, right, So yeah, go ahead, I just should point out that, um, you know, bribery is illegal and that's a big allegation. So we don't know what happened. We don't know. We don't want to say, um, we don't want to make that kind of accusation. Of course,

SBF was a big political donor. I think he gave thirty forty fifty billion a million dollars million with an m UM to political candidates in this election cycle. But you know, we still have yet to find out. The interesting thing I think is that, um, this was supposed to be bitcoin initially it's a trust less currency, right,

and it's all about decentralized finance. But at the end of the day, too many people trusted Sam Bankman Freedom f t X gave him their private keys, essentially giving him their fiat and crypto to hold, and of course he seemingly then used it wasted it spent it and they didn't know that was going to happen. Is he going to be prosecuted for fraud or do you think

there could be criminal charges coming? Yeah? I think so because you know, this f t X collapse reflects the failure not only by you know, from an inexperienced CEO who puts short term great ahead of long term value. I mean I I myself have been regulative for more than two decades because I was working on a wall street. I think the cryptal industry needs more, you know, growing up in the room experienced financiers, that's stay on the course and apply the best practice. But you know you

rightly say so. You know CEFI has custody of users deposits, and user are left trusting in these people running that business to carry out the services for you and coming back to you know, DEFY, you know, brilliant. Yeah, decentralized finance, right, you know what happened with HPS is not possible happening on DeFi Why because it's computer code, it's smart contract that provides the services offered. You keep your funds in your own wallet and enter into peer to peer transaction

via a smart country there's no middlemen, there's no centralized authority. So, you know, the event over the past few months making really really clear to the whole industry and US builders that we need more deference services. The goal of the crypto is to eliminate the rest and the indefficiency in traditional finance, right and to build a more efficient, decentralized, open financial ecosystem, and the one that in a where to put it simply, the need for trust is removed

and to cuoss Easy, the CEO of violence. You know, DeFi is the end game, right, all right, and so thank you so much for breaking that down force. We're all still learning a lot about crypto in general and kind of what went wrong at ft X in particular. Shin Zoo Sue, she's CEO of ALEX, the automated Liquidity exchange. This Federal Reserve has been clear this year about raising

interest rates to fight inflation. Rising interest rate environment has had an impact on a broad variety of industries, not the least of which is the housing industry. The housing manufacturing business, uh really feeling the brunt of that. So we want to get some color as to how that business is dealing with this new environment. We turned to Brian Fairbanks. He's the CEO of treks uh. It is

a New York Stock Exchange listed company. T r X, not surprisingly, is the ticker to put into your Bloomberg terminal. The manufacture non would decking alternative products, you know, all decking, railing, all that kind of stuff that people do to their homes. Brian, thanks so much for joining us here. Really appreciate it. Um, tell us about your business. How is it faring? I know,

I'm just looking at the chart. The stocks down this year is you know, one of those as many are, but one of those sectors that doesn't really do well with rising interest rates. But talk to us about the the state of your business. Good morning, Matt and Paul. Thanks for having me on this morning. The consumers for outdoor living products have remained remarkably resilient over this year.

Past couple of years, we've grown quite significantly as people have been spending more time expanding their existing living areas. As we moved into this year, of course, we've seen inflation start to catch up with the consumer. Prices of our products have gone up as well. But what we've seen is, rather than growing the year, the volume told by our company is about flat was the prior prior year. Uh and given the kind of growth that we've seen,

we're pretty pleased with that. So inflation has definitely been an impact, but consumers are still flocking to the track's brand. What about the stock I mean, the chart is pretty amazing to behold. Um. As Paul said, you know, a lot of companies got to run up in the reopening um push at the end of last year and then crater this year. But what happened in October and November, I mean, it just took off from the span of a few weeks. We were absolutely a beneficiary during the

pandemic run up. As we moved into the later stages of the pandemic, we announced significant sales growth and then adding additional capacity in Little Rock, Arkansas. And with that, the market may have gotten a little bit ahead of itself in the back half of this year. Coming out of our second quarter earnings, we announced that we would be reducing the back half of the year by about two hundred million dollars to take into account inventory that

had been built in the channel. You heard me mentioned earlier that are sales to consumer have been flat year every year, but our channel did build assuming that they would grow fifteen in two and we felt that we should be aggressive get that inventory normalized so that we can start with the right level of inventories moving into So talk to us about the competitive nature of your business here. You know how fragmented it is in where what is your position? How do you think about market

share in your business? Compositicking and railing is a very unique business. There are three major players in the marketplace. Trex has about market share, the number two competitor has about market share, and the number three competitor has about market share. So it is a consolidated industry and all three of the competitors understand the value within the industry itself, uh and we each make the other better in the industry.

So the sustainability side of it is that a benefit um that consumers are that are into Absolutely thank you for asking that. Trecks is very unique in that of the content that we use in our deck boards is recycled and reclaimed. The deck board is made of roughly fift recycled plastic and the other is from reclaimed Would we get that from furniture flooring and other manufacturers that

have wood scrap. So it's a very unique manufacturing environment where we have a lot of variability going into the plant with our ramic sial, but our manufacturing technology allows us to strip out those that variability that comes through in the raw material and create a very consistent, high value added product at the end of the line. Well

what does that chain look like? It's so fascinating to me because well, right now, um, we've just come out of COP twenty seven, right or maybe people are still there in Charmel Shake talking about this, you know, global plastic problem and here you are. You found, um here in the US at least one one small solution doing kind of your part. Where do you get the plastic? You know, what are the prices like? Um, how do

you how do you put that all together? RECs has been using recycled content in our product since day one, and we've been in business for over thirty years now, so it's part of the culture of this organization to be doing green solutions. The push for e s G over the past years has been a benefit where more

material has become available on the market. We are the largest buyer of polyethylene films in the marketplace and we will source from all over the country and up into Canada, will ship to one of our two existing manufacturing locations and eventually a third one in Arkansas. From there, we can run that material either direct to our manufacturing line or we will send it through other processing manufacturing operations to create a more consistent product for our decking. So

Brian talked to us about labor. You know, every business we talked to just challenging to attract and retain labor. What's it like in your business during the midst of the pandemic, we were adding a significant amount of capacity while most organizations were just fighting to hold onto their existing labor. We were having to add about more heads to our overall operations, and we were effective in doing that.

It's fair to say it was quite a challenge. Since earlier this year, we've seen much more stability in the labor marketplace, and I expect that will continue as we go forward. Uh and we have we don't have nearly the same growth requirements at this point from a labor need perspective. Brian, great talking to you, Thanks so much for joining us. Brian Fairbanks, there is the CEO of Treks.

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. P On Fall Sweeney, I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio