Separating Digital Duds From Valuable NFT Art

I f e X dot Art. They just held a show UM Digital Icons plus Miami or Digital Icons and Miami on June seven with a bunch of artwork, original artwork, three D sculpture and f t s. That should be your clue as to what we're gonna talk about, so non fungible tokens. Roger, thanks for joining us. What what did you actually show at the show? Are we talking about physical art that you hang on the wall, three

D sculptures like three D in real life? Or was there the were these all sort of computer renders that It's a pleasure to be here. Thank you for having me. So what we showed was digital art and so the proxy is the real world. Imagine a painting on your wall that would be a two D and imagine a sculptor took that painting, a character in that painting, and made it a literal sculpture three D version of that.

We're doing that in the digital sphere. So we have the two D version of an artist's artwork, and we have a digital sculpture that can be displayed all over the place in three D. Four Can you define, Roger, what is a non fungible token? Think digital ownership. So think a digital artist for the past several decades making fabulous art, doing it on behalf of a brand, a commission, a contract. They had no way to do that on their own. One one of my favorite stories an artist

named Bill ellis part of the Artifacts project. He worked for an ad agency and he had Nike Lebron James come to him for his work, but he had to do it under the ad agency's brand. That was a sixty five dollar contract. He got paid less than five dollars. Non Flungible tokens allow a creator like that to go directly to consumer, to collector with valuable artwork and make

a transaction. But what I don't understand is say, um, I made a three D digital render of a Ducati Panagali and I photo shot by dog Steve driving it. I could sell the n f T to Paul. That guarantees him the rights to own that digital file, and then I could just give it away copies of it to anyone else. Right, So does Paul really own it? This is a great question, right, he owns the spot on the blockchain. Now you can look at physical artwork.

To look at museum famously or infamously housing forgeries for hundreds of years, right, unbeknownst to anybody, physical paintings can be forged to. Physical drawings can be forged to. An artist can overprints, right unknown to the collectors, you face these same issue whose ownership matters? It's faked in the human DNA. People want something and they want the true version of that thing. And if he's help with that, how does a consumer you know that they're getting I

guess the real thing versus fake? I mean, do you kind of think this investment market is safe? I guess that. I can't think of a different word, But do you think it's safe? It doesn't even have to be fake? Right, A copy could be exactly the same as the original, It could be the exact same code. But if you don't have the spot on the blockchain, does that make it less valuable? I believe it does. I believe it does, and I believe that you know, the platform or artist

providence matter. So where are you acquiring this from. You're starting to see artists step forward with their own contracts, You're smart contracts, that is, you're starting to see, you know, platforms, established brands step forward as a trust in place to transact and both of those sources will help with that verification process. And in honestly, you know that verification process is easy year with an n f T than it

is a physical painting. I think there are still issues around the the uh you know, whether the Mona Lisa right, whether it's really the Mona Lisa or not. So Roger around these halls here Bloomber, we talk a lot about investments, and I guess the question is do you consider n f t s to be a true slash real investment or is this maybe a fleeting sign of a very

expensive and frothy market. There are many There are many aspects of n f t s that are just frouthy market will pass, you know, like ships sailing in the night will never hear from them again. However, here the tried and true value propositions of n f T s to break it down as art, utility and access art global art market over fifty billion dollars. That has been a thing for a long long time. Digital art is the most recent art form against several decades old. There's

real value. Their auction houses like Christie's and Southeby's starting to step up to the plate and see that Christie's recently proof of sovereignty auctions tell the bees recently natively digital auctions. They are leaning into this. They understand there's value and digital art then utility. Now n ft s can do more than just art. Art lad the way.

Digital artists lead the way. But we're talking about games, we're talking about our tickets will be n f t s. We're talking about our jerseys and future metaverses will be n fp They're gonna be around for a long time. The question there, with utility in mind, what can your n f T do? And then lastly access You see these fabulous cases of artists, creatives and beyond opening the doors with their n f T s. For example, another artist is part of our project, Robbie Trivino on his

own he's UH Magic the Gathering Tool music. He did some covers for them. He's built a social profile to several hundred thousand people, and he was able to sell a key. It's an access key. It's an art piece, but also a key to future prints of his future, access points of his future meet and griefs of his future gatherings of his And I believe he he grossed over a hundred thousand dollars yesterday. Tool uses that guy's

art a lot. Yeah, And and I love um tool so much, and I love the artwork as well, But I just to me, I don't get the value, like is it do you use it as a screen saver then? Or is it like on your iPhone? Um, it seems different from having what we consider to be the actual mona Lisa, you know what's interesting? You touch on that. And I make this point a lot. And I think as this market develops, we're gonna see two things spearhead this notion of how do you display digital art, which

will help with that value connection. We're gonna see better frames flat out better frames, frames that you can put on your wall in your home that will blow any physical frame away. They will be thin, they will be sleek, they'll be able to look traditional if you want, to be able to build into the wall if you want, and they are going to blow your mind. The art will be able to move, it will change based on time of day, It will be programmed to do different things.

N f T s are really going to shine when those frames improve. And then also in digital lands. You know, we talk about futuristic movies, right ready Player one, Steven Spielberg. You get into that future world in which people spend a little bit more time in these digital universes when the display used cases improved there, and you can take your n f T into those digital worlds where you spend a lot of time. That's also going to drive value. Alright,

very cool to me. The most interesting thing is just talking about these concepts and trying to wrap my forty seven year old brain around them. I like it. I like it. Roger, thanks so much for joining us. Roger Dickerman, their founder and CEO of Artifacts, talking to us about non fungible tokens. It has you have to admit that It's definitely a fascinating topic. This is Bloomberg right now. I want to bring in Darren Williams. He's the CEO

of Southern Bank Corps. Southern Bank Corps is a for profit, mission driven community developed develop financial institution. They're based in the Mississippi Delta. UH. Darren, thanks so much for joining us here. UM. I love to start off with you just kind of giving us a thirty thousand foot view of Southern Bankcorps. Who are you guys, and just give us a sense of the type of business that you

guys are pursuing. Sure, Paul, first of all, thanks for having us on so Southern Bank Corp. We are, as you said, a community development financial institution or a c d f B I. We're about two billion in assets, Fidget. Two locations spread out through the Arkansas makes the Delta UH and one of the most persistently poor community of the United States. Our our our communities are largely rules and financial, African American and low wealth communities. We are

in place where many banks have fled with bank consolidation. UM. Happened across the country for you know, you know, two dozen years now. The number of banks and rule and underserving low wealth communities continues to shrink, and we know when those communities don't have access to account of credit and traditional financial products and services, then they are often um inundated with predator are types of alternative financial services.

So we've served those communities where others have chosen to play. So last week Square announced the allocation of million dollars as part of this hundred million dollar investment. You're making a minority and underserved communities. How are you doing that? How are you getting them help? Well? We well, first of all, let me say we're extremely um pleased and excited to have Square as a shareholder. Square, of course

is a has a superior payments platform. They are a final sal technology company, one of the best around, and so they have their endorsements. To have their support in their partnership means a great deal. They invested common equity mopen million dollar common equity investment in Southern which will allow us to grow and expand, to go deeper UH and to go further in the market we serve, and and to expand traditional places and UH. In fact, one of the things that we're very focused on is increasing

and expanding our financial technology ourselves. So we u over the last four years of develop a cloud based corp process of which is the back off the bank UM and on that platform we build digital verticals or the fintech apps. So to have one of the world's leading fintech companies UH partner with us, we are excited about what we might learn from them. UH. So their investments are going to really help us to go deeper and further in helping to serve those who often left out

and left behind, forgotten about by the financial services space. Darren, you know when Matt and I speak to UM CEO is like yourself. You'll always like to get a sense of how the pandemic has impacted their business, their market. Love to get a sense. We know that some of the underserved communities around this country were uh disproportionately impacted by the pandemic, by the economic disruption. Tell us about

your markets and your business and your customers. So, Paul, you know, one thing that that you have to think about is even prior to the pandemic, the Delta region is one of the most persistent poor community United States. It suffered from a number of ill effects of just uh you know, just poverty, lack of educational opportunities like economic opportunities, and so that's why we do the work

that we do. That's why our work really focused on things that are proven to build wealth and move people from financial UH insecurity, financial security, and so the markets that we served that were suffering prior to the pandemics, but like um many markets, the pandemic had had a had a huge impact on on retail, on on our hotels,

on our restaurant customers. We were able to provide the paycheck Protection Dollar program UH to almost twenty three hundred businesses in our markets, about a hundred and fifty million dollars and paycheck protection dollars that we provided, and many of them, many of the customers that we talked, we actually we actually did a survey and some fifty percent of them said they had no other alternative UH and would have probably closed down but for those paycheck protection dollars.

And so really we're proud to provide that SBA program that support to them and they are slowly recovering UH and it's it's it's hitting that some are doing better than others, but they without that, the devastation would have been much worse. You, um you were spearheading that ten billion dollar push, and you also were working with Jamie Diamond at JP Morgan David Solomon at Goldman Sachs on

President Trump's Great American Economic Revival initiative. How do you see that we're continuing with this new administration, Well, I can I can tell you that the first meeting, the kind of the financial services team we had with President Trump. Really proud that David Solomon, Brian Wannahan, UMU and others really encouraged administration to um support and invest and make

it and and and and support the efforts. Had a car about to make sure those paycheck protection dollars went to minority depositor institutions and to see the bias because we serve those who are often left out and left behind and don't have access to larger banks. And so really proud to have that partnership. And now that Wall Street partnership UH is taking taken additional form. So Brian mornahand in Bank America also made a multimillion dollar investment

of them just just some time they go. And so really please at these partnerships with cit if I, NBIS and and and Corporate America continues to flourish. Also proud of the philanthrophic community, which has been a long time support of mission focused banks are even redoubling their efforts. And now the government you asked really about theerka's response. So for the CD five space, there's some twelve billion dollars that's coming to the C five space through the

government support. And in fact, today Vice President Harris is going to make an announcement UH and she's gonna be introduced by Lisa mensa Opportunity Financial Network, one of our leading trade associations for cd if by loan funds UH and they're going to talk about the this administrative support of this industry and so really proud to have that attention focused on right now. All right, Darren, thanks so

much for joining us. Darren was one of the Bloomberg fifty and he continue to lead the push to help those UH. Support those probably is a better way to say it, that are under banked in the Mississippi Delta area and throughout the u US. Let's bring in Ben Emmons UH. He is a Managing director at Global Macro Strategy, UM of Global macro Strategy at Medley Global Advisor has been up been getting your notes and absolutely loving your research. Let me get your take first on the inflation debate,

because this is obviously the focus of markets. On the one hand, you've got fiscal stimulus of five trillion and more coming, um, monetary easing of an extra well four trillion on the balance sheet, and then some um pent up demand by consumers with fient savings rates, um companies that are investing capex and UH and spending money like they haven't in many, many years. And what's holding us back then from from real inflation that's gonna stick around

for a while. Man, thanks having us again. Um, yeah, that's it's actually an interesting question. Maps to the extent of that, how do you define transitory as we talk about it? Right? Like, you know, if you look at the PPI data today, you drill in that you see the autose and sector example that was off the charts, it's like twenty seven or thirty eight percent year and your change in producer prices on those and that that sounds a lot like a peak inflation, right, That's very extreme.

I think that's what markets are looking at. If you get these kinds of jumps in these sort of categories becomes almost untenable while you cannot really sustain that price level, whereas the art factors that you mentioned, of all the spent of demand and savings and cap acts, that's all working itself through the economy could sustain at least a higher level of inflation that we've had pre pandemic, when

we were really in a low inflation environment. So I think if you square too, I think we have a transitory narrative about, yes, you have excessive price increases in some categories, that this happened to be a major demand because as we unmine this pandemic slowly, at the same time, there's an underlying current that is clearly pointing to that at least the growth of the economy stays stronger, and that should lead us at least closer to that long

term average of what the Fed wants. Two. Looking at the high yield, they're not very high, Ben, I mean, it's just extraordinary what's happened in that market. Just give us a sense of what your call is there, what your what, what what your take is. Yeah, I find an interesting cold, Paul, because you know, if you look at how yield has done really well, you know, if you want to invest in fixed income, that's what that's

the place to be this year. Right, And and if you drill in there too, what's really driving it again, it's energy, materials and autos, right, those are the sectors have done exceptionally well. So there's a lot about I think,

you know, global demands reopening. That is, you know, have investors in the in particularly those bonds, and I guess if you add in the cruise lines and the leash hospitality, they've been issuing bonds during the pandemic, and they they've been scooped up, right, So I yield is strong really because the economy is strong. It is there's very little the fault risk at this moment. But we also have

to take note of the fundamental factors. You know, one key factor I think that is driving inflation is his used car component in CPI and in p p I that's not going to sustain that way. So I do think that that high yield, if it is traditionally seen in autos and related type of sectors. You know what we had back in two We've got to get an oil price change right at drove the energy sector high yield much wider somewhat could happened in this case too,

once these auto prices start to correct. If you have this really like the situation where auto prices are just too high and demanded supply works itself out right, I think that's where maybe somewhat of a of a down draft could happen in high yield. What it means for broader markets will see why it It tends to be pretty slow bleed initially, but it is to be watched because it's definitely a levels that is yeah, I would say, brings us back to the two thousand seven complacency levels.

What what do you think about the meme stocks that we're seeing. I spend a little time on Wall Street bets today and it just blew my mind. And it's not my first time there, right, it's but every time I go there, I'm like, holy cow. Um, there's some big dogs here and and they're doing some crazy stuff, but they've managed to push like game Stop into the Russell one thousand. Now. Um, a lot of the stocks that they're a lot of these meme stocks are big palatiners,

a forty six billion dollar company, you know. Um, what's your take on on what's going on? And do you spend a lot of time now on Reddit. I don't spend much stim on Reddit, and that's but there's an interesting platform to keep keep an eye on that there is in there's a lot of sentiments and hype there about these stocks and seems to be communicated there quite a bit. But if you really look at that sector and just again look at the fundamental way, but I

find really interesting exactly what you're telling. You have the market capitalization of some of these companies ballooning at the moment, and it's all driven by equity value increasing. And there's some companies Game Stuff is one of them a MC two and I believe it's good or actually go go

one of those others two. They actually pretty levered, right, they have a lot of short term that And what's now occurring is like if you're seen with SMP last week upgrading AMC's rating to triple C plus but still the stars rating, but it's upgrading. That's exactly the effect from this this hype around that stock to start prices

off a lot, keeps going up. The equity value that these to improve, the market capitalization increases, and that brings the leverage of that bounce sheet by itself down and I think this is what draws in the fundamental investors whom, as you mentioned now have to take it more seriously because those stocks have a bigger weight and say you russell one thousand index, right, so fund managers have to pay attention to these stocks, whether they like it or not.

So I think if you if you look at that whole space, you want to particularly look at the companies that are that have actually short termed death and as a result can be able to deliver that that sort of speak good either indeed equity sales and use the proceeds to bring down to that and world actually value those up and the dead leverage goes in. Hey Ben, thanks so much for joining us. As always, always appreciate getting your perspective and your views across asset classes. Ben Emmons.

He's a managing director Global macro Strategy at the firm medley A Global Advisors. We love talking to Ben. Again. He puts out some fascinating research notes with great regularity, I might add, and there's always a good read giving you some good thoughts for these markets. This is Bloomberg. Well,

a bunch of economic data came out this morning. Retail sales a little bit weaker than expected in the month of May, although the April data will was revised higher, but the market scenes to be looking at that pp I data Producer Price index came in higher than expected, so that factors into the inflation discussion. Let's break some of these numbers down and preview what we will likely here here from FED Chairman j Pal tomorrow. We do

that with Elena Shulietteva, senior US economists for Bloomberg Economics. Elena, thanks so much for joining us. Any takeaways here one way or the other out of the economic data that we saw this morning that jumped out to you. So the retail sales report, yes, at the headline it showed a decline, but you need to remember where it's coming from. So the previous two months of data were revised higher, basically showing even a bigger boost from the stimulus checks

that consumers received earlier this year. So this is just normalizing from significantly elevated levels of retail sales. If you look at the retail sales in level terms, there are still way above the trend that persisted before the crisis. So the data still supports our expectations for a very robust reading on consumers spending in the second quarter of

this year when GDP numbers are released. And one more thing to highlight is that the report actually shows ongoing rotation uh in terms of conser what preferences consumers are dying to get back into, you know, experiences, things like dining out, vacationing and things like that. And the report actually shows that there is a pickup in the services sector of the economy if you look at the restaurants sales components of the reports. So that is all a

pretty good news. Actually, I think I wonder about the savings UM thesis Lena every time I read about especially UM an inflation hawk. But anyone who's talking about big growth coming up says it's going to be powered by savings, and I, you know that data I can't see through. You know, does that count money I put away in my I ra A? Does that count the meme stocks I'm buying? How is it measured? And how broad is

that savings? Does everybody have a ton of savings or is it just you know, rich people on the coasts. So it's very difficult to assess. But yeah, a lot of it is held in um UH in the hands of more high income people, so a part of it will go into the stock market, I think, but it doesn't mean that the rest will just stay in the savings and checking accounts. So there are a lot of

different ways to look at this data. So one is just simply to look at at how savings and checking accounts UH compared to prependemic trends, and there's a huge discrepancy there, so there's a lot more money held in checking and savings accounts. You can also look at saving strength UH based on personal income and spending data, which usually is released at the end of the months each month, so that shows two point three trillion extra savings in

the hands of the US consumer. While not all of it will be spent consumer servings to just that about a quarter of this money will be spent on goods and services, and I think that's going to be an important driver, along with other things such as a powerful

wealth effect that we will see this year. So some still know his money basically helped h to boost a consumer spending in the beginning of the year, and UH those more powerful trends like savings and the wealth effect will continue to put consumer spending higher as the year progresses. All right, Elena, let's fast forward to tomorrow preview of what we may hear? Bet Chairman Pow, what are you looking for? So the market will be looking at whether Mr Powell flips in terms of UH his message, and

I don't think it's gonna happen. Can you afford to do that without losing his credibility? I mean that would really be giving up. He would be a huge loser if he did that now, and to use some trump like that, but doesn't have any reason to do so. So uh. Basically, back in equal he said that the recovery is far from complete and the FED will continue to provide accommodation until the recovery is complete. So it

was not complete back then, it's not complete now. If you look at the payrolls report, write the latest two of them, so that actually reinforces that is message from the Fed. So despite an inflation pick up, I think the Fed will stick to the same exact message. They will upgrade UH their projections for inflation in the tamary economic projections, but will quickly discount it as temporary. Our favorite words, you know, temporary trendient factor um in the

press conference. One thing to which will be the dot plot and whether the median dot for twenty twenty three moves showing a lift of Oh yeah, that is also quite far away, and I think we will speak to our old book for dots go also on the terminal, but of course, uh always great to get your take as well. Elena juliet Jeva, thank you so much for joining us senior US economists at Bloomberg Economics. Thanks for

listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews of Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. Pet On fall Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio