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Let's get some of those geopolitical issues coming out of your Ros Matheson joins us, Bloomberg News Director for Europe, the Middle East, and Africa, on these US and Russia talks here, Ros, what do you think the strategy is for the US and Russia Here at these early early stages of the talks.
It's very clear that they're trying to enact Donald Trump's agenda, which is for a quick resolution to this conflict. But also it seems to be about a really broad reset of the relationship between the US and Russia. Of course, under Joe Biden and Russia was very much seen as a pariah state. He called him a dictator and other things, and so there was very little contact, and certainly the US was amongst those imposing very sweeping sanctions and penalties
on Russia. And this is all signaling a very different mindset from the current administration. Which is about engaging with Russia, perhaps no longer so strenously policing those sanctions, collaborating even with Russia on issues around energy supply and so on, and certainly a core part of that is bringing this war at least to a cease five very quick quickly. So that's a very startling turnaround in just a matter
of weeks. The question now is, off the back of this meeting, at what point do we see Vladimir Putin and Donald Trump sit down together.
Let's we'll get to that into just a second. What role though, should Ukraine, mister Zelenski and maybe even broader Europe play in these discussions. I suspect that, you know, a lot of politicians, a lot of ambassadors in Europe are really on their heels today.
Well, that's been the concern and certainly was brought home with the speech by JD Vance to the Munich Security
Forum here in Europe just last week. The strong sense of a completely different relationship with Europe, and the concern that you hear a lot amongst European officials is they're going to get squeezed out of the conversation when it comes to Ukraine and effectively defense on their doorstep in their own region, and what part do they play in the parameters of an agreement on Ukraine, and what role are they expected to play afterward, potentially with peacekeepers or
funding collective defense in the region. And certainly you can see from the news just recently that blood Muslimski has now canceled his trip to Saudi Arabia tomorrow. He was due to be there in the aftermath of these US Russia talks, and the concern optically there is obviously that he was coming to get some kind of readout from the Saudi Arabians from a call that he was excluded from from those meetings, and that he's now decided longer
going to go. And that's a really telling signal from Ukraine again that they're at this point feeling they're completely cut out of the conversation.
Do we have any sense of what can actually be agreed upon between the US and Russia that does not include Ukraine in that agreement? It doesn't seem like I'm not sure anything substantial can really be agreed to if it doesn't include Ukraine.
Well, that's right, And does Ukraine just then reject whatever is presented to them and what role do the Europeans have in that, And it seems to be from the europe sod at least about trying to help shape what the US and Russia are talking about shape it early for some of those concerns that are on the table again about does this involve Ukraine having to see territory?
If so, how much territory does it have to seed for an agreement to be done, What does it look like in the future in terms of a frozen conflict in potentially you know, what does it mean for security guarantees for Ukraine and what are those? I mean, it's clear the US doesn't want Ukraine part of NATO, for example, doesn't want to put its own troops on the ground
inside Ukraine. But can Europe do that in some fashion And that's a very difficult question for Europe as well, And so it just feels like they're worried that some kind of understandings will be reached and then in essence an agreement kind of gets presented to Ukraine collectively by the US and Russia and is it to take it or leave it? Equation at that point.
So the next step, maybe one of the next step for OZ is actually a meeting between mister Putin and President Trump. Is there any consensus about when that could happen and where maybe, well.
There have been some talk it could happen as soon as next week, also in Saudi Arabia, but it's it seems clear from the readouts from the meetings today that that's unlikely. And obviously it's an incredibly tricky logistical exercise to get them together, even in a country like Saudi Arabia. I've got a lot of security issues around that. The optics of putting the meeting together. What does that look like in terms of basic stuff like where do they walk,
where do they sit down? All that has to be agreed and then you know, in a way, it's a trickier meeting for Donald Trump. You can see perhaps why the Americans have decided not to rush it next week, because on the surface of it, he has more to lose from a meeting. Vladimir Putin doesn't have much to lose from sitting down with Donald Trump. It's only really upside for him. But for Donald Trump it's not without
some risk for his own reputation. So perhaps the Americans want to take a bit of a pause there and work out again how they would come into that meeting and what they want to get out of it, and so are slowing things down a bit, but it doesn't seem like it's going to be on the cards at least now for next week.
All right, Rose, thank you very much for your reporting. Appreciate getting a few minutes of your times. Ross Matthewson. She's news director for Europe, the Middle East and Africa for Bloomberg new She is based in London, and we'll keep in touch with her and her reporting as this situation remains extraordinarily fluid, and we'll see again. Maybe one of the next steps in this process will be Resident Trump sitting down with mister Putin and maybe trying to
move this ball forward. The question then remains for a lot of observers is what role is there for President Zelenski and Ukraine.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
I am Paul Sweeney. You're live here in our Bloomberg Interactive Broker Studio and we are streaming live on youtube'shead everyday YouTube dot com and search Bloomberg Podcast Live, and that's where you'll find us. As Lisa was just reporting here, we got kind of a mixed tape out there, but a pretty good start to the year. S and P up about four percent, and even if you look at the equal weighted SMP up a similar levels, so maybe
a little bit of a broadening there. Grace Lee joins, a senior portfolio manager Columbia thread Needle from the great town of Boston. One of my all time faves. Grace, thanks so much for joining us here. You know a lot of folks saying for this equity market to continue to move higher, it really has to be earnings driven, because it doesn't look like the feeder reserve is going to do a whole lot for UH equity investors. How do you think about the drivers of this equity market here?
Thanks for having me, Paul. Yeah. I do think that earnings are starting to catch up for the non mag seven and we started to see that late last year, and I think the market actually is in a pretty good place year to date. The most interesting things that stand out to me is that UH, and we don't play our funds don't play specifically in Europe, but Europe
is outperforming the US. Value is outperforming growth. So far, that's a very different UH setup than we've had in the last two years, where where you've had, you know, where it's been so tech and growth dominated. And what that tells me right now is that I think the FOMO is fading, particularly as it relates to the growth the MAG seven group. I think investors are starting to look elsewhere and probably should be looking elsewhere for growth opportunities and investment opportunities.
So outside of the MAG seven, outside of tech, which in fact obviously has been the big driver of aggregate markets for years and years and years, to the extent, people wanted to look for value opportunities in other sectors. What screens well for you these days?
So I think within tech, the old tech is actually pretty interesting. There are companies like QA Packard Enterprises or Cisco Systems that trade below the market multiple Still IBM is turning into turning from the old tech hardware focused
company to more of a faster growth software company. And then separately, I think financials are very interesting still, They've had quite a run since the election, but coming up ahead, probably in the next year or two, you'll have potentially greater capital returns from the largest banks, which are probably sitting on too much capital. And as the FED eases those those requirements, I think you'll see, you know, these sleeping giants really wake up.
I guess you know, in terms of this is going to be an earnings driven marketplace, you have to obviously have to be right on the economy. You have to be pretty optimistic about the economy. What is your economic call? I think most of the data feels pretty good, but I guess there's some uncertainty out there, whether it's tariffs or anything else like that.
Yeah, I think I think the data is still pretty strong. We saw that in the CPI numbers, you know, offset a little bit by the retail weakness, which I think might just be somewhat more seasonal and weather related. But in general, I think the numbers are still strong. The data is still strong. Does it mean that inflation could be a little bit stickier, yes, possibly, But does it mean that we're going to see higher rates or the FED actually raising I think that's a really tough scenario
for that to play out. I think most people are still looking for lower rates, even marginally lower rates, or I think right now we're in a holding pattern. But I think that that in general things are strong, and I think that the Fed is going to be very careful about about the great outlook and how that impacts the economy here in.
Terms of sentiment, Grace, I mean, you think about the election and the inauguration, some pretty strong animal spirits in the marketplace were unleashed. I think people, you know, trying to discount maybe lower taxes, maybe less regulation, maybe a little bit better environment for m and A. A do you do you buy into that?
And B?
Do you do you think it's long term?
Does it have some legs? Yeah? I think that, you know, there's definitely been a lot of fits and starts. I think there was a lot of exuberance post election that the Trump administration would be, you know, certainly more business friendly, and I think that will be the case. Right now, I think we're still digesting all of the tariff headlines. They're coming pretty fast and furious these days, and it's
it's hard to really play tariff blackamole. I think we just have to wait till till they figure things out maybe on a more country by country basis in April or so, you know. But but yeah, I think we've had a bit of a honeymoon in terms of the market sentiment and and we might be getting into a bit more of a reality phase where where you know, we're waiting for a lot of the the goodness to play out, and we might hit a couple of air
pockets here and there. But but I do think on the you know, coming out of this, I think we will end up with a better regulatory environment for businesses, you know, possibly lower to tens or certainly you know, maybe in an extension of the tax breaks we got in twenty seventeen, and I think it should still be a constructive environment for business and the economy.
Right, Grace, thank you so much for joining us. I always appreciate getting a few minutes of your time. Grace Lee, Senior portfolio manager at Thread Columbia. Thread Needle up there in Boston, joining us via zoom.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
Okay, a bitcoin here off about eight tens to one percent here today just about just below ninety six thousand dollars per token. It did reach a high of one hundred and seven thousand dollars per token right after President Trump was elected in the inauguration time, his administration touting itself as a crypto friendly administration. Let's see if that's actually playing out. Ian Ballina joints his founder at see
of Token Metrics. Ian, give us a sense of kind of how the crypto community is viewing this incoming, this Trump administration and its view of all things crypto.
Thanks for having me, glad to be here. So the new Trump administration being pro crypto. They've mentioned that they anticipate having procrypto regulation within six months. So long term this is amazing for crypto. For the first time in this history, crypto is running downhill, not uphill. But in the short term there has been a large correction in crypto from different sectors, from AI to DeFi and but
crypto hasn't really taken off as people had anticipated. Trump entering office has led to essentially buy the rooms seldom US. But long term, this is bullsh for crypto long term?
Well, how about you mentioned distributed finance AI crypto a lot of stuff wrapped up in that. Where do you see or where are you and your clients and your vests. Where do you see the most opportunity here?
AI? AI still has the most opportunity. If you just take the total crypto mind share in the last one year or so peaked at about seventy percent being fully AI. What does that mean? That means the attention, the awareness in the crypto space was solely focused on AI sector AI projects, from products like A sixteen Z to products like ARC and others. People are seeing what's happening in just tech in general with open ai, XAI and all these other competitors, and that's leading into a rising tide.
Looks all both kind of mentality in crypto in the crypto AI space because people see AI as the future. But why it's beautiful in crypto Crypto and AI are marriage made in heaven because in a digital world with digital AI agents, you have Sam Altman saying that AI agents is the biggest narrative in all of tech for this year.
So de find what that is?
AI agents basically other AI is working together as a team of AIS. These teams of AI is working together, how do you trust each other? That's what cryptos is about. Cryptos built on cryptography, having people online transact through different currencies without having to trust each other. Applying that to AI agents to me does naturally makes sense.
Well.
One of the areas that I a lot of folks that maybe aren't as involved in AI, in crypto, in some of these new technologies is does there need to be regulation? If so, how much and by whom where are we there?
Yes, there's definitely does need to be regulation in the cryptic space, also in the AI space as well, but not to a level what it stops or restricts innovation, right because AI, as mentioned by the administration, is essentially a national security issue. China is basically just flying but by their pants, and we can really allow the US to become backwards in terms of technology with AI and the same thing with crypto. So I don't think restriction
that inhibits innovation makes sense. That's why I think David Sachs the AI cryptos are was actually a pointed to that role. Those two are tied together. AI and cryptoire tie together because for America to stay forward as a company, as a country in terms of the economy and just
technology and advancement. They have to innovate. And for the last almost eight years in crypto, with the SEC and other different regulators, they forced US entrepreneurs offshore, and now by the administration wanting to make crypto or rather make America the crypto capital of the world, they have to basically be open for business and they have to welcome innovation, not try to social offshore.
So one of the uncertainties I guess of the Biden administration was who in fact would regulate some of these technologies, particularly across the crypto space. Was a Gary Gensler at the SEC. Was the CFTC, the Commodities Futures UH Commission Commission? Where are we going now? Where where's where's the wind takeing us?
Now?
Who's going to regulate this thing?
So right now it looks like it's basically a team effort. It's both does CFTC kind of taking the lead and also the SEC as well. But regardless of who's taking the lead, they all have to really understand crypto at a deep level. They can be crypto and a sayers, Yes,
they are risking and crypto. Yes, scripture is not perfect, it's not ideal, it's new to technology is still being polished, but you have to kind of take a very optimistic approach in terms of seeing the future and the possibilities of crypto.
So, you know, Bloomberg News did a story a couple of quarters ago when every single one of the S and P five hundred companies mentioned AI in their quarterly earnings release and comments that came. That's up from like, you know, a handful a quarter or two before that. Where do you see the real I guess applications of AI where most of us going to see it day to day? How are you guys thinking about that?
So, what we're seeing with our customers and even people in a cry crypto space is AI is unlocking a completely new user experience. So, for example, take define the centralized finance and crypto space. Whether it's yield optimization, whether it's trading agents, different complexities that you basically had to be a crypto expert or quant expert to leverage. You can now just use AI to help manage all that
for you. What does that mean? Let's say you want to do a flash loan which is basically complicated where in crypto of borrowing money and making a trade and paying it back all in real time, all in one transaction,
very hard to execute. But now with AI in the same way how chad GPT has unlocked and given everybody pretty much a PhD on their computer, you can now have that same PhD person doing all kinds of innovations in the crypto space, from trading to investing to rebouncing your portfolio, for example, talking about we're building trading agents to allow people to trade crypto using AI passive way.
So we're seeing this completely unlock different elements that the average person didn't really tap into will have access to.
How and it's it's early in the Trump administration. Hell I guess optimistic are folks in the crypto space that President Trump and his team will in fact deliver on being, you know, a very positive force for crypto.
Very very optimistic because if you just kind of zoom out and see the history of crypto, crypto has grown to become a three trillion dollar asset class. We think it can go to about eight to fourteen trillion by twenty twenty six. But that entire time it's been basically pushed down by an anti procrypto regulation. And now crypto finally has a seat at the table. From the Crypto
ball to the Crypto Council to the AI. Cryptos are the Finally, there's finally a pathway to crypto having a seat at the table and to crypto coming in much bigger asset class.
All right, Ian, thank you so much for joining us. Fascinating discussion there. Ian Balina he is the founder and CEO of Token Metrics, joining us via zoom from Austin, Texas.
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