Turbulence Ahead in the Markets, Ward Says

Bloomberg dot Com, and of course, on the Bloomberg. In the effects market, the dollar weaker pretty much across the board in G ten even against the pound just a little bit sterling on the front foot by a tenth of one percent at one thirty three fifty as inflation in the UK comes in higher than expected, north of three percent, which means that Governor Khney has to write a letter to the Chancellor about why he's missing his

inflation target by so much. Howard Ward joins us in a studio in New York of Gabelly Funds, the c i O of Growth Equities. Can you imagine that, Howard, that you missed your target and you've got to write a letty your boss that is disclosed publicly as to why you haven't met it. Yeah, I'm sure that's uh not a lot of fun, But I think it's a bit of a wake up call regarding the universal complacency regarding inflation amongst the central bankers. Yeah, that inflation can

come upon us sooner than expected. And uh, and then what because it's it's in nobody's expectations here in the US that we're going to have an inflation problem anytime soon. Lots of headlines about how inflation is still missing in action, but it can resurface unexpectedly. So there are some really specific issues in the UK, Brexit driven issues, a real collapse in Sterling after the Brexit vote. Here in the United States, we sit down and prepare for the two

day meaning of the f WEMC, which concludes tomorrow. Most economists expect the rate hike. Everyone expects it to be Yelling's last press and we go into next year and it's just this unbelievable comfort Howard with how this is going to play out of the next couple of years and yet on two points and things are going to remain us They offer a while, do you believe that? Yeah, Well, actually, let me just go back from it and try to

connect some dots here. Because of the because of the lag in monetary policy and in the lag impact that low rates have on economic growth, you can uh connect the surge that we've had in global economic growth in recent months to the breaks it period of June of sixteen when we had record low interest rates that's when the tenure had one point three percent and uh that

and so because of the lag, we've had a surge. Well, now that lag is ending and we're gonna be going into a period where we we we haven't benefited from the ultra low rate period that we had then. Now rates are still very low. In fact, I still think there's eleven countries in the world with negative sovereign yields. So you know that is still a bit of an

artificial situation. But what I do think we are we are at a point where growth is not it's not accelerating, it's actually beginning to slow, and it's going to begin to slow in Europe as as the months unwind h immediately ahead. Now that's going to be interesting because we approached the side of the equity market where a lot of people are saying this is late cycle stuff. Now position for the late cycle. Themes Bank of America said to me just yesterday, position for euphoria? Is it time

to position for euphoria? Well, I think it's time to be prepared for uh. Turbulence because we've had far too long a period has passed without having any real turbulence in the equity market, and so I think that, uh, are things euphoric? No, uh, well, the bitcoin being a side, uh you know, something different. But as far as the stock market concerns, we don't have euphoria. But we have had a three hundred and seventy one total return on the SMP five hundred since March of oh nine, and folks,

that doesn't get much better than that? Can we just site Tom Kane that bitcoin was brought up by Howard Ward and not me. I didn't mention it. Yeah, he did have this morning on television. He just just randomly brings up bitcoin. I like to talk about my mistakes because I haven't gotten bitcoin right. But let me just say this with respect to how bitcoin's price behavior in the last couple of weeks, I don't care what you're

talking about. When anything rises the way bitcoin has risen in the last few weeks, to me, that is a definition of a mania, and it's smacks of greater greater fuel theory. I don't think most of the people that are buying bitcoin actually have any idea of what they're buying now, we will we will see you. We'll do some more on this as well today. Good morning everyone, John Pharaoh and Tom Keane in New York, a day

before a FED meeting. I guess two day meeting, but we'll do a lot of FED coverage tomorrow as well. Bloomberg Surveillance this morning with Futures Up one brought you by Investco. Investco dedicated to delivering an investment experience that can help you get more out of life. Learn more at investco dot com slash more out of Life. I am v E s c O investco dot com slash more out of Life. When de FED rate increases, Howard Ward click in and begin to impinge in a normal

traditional way that we have forgotten ages ago. Well, Tom Um, I think that, uh, we're at a point where ordinarily you would start to see some impact very shortly. Um. The reason that it really hasn't happened is that we've had no uh increase in longer yields during the last two years while the FED has been tightening, and that I think is largely because of the lack of yields abroad in Europe and Japan has created tremendous demand for treasuries.

You're getting about twenty nine basis points on a five year German bond. You're getting really nothing on a five ten year Japanese bond. So the US looks like Mount Rushmore in terms of yields right now. So, so you've had a flat end of the of the yield curve, and as the FED continues to tighten, I don't think that yield curve is gonna Stephen. I think it's going to remain flat. It's going to get even flatter, And

so I think that the pe ratios can sustain themselves. Uh, as long as that's the case, it's time to get out of growth and get into value. That's really the heart John, you've nailed. Do you know how many times I had that? Howard, all my radars up because of that. That's it is. It time to get out of growth and get into value. So you know, full confession, you know I am. I'm on the growth side of the ledger. That's why. Yes, So growth has outperformed value every month

this year except for June and September. September was a violent rotation in the direction of value and smaller caps, but I would say this. Historically, we know that growth typically outperforms value during periods of of moderate to slowing economic growth. So as we look at two thousand and eighteen, you can go on the Bloomberg Economic Survey and you will see that the consensus for economic growth next year

is slower growth, not faster growth. So if we're going to have slower growth next year and the old curve is flat and getting flatter as the Fed titans, I don't think I'd be wanting to rush into value stocks. So I talked to me about what this means at a sector level, because the sector level story that goes with that get out of growth and get into value story is get out of tech and get into financials.

What do you say back to that? So, Uh, there's a wide variety of stocks that fall under the heading of financials, and some of them are not your traditional banks or insurance companies. So let me just talk about the more traditional financials. For the banks, um flat or yield curve is not good for them. Uh, loan demand is falling. That's strange. Again, it speaks to the lack

of acceleration in economic growth. To see commercial industrial loan growth slowing, not not increasing, and so the banks are gonna have a more difficult time making profits on loans and loan demand is falling. Will they benefit from higher rates at the short end, yes, they will on their deposit base, But nevertheless, uh, you know, the banks have had a bit of a run. I don't think it's going to be anything surprisingly good for them in the

near future. Hard word, thank you so much. With Jam greatly appreciate the briefing this morning, and of course John, I guess really this week we're at the time John, where every conversation is a next year coming and it has a year and feel. And what's interested about that, Tom, is that the year it really hasn't finished. I don't mean just by the day. We've got a FED hike

coming up. We're still waiting for the tax bill to go through, and you need to get your Christmas shopping done, you know, to the point, and we really haven't discussed it yet this morning. You really wonder where is the tax bill? Late last night I saw one legit analysis that that suggested that they've only got four to five

billion of the one point five trillion covered. They've got to work it out, which which I think is why we've we've kind of got this move away from twenty and talk at twenty two on the corporate rate to which might open up things a little bit. And we've got an Alabama special election or Kevin surreally in Alabama with some terrific perspective really turn out focused. I know Michael bar will be touching that in New York and with our news around the nation and world as well.

Futures up one jeoff, Futures Up thirty. This is Bloomberg. And now with the news in New York City and sadness in San Francisco. Here's Michael Barr, Tom Jonathan, thank you very much, and as you mentioned out of San Francisco this morning news Mayor ad Lee has suddenly died. Lee when was the first Asian American mayor of San Francisco. Lee was sixty. It is election day in Alabama and highly it watched in at race. Voters will choose between

Republican Roy Moore and Democrat Doug Jones. Multiple women have accused More of sexual misconduct when they were in their teens and he was in his thirties. More now seventy denies the charges. Top world officials have opened the Climate summon in Paris by saying investors and the entire global financial system need to shift faster toward energy and businesses that don't worsen climate change. The Prime Minister of the Island of Fiji said, we're all in the same canoe.

Rich countries and poor Global news twenty four hours a day, powered by more journalists, analysts, more than a hundred twenty countries. Michael Barr, this is Bloomberg. Jonathan tomp Michael, thanks so much. Curve flattening this morning, not down to new record flat, but nevertheless a flatter yield curve fed day tomorrow. This is Bloomberg. Surveillance is brought to you by Bank America,

Mary Lynch. Dedicated to bring in our clients insights and solutions to meet the challenges of a trend filming world. And that's the power of global connections. Marrow Ledge, Pace, Phenom and Smith Incorporated member Spike PC to be direct. It was the interview of the day given the huge tragedy we saw a number of months ago and Alexandria, Virginia, you remember the um, the shootings, the terror of a baseball field with a congressman struck down grievously, and many

others dead. Nobody gave us better coverage than Terry Haines on that horrific morning. He used with ever Corps, I s I a citizen of Alexandria, Virginia and someone who, among other things, out of Oberlin provides political strategy to Ed Hyman and the team over at Evercrep I side. He's in her studios, which is a good thing, which wonderful to have you here, to be here, thank you

very much. How do you get a turnout out? I mean, you are so steeped in the Washington game that if it's Alabama and everybody knows it's about to turn out real clear politics as Mr more I believe it had by two point two percent. How do you get the turnout out? Is that guys like you in Washington who fly into a place to get the turnout out? Or is that locally derived that The answer is it's a mix of both. Actually the what they and I I saw a lot of this with the Georgia sixth special

earlier in the year. You get a lot of you get a lot of state party officials and UH and technology and the like. To get people out. And then you have a lot of money and expertise coming in from Washington as well as an overlay, and they hope that will help as well. Let's let's just do the bipolar outcome here. If Mr Moore wins the Republican hugely contentious, what happens next for your Washington? Uh? In my Washington,

the tax bill still goes forward. Whoever wins this election won't be seated until the two of December at the earliest. So what the you know, the that goes forward? Uh, the more more spending bill negotiations go forward. I expect there to be a continue another short term bill to tide people into the new year. Uh. Not much changes. And there is a decision by the Republican leadership in the Senate as to whether they started investigating or all that. What about Mr Jones a Democrat? If he, I guess

it's an upset, I'll use that word. If he wins, it's a it's a huge deal for next year, isn't it. Yeah? I think it's a huge deal anyway either way. The what you have is a situation where, uh, in a in a short term sense, Democrats can't lose because either More wins, in which case they decry that and uh,

you put Republicans into a bit of a box. But if Jones wins, Uh, then they think they've got more wind in their sales for eighteen and uh, and they think they've got the last chance to knock off some of this stuff they get. They they think they have marginally more strength on spending bills. Uh. They probably don't think they have an opportunity to knock off the tax bill, but they think it might make Republicans think twice. It's

the Trump miracle versus the nullification project. The words of Steve Bannon, The words of Steve Bannon on what is happening in Alabama? What's his what's his role? What's his role here? Terry? Uh? In other than uh, let's see sort of Adrian provocateur h slash uh informal strategist. Although I think that that that's probably a little overblown uh slash. You know, bringing some money into the campaign. Is he splitting the Republican Party? I don't think so. I don't.

I really don't think so at all. I think I think a lot of that's overblown. Frankly, why do you think that because a lot of people think that he could possibly do what Nigel Farach did in the United Kingdom, which is drive a wedge between the between the center right party in this case, drive a wedge into the Republican Party. Why can Steve Bannon not do what Nigel Farage did in the UK? Um Well, and then I

think that's a smart question. The I think the answer to that is what you've got is you've got a few races, and I mean a few, the Alabama Race, the race uh, couple, a couple of others where the Arizona Race where there was a situation where the incumbent was already getting way out of step with the state party. Bannon is taking that those races, and I think trying to project more into that. But as far as the fundamental rift in the party, I don't see it. Okay.

Can I just say the tweet of the days this early in the morning, just Scarborough kills it over at MSNBC, say, hey, Bannon, you only went to Harvard because you couldn't get into Alabama rolled damn tide. You know this this back and forth they've had the last forty eight hours, that's just you know, I just that's the spirit of this, you know, John, that's the trenches debate, the cultural debate that we're seeing

within this election. In this trenches debate, there is a serious discussion about the morals of the goop at this point, given the accusations around more in alabamatary, how does the president tread this really delicate line between the moral issues that are dominating this particular election and the idea that actually just got a really slim majority in the Senate. Againethan done. Well, there's two There's there's two ways that

gets addressed. One is that the Republicans and the Senate, should More win, have to have to engage and uh and investigate more on their own and figure out what they want to do. They've got an awful lot of of leeway to do that. Number one. Number two, Uh, you know, Democrats have frankly helped here. This is not a republican problem. This is a political problem. It's a it's a political ruling class problem, and of course it

goes far beyond politics. Uh So, what will end up happening is is that as the Democrats seek to make this a republican problem, what will end up happening is that Republicans will remind everybody that this is a problem. Uh, regardless of political affiliate. Your your claim, Terry Haynes with this ever corps I s I your your a claim is just a very calm Washington. The pragmatic. It's like, we're pragmatic. This is the legislation. We've got to get

it through. What is the pragmatic view in this conference now on tax cuts on salt, on state and local taxes? What's the pragmatic discussion going on right now? The pragmatic discussion is really this the uh that that you have what I call the bones of the bill, corporate tax rate, keeping it under the trillion and a half dollar deficit cap, uh, tweaking the individual rates, that sort of thing. Uh. Every

you know, you've got to keep that. Everything else is to pay for every other discussion about every other pay for means you gotta pay for it, You gotta you gotta pay for it. Do you see evidence of that? Because I don't see evidence of that as a ten pm last night, that it's not being paid for it. How are we gonna pay? How are we going to pay for it? To close a nut to one point five trillion. Well, both both bills have pay for us

that get you within that. So it's a question of whether it's it's really a question of which one you pick from a from a fairly long laundry list. But nobody should be surprised to find that vast majority of the ending the salt deduction states in all that sort of stuff, because my conversation with Trump administration officials is simple. They seem to be modestly aware of how unpopular this legislation is. How do how does your Washington respond to

the polling of this text cut bill. What they think is that six months, nine months from now, when the rubber starts meeting the road with the mid terms, Uh, they get credit for revivifying the economy. And the opinion that what's your opinion of that opinion? Well, what we see economically, and we wrote about this yesterday, is that we see a thirty BIPs increase so that you get our median growth is to seven to eight something like

that for next year. That's a modest uptick, but it's uh, but it will help and and and politically, you also get to take your Republicans. You also get to take credit for every good thing that's happened between now and when the effects of the bill start uh start bringing Tom. We spent much of the last two years talking about the two Americas and the headline GDP number might increase, But I wonder whether this really helps the Second America.

And whilst they might be able to go around next year saying that GDP is up, we promised you three pc and GDP has a three handle, I wonder what wage growth looks like in the Midwest and whether they've really moved the dial there, because that's going to be the real test of this administration, the promise to address the economic issues of the Second America outside of the metropolitan and leader New York City, etcetera, to help them.

UM and I wonder whether this tax plan what he does that Terry's thrilled that he's with us right now. Brian Reynolds can of court Jenuity, you know Tony Dwyer giving wisdom there. Brian has done terrific research and something very important and that is shared by back Dynamics. Brian, give us the quick summary here what you've learned in

your year in study of share by backs. Well, buy backs have been the main engine for this bull market since two thousand nine, and they're continuing to grow when they're actually accelerating a little bit. In fact, just yesterday Bowling announced an eighteen billions dollars buyback that comes on the heels of home depots fifteen billions dollars buy back last week. It is stunning the disparity. You've got a chart, folks, is too complicated even the discuss, but it's got like

eight lines and then there's buy backs. I mean, are you willing to say we're getting these big double digit returns just because of buybacks? Yes? And well, letrot you refer to was really complex because it looks at every major participant in the stock market. I have another chart that's really simple towards the end of that column, which just compares buy backs to all investors combined. And what that shows is that investors have done very little point

to point during this bull market. What do they say, What does this say about tax cuts though? And what's going to happen with the money once they fall to the bottom line? Well, these buy backs are fueled by debt. The debt is fueled by our nation's public pensions, who have become the dominant global investor, tax performer is going to do nothing in terms of changing the demand for debt, and so what it may do is that if it

makes companies issue less death then there's two outcomes. One is that bond fields decline or two there's more shadow banking to fill that void. Either way, that results in more money for share buybacks going forward for the next few years. So the bullmarket rolls on. Is that basically the conclusion then, Brian, Yes, and there's a chance that may accelerate. So you've expected to mount up. Is that what you're looking for, the classic top, that's just a

mount up to infinity and then not quite beyond rollover aggressively. Well, the amount of money going into public pension is increasing, so the melt up may come after two. But don't forget this is just a credit cycle. Credit cycles always end, and they always end badly. I don't think it's going to end for a while, but when it does end, we're likely going to have another financial disaster on our hands. But in the meantime, all this financial engineering results in

higher stock prices. Brian, what's going to lead to a financial disaster? Though? The banks, the CEOs would say we're really well capitalized. In fact, what we'd like to see is less regulation, not more. Please stop. The banks really well capitalized. Can they handle any kind of big time correction in the ext market because the stress tests would say yes, Well, the banks are going to be fine because they don't own any of this stuff. In the last two cycles, in the nineteen nineties and in the

subprime cycle, the banks owned a lot of it. Now we're having the most intense creditable woever without the banks participating. That tells you the other participants, the public pensions and the insurance companies, are pushing the accelerator harder than ever. So the next financial crisis likely won't impact the banks the way the last one did, but it will impact other sectors on the downside. So let's explore this, Brian, what's the response of the government to a financial crisis

that we're not anticipating next year. It might not happen next year, the year after that, but eventually, what does the response look like. Well, the crisis may not happen until further out than that, and the crisis response will be pretty much the same. The Fed will ease and it will not have any impact. Remember, the FED eased all the way down from late two thousand seven through two thousand nine. They ease from two thousands to two

thousand and three. In need occasion, get it stopped to decline, because once you get a snowball, a snowball decline and credit. It continues until the price of credit goes below its liquidation value. In other words, crom bonds going to twelve cents g GM and Chrysler bonds going to eighteen cents.

Once you hit that point where a bankruptcy judge gives creditors more than the bonds are worth, that's what stops the crisis, not the FED grant to catch out the Brian Reynolds on some really interesting research on his bi exton where we might be in five to ten years and who know its kind of call genus asset class strategists.

This is a joy, in an important joy. They're rowers out of Harvard, which I've thought has always been grossly unfair to their accomplishments at Greenwich Country Day and Brunswick in and onto Harvard where they actually took a Really I mean, can anybody, how can anybody take a light course at Harvard? Is their basket weaving at Harvard. There's actually a couple of rocks for Jacks was geology, of course, but yeah, most of them pretty hard, yeah, would be.

You can know it's the Winkle Losses twins are with us right now, which barely describes again their success with bitcoin, which is the topic of the day. I can talk about all sorts of other things, but Cameron, we start with with where you are right now with Cebo And see, I mean you've picked one of the exchanges and what are you exactly going to do for them? So, uh, the cebos Bitcoin futures contract XPT futures is a cash

shuttle contracts. So in order they need to price that contract, and so Gemini will be providing the price that contract will settle to Gemini's four pm daily auction. I'm gonna cut right to the chase. You guys have had a huge success with this. You've got to be the greatest sale candidate in investment. Right now are people knocking on the door major firms saying we'd love to take over Gemini.

So we're seeing both interests obviously from the customer side. Um, we're seeing a lot of the largest market makers in the world start onboarding on our platform, and we're also seeing a lot of inbound investment interest. Um so absolutely yes. I mean the the the interest here is extraordinary to me.

It goes back to you know, within your family and your father was one of the grandfather uh was it acclaimed actuary blah blah blah, But you're you grew up in a math household with a terrific rigor with your father being one of the leading actuaries in the nation. Give me the underlying mathematical architecture. Tyler, of the futures market to cash right now? Is it a normal futures

market to cash? You know, I don't know. I'm not an expert on that type of structure, but the I can tell you that the futures have been off for thirty six hours right now, the first ever big point futures. And I remember other ones they start out slow. Just this completely normal. Actually this started out faster than the VIX which is a well traded contract on the CBO as well. Um so about seventy eighty million dollars notional

traded in the first Asia US session. Um, but you know, the emails were getting from the huge prop trading firms in Chicago that are trading this are about to trade. This was you know, massive congratulations, double exclamation points, you know, huge success. So for a launch, Um we you know,

I said Gemini. Um, the folks at the CBO and also the other market participants, UM, we're all like, you know, jumping and excited for this to our global audience and across this nation and particularly in Chicago and serious sex. I'm Channel one nineteen Cameron entire wrinkle us with us right now with Gemini on this day, the second third day, almost third day of trading on uh A bitcoin camera. When I look at this market and I look at the doubt involved, you guys had a huge confidence of this.

People made funny. Come on, people were laughing all these guys come last week, first day, laugh at you. When did you know it was for real? Don't give me this malark. You know it was real right away. When did it click in that bitcoin could be a tradeable, fungible product. Well, I think part of that was when

we got a trust company license in New York. Um, Gemini is a New York trust company, so we have the same licensing structure that State Street in Bank of New York started with over two hundred years ago, so we literally have one of the oldest banking licenses in the world married with one of the newest technologies in the world. So I think that was really a watershed moment where we could say, hey, we're now building regulated infrastructure in this market with the same type of license

structure that UM. Some of the largest financial institutions entrusted in the world have UM. And then, as like an operator of the business, you see the types of customers that are onboarded, and you see the type of customers that we're dealing with on a day to day basis. It definitely started out as more of a retail market or high net worth partners or you know, people who got excited about the technology but couldn't necessarily sell it

to their LPs, and that has completely changed. The conversation is completely different. Just to be clear, if you saw a list of names of our client US and Gemini is a is the world's most regulated exchange custodian to buy and sell and store bitcoin and ether. In fact, Andrew Governor Governor Andrew Cuomo gave the press release when we got the approval to UM to support Ether which

is another digital asset. But if you looked at the client list of companies individuals who are on Gemini and trading, the biggest names in the head fund industry, the biggest market makers, high frequency traders, proper checkers, down to the everyday person. Okay, let's compare to wheat is a tangible product. Bitcoin is clearly an intangible product. It has a value, there's no question about that. Is your future Tyler and Cameron Winklevoss, it's your future linked to the volatility of

it of bitcoin? Is it linked to a price drop? I mean, do you care if the price goes from sixteen thousand down to eleven thousand right now? You still make money? Right well? As an issue, so the answer is um are we're tied to all of it. So we are long term UM owners and holders of bitcoin and ether um. But with Gemini UM we're tied to basically three lines of business exchange trading fees, market data fees and custodial. That tells me you don't care what

the price does. Gemini doesn't. Gemini is agnostic and the futures price will follow the spot price. And and quite frankly, as you mentioned, earlier. There are a lot of naysayers. Um, there's plenty of people going on and saying, oh, bitcoins a bubble this or that, and hey, we've been working really hard to make this future's contract, um, to bring it live so that those people can cut their money

where their mouth is. If you touch Ice just as one example of of one major major international player and exchanges and in volume and transactions, if you talk to Ice just as one example, No, I'm I'm referring more towards the investors and or people who are saying, oh bitcoin, you know, we don't agree or think there's long term value like Jamie there, Um, so we you know the

Future's contract. The great thing about is you can now actually short bitcoin and so that will increase price discovery and long term probably reduced volatility because it has not been a two sided market. What would you say, Tyler to Jamie Diamond is he looks at JP Morgan, who have they have They have a bank responsibility to study this market, to study this speculation and hedging. What would you say to Mr Diamond this morning? Well, first said say, um,

talk is cheap. You should put your money where your mouth is. Well, he is he's got some people at JP Morgan looking at this right well, he thinks that he personally thinks that, um, you know, bitcoins of fraud.

He would fire anybody in his firm that traded it. Um. So if he thinks it's a fraud, he should go on the c bow and in short bitcoin contracts, because that's what I would do, right if I if I thought a company was inflated or cooking their books or something, I wouldn't just go on and throw at hattums at it. I would actually go short it. And so now we've given him the opportunity to do it. I agree that, um, you know, his bank should look at it, and I

imagine they are okay. But with Cameron, did you take exten With Martin Feldstine? I did? What was it like sitting in Necktien with Martin Feldstine? You're seventeen, eighteen years old. You're dumb as what I mean? You have your claim in high school and all that. How dumb did you feel in neck ten there's definitely points. Martin Feldstine was on the show the other day. He's a little bit

skeptical about bigcoin. What would you say to your professor freshman year at Harvard about the value, the economic intrinsic value of this currency want to be, Yeah, it's a great question. I actually did talk to us, so we went. We did an NBA at Oxford, and I did talk to sent some emails to two of my professors years ago, and I should actually probably dig those up at this point and kind of see what will give some names we like some dirt man, I have to I had

you didn't go? Did you go to his robof on your board? No? No, that would be very interesting with a cursor, I'm su which is my book. So I think, what what what? Most probably you know Mr Feld's Professor Feldstein, or or academics in the space would would look at bitcoin and say where's the intrinsic value? And most people say, well, gold has intrinsic value because you know, jewelry or this, it's shining in this, and it's a store of value.

And and that is true to some extent um maybe ten to fifteen percent of gold value could be attributed to industrial purposes or jewelry and things like that UM, But in reality, gold is simply a network. We all agree that it has value UM, and it's been around for thousands of years. But if you look at the properties of gold that make gold gold, scarcity, fungibility, divisibility, portability, Bitcoin equals or surpasses it in each category. For example,

gold is scarce. Bitcoin is actually fixed. In terms of portability, Bitcoin is like you can send bitcoin like you can send an email. It's pretty hard to to to send a bar of gold. And and going back to of the larger intrinsic value thing, gold has zero intrinsic value. To Robinson Crusoe when he's shipwrecked on an island, he'd much prefer to have a bottle of water or a sandwich. So I think the intrinsic value arguments of gold are

way overstated. Um. And if you talk to any millennial or younger person, they don't want hardware, they want software. They do not want to do what you're saying. This is a generational thing. It's definitely, that's definitely part of It's how your worst nightmare has got to be the government's. China looked at this, Stereus said, enough Japan huge, South Korea huge? Can government be your friend or enemy as you build out Gemini? Oh we we I mean we

definitely think it's our friend. UM in terms of you know that if we went out to build a bank that had nothing to do with bitcoin, we would never expect not to become licensed and have any money laundering and k y C type regulations. Um, we're actually in. We're a New York trust company regulated by the New York UM State Department of Finential Services, and it took

us about two years to get that license. And that license allows us to get banking partners, that allows us to attract hedge funds and actually allows us to do this business relationship with the Sea Bows. So we think government thoughtful regulation is completely the path forward, and that's what we've done with Jemina. I believe it there. Cameron Tyler Winkles, congratulations. A lot of people doubted you been very very interesting, to say the least on bitcoin. Uh

the Vinkal Bosses. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keane before the podcast, you can always catch us worldwide. I'm Bloomberg Radio