24 Burst results for "Joe Wiesenthal"
Crypto Critics' Corner
A highlight from All-In? We're Out: Why the All-In Podcast is Bad for America
"Welcome back everyone, I am Cas PNC, I'm joined as usual by my partner in crime, Mr. Bennett Tomlin. How are you today? Well I was just able to get out of a position in some unvested tokens I wasn't really a fan of anymore, so I'm feeling pretty good all things considered. That's awesome news man, I hope it wasn't Cas coin. We are, he's bringing up that topic because we're talking about possibly four of my least favorite people in the entire world today. We are talking about the hosts of the All In Podcast. Now if you're unfamiliar with the All In Podcast, god bless you. You probably just want to turn this off and skip it because you know what, you should never ever listen to them and just move on with your life. However I think a lot of people, especially people who listen to our show, are likely familiar with the All In Podcast and the hosts who are, let's go through them one by one, Chamath Palihapedia, Jason Calacanis, David Sacks, and David Friedberg. Now I decided that we needed to do an episode about these gentlemen because Chamath has been an asshole on Twitter a lot lately, and that's it. He basically, he triggered me to force Bennett to discuss these fellows. So I'm going to go ahead and just jump into that, which was he tweeted at this guy who said, hey man, I'm not using exacts here, but this guy basically said, hey man, how's it feel to be a billionaire after having made all this money off the backs of retail investors and scammed a bunch of people with your dumbass SPACs? SPACs are Special Purpose Acquisition Companies, that's what it stands for. It was this, I guess it's still going on kind of, but it was a bit of a fad over the time, onto stock exchanges, whether it was the, you know, New York Stock Exchange or NASDAQ or whatever. And Chamath was one of the people doing it all the time, and almost all of them had basically just done terrible. So this person asked Chamath this question and Chamath's response was, I'm in the arena, as though he's a goddamn gladiator in Roman times, which is just unreal. Like, we don't know at all, like comparing any of our existences to what it was like for gladiators in the arena, especially a billionaire who's just investing in shitcoins and fucking, and crappy investments, like what an unreal statement. You're not allowed to say you're a man in the arena until you lead the Rough Riders in the Spanish American War, everyone knows the rules. I even read a substack this past week where someone who notoriously sides with venture capitalists, like a journalist who basically writes for venture capitalists, even he was like, Chamath, what the fuck, man, like got to apologize for this. Like you, you are celebrating, you're celebrating shitting on retail investors. You're celebrating stealing money from the everyman and you're owning it. Like you're owning it, saying it's fine and suggesting that like you are the gladiator for destroying the common man. And it's just like such a weird flex. Well, and just to kind of add on to that, did you realize just how much money he made from some of his specs? Oh, it's almost a billion dollars. Yeah, like he sold his stake in Virgin Galactic for $213 million. It's now down like 95 percent from peak or something like that. Clover, he had an original $25 ,000 investment that he sold for $290 million. And it's also down like 94 percent from peak. He made a ton of money on these companies, which the market seems to have determined as soon as he dumped his stakes were effectively valueless. And I know he was involved in SoFi or whatever, too, which is doing better than these ones. But it struck me at just how massive those numbers are. Do you remember during the GameStop mess when Robinhood closed down their trading for a little bit, he sent a bunch of people over to SoFi saying like, Robinhood is selling your order flow to Citadel Securities. You should come trade it SoFi instead. And of course, SoFi was selling all their users order flow to market making firms. Anything for cash. So I fucking fly home from Italy. From Italy. Get back in the arena. At 35 ,000 feet, I decide to troll the mids. We'll talk about that later. But anyways, sipping a beautifully chilled white burgundy. So that was his first kind of strike recently, recent strike. But then he did something that really fucking pissed me off. And this is you got to go on this show. You got to join Joe Wiesenthal and Tracey Alloway, who host the Odd Lots podcast, which if you're not subscribed to, fantastic podcast, go listen to it. It's really like if you're interested in any random finance topic, they probably covered it and you should find that episode and listen to them because they're super informative and fantastic. Someone said, because Joe posted, Joe posted on Twitter and said, one of Chamath's SPACs had gone down 93 % since he had shilled it. And someone said, oh, and someone, yeah. And someone said, okay, so Chamath, are you going to go on the Odd Lots podcast? And he said, why would I go on a podcast no one listens to? Which is just like, dude, not only is it obviously not true, this is one of the most listened to financial podcasts in America, in the world, but also is just so cringe to have that as your response. It's so like, I'm rubber, you're glue kind of fucking kitty bullshit that it incensed me enough to be like, we got to talk about these guys. I fucking hate these guys. So that's where we are. Where do you want to start with these fellows? Because there's a lot, there's a lot here. It's almost overwhelming to go over some of the details about these things. So I think we kind of just need to start a little bit with some of their backgrounds, right? David Sacks and Jason Calacanis are both members of the PayPal mafia, right? They were executives involved in various ways with PayPal. And when that was initially bought out, this group, including Peter Thiel, Elon Musk, Reid Hoffman, and a bunch of these other folks became very important in Silicon Valley because they were rich. And that's how you become important in Silicon Valley. Since then, they have two varying degrees and slightly different depending on which member of the mafia you're talking about, grown in self -importance to an almost preposterous degree. And what I think is especially striking about many members of the PayPal mafia is they have not shied away from using their money to get involved in other things, especially politics and other societal issues. For David Sacks and Peter Thiel, this dates back to the book of rape apologia they wrote in college. For Jason Calacanis, he's involved in a variety of nonsense political movements. David Sacks is contributing to a bunch of idiots in various political races that he wants to support. And broadly, many of these individuals have shared opinions that range from the stupid to the abhorrent throughout their entire careers with extra consideration given to these meaningless thoughts because of their wealth. And I think that's kind of really the issue with them is that they are given consideration for stupid objectively things because they are objectively wealthy people. Yeah, it's kind of a double edged sword here, actually, because I think that in some sense, these guys represent to retail and, you know, plebes like us, these guys represent, you know, these are the wealthy, these are the wealthy people, they're speaking on behalf of the wealthy people. And then on the other end of that, I think it's funny because it's not like, not that I think venture capitalists in general kind of suck. But the truth is that not all venture capitalists suck, and not everyone in Silicon Valley sucks. However, these guys, by being the loudest, most obnoxious people coming out of venture capital and coming out of Silicon Valley, they become the voice of all the venture capitalists. And so now they represent those people, whether they like it or not. And so here it is, it's this double edged sword. On one hand, you have retail going, oh, these guys speak for all venture capitalists. And then on the other, you have venture capitalists going like, I wish these guys didn't speak for us, but they do. And I think the other thing is just how much of their shtick is like just so clearly a performance, right? Like we're talking about billionaires and centimillionaires. I'm not sure if they've all hit the billion mark, Friedberg especially. But these are incredibly wealthy individuals. And in their last podcast episode, I think it was the last one, they spent 40 minutes reacting to the song Rich Men North of Richmond. And because of this, the top 20 percent, the top 5 percent have acquired an outsized amount of the assets and outsized amount of the income, as we all know and have all benefited from. And the vast majority of Americans that have been working, I have a question for Friedberg. Friedberg, do you think that we should implement policies to change the lines on this graph? That's exactly what I was going to ask. Yeah, right. Which is them.
Bloomberg Intelligence
Fresh update on "joe wiesenthal" discussed on Bloomberg Intelligence
"Fed doesn't appreciate perhaps that they can be sustained. The dots are coming up. talk So to us about that risk that the Fed is still sort of pessimistic about inflation dynamics. it's sort of engaged in a modest tightening still by raising those out dots and in a Drop of a time when the recession risk is ticking up. It still is a very healthy economy. I mean, the fact that the corporate side of the world has gotten more optimistic is probably helps labor market in terms of preventing further layoffs. But I think, you know, if you're extrapolating off of the Q3 GDP tracking, then you're probably going to see that growth has ebbed and flowed. You know, what I see is if I look at the consumer, consumer spending sort of dropped to trend early last year, and then the quarterly numbers bounce up and down just depending on where that spending falls and kind of ebbs and flows. So, you know, whatever Q3 is tracking, that's not the run rate right now. We're in for some slower patches of data. Coming up next on Odd Lots, we take a closer look at policy lags and the impact of U .S. rate hikes. Which sectors could be most impacted? How worried should we be about commercial real estate? You're listening to Odd Lots on Bloomberg Radio. do you think we're going I'm Tracy Alloway, and I'm Joe Wiesenthal, and this is Bloomberg. you heard the phrase more than 1 1200 international firms have already discovered that Northern Ireland is the ideal location for business action. We offer unique Tara free access to GB and EU markets as well as a talented workforce, free company specific training, highly competitive costs and world class infrastructure. There's a also high standard of living and business friendly support. That's
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"Thoughts on Bloomberg radio. I'm traci alloy. And I'm Joe wiesenthal. And today we are talking semiconductors for artificial intelligence. What makes them good for machine learning and who is making the cutting edge ones right now, we are speaking with Stacy Raskin, Bernstein, semiconductor analyst. Can you draw directly the connection between the software and the hardware here? Because I think at this point, probably everyone listening has tried chat GPT, and you're used to seeing it as a sort of, you know, it's an interface on the Internet and you type stuff into it and it spits something out. But where do the semiconductors actually come in when we're talking about crunching these enormous datasets and what makes you kind of touched on this a little bit with Nvidia, but what makes a semiconductor better at doing AI versus more traditional computational processes? Yeah, yeah, you bet. So to answer that second question, I think AI is really much more around parallel processing and in particular thing, it's this kind of map matrix map. It's a single class of calculations that these things do very, very efficiently and do very, very well. And they do them much more efficiently than a CPU that performs a little more serially versus parallel. You just couldn't run this stuff on CPUs. But don't get me wrong, you do some of we've been talking about inference on large language models. There's all kinds of inference, inference workloads range from very simplistic to very, very complex. It might cat recognition example is very simplistic. Something like this or something like autonomous driving, that is an inference activity, but it is a hugely computationally intense inference activity. And so there's still a lot of inference today that actually happens. In fact, most inference today actually happens on CPUs. But I say the types of things that you're trying to do are getting more and more complex. And CPUs are getting less and less viable for that for that kind of that kind of math. And so that's kind of the difference between GPUs and other types of parallel offerings versus like a CPU. I should say, by the way, GPU is not the only way to do this. Google, for example, has their own AI chips. They call them a TPU tensor processing unit. One thing I really like about talking to Stacy two things is a, I think he comes up with better versions of our questions that we do, whichever. One thing about this question is just ask. He's always like, all right, that's a good question, but let me actually reframe the question to get a better response. So I appreciate that. And he also anticipates because I literally like on my computer right now, I had Google Cloud tensor processing unit, because that was my next question. And also in part because I think the information reported that Microsoft is also so why don't you talk to us about that, these other and what I think is actually getting your thoughts on this is yeah, yeah. Yeah, you bet. So Google, this is not a new Google has been doing their own chips for 7 or 8 years. It is not new. But they have what they call TPU and they use it extensively for their own internal workloads. Absolutely. Amazon has their own chips. They have a training chip that's called hysterically. It's called cranium. They have an inference chip. It's called interferencia. Microsoft apparently is working on their own. My feeling is every hyperscale is working on their own, particularly for their own internal workloads. And that is an area where we talk about Nvidia software mote, like Google doesn't need Nvidia software mode. They're not running cuda. They're just running TensorFlow. And doing their thing. They don't need cuda. Anything, however, that is facing an end customer like an enterprise like end cost. We're like on a public cloud like a customer going to AWS and renting compute power that tends to be GPUs because customers don't have Google's sophistication. They really do need the software ecosystem that that's built around the stage. And so for example, I can go to Google Cloud. I can actually rent a TPU instance. It can be done. Nobody really does it. And actually, if you look how their price typically is actually more expensive, I'm usually even than have the way that Google's pricing at GPUs on Google Cloud. It's similar for Amazon and others. And so I do think that all the hyperscalers are working on their own and there is a certain certainly a place for that, especially for their own internal workloads. Anything that's facing a customer that Nvidia GPU ecosystem is really kind of. So actually, these just to clarify because that point is really interesting that for like, if again, Tracy and I want to launch odd launch GPT, part of the issue would be not necessarily the hardware, the silicon, but actually that Nvidia's software suite built around it would make it much easier for us to sort of start and use on Nvidia for training our model. Yeah, yes, it would. And they built a lot of it's funny. You can go listen to Nvidia's announcements in their analyst days and things. And there's much of a software as they are about hardware. So not only have they continue to extend the basic coup D ecosystem, they layered all kinds of other application specific things on top of it. So they got what they call rapids, which is for enterprise machine learning. They've got a library package called isaacs, which is for automation and robotics. They've got a package called Clara, which is specifically for medical imaging and diagnostics. They've got something called cu quantum, which is actually for quantum computer simulations. They've got something for drug discovery. So they're layering all these things on top. Depending on your application, they've got internal teams that are working on this. It's not just throwing the software out there. They've got people there that can actually help you work and come along with it. They've been doing other things easier. So they actually just launched a cloud service. And this is what Google and Oracle and Google and Microsoft where you can almost they'll do like a fully provisioned Nvidia AI supercomputer in the cloud. So they sell these AI servers and they can cost hundreds of thousands of dollars a piece. If you want, now you can just go to Oracle cloud or Google Cloud or whatever, and you can sort of rent a fully provisioned Nvidia supercomputer sitting in the cloud that they'll all you got to do is access it right through a web browser. This was going to be a super easy. This was going to be my next question actually, because I take the point about software, but what do the AI supercomputers actually look like nowadays? Like, is there a physical thing in a giant data center somewhere? Oh yeah, they mostly cloud based or what does this look like? Walk us through the Nvidia cells Nvidia sell something they call the DGX. It's a box. I mean, I don't know. When is it two feet? 500 with the dimensions are two peaked by two feet or something like that. It's got 8 GPUs. And two CPUs and a bunch of memory and a bunch of networking. They've got their own, they bought a company called melon. So a while back that the networking hardware. So it's got a bunch of proprietary network because that's something that we haven't talked about. It's not just enough to have a computer that could compute these models are so big, they don't fit on a single GPU. So you have to be able to network all this stuff together. Right? And so they've got networking and they have this box. And then you can stack a whole bunch of boxes together like Nvidia has their own internal supercomputer. It's on the it's fairly high on the top 500 list they call it Celine. It's a bunch of these DGX servers that they make all just like snack together effectively. And they sell for the older generation, their prior generation was called ampere and that box hope for a $199,000. I don't believe they've released pricing on the hopper version, but I know for the hopper GPU, it costs two to three X, what amateur product would end for your cost? The prior generation. So a separate question to me, which is, okay, there's the price and it exists and you could go to theoretically go use Google's tensor based cloud or is it available? Or is it because I sort of get the impression
Bloomberg Intelligence
Fresh update on "joe wiesenthal" discussed on Bloomberg Intelligence
"Bloomberg News. Mike Wirth, Chevron Chairman and CEO joins us now. We talk to GM CEO and chair Mary Boggs wide ranging conversations with fortune 500 CEO big name investors and business leaders around the world joining us on the president of the European Central Bank, Christine Lagarde Bloomberg talks subscribe today on Apple Spotify and anywhere you get your podcasts Bloomberg radio context changes everything. Are you a wirehouse advisor that's looking to break away? Commonwealth Financial Network can help you take control of your career and build your business on your terms, your clients, your strategy, your time. Unleash your entrepreneurial spirit and choose a growth path that's right for you. Own your future with Commonwealth. To learn more, visit Commonwealth .com Commonwealth Financial Network member Finn Recipic, a registered investment Whether you're an in house counsel or in private practice, Bloomberg Law gives you the edge with the latest in AI powered legal analytics, business insights and workflow tools With guidance from our experts, you'll grasp the latest trends in the legal industry, helping you achieve better results for the practice of law, the business of law, the future of law. difference The is Bloomberg Law. Learn more at Bloomberg Law dot com. You are listening to the Odd Lots podcast on Bloomberg Radio. I'm Joe Wiesenthal and I'm Tracey Alloway. And on today's show, we're discussing monetary policy lags. When will we feel the full effect of the rate hike? So for more on this topic, we're joined by Julia Coronado, founder, CEO and president of Macro Policy Perspectives. You know, one other thing
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"Davidson Kate, thanks so much for the reporting on the insights. Thanks. I'm Joe Matthew along with Kayleigh lynes who got breaking news coming from Florida. He may be overseas but news on the desantis campaign in a conversation with the stalwart yet. Joe wiesenthal is index. This is Bloomberg. Bloomberg radio on demand and in your podcast feed. On the latest edition of the tape podcast, a conversation with Sylvia jablonski of defiance ETFs. What's your view when you start seeing some of these regional banks really face some stress here? Interestingly enough, it actually feels like it is a little more common on every day, but it's happening in a couple of days this year. So I think what it does is it puts some strain on the confidence of investors essentially about that regional banking system and that becomes problematic, right? Because if all of the funds are pulled from regional banks, we can assume that they go elsewhere. So find the money phase in the system. But you do have this major part of the financial sector on shaky ground. And I think if that happens, you know, these are banks that classically led to Main Street and that's a major part of our GDP and our economy. So there is some fear that these things that they keep piling up, you know, would be inherently pretty bad for the banking banking system and it would make investors worry about the stability of larger banks eventually. Sylvia, how concerned are you about in the broader economy if there is some more stress to this banking system that maybe not a credit crunch, but certainly maybe tightening of credit out there such that it might impact the economy. Are you factoring that into your outlook? I think it depends a lot on what the fed plans to do, I think. So we'll certainly have credit tightening and we'll certainly have less liquidity in the system. And then on top of that, you'll have sort of even less liquidity in the system because investors will kind of pull out in the market and if it gets worse, think that, okay, perhaps there are some systemic risk. I don't think there is broad based risk to the entire banking system, as you said, these are a handful of players, but nevertheless, you know, these things haven't happened in the U.S. since 2008. They
Bloomberg Intelligence
Fresh update on "joe wiesenthal" discussed on Bloomberg Intelligence
"Accepted at feedingamerica .org slash coronavirus. Brought to you by the Ad Council and Feeding America. 200 food banks strong. This is Odd Lots on Bloomberg Radio. I'm Joe Wiesenthal. And I'm Tracey Holloway. And we are looking at the question of monetary policy lags and whether we're still going to get hit from the massive spike in the fed funds rate over the last year and a half. So our guest is Julia Coronado of Macro Policy Perspectives and the University of Texas. Can we get Jackson Hole -ish for a moment? But you know, going back to the way monetary policy is supposed to work, when you hike interest rates, you are supposed to be deterring some speculative policy activity. So in a sense, how expected is this development for policy makers? I mean, you were in Wyoming, you were talking to loads of people. When you talk to them about what's going on in the Sun Belt, construction may be slowing in places like Austin. What do they say and what do they think?
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"Radio. I'm Joe wiesenthal. And I'm traci alloy. And on today's show we're discussing is the golden age of being a landlord coming to an end is the interest rate environment and changing macro and political situation going to make harder to make a profit. For more on the topic, we're joined by Ben Carlos typhon, a landlord, and the CEO of. Can you talk a little bit more about what you see changing now other than the higher interest rates? What is the mix that is going to pressure the rental business? Sure. So we have this demographic decisions, a demographic driven policy to students that were made in the mid to late 20th century are now coming home to roost. You have this growing class of renters, you have increasing rent burdens, evictions, or destroying lives, just like foreclosures are. And I think most crucially, this crisis is now including people from that very powerful political block. And so far as people of my generation in our generation, really, who would have been homeowners 30 years ago, are now not going to be homeowners, or if they are, they're going to pay much more for it and by become homeowners much later in life and view it more as a housing cost stability vehicle, there's this joke about the 30 year mortgage being homeowner rent control. And I think that sort of logic is now seeping into the homeowner of ship market and it's becoming less of a slowly becoming a less gambling market. So you now have this big demographic of people that are concerned with rental costs. So this seems really key, which is that politicians have this idea of what a good voter is. What a good citizen is like. And for years, that person was a homeowner. Right. And now the basic idea is that there is becoming a meaningful voting politically influential block that is much more likely today to be a tenant than a homeowner than they were 30 years ago. And so the political wounds are over time. There's like, oh, the voters, these days, ideal voter is not necessarily a homeowner. Right. And it's also, you know, that sort of new rent or block is teaming up with the old renter block, because it's not like we didn't have renters, and they weren't organized before. It's just that politicians could sort of ignore them because they are of a marginalized background or because they are perceived not vote as much or whatever reason they come up with. So this is manifesting itself in two and a half different ways. One is the yandy movement, which for those who are not familiar is the yes in my backyard movement, which advocates for building more housing, particularly in high demand areas, arguably it's a successor movement to the fair housing movement from the late 20th century. I was one of the founders of the biggest group that does this in New York City called open New York. And in parallel, we have a resurgence of the rent regulation movement and sort of brought tenant protection movement broadly. And I think it's important to keep in mind that America is pretty unique in being a developed country and having vastly unregulated mental market. We have an unusually low homeownership rate contrary to what people think. But unlike countries with similarly low homeownership rates, we typically don't have brand control. So like Germany has comparably low homeownership rates, they have rent controls. France has comparably low homeownership rates, data is reinstituted. So we've seen these resurgence of rent regulation. And even not just in places like New York and California, but in Minnesota in even in Orlando, they had something on the ballot, this last year, and I think this is a good segue for both of these into the consequences of institutionalization. Because institutionalization has created real estate entities that are much better targets of organizing from political perspectives. They might not be Blackstone might not be as vulnerable as your mom pop landlord for organizing individual building, but in terms of like getting policy passed and creating a political coalition, it's much more compelling. This is interesting, you know, like you should labor people talk about like actually it's kind of good that Amazon is becoming a huge employer because if you can get unions into Amazon warehouses, you've radically changed the American labor market or at least you have one identifiable entity to target. And so then if you had these big institutional landlords, then you have right, I hadn't thought about that. Which is we have a thing to organize again. It's also already sort of happening because you hear so much nowadays about institutional investors buying up single-family houses for rent or for flipping purposes. Right. And it's not like single-family landlords didn't exist before. Right. But now we're talking about it because it's Wall Street. And the third, I'll get into the third one in a moment, but this is also a function of technology because the same similar technologies that made it easier for institutions to be created and organized themselves are now making it easier to organize among tenants. If a bunch of people in different buildings all over the city had under different we're living under the same landlord, how are they going to find each other? But now there's all this public data. There's the Internet. There's all different ways for people to get together and build coalitions that didn't exist before. You mentioned the MBA movement. We talked about some of this on a recent episode and you're a part of an organization. You know, I
Bloomberg Intelligence
Fresh update on "joe wiesenthal" discussed on Bloomberg Intelligence
"Here. A lot of these developments, you know, the Google and the meta buildings are an exception, but there are a lot of developments around town that are built on spec. And is it broader than Austin? Yes, there's a number of cities. Austin is by far got the biggest overhang, but Dallas has a pretty overhang, big Denver, Boise, there are a number of the Sunbelt boomtowns, the COVID boomtowns in the West where you can build where it's relatively more straightforward to get from concept to groundbreaking. I would say it is a Sunbelt slash COVID boomtown phenomenon, mostly in the West and the South and the Southeast. Coming up next, we delve deeper into the state of the US economy. Why didn't we see a recession in 2023 as many people expected? Could we one see in 2024 as rate hikes start to bite? That is up next on All Thoughts right here on Bloomberg Radio. Also, make sure to subscribe to the All Thoughts podcast on Apple, Spotify, or anywhere else that you get your podcasts. I'm Tracy Alloway and I'm Joe Wiesenthal and this is Cameo Radio gravy. on demand and in your podcast feed on the latest edition of the tape podcast, a conversation with John Hertel with Hertel Callahan. The first 30 years I was in the business bonds were such a critical dimension of a diversified portfolio. And then we got this place where we had no real yield and we needed
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"Know, after the list, reading everything I can on this SVB issue and now signature bank, I think I've got an understanding of what happened. Okay, but our next guest is going to show me how much more I still don't know. And it happens every time. John authors, senior editor for Bloomberg opinion, joins us here on our Bloomberg interactive broker studio. John, let me just start with what I think Matt we're talking about Joe wiesenthal from Bloomberg news and odd lots podcast was in here earlier because he wrote a piece today saying, of course it's a bailout. What say you? Is this a bailout near governor Kathy hochul says it's not? A bailout has come to be meant thoroughly pejoratively. It certainly in some way a rescue which is perhaps a less loaded synonym for a bailout. I guess the question is whose money goes towards it and who precisely gets bailed out. So what was most controversial in O 8 was that taxpayers money bailed out rich people running banks. And fatally. The rest of the country. That's exactly what I think. It's just I didn't mind tarp rescuing my credit cards, my ability to get money out of an ATM, my ability to get paid my paycheck. This was the thing that people didn't understand, let the banks fail means let my bank fail and at least for a while cut me off from access to my money, which is what happened for two weeks in Greece when they had the Brexit. Crisis, little remembered now because of what's happened the year after. And that single handedly created a depression in Greece two weeks of not having access to your bank. That is what we're talking about. So if we're talking about some kind of coordinated action to stop the banking system which is inherently unstable because of fractional reserve banking because if everybody wants to take their money out at the same time, even the best run bank will fail, then there needn't be anything pejorative about it. The reason people are dancing around the topic of whether this is a bailout is because it's been decided politically in the discourse. I think mainly because nobody got punished for 2008 that bailouts are bad. Therefore, we have to say that this is not bad. As it stands at the moment, well, it's the so far it's not bad. I mean, look, there could be unintended and unattended consequences. I think right now we're happy that there are no more runs on banks, right? That's a good thing that the fed the FDIC and the treasury did yesterday. They stopped people from freaking out and pulling their money out of a ton of other regional banks. I'm not totally sure we can say that yet. If you look at what's happened to two year bond yields, somebody is spending a lot of money buying short dated bonds today. It's the biggest fall in bond yield two year bond yields since black Monday in 1987. That money had to come from somewhere and I suspect quite a bit of it will have come from uninsured deposits at smaller banks. We need to find out more. Similarly, if you look at the share price plainly quite rightly, if anybody is bearing the brunt of it, it will be bank shareholders because this is going to damage profits for banks across the system because of the extra levy on them for banking insurance, but if it's positive insurance and certainly what's happened to the retail bank index is pretty spectacular. By the way, are there still uninsured deposits at U.S. banks or are all deposits insured now? If effectively, at this point, you could say that, yes, all deposits are insured, but the government is still saying, but even if we come in in the very first resort ultimately, it's going to be the banking system that pays because we're going to levy extra deposit insurance premium. And that's what governor hulk was essentially saying, right? Yes. Given that the great majority of us do have money on deposit with banks and the great majority of us do pay tax ultimately taxpayers are going to have to pay for this. That said, a functioning banking system is a public good. So if something goes wrong with it, presumably it's not unreasonable for us to have to pay something towards making sure it carries on. But yes, in terms of getting back to the angels dancing on the head of a pin or whatever. You could say it's not a public bailout because it will ultimately we are being told come from other banks depositors from the levy that's paid on them. Well, until you get to the this new facility that was opened up by the fed. Now you can take assets that may be worth only half of par and get the par as using them as collateral. That's yes. I can myself live with that because if this is a liquidity crisis and I think it is more of a crisis of liquidity than solvency, then this is a way to deal with that liquidity crisis. Banks are sitting on a bunch of bonds that whose value has gone down dramatically. That needn't matter if they hold them until term. If they have a run and need to sell bonds for a loss then things get very much uglier. This is a sensible way I hope of doing away with that liquidity issue. I don't myself ever conceptual problem with what the fed is doing there. The issue is whether people are going to believe that it can be done. There's a
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"Is Bloomberg. Hello and welcome to another episode of the odd lots podcast. I'm Joe wiesenthal. And I'm traci alloy. So Tracy, obviously, a lot going on in crypto, but I would say the two big things are like, I guess the crypto winter, there's been some recovery, but obviously all the coin prices are way lower than they used to be. And then there's just everything going on on the regulatory side. Yeah, it's sort of a double whammy for the industry. And I guess it's hard. It's hard to determine causality when it comes to price and extra regulation coming in, but yeah, it is not a great time for crypto. Well, I would say that the historical patterns would suggest the regulators like to come in after people have lost money after people have lost money in scams, their investments go down. So it kind of makes sense that you see the uptick in regulation right after just like the lines have been going down for a while. Right, but it does prompt these big questions about should the regulators have been more proactive? Should they have been doing things before people lost money? And then what should they do now? Anyway, we have the perfect guest to talk about this because we are going to be speaking with Brian Armstrong. CEO and cofounder of coinbase right in the middle of all the preeminent American crypto exchange. So Brian, thank you so much for coming on all loves. Yeah, thanks for having me. What is yield farming and where does the return of it come from? Well, I mean, yield farming has a little bit of a bad name, I think, in this environment. There was obviously with the collapse of Tara Luna and BlockFi and some other firms like that. I think that's a very valid question to be asking. And I'm not sure I couldn't even answer it on their behalf. I think there's a lot of other pieces of crypto that people are still excited about. And there's lots of things we can build beyond that So one of the things we've talked about on the show quite a bit is this idea of crypto as kind of the ultimate momentum asset. And when money is flowing in, prices go up and everything is great when money flows out prices collapse quite quickly, which would seem to make the business of being a crypto exchange extremely cyclical. But one of the things that stood out from your most recent results, you just reported relatively recently, you talked about how you want to be profitable through the cycles, through the upturns and the downturns. Can you talk a little bit more about how you plan on doing that? Yeah, well, historically, most of our revenue has been from trading fees, which are absolutely right. It is cyclical and crypto has been fairly volatile asset class. It goes up and down. Now, what we've done is we've started shifting more and more of our revenue to what we call subscription and services in our financials and our earnings calls. And basically what that means is things like USD coin, a stable coin that's been a nice growth mechanism for us, even in a down crypto market. Things like custody fees. Fees that we earn on coinbase card, people are using it for spending merchant commerce activity. So these things are, I wouldn't say there's 0% correlated with overall market and crypto, but they're certainly a lot less than trading fees. And that's allowing us to build a more predictable business. So we started in the industry also talking about the regulatory side. And I want to definitely talk a lot about that. But in particular, I think yesterday I saw that coinbase, you had some new program. I think it was called the four 35 program about call your congressmen, like let people know that you care about crypto policy. And of course, like Uber sort of famously started this strategy, like telling people on the app. Tell your local regulators, you want to drive an Uber. And I'm going to try to ask this in the most diplomatic way possible. And I have many friends who are into crypto and I like many of them. But when it comes to crypto, do you want the type of person who had called their congressman to tell them to do better crypto policy? Is that really the type of person that you want sort of being the voice of crypto regulation? Well, I think the average person in crypto, and by the way, there's a lot of them. One in 5 households now have used crypto about 50 million Americans. This is becoming a major constituent of lobbying group and everything that's going to shape future elections. These average people, they may not have the exact solution for what the legislation should say around regulation of crypto. But they do know that they want elected representatives who are going to ensure that this industry comes within the regulatory perimeter offers consumer protection, but also allows this innovation to flourish so that it can update the financial system. You know, 80% of Americans now believe that the financial system doesn't work for them. It's either too slow, it has too high a fees. It doesn't, nobody has equal access or not everyone has equal access to it. And it's not surprising that's the case. I mean, the technology behind the financial system is sometimes 40 years old. Written in cobalt and these mainframe computers and the laws for it are sometimes a hundred years old. They were created before the Internet even existed, right? So it's time to update the financial system. I think the average voter in America is now realizing that crypto is one of the great technologies that can help update that. And they want their elected representatives to bring that legislation and clarity to the U.S.. So actually I want to ask you, you know, you talk about this impulse is like, okay, in the wake of FTX bring it inside the regulatory perimeter. And part of my question is like, why? Because I look at FTX collapse and one of the biggest sort of crucial exchanges in the industry. And nothing bad happened after that. There was no fallout or no bailouts. It didn't have any spillover. So part of my thing is like, I don't want this in any perimeter because that seems to work pretty well in terms of the lessons of 2008, avoiding too big to fail. What about the argument that it's like from a sort of like structural like, yeah, like financial contagion standpoint, regulators have done a pretty good pretty good job not letting this volatile product as volatile industry create problems for the financial system. The let it burn strategy. Well, I would disagree with the idea that nothing bad happened. I mean, a lot of people lost money. Absolutely. And I'm glad you said it, because I did not. You're right. People are like, yes. Yeah, so there were certainly some bad activity there. And I think that's the kind of consumer protection we're talking about. I don't think there should have been bailouts or anything like that. Nothing encrypted was too big to fail, and it's kind of antithetical to crypto, frankly, to have a bailout or something like that. The first Bitcoin block that was mined, right? Had a message in it about that Chancellor on the brink of bailout. So crypto was kind of founded almost a Bitcoin was founded as a result of reaction to the 2008 financial crisis. But I think those two ideas can come into unity. I mean, we can have, and again, I'm talking about for the centralized actors in crypto. The custodians exchanges companies like coinbase. It's pretty clear everybody generally there's broad consensus. Those should be regulated. It applies some of the best practices and standards, so we don't have fraud and corruption and things wash trading or AML issues. But the decentralized pieces of crypto, that's different. I mean, we need to have decentralized protocols so that we can have a more global and fair and free financial system. And that piece, I don't think those are going to be regulated because there is no central authority for Bitcoin or Ethereum, for instance. What should consumer protections look like in crypto in your opinion? And especially when I think of something like
The Breakdown
Silicon Valley Bank Becomes Largest Failure Since 2008 Crisis
"For the purposes of our conversation today, the key dynamic in silvergate that we want to think about is this idea of a duration mismatch between short term deposits and long-term loans. It is also worth noting at this point that banks having that sort of duration mismatch isn't necessarily them acting badly. It is fundamentally what fractional reserve banking does. Joe wiesenthal from Bloomberg tweeted, every time a bank gets into trouble, people are like, they took short term deposits and made long-term loans. What were they thinking? As if that's not the business model of every bank ever. All of which gets us to Silicon Valley bank. For the TLDR in this situation, I'm going to turn to a great little explainer from investor Jamie quint. Jamie writes, in 2021, SVB saw a mass influx in deposits, which jumped from 62 billion or so at the end of 2019 to around a 190 billion at the end of 2021. As deposits grew SVB could not grow their loan book fast enough to generate the yield they wanted to see on this capital. As a result, they purchased a large amount over 80 billion in mortgage backed securities with these deposits for their hold to maturity portfolio. 97% of these mortgage backed securities were ten plus year duration, with a weighted average yield of 1.56%. The issue is that as the fed raised interest rates in 2022 and continued to do so through 2023, the value of SVB mortgage backed securities plummeted. This is because investors can now purchase long duration, quote unquote, risk free bonds from the fed at a 2.5 X higher yield. This is not a liquidity issue as long as SVB maintains their deposits. Since the securities will pay out more than they cost eventually. However, yesterday afternoon, SVB announced that they had sold 21 billion of their available for sales securities at a $1.8 billion loss, and were raising another 2.25 billion in equity in debt. This came as a surprise to investors who were under the impression that SVB had enough liquidity to avoid selling their AFS portfolio. So as you can see, here we again have the same structural problem faced by the assets in silver Gates portfolio. Those assets had unrealized losses because interest rate increases in the wider environment had made them less valuable relative to government bonds, which wouldn't have been an issue unless they were forced to sell, but boom, all of a sudden they were forced to sell.
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"This is a lot on Bloomberg radio. I'm Joe wiesenthal. And I'm traci aloe. And today we are looking at why it is that real estate developers don't build more units suitable for families. We're speaking with Bobby fion and Stephen Smith. Bobby, you mentioned the lack of floor plan data. What do you mean by that exactly? Because when I think of floor plans, I think that's like the one thing that is potentially available and kind of standardized across every apartment building in America, certainly. Oh, Tracy, where to begin. Answering that. Naively. Yes, so I'd say this is the question has been driving me in my career. I'd say for the last like 7 years and bother me, I'd say in looking at my own excel models, like when I've built ground up apartments, it always intensely bothered me that in excel, there was no differentiation between square footage. It's always a multiplier, like a base rent per square foot multiplier, depending on type, just like a little pivot table. If one bedroom multiplied by $4 a square foot, if two bedroom multiply by, usually less three 50, right? And there's no differentiation between those two. So I'd say that is something that is bothered me for a while, given that anyone who walks into a unit knows that there are 700 ft² one bedrooms that are great and 700 ft² one bedrooms that are a piece of junk, right? But it has to be captured like in data somehow or else it's like the qualitative difference. I would say, yes, qualitative but like you have to use some sort of data analytics or some sort of data columns, just to say, well, how large is it? Similar things like, we all know that height matters. Height should increase rent, but what would be the only way to prove that? Well, you would have to go through and measure the height of every place, then equalize for all other like real estate type attributes and then say, aha, now we know that height matters by this much. When, in fact, every person knows that to be true, we just don't know exactly how much. So I would say that the difficulty on that has been driving me and my career for a while. That's why I left a real estate development for a little while to start two different sort of technology ventures and now I'm in, I'd say the software data business around floor plan data. I was just about to ask, could you create an algorithm that takes in data inputs and then tries to spit out? I don't know, like a livability score. Well, I was just going to say, you know, Bobby in your Twitter bio, you have a question. I don't know who made this quote. Maybe you've made it up. Bill James of apartments. Bill James, of course, being the money ball guy who famously took baseball and tried to get it out of pure sort of like subjective like that guy that guy is a good hustle and tried to put numerical really quantify the speed that someone could go or all these other things. So how do you go about sort of taking these things that seems subjective? Yeah. This seems like good, nice and airy, it's roomy and try to put some like hard math behind it. So that is a that is a self chosen moniker, and it is. It is an homage to, I think, the mathematical approach, and it is also meant to me to be a reminder of how long it takes to do that. If those people who remember the story of Bill James, he was doing this by manually calculating things from box scores that he got a newspapers 30, 40 years ago, and it took at least 25 years for the general approach to move forward. And the other thing that I also greatly admire about that approach is that none of his particular algorithms or that meaningful. That good anymore. But it was the approach of saying we are going to go through and turn the sweet science into something slightly analytical. So for me, how that works in floor plans is, as you mentioned, Tracy, there are a tremendous number of floor plans, every apartment has one, the dimensions on them are nearly always useless because it's not always clear whether it's putting to a wall or whether it ends in the middle of the room, sometimes the dimension is just incorrect. Sometimes they've taken room names and change them from something useful to something useless, like from bedroom to dream, and some other some other ridiculous things which confuses people. But my basic approach has been to build some software tools to take the essentially these low resolution image files and turn them into a lot more usable pieces of data. So instead of a room or a unit being described as a 775 ft² one bedroom, it would be described as there is a room that has dimensions, X and Y, it may or may not have a living room. It may or may not have direct access to a bathroom, and it has a closet with linear feet hanging of Z and by breaking things down into some more pieces than you can do some of the fairly straightforward statistical analysis on apartments to say in an area do people want? Like a kitchen that's 14 feet or are they okay with 11? Does someone prefer that extra foot in their bedroom? Or in their living room, given like a fixed space. So I'd say that's where it initially started. The family oriented aspect of those apartments kind of came out of the data and saying, there are a lot of apartments and many of them are not being built through these sorts of specifications. Steven touched on some of them, which is that the size of closets in the United States is at least two to three times. What is in Europe? And I'm not an expert near they're huge. In Europe, we still use wardrobe. Yes. Like a piece of furniture that acts like Joe's looking at it. No, no, I had one of those. I had a studio. Or I had a loft in the financial district. So you have a rail that you was just like, we just bought this huge sort of wardrobe from Ikea that's next to our TV basically. Stephen is absolutely right that our building form does drive a lot of this stuff, right? So the general process for real estate developments that a developer is going to go identify a piece of land
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"Joe wiesenthal, and today we are looking at egg inflation, what caused that big surge in prices and our prices finally coming down. We are going to be speaking with Glenn hickman, the president of hickman's family farms. So just on the sort of cyclical note, when it comes to, for instance, if you have an outbreak of avian flu and you have to destroy a large chunk of your flock, do you get compensation from the government for doing that if you're mandated to do it and also a similar question for the transition to cage free chicken raising? Do you get grants or something like that for the further capital investment? So since the government does mandate that you have to depopulate your farm, they do pay a bit of a stipend so that it basically pays your cost of depopulation, your cost of cleaning and disinfecting. And approximately the value of the birds that were in the barn at the time. It doesn't pay you for the loss of eggs. It doesn't pay you to buy a new chicken to put in the barn. So it really does lack a component of full compensation for the disaster that happens. Efficiency gains over time in the egg business or like how much human labor is required in 2023 to produce, I don't know, a million eggs versus how much it would have taken 20 years ago, et cetera how has it changed over time and the operations of farming at scale that you've seen? How does it look different than if a time traveler had come from 20 years ago, the big changes? Joe, I looked at a study that goes back to 1960. If you take it from the production of corn through the production of eggs, four times as efficient to date, that acre of grain production will produce four times as many eggs as it did in 1960. Wow. Almost all of that efficiency has been reflected in the marketplace. It's a highly competitive marketplace. So as soon as a producer for use on how to cut their costs and they feel like they have a market advantage, they might reflect that in their price to win greater market share. And so I think that's the American consumer up until recently a year ago last summer in 2021, we were selling eggs for virtually the same price that we did in 1960. And so all of those efficiencies have accrued basically to society's benefit. You know, you've mentioned several times that egg farmers are price takers. And I'm wondering, as you see the prices shoot up and we see more and more people apparently talking about this, you know, here in New York, I think it's gone up from like two or three dollars per dozen eggs to like maybe 7 or 8 recently. And I've seen some people on Twitter joking that the price of a carton of eggs is higher than the minimum wage per hour in certain states now. Do you see the consumers start to push back as the prices go higher? I guess another way of asking that is how elastic is demand for eggs. Egg demand is very handy elastic Tracy. What you do see is some of these higher levels is a family that might have bought 5 dozen eggs might go in and decide I'm only going to buy a dozen and a half or 18 eggs and see if the prices come down next week. And we have seen that happen. So there's been some of that, you might say, consumer pullback, also in the industrial uses, if a bakery is a commercial bakery, it might be making a recipe that takes 30 pounds of eggs per hundred pound batch of whatever they're making. That might be cutting back to 29 or 28 to try to make the egg supply last a little bit longer. And so there's all different kinds of coping. We have retailers across the country. Some have reflected the price of eggs and some have not. And so there's all kinds of different strategies that are deployed by retailers. And frankly, I can't begin to understand any of them. Just on this note, you know, if I'm a big food producer, say I'm Kraft Heinz or someone like that. And I'm buying an enormous amount of eggs per year. Do I buy them on a long-term basis? Do I have like an annual egg contract or am I going out every week and Tapping suppliers? I don't want to speak to either of the companies. Just generally. Generally, if I'm a big egg controller, yes, we have all kinds of different arrangements with our customers. So yes, some of them do forward purchase 6 months or a year in advance. And some prefer to buy basically on the spot market. And we have everything in between. So it's just kind of the strategy that that customer wants to execute. I'm still a little unclear. Okay, when you talk about the spot market for eggs. So let's say a grocery store that you distribute your eggs in. Is there a de facto competition between you and other egg producers regularly and who gets that shelf space? Do they put out a bid? Do they put out a price? Like, how does that actually work in practice? The setting of the wholesale price at a retail outlet. Yeah, generally, Joe, we've had relationships with some customers since the beginning of our company. And we've had relationships that are annual bids and sometimes you win the bid and sometimes you don't. And we have everything in between. So there is a lot of I guess strategy that goes into building your universe of customers and balancing. You don't want a customer base that is a 100% medium a because chickens don't lay a 100% media Meg. So you have to kind of balance that with what your production is and what your desired customer basis. So in the current environment of higher egg prices, what do we see egg producers doing in response? Is it all out expansion to try to take advantage of the price increase or are you still a little bit cautious given the recent history of the past couple of years that you were discussing? What exactly do you do here? Grace, we had a pretty industry wide I think we had a pretty good hold to fill and so that was that was what happened with the with the earnings that when we started to experience elevated prices due to avian flu. And so I can't speak to the industry. As a company, we don't see the demand for eggs, warranting a big expansion. We're not going to, we're not going to go from our current flax size and add a million birds just because there's a temporary shortage. Those cages that are empty due to due to avian influenza will be refilled at some point in time. And we're hustling to refill ours and I'm sure everybody that has been affected is hustling to refill theirs. I see. So you have because you have spare capacity. There's no necessarily need for like extra capital investment is sort of just the natural process of repopulating the existing space. Well, Joe about you might say typical layer barn is designed to last 30 years. So there's 3% of the population that needs to be rebuilt or start over every single year. And when you had a period of time where you really had negative returns, you might have some deferrals that you need to catch up on. So I think there's probably as many answers to that question as there are egg producers. Glenn, I'm looking at your website, which by the way is full of chicken and egg puns. So I love that. But there's a little press release on your what's kraken blanc. About you expanding into feed production in 2014. And I'm wondering if that kind of, I guess, vertical integration is the future for farms if they're dealing with
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"Radio. I'm traci alloy. And I'm Joe wiesenthal. And today we're looking at the question of whether there is a regime shift happening in markets, we are speaking with Steve weisman portfolio manager at neuberger Berman. Just on the paradigm shift, you know, when I think about the paradigm of the past couple years, you mentioned low interest rates and that helping to boost valuations. But I also think about momentum and people just identifying the thing that they think other people are going to buy and then pouring into that. And so having a lot of valuations driven by flows. Can you talk about that behavior in the market? I call this what I call this the Amazon disease. I'm not saying Amazon's a bad company. It's a great company. What I mean by the Amazon disease is when Amazon came public, there was a lot of skepticism that this work. And Amazon has basically conquered the world. And so people are always looking for the next Amazon. And you know that they're looking for the next Amazon when they when the sell side writes a research report. And the first sentence is the Tam is huge. Which means the total available market is huge. Well, take open door again. Housing is huge. I mean, there's no question that housing is huge. But that doesn't mean people's business models are going to conquer housing. But people are constantly, again, when rates are zero, you're paid to speculate. So you look at open door and you say, well, the housing market in the United States is, I don't know what trillion to whatever it is, a 1 trillion 2 trillion. If open door only gets 1% of that market, the stock is huge. And as long as revenue growth is strong, people are willing to make that bet. When revenue growth starts to slow, they don't think about the Tam anymore. They start to think about the business model. So let's say we are at this paradigm shift. And we don't know what it's going to be. We don't know what's going to look like. But something that's not speculative tech will be the new leadership presumably for a while. As an investor, like, do you feel like you can wait and sort of see what it is and let the market kind of decide? Or do you feel like an impulse to try to anticipate today what that thing is going on? I think you anticipate a little bit. So for example, I think one of the themes for the next several year is what I would call the reshoring of the industrial world back into the United States. So for the last call it 30 years, companies have essentially sent their supply lines out to the United States because labor in the United States is expensive and labor in China and Vietnam is cheap. And that worked for very long time, and it was very deflationary. And COVID proved one thing. Yes, that supply chain is less expensive, but it's also very brittle. And because of what happened during COVID, people are companies are bringing back the supply chain. At least partially back to the United States. So, you know, stocks that haven't done anything in 20 years, let's say, might start to do well like BHP, iron ore. That's one theme that I think will last a long time. Green is, I think, will last a long time. So those are things you could start to look at. So that's actually something that we've spoken quite a lot about on all bots, this idea of a sort of shift from, I guess, ephemera tech software to the reality of actual things. This might be a slightly weird question, but do you think investors are well positioned or well informed to grasp that shift? Because I imagine there must be a fundamental difference between looking at a tech company versus, say, I don't know, an oil major or something like that. Oh, I don't think people are prepared yet. They've owned tech stocks for so long. You know, they look at revenue growth. They look at EVD, but one of the things that I find astonishing, for example, about tech stocks is they don't include stock based compensation and earnings. Which I just find a little weird. And because I would always ask, do you deduct stock based comp from your taxes? And the answer to that is always, yeah. So in that sense, it's real. But when they report earnings, they pretend it's not real. But the market doesn't seem to care. But I think it's going to take time. Like I talked about before, some of these very speculative stocks are 40 to 60% this year. It's going to take time for people to start to do, I think, research on other stuff. I know you weren't investing it at this point, but as a student of market history, was there the same process like with the earlier tech bubbles like the 60s with the aerospace stocks and some of those other waves. You know, I think if you look at economic history, probably it's true. I haven't really looked at that much. But you know, in the late 70s, the group that people wanted to own oil stocks. Oil stocks haven't done well for God knows how many years until basically the last two. Now let's talk about real stocks for a second. Pipeline stocks oil stocks. Why did they do so poorly? This is not a paradigm shift. This is a shareholder's revolt. Issue. So if you look back, call it 2010 through maybe 2018 or so. And this is where I would say incentives Trump ethics every time. So the people who ran these companies where there was a midstream pipelines or the drillers. The CEOs of those companies were all compensated essentially on volume. So it didn't matter whether oil prices were 30, or whether all prices were 80. They kept growing their production. And in most cases, they basically never made money, whether oil prices were 30 or prices were 80.
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"Joe wiesenthal, and today we are speaking with Isabella Weber a professor at UMass Amherst on her research about new ways to identify the sources causes and solutions to inflation. So just on this point, can I just press you when it comes to identifying the systemically important industries or I think you call them ubiquitous industries, how do you disaggregate their weight in the inflation indices versus the extent to which they matter for other prices? Because I'm sure there will be some people who listen to this and say like, well, obviously energy and maybe some consumer goods and things like that have a higher weight in the CPI. And so that's why you're getting these results. If you look at the paper, which I'm not expecting anyone to do. We can we can't distinguish between a direct and an indirect effect, right? So what our direct inflation impact is, it's just a weight in the CPI, right? This is just giving you this is what the CPI shows us is the weight of the change in safe petroleum in core products for the change in the CPI. But then there's this additional share, which we call the indirect effect, which comes from tracing the indirect price movements that reside from this initial shock in say petroleum and core products. Now, of course, we have to make assumptions on how industries hand over cost increases In the paper, we make two distinct assumptions. One is that it's just a pass through of 100%. And so firms just have a cost increase and just pass this on to their customers. The second assumption that we make is to say what if firms actually don't just pass on the cost, but they actually want to protect their profit margins. Now, if their costs go up and they were to increase prices by just the amount of the increase in cost, their profit margin would go down. So what if what if they actually protect their profit margin? So therefore, increased prices by more than the increase in costs. So this then gives us different magnitudes of the total effect, but we find that the rankings are relatively stable independent of these different assumptions that we are making. And the CPI that we are using here is a synthetic CPI because of course we have to break it down to these 71 industries that we have. So it's not the CPI that you download from the VA if you just look for CPI, but it's a CPI that you get from the VA if you look into input output tables. Something I'm interested in and I don't know if it is something you've specifically looked at, but it sort of reminds me of this. You know, we talked a lot about or economists have talked a lot in the last year about goods versus services, inflation, as if these are like two distinct categories of types of things that people buy that you can draw a bright line and say, okay, goods have gone down, but services still up. But it seems to me that any good that we buy is also implicitly a bundle of services that need to go into the, you know, if I buy a refrigerator, well, there's some sort of service person who helped delivery deliver the furniture. And there are services for the truck driver, whatever it is, does your approach this sort of input output approach sort of, I'm trying to think exactly the way to phrase it. But in your view, does it offer a more useful way of thinking about categories of goods beyond your sort of would seem to me like these arbitrary distinctions between the types of things that get bought in the economy. Good question. Yeah, I great question. I mean, I would of course say yes. Thank you. Thank you for saying that. It's a great question. Okay, no, sorry, keep going. To be sure, services are part of the input output tables. And we actually find that they are pretty upstream because of the fact that you just write, right? Because there is some form of even small administrative service involved in pretty much everything. So if we talk about sorry, if we talk about upstream sectors, we tend to think about physical stuff like oil and gas or metals or chemicals and so on. But we'll be actually see when we do the analysis is that some that some services are very upstream. Now, the price movements in services are relatively small on average over time because they're very much tied to pages, right? And they just tend to move much less than, let's say, commodity prices, right? So therefore, maybe around these shocks, the service sectors, even though they are pretty upstream, end up not being very important for the general movement of prices in this model because the initial shock is so small if we model the shock based on magnitudes of past price movements and price movements in the COVID-19 inflation. Now, I do think that this kind of does give us a different way of distinguishing categories of sectors if you want so. Because the idea here really is to say, okay, we don't care if it's services or if it's commodities or if it's processed goods or if it's manufacturing whatever it might be, but all that they care about is the importance of this sector. If you want to centrality in relation to all other sectors and in relation to people's consumption patterns, right? So what we find then is that the sectors that we identify as systemically significant are basically in three groups. So as a basic necessities, stuff like housing food, utilities, and of course also energy. And then basic production inputs, stuff like the fossil fuels that we have already talked about, but also chemical products. And then kind of like basic circulation infrastructure. So things like Jose trade. So I do think that this does give us a different way of distinguishing the nature of different sectors. So once you've identified these systemically important industries, these ubiquitous industries for inflation, things like basic necessities, housing, farms, food, and utilities and energy, how does that inform the policy response? So the idea here is that because these sectors are so important that if there are a large price movements in these sectors that this has implications, way beyond these specific sectors, we should be paying more attention to what is happening in these sectors. So the first implication is to say, we need more monetary capacity. Why do we need more monitoring capacity? Because we are living in some sort of age of overlapping emergencies, right? Where we have, of course, the pandemic that is not over. For example, at what's happening in China and how this impacts global production networks, but also looking at climate change and your great episode on the Mississippi River and how this is a kind of just making a whole sector in this case, of course, grain. And other commodities grind to a hold.
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"I'm Joe wiesenthal in today, we're discussing the plastics market. Why it's surged so much last year why it's plunged so much this year and where it's going next. For more on this topic, we're speaking to Bank of America commodity strategist, Warren Russell. One thing I've been wondering about is if the plastics industry experiences the kind of same existential concerns that the oil industry does in terms of investment and building out capacity because I think most countries are, I should say many countries at this point have said that they want to move away from one use plastics and we all know that nurdles aren't very good for the environment and they get in like fish lungs and stuff like that. But if there's a stated goal to move away from plastic production, does that start to impact decisions on whether or not to build out refining capacity? Yeah, absolutely. It's been interesting actually over the last few over the last few years, the solution to oils sort of demand concerns long term was, what would this focus on the pet can space? So we'll build up more pet gun capacity, obviously that's a big risk going forward. You are seeing traction on plastics, use reduction. I think it really depends on what you're reducing the use of it. The most obvious cases packaging things that you see most visibly floating in the water in all these sort of terrible images that you see that is sort of the low hanging fruit. I would say the one used plastics. What are the alternatives? That's the tricky thing. Are you talking about what are you going back to glass going back to aluminum first? Oh my God, the worst. Not a fan. No, but in all seriousness, there's also bioplastics, so bioplastics, you sort of split into two categories. One is you're using biomaterial to create a sort of a lookalike chemical structure for that basically replaces plastic, arguably that is not very easy to biodegrade. But you also have the biodegradable design plastic, which can either degrade in normal environment or in a compost environment. And that maybe has a little bit more traction. There's a lot of growth there. In that space, but it's very small as a percentage of the global market. It's, you know, I would say 1% or maybe a less than 1% right now of sort of total plastics. This brings me into something else I wanted to ask, which is how much of our current plastic supply comes from recycled plastic. That is a good question. You know, we don't recycle a lot of plastic to be honest. There's all sorts of figures out there. Most of them seem to sort of center around 10% plastics recycled. The waste of plastic relative to total use is, I don't know, somewhere around just ballpark in 75% on an annual basis. So you do get like in a market that's the total market's probably around 450 to 500 million tons or ballpark. The stuff that you're recycling is the PET. So or the plastic bottles that may be HTTP, and it's a lot harder to recycle these computer screens or this chair. So there's real barriers to sort of recycling the broader. You talk about replacing plastics that the low hanging fruit is the stuff that we dispose of. Single use plastics. I think the hard part about dealing with that is you need to make an environment where it's economic to collect economic to either mechanically or chemically recycle that. And sort of make it make it more of a closed loop environment where a ways away from that today and it's going to cost, I think, a lot to get there. But that's what really people need to come to grips with is that it's going to come down to diligence from people as we walk out of this room, making sure we're putting our plastic cup or in a recyclable container. Beyond that, it's making sure that the plastic recycler can actually recycle it. So is it like a clear shot there or is it going to be something where they're going to spend a lot of money sorting it and then ultimately at the end of the day they don't break even. You know, just before I just realized, what is the sort of if someone said, what's the price of plastic? And I get the whole we've been talking, there's no one plastic, and there's no one global price. Is there like a number that you would say that's like a rough benchmark that you in the industry used? I mean, I typically sort of default to polyethylene price or head density polyethylene or polypropylene price, but like you're talking around a $1000 a ton. And where did that, what was that pre crisis and where did it get to it? It's peak in 2021, roughly. Sure. So again, this comes down to where we are with oil prices because that's going to dictate on the margin what people can actually operate at. So they need the end product to sell at a certain price to actually keep the margins at a level that allows them to operate. So we've seen plastics prices above a thousand dollars a ton for a while. They got up to upwards of $2000 a ton. During the chaos of 2021, now they're sort of back down to those levels, oil prices are obviously a lot higher today. Well, I should say marginally higher today, but they were a lot higher earlier this year, relative to where they were in history. So this is not really a scene territory where we are today. Could I ask you touched on China reopening? What impact would you expect that to have on the plastics market? Because it feels like it could affect it in various ways. So on the one hand, maybe you have exports from China to the U.S. have already been falling a little bit. But maybe you have more domestic consumption because people are going out and buying things or maybe they're not because they were buying things online while they were stuck at home. You could have capacity ramped up if more people are out and going to factories. How are you sort of parsing that development? I think there's definitely several moving pieces here. I think the one that you touched on, the big sort of elephant in the room is the fact that people, when they reopen, they may not be buying as much online. So you're not going to have that sort of support for plastics demand. In China, I would expect single use plastics, eating out that type of plastic used to go back up. I think there's questions around obviously China's real estate market and what construction is going to look like going forward, that's going to have an impact on your construction plastics like PVC. So you may see even when they reopen that some of this plastics demand isn't what it used to be during prior years. So what's your outlook overall? Well, I think again, it comes back to how much capacity we have coming online. We have 5 to 7% of capacity growth in the polyethylene polypropylene space. You look, you look at GDP growth expectations and obviously they range from anywhere in the low ones to maybe two and a half next year. So I think that there's definitely room for further margin contraction here. Ultimately, you know, margin contraction tells you one thing, but oil prices at the end of the day will sort of be your lower bound for some of this stuff. So just on that note, this might be a slightly odd question, but given that a lot of plastics comes from oil and given that a lot of plastic consumption is dependent on economic growth and oil is also sort of a play on economic growth. Can plastics be a leading indicator for what people are expecting for the overall economy? I think so. I would say you're sort of shrouded a little bit now with the capacity that we're trying to sort of work through today, but certainly you're very high up the value chain with plastics. It goes into everything, again, that we use. So you start to see demand for plastics pick
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"Welcome to the odd lots podcast on Bloomberg radio. I'm Joe wiesenthal. And I'm traci alloy. Tracy, I have to say that at this point, maybe in my career, this stage in the economy, I can't remember a time in which I feel like there are so many legitimate divergent views on the direction of the economy Some people say, inflation is going to stay high through all of 2023 and the economy is going to slow down. Some people are saying, okay, we're headed for a recession because the feds hiked rates and housing is plunging and others say, oh, this is stagflation because there's entrenched. There are many very legitimate views in my perception about where things could head from here. It does feel very bifurcated at the moment, like two very extreme paths like either you get a massive global recession and ensuing deflation or you have this period of 1970s style hyperinflation or you have something even worse, which would be stagflation. And people used to talk about the prospect of the soft landing. That kind of went away for a while, this idea that the fed could raise rates and quash inflation without necessarily engineering a huge knock to economic growth. It kind of went away for a while, I think, when the inflation readings kept coming in higher than expected. And so now we have a lot of talk again about the possibility of the soft landing. Yeah, I mean, the way I've been thinking about it is that until unemployment actually really starts jumping. And it hasn't jumped at all because we're back down to 3.5% basically. The historic lows. Yeah, historic lows. I think I saw a tweet that actually, if you were to go out to like the 6th decimal point, it really is like the lowest and like 50 something years now, I don't know. I didn't fact check it. But you should do a post on it if that's true. This is why we need each other in the office so that someone's like, don't just don't just look at themselves. But in all seriousness, you know, like until my view is like, until unemployment really starts to rise. Until we really have that. Like the soft landing scenario can't be disproven, right? Because there's always the chance that inflation comes down and employment doesn't go up. It's a hope. Knock on wood, we all want it to happen. But you know, until like unemployment really starts falling apart, that can't be disproven. And then there's the additional layer, which is, let's say, inflation were to come down and get closer to the fed's goal, but the unemployment rate refuses to budge. Does the fed believe it? Or does the fence say no? We have to keep hammering. We have to keep rights in order to get an unemployment up. So that we can be confident that this decline inflation is sustained. I do have to say part of me still feels a little weird when we're talking about the fed explicitly trying to push up unemployment and also the idea that, oh, it's good that wages aren't going up in a period of high inflation. We're all kind of poorer, but on the other hand, we don't have unanchored inflation expectations. But setting that aside, the thing I'm getting from this conversation is that we have a lot to talk about. That's right. And we could keep talking because we have plenty of thoughts. But why don't we talk to two guests who have both had on before that also plenty of thoughts, some of our favorite big picture econ thinkers, a great conversation, hopefully a great conversation. To start 20, 23. Destined to be a great conversation, I'm sure. Yes. We're going to be speaking with Connor sinn, a columnist here at Bloomberg opinion as well as Neil dutta head of economics at renaissance macros, so Connor and Neil, thank you so much for coming back on odd lot. Great to be here. Thank you. I'll start with you, Neil, because I think at some point last summer you're starting to get a little bit more negative on the economy these days, I feel like you're a little bit more optimistic. Can we get the soft landing? Is this still in the cards? One of the data points that we like to look at is the index of aggregate weekly payrolls, which is the sum product of job of jobs, the workweek, and hourly earnings, and over the last three months, that's up just under 4% at an annual rate. So that's basically a proxy for nominal growth, right? I mean, jobs and hours, that's real GDP. And wages you can consider is basically your inflation proxy. You put it all together. You're around 4%. That's the kind of number that will make the fed very happy. And I think lead them away from a more aggressive rate tightening campaign, at least in the short run. But I think to something that you were getting at earlier, the unemployment rate is three and a half percent. I mean, there was a lot of discussion around this sort of yawning gap between the household measure of employment and the establishment payroll figure. That gap basically narrowed substantially in December. And the unemployment rate is three and a half percent. And you know, ultimately, it's hard for me at least to push the kind of immaculate disinflation thesis that much if the unemployment rate is three and a half percent. And ultimately, the fed views the labor markets as the conduit to achieve their inflation objectives. And by that standard, they're not really succeeding. And so, you know, and remember that the inflation numbers will look a lot better over the next several months, right? I mean, you have gas prices coming down. You hustle utility bills will probably come down, food prices will probably moderate. But aggregate incomes growth are still okay. And so it just means that you have this pickup in real disposable income. Connor? Yeah, I think right now it's easier to think about what's happening in the economy at the moment and over the next three to 6 months than to talk about sort of the more abstract does this level of labor market utilization mean this for inflation and that for a session. I think that's a conversation really for the second half of this year. And right now, because people came into the year so negative, I think the bigger story is just that real growth was very good in Q three. It looks like Q four and we're kind of entering 2023 with good momentum on that side. And then at the same time, we see inflation really rapidly coming off between core goods, which we've seen for several months now. Gas prices, which is just a nominal thing, but still matters to the consumers. And then also in the rental market, we're seeing market rents really start to decrease pretty rapidly over the past few months. So the outlook at the moment is very, very good. And we can sort of think about later later, but I think the story for now is just how good things are heading into 2023. So Neil, you sort of touched on this the idea of the fed at some point starting to slow down its rate increases. We had the fed minutes where the fed was talking about the difficulty of tightening financial conditions and financial conditions relative to the pace and extent of rate increases you could argue have been relatively loose. So I guess my question is, what would be the catalyst for the fed starting to take its foot off the pedal if we haven't really seen a big tightening of financial conditions? Well, part of that simplicity in their forecast, right? I mean, to me, I think a lot of this is just optics, right, Tracy. There's no denying that financial conditions have actually eased over the last couple of months, even as the fed has been trying to jaw bone markets and has been
The Breakdown
Will Negative Inflation Prompt a Shift in Fed Policy?
"All right Friends, we are in the macro side of the house today because today is inflation day. The first Thursday in a new month is when we get the official inflation data from the month previously, and this one has definitely felt a little more significant than some in the past. We've had relatively good inflation prints for the last couple of months, and traders seem to think that coming into this one, the stakes were a little bit higher, like this one might have more of an impact in showing the fed that they're actually was a trend than those previous reports. The basic narrative before this print was that everyone was expecting CPI to come in cold with a fair chance that it would show month over month deflation. Because of that, it had been a partial driver of the current rally. Now the concern, of course, would be that markets were getting ahead of themselves and that the print would end up coming in hot. Estimates overall were for a 6.5 headline inflation and 5.7% core inflation. For some context, remember in November had 7.1% headline inflation and 6% core. Joe wiesenthal from Bloomberg said happy CPI date to all who observe. Economists looking for a 0.3% month over month core reading. That's an acceleration from last month's 0.2% number. On a year over year basis, headline CPI is expected to fall from 7.1 to 6.5%. Cold blooded schiller writes honestly, I kind of like JPMorgan's overview of CPI tomorrow. Quote, investors are largely defensively positioned any evidence that the Federal Reserve's inflation fighting campaign is working will spark a rush to unwind bearish positions. This could aid the nascent bear rally, but we remain cautious as long as the fed remains active with its tightening cycle. Our scenario analysis is skewed bullishly based upon positioning that could cause an overreaction via short covering on a dovish print. Schiller follows up and says, I think the bullish reaction tomorrow on a positive print could really be huge for equities in this rally and a real ignition point for the next week into earnings.
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"On Bloomberg radio on Tracy alloy. And I'm Joe wiesenthal. Joe, do you know what a nurdle is? No. Is that like something related to wordle? No. It sounds like a nerdier whirl? A nurdle is it's like that tiny little pellet or bead of plastic, which is used to make bigger plastic items. I had no idea. Yeah, it's one of my favorite words, and this episode is really just an excuse for me to say, several times. But today we are going to be talking about the plastics market, which I kind of think is an underappreciated thing in global supply chains, but also potentially an inflation. Yeah, it's super interesting because plastics are obviously huge. They're in everything. They package everything dirt. Omnipresent. But I feel like we don't actually talk about plastics very much. We've never done a plastics episode and by and large and look like you read the news, you know, read about commodities or things like that. I don't think there's actually much discussion about the plastics industry. Right. So I wrote a tiny bit about it in 2021. It was based off of this great Bank of America note talking about how there was this huge arbitrage opportunity that had opened up between U.S. and European and Asian plastics markets and the price of plastic at the time was just going absolutely nuts. Like everything at that time. Since then, it has come crashing down. So we flip from record high plastic prices to I think a two year low. So it's kind of similar to what we've seen with a lot of commodities, a lot of different types of consumer goods, which means that we need to check in on what's going on with the market. Let's do it because like I said, I'm kind of starting from scratch. I don't know anything. I don't know what a nerd all is, but more importantly. I really don't know anything about it, but the plastics industry at all, which is kind of indefensible for such a such an important part of our lives. We'll just keep saying nurdles. Okay, well, we have the perfect guest to discuss this. We are going to be speaking with the author of that analyst report that I just mentioned, we're going to be speaking with Warren Russell. He is a commodities strategist at Bank of America, and he's going to give us the lowdown on nurdles and what's going on in the plastic market right now. So Warren, thank you so much for coming on all thoughts. Thanks for having me. So maybe just to begin with, a very basic question, but when we talk about the price of plastic, what are the sort of ingredients or factors that go into that? Sure. So the primary feedstock for this comes from oil. So when we think about the fundamental pricing of plastic, it comes down to a large degree with what's happening with oil, but there are a lot of other nuances as well with regards to capacity within the plastic space. The ability to meet demand. So is there enough capacity to meet demand and obviously during the last few years we've had a bit of a challenge doing that. And so you've seen some disconnects in price between what oil is doing and what some of the plastics you're doing. So talk to us a little bit more. First of all, within the broader world of petroleum consumption. You know, we think about cars, think about jet fuel. How big is plastics? And then talk to us about that refining component. Again, we talk about gasoline refining and we talk about diesel and all that. But in terms of the process for turning oil petroleum into plastics, what are we talking about in terms of capacity, spare capacity, how tight is that gone? Sure. So I guess I should just start with where this is all coming from. So when you drill a well, you've got most people just think of gas and oil, but you actually have a broad spectrum of what we call hydrocarbons coming out of the ground. And so you'll have the very heavy viscous stuff that looks like or feels like peanut butter and then you've got the very light stuff, which is pretty much natural gas. Or methane. And in between, you've got just after methane, we call them hydrocarbon chains. So you start with methane with one C two C is ethane, three C is propane. And up the stream, the plastics come from the light ends of that. So you drill a well, you're producing oil you're producing what we call wet gas, that wet gas is separate out it into different streams, so you're going to split out most of the natural gas. There'll be some ethane in that, but the recover some methane in the U.S. is used heavily in our industry. You're also producing propane and butane and what we call C 5s as well. That is a large component of the feedstock for the pet chem sector. You also are producing some of these feedstocks from the refinery too. So you can pull those other streams that to a large degree comes from refining too. So can you talk to us about the types of plastics? Because there are a bunch of different types, but they all kind of sound similar and have similar acronyms, which is a little confusing. No, I think we have, you know, a larger focus is on what we call the poly or at least in our markets, polyethylene, polypropylene. So you have these acronyms like HDPE, which is high density polyethylene. You've got low density polyethylene LDPE. You've got linear low density, that sort of rounds out the polyethylene space, then you've got polypropylene, that's a polymer version of propylene, which you could talk about further. And then you've got PET, which is what we see a lot of plastic bottles made out of that is polyethylene terephthalate. It's not how I would have pronounced that. I learned something new. Well, I think you've got PVC, which I think most people are familiar with polyvinyl chloride. And so just to be clear, all of these different acronyms, different polys, et cetera. It's just slightly different purposes. So there's, you know, you might have a plastic bottle for like a Diet Coke or something, and then like, I don't know what would be like the clamshell plastic for like a baker Yeah, I mean, you can make that from one of the blow mold polyethylene type this should be a good game too. Like just throw out items. I think that there are what about like my daughter's toys, like a dollhouse or something made out of play. I guess it depends, but you can pull in all sorts of things
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"I'm Joe wiesenthal. And on today's show, we are going to be discussing more about the financial system and particularly the effect of extreme weather and climate change on insurance. So for more on that topic, we're joined by Steve Evans, CEO of Artemis BM. Maybe this is a good time to ask you about parametric insurance as well. Because this is something I've written a little bit about Kat bonds in the past and the World Bank's pandemic bonds. But parametric insurance is something that I've seen come up increasingly in recent years, but I don't actually have any idea what it means. So what is that exactly? Sure. So essentially, insurance is usually what we call an indemnity based product where it's a promise to make somebody whole again when something happens that meets the terms of the contract and the making hole is subject to certain exclusions and things like that as with any insurance contract might be That works really well obviously for your average insurance consumer. It also works well for insurers buying reinsurance as well, and they will do that on an indemnity basis as well. Parametrics really came into the industry as well over two decades ago when we first saw them come into the marketplace and they're basically an insurance contract that will trigger based on the parameter of an event. So it's some kind of data input be that wind speed, earthquake intensity, ground movement from an earthquake flood depth, temperature, there's so many different triggers out there now in the parametric world. These are much more applicable in developing economies because there's often a lack of insurable interest on the ground, so there may not be very much insurance in force, but a sovereign government, for example, could buy draft protection that pays out based on a parametric index of how much moisture has fallen in that year in that country and that that now quite a popular product in places like Africa. But there's people in Florida on the coast who will buy parametric protection to cover their condos or their hotels or golf courses or whatever they may be against a hurricane of a certain wind speed moving through a specific area of the coastline. That's going to be close to where they're based. For me, parametrics are something that I'd love to see continue to develop at the pace they're now beginning to because it's really accelerated over the last few years. There's some really good technology companies coming to the space trying to build better parametric triggers, trying to build software for trying to automate claims payments to some degree as well because that's the other beauty of a parametric trigger that there's no need for a lengthy claims assessment. You don't have to send an adjuster out to look at a property. For example, to assess how much damage has been done, you can just see from the data input that it's above the level that is required to trigger the contract and trigger a payout. And then there's usually a third party or validate that in some way. So claims payments can be as quick as they usually in the two to four week range, but I've seen them made in 24 hours for certain parametric contracts, which is really fantastic because it means you can make somebody not whole because they're buying at a certain amount of protection, but you can certainly deliver the capital. They may need to help them recover far, far more quickly. It does seem like the triggers for the payouts on parametric insurance products. So I understand you're trying to make specific parameters or data points that get that get hit by an event so that you have these automatic payouts. But it does seem like getting the triggers right would still be an issue, right? Because the investors would want to see something that they think isn't likely to happen. And then the people who are actually selling those products would want to have them set so that there is a realistic chance that if something happens, they would get that additional money. I don't know. It just seems like it would be slightly complicated to figure those out. It certainly complicated. And I think this is an area that the industry struggled with for a while when parametrics first came around. They tended to be quite simplistic in the way that triggers were structured. One of my favorites was Tokyo Disneyland, the theme park, water. It's the best Disneyland. Don't we all? They actually bought a catastrophe bond back in the late 90s. I can't remember the exact year, but it was called concentric limited, and the reason it was called concentric was that the people who structured the deal drew three circles around the center of Tokyo Disneyland and if an earthquake occurred within those three concentric circles that worked out from Disneyland, you'd get a different payout depending on which circle it fell in. Now, of course, if the earthquake epicenter was outside the furthest circle, could still be some damage. They may not get any payout at all, of course. But that's really something that the buyer of the protection, I guess, has to. Has to reconcile with themselves and really they're buying this as kind of a form of just in time capital that's going to come in when the
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"I'm Joe wiesenthal. And on today's show, we are going to be discussing more about the financial system and particularly the effect of extreme weather and climate change on insurance. So for more on that topic, we're joined by Steve Evans, CEO of Artemis BM. Maybe this is a good time to ask you about parametric insurance as well. Because this is something I've written a little bit about Kat bonds in the past and the World Bank's pandemic bonds. But parametric insurance is something that I've seen come up increasingly in recent years, but I don't actually have any idea what it means. So what is that exactly? Sure. So essentially, insurance is usually what we call an indemnity based product where it's a promise to make somebody whole again when something happens that meets the terms of the contract and the making hole is subject to certain certain exclusions and things like that as with any insurance contract might be. That worked really well obviously for your average insurance consumer. It also works well for insurers buying reinsurance as well and they will do that on an indemnity basis as well. Parametrics really came into the industry as well over two decades ago when we first saw them come into the marketplace and they're basically an insurance contract that will trigger based on the parameter of an event. So it's some kind of data input be that wind speed, earthquake intensity, ground movement from an earthquake flood depth, temperature, there's so many different triggers out there now in the parametric world. These are much more applicable in developing economies because there's often a lack of insurable interest on the ground, so there may not be very much insurance in force, but a sovereign government, for example, could buy draft protection that pays out based on a parametric index of how much moisture has fallen in that year in that country and that now quite a popular product in places like Africa. But there's people in Florida on the coast who will buy parametric protection to cover their condos or their hotels or golf courses or whatever they may be against a hurricane of a certain wind speed moving through a specific area of the coastline that's going to be close to where their base. For me, parametrics are something that I'd love to see continue to develop at the pace they're now beginning to because it's really accelerated over the last few years. There's some really good technology companies coming to the space trying to build better parametric triggers, trying to build software for trying to automate claims payments to some degree as well because that's the other beauty of a parametric trigger that there's no need for a lengthy claims assessment. You don't have to send an adjuster out to look at a property. For example, to assess how much damage has been done, you can just see from the data input that it's above the level that is required to trigger the contract and trigger a payout. And then there's usually a third party or validate that in some way. So claims payments can be as quick as they usually in the two to four week range, but I've seen them made in 24 hours for certain parametric contracts, which is really fantastic because it means you can make somebody not whole because they're buying at a certain amount of protection, but you can certainly deliver the capital. They may need to help them recover far, far more quickly. It does seem like the triggers for the payouts on parametric insurance products. So I understand you're trying to make specific parameters or data points that get hit by an event so that you have these automatic payouts. But it does seem like getting the triggers right would still be an issue, right? Because the investors would want to see something that they think isn't likely to happen. And then the people who are actually selling those products would want to have them set so that there is a realistic chance that if something happens, they would get that additional money. I don't know. It just seems like it would be slightly complicated to figure those out. It's certainly complicated. And I think this is an area that the industry struggled with for a while when parametrics first came around. They tended to be quite simplistic in the way the triggers were structured. One of my favorites was Tokyo Disneyland, the theme park of water. It's the best Disneyland. Don't we all? They actually bought a catastrophe bond back in the late 90s. I can't remember the exact year, but it was called concentric limited. And the reason it was called concentric was that the people who structured the deal drew three circles around the center of Tokyo Disneyland and if an earthquake occurred within those three concentric circles that worked out from Disneyland, you'd get a different payout depending on which circle it fell in. Now, of course, if the earthquake epicenter was outside the furthest circle, could still be some damage. They may not get any payout at all, of course. But that's really something that the buyer of the protection, I guess, has to. Has to reconcile with themselves and really they're buying this as kind of a form of just in time capital that's going to come in when the
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"And I'm Joe wiesenthal. And on today's show, we are going to be discussing more about the financial system and particularly the effect of extreme weather and climate change on insurance. So for more on that topic, we're joined by Steve Evans, CEO of Artemis p.m.. Maybe this is a good time to ask you about parametric insurance as well. Because this is something I've written a little bit about Kat bonds in the past and the World Bank's pandemic bonds. But parametric insurance is something that I've seen come up increasingly in recent years, but I don't actually have any idea what it means. So what is that exactly? Sure. So essentially, insurance is usually what we call an indemnity based product where it's a promise to make somebody whole again when something happens that meets the terms of the contract and the making hole is subject to certain exclusions and things like that as with any insurance contract might be. That worked really well obviously for your average insurance consumer. It also works well for insurers buying reinsurance as well and they will do that on an indemnity basis as well. Parametrics really came into the industry as well over two decades ago when we first saw them come into the marketplace and they're basically an insurance contract that will trigger based on the parameter of an event. So it's some kind of data input be that wind speed, earthquake intensity, ground movement from an earthquake flood depth, temperature, there's so many different triggers out there now in the parametric world. These are much more applicable in developing economies because there's often a lack of insurable interest on the ground, so there may not be very much insurance in force, but a sovereign government, for example, could buy draft protection that pays out based on a parametric index of how much moisture has fallen in that year in that country and that that's now quite a popular product in places like Africa. But there's people in Florida on the coast who will buy parametric protection to cover their condos or their hotels or golf courses or whatever they may be against a hurricane of a certain wind speed moving through a specific area of the coastline that's going to be close to where their base. For me, parametrics are something that I'd love to see continue to develop at the pace they're now beginning to because it's really accelerated over the last few years. There's some really good technology companies coming to the space trying to build better parametric triggers, trying to build software for trying to automate claims payments to some degree as well because that's the other beauty of a parametric trigger that there's no need for a lengthy claims assessment. You don't have to send an adjuster out to look at a property. For example, to assess how much damage has been done, you can just see from the data input that it's above the level that is required to trigger the contract and trigger a payout, and then there's usually a third party or validate that in some way. So claims payments can be as quick as they usually in the two to four week range, but I've seen them made in 24 hours for certain parametric contracts, which is really fantastic because it means you can make somebody not whole because they're buying at a certain amount of protection, but you can certainly deliver the capital. They may need to help them recover far, far more quickly. It does seem like the triggers for the payouts on parametric insurance products. So I understand you're trying to make specific parameters or data points that get that get hit by an event so that you have these automatic payouts. But it does seem like getting the triggers right would still be an issue, right? Because the investors would want to see something that they think isn't likely to happen. And then the people who are actually selling those products would want to have them set so that there is a realistic chance that if something happens, they would get that additional money. I don't know. It just seems like it would be slightly complicated to figure those out. It's certainly complicated. And I think this is an area that the industry struggled with for a while when parametrics first came around. They tended to be quite simplistic in the way the triggers were structured. One of my favorites was Tokyo Disneyland, the theme park water. It's the best Disneyland. Don't we all? They actually bought a catastrophe bond back in the late 90s. I can't remember the exact year, but it was called concentric limited. And the reason it was called concentric was that the people who structured the deal drew three circles around the center of Tokyo Disneyland and if an earthquake occurred within those three concentric circles that worked out from Disneyland, you'd get a different payout depending on which circle it fell in. Now, of course, if the earthquake epicenter was outside the furthest circle, could still be some damage. They may not get any payout at all, of course. But that's really something that the buyer of the protection, I guess, has to. Has to reconcile with themselves and really they're buying this as kind of a form of just in time capital that's going to come in when the
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"Joe wiesenthal. And on today's show, we are going to be discussing more about the financial system and particularly the effect of extreme weather and climate change on insurance. So for more on that topic, we're joined by Steve Evans, CEO of Artemis BM. Maybe this is a good time to ask you about parametric insurance as well. Because this is something I've written a little bit about Kat bonds in the past and the World Bank's pandemic bonds. But parametric insurance is something that I've seen come up increasingly in recent years, but I don't actually have any idea what it means. So what is that exactly? Sure. So essentially, insurance is usually what we call an indemnity based product where it's a promise to make somebody whole again when something happens that meets the terms of the contract and the making hole is subject to certain exclusions and things like that as with any insurance contract might be. That works really well obviously for your average insurance consumer. It also works well for insurers buying reinsurance as well and they will do that on an indemnity basis as well. Parametrics really came into the industry as well over two decades ago when we first saw them come into the marketplace and they're basically an insurance contract that will trigger based on the parameter of an event. So it's some kind of data input be that wind speed, earthquake intensity, ground movement from an earthquake flood depth, temperature, there's so many different triggers out there now in the parametric world. These are much more applicable in developing economies because there's often a lack of insurable interest on the ground, so there may not be very much insurance in force, but a sovereign government, for example, could buy draft protection that pays out based on a parametric index of how much moisture has fallen in that year in that country. And that's now quite a popular product in places like Africa. But those people in Florida are on the coast who will buy parametric protection to cover their condos or their hotels or golf courses or whatever they may be against a hurricane of a certain wind speed moving through a specific area of the coastline that's going to be close to where their base. For me, parametrics are something that I'd love to see continue to develop at the pace they're now beginning to because it's really accelerated over the last few years. There's some really good technology companies coming to the space trying to build better parametric triggers, trying to build software for it, trying to automate claims payments to some degree as well because that's the other beauty of a parametric trigger that there's no need for a lengthy claims assessment. You don't have to send an adjuster out to look at a property. For example, to assess how much damage has been done, you can just see from the data input that it's above the level that is required to trigger the contract and trigger a payout. And then there's usually a third party or validate that in some way. So claims payments can be as quick as they usually in the two to four week range, but I've seen them made in 24 hours for certain parametric contracts, which is really fantastic because it means you can make somebody not whole because they're buying at a certain amount of protection, but you can certainly deliver the capital. They may need to help them recover far, far more quickly. It does seem like the triggers for the payouts on parametric insurance products. So I understand you're trying to make specific parameters or data points that get hit by an event so that you have these automatic payouts. But it does seem like getting the triggers right. Would still be an issue, right? Because the investors would want to see something that they think isn't likely to happen. And then the people who are actually selling those products would want to have them set so that there is a realistic chance that if something happens, they would get that additional money. I don't know. It just seems like it would be slightly complicated to figure those out. It certainly complicated. And I think this is an area that the industry struggled with for a while when parametrics first came around. They tended to be quite simplistic in the way the triggers were structured. One of my favorites was Tokyo Disneyland, the theme park of water. Don't we all? They actually bought a catastrophe bond back in the late 90s. I can't remember the exact year that it was called concentric limited. And the reason it was called concentric was that the people who structured the deal drew three circles around the center of Tokyo Disneyland and if an earthquake occurred within those three concentric circles that worked out from Disneyland, you'd get a different payout depending on which circle it fell in. Now, of course, if the earthquake app center was outside the furthest circle, could still be some damage. They may not get any payout at all, of course. But that's really something that the buyer of the protection, I guess, has to has to reconcile with themselves and really they're buying this as kind of a form of just in time capital that's going to come in when the
Bloomberg Radio New York
"joe wiesenthal" Discussed on Bloomberg Radio New York
"Up 16% on the S&P Vis-à-vis the last 20 training days. S&P 500 closes up 52 points, let's call it. We're at 1.4%. The NASDAQ up a 132.61 .3% on the higher side. Now I will caution you that both benchmarks are down on the week we're down more than 5.6% on the week for the NASDAQ, for example. The Dow is up one and a quarter percent endow really has continued to march and we're currently up 400 points to 32,404, bring it out. Let's have a little look at what's happening in terms of your Russell 2000 there because we are too marching up more than a percentage point on your small caps. Quaid broad based all that Taylor go through the sectors and the industry groups. But when it comes to numbers, we saw more than 400 stocks move higher in the S&P 500 today and only 99 move lower Taylor. Tim it was really broad based. Take a look at the sectors, a few levels underneath the surface, and there's a lot of green, even in the quote worst performer sector. Take a look at the best ones. It's semiconductors, getting some durable, some materials in there. Thanks as well when you think about the yield story as of late in the climb higher. So you guys for the classic value stocks that are coming back and providing a lot of leadership here today. To the downside, Katie, there were only three sectors in the red, it's communication. It's hardware equipment. And it's auto components. It's really auto components that we're the only sector in the red. You're off about 2.6%, but really it has been a decent day for breadth. A decent day for breath. Yeah, it was easy to find some gainers, spent some really interesting stories here. Let's start with Starbucks. One of my favorite places to go in the morning. We broke the earnings yesterday. Katie texted me the other day and said that the Starbucks that she went to ran out of cold brew. I don't get it. Does that get free? That's what I tell her all the time. She gets free cold brew here. Soy sauce, it's about the little joys in the world. I don't know. In any case, frivolous, Katie. There's a lot of people like me because we know that the fourth quarter comp sales beat estimates China didn't look so great, but North America did a lot of the heavy lifting here. Shareholders were thrilled to stock up 8 and a half percent or so we also talked a little bit about another good day for this company. It suggested even a beat expectations in particular you had Wall Street analysts singling out the performance of blocks, cash app business, the stock closed about 11 and a half percent higher monster beverage. This story is so fascinating. There was a really good article by Joe wiesenthal on the terminal that I mean monster. It's just been impeccable. It crushed it on margins. It's at an all time high right now, finishing an up another 7 and a half percent today and Joe looked back to 1997. 333,000%. And I get those numbers. Is that good, Katie? It seems better than it seems pretty good. All right. All right, so the lesson is go back to 1997 and investment monster. Yeah. Got it. All right. Let's talk about some of the decliners today. There were some pretty prominent decliners. I just want to start with a couple headlines that cross the terminal DraftKings is down 28% today. Biggest drop ever. We also saw carvana tumbled to a record at 39 record 39% to close at $8 and 77 cents. Let's talk about the three that I chose though Tesla finishing the day down by 3.6%. It is the biggest drag on the S&P 500. Cloud stocks got really hit hard today. We saw shares of Twilio down by double digits at lassi and down about 30% Twilio down more than 30% after we saw weak results from them. Salesforce taking a hit as a result there. Salesforce actually down for a 5th day in a row and hitting a new 52 week low today. And then Warner Brothers discovery reported after the bell yesterday shares down close to 13%. The company said that third quarter revenue missed expectations, analysts see weak trends when it comes to TV advertising as a continuing headwind. Advertising the headwind, but also what was a headwind today for the dollar at least was that jobs number that came in and ostensibly crushed it to use cadence tenor phrase. We are seeing though overall still maybe some weakness underneath the hood and I do want to shine a light on some of the unemployment data and indeed some of the worries about female participation, people of color being left behind. But at the moment, we do see a number that exceeds a 190,000. We see Bloomberg dollar index, we can buy the most since 2020. What does that mean when you've got a Singaporean dollar surging 1.4% because that also takes some hope some prayers, some reporting that is indeed China, maybe will be easing some of its own COVID restrictions. The loony having its best day since 2020 in terms of strengthening some 2% that on the back of oils move as well as the dollar goes lower. Aussie dollar up 3% on those hopes to do with China, so really an extraordinary volatile FX space and indeed in commodities as well. I'm looking at WTI crewed up 5%. That back up to a 92 handle, I'm going to turn my earpiece because overall I don't want to lose my Brent crude up $98 at the moment, this is all on the back of the hope of demand coming from China the second largest economy, the biggest overall net buyer of oil. We look at Nat gas up 8% steel. We saw some of the metals do zinc up 4% on the back of that China news and indeed help by dollar weakness. And I'm looking at what is a pretty mixed picture in terms of yields pushing higher generally the Aussie yield coming down a little bit, but that was at the front end and I feel that that was similar in the U.S. Taylor. It was such a wild story, Caroline, when yields are actually falling on the front end of the old curve for a two year guild, you fell for the first time in 6. After rising for 5 straight days, finally a reprieve here same with the 5 year yield finally yields are falling, but tens 20s, 30s yields are still rising and out on the long end. You're up 9 basis points on the day. For the week though, overall, it has been a story generally of yields are rising. You really see that on the two gear yield where we finished last Friday to four 40 and we've migrated northward again to four 66. Again, Katie, this is a big week of the Federal Reserve and those meeting the jobs numbers, this morning that has the front end, as always, back in focus. And we have so many data points to look forward to next week's CPI. But to the point that you made on the dynamics of what we saw along the curve, you add that together, you did see the twos ten steep in a little bit. Now it's a negative 50 basis points of inversion. What was the size and scope it was the most inverted in what 40 years? Since the 1980s at one point when we woke up this morning that inversion was negative 62 basically. You recovered some of that. I think at 50 around the inversion levels of weight of 2000, but you're getting close to where we were back in the 80s and Tim that hints that there might be a mistake, if you will, that a soft landing is becoming a less probable one. Well, Taylor, I want to give you a shout out here because you just put this in the chat, but a new story from our own Christianity about sorry, what was that Carol? Yeah, I mean, well, this is a good one. I mean, we've got an IV going. It's a tweet at the same time. Former treasury secretary Larry summers, he's on Wall Street week tonight with David Weston, and he gave an interview and we might think back to that was sort of the pivotal moment in the press conference with Jay Powell on Wednesday was when he talked about the terminal rate and it might have to be higher than what the summary of economic projections said. Back in September. And Larry summer says that number could be as high as 6% now. So forget 4.6%