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tv   Bloomberg Markets  Bloomberg  April 16, 2021 1:30pm-2:00pm EDT

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as a young male in his 20's. police chief randall taylor also notes that a "significant number of employees" at the facility where the shooting took place thursday night are members of the sikh community. eight people were killed, another five hospitalized. police say the gunman killed himself. have a metal guitarist has become the first defendant to plead guilty to federal charges in connection with the insurrection at the u.s. capitol in january. john ryan schaefer is the front man of the band ice earth, a federal district judge said he has agreed to cooperate with investigators in hopes of a lighter sentence. the justice department is considering putting safer -- putting schaefer in the federal witness secured a program. china will be in focus on president biden meets with japan's prime minister, yoshihide suga. it is the presence up a first in person meeting with a foreign leader since taking office.
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the leaders will discuss human rights, taiwan, and supply chains. in vienna, iran says it has enriched uranium close to levels needed to make a weapon. that adds to the obstacles diplomats are trying to overcome as they try to revive that landmark 2015 nuclear agreement. iran is demanding that the u.s. lift sanctions before it agrees to rejoin the treaty. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries, i am mark crumpton. this is bloomberg. amanda: hi, i'm amanda lang. welcome to bloomberg markets. matt: i'm matt miller.
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we welcome in our audiences at this hour each day. here are the file -- here are the stories we are following around the world. coinbase made waves in its debut, but now galaxy digital could be the next crypto bank to list in america. we will talk shortly to the ceo, mike novogratz come about his plans. and the big traditional banks trounced analyst profit estimates this week, but how healthy are the smaller players? we will get insight in an exclusive interview with his ceo of citizens financial. how are the markets doing? amanda: markets are pretty flat today, matt. we have some pretty -- czar a little more buoyant, -- things are a little more buoyant. drivers for the u.s. market, we are seeing materials and utilities as the leaders. energy showing up as the weak spot across the board. you can see from the nasdaq,
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consumer discretionary communications a little weak on the day. look at the 10 year back at 1.57, whiplash for folks expecting that to keep trading up to 2%. and of course we were watching coinbase after its direct listing was pretty well received, and it continues and will end the week higher here. you can see down off the big pop it got on day one, but nicely above where you might have expected this to trade, all of course in an atmosphere of questioning around the valuation of crypto in general. some new questions raised, a potential for a washout, and other direct listings. mike -- mike novogratz is the ceo of dexter nunnally bostick, i will handed over to you to kick things off great to have you with us. sonali: coinbase is that 332,
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the lowest it was trading in private markets. what do you think it should be worth? mike: listen, it is tough to put a number on something, but i will tell you one thing. it is the first -- coinbase is the first big institutional equity name of the crypto space. it will be part of everyone's space. they will think if i am not long crypto i am short of it. a lot of the investors and employees who have but -- made lots of money on coinbase, having their entire network based on selling, as they always do, there is a turnoff by insta -- there is a turnover by institutions, it will take a couple of weeks for we have it turned over and achieve equilibrium. at that point my gut says the stock market will start climbing higher again. is it expensive? on a pe basis, priced to growth basis, you tell me. i will tell you one thing, if
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you think it is expensive, it will stay expensive because crypto is just starting. sonali: how does this $55 in valuation think about your own plans to list in the u.s.? i to unfortunately we are under strict guidelines, so we cannot talk about that. i can talk about the company. we are bursting at the seams, hitting on all cylinders right now. our trading business is up. i direct invest business is up. we have hired 75 people in six months and we will hire another 40 in the next four months. the quality of people coming into the crypto space is amazing. young talent that is looking at tech and investment banking and saying i want to move to crypto. this is not a fintech business. coinbase does not have a fintech business, nor do we. it is hard to even note where the borders are of that. what is the total addressable market? four months ago, no one thought
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nft's would explode like it did. using the blockchain to transfer value, whether in digital gold and bitcoin or smart contracts with financial services in d5, are now collectibles in nft's, it is just an exploding sector. matt: you brought in michael from goldman sachs fuld up what did you want him to do? mike: i want to send a strong message to our investors, our employees, stock market investors and customers that we are a customer-focused merchant bank for the 21st century. michael probably was the number one client guy on wall street over the last 20 years. his relationships with the biggest hedge fund managers and biggest real money managers, institutional investors, are the best i think in the entire street.
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really, he understands how to deal with customers and does all the customers. we are trying to migrate customers from traditional finance into this new world of crypto blockchain, bitcoin. they often go on the same path. they start with bitcoin. they start learning a little more. what is this a theory about? we want to be that bridge, and i think he is perfectly suited to help guide us there. matt: even sophisticated investors find it hard to wrap their heads around this area of digital finance. who do you compete with? that may make it easier to view the universe. are you competing with a coinbase, or are you competing with a goldman sachs? mike: as of right now we are not competing with goldman sachs or any of the big banks. we are collaborating with them. we did a partnership with morgan stanley, we hope to do partnerships with most of the banks. i think in three or four years we will be competing with them. message to my employees is we
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have to stay the smartest guys in the world, -- in the room, keep earning, keep innovating. we are starting to compete with centralized finance, with unchanged solutions to unlock these problems. in some way in 15 to 20 years and from now all banks might be anachronisms. i say we are a bridge to the new era. the new era might be much more of a peer to peer era. angst don't happen overnight, so our idea is to continue to innovate and stay one step ahead. >> you know better than anyone because you were an earlier mover in this space. you mentioned nft. i think that is an excellent place to focus because while of course the blockchain part of that has great value, and as you say it may replace every intermediary in the future, but it doesn't mean that the trading value of the current nft's make any sense at all.
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to launch the galaxy etf, do you worry about valuations? mike: listen, i think bitcoin has had its cycle. we had a crash in 2017 and now we are in a massive adoption cycle. so bitcoin is going higher. same thing with ethereum. ethereum went from 1380, now all the way back to 2300, 2400. use cases are going higher and higher. all nft's are being built on ethereum, the bulk of central bank issued currencies, stable coins are going on a cerium. and a lot of the projects are being built on a cerium. -- on ethereum. the more people use the network, the higher prices are going to go. in the nft space, we have some crazy prices. i don't think someone else is going to pay $69 million for a beetle. that money is coming from the
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crypto economy. it was not a buyer who bid 69 billion, it was two wealthy crypto people. there is over $2 trillion of wealth in crypto that didn't exist 10 years ago. it did not exist really three years ago. so that is real money, so there is new consumers that are spending things that matter to them. so we are going to see these two economies merge. we are a half percent of global wealth in crypto. inc. of what i just said. one half of 1% of wealth in crypto. that will be 2, 3, 4% in the next two years. this economy is only going to grow. amanda: as it gets there, the growing pains, you reference them, the potential for washouts. putting together an etf, how might some of the valuation corrections hit the retail market and that retail investor? mike: bitcoin, ethereum, they are 80 vol.
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that is a lot of volatility. right now that is more time stock market to stock markets that are valuable. it is a time currency markets. people's out location should be made with that in mind. -- people's allocation should be made with that in mind. the broadness we are seeing right now is not in ethereum, in coinbase. it is in smaller, what they call all coins. smaller tokenized communities. rallying up to a $50 million market cap, reminiscent of the gamestop -- $50 billion market cap. reminiscent of the gamestop thing. lots of people on the reddit chat rooms, that elon musk and mark cuban are pumping it up. it doesn't really have a purpose. it is a community and maybe they can keep value there. i would be very, very worried.
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one of my friends was investing at these prices. i do think there is some pockets of retail froth. exar p, which is under investigation, the parent company, under the sec, their coin went from $.40 to $1.60 in a month. doesn't make much sense to me either. so there is a retail frenzy. it's not really being seen as bitcoin and ethereum. quite opposite, money is coming out of bitcoin and ethereum, moving to others for more juice and excitement. matt: candida has been ahead of the u.s. in terms of regulatory -- canada has been ahead of the u.s. in terms of regulatory. as we get more products like that, will it bring more calm or less volatility, do you think, to price movements? mike: i think it should bring
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less volatility, and i say that because the more liquidity, the more people have easy access to make the bets they want to bet, you get price stability, you get price discovery. and so previously, you had to go out and find a borrow, sell it, which is a traitor it is not hard to do, but if you are a retail investor that if you are a trader -- if you are a trader it is not hard to do, but if you are a retail investor -- i wish i had thought of it first. the more liquidity in the system, the better. sonali: mike, this is not the first higher that you have made with michael from goldman sachs. a little secret was, you know, a couple years ago i used to find a lot of my banking sources in the crypto community because there were people who were working in the banks looking to leave.
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do you think that there is something about talent that the banks are not getting that is attracting people away from them into firms like yours? mike: listen, this is a frontier industry. when you dream, you can dream big. forget the senior guys, right? i have known michael for 30 years. he had a wonderful -- he was ready to leave for the next chapter. what is more interesting to me is that we are hiring 24, 25, 26-year-old's from those firms, goldman sachs, bank of america, j.p. morgan who are at the perfect part of their career for those banks. they have gone to the right schools and been trained well. it is almost more painful for those guys -- those banks to lose those guys than their senior people. the jr. people are the lifeblood of those banks. those jr. people are stern to say, hey, this is a polar career. it has more upside potential. it has a lot more upside potential, so we are seeing a
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migration of great talent. amanda: one of the things that makes the space so interesting, and there is opportunity and potentially risk, is the role the regulators will play. do you think that generally speaking the regulators -- getting through central bank than what they are thinking about their own version of digital coin or cryptocurrency -- will they be a partner in this, or will they be something you have got to figure out how to get around and over he echo ? mike: there are two sides to that point. gary gensler, he said a lot of innovation but happens by small guys that the regulators kinda let get away with things. you are seeing a ton of that in crypto. but the big guys have to work with the rules of the regulars. fortunately or unfortunately, we are big guys, so we are working with the rules and the
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regulators. i think gary will be great as an sec commissioner. he is smart. he wants to be perceived as smart and articulate, so he is not going to not answer things. and i think he will lay out rules. the big question in crypto are really 2 -- one is around centralized finance. when i am trading with someone in a smart contract, do i need to know who is on the other side of that? we take the approach right now, unless you can have some way of high probability knowing you're not dealing with a bad actor, we don't ky see that person. that is going to be solved, and the regulars will put some bumpers around or real guards around that. the second really is, the same theme. know your customer, unposted
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wallace versus hosted wallace. how we think about. to p or transfer in daniel -- know your customer, unposted wallets versus hosted wallets. how we think about securities offerings versus nonsecurity's offerings. a lot of these took in economies were launched in 2017 and 2018, and you can go back, and say that looks like a securities offering, so now they are in trouble. there are a lot of other tokens out there that are probably sweating a little bit, and i think it will help when we get more clarity around it. matt: the biden administration, china is rolling out a digital u.n., and the biden administration views that as a threat to the dollar. however, our bloomberg intelligence analyst mike mcglone says bitcoin actually handles that dominance. tether is a digital dollar volume at double bitcoin.
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how do you view governments and their foray into digital currencies? michael: i think it is a real threat to the dollar dominance, that we don't have a bigger u.s. backed stable one. we are going to, right? facebook is launching hopefully in the next quarter or two their dm coin, which is basically just a dollar wrapped in a coin. circle and coinbase have a coin called usdc, which is a stable coin which is growing like a weed. central bank issued digital currencies is not sanctioned by the central bank, and that is a major part of what we will see developed by the next three years. it is why ethereum continues to go higher. but if you let china dominate those global payment platforms, the dominance of the dollar is going to weaken, period.
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treasury knows that now, politicians in the u.s. know that now. so we are not turning back on that. figuring out how to do that where you protect the privacy of your citizens versus what china is doing, there is a lot of art in there, so i think the u.s. is being thoughtful on how it is approaching it. most likely you will allow private companies to run these things, but having the assets held at a sanctioned bank, that makes the most sense to me. i have been on the phone with heads of central bank for four or five different countries in the last two months, and they are all trying to figure out their version of what they call the central bank issue, digital currency. matt: have you talked with treasury about helping them figure that out? mike: i haven't specifically, but our guys are in dialogue with the lower tiers of treasury. matt: great to get some -- mike: i'm sorry. matt: please, go on. mike: when you have these
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turnovers in administration, it takes a while for the new leaders -- gary literally just got put in front of his desk yesterday. it takes a while for the senior people to kind of get their hands around everything, but there is a lot of people in the working ranks of treasury, sec, occ, that know a lot about the crypto economy, about blockchain, and about all these issues. matt: great to get some time with you, michael. fascinating space. michael nova gretz is the ceo of galaxy digital -- michael nova gretz -- mike novogratz is the ceo of galaxy digital. the day banks to coinbase, you bring this interview with michael, so we really appreciate your recording, sonali basak. coming up, we will ask if regional banks are just as optimistic about the economy is wall street. this is bloomberg. ♪
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amanda: this is bloomberg markets. i am amanda lang with matt miller fulton we are taking -- keeping our eyes on citizens financial today as it beat analyst estimates for we have the chair and ceo with us. bruce, thank you for being with us. today we see softness and the stocks. give us your flavor on the quarter. what do you see by way of -- on the commercial banking side come are you seeing a real kind of rebound at this stage? bruce: i characterize the quarter as led by strong results in our people businesses, particularly capital markets, so we had a good quarter in emma day and underwriting, -- in m&a and underwriting, which is great to see. our mortgage business is starting to suffer a little bit in decline and on sale margins.
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still overall strong revenue levels. that was the high note, and we also did a good job managing the balance sheet. bonds were broadly stable, and it was up a tad. the real positive news i would say overall is that the credit picture continues to improve. we put -- we called out improvement in our charge-offs down from 50 to 65%, down 35 to 45 basis points. a sickly a 25% reduction in the outlook in three months. matt: what everybody wants to know is your outlook for loan growth. it was disappointing to a lot of the big wall street ceo's. what do you see? bruce: i would say we are going to see loan growth build over the course of the year. we already expect to see an uptick in the second quarter. we have a number of drivers on
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the consumer side of the house. so our mortgage business, our student loan business, and our point-of-sale financing business all should have -- should start to see nice growth in the second quarter. some of those are nations where we play, like the student loan refinancing and point-of-sale finance. so we might catch a wind before some of our peers. i would say on the commercial side, as the economy gains momentum, companies will start to invest for growth. whether that is working capital or emma day, they will -- or m&a. pipelines are starting to build, so we are optimistic in the second half we will see more corporate loan demand. matt: i have to jump in here. we did not get enough time with you, so hopefully we will get you back. bruce van saun. the reason i have to jump in is because we have breaking news amanda, on spacex. the washington post is reporting that spacex has now won a nasa
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contract to land astronauts on the moon. this was, of course, art of elon musk's gold with the company, and we have been talking for so long as goal with the company, and we have been talking about private enterprise working for national space exploration. it looks like now, according to the washington post, that it is going to happen. amanda: real shot of credibility for spacex, of course. matt: very fascinating stuff, and it is about time we get back to the moon, isn't it? it's been too long. we need to go back there and plant a flag again. hopefully they will bring a canadian flag as well. for amanda lang, imf miller. this is bloomberg. ♪
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♪ >> i am mark crumpton with bloomberg word news. authorities in indianapolis say
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a gunman who opened fire thursday night at a fedex facility killing eight people, and taking his own life was a male in his 20's. indianapolis police chief also noted that a significant number of employees at the facility are members of the sikh community. it was at least a third mass shooting this year in indianapolis alone. >> nothing we learn can heal the wounds of those who escaped with their lives. but who will now bear the scars and endure the memories of this horrific crime. mark: authorities trying to determine a motive for the shooting. china says the u.s. is being "too negative" towards china on the issue of climate change. the chinese foreign ministry also cured -- criticized -- and change targets set by the paris agreement set by 01

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