tv Bloomberg Technology Bloomberg November 22, 2021 5:00pm-6:00pm EST
announcer: from the heart of where it ovation, money and power collide in silicon valley and beyond -- this is bloomberg technology with emily chang. caroline: i'm caroline hyde in for emily chang. in the next half-hour, we will take a deep dive in two president biden's pick for chair and vice chair of the federal reserve. has the president avoided a
contentious senate battle? let's take a look at the market reaction to those announcement because big tech took a hit. we may be seeing a more hawkish tone as the fed chair remains in place. many felt that brainard would be a dovish voice. no news on what sort of bank supervision. still three more seats to fill. the kbw bank index -- we did not see yields push higher as we expect a rate hike as soon as june 2022. gold futures fall as inflation could be tamed somewhat quicker than the market anticipated. bitcoin up off its highs, not much of an inflation hedge, more of a risk asset. the s&p 500 falls from its
record high as we see some of the key tech names under pressure and the two year yield, an auction with soft demand overall. the dollar index continuing to rally, up .4%. the emerging markets feel the brunt of that. i want to welcome our bloomberg television and radio audiences we had to washington where we are joined -- democratic senator mark warner to chew on the issue today, finally the announcement, the federal reserve. we are still waiting to hear who will be nominated for the three remaining seats at the federal reserve, but first and foremost, your reaction to the pick? >> i think it was great news. in jay powell we not only have continuity, we have someone the markets are comfortable with, someone both democrats and
republicans alike respect. i think he will be overwhelmingly reconfirmed as chair and as one of the vice chairs, we've got a known quantity, strong credentials on the democratic side. i think it is a great one-two punch. >> i wonder if someone will be among the first to vote on these pix. if you agree with the administration when it comes to its argument on administration, is it transitory or will prices continue to rise through next year? >> i think we've all been a bit surprised at how big the inflation bump has been, though we are obviously in uncharted territory. we've never gone through a complete economic shut down and how long it's taking to get the economy reopened. we've seen certain books that
have been transitory. earlier in the year, -- i'm starting to hear better things in terms of shipping and hopefully that will come down, but my advice to the fed chair would be i hope we get to see a little tapering and maybe that moving faster in terms of the fed's acquisition of expanding its balance sheet. but this is uncharted territory. i agree it's transitory but it could be, for the short term, the next 60 or 90 days, it could get a little worse before it gets better. caroline: your democratic colleague, elizabeth warren was less jubilant about the continuity. how has been the oversight of
wall street? brainard might be tough, but we are waiting for three seats, most notably the supervisory role when it comes to the banks. what are you expecting when it comes to the other administration appointees who have yet to be confirmed? sen. warner: i'm anxious for the administration to move a bit quicker on the nominees. i appreciate that while i have not always agreed, i appreciate the fact he's been willing to move on to give the president more flexibility. i'm not sure i agree with all my colleagues that we've seen any kind of dramatic relaxation. i think the basic framework we put forward in dodd-frank has stood the test of time. we've gone through a pandemic
and a complete economic shut down and while many parts of the economy suffered, the financial sector did not face the kinds of hit that if we did not put the capital reserve in place -- i would give this sector, may be individual areas i would have done differently but i would give a passing grade and a lot of that was due to the reforms after the last financial crisis. >> president biden said chair powell, assuming he will be reconfirmed will make climate change and acknowledge and try to mitigate the impact of climate change. knowing it doesn't republican senators sent a letter to chair powell last summer, essentially criticizing the fed for changing its tone and mission, do you believe that would be the case? what would that mean for the mission of the central bank? sen. warner: i don't know any
sophisticated investor that doesn't think taking into consideration some of the hidden costs being brought about by climate change, we need to have those costs factored into the system. we need to have more visibility. we just went through a year where a third of america couldn't go outside because of the fires and we had more deaths and flooding in new york in basements than we had in the hurricanes. the notion we could ignore climate, i don't know any sophisticated investor who doesn't think this shouldn't be high not only on the fed but the bank's agenda. caroline: there is plenty of worry when it comes to the energy crisis, we have been seeing gas prices spike significantly in europe. much of that, we see tensions
rise between russia and europe and we see a buildup of troops. a buildup on the border of ukraine, that's affecting the corn market. can nothing be done in the political relationship? sen. warner: i happen to be the chairman of the intelligence committee and the one thing we are sure of is that vladimir putin likes to stir the pot. his overarching goal is not only vis-a-vis america, but nato to try to keep us off balance. he has a historic view about ukraine that the vast majority of ukrainians don't share. the one thing that unites ukrainians whether they are in the west or even some of the eastern regions is when you see putin and his forces start to mass -- i was in the u.k. just a week ago and this is clearly top
of mind amongst our british friends. my hope would be the balance of nato would continue to send that message to putin about tactics and it would be destabilizing through the whole region. the last thing the world needs is putin messing in ukraine as the overall global economy tries to come back from covid. caroline: senator mark warner, we wish we had more time with you. jay matthew will be sticking with us. we have so much more after the break. we're talking more politics and more power. this is bloomberg. ♪
bloomberg technology. let's get a quick check on where the markets were today. the news of the renomination of jay powell for the fed chair -- many felt perhaps a more hawkish tone if pal takes in place. many people felt if brainard took the leadership role, things would have been a little more dovish. the markets factoring that in, meaning yields back up. kbw back as we start to see a rise in interest rates. your underperformer in terms of commodities, gold up as we see less need for an inflation hedge. bitcoin, seems to be a risk asset at the moment, drag lower, the risk off sentiment in terms of growth. let's have a look at what would
happen in terms of the s&p 500. we saw risk aversion coming into the market. this is a short week. as we see the stocks take a well-earned break. new supply coming to the market and the yields pushing higher to the tune of seven or eight basis points on the two-year. that factors in the fact we might see rate increases faster than anticipated and moves the shorter end of the curve that much quicker. we saw yields rise across the entire curve and the breakeven rates signaling where you see inflation rates. they have pushed back and the real yield, overall it feels as if this is a market that feels president widens reappointment of jerome powell is less dovish not a hit on growth. a signal in confidence for the u.s. dollar.
emerging markets feel the pain, but remember there is idiosyncratic news at play, the russian ruble getting hit as we look at the relations between russia and ukraine. we want to be going back to our conversation on the federal reserve and what it means for regulation and we returned to d.c. where my cohost, joe mathieu is standing by. we want to return to the white house where we are joined by the president top economic adviser, the director of the national economic council. it took a while to get these announcements, but what do you make of the reaction? the market seems to think we have a slightly more hawkish bent with chair powell at the helm and the rate being factored into the market is we could be on track as soon as june. >> the president's focus is to
focus on people with experience, expertise and independent judgment. we feel good we found to individuals with unmatched experience, sound judgment, crisis-tested coming through this crisis and both of them spent a lot of time working on this new monetary policy framework, a commitment to a strong, robust economy that brings everyone along. we feel good about their reaction and we hope we get them confirmed quickly. joe: we have been talking about this for weeks. i wonder what took so long to make what was apparently a noncontroversial announcement? why wait until today? brian: the president is deliberative about these issues. by making the announcement now, we are signaling to very strong
individuals we think will have plenty of time to be confirmed before the end of these terms. an appropriate moment to get this rolling and i think it will be good for reinforcing something the president reinforced today, which is the independence and credibility of the fed. it's incredibly important we reinforce the independence of this institution. you see the president prioritizing this in his announcements today. brian: senator elizabeth warren says she will not vote for jay powell to continue in this role. not a big surprise there. i wonder if when the president met with senator warren he asked for her support or is the white house counting on republicans to make up for progressive votes either in the banking committee or on the floor. brian: senator warren is a trusted partner of this white house and of the president. we are grateful to have her support for the vice chair and
understand chairman powell will have broad support in the senate. we've seen that over the course of the day today from republicans and democrats. the chair of the relevant committee in the senate is in the congressional progressive caucus and what you will see his support from republicans and democrats to reinforce the importance of the independence of the federal reserve. we are confident both will be confirmed and that we will work with supporters and detractors alike, particularly as we look to this next set of nominees the president has to make, the vice chair for supervision who will have to oversee regulatory issues. caroline: talk to us about overseeing banks and regulation. how aggressive will that person be from your perspective? that's what a lot of the progressives are calling for. brian: i don't want to get ahead of the president's choice.
but what he said today as he's focused on identifying somebody who has the credentials and expertise and toughness to do that job. it's an incredibly important job and conversations, they are looking forward to having someone in that role and they will defer to the expertise of that person. it will be an important pic and an important complement, including the additional two governors spots be that the president will have an opportunity to nominate. all three of those individuals will help fill out the slate and that is something the president will take very seriously. joe: tell us more about the remaining seats and announcements that the president said would bring new perspectives and different voices to the central bank. how would they change the mission of the fed? brian: i don't think they change the core mission at all. you heard the president and the
dual mandate and priced ability. what they would bring his diversity of perspective and thought that is so necessary to actually make those decisions in a thoughtful and independent way. the president is committed to the idea that a body that makes such vital decisions for the american economy should reflect america, should reflect the diversity of life experiences this economy reflects. so i think you will see people who have real expertise in the field but also bring perspectives we haven't had on the fed board historically that will add to the decision-making process. joe: assuming you have a short list, do you expect announcements by the end of the year? brian: that is certainly our focus. we are going to try to get it done in the coming weeks. caroline: as we try to get those names sorted, i'm interested when you talk about diversity at the federal reserve, it's important to have viewpoints
when we see inequality growing in the economy, an economy that is roaring but not bringing everyone with it. we saw in the previous labor data that woman of color in particular are being left behind and we are not seeing participation rates when it comes to women and black men. how do you hope the federal reserve might be able to ease the growing inequality? brian: one of the things the president was most impressed by over the last couple of years has been there focus on developing this new monetary policy framework that puts at the center maximum employment broadly defined and looks at driving and economic recovery that brings along parts of the labor market and parts of our society that have previously not benefited from economic growth and opportunity. that is a framework that is new and important and one that i think they will be committed to pursuing even as we go into
uncertain times and need to deal with the threat of inflation. on the fiscal policy side, that is a core focus of our economic agenda. it's something the infrastructure bill will help support and the build back better agenda by investing across childcare and eldercare would be a key way to help more women, particularly women of color get back into the workforce. we've seen this pandemic create really unfair disadvantages for low income parents who have to make the choice between stepping out of the workforce to care for a child or remaining there. we could solve that issue and get more people back to work in a more equitable way i some of the investment in that package. joe: how has your own view on inflation evolved? it's become a daily conversation in a full-time job almost for this west wing. do you see prices continuing to rise until the fed could knock them lower?
brian: prices are high, no question, and that is affecting american consumers. at the same time, we are looking at the actions we can take as an administration to try to address those. a lot of the drivers behind that is we still have covid globally. it's affecting supply chains with a supply-demand balance. we expect that to ease across time but something like the supply chain challenges at our courts, a couple of weeks ago, the president brought stakeholders to get ports on the west coast to go to any four/seven. in the last couple of weeks, we've seen the amount of time a container sits at port fall by a third in shipping costs fall by a quarter. so we see some concrete progress there. on gas prices, we've been very focused on the president will talk more about that over the coming days. we are going to do what we can
caroline: activision-blizzard ceo is not ruling out the possibility for his resignation. this comes after a wall street journal article last week mentioned he was aware of allegations of sexual harassment and assault against employees and did not report them to the board of directors. resignations have been piling on. el salvador intends to issue the
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>> this is a good team at the fed. >> this is the dream team. >> this is a don't rock the bow to move. >> they will not be any conflict on monetary policy. >> this is the central case the markets expected. >> to not reappoint powell would have been quite negative for the markets. >> it gives the market more confidence to move ahead for the pricing of rate hikes next year. >> we still have the fed on wait-and-see. >> they stick with the current
pace and then hike once you get to the end of that. >> we are at the point in the economy where stability is really important. >> total continuity. >> continuity is a very good thing to have at the central bank and that is what we are going to have. caroline: a little bit of reaction from just some of our guests earlier today on bloomberg tv about president biden's nomination of jerome powell to head the federal reserve for a second term. tech, cryptocurrencies, and nomination as vice chair. i am joined by ed ludlow in london. what do you make of the picks? ed: you set me up well because they were talking about there will be no conflict on the monetary policy side. i thought why don't we find some conflict? that is always a good thing to do. i do not know what you call it, there was a relief rally across risk assets. if you come into the bloomberg terminal, cryptocurrencies are no different. we saw bitcoin and other cryptocurrencies, which have
been heavily lower on monday, they paired the losses but they have trickled down. this is the key differentiator between nominee powell and dr. brainard. she talked about how the fed should be more active in his research around cryptocurrency. she back to the idea of a fed digital currency, a digital dollar essentially, whereas chairman powell has resisted the urge to go into that territory. although we also expect her to be more active on the regulatory side of things. she has sounded a warning on a particular section of the cryptocurrency market, stable coins. this is what she had to say during a speech on may 24. essentially she is warning about the risks for the monetary system. there is a risk that the widespread use of private money stable: for consumer payments could fragment part of the u.s. stable system. the stable coin has a
fixed-price, usually has a value of $1, it is backed by real assets. it will be interesting to see what she does. there was other news in the news -- in the world of bitcoin. bring in the pictures. i want to show you this. this is an astonishing story. odell beckham junior, who has joined the rams, will take his new salary, quote unquote, in bitcoin. this is a lot of money. he has also pledged to give $1 million of bitcoin to fans via a tweet. but you wonder how much of this is a marketing exercise. if someone comes to you and says, hey, how about taking a salary in bitcoin? do you have any visibility of what you're going to earn, future earnings? imagine a sports contract like that. i thought that was astonishing. caroline: indeed. we got the leader of new york, mayor of new york wanting to take his first paychecks in bitcoin as well.
quite the flavored assure -- de jeur. el salvador intends to issue the world's first sovereign bitcoin bonds and bill as bitcoin city. the president there announced in a beach town to a crowd of cheering bitcoin enthusiasts. and one man who knows the ins and outs of this, samsung ma -- samson mow. they are going to be financing this bitcoin city that is surrounding this area of the volcano. i am wondering why any institutional bond investor would buy this. samson: why wouldn't they? caroline: because it has a 6.5% yield and the yields on the current bonds of el salvador that come to you in 10-year is 13%. samson: yes, but this bond has a
bitcoin component which is why it is called a bitcoin bond. when el salvador is facing $1 billion in this first bond issuance, $500 million will be used to acquire bitcoin and go towards energy and mining and infrastructure. so there is a war chest of bitcoin backing this fund. that dividend or that coupon will increase after the fifth year. so for the first five years it will be a 2.5% coupon but that it accelerates to what i call a bitcoin dividend, or a special dividend that is basically the bitcoin being sold off. $500 million worth of bitcoin being sold off gradually quarter by quarter. el salvador will share that with the bondholders. caroline: if an institutional bond investor was allowed to buy into this, to have exposure to crypto, why wouldn't they just buy bitcoin straight up?
samson: they could, but usually the mandate do not allow them to hold cryptocurrencies like bitcoin. caroline: but you think they will be allowed to hold these bonds? samson: why not. it is just a bond. caroline: but it is not, because it is related to bitcoin. and as you say, 50% over five years, if you can pay that back, would be based upon bitcoin. do you think the mandates would allow them to buy it? samson: that is for them to figure out. but we are trying to figure this in a way that they can present it to the boards come of the directors as a normal bond because it is a normal bond. it just happens to have a large chunk of bitcoin behind it. but i do not see a problem. bitcoin's market cap is over $1 trillion. there's about $145 billion worth of stable coin. this is a -- this money will pour in. i was in turkey talking to a
friend, and i told him i was going to el salvador next and i told him about the bonds. in two seconds he said i am in for $1 million. i said are you sure you do not want to think about it? do you want to read more? no, this is for the people of el salvador. the money will come in. i spoke to someone just before coming on your show and he said i will take $20 million. caroline: is it not wrong to say people should do their due diligence first? samson: they should, but there's an important part here which is helping el salvador and fixing the money supply. that's more important than the specifications of a bond. caroline: so even without institutional bond investors, if they are perhaps driven away by the fact that the yield is so low relative to existing bonds, or indeed they cannot have exposure to bitcoin, who will be the actual investor?
it will be more crypto-focused enthusiasts and they will be good for $1 billion? samson: i think there is more money than $1 billion that will go into the funds. the institutional investors can come in, do their due diligence. 6.5% is in line with most bonds around the world. they can run the calculations. at the end of 10 years, if bitcoin is $1 million, we've done a car collision of bitcoin appreciating 35% year-over-year, then the yields that year will be 90% plus the 6.5% coupon. we had another conservative model put it at 140% api, plus thec -- the coupon. it's attractive in any measure. caroline: crypto is up on an annualized basis 240%, so you might be losing out on the opportunity cost of just getting into bitcoin rather than this
bond. you are in turkey, you are in el salvador. are there other countries, areas looking at this with, dare i say it, perhaps political risks that some just don't always willingly swallow? samson: there is risking everything. even buying bitcoin comes with risk. it is up to people to make their own decisions. i think there's a lot of interest. we have had some interest -- some institutional investors reach out to blockchain and they are very interested in developing. i guess that means their mandate would allow them to buy these bonds. caroline: to talk about accelerating hyper bit conization. can you dissect what that means? samson: it just means you do not need to go back to currencies. you can just buy bitcoin and
stay in bitcoin and spend bitcoin. el salvador is a key part of that. bitcoin is legal tender here, so you can buy with a lightning network and spend bitcoin freely. bitcoin city is going to be a very attractive place i believe for a lot of bitcoiners. caroline: meanwhile, relations with the u.s. and el salvador, from a government perspective, seem to be unraveling, heading to a new low. there are worries of relationships between el salvador and the imf. does any of that matter to the investors were talking to? samson: no. [laughs] i do not think a lot of these organizations like the imf or world bank are relevant in the world based on bitcoin. they are only relevant because they can print money, they can make fdr. they can make money out of thin air. you cannot do that on a bitcoin standard.
it really takes us back to what money should be, which is just money, not a surveillance mechanism and not a tool to enforce your beliefs and economic policies on another nation. caroline: samson mow, a beautiful shot. talking us through some of the risks and the rewards potentially coming from these bonds. but fervently say do your due diligence. samson mow, block stream cso. coming up, we will look at how one company is trying to mace space exploration more affordable. the company that has partnered with blue origin is received a new capital to move forward in his dream of a space station of its own. more on that next. and let's take a look at zoom video. they gave fourth quarter revenue to beat analyst x-men -- beat analyst estimates.
caroline: amazon cofounder jeff bezos is giving $100 million to the largest single gift ever to the organization. it is an honor of the late congressman john lewis. the foundation says it will be used to help programming that reaches emerging leaders in the u.s. and around the world. let's turn our heads to the stars now. sierra space, valued at $4.5 billion, just raised $4 billion
that will help them move forward with its vision of setting up affordable space transportation habitation. the project called orbital reef is a joint product with jeff bezos's blue origin. joining us is janet kavandi. i'm interested in what you hope to accelerate through the money. i think we have some technical issues. you are muted. give us one second. there you are. janet: sorry about that. the first and foremost that we are trying to accelerate is our space points. this is a model of that right here. looks like a miniature version of the space shuttle. it's due to launch at the end of next year from the kennedy space center. so we are trying to keep that on track for that launch window would begin at the end of november next year and end at
the end of february 2023. in addition we're trying to accelerate our ability to build space destinations which would include an inflatable habitat that would go to low-earth orbit and be available for the time when the international space station reaches the end of its normal life. so we want to have that checked out and operational before the end of the life of the international space station. that is what we are in partnership with blue origin for. caroline: this is validation to the credibility of the business. i look at the investors, but also blackrock private equity as well. household names. what do they see in their business? what is the vision of space you are painting for them? is it somewhere we go and move and live, or is it more learning and mining? what is it that you paint? janet: a little bit of everything you just said. we want more and more businesses to go into the area of low-earth
orbit, which is about 200 to 250 miles out. one of the main advantages we provide and that altitude is to do things in microgravity, where you feel the lack of gravity even though you are in freefall the entire time. you are able to manufacture materials with zero g defects. you can do medical research much better in microgravity than we can on earth. we can print 3d tissue that can potentially grow into organs, so that we can print organs for people so that they would not have to wait for donors to donate their organs to people when they are most in need. there's just a limitless number of opportunities out there, and we probably do not know the one that is going to be the big result of all this work. we probably do not even know what that is yet because most of our research ends up in things that we do not even anticipate. those are sometimes the biggest
producers of monetary and -- caroline: i understand you are in the astronaut hall of fame. pretty amazing. talk to us about some of the other companies that we might know that are already working in partnership with you. we mentioned blue origin i understand you're working with boeing and the like. janet: we are working with boeing as well, and i worked with boeing in a former life before i went to nasa in the aerospace field. we are also working with red wire, we are working with several other companies that will enable us to put the whole project together. so we want everything from launch capabilities, which blue origin can provide. we provide the space plane which can take both people and cargo to the space station, our new space station, and return cargo and crew. we can return cargo back to a runway and crew back to a runway
so they will not be coming down into the ocean with a parachute. they will land the way the space shuttle used to land, which we think is a real advantage. and we have people with experience working at a space station who are currently operating on the iss, as well as people working in other technologies. caroline: janet kavandi, great to have some time with you. thank you for your time. coming up, the cofounder of deliver, valued at $2 billion, joins me to talk about how they are making shipping even faster. this is bloomberg. ♪ ♪
dropping off items ranging from cans of tuna to -- for now, deliveries are limited to a little more than one mile from a walmart in arkansas. but the service will be expanded to several more stores in the states. companies are doing everything they can to make sure things are delivered not only on time, but in at least a day or two. deliverr, an e-commerce startup, just announced more funding. clients include merchants on platforms like walmart, shopify, target, and ebay. joining me now is the cofounder of deliverr. what are you going to be using the money for? michael: it comes down to our merchants. we are going to be investing in things that makes our merchants successful. number one is getting faster and faster with our delivery speed. we see it very clear increase in sales you get with fast delivery
and so we are going to be pushing next day delivery and maybe even exploring same-day delivery as we get to next year. second is going to be making our platform more flexible for merchants. covering a wider variety of use cases. that includes things like temperature control, return for various different verticals to use a network. lastly it comes down to growing the team in the network. caroline: talk to us about growing the team. supply chain is something i talk about date in, da -- day in, day out. what are the biggest headaches for you right now? michael: well, it kind of depends where you want to focus. we are looking at actual warehouse and carrier capacity, the biggest way we are unique is we do not own any of the assets. we are an asset-like network and we basically orchestrated different assets and the way to the old is --
we more than doubled the size of our warehouse network and doubled the amount of carriers we work with. with more optionality we are going to be able to build more capacity. as it relates to growing the team, we've grown the team quite a bit over the past year. it's been really interesting as everything has been mostly remote. you have to come down to the cultural values and really focusing on creating this cohesive community with your team and your employees. caroline: who are your competitors right now? do i know it is you delivering or do i just have a relationship with the company that i am buying through and you are the backend? how does your name work? michael: yeah. so you would not actually know you are receiving from deliverr, but deliverr is on track to power more than $2.5 billion annually. so we are behind the scenes. in the end you are going to be working with the merchant. let's say annie energy is one of
our grants, founded by josh richards, a popular tiktoker and influencer. you are going to see freed next day delivery and that will be powered by a deliverr network, meaning that inventory will be sitting in a deliverr location, we are going to deliver those promises to you via the store, and when you order online we are going to figure out how to get those items to you in either one or two days. caroline: to that end, who are your competitors in that landscape, and is there enough demand as we hope and pray that we move outside of a code life and get back into the stores? michael: there's a lot of ways. the most common thing that we hear merchants -- merchants have their own locationhey us for everything, and then they would ship it with one carrier and it would be seven day delivery.
you are going to have your typical fpl as well. they tend to do with much larger brand. then you have services owned by amazon or walmart that are mostly geared towards hoping merchants just sell on that particular channel. so it's a very diverse competitive landscape, honestly. but really the core usually comes down to merchants shipping themselves five to seven days. our job is to convince them that by outsourcing them and partnering with us, we can essentially offer today, next day -- two day, next day delivery across the country. caroline: thank you for your time. congratulations on the fund rate , and tell us how you continue to grow. that does it for this edition of "bloomberg technology." make sure to join us tomorrow. we will also be speaking with tableau president. from new york, i am caroline hyde. this is bloomberg. ♪ s bloomberg.
haidi: a very good morning. we are counting down to asia's major market open. shery: welcome to "daybreak asia ." president biden stays the course, tapping jerome powell for a second term as fed chair, while picking his deputy. we speak exclusively to the atlanta fed chief in a few minutes. we will ask raphael bosticbo