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#FinanceDaily: Inflation, Jobs & the Fed | UK Embraces a16z
Recorded: June 12, 2023 Duration: 1:11:59Space Recording
Short Summary
The UK is positioning itself as a hub for Web 3 development, with strategic partnerships and government support. Despite skepticism about Web 3's potential, the trend towards integrating decentralized technologies into enterprise use cases is gaining traction. Additionally, the economic landscape is shifting, with inflation trends and market sentiment indicating potential challenges ahead.
Full Transcription
Can people hear me?
Because this space is glitching all over again.
All right, people can hear me.
Holy shit.
It's fucking Monday.
Like, why is space is glitching at 8 a.m. Eastern on a freaking Monday?
Like, how hard is this?
Oh, all right.
Give me a second.
We'll wait for a few more people to come up and for me to calm the fuck down.
I thought Rob would join for this.
I am here. You're mentioning Britain.
Yes. I'm mentioning it so I can tear it down, just so you know.
Please do. I don't like our country.
That's probably going to get me out.
I'm going to build you guys up and then tear you all down.
You can't tear us down. We're unterable.
Nothing anybody from outside the UK can tear down what British people already think about themselves.
All right.
The UK races tech as well. That's a hilarious title.
What'd you say?
UK embraces tech.
It's more like UK reluctantly sort of follows trend.
Actually, I was going to put in a UK Embraces Web 3.
That's what I was going to say.
Actually, I have a really good idea.
And then I'm going to put, hold on, there you go.
Sorry.
That's actually probably a much better title.
It's a good at London Tech Week this week, which is essentially a load of, and I mean this kindly to anybody listening, who's going to London Tech Week, of which there won't be many people in here that are, are basically just getting together and saying, oh, yeah, how can we do banking but in a different way?
Oh, my God.
There's just so much going on this week and the fact that, oh, no.
No, Mario's team changed the title.
Yeah.
All right. Hold on. Let me fix the title in a second. I just want to make sure.
This is an example of how I get overruled. Come on. All right, fine. All right, cool. You know what? I'm not going to get.
This is me getting silenced. You can all hear it now. This is me getting silenced with my jokes about Web 3.
All right, fine. I was told by Romi that it would be incredibly unprofessional for us to make fun of Web 3, but I think I don't think that that's correct. But we will see.
In fairness, you weren't making fun of Web 3. It read like you were making fun of the British thinking they can do Web 3.
I think anybody that thinks they can do Web 3 is misguided.
But I know that we have people up here.
All right.
So let's get started.
Today, what we're going to cover are sort of the bigger...
This week is all about the data that we're going to receive.
For people that are not aware, because you're living under a rock,
this is probably the most, I would say, the market has been about what the Fed is going to do in a long time.
And I think that that's what makes this incredibly interesting.
So let's walk through what's coming.
This week, we're expecting CPI data, BPI data, jobless claims data, retail sales and
inventories data, and a lot of other economic data.
And then in the middle of this week, and we will probably cover it live, is the FOMC meeting
where the Fed decides what they're going to do next.
The market has priced in, seems like, no rate hike.
which I think is incredibly misguided.
I think the market is incorrect.
Not because they are thinking about what the Fed should do, but not what the Fed will do.
And this is super important.
And I'll explain why it's so important in a little bit, but there's a few sectors that still haven't flushed out the interest rate.
And so...
One thing that's going to happen this week is that we are going to, you know, we're going to see the market surprised.
There is nothing worse than a surprise market.
For people that are not keeping track, the bulls have been making a run.
I think this is the longest bull run seven weeks in a row, I think, in a long time.
And so one, you know, my original title was going to be Bulls versus Bears
and I was going to have people fight on stage for our entertainment.
But I realized that right now the Bears don't have much to say
because the past seven weeks have been very positive.
I'm going to say something.
And this is me just putting my biases out there.
I think that the rest of this year is going to be a lot more bearish.
I think this is not the most positive.
set of circumstances and I am very convinced that later this year is going to look more like 2008.
I know, I know, but I'll explain my thought process in a little bit.
And I think all of it will be traced back to this FOMC meeting.
I think this is the one where we make the big mistake.
But...
Wanted to start with Rob.
I know Rob, you agree with me a little bit because you threw some hundreds up there.
Wanted to get your thoughts on what you're looking for this week.
Are you expecting a hotter than expected CPI?
Are you expecting a colder than expected CPI?
And then also, what do you expect the Fed to do?
I don't have a view on CPI.
I wouldn't be surprised if it's a little bit lower than expected just because the
flow rate of unemployment's been was off a bit but either way it'd be pretty much where you
expect it to be if it's up or down a little bit the fomc meeting i'm with you i think i think
we're in this sort of period where i'm expecting the fed to hike this week if it doesn't hike
this week it's definitely going to hike next month and so you know your 2008 kind of reference has been
playing in my head a bit
I don't know if we're going to be there this year necessarily,
because I think the market's kind of, I don't know, actually.
I really don't know.
I'm not going to profess to know anything on that one or even give a view on that.
What I will say is that, you know,
fundamentally, interest rates rising or threatening to rise is not positive news.
There is nobody saying that interest rates are being lowered.
So the knock on effects of the economy are still going to be felt.
And I am growing in concern now where the data is trending towards not good news most of the time now.
And so we can be a bit sort of professorial about it and try and create a bit of a prophecy about when or where things are going to happen.
I'm not going to do that.
But broadly speaking, we're in a recessional environment.
Families are receding and their day-to-day lives the businesses are.
And I think the fed's reflecting that if they pause.
And if they're not, they're willing to cause a bit more pain.
But I do think a Fed rate is coming, raises is coming this week or next month.
And we have a bunch of people joining us soon to kind of talk through the details.
But one thing that people don't realize, and I hate to do this, Brian, you can tell me if this is too politically charged.
But one of the big changes that occurred in January of 2023 that no one noticed outside of some of the experts that we all follow here on stage was that they actually changed how they report CPI.
This is something that no one's been talking about publicly,
but we actually change the actual model we use to judge inflation.
Again, for people that are not aware,
the Fed does not actually use the CPI,
but it does drive market sentiment.
And so what they did,
They did a few things, but one of the big things that they did was that they made CPI look back only one year instead of two.
That was a really big difference.
So now you can imagine that you're not comparing inflation data over a long time horizon.
You're comparing it over a shorter time horizon.
So it is actually more...
in some senses. And so that's a really important aspect of it. So what ends up happening as CPI may come out. And again, I'm not trying to quote unquote blame anybody or say anything that might be a little bit controversial. I actually don't think this is controversial at all. If inflation would have gone up again, it would come out higher than expected.
And if it came down, it shows up.
The numbers show up lower than expected because you're not looking at the last two periods of time.
You're looking at the last single period.
So it actually makes a volatility or the movement exaggerated.
And that's a really important part about it because if you put your tinfoil hat out, you can see how...
if there is a narrative to be written,
the narrative could be,
hey,
CPI is coming down really fast,
let's not raise rates and so on.
shift on that.
The narrative is always from...
Yeah,
yeah,
I think that that's a good explanation of it all.
I've...
I feel that for the general populace and people that don't pay attention,
it's definitely something that could kind of fool them into believing that
rates are coming down faster or rising faster if it goes the opposite way.
But yeah, I mean, that's kind of what we've gotten used to, right?
The politicization of everything, including the economy.
Isn't that funny that we're like at that point in our existence that even the economy is politicized?
It's kind of great.
By the way, Brian, can you hear Rob?
I don't know if you heard him speaking.
I didn't.
I'll drop it down.
All right, thanks.
See you in a second.
I was next you were going to say, Dan, go ahead.
The central, any sort of central index that's kind of led is very much promoted or if it's political.
And we can, I think we can say that with fairly, fairly,
fair certainty that it almost certainly is politicized in some way or another,
they're incentivized to make the inflation look like it was slower on the way up and quicker
on the way down.
So they're always going to amend policies on how they measure things because they don't
want it to be seen as much as running away and they want to make sure it looks like
it's coming down really quickly, even if it's not in real time.
By the way, can everybody hear me?
Yes. All right, perfect. So kind of let's start running through the information that we're going to be receiving. So as, you know, today is June, Monday, June 12th. On June 12th at, at 2 p.m., we expect to see the federal budget come out. Tomorrow we'll see the optimism.
index. The previous optimism index was 89. We expect that to be slightly lower. So the
expectation is 88.3. I'll talk through what the NFIB optimism index is. It's like
It's the small business optimism.
Consumer price index or CPI, which we're talking about.
Last one was 0.4%.
This one, we're expecting a 0.1% month over month.
And then core CPI, we're expecting to be same as last month, which is 0.4%.
Year over your CPI, for people that are paying attention,
we are expecting it to go down compared to last month.
So consensus estimate is that it's going to be 4% as compared to 4.9%.
And then core CPI year over year is expected to be actually much more stable,
which is 5.3% versus 5.5%.
Then the rest is...
under the PPI is coming out on Wednesday.
So again, as a reminder, CPI, you're expecting month over month, significant change.
But you're expecting core not to move as much as the, I can talk to core versus regular for
people that are not as knowledgeable.
And then the producer price index, we're expecting that to actually go down as compared to
being slightly higher.
0.2% month over month.
And then core.
or PPI was 2.3% consensus assessment yet that's produced. And then third, we expect initial jobless
claims and retail sales and import price index and then all other stuff. And so, you know,
an FOMC is coming up later this on Wednesday. And so,
There's just so much news this week.
It feels like this is going to be a very important week.
Would love...
Oh, Lily's here too.
I would love other people to kind of weigh in.
Mickle, what are you looking for this week outside of the...
Yeah, so the biggest thing I'm really paying attention to is just...
The CPI numbers.
I mean, the thing is I just want to know is CPI continuing to fall at the rate it is.
I actually kind of disagree with your prediction that we're going to see some massive 08 style.
drop off at the back end of the year. I've been consistently surprised how well these companies
have weathered these increase in rates. And from my own perspective, seeing the numbers that
NVIDIA just put out whether or not you want to throw it all in the AI category, what we're seeing
is even through all this massive turmoil, even through
all these predictions for the last couple months that we were already going to be in this massive recession or massive depression.
All these companies have continued to be really strong.
And I just wonder if we're in a time period now where we have some of these tech companies that are so intertwined with each other, some of these companies that are almost...
have not as much as a consumer effect to them.
I wonder if we're going to have less of an impact from these rate rises.
And the more I see these inflation numbers coming down and the more I see these companies
just continuing to put out solid numbers, the more I'm convinced we're really moving past
the worst of this.
And the markets are really looking past most of the bad numbers that have already taken place.
Interesting.
So you don't think that this bull or bare market rallies, I would call it.
And the last seven weeks of bull market, you're not convinced that that's going to end.
You think that's going to continue?
It's been seven straight.
Yeah, I mean, I'm not going to...
Yeah, I don't necessarily think we're going to continue up in a straight line.
I mean, I'm a very long-term oriented investor.
I just think right now the markets are pretty optimistic based on where inflation is trending
and based on where companies' earnings are at and how they've kind of been a lot better than people have been forecasting.
I mean, if you looked at any major financial news site over the last four months,
every single analyst that came on was essentially...
100% of the time predicting we were going into a massive recession.
And I think markets are just starting to look at everything going on a little more optimistically.
And I think we just had a lot of fear priced into the market.
So now as we do see inflation coming down, and I agree,
a lot with what Will says when he comes and speaks here.
I do see a lot of these commodities dropping pretty heavy.
And I see that the only real, real sticky things seems to be the housing and rental data.
And I've seen a lot of predictions excluding that that really shows inflation coming down quickly.
So I just think some things are coming down a little slower.
Some things have come down faster.
Right.
but the trend for inflation is down.
And until I really start to see some big hits from these companies,
I'll continue to be bullish based on how bearish the market was over the last couple months.
You know, they were, you know, you're saying they were bearish,
but yet the market's been going up seven weeks in a row.
So it's interesting.
I do find it very interesting to see that the sentiment was bearish,
yet every week over week, the actions were bullish.
But Jeff, what do you think?
Are you in my camp or Mickles?
I'm more in Mickles.
And the reason, I mean, one of the things that was released last week
was something called the American Association of Individual Investors,
just to pick up a little bit on what Mickle was saying and what you were saying.
I mean, there's a sentiment change in the market.
So I don't disagree that...
we could get a hike in June or July.
I think, you know, a quarter point.
I mean, it just all depends what message, you know, the Fed wants to send.
But this AAII index is something that's looked at by a lot of analysts.
And basically what it is is the monthly survey of 1,500 investors.
And basically, are you bullish or bearish in the market?
and this is the first time it's been above its historical average 37.5%.
since I think February and, you know, last year was, it was trending much lower.
It's at 44.5% now.
And, you know, those are good reading.
That's a good reading for that matter.
That means people in the market are, you know, turning more and more bullish.
And I think, you know, that's going to weigh on markets and how they respond to the Fed,
how they respond to CPI.
So in CPI, you know, I, you know, now we're getting down into the low fours.
potentially high three. So I mean, what's the Fed doing raising the Fed funds rate above,
you know, the CPI? Like what what what message are they really sending to keep ratcheting
that higher than than the actual CPI, you know, level? And yeah, I've seen the same things too
regarding the CPI if you know, the Fed can't build houses. That's one of the things that's that's
propping up the
the housing market right now, they can't build houses.
And they can prevent houses from being built.
But that's what's driving, you know, most of the real estate market is a lack of inventory.
So I've seen the same thing, Michaelis, you know, without use, you know,
K. Schiller data more real time or Zillow data that CPI is, you know, below three.
So, I mean, I don't know what the Fed would be doing, what kind of message they would be sending.
by doing that but i think the market just flipped more more positive
All right. So now that I let you guys build it up, I'm going to tear it down. Let's go.
So the reason why I think this reminds me of 2008 is because when you look at March to June in 2008, it was a very similar picture.
Number two, it takes up to 18 months after Fed rate hiking cycle for the recession to really kick in.
Number three, we have seen that there are actually specific sectors that are being affected.
You mentioned housing. I think housing is.
deceptive right now. We haven't seen the default cycle really take place. Default cycles take
place right after the last rate hike occurs. And so what you're going to see is you're going
to see commercial real estate drop. We're going to see more banks fail probably over the course
of the next year or this year. I do agree that they've done some things to prevent that,
but they're not going to be able to prevent all of them. We're going to continue to see
Here after failure.
And then four, we haven't seen this flush out
because it's not actually a broad-based increase.
We were talking about Navidia.
We're talking about Oracle.
We're talking about Apple.
We're talking about specific stock picks.
But when you remove those big winners...
the market has been incredibly bearish.
That's why it feels like it's been bearish when it hasn't.
So I think while some people are looking at the big names and the big things flush through,
when we look at the rest of the economy outside tech, because we do have a tax here,
we're seeing it completely tear apart.
What percentage of commercial real estate has actually hit default yet?
We all know it looks like shit, right?
What percentage of commercial real estate has actually hit default yet?
Not even a significant portion.
We have not seen commercial real estate hit default yet.
The default cycle is just beginning.
Next thing, you see empty office buildings.
You start seeing this really take into account.
Small regional banks die.
You start, because again, they're over leverage in that market.
We start in the negativity really take on.
So I agree with you guys that if you looked at today, you could see that.
But, you know, again, the market, the reason why it's not just going to start ripping.
And the reason why getting surprised by a 25 basis point, which is like a baby hike, a 24.
five basis point increase is going to break everything
is because it's going to break people's spirits.
So Matt,
I wanted to hear if you agree with me now
and wanted to get a sense.
And I will go back to Jeff and Mickle to fight me.
But Matt,
wanted to get your thoughts on this.
Yeah.
Yeah, you've got a teammate to me, I think.
You know, I think one of the things,
it sounds like we may be talking past each other a little bit,
and we've got to recognize that the market is not in the economy.
So I think that we are seeing some trouble ahead in the economy.
That's not being priced in at the moment, I don't think.
But I do think there's a bit more temptation out there
when you kind of get under the surface a little bit.
You know, I don't think we need a lot of banks to fail
in order to have the economy really kind of have some stumbles.
Yeah.
It certainly is possible, but there's going to be some ripples.
Yeah, and Amy, before I go to Mickle and Jeff, because I want to keep talking crap a little bit until we let them rebuttal.
But Amy, do you agree with my, so before you joined, we were talking about there, it looks like we're in the current bull, you know, bowl market or bowls are at least starting to take shape.
we've seen seven weeks in the market of, you know, week over week increases.
And then, you know, this week, a bunch of data is coming out.
My opinion is that the rest of the year is going to be incredibly bearish.
And it's all going to come back to this one mistake, in my opinion, that the Fed's going to make,
which is they're going to hike again.
And no one in the market, I think less than 25% of the market and the economists are expecting a rate hike.
I think it's all going to come back to commercial real estate and banking.
I know that you probably may agree with me.
I think the default cycle is just starting.
Amy, what are your thoughts?
Oh, you know, gosh.
You know, we just found out we're from like the same hometown practically.
So now I understand why I almost always agree with you and everything.
Yeah, I mean, as far as this week goes, I'm not certain they're going to hike again.
I think we're going to get a pause or a hike.
But...
I think the market is running way ahead of itself.
That's a zone separate thing.
I think, you know, as far as the market is concerned,
it's on what looks like a new bull run.
But sometimes the market, it tends to get ahead of itself.
Historically, we've always seen that...
Whenever we've had bare markets, what typically happens is we don't get that final leg down until there's a pause or even a cut in the hiking cycle.
That just historically has tended to be what's happened.
It doesn't mean it's going to always happen.
But I just posted something a couple minutes ago that again, there's,
There's more and more people warning about commercial real estate.
And I think that regardless of whether or not we hike or pause, the damage has been done in terms of the lag effect of the hikes that we've already done.
And it's just a matter of time before all of these problems start to sort of roll forward.
And the Fed is in a really bad spot right because we still have...
With the lagging inflation data, the inflation looks bad right now.
And in fact, inflation still is bad in some sectors of the economy.
So they have a real problem on their hands because we do have inflation that is too high.
But we also have a credit crunch and we have problems emerging in the commercial real estate market.
So they sort of, you know, to protect the commercial real estate market, they're going to need looser monetary policy.
But to combat what's going on still with this inflation, they need to keep tightening or at least keep it tight for longer.
So I wouldn't want to be in their position this week.
I don't think it's going to be an easy decision.
I think this might be one of the weeks where we start to see divergence where it's not unanimous, where they're starting to go back and forth on what they think they should do.
And I just think it's going to get trickier from here on now.
But my personal opinion, and it's always been this opinion, is that something is going to pop up and break, and it's probably going to stem from CRE.
And that is going to lead us into a leg of deflation.
But that's just my thought.
Yeah.
And, you know, I will go to next because he's been waiting very patiently.
But I do want to remind people.
Again, I'm old enough to when J.P. Morgan took over Bear Stearns.
And if people remember, go back in Google right now.
What's listening to us don't leave.
But in March of 2008, when J.P. Morgan took over Bear Stearns, the market actually viewed it as, you know, there was a crisis.
There was a policy response, and the crisis was solved.
And then there was a three-month rally in the markets, just so people can remember in 2008.
And then everything crashed.
So I do want to remind people of the reality of what happened last time.
So, Mickle, I'll let you push back now.
Yeah.
Yeah, so there's no way I don't disagree with anyone saying that there's issues with commercial real estate or anything like that.
I mean, I think when we have low interest rates for so long, there's a lot of excess that's being that was created and we see a lot of this excess kind of being weeded out right now.
I guess most of my thesis about where we are in the market right now.
comes from hearing this argument over and over again back from 2018, back from 2020,
as we rally out of a bad situation and people are always expecting things to get worse.
People are always expecting
the next big thing to come out and just take the markets to the new low. I heard the same
exact thing we were coming out of the 2018 dip and the same thing when we were coming out of the
2020 dip. When I mentioned stocks like Nvidia, stocks making new highs, I see a lot of those
stocks like meta that v-bottomed back in October and are really just ripping back to new all-time
highs. Now, my personal opinion is that those companies are leading the market and
and they are looking at an optimistic future going forward.
And my thesis would be that the rest of the market eventually catches back up.
I don't see Nvidia going back below October lows because it is just ripped out of there.
And I've seen countless other tech companies do that.
So my real thesis is just that there are some troubles ahead.
I think the market has already kind of looked past a lot of those.
And maybe we do have kind of a bumpy road going forward.
But in terms of what I'm seeing, people were saying the same thing in 2020.
Oh, all this is still going on.
It's going to get worse.
It's going to get worse.
The fact of the matter is, the market just priced in a lot of that pain prior.
And even though things still did get bad and there still were more problems going forward,
at the end of the day, the market was able to rally out of it and it got past most of the problems people were forecasting.
Interesting.
I mean, I guess I can imagine how looking at the past few years, you know, people like me, it's like, this doesn't seem real.
People could say, kind of right.
It's just the market didn't agree with me.
But, Jeff, go ahead.
Can you hear me okay?
Yeah, I can hear you.
Oh, okay.
You're definitely, go ahead.
Yeah, you know, I, can you hear me okay?
Yes, yes, yes.
Okay.
Yeah, no, I think this is, this is different.
Number one, you look back at 08 or if you look back at 2000,
the way these tech companies are built today and their earnings, I mean, they're real earnings.
This is, you know, these are...
These are powerhouse companies.
And, you know, the market, the rally started whiting out last week.
This is not only seven stocks.
The Russell 2000 perked up last week.
This rally is starting to broaden out.
Now, I don't doubt.
I mean, the Fed has a history of overdoing.
They start late and they overtight.
So to bet against that would be,
And they use lagging data.
They use lagging old data.
And so to bet against the Fed doing something stupid, I think that's a low quality bet to take.
So I agree with that.
I agree that there are issues with with CRA.
But, you know.
When I look ahead and I look at the strength of this rally and I look at, again, the strength of these companies, this is different than prior.
I think you can just use historical norms.
Am I saying it's like it's going to go up in a straight line?
No, I mean, he could surprise us, you know, Wednesday or we get a surprise in July or something could break.
I don't doubt that we are well ahead of the tightening cycle.
I don't think we've tightened this fast in 40 years.
So to say that there's not going to be surprised with,
if there's a surprise, they're going to cut.
And now they have the,
they've got 500 basis points or more to work with.
And, you know, again, it's going to be bumpy,
but I don't think it's going to go up in a straight line.
But in terms of it, like, just turning and crashing,
the earnings would have to turn and crash.
Right.
And that's the question, like, why would earnings just start turning around and crashing with where the job market is today?
And, and again, this sentiment in the market chain.
And the markets in the economy are different.
And again, something can break, but the Fed has tools to respond with it.
Yeah, I mean, there are people that think that, unlike early this cycle, where the CEOs were saying, hey, look,
earnings are going to look bad earnings are going to look bad they're not being bearish enough
with earnings right now so uh you know that's the so actually there's a higher likelihood of missing
because they weren't bearish enough on future outlook via being the best example of that where
they have looked easy to beat earnings when you put earnings at a local but once you start saying
hey earnings are going to grow like crazy i think uh it is a little bit more dangerous uh but
Do I expect Navidia to miss?
Probably not.
AI is pretty hot right now, and they are the infrastructure that's powering most of AI right now.
George, you had your hand raised.
Would love your thoughts.
And welcome to the stage.
Thank you.
Hello, gentlemen.
Nice to meet you.
And introduce myself.
My name is George Lee.
I am asset management company, Basie, in Switzerland.
I have a question, please.
Yeah, go ahead, George.
Okay.
Do you have any project or crypto?
You're on the wrong stage, my friend.
Do you have any projects for crypto?
No, I do not.
So, sorry.
I love that.
This reminds me of like the Pepe stages or something.
You were in the wrong room, my friend.
All right.
So let me bring talking about crypto.
Scott's coming back up.
But what I say that, Rob, did you have something to add that George didn't?
Yeah. Does anybody have any
crypto projects that
I would just push back on
Jeff a little bit on this
earnings thing. I mean I am actually a little bit
nervous for earnings primarily because
If we ignore what the markets are saying in terms of investors, which I know people who are market-focused hate doing and just talk about Main Street who push a lot of these earnings, they're not in great shape now.
So like compared to 2008, we're now getting pretty close to highs not seen since 2008 in lots of areas.
But before we get into that, you've got general consumer spending is slowing.
We've now got debt per capita, which is higher than 2008, actually, as a percentage of revenue.
As a percentage of earnings per household, the percentage of debt they have, I think it's about 135% of their household income is now debt.
versus 120, 110.
Can't remember what the number is from 2008,
but it's considerably higher.
We remember when they said back then
that debt was too high at 110%,
now it's 130 and everything's fine
and we're having a bull run.
I'm a bit confused by that.
The second is how is that not going to affect earnings?
Let's take that down to consumer spending.
Consumer spending will be lower.
They've got debt servicing to be added into that.
We also didn't have in 2008...
you know, COVID loans and relief loans to add on top of increasing debt metrics.
And then if you go right the way down into some really basic stuff,
it's affecting earnings on the ground right now.
And the reason I can say that with certainty is that this quarter, first quarter,
not this quarter, we're in the second quarter, but first quarter,
2023, January through March, business is, business closures increased by about 20 to 25% year over year.
to the highest level since 2008.
So if you,
2008 was 100,
I got the figures up because I don't want to BS,
but 170,000 business closes during the bust in 2008 September.
We're at 210,000 Q1 in a,
in a bull market on the stock market.
This, this,
feels very, very strange to me.
If you put that into percentage terms,
it's only marginally lower
than during the bear of 2008 during this bull.
So I am a little bit concerned
that that will now flow through
to Danish's point about commercial real estate,
that will flow through to consumer spending,
that will flow through to employment,
which is going to affect earnings on most of these markets.
And also, just to sort of finish this off,
and sorry, you're on meeting,
to finish that off,
earnings outside of the top maybe 10 steps
tech companies have been pretty flat and the market itself is not really going anywhere.
It's not, I'm not going to say it's on a bear run at all, but it's really quite flat.
And my worry is if you add just a few extra circumstances about people's personal spending habits,
and I'm not going to say,
And they go down by 2 or 3%.
Those earnings are going to get affected quite deeply.
So I'm a little bit nervous.
I'm not going to say we're going to hit a recession this year in terms of like a big Black Swan 2008 event because there's not the same circumstances.
But I don't think this bull run is going to continue, it would be my guess on that.
Not financial advice.
Yeah, agreed.
Not financial advice.
I did want to make sure that we gave ourselves enough time to talk about this ridiculousness that's going on in the UK.
Yeah.
you know, there was two big pieces of news within like a week of itself.
And I'm not hating on the UK.
I love that Rishi Sunak is thinking different.
And there's going about it slightly differently.
But umbrella, I am going to move on to that if that's okay.
I was going to say that, you know, the...
So the news, and I have to use this, I am so sorry for everybody that supports Web 3, Jesus.
You know, let's just be honest.
Is UK, like everything else, like three years late to the game?
Chris Dixon needed to find somebody to go after.
It's kind of like...
It's like as soon as Web 3 loses its flavor,
suddenly everybody in the UK actually can eat it without turning red.
I mean, what is going on over here?
Sorry.
For anybody that knows UK food, they'll understand the joke.
But I was going to say, you know, in this last week, we have now seen...
Two different announcements.
Announcement number one that failed Silicon Valley Bank, now HSBC,
innovation is what they're calling it, I believe.
And they're rebranding it and getting ready for it.
And now, you know, UK is the capital of capital,
or London is the capital of capital.
And then number two,
and Rishi Sunok actually posted about this.
I have to say it was kind of interesting.
And then number two, Web 3,
icon
Chris Dixon, who by the way
led most of the Web 3
mania that occurred
and has been largely
pushed back at A16Z
is in a collab
with the UK government
to open
another
location in London and it was big
enough news that Rishi Suna
posted about it. Now
Cal, I'm going to go to you first.
It's because it's London Tech Week, Danish.
That's why he did it.
He was doing a speech this morning at London Tech Week,
and that's why he mentioned it.
I don't think otherwise Rishi Sennak would be out of
downing street saying good news.
I think it's a really bad idea to be pro-Web 3 right now.
I'm just saying...
It is a real...
It's London. It's London. No, literally, we take innovation, and it's where it goes to slowly start its percentional gain margin increases.
Like, we did it with banking. We did it with colonialism. Now we're going to do it with Web 3, everyone.
Oh, my God. Scott, what do you think about colonialism and Web 3 being in the same sentence?
Web 3 is definitely racist.
Um, that's what we're talking about it.
I don't know.
Um, I think there's a non-events.
It's not news.
It's a company moving their office from moving, excuse me, not even moving their office,
but opening another office in another country that's being turned into some massive PR event,
probably just because it's an opportunity to dunk on the United States slightly and
to push back against all the crackdowns we're seeing here and say that we're open for business.
But like.
I've never seen...
A VC is moving...
A VC is opening an office in another country
and apparently that's like international news.
It's hilarious.
Somebody messaged me this morning.
All right, let's hear from Cal, Rob.
Hold on.
I want to get a different perspective.
No, no, no, I kind of agree with the sentiment here.
Listen, I live in the UK.
and, you know, pretty, pretty close to the U.S.
It's his all timing, tech week, as Rob said,
but more than that,
Rishi's just, you know, trying to survive
with some sense of an overall...
I admire him, I like him,
he's better than all the other guys there.
All the racist British...
what can I say,
country conservatives,
tried to take him out,
and he's trying to survive.
And so what he does is he picks on
any opportunity to brand himself as the innovator, the progressive, anything he's got.
I actually know that very closely.
I'm very, very linked up with families in the UK that are linked up to him.
And, you know, it's fine.
You know, he's just being an opportunist.
But what's really hilarious, which I agree with you, Donish, is how...
A16 Z, or Chris Dix, and Sri Ram, by the way, is an old clubhouse podcaster, actually,
a clubhouse room maker.
basically left clubhouse and joined a 16 Z.
And he's a smart guy and he talks really, really well on.
He's a good podcast or not as good as you, Donish.
You're really emerging to be good.
And I don't mean, I don't bullshit you, you know that.
But he was very good at that and then he,
and as this is my personal view, the entire clubhouse
ethos was about promoting crypto, which is, you know, it was a platform for them to do that,
because that's what you do in these platforms, unless you run them like you do, they're full of
scammers, right? They pump themselves up, they put out there, belong to all these different
companies, but they don't, right? And they get business behind the scenes and they get some
branding. And that's what that whole thing was. A, and Drason knew that, and that's why he
invested. He wanted that to be that.
platform when when that started to deflate you know and it's it's kind of you know it was going to right we all knew it was going to and uh shirams got hired to be a
partner in crypto at at a 16 z so now we're looking at the u.s you know it's all kind of coming to roost in the u.s
It's just an organizational thing.
You've got to find a room for somebody.
What a great opportunity because you've got this Sunac running around the U.S.
trying to find some headlines.
You know, they meet up.
This is, and this headline comes out.
So that's where that is.
The UK is in dire straits around innovation, right, and around tech.
Very, very smart players here.
Donish.
People like.
Sorry, go right, go on.
No, please.
No, just one last thing on that.
Sorry, I know.
But there are some really good people like Brent Hoberman and others in the VC world here.
And then there are a few credible U.S. firms that have made their name here.
But, you know, I opened an office here in the UK for Vantage Point way back, right, for Alan Salzman,
which was the company that invested in Tesla.
And it was like, you know, Klingtack Wave 1.
But all the action was in Silicon Valley.
It's so hard to get action going here.
It's just not the right place.
And now it suddenly hasn't turned into that place.
But I think it's a nice place to park some partners.
And maybe it's a low-cost option.
It doesn't take that much to rent an office and pay your salary in pounds.
Anyway.
I mean, Donners, doesn't this just reek of like, and I'm not even saying this in a negative way, but if it's tech week and he's speaking to the audience that's currently there, I mean, isn't this Rod DeSantis making pro-Bitcoin statements from the audience or two or two potential presidential candidates, RFK, like these guys going on stage at the Bitcoin conference and making very pro-Bitcoin statements.
What you say?
I'm not saying this in a negative way.
I'm just saying like it's a best opportunity
that will be forgotten next week.
I mean, at the end of the opportunism here is interesting.
I will say you could see the opposite also be opportunistic, right?
So you can see what Gary Zler, you can see obviously what the Biden administration is doing,
where, you know, clearly the brats at this point are an all-out war against crypto across
the board this is not a partisan comment i actually think that crypto needs more regulation so
it's that bad of a thing i wish they would have done it differently we all did what did you say
sorry scott did you agree i couldn't go i mean every i just wish they went about it a little
yeah i don't mind i'm having some internet connectivity but yeah
Yeah, no, I wish they would have gone about it differently.
So if Rishi Sunak, as the conservative, would have come in and said, look, you know, we're going to do it differently.
We're going to regulate crypto differently.
We're going to go about it.
We're not going to fight.
You know, but the problem is ultimately that's not the goal.
The goal is to just get a photo op so that he can move on to the next.
Right?
Like right now, no one is suffering.
Exactly. He's got no political capital.
Yeah, Doni she's got no political capital to take the big...
Just to add in, Rishi Sinek is about as conservative in real terms as Elizabeth Warren.
I disagree.
One hundred percent.
It's fundamental.
Apart from immigration, everything else is such a...
All right, let's hear it.
Let's hear it. This is what I wanted.
It's funny. It's funny.
It's funny. It's funny, Rob, but it's true.
Funny but
untrue.
It's fundamentally true.
Apart from immigration,
what are they concerned about?
You're comparing Elizabeth Warren to him.
That's just,
just way off.
Apart from immigration,
what have they done that's any different?
What do you mean they?
Are you talking about Rishi?
Are you talking about...
Yeah, Rishy in particular, he's pro-mastically bailing out people on an individual level.
He advocated for it.
Yes, he is.
Every opportunity he's put money into our pockets.
But even if we don't want it.
All he's doing is trying to get in power and stay in power so he can do some things that are pretty capitalistic and pretty enterprising and pretty good.
But guess what?
Like raising taxes and putting more money into public.
All right.
That's what the thing is.
I can't believe I'm having to say this to British people, but can we just go one at a time, please?
Go ahead, Cal.
Sorry.
No, all I'm saying is that.
Rishi is a capitalist.
He's a complete like, okay, he's center right.
Okay, maybe he's not way out there in the right, but he's center right.
It's pretty obvious he is.
But he doesn't have the political capital in the UK.
He's smart enough to get in there to what he's got so far.
They unelected him last year.
They brought him in.
It's the core British public.
which is either left or far right
that basically not allowing him to be in power
which is fine so all he's doing is surviving
but you can't call him he's Elizabeth Warren
he's like come on I've been in the US
I've lived there I've met her as well
that's just way off
that's just funny
that might get you some Twitter followers
but that's just way off
but that's just way off
I fundamentally disagree.
Apart from immigration policy, which I do agree on,
and I don't doubt his capitalist credentials.
I'm just saying from a policy standpoint,
they are exactly the same.
Who say?
You mean the Conservatives, right?
But he is trying to stay in power.
You let me finish. I'll let you talk.
I'll explain myself. Elizabeth Warren's policies in the United States are dimensionally about getting her into power and then promoting socialist policies in terms of bailing out individuals, in terms of extra taxes, in terms of attacking core industries.
Unfortunately, from what I've seen from Rishley, and I sit on two government advisory panels, I'm not seeing the policies.
from Rishi Sunak, and I'd love to, by the way, because I really like him as a person.
I'd love to see him actually be a capitalist in policy stance, and he's not doing that.
Apart from immigration, he's very pro-bailing out individuals.
He's incredibly pro-doing it. He's done it with energy markets.
He's done it with furlough extensions.
He's done it with capital-release.
He's not being a capitalist in terms of tax policy at all.
We have the highest tax burden ever, and he's increased it, not reduced it.
He's not looked at any sort of freedom of markets outbursts.
Under him as Chancellor and as, under Boris Johnson, and as Prime Minister, more flight of
headquarters of left our country.
We've got an employment tied to more relief now.
Tax reliefs in terms of 50%, 50% of taxpayers in the UK get more in tax
get more tax spent on them than they pay.
This is really, really silly.
And so I'm not, we can ignore the direct comparison if you want to,
but to say that Rishi Sunnix policies currently are capitalists,
I disagree.
I don't doubt his credentials as an individual,
and I really do admire him as a person.
I do agree he is surviving.
I'm just saying he's not a conservative,
as we would conventionally call him.
He's way more like a centrist,
if not completely left wing in many of his policies.
not maybe his individual opinion, but the way he's projecting his policies is 100% not conservative.
But Rob, could this be because, could his actions be driven by the fact that there's a parliamentary system currently in the UK?
And so, you know, his level of power is significantly limited because at any point, they can kick him out.
I mean, like, isn't that sort of what drives?
So he doesn't have the ability to just do whatever he wants like we do in our current system in the U.S.,
you know, there's been a lot of talk around this, and so I find it fascinating.
Yeah, that is true.
Parliamentary systems do, and they do encourage more leftist-leaning policies, unfortunately.
Or more collaboration, actually.
I wish we were a parliamentary system.
Collaboration in the UK typically means more government intervention and less free market capitalism.
I think Calum, I can at least agree on that.
So broadly speaking, I do agree he's got to pander us that.
My point is that if he wanted to be a real, real opportunist when it comes to policies,
he could have stood on a much more aggressive political standpoint.
If he honestly believes, as he seems to be indicating right now,
that he's going to lose the next election,
I don't think he's got anything to lose by stepping into it.
showing his true colours.
If he is truly a capitalist,
which I think he is,
he's made a lot of money,
then could we see a policy standpoint,
which is conservative and capitalist
and protection of markets
and encouraging growth?
And just go for it.
What have you got to lose?
Maybe don't do it in the way Liz trusted it,
which is what he's worried about.
She went out and did it in one day.
Well, that's not a false thing.
But that is politically not a small thing, Rob.
So I know you mentioned that there.
And I'm glad that you took the comparison of Elizabeth Warren.
That was my trigger.
Sorry about that.
But, you know, you are.
I want it.
Go ahead, Cal.
No, no, no.
That's it.
No, but I think, yeah, no, go ahead.
Sorry, done.
So I wanted to bring Matt into this conversation.
Matt, thank you for joining us.
I know that you've been investing across many different spaces.
I believe you invest in Web 3 as well, but you can correct me if I'm wrong.
Have you made any Web 3 bets?
I actually don't know.
We're Web 3 infrastructure.
So some of our companies are deploying technology both in Web 2, 1,3, obviously more focused
on Web 2 these days, but we're only investing in the underlying infrastructure, not the application there.
Okay, so what are your thoughts about this move?
So you may have seen that Rishi Sunak embraced, I mean, like literally was embracing Chris Dixon in a photo talking about how A16 Z is opening an office in London, their first international office.
and how this means that London is now, you can hear in my voice.
Yeah, it's worse.
But, but Matt, what are your thoughts about Web 3 building in the UK?
Well, I think any time you see a political press release,
you always have to wonder exactly what the fuck is going on from a funding source.
Like we had, um, a company here called Clearco, uh, that opened up offices in the UK, in Ireland, in,
Israel, I think all in the same month,
but all of us back home knew
the company was basically heading towards bankruptcy
or some form of restructuring.
And this was just a political
sort of like PR push
to save the company if they can
from a fundraising standpoint.
So I don't buy a lot of this stuff.
I think, you know, the time for them to expand to the UK is counterintuitive to what we see firms like Sequoia doing, where they're retrenching back to the U.S. and keeping their European operations, which are basically like a U.S. overlap and giving up on India and China.
I think.
Andresen also merged their fintech and their consumer platforms at the same time,
which is also something people are questioning,
you know, Andresen has been notorious for chopping the heads off of their GPs
who are not performing.
So whenever you see moves like this,
it's not because they're trying to play the offensive,
it's trying to cover up some of the losses
and some of the missteps that they've probably made over the last year or two.
And just by splashing the Web 3 on it,
I think probably cost a broader net to people who are holding on for hope that funding is still going to come into the Web3 universe.
I will say that the companies that are receiving funding now to start building in Web3 are probably more real companies,
just because the competition to get that funding is so much harder that I would say,
like, you're probably going to see some really good opportunities come out of this.
But I think that...
The political overlap with what they're doing is a hand-waving exercise to probably cover up some of the missteps that they're seeing back home and what's happening internally with some of the teams merging at Andreessen.
So on that note, anybody that's listening, please do comment.
And if you are one of those companies that's building in Web 3 or AI, IBC, our sponsor, incubates and accelerates.
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I got that out of the way.
Sorry, Matt.
I had to use that.
You, like, set it up perfectly for me this time.
Usually, I try to do a weird way to get into it.
But, you know, so, you know, kind of walking through it a little bit more deeply.
Chris Dixon has been the face of Web 3.
I would say, Matt, do you agree or disagree?
I feel like he's been the face of BC back.
Yeah, for sure.
Yeah.
And so...
The fact that Chris is still at A16Z, does that tell you that A16Z is still bullish and left-free?
Well, you made a lot of fucking money.
Like, you have to remember.
Management fees, you mean?
No, no, no.
Like his early...
Oh, selling tokens.
Yeah, his early token exits are probably going to help him carry a lot of weight, even though they're not.
So, Matt, unlike me and you, unlike you and myself, a lot of other people don't know what they did.
So, again, this is all alleged.
I'm not sure if this is proven.
Yeah, it's proven.
Like the LP numbers are out there.
So people who are LPs in the fund will see their quarterly reports.
But like some of their early token bets where they, you know, they'll give the company
$10 million or $15 million of U.S. dollar or Fiat in exchange for equity in the, you know,
in the web through business.
Obviously everyone knows here.
Like you get those.
those tokens alongside of it that are struck like a penny,
we know that they sold a lot of those tokens at like a thousand X return.
And so that's why they were able to raise that second crypto fund very quickly.
And also why Chris is probably the one remaining.
partner after his other crypto partner.
I forget her name.
She left to go start her own fun at the same time.
So yeah, there were actual returns there.
Now, I don't know how much of it was DPI, meaning distributions that were paid back to LPs, but they did have a lot of tasks that was generated from those early token exits.
And, you know, with what we're seeing right now with the U.S. and it's, well, let's just call it's war on crypto. Let's call it that because it's easy way to do it and probably a little bit aggressive. But it's provocative and gets to people listening. So I was going to say that.
So, you know, the U.S. is going after crypto pretty hard right now.
You know, do you think that VCs should be worried about these tokens that they bought and sold and how they may have dumped on investors, on retail investors?
You think that the – I'm just asking.
I'm asking the truth.
Can they come after –
So I, oh, yeah.
I mean, they could.
I think there's too much untangling of the web for, like, Gensler to go out.
Because remember, the SEC is really trying to focus on, like, protecting the retail investors from getting dumped on, which they were.
But to say that, like, the...
Matt Salana.
Yeah, I got it.
I'm trying to go back and see, like, how would you even get it back to Andresen as the underlying investor...
Because they were allowed to sell.
There's no one saying what they were doing was illegal,
but you're saying if they were doing it on in U.S. bank accounts on U.S. soil
and then translating that back into like U.S. securities,
yeah, it's possible they could go back through that.
I mean, they could tangle.
So for example.
That's annoying.
For example, we remember in an unexpected move earlier last year, A16Z had spent how much money on building their brand new website and whatever it was.
And then suddenly they shut off.
A lot of people were saying that this might be because security issues were coming up because they kept on pumping their investments.
Well, I think the bigger question, Donish, actually, that people should be talking about is we all know that Andreessen has been moving towards the RIA model, registered investment advisor model, and that their planning, their plan was to go public.
where they would sell off the stake of their management company,
the GPs,
would receive equity basically,
like a Blackstone does or an Apollo or something.
And that could fuck them over big time
because to get the approval to go public
when you have this underlying sort of like
shitty crypto exit pathways that you've gotten to, I don't know.
I think the SEC and everyone else would block that.
So maybe that's a question people should be bringing up.
Does this stop Andreessen from going public as an RIA?
I mean, and so people are not talking about possibly Matt.
So I want to make sure that people understand.
So when you see private institution A16Z, go and get RIA,
registered investment advisor,
certification, it's not a small deal.
It's a pretty big step to do that.
And it actually opens you up to scrutiny
because suddenly you're compared to other,
you know, like the Edward Jones of the world.
And so when they are then...
making their investors invest in certain assets that are deemed as securities through this model,
suddenly what seemed to be obvious, which was that Andries making more money through...
their management business, then they were even through their carry, I guess, maybe, maybe not.
Like you said, the crypto side of things, actually, the tokenization allowed them to liquidate before the market crashed, which also seemed...
rug pulling on poor retail investors, but I'm going to go there.
So, you know, ultimately, when you look at the largest PE firms,
Blackstone and others, they were able to go public and invest in the actual management organization.
That's not how it usually works. As an LP, you're investing in the funds, not the management
organization. This would allow people to...
management organization that gets that recurring that sweet, sweet management fee that a lot of VC firms like.
And then on top of that gives them upside if the investments are good.
So Matt, I'm being involved in crypto right now may, the point that you're making is that their involvement in crypto and this deep, deep involvement in crypto, of course, for the last few years, may hinder their ability to go public.
Is that the point that you're making?
Just want to understand.
Can you hear me now?
Yeah, I can hear you.
Right?
Yeah, so the plan that Andreessen had always gone down was they hired this in-house wealth management leader.
His name is Michael Del Buono, B-U-O-N-O, basically to help manage the fortunes of all the founders that they had backed over the years.
There was an article that was written about this a couple weeks ago.
And essentially, in 2019, the firm became a registered investment advisor.
allowing them to devote a larger portion of its capital to alternative strategies and investing in other funds and issuing debt and all these things.
So it's not just, you know, you get the stamp of approval.
It allows them to do much broader things on their mandate.
Now, to say that crypto and what they were doing, I don't know what portion of assets under management it represented.
For it to take down all of the other businesses within Andrewies.
I would have to think that, you know, Mark is probably not stupid to think that this could all be connected under one entity.
So if he had to like shut down a part of the crypto business or the entire thing, not to have a domino effect against the
other businesses going on with inside the platform of Andreessen, you'd think that they'd be smart enough to do that.
And so because of how they're positioning themselves as a wealth management platform business, where the founders of Airbnb and, you know, other businesses that they've backed over the years are having their money managed on Andreessen's wealth business, like a Goldman Sachs model.
You would have to think that they're not stupid to let a small portion of their crypto portfolio take down that entire platform.
They've been working so hard to build.
Hey, Matt, do you think they could move it to the UK?
No, I don't think so. I don't think so. I think if anything, it would be like a Cayman kind of thing.
I think it would probably be an offshore Cayman style. But again, like you're talking about
so many different layers of the cake here. Like for everyone who doesn't understand how like a wealth
management business works, right? There's like there's the vehicle that outside investors invest
into. And that's like a limited...
partnership vehicle. It doesn't have any sort of management. Then there's a general partner who has
the ability to actually delegate where that money goes to certain investments. And there's obviously
shares that are issued in lieu of that. And then there's the management company, which is completely
owned and completely separate from those vehicles, but it has the legal right to
to receive fees for managing those vehicles.
And then there's share classes within each one of those.
And so it's very easy to kind of carve off where different layers of the cake
sit from a jurisdictional point of view.
And so like the management company, I have no idea where they're going to keep that.
That's probably the most likely thing to be offshore.
Then the general partner entity can be offshore.
If the limited partner vehicles are onshore, which allows them to take
investment dollars from accredited investors from U.S. banks that approved or passed like the
credit investor test, the AML, KYC compliance test, that I'm sure they're going to make sure it stays
local or wherever they're getting the highest sources of capital from. Maybe it's the Middle
East, maybe it's Saudi Arabia. I don't know. But there is a way for them to
unspoke the flywheel of what they've built by taking those different hubs and pushing them offshore,
not so that it can have a knock on effect if one of them gets investigated by Gensler or something.
I mean, it is interesting to now put into context.
how the moves by Gensler and the Biden administration are going to affect the flow of funds through the U.S. government.
I mean, you know, if all, because you think about And reason and how much money is,
is flowing through their organization.
And you now start realizing that they might just offshore this.
Now, again, anything that happens in the U.S. still gets taxed in the U.S. and all of that stuff.
But just the fact that that equity, that the value is not being captured in the U.S.
is another domino that I don't think people are paying their attention to.
It's bigger than some of these regional banks that have failed.
Like, there's a lot of capital underneath Andresen that people will probably watch a lot closer now.
But yeah.
I mean, it's unreal.
It's like, it's sort of another example of how policy drives decision-making and decision-making then drives dollars out.
People that are building the next big company...
I mean, look, I'm not a believer in Web 3.
I don't think Web 3 is going to change the world.
I think that I haven't seen enough use cases yet to really drive them home for me yet.
But the point is that now that everybody else is bearish Web 3,
I'm starting to think maybe it's a good time to start considering it
since the hype is gone.
We're at the trough of disillusionment, right?
And so that's sort of like my thesis on life.
And so right now, everybody is super bullish on AI, and it's like, probably high-up.
So it's very interesting.
It's something we've talked about internally about how, like, the use cases for Web 3 start in the Web 2 Enterprise, and then they move into a Web 3.
And that's only like the way that we've thought about it.
What I mean by that is, you know, can you sell...
an application to a very sophisticated use case, like an enterprise use case, get through that entire cycle and get them to buy into your Web3 vision.
And if you can, then you have a very bright future ahead of you to stay around to sell this thing into the broader masses.
I think.
I can't remember who wrote the tweet.
I'm trying to find it right now, but it was a very well thought out.
Like the web three years of the world, they're going to have to figure out how to sell as a Web2 application in order to actually survive this downturn.
And if they can, then they can go back to their vision of being a broader decentralized Web2 application.
But it is interesting that we've gone after tokenization directly.
I mean, that has been the interesting decision by the SEC,
which is that tokenization is like the culprit and automatically...
Well, that's because when you have like, you know,
people who are lower income underrepresented
and using their life savings to trade on tokens all the time,
someone needs to be the...
principle, I guess, to help them, you know, stop getting bullied in a way. I think that's the
SEC's like motor. There's like we don't really have a thought process around like USDT or any of
these tokens yet. We're just going after the low hanging fruit, which is all of the securities
that people were trading unregulated on U.S. soil.
Agreed. And so on that note, I know we have a lot of requests and thank you everybody for coming, but I do have a day job and need to return to it. We will see everybody tomorrow morning at 8 a.m. Eastern. We do this every day. Hopefully today was interesting. We had a lot of talk about UK. So that was very interesting for me. But we will see everybody tomorrow morning at 8 a.m. Eastern. Thanks, everyone.
