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- [00:00]
Public Sponsor
Support for the show comes from Public, the investing platform for those who take it seriously. On Public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index with AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year. You can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com podcast and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com podcast paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors llc. SEC Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available at public.com disclosures.
- [01:03]
Carol Massar
Bloomberg Audio Studios podcasts radio news this is Bloomberg Businessweek daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Massar and Tim Stenbeck on Bloomberg.
- [01:32]
Tim Stenbeck
Radio Video I'm looking at shares of Coinbase in the after hours. They're taking a leg lower and like you said Carol, this stock was under pressure but still down 1.72% bouncing around but in the red as we speak. In terms of fourth quarter total revenue that missed estimates, the company expects headcount to grow slightly higher than in Q4. Fourth quarter adjusted EBITDA came in below estimates. Fourth quarter adjusted EPS came in at $0.66 below estimates. What are you seeing?
- [01:58]
Carol Massar
I'm looking at the release, looking forward to 2026. We continue to be optimistic about the long term trajectory of the cryp industry and they also said it was a strong year in 2025 for Coinbase both operationally and financially. And so yeah, they say as regulatory clarity emerges, we believe crypto will update all financial services and Coinbase is well positioned to capitalize on that transition. So I mean, you know, but Connect stock underperformed.
- [02:27]
Tim Stenbeck
It was down 9% in 2025. So even if it was a good year financially for the company, investors didn't reward it.
- [02:33]
Carol Massar
Yeah. Let's see what Monique Malima has to say. She's Bloomberg News equities reporter. She's in Toronto. Follows this name. Was 2025 a strong year for Coinbase and does 2026, should they be Coinbase optimistic about the year and the long term trajectory of the crypto industry at this point in time.
- [02:54]
Monique Malima
So 2025 was a mixed year for Coinbase. We saw at the start of the year there was a lot of momentum as the Trump administration came in, was really embracing cr and we saw a huge wave of investment into cryptocurrencies which benefited Coinbase on their transactions and trading. But as we've seen crypto prices, pullbacks and that record high they hit in October, we've seen that weigh on Coinbase's shares and we've also seen it weigh on their revenue as less people are trading on the platforms, which means less transaction revenue and also less volumes.
- [03:26]
Carol Massar
Monique, what is your balance? What does their balance sheet look like? I'm just looking at. It says in January 2026, we know this, our board expanded our our share and long term debt rep purchase authorization by an additional $2 billion. We are mindful of reducing our overall dilution opportunistically. We are deliberately well capitalized with 11.3 billion in cash and cash equivalents to weather these cycles and continue to invest in the future of finance. Is their balance sheet solid?
- [03:55]
Monique Malima
So analysts do think that their balance sheet is still solid. You know, Coinbase, they are the largest cryptocurrency exchange in the US they are on much solid footing compared to some of the smaller crypto firms are out there. But you know, analysts are also expecting that cryptocurrency is going to continue to kind of see a downturn going through this year. So that's going to continue to weigh on Coinbase even if they can weather it for now. And we've seen some analysts already pull back their price targets and their estimates for Coinbase's earnings for this year and next year.
- [04:26]
Tim Stenbeck
Yeah. How do you explain the analyst community has just been brutal to this company over the past few weeks? You had a great article. It was like kind of an earnings preview, but also much more than that because it gave the context for what all these analysts are saying about the company. Recent double downgrade to the company as well. Why are analysts so bearish?
- [04:47]
Monique Malima
So analysts are really bearish because of the downturn we've seen in crypto markets. Bitcoin is down over 40% from the high it hit in October. And that's really weighing across the whole crypto ecosystem. We had an analyst at Moness, Crispy and Heart say today that they felt that they were foolish for thinking that crypto markets were going to be recovering more quickly than they are. And they're the ones that did the double downgrade on Coinbase. We've seen six analysts cut their price targets on Coinbase this month alone. So they're really realizing that this downturn we're seeing in crypto, people are thinking is not going to be changing anytime soon. They think prices are going to continue to be depressed. And with so much of Coinbase's business at this point being focused on cryptocurrency, they think that's really going to weigh on the company shares.
- [05:33]
Carol Massar
What do you think they're going to be kind of hammered on? On the call with investors and analysts. I mean, the stock, it is still down, but it's paring some of saw deeper losses after it reported earnings. It's still down, though, about 2.2% here.
- [05:48]
Monique Malima
A lot of the focus for analysts has been how is this company going to expand its revenue base. We've seen that Coinbase announced last year that they're going to be venturing more into prediction markets, into equities trading and all these other products that are hoping to diversify the company from being so concentrated in the crypto industry. And that's something analysts think can help kind of balance out some of these declines that are happening in the crypto space. But they really want to see more gains in those areas, particularly in prediction markets, which has been come such a massive market, to really see that there is more longevity and more sustainability outside of this downturn that's in crypto right now.
- [06:26]
Tim Stenbeck
What I don't. I mean, help me understand this, this, Monique. If, if stock prices go down, do exchanges that have stocks suffer because they're still buying and they're still selling? Is the crypto industry different in that the exchanges only do well when the prices go up?
- [06:48]
Monique Malima
So transactions are transactions, right? Yeah, transactions are transactions. But for crypto, the difference is that a lot of crypto is sentiment driven. So when crypto prices are depressed, that means that a lot of people in the crypto industry start pulling out. We've seen that, that there's been mass liquidations in crypto, that we've seen people go to other market markets, like prediction markets, or to the stock market or just sitting back when prices become depressed. So it's not just about the fact that the crypto prices are lower. It's that then that also leads to lower volumes, which isn't necessarily the same in stock markets. Even when the stock market's down, people might be switching to other areas of the stock market versus in crypto, some people are just choosing to leave.
- [07:31]
Carol Massar
You know, I'm looking at Olga Kharif with a right through on Coinbase here in the aftermarket, and she reminds us about rival exchange Gemini Space Station saying this week that it plans to cut up to 25% of its workforce and scale back international operations. So underscoring how these rapidly weaker markets can basically translate into operational pressure, is there any operational pressure on Coinbase that we know of?
- [07:59]
Monique Malima
Not that I'm aware of. In terms of the operational pressure, like I'd mentioned, they're really focusing right now on expanding their products so that there's not going to be so much concentration in crypto. And so there will be a focus on the prediction markets, on the equities, trading on options.
- [08:14]
Carol Massar
But the prediction markets have their problems too, right? I mean, especially when so much as sports. Right? And sports gambling, or gaming, if you will. I mean, the gambling guys and the gambling platforms who are, you know, highly regulated have got to be looking and saying, well, wait a minute, you know, there's got to be some regulation that's going to come in to these prediction markets.
- [08:36]
Monique Malima
Yes, definitely. It's not an area without its own issues. We know the CFTC had said that they are looking at creating some types of rules or frameworks around prediction markets when it comes to things like sports. But for people who are in this space, the idea of something being a little volatile of operating, you know, somewhat in a bit of an area that hasn't been fully regulated yet isn't out of the ordinary for crypto. You know, this is something they're used to. They're used to the fact that, you know, even for crypto markets, we're still seeing legislation being debated. So for them, it's not as much of a fear of going into prediction markets with that uncertainty because they've already been for so long having to operate in uncertainty.
- [09:21]
Tim Stenbeck
Hey, speaking of prediction markets, we're getting DraftKings results. Crossing shares fell as much as 14% in the immediate aftermath of these, now down about nine and a half percent. The company sees 2026 revenue six and a half to $6.9 billion. That came in below estimates of $7.32 billion. The 2026 revenue outlook miss is what is pushing the stock lower. Fourth quarter revenue did meet estimates. Fourth quarter adjusted EBITDA did come in above estimates. Fourth quarter earnings per share coming in above estimates too.
- [09:51]
Carol Massar
Yeah. And I think it's interesting fourth quarter looking back at the quarter that was monthly unique payers 4.8 million, the estimate was 5.43 million. So a little bit below as well as you look. But that outlook is certainly what's got investors a little bit, a little bit nervous. The stock, by the way, is down 27% already in 2026.
- [10:09]
Tim Stenbeck
Monique Malima, we are going to let you go. She's equities reporter for Bloomberg News. She joins us from Toronto. She covers Coinbase. She covers the entire crypto industry. Check out her reporting and more on the Bloomberg terminal and@Bloomberg.com stay with us. More from Bloomberg Businessweek Daily coming up after this.
- [10:30]
Public Sponsor
Support for the show comes from Public, the investing platform for those who take it seriously. On Public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index with AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com podcast and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com podcast paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory services by Public Advisors llc, SEC Registered Advisor. Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available@public.com disclosures.
- [11:30]
Carol Massar
You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [11:45]
Tim Stenbeck
Eric Weiner, he walked into our studio. He's like what a day.
- [11:50]
Carol Massar
And like you could almost say that every day. But there are days where it's like, oh my God, right? Why do you say that though? Specifically? Because it's not like everything was down today.
- [12:00]
Eric Weiner
No, not at all. It was a weird day. See, we've been having a lot of weird days.
- [12:07]
Carol Massar
Is that the AI scare is that.
- [12:08]
Eric Weiner
What it is, it is the AI scare. And you have this roving AI worry that's just taking out entire industries at once. Sort of a sell now and then, see what happens later. So today we saw like logistics stocks get hammered because the company that was the singing machine company and made karaoke equipment now has an AI bot that does logistics. And they're taking out, you know, billions of dollars in market cap from logistics.
- [12:38]
Tim Stenbeck
Is a real thing.
- [12:39]
Eric Weiner
It's a real thing. Okay, well it is a real we.
- [12:42]
Carol Massar
Are the world, we'll ship your good, let's mold.
- [12:45]
Monique Malima
Like what?
- [12:45]
Carol Massar
Like what is that?
- [12:47]
Eric Weiner
Well, it's really strange. So what you have is the idea, you have two ideas that are filtering through the market right now, both related to AI that seem to be at conflict with each other. You have on one level, big spending a ton to develop AI and the market saying when are we going to start seeing some returns from this and are you spending too much? And is this throwing good money after bad? So they get hit. Then you start seeing some little obscure company that used to make karaoke machines saying we've got an AI bot that is going to fix logistics. And all of a sudden they sell off logistics companies. Now I don't necessarily know that the market knows exactly how this is going to play out. They're just thinking that right now sentiment is so soft that you just get, get out when you can and then buy back in 25% later.
- [13:41]
Tim Stenbeck
We I want to bring in Bloomberg News senior editor and author of the Everything Risk newsletter, Ed Harrison. He joins us from our Washington D.C. bureau. Ed, I want to bring you in because you write about Risk, the Everything Risk newsletter. And it seems like the risk right now is that there's going to be, you know, that old commercial from Apple, there's an app for that. Well, as soon as there's an AI for that, whatever sector that is sells off what's going on.
- [14:09]
Ed Harrison
Yeah. Hey, Tim. So remember we were talking a few days ago, I was saying that there was people were de risking ahead of time and that this was building. But we're at an inflection point where we really don't know how that's going to work out. I think Eric is hitting the nail on the head that people are, you know, selling a bit and asking questions later. But obviously if the, if the economy holds up, then you know, they can re risk. You know, from where I sit today, this has an algo selling momentum driven feel to it. When you look at like the Mag 7 as an example, Apple's down the most there. There wasn't really any news flow on this. So this is really just the out algos, you know, taking the momentum of this trade into small caps, the rotation, etc. And then we just have to see, you know, does this have legs as a result of the economy?
- [15:10]
Carol Massar
Yeah, I'm looking at the Vix too. And we did go a little bit above 21 today, but we closed just at 20 or just below 21. Is that significant, Eric?
- [15:22]
Eric Weiner
Yes, yes. I mean that will to feed into what's going on in the equity markets. When you get these selling pressures, you often see the VIX bump up over 20. If it holds there, then it means that there's real sustained fear. But today was one of those days where, you know, we had a pretty significant downdraft. So it jumping over 20, 20 isn't and not necessarily holding. There isn't exactly, you know, a fear gauge.
- [15:49]
Carol Massar
Is this just a case though of things just feeling jittery?
- [15:52]
Eric Weiner
Yes.
- [15:52]
Carol Massar
And then it doesn't take much for people to be like, okay, maybe logically or fundamentally this doesn't make sense, but I'm out.
- [16:00]
Eric Weiner
Well, that's it. So if you look at what's going on with the say real estate firms or whatever that were hit by cbre, yeah, this is actually going to help them. Like it's not necessarily going to help or financial services. You know, the wealth managers thought with Schwab and others.
- [16:18]
Ed Harrison
Yeah, right.
- [16:19]
Eric Weiner
Schwab is going to do well with this. Employees at Schwab may not do well with this because you're going to lose some workers, salaries are going to go down, but the stock should do well. So exactly what the law logic is behind this is hard to say. It's really, you know, to, to paraphrase that it's really, you know, sell now and sort of wait and where you start seeing it pop up like in places like in small caps, that's where you start thinking this doesn't exactly make sense because they would normally be risk off too.
- [16:49]
Tim Stenbeck
So Ed, if we move past the sort of day to day market swings here and look at the fundamentals of the U.S. economy, we're, we're getting more data. We got more data this week. We got jobless report for last month on Wednesday, which was weird. We got initial jobless claims today. You argued in a post on the Life blog that together this shows a weakening employment picture. What are you looking at?
- [17:11]
Ed Harrison
Yeah, so what I'm thinking is, is, is that generally we have a decent employment market, but it's weakening. And the number that we saw on Wednesday wasn't reflective of the weakness that we're seeing. Number one, we saw a lot of layoff announcements. Number two, we also saw whether that should be negative for four jobs, at least in a temporary sense. And then we've seen two consecutive upticks in initial claims and we saw continuing claims tick up this past week as well. All of that speaks to when you look at the BLS data, that these are things that weren't in the actual numbers for January. In fact, on the BLS website, they say specifically none of the weather was in the, you know, in our collection period. So the February number is going to be worse. And, and so we're seeing a little bit that will help in terms of the jitters, unfortunately, help continue those jitters going forward. The only positive I could say is, is that we're looking at CPI potentially coming down, that's going to be released tomorrow. 2.5% is demonstrably below 3%. That would be a good number. That would help perhaps stop some of the jitters that we're seeing now, to be fair.
- [18:35]
Carol Massar
And everybody always reminds us, you know, you got to look longer term. S and p was up 16% last year, 23% in 2024 and up 24% in 2023. Eric, we've talked about these three consecutive years of very strong gain. I mean, at some point the market takes a little bit of breather. We've seen this where we'll get a 10% correction and then it moves to the upside again.
- [18:58]
Eric Weiner
Well, that's, I mean, in the longer term scheme of things, the market is okay. The concern would be that sentiment has been pretty lousy since October, really. So you're starting to see real kind of pain come through when you're talking about employment and you're seeing like what's going on with crypto.
- [19:18]
Ed Harrison
You're.
- [19:19]
Eric Weiner
What the concern there is is that people aren't spending, people aren't investing, the individuals are stepping aside and that can bleed into a lot of different industries. So the concern, you know, the idea that like you would have a sluggish year isn't necessarily the problem. It's the reasons behind it. And if we're not getting growth, if jobs aren't there, then this can be more sustained.
- [19:43]
Carol Massar
We have economic growth.
- [19:45]
Eric Weiner
Yeah, we do have economic growth right now. But the question is what it's measuring because it's that K, you know, so if we're having economic growth but individuals aren't spending, then the question is how much can, like the top 20% keep the market, keep the economy afloat?
- [20:03]
Carol Massar
Right.
- [20:04]
Tim Stenbeck
To Eric's point, Ed, Airbnb shares higher right now. They rose 4.5% in extended trading. The company's first quarter revenue forecast exceeded the average analyst estimate. Is this that top 20% that, that Eric's talking about right here?
- [20:19]
Ed Harrison
Yeah. That K shaped economy is really creating a lot of uncertainty about what's happening. And I would also reiterate what Eric said about the jitters beginning in October. I thought it was interesting, you know, the VIX actually bottomed in the day before Christmas. And so you could. The jitters that we had during the shutdown were sort of overtaken by year end, buying into the year end. And then people took a week off between Christmas and New Year's, and then suddenly people came in with fresh eyes. And those same sort of concerns that Eric was talking about that people had during the shutdown in October and November have now come back. And then the question is, can the top 20% actually pull this, this market along? So far they have, but that retail sales report that we had, you know, calls into question whether that's actually the case.
- [21:19]
Carol Massar
I want to go back to some of the earnings after the close Applied Materials out. And we're seeing the stock rally in a big way in the aftermarket. Largest US Supplier of chipmaking equipment, giving an upbeat sales forecast for the current, current quarter, signaling that demand for artificial intelligence and memory semiconductors are fueling purchases. So, Ed, there is this kind of yin and yang. Like, we're watching consumers, we're watching the economy. There's also that trade, which in some ways there's the AI scare that is freaking out some sectors. And then there's that spend in AI. You know, when you've got something like this, it just to some extent points to some cross currents in the market.
- [21:54]
Stuart Paul
Right.
- [21:54]
Carol Massar
There's some good, there's some bad.
- [21:57]
Ed Harrison
Yeah. And what I would say is, is that if you look at it from a very, very macro perspective, we have 6% deficits, we have tax cuts coming, and we have massive spend, as we've seen the likes of Alphabet, you know, the likes of Amazon saying they're going to continue to spend more, they're taking on debt to spend more. Those are tailwinds that are very difficult for, you know, barring some sort of macro shock to overcome. So really, the economy might be slowing, but it's not, you know, slowing into anything that should have a sustained negative impact in the near term.
- [22:40]
Carol Massar
A match here is up more than 9%. Eric Weiner, Bloomberg News Senior Editor, Equities Americas and Bloomberg News Senior Editor and author of the Everything Risk newsletter, Ed Harrison Guys, thank you. Stay with us. Plus more from Bloomberg Businessweek Daily coming up after this.
- [22:56]
Public Sponsor
Support for the show comes from Public, the investing platform for those who take it seriously. On Public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index with AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com podcast and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com podcast paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors llc, SEC Registered Advisor. Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available@public.com disclosures. You're listening to the Bloomberg Businessweek Daily Podcast.
- [24:01]
Tim Stenbeck
Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto.
- [24:07]
Eric Weiner
With the Bloomberg Business app or watch.
- [24:09]
Public Sponsor
Us live on YouTube.
- [24:12]
Tim Stenbeck
I said we were going all in on the economy this hour. We kind of do that every day but you know, that's kind of what we do. But we're doing it from a few different angles on that. I want to bring in Stuart Paul. He's U.S. and Canada economist for Bloomberg Economics. He jo us here in the Bloomberg Interactive Brokers studio. We want to broaden this out to the entire world. The economic effect of potential conflicts. Bloomberg Economics team is out with a special report about global risk is called Flashpoint Counting the cost of potential conflicts. US China, war over Taiwan, the cost of escalation on the Korean Peninsula, war between Russia and Europe. Kind of modeling this stuff out. Venezuela is in there as well. In addition to others. We should know the team does rise, right? That the human cost of conflict is tragically high. We recognize that each time we talk about a potential conflict or a conflict, but the economic cost is also rising. So Stuart, if we Sit here in the United States. You're in charge of US and Canada economics for Bloomberg Economics. If you look around the world, where do you see the biggest risk?
- [25:13]
Stuart Paul
Well, we could think about risk on two different dimensions. We have the probability of risk and then the consequence if something were to become, let's say, a hot war, right? So if we were to just think strictly about the consequences of global conflict, really any conflict that takes place in the South China Sea, an attempt to control the Taiwan Strait, an attempt to control territorial Taiwan would be the most consequential for the global economy. If we think about semiconductor production, about 60% of global semiconductor production takes place in Taiwan. These are the primary inputs to about 1.1/5 of these are the primary inputs to about 5%, excuse me, of global GDP, right? So we're thinking about just how much GDP can get dented by shutting down exports of semiconductors from Taiwan. And we're really talking about 5.3 percentage points of global GDP, trillions of dollars of economic activity. And if we think about the amount of cargo that just flows through the Taiwan Strait rates, we're talking about a fifth of global shipments, another two and a half trillion dollars of goods that are shipped through there every year. So again, we're talking about trillions of dollars of economic consequential activity that's flowing through the region. And so of course, it's going to matter most if tensions heat up between the two largest geopolitical rivals in the world.
- [26:37]
Carol Massar
I want to just, if I can highlight that you say, you guys say the damage would be global, Taiwan's economy would be decimated, and that you folks estimate China's GDP would fall by 11%, the US is by 6.6% in the first year. In addition to the main actors, the EU, European Union could have GDP drop by almost 11%, India by 8%, the UK by more than 6%. And then closer to the fighting, something like South Korea could shave 23% off GDP in Japan, 14.7%. I have to believe we talked about, you know, during the buildup of the nuclear arms race, there was a nuclear deterrence. There has to be to some extent an economic deterrence that understanding that doing things like this, it's not like you hurt one person, maybe your original or initial foe, everybody's going to feel it.
- [27:26]
Stuart Paul
That's very true. And it's important that you bring it up because an outright hot war is something that's incredibly improbable because of the economic consequence. We're talking about denting global GDP growth by about 10%.
- [27:38]
Carol Massar
Nobody wins there.
- [27:39]
Stuart Paul
Nobody wins there. So what happens along the gradient of outcomes? Let's dial it back and say, okay, what if it's not a hot war? What if China just imposes a blockade on Taiwan and asserts its authority through the Taiwan Strait, preventing cargo from flowing through that's still dense. Global growth by about 5%. Right. So it's the sort of thing where now it becomes a little bit more economically viable, the deterrence. Now, we're not talking about, about a sort of nuclear type deterrence, a mutually assured economic destruction like we were contemplating during the Cold War. Instead, we're talking about more like regional skirmishes or something that's more akin to a proxy war during the Cold War. 5.3% percentage points of global GDP is nothing to sneeze at, but it's a little bit more of a realistic expectation. And so it does put something like China asserting its authority in the South China Sea. It makes it a little bit more viable.
- [28:40]
Tim Stenbeck
Hey, we. I want to kind of go around the world in the time that we have left with you, and you're going to hang out with us for a little bit until the end of trading here. So we're looking forward to that. But Stuart, the Middle east right now and the buildup of resources from the United States in the Middle east, we talked about some of those headlines earlier this week. Week, there's a section in Here called the $108 Oil how the Middle East Could Crash the World Economy. How does that happen?
- [29:08]
Stuart Paul
Well, it's so interesting because we think about North American energy independence and we think that, okay, well, maybe the Middle east doesn't play as much of a role as it did in global economics, let's say, two decades ago. But if we think about energy consumption and where the energy is produced that ends up getting consumed globally, the Middle east is still a major actor. Still, about 15% of global energy production is initially sourced from the Middle East. That's the same as what we saw in the early 70s. Right. So the Middle east, still the key player globally when it comes to energy production and energy consumption, not the U.S. u.S. Matters a lot. And certainly for our standard of living, which was a phrase that mattered a lot during the Bush era, for our standard of living here in the United States States, the Middle east is a little bit less relevant. But globally, the Middle east is as relevant today as it was even in the early 1970s. If we think about where conflicts can arise, the places that are in control of oil are the places that matter most. The conflict in Israel and Gaza didn't matter as much as, let's say, the US Sending an aircraft carrier toward the Strait of Hormuz for a potential conflict with Iran.
- [30:21]
Tim Stenbeck
Could, could, could the what's happening in Venezuela change this equation? We just heard from Chris Wright, the Energy Secretary. He was in, he's in Venezuela with Anne Marie Hordern. They're talking about the opportunity for US Oil companies there. He said he will not. The US Will not guarantee security. But it seems like this, the administration in Venezuela is receptive to US Companies increasing output there. Does that change the equation?
- [30:46]
Stuart Paul
Well, so let's just put orders of magnitude on everything. Right? So, so those are big reserves. They are pretty big reserves, but only about ramping up Venezuela production to where it was, let's say, before the Chavez era would just add about 1 1/2 percentage points to global oil supply.
- [31:03]
Steve Moore
Yeah, Right.
- [31:04]
Stuart Paul
So that's just one and a half percentage points. We're talking about 15% coming from the.
- [31:08]
Carol Massar
Middle east doesn't move the needle in the same way.
- [31:10]
Stuart Paul
Right. So it doesn't move the needle in the same way. When we think, though, about regional trade alliances, it again creates a sort of hemispheric independent from the Middle East. Already the Western Hemisphere is relatively insulated from the goings on in the Middle east, but bringing that additional supply online from Venezuela would do good in the Western Hemisphere.
- [31:28]
Carol Massar
All right, Stu's going to stay with us because we want to broaden out our conversation even more and add a really interesting voice to it as well.
- [31:35]
Tim Stenbeck
So I want to bring in Steve Moore. He's the co founder of the nonprofit Unleash Prosperity. He's a former economic and senior policy advisor to President Trump in 2016 and 2024. He served as chief economist and distinguished visiting fellow at the Heritage foundation for 12 years. He's the author of a couple books, including Trumponomics Inside the America First Plan to Revive our economy in 2018 and more recently 2024, the Trump economic miracle. And then in 2019, President Trump selected Steve Moore for the Federal Reserve Board of Governors. Moore ultimately withdrew from that.
- [32:05]
Carol Massar
All right. He is also the author of Trump Trumponomics, Inside the America First Plan to Revive Our Economy and the Trump Economic Miracle. I think you said that, but we thought we'd. Again, it's okay. There's a lot going on. Steve joining us from Washington, D.C. steve, it's good to have you here. Bloomberg Economic having me. US Economist Canada economist Stuart Paul is also with us. You know, we're talking about a lot of issues. And it does feel like when we think about what's going on in the world, geopolitics largely at play in a big way. We're trying to assess the different trade deals, the different alliances, Stu, just laying out if we had problems, certainly in Taiwan are in the area in terms of what that could be. It could be a $10 trillion global economic hit. These are big, important things. The world, though, is changing. What do you assess when it comes to some of these global alliances, trade or other, and how that could impact the global economy and the US Economy?
- [33:02]
Steve Moore
Is that for me?
- [33:03]
Carol Massar
Yes, that's for you.
- [33:05]
Steve Moore
So, I mean, let's start with the fact that, you know, we have a very, very strong economy right now in the US it's, it's all the, all the economic indicators are pointing north. We have declining inflation. We got really good job report yesterday. We are seeing, you know, a booming stock market over the last year or so. We're seeing real wage increases for workers. So it's about as good a picture as you can get right now. And, you know, Trump was right when he went to Davos and said, if you want to grow, because we're growing, growing much faster than virtually any of our competitor countries, do what we're doing, promote lower tax rates, promote energy production in your home country, deregulate. And don't forget, that's a huge, huge burst to the economy in terms of increasing the productivity of our, of our businesses. So I feel very confident about the economy in 2026. I think, think that we, I don't think we're going to see the 15% growth that Donald Trump said we could see, but I think we could easily grow at 3, 4, or 5%. And those are, those are very positive numbers.
- [34:18]
Stuart Paul
One of the things that I'm thinking about, Mr. Moore, is that there's sort of a reshuffling of a lot of a reshuffling of the global commercial order. There's a reshuffling of global alliances. There's a reshuffling of military alliance alliances. There's a reconsideration of tax policy, there's a reconsideration of regulatory policy, big structural changes that have a lot of growing pains. On the other hand, you have the Fed, you have the president calling for interest rate cuts, perhaps to smooth over some of those growing pains. But all the data that we're seeing so far that you're alluding to is pointing to a relatively resilient U.S. economy. Sure. We didn't see a Ton of dramatic job growth last year, but it looks like we're kicking off 20, 26 really strong. Where do you think that these two different tension, these two different things end up shaking out? On the one hand, we have really resilient economic activity right now, but there's a lot of risk in the reshuffling of these major structural factors.
- [35:22]
Steve Moore
Well, there's no question you're exactly right that Trump was, does want to and has reshuffled the deck when it comes to both our foreign policy and our trading policy. I'm much more of a conventional Ronald Reagan free trader. And so President Trump knows I don't always agree with him on his, on his trade policies. There's no question that when we had the Liberation Day, that that really roiled markets and did cause a temporary reduction in economic output. On the other hand, and the one thing that I try to let people understand that don't necessarily understand how Trump operates is the guy is a dealmaker. That's an obvious point. And he has. The way I like to put it, is, look, the global economy is pretty simple to understand. The United States is the hub of the world economy, and every other country is a spoke. And that gives the United States an enormous economic advantage, just as we are, you know, so majorly benefited by the fact that we have the world reserve currency in the dollar. And so Trump is, for the first president in my lifetime that is sort of using flexing America's economic muscle to force other countries to do things that are, in many cases, their own interests, but also in America's interest as well. And so what I'm saying is that I don't, I'm not a big fan of the trade tariffs that Trump has put into effect. But some of these trade deals that he has delivered, we don't know for sure yet because it's still early in the game. But it looks like if Trump is even nearly right on this, that they will bring a lot of capital investment in the United States. We'll see lower tariffs applied on American manufacturing and agricultural products, and that will only make America stronger.
- [37:07]
Tim Stenbeck
You mentioned the president is a dealmaker. One of the deals that he made in his first term was the USMC trade pact. Our team reporting that the president is privately musing about exiting that trade pact, according to people familiar with the matter. Earlier today, we heard from White House trade adviser Peter Navarro. He said the North American trade pact has significant flaws. He expressed worries about China shipping goods through Mexico and Canada should the U.S. get out of the USMCA.
- [37:35]
Steve Moore
Now, I'm a big fan of that. In fact, I mean, I was a big fan of NAFTA when it was first, first, you know, talked about under Ronald Reagan and then signed into law by Bill Clinton, a Democrat. It's been enormously advantaged to the whole North American continent. It's critically important that we trade with Mexico because for many reasons, we want to make sure that Mexico remains politically stable and we want to see living standard, higher living standards in Mexico and Canada's. A lot of people don't realize, by the way, that Canada, Mexico are our biggest trading partners. Not China, not Europe, but Canada, Mexico.
- [38:11]
Tim Stenbeck
Don't worry. The Bloomberg audience knows, Steve, that's for sure.
- [38:15]
Steve Moore
So the, Well, I was even surprised, frankly, when I was looking at these statistics. I thought our trade with China might, might have been larger than Canada, Mexico, but it's not. And so look, you're talking to somebody who is very much in favor of continuing free trade flows between our three countries. Now it is, is, I think Trump has a legitimate complaint that if we have a free trade deal with Canada, Mexico and then Canada, Mexico are bringing in goods from China and then China is using them as a port of entry to bring in things to the United States, that's a problem.
- [38:49]
Carol Massar
But are we doing that? I mean, that's, I guess we should know that, you know, you know, we have to be careful about what is said.
- [38:55]
Steve Moore
Right.
- [38:56]
Carol Massar
To understand. Exactly. Because I think Mexico and Canada understand the importance of an ally like the United States and certainly when it comes, comes to China. What do you think, Steve, is the damage, though, that is being done to the United States on a global level because alliances, the EU is moving on, China's moving on. And I do wonder that those aren't quick fixes necessarily. Are we being kind of hurt longer term by some of these, these, you know, former allies are allies still in name, but also they're looking elsewhere because they don't love the volatility and instability of this White House.
- [39:37]
Steve Moore
Yeah, that's a great question. And the last thing we want to do is send these other nations running into the arms of China. I don't quite get the logic of, of that, by the way, by on the part of the Europeans who've really been saying, well, maybe we'll trade with China. I mean, my goodness. See, these same countries for the last 15 years have talked about, you know, climate change being the most important issue on the planet. And here they are running to the country that's the biggest polluter in the world. So that's a little hypocritical. But look, we want to trade with Europe, we want to trade with Canada. I think it's.
- [40:10]
Carol Massar
Don't we need to. Don't we need to. To keep the U.S. economy? You talked about earlier that this economy is doing well. Don't we need.
- [40:16]
Steve Moore
Sure, yes. Trade is critically important here. I believe that. You know, in fact, the one thing I would say that I disagree with Trump about him. He thinks that the free trade regime over the last 50 years has been negative for the US and my own opinion is I don't think there's any country in the world that has benefited more from free trade than the United States. I mean, my goodness, when I first came to Washington in 1982, 83, the Dow Jones was at a thousand. Now we've got a Dow Jones at 50,000. I mean, we have so dominated the world economy in terms of the competitiveness of our businesses, no other country, not even China comes close. I mean, our, our net worth as a country in terms of our businesses are almost as large as the rest of the world combined. And that's largely because not, not just just. But that means that trade has actually benefited the United States, not hurt our.
- [41:10]
Stuart Paul
Workers as an economic competitor. Sure. The U.S. has been a tour de force. If you ask somebody like J.D. vance whether it's been worth the toll that it's taken, let's say, on the Rust Belt, it seems like he's a little bit unsure. And Scott Besant, of course, famously has the line that the American dream is not having cheap imports and cheap labor flooding the country. Instead, it's about, you know, having having a job and building a future. We were just talking about housing affordability, having a stable job job and being able to afford a home. One of the things, though, that I think about in terms of free trade. So at a minimum, it seems like there's at least a questioning in the White House whether free trade has truly benefited us. What I'd like to hear your opinion on is whether free trade for manufactured goods is different, let's say, than free trade for input inputs to production. Like, we definitely need graphite, we definitely need nickel, lithium, copper, things that we don't necessarily have under our feet. Is that different to some extent than trade for cheap manufactured goods that the White House seems to be so upset about?
- [42:13]
Steve Moore
Well, let's put a little political angle on this because, look, as I said before, I think this is a strong economy, but a lot of the American people don't agree with me right now. If you look at the polling. You know, middle class Americans have a lot of anxiety right there. Now some of it is many people just don't like Trump. But some of it is, you know, people aren't feeling the love, so to speak, and they're not feeling the positive effects of the kind of statistics that I mentioned. And so that's a political problem because we do objectively see a lot of things moving in the right direction. But you're right, you go to these, you know, towns in the Midwest, I grew up in the Midwest, and they're not feeling like it's a sort of shared prosperity.
- [42:55]
Carol Massar
Well, is it? Because they're not. But Steve, is it not that they're not feeling it, it's the reality of it. It isn't a shared prosperity.
- [43:04]
Steve Moore
Well, maybe not. I mean, although even the statistics show that, you know, the incomes for even the lowest income groups have been rising. And you can tell I'm kind of flummoxed by this because it does, it does look from the objective evidence like things are getting better. But there are, there are, you know, certainly patches of the country that have not felt the kind of prosperity that other parts of the country. And so that's why it applies to manufacturing jobs because a lot of Americans believe, you know, we're losing a lot of those old, you know, 1970s, 80s, 90s jobs that gave people a middle class living. Now the problem, if I may, I mean, what's sort of interesting about this subject though is that many of those of manufacturing jobs won't even exist in 20 years. I mean, we are moving into a new era of artificial intelligent intelligence, robotics, you know, that just are changing so dramatically and so rapidly. The way we work, the way our businesses work, the way we play. I mean, how many trucking jobs will we have in 20 years? Not many.
- [44:12]
Tim Stenbeck
Yeah, you know, if, if the tech there and if the legislation gets there. But, but I kind of see that happening. We're speaking with Steve Moore. He's the co founder of Unleash Prosperity. He's a former Trump economic adviser. He joins us this afternoon from Washington D.C. also joining us is Stuart Paul, U.S. and Canada economist for Bloomberg Economics. Steve, the President is trying to bolster the shrinking U.S. coal power industry. He'll use $175 million in government funds, taxpayer money to upgrade six plants and have the Defense Department buy power from others. We had an interesting conversation with our colleague Will Wade, who covers energy here and power at Bloomberg News. And we asked him why the US Moved away from coal. And I was Expecting an answer from him, to be honest, that it was about, you know, environmental reasons. But he had one word. He said money. It's cheaper to use natural gas and have natural gas fired power plants. Is this a bad move by the Trump administration because it's, it kind of goes against the free market forces.
- [45:11]
Steve Moore
Well, that's a tough question, too, because it's also intertwined into politics. You know, the coal. Coal is still a fairly important source of our energy, and we get much more energy from coal than we do from green energy, for example, not that much.
- [45:25]
Tim Stenbeck
We get about 16% from coal. And then if you take all renewables together, you get 20%.
- [45:33]
Steve Moore
I definitely, I don't, I'm not sure about those stats. But, but, but the point is that coal is still, it's basically, you know, been an important part of our energy mix. I happen to believe that we should use all forms of our power that are competitive. And coal was made uncompetitive in no small part because of the regulations. But we also all want clean air as well. But I, look, I'm not going to count out coal. I don't want government subsidies to coal. I certainly, I think, I'm glad that Trump is getting rid of the, Remember those green, the green movement grew only because they were lapping up, you know, tens and tens of billions of dollars from taxpayers. They just weren't competitive. So, look, my view is very simple on the future of energy. It's the two ends. It's natural gas and nuclear power. And ultimately those are going to be, I think, the fuels of the future. And that means that. And the good news about that is both of those are very clean burning fuels.
- [46:32]
Stuart Paul
Is it possible to have your nukes without subsidies?
- [46:37]
Steve Moore
Yeah, that's what. Oh, without. That is a good question. I don't know the answer to that. I mean, you may know better than I do, but. Because nuclear power has been subsidized. But I think I'm going to go with the optimistic forecast that we will see nuclear power becoming more efficient and more productive and competitive without any government subsidies.
- [47:01]
Carol Massar
Hey, last time, Steve, you were with us, this was at the end of the year, before we knew the President would pick Kevin Warsh as his nomination to the Federal Reserve. Is this a good choice, in your view? Does this ensure that there will be an independent Fed? And I'm assuming you think an independent Fed is important.
- [47:19]
Steve Moore
Yeah, look, I, I told the President early on in this process that I thought that, that the three people I thought would be the best for that position were Kevin Hassett, Kevin Warsh, or Arthur Laffer. And so I'm glad he picked somebody off of that list. I am incredibly excited about Kevin Warsh. He will be independent and he's a smart guy. He understands monetary policy. He understands the importance of, importance of keeping. The most important thing the Fed needs to do right now, in my humble opinion, is to keep the dollar strong and stable. And by the way, Trump isn't always in favor of a strong dollar. Sometimes he favors a weaker dollar. I disagree with them on that. I think we clearly benefit from having a stronger dollar. And by the way, if you want to afford, you want to have things more affordable, you want the dollar to be stronger, not weaker. So I think he's got all the right economic, economic instincts. And I think he will, he will once the Democrats on the, you know, because the big committee hearings will be coming up for his Senate approval. And I think he will do very well with that. I think he will be confirmed and.
- [48:26]
Carol Massar
It'Ll be an independent Fed just quickly.
- [48:29]
Steve Moore
I hope so. I think it will. Look, I think he's not a political guy for the most part. And so, I mean, he's a Republican, but I've known Kevin Warsh for many years and he will. And he's a real professional. And I can't think of any better. Any better. I really, truly, I think he was about the best choice that we could have.
- [48:50]
Carol Massar
All right, Stephen Moore, thank you so much. Co founder, prosperity, former Trump economic adviser joining us from the nation's capital. Stu Paul still here in studio, part of our Bloomberg economics team. We're counting down to the close. Got about a minute here. Your thoughts on that?
- [49:04]
Stuart Paul
Well, so I think that Kevin Warsh actually runs the risk of being a little bit too political. I think that when we saw an additional half a cut or so priced in upon the announcement that he'd be the nominee, I think that that was markets reconciling. This fact that there is going to be a little bit more of a political charge to monetary policy if we were to see somebody like Kevin Warsh. But the Senate Banking Committee members know this to be true. That's why Senator Thom Tillis is going to prevent that nomination from going forth until we see the DoJ probe into the Fed stopped. And we'll see just how much President Trump is devoted to Kevin Warsh as a nominee, because he would have to direct the DOJ to stop the probe into the Fed, something that it doesn't sound like he's been willing to do to this point.
- [49:51]
Tim Stenbeck
Yeah, we'll see what what Thom Tillis and the Senate Finance or Senate Banking Committee Ralph Weather ends up doing. I do want to point out I'm looking at the U.S. energy Information Administration data from 2023. It's the most recent data that's available in terms of total electricity generation here in the US because we just had this debate with Steve Moore.
- [50:10]
Ed Harrison
Yeah.
- [50:10]
Tim Stenbeck
60% comes from fossil fuels, 16.2% came from coal. And then renewables accounted for 21.4% of those. Of that 21.4% total generation, more than 10% came from wind power. Back then, hydropower was at 5.7 and solar was at 3.9%.
- [50:28]
Carol Massar
Yes.
- [50:28]
Tim Stenbeck
So we do have, we do more renewables than coal.
- [50:31]
Carol Massar
Yeah. And at least as of now, that move. Good stuff, Stew. Paul, thank you so much.
- [50:36]
Stuart Paul
Thank you.
- [50:36]
Carol Massar
Really appreciate it. He is US And Canada economist with our Bloomberg Economics team joining us here in our Bloomberg Interactive Broker Studio.
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Eric Weiner
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