Marketplace Podcast Summary: "What Does the Crypto Industry Want?"

Episode Title: What Does the Crypto Industry Want?
Host: Amy Scott (in place of Kai Ryssdal)
Release Date: November 11, 2024

1. Crypto Industry's Post-Election Ambitions

The episode opens with a bold upturn in the cryptocurrency market, highlighted by Bitcoin's surge to a record-breaking price of over $87,000 post-election. This rally is attributed to the crypto industry's substantial investment in supporting pro-crypto candidates, including President-elect Donald Trump. Trump has pledged to transform the United States into the global hub for cryptocurrency, with his family launching a new crypto business, World Liberty Financial.

Regulatory Clarity Sought

Paul Grewal, Chief Legal Officer at Coinbase, expresses optimism following the election. At [02:29], he states, “Coinbase would now like to see the new Congress pass new laws, including one that would clearly define what crypto assets are and who exactly is in charge of making the rules governing them.” This call for clear legislation reflects the industry's shift towards seeking structured regulatory frameworks.

Focus on Stablecoins

Dante Disparte, Chief Strategy Officer at Circle, emphasizes the need for specific laws around stablecoins—digital currencies pegged to fiat currencies like the dollar. At [03:01], Disparte explains, “A US Law would mean existing international laws wouldn’t dictate how digital dollars are regulated.” This regulatory clarity is crucial for companies like Circle to operate effectively within the US market.

Maturation of the Crypto Industry

Gil Luria from DA Davidson highlights that the industry's push for regulation signifies its maturation. At [03:42], Disparte adds, “All of us are begging for sensible standards that would allow us to get back to building great products and services and spend less time and frankly less money arguing over legal definitions and statutes.”

2. Inflation Trends and Federal Reserve Uncertainty

Kristen Schwab discusses the recent trends in inflation, with the Consumer Price Index (CPI) for October showing a consistent rise of 2.10% month-over-month for three consecutive months. This persistence suggests that the Federal Reserve's efforts to reduce annual inflation to its 2% target may be stalling.

Economic Implications

At [05:22], Disparte notes, “This slowdown of progress towards the target rate becomes more of a feature over the course of this year than some sort of statistical quirk.” This sustained inflation rate poses a dilemma for the Federal Reserve, which is now uncertain about the next steps regarding interest rate adjustments.

Labor Market Dynamics

Raghuram Rajan from the University of Chicago points out shifts in the labor market, such as fewer job openings and reduced employee turnover, which may influence wage inflation. Kristen Schwab mentions at [06:11], “Fewer people quitting and fewer job openings might make the Fed more confident that wage growth won’t outpace inflation.”

Federal Reserve's Dilemma

With inflation progress slowing, the Federal Reserve faces uncertainty. At [05:45], Schwab states, “The Fed seems to be uncertain about what they'll do,” reflecting the broader financial market's uncertainty regarding future Federal Reserve actions.

3. Rising Beef Prices: Supply and Demand Factors

Justin Ho reports on the significant increase in beef prices, driven by both supply constraints and rising production costs. Cattle futures surged nearly 10% between August and October, influenced by prolonged drought conditions in key cattle-producing regions like the Dakotas, Kansas, Nebraska, and Oklahoma.

Impact of Drought

Naomi Bloom explains at [07:19], “Drought conditions affect cattle production because cows like to spend their waking hours grazing and droughts mean less hay.” This reduction in available feed leads ranchers to limit herd sizes, directly impacting beef supply.

Rising Production Costs

Glenn Tonser adds at [07:45], “Whether it is feed costs, labor costs, land rent, almost all of those entries are going to be higher than they were certainly before the pandemic.” Increased costs across the board contribute to higher beef prices.

Sustained Demand

Despite rising prices, consumer demand for beef remains strong. At [08:14], Tonser notes, “We've actually seen a small growth since February 2020 in that,” indicating that consumers are adjusting their purchasing habits but continue to buy beef, supporting price levels.

Potential Price Moderation Factors

Bloom mentions at [08:24], “Cattle imports are up from countries including Australia, Brazil, and Uruguay, and the weather could always improve,” suggesting that increased imports and favorable weather conditions could help moderate prices in the future. However, any new beef supply would take years to impact the market significantly.

4. Long Covid Research Struggles

Samantha Fields delves into the ongoing challenges in addressing long Covid, despite the allocation of over $1.5 billion to the NIH's Recover program. Patients and advocates express frustration over the slow progress and lack of approved treatments.

Patient Experiences

Charlie McCone shares his prolonged battle with long Covid, highlighting the personal toll and the gap between expectations and outcomes. At [09:48], he states, “I’m still sick. I’m not working anymore and can’t walk much more than a block.”

Research Focus Criticism

Betsy Ladize of The Sick Times criticizes the NIH's focus on understanding long Covid rather than developing treatments. At [11:00], she asserts, “Most of the research money so far has gone into trying to learn more about what long Covid is rather than focusing on treatments, clinical trials.”

Need for Treatment-Oriented Research

Dr. Serena Spudich from Yale emphasizes the necessity of understanding long Covid to develop effective treatments. At [11:27], she states, “There has to be a very, very strong urgency for finding treatments, and at the same time, we will only find treatments if we understand the condition properly.”

Calls for Increased Funding and Strategic Trials

David Petrino advocates for a more diversified and rapid approach to clinical trials, suggesting at [12:50], “We need to be rapidly testing as many drug targets as possible rather than taking big swings.” Additionally, legislators are pushing for the Long Covid Research Moonshot Act, which aims to provide $1 billion annually for a decade to accelerate research.

5. Stock Market Overview

Amy Scott provides an update on the stock market, noting that the Dow Jones Industrial Average reached a record high, while the Nasdaq and S&P 500 saw modest gains. Significant movements include AbbVie's 12% drop following disappointing Phase II trial results for an experimental schizophrenia drug, contrasted by Bristol Myers Squibb's 10.5% increase after FDA approval of its own schizophrenia drug.

Market Performance Highlights

At [14:20], Scott reports, “The Dow Jones Industrial Average gained 304.7 points, finishing at a record 44,293.” This surge reflects broader market confidence despite sector-specific challenges.

Sector Volatility

AbbVie's decline contrasts sharply with Bristol Myers Squibb’s rise, illustrating the volatility within the pharmaceutical sector. Additionally, Cigna's 7.3% jump after announcing it will not pursue a merger with Humana highlights significant investor reactions to corporate decisions.

6. Climate Tech Challenges Ahead

Michelle Ma discusses the significant decline in funding for climate tech, with investments projected to drop by approximately 50% this year. This downturn is driven by the capital-intensive nature of climate tech and a shift in investor focus towards the burgeoning field of artificial intelligence (AI).

Investment Decline Factors

Naomi Bloom attributes the reduction to the high capital requirements and perceived risks associated with climate tech startups. At [18:37], she explains, “These are startups that are often not dealing with software, they're dealing with hardware, with massive facilities and factories that they have to stand up.”

AI’s Dominance in Investment

Bloom highlights that AI has been “sucking all the oxygen” from the investment arena, diverting capital away from climate tech. At [20:31], she notes, “AI is kind of sucking all the oxygen,” indicating that investor enthusiasm has shifted towards AI-driven innovations, often at the expense of climate-focused initiatives.

Policy Support Uncertainty

With Donald Trump’s reelection, there are concerns about the potential rollback of federal support for clean energy projects. Bloom emphasizes the critical timing for scaling climate tech and warns that the removal of federal incentives could severely hinder progress. At [22:15], she states, “If those federal dollars disappear, if those tax credits disappear, that could make a huge difference in how much progress we're able to make or not make.”

Future Prospects

Despite funding challenges, there remains cautious optimism within the climate tech community. The introduction of innovative technologies such as carbon capture, green hydrogen, and advanced battery chemistries continues to drive the sector forward, albeit with the need for sustained investment and supportive policies.

7. U.S. Forest Service Budget Cuts

Caitlin Tan reports on the anticipated budget cuts to the U.S. Forest Service, particularly affecting the Bridger Teton National Forest. The cuts threaten to reduce the agency's funding by about half a billion dollars, impacting critical services like trail maintenance and campground facilities.

Operational Challenges

Scott Kosiba of Friends of the Bridger Teton explains how the nonprofit has been instrumental in maintaining services by contracting out work at a fraction of the federal cost. At [25:06], Kosiba states, “They agreed to do the job at about a third of that $120,000.”

Impact of Budget Cuts

With Congress yet to finalize the budget, the future of essential services at Bridger Teton remains uncertain. The nonprofit's role becomes increasingly vital as federal funding dwindles, ensuring that visitors can still access clean and safe facilities. At [27:32], Caitlin Tan emphasizes, “It is astounding that a nonprofit has to exist to help fund and help support a federal land management agency.”

Conclusion

This episode of Marketplace provides an insightful exploration of the crypto industry's regulatory aspirations in the wake of a significant election, the ongoing challenges of inflation and economic uncertainty, the dynamics behind rising beef prices, the persistent hurdles in long Covid research, fluctuating stock market trends, the downturn in climate tech investments amidst AI's rise, and the critical budgetary pressures on the U.S. Forest Service. Through expert interviews and detailed reporting, the episode offers a comprehensive understanding of these multifaceted economic and industry-specific issues.

Notable Quotes:

• Paul Grewal [02:29]: “Coinbase would now like to see the new Congress pass new laws, including one that would clearly define what crypto assets are and who exactly is in charge of making the rules governing them.”

• Dante Disparte [03:42]: “All of us are begging for sensible standards that would allow us to get back to building great products and services and spend less time and frankly less money arguing over legal definitions and statutes.”

• Naomi Bloom [07:19]: “Drought conditions affect cattle production because cows like to spend their waking hours grazing and droughts mean less hay.”

• Charlie McCone [09:57]: “I’m still sick. I’m not working anymore and can’t walk much more than a block.”

• David Petrino [12:50]: “We need to be rapidly testing as many drug targets as possible rather than taking big swings.”

• Naomi Bloom [20:31]: “AI is kind of sucking all the oxygen.”

• Caitlin Tan [27:32]: “It is astounding that a nonprofit has to exist to help fund and help support a federal land management agency.”

This detailed summary encapsulates the key discussions, insights, and conclusions from the episode, providing a comprehensive overview for those who haven't listened to the original podcast.