You see this type of market action, the names that are highly speculative are maybe not the best shorts, you have to Pay Attention to the technicals of those. Such as what is the existing shortage . If it is difficult to get borrow, that means especially this type of market where the speculative names are doing quite well, those can rip on you. We are generally trying to avoid shorting names like that. We always try to avoid names with high short interest. It does get crowded, then we do either reduce risk or exit the position. Sonali how do you see the exuberance in the market right now . Do you avoid certain sectors but worry about their valuations . We generally do not usually avoid certain sectors or industries. We have done a lot of work over the past few years in the cleantech space. And you look at cleantech names on the longterm basis, many of them have fallen apart. The thing is we have found that technically, they are difficult to be short because even on days where you do not have a lot of froth in the market, something that you are sure can rip 9 for no reason at all it seems. Those are ones that on a longterm basis you feel good shorting but, the short to mediumterm volatility can be really painful. It has been an open, ongoing debate at muddy waters to what extent we keep doing cleantech for that reason. Sonali i want to broaden the aperture because over at muddy waters you watch the new strategy and you called it the new world order fund. It is a strategy, you are not going to short here but you are in vietnam, the rationale to this is pretty interesting. This idea here that it has to do with the flows away from china. How do you feel about opportunities abroad right now, particularly china and the chinese economy given that there is a strategy that is directly focused on the troubles you are seeing . Carson i have been very public well over a decade, really since 2010 through 2011 that i think china is in general on investable. The reason that i felt it was on investable back then un investable back then was because of fraud and the u. S. Listed chinabased companies. There is no way to hold people accountable. That old saying that you show the ascendance and i will show you the outcomes. On top of that we can layer a very hostile to business and to western governments and america government in the form of xi jinping. It is also, this is the type of situation where you can literally wake up one day and see that china is preparing to invade taiwan. That could very well put the u. S. And china on a course towards a kinetic war with each other. That is another reason why china is on investable not investable. Back to the way that we see the world come in 2020, covid shut most of the u. S. Down and shut a lot of the world down. It dawned on us that coming out of covid, it was going to be the biggest geopolitical realignment since world war two. It would all be about relationships with china. The question was what is the trade . What we settled on was that the country that is going to be the most profoundly benefited by this realignment is relative to the size of the market and economy should be vietnam. It will be ground zero for money for Foreign Direct Investment that would have gone into china that is now looking for other homes because of the need to diversify supply chains because of the political risks associated with china. I think in this new geopolitical framework, the countries that are best positioned or in general the ones that are the least aligned, the ones that balance effectively the u. S. And china. That would include vietnam, india, that is also indonesia. That to us is the sweet spot in why we are excited about vietnam and at least for the foreseeable future. Sonali with that kind of a view on china, i can understand the long interest in vietnam but what about adrs listed in the United States for chinese stocks . Where do they go from here and are you looking at individual opportunities . Carson this might seem like a copout, i cannot tell you where they go. First of all, take a step back, i do think that substantial majority of those companies are financial their financials have problems. There are misstatements in their financials, ranges from the mile to the wild. There is no way to enforce our laws against chinabased issuers. If you are asking why would they commit fraud . The question is why would they not commit fraud in that environment . You cannot trust the financials. There is no ability to enforce. You have this element of this capricious government in china that is kind of funny because i have to laugh every time the Chinese Government or june being changes xi jinping changes the message. How many times will western investors be suckered into this . Part of it is the financial industry has already sunk a lot of the money into infrastructure for investing in china. There are a lot of incentives. This time is different. They are not going to cheat us this time. We are not going to wake up one morning and find out that xi jinping has ordered the shutdown of companies in this space or pulled something on us, but why would it be different . I think it is a sucker spent at the end of the day. Maybe the adrs go up in the near term. Again, maybe tomorrow morning, there has been a decision that kills off an entire industry like the forprofit education industry . It is not investable. You can find better ways of utilizing your capital at the crafts table in vegas. Sonali investors have concerns about commercial real estate, regional banking, a number of months ago you announced a short on Blackstone Mortgage trust. Where do you stand on that view and how and what the look for in the equity . Is it as dire as you initially laid out . Carson we are more bearish on Blackstone Mortgage trust and we were at when we announce the short in december last year. The reason for that is initially, we were really only focused on the office. We have come to the view that a lot of multifamily real estate is quite troubled. There is a decent bit of that in the blackstone portfolio. Also a lot of these regional banks. This reminds me of 2007 when there was this zeitgeist for a little while after the hedge funds failed there was a zeitgeist of there has been deleveraging and everything is ok. It turned out not to be. I suspect and i am not a great macro guy and i am not a real estate from nasa cater. I suspect based on a lifetime of being in the markets and seeing bubbles and cycles, i suspect we are in the early innings of a shakeout in cre. It is not just office but also multifamily residential. Sonali since your initial presentation blackstone has come out and has maintained its dividend and said that a lot of firms have actually reserved less than what you have said they have reserved, less than than we had anticipated and they would do. Are you saying things will get worse for them or are you looking at other instances in the market here where you can also go short that will be tied to multifamily and properties . Carson right now we are only publicly short on blackstone. The thing is, one of the dynamics that we are clued into as we researched the xmt before going public is that you have some of these other mortgage reits and kkrs is a good calm. Basically, i think there was a prisoners dilemma where if at blackstone they figured hey, if nobody else is going to really drop their loans, nothing appears in the Mortgage Rate space or the cre mortgage space, their reserves, why should we be the first ones to do it . It is funny because kkrs reported before blackstones and they started the process of throwing it up. Because we are well after the close of the year, it is not like blackstone could have gone back and said ok, we need to change the numbers here and increase the provisions for losses. I feel like their outline is conspicuous by absence of true ups or reserves, provisions against losses in their own books. Im not worried about this one. It was somewhat of an atypical need for us to be short because usually when we are short, we are saying all of this is hidden and if investors start to Pay Attention to this, the company will crack under the pressure and that is how our thesis plays out. They can hold the line for now. We feel really good that the dividend cut will be coming in the second half of the year because the cash flow will not be there to support these dividends. I do not really have to go out on an Ongoing Campaign here. We are hanging back and we feel even more convicted at this point in time than we did in early december, the second half of this year is going to be problematic for the xmt. Sonali you have to join us later this year and see how the whole story plays out. That is carson, thank you for your time. This is the perfect time to remind you about the bloomberg Investor Conference in new york. It will offer the top strategies for navigating market risks and opportunities, he is joining us as part of our bloomberg tv store series, check out the qr code on the screen for more details about that event. It is time for these start of the hour, we are watching shares of coinbase which is up from the bitcoin selloff, of course it has been defending from the addition of eight etfs against all odds. At least according to many wall street analysts that have doubted them. Changes have even suffered a number of technical issues from the influx of business, that drove them to higher volumes as ever. Let us discuss this with brian armstrong. Brian, welcome to the show. I want to start your actually not with the volumes, but i want to give you the chance. You are flying out to d. C. And hosting a lot of congress over at a summit at coinbase that coinbase is spearheading. How much do you see your presence in washington today . Why is it so important for you and others to be there . We are hosting an event tomorrow called update the system event and we are inviting a bunch of policymakers, members of congress, the goal is to talk about all of the different use cases of crypto that are emerging. There is this trope that is out there that crypto does not have any use case and we could not and i could not be farther from the truth. Crypto is a new form of sound money, it is returning to almost like a new Gold Standard that is digital. In this time of high inflation, i think people are interested in that. It is a nice check and balance that will help america with any issues there. It is digitizing the dollar and making payments fast, cheap, and global. 11 artist to sell directly to their fans allowing artists to sell directly to their fans. We want policymakers to come together to talk about that and get the word out. Also to see the number of americans were actually using this technology now so that the message can be delivered. Being anticrypto is political suicide in this political environment. Sonali you are talking so much about other use cases for crypto outside of being a store of value as many people have seen as as they are entering this asset class for the first time. It begs the question, how do you see the future of coinbase . There are a lot of questions about the future of Crypto Exchanges in a world where bitcoin eds of the my chair. Using coinbase going far and above and beyond being simply a Crypto Exchange . With eds that got approved recently, a huge influx of capital, it started off at 12 billion of inflow that have happened. Some of that happened and people ask us what does that mean for coinbase . It is incredibly positive for coinbase. We are the custodian for 90 of the assets in those it etfs bit etfs. It did not remove our opportunity in the retail or institutional products, we saw increased inflows there, always thoughtful billion dollars of inflows into the etfs. The etfs were incredibly positive for the industry and they are a Regulatory Approval and unlock new capital. Coinbase is going to be not just a place where you store crypto, it is a place where you can actually treat crypto and use it in many different applications all over the world and it is not just bitcoin. We support over 100 different Crypto Assets. We want coinbase to be the most trusted and easiest to use place to store crypto and prayed into actual use it trade it and actually use it. Kind of like a crypto bank . I do not think it will get a bank license, they do fractional reserve of the assets. I do not think that is the right path. It has caught all kinds of issues with bank failures. We do not want to do fractional reserve. We want to store 100 of customers assets. They can do self custody. If they choose to opt their funds into some product to earn rewards, they can choose to do that. We are not going to do it on their behalf the way that banks do. It is a new paradigm. I think there is a new generation of people who are looking at, they want to see crypto update the Financial System. 87 of americans say that the current Financial System does not work for them. Fractional reserve is on a piece of that, look at credit card fees are overdraft fees. Why does it take two or three Business Days to send a transfer . Our Financial System needs to get updated and that is what we think is the most important technology. Bring Economic Freedom and good financial infrastructure to people all over the world. Sonali before we update the system we had to talk about the things we have seen on coinbase, as well as other exchanges and hiccups along the way as we have seen the new activity, when he bitcoin to new highs and backing off of those highs, what have you learned from the outages in recent weeks over coinbase . We have seen those elevated borrowings in activity and trading after we have seen that inflows into the etfs . We have seen a surge of activity in our platform and last year we spent a lot of time doing load testing and making sure we can handle a surge of traffic, it is incredible that as bitcoin touched and surpassed the previous alltime highs, in the span of an hour we saw more than a lot of traffic come in, it exceeded our models of the amount of interest that would come in. I think what is happening is coinbase is becoming systemically important for the world to power this economy. We will have to continue to investor infrastructure at an even greater level than we have in the past. It is a symbol of adoption of crypto, it makes our job even more important. We are serving our partners and customers. Sonali i think it begs the question as well, about a week or so ago we saw a record price for bitcoin which of course attracted a lot of interest and Crypto Assets, i want to ask you about ethereum for a minute. We have gotten past the spot bitcoin edf approvals and ethereum has been a very popular crypto asset. When you think about the tone in washington and when you have seen after the bitcoin edf approval, do you think it is going to be as easy the Second Time Around . I should not say easy, itd take a while to get here. Or estimate or is likely as investors see the ethereum etf be approved as swiftly . I think the edf, ethereum etf should be approved. Unfortunately, some of the crypto stuff has gotten a little bit politicized by our federal agencies and there is this turf war between the fcc is it a commodities and etc. . The facts are pretty clear that ethereum is a commodity. I will not stop folks from trying two and throw a wrench into things to go and throw a wrench into things. We are to follow a similar path of what happened there big quit and go to court and the court will compel regulators to follow the rules and the law. Get equal treatment under the law. It may take additional effort but i think they should be approved right away. I was pleased to see that coinbase was named as the custodian of five of the eight ethereum applications. It is an endorsement of us as a platform that people are built on top of. Sonali what is coinbases role as more Crypto Assets see an edf rapper come to the surface here . We have a large Custody Business here and you are running the show here when it comes to the spot bitcoin etfs. Do you think that this is also a business were more people need to diversify their custodians . Well that have a big impact on your business . We want there to be a diversity of custodians in crypto and people should be able to store crypto themselves. Be your own custodian. Should be diversity in the ecosystem and i think coinbase is trying to be one of the trusted pillars that folks can build on. As etfs can build on top of us as a custodian and they can do trading services, financing, other services we provide. I think there is even some there is an edf for bitcoin, eventually we should have an index fund, hopefully there will be a coinbase 500 with the top 500 coins with market cap. All kinds of things can get built in the future. These are not just past and investments. People paying for things, with usdc, you can actually send it instantly anywhere in the world for free. On ethereum. We can revolutionize payments, we talked about earlier with artists getting paid and decentralized social media, it is the future of how applications are monetized. People are going to come to coinbase where the whole crypto directly and they use crypto where they hold crypto directly and they use crypto. They can spend their crypto at any merchant or visa is accepted. We can be an Infrastructure Provider to Traditional Financial Services and we can be the retail institutional application for people who want to do it. Sonali as you have head to washington for the summit i want to point out here, you have had a large voice here in advocating for potential candidates. Where does the rubber hit the road . Is it really making a difference when america is facing a whole host of other challenges like inflation . It is funny. Inflation ties really neatly into crypto. The dollar, money supply, it is probably the biggest driver of inflation in the u. S. And a lot of average people may not think about quantitative easing or fiscal deficits. They do notice the prices of things have gone up and gas stations are three stores. Inflation is a big temple issue, people are starting to realize that bitcoin is the answer to inflation. It is a very important check and balance on deficit spending and i think for the u. S. , to remain a global superpower, the technology hub. To keep its reserve currency status, which i very much want as an american. We need to check and balance. In the early 1970s, the dollar was fully decoupled at the time from commodities like gold. It has followed a similar pattern to other nations around the world. I think bitcoin is increasingly becoming a part of the political dialogue and they tried to help out here. Help these 52 million americans who have use crypto, that is the number that is through the electric vehicle. The union card. It is a massive constituency and i do not think a lot of people realize that. If contribute to organizations like a stand with crypto. Org which is we have contributed to organizations like stand with crypto. If up with the super tuesday elections. We need to get crypto proinnervation candidates elected that recognize the need for regulation. Sonali we have to leave it there. We hope to have you back soon. Good luck with the conference tomorrow. That is coinbase ceo brian armstrong. Thanks to avalara, we can calculate sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh sonali sequence us through the close that is all for crypto, stick with us for the close. The future is not just going to happen. You have to make it. And if you want a successful business, all it takes is an idea, and now becomes the future. A future where you grew a dream into a reality. 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