Gold Reasserts Lead Over Bitcoin as Top Hedge

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens It's smart, calm and to the point And it fits into your morning You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris On Apple, Spotify, YouTube or wherever you get your podcasts

1:02Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Bitcoin gets your attention, folks. It is down another 1.8 percent today. $86 ,000. The high just a month and a half ago was$125 ,000. So we got north of a 30 % drawdown in Bitcoin. It's a commodity to me. I don't know, more sellers and buyers. Let's check in with Mike McGlone. He covers this stuff because he's a commodity strategist for Bloomberg Intelligence.

1:48Mike, you've seen commodities trade up and down for decades here. Put this Bitcoin move in context for us. Well, Paul, I like the way you started. It's a commodity to you. And I used to think that too. Now to me, it's actually less of a commodity because in all commodities, you have an underlying basis and you have supply and demand fundamentals. In Bitcoin, there's millions of competitors and there's no underlying to it. So I'm worried and it doesn't have a practical value other than to trade and hold value. At least gold looks pretty and things. So I'm afraid what's happening in Bitcoin is we're seeing that overdue purge and those millions of cryptocurrencies that track nothing.

2:21It's pulling down Bitcoin. They're probably going to have to head towards zero. And the key question is, what do we do for the end of the year? Can we recover from these levels? And I think it's unlikely we do, which means the whole system might be coming down into maybe a Grinch is going to win Christmas. Wow. That's quite a call, Mike McGlone. Yeah, the whole system coming down. I mean, for now, people are saying that we're shaping up to be the worst November for Bitcoin since 2022, which was around the time that Sang Bankman Freed and his company basically fell apart. Talk a little bit about the Bitcoin ETFs and how demand and inflows into those products drove a lot of the rally in spot Bitcoin overall and perhaps are removing a big source of support right now.

3:07Well, I'm glad you went there, Scarlett, because my primary goal the last few years when we launched the Bloomberg Galaxy Crypto Index idea was eventually for the whole space to be tracked widely by ETFs, including that index. and once we got there, I figured to put in a plateau. Now, we've gotten there and I think it's a plateau. So basically, we've gone from the geeks and the insiders who made a lot of money, pushing it over to retail in the big picture. People want to catch up and chase the performance and they're finding out it's poor performance near a peak. They're piling on to the biggest ETFs ever.

3:37It's classic peak bubble. So if you want a bubble in all markets, it starts with cryptos, maybe not equities, but it's as bad as it was for dot-com bubble in 1999. Now, the whole thing is going back downward. And by the end of the year, should it recover? I look at it as we need to just purge millions of these things that track nothing that are worth billions of dollars. One good example is number nine on the Bitcoin CRYP page is Dogecoin. It's worth$21 billion. It tracks nothing. It was launched as a joke. Wow. So we had Eric Bautunus on just earlier, and he said most of the ETF buyers are still in it.

4:13They haven't sold. About 5 % or 6 % have sold or seen outflows out of the ETF. So the ETF flows are kind of hanging in there at this point. So we'll have to see. Do we know who is selling, Mike? Yeah, well, certainly some of the OGs. People have been in for a long time. Once they heard that Trump was so involved, they wanted to get out. But Eric has been atop of this. He nailed it very beginning with the launching ETFs. The problem is I hear the average price for all ETFs since they've been launched for Bitcoin is around$89 ,000. We're below that. So we're getting below there. And also, they've got double the volatility of what they left.

4:46They left the stock market to get better performance. They're getting worse. This is classic peak stuff, Paul. I'm worried about that Grinch effect until the end of the year when everybody expects, oh, Santa Claus is going to come, but Grinch shows up. OK, maybe, Mike, but the president and his family are very much invested in Bitcoin in the crypto industry at large. Is there not a Trump put here? Well, that's a key thing. What are they going to do to make a difference? Strategic Bitcoin Reserve, though, that was floated last year, didn't work out. We have the president's son calling for it to go much higher.

5:18In the future, we might have laws against those kind of things because there's a vested interest. I don't know how it's going to work out, but it was that Faustian bargain. I'm worried about that just imploding now. And the key question is what stops it? What are they going to do to make it change? The bottom line is there's so many millions of these things that are just pine sky speculative digital assets. They just need the purge. And then we'll go back. And I'm afraid that means Bitcoin's first stop on this move is really towards 50 ,000. It's got to really end the year up on the year to show anything other than that.

5:46I'm afraid$50 ,000 is the next key level, which means dominoes tumble. I have questions, what can they do to make a difference? Maybe get the Fed to ease, which means more inflation, which means they're not going to get elected. All right. Well, all of that, the macro headwinds are the same as for any other asset class, I guess, in many ways. Mike McClone, Bloomberg Intelligence Senior Commodity Strategist, joining us on Bitcoin. Stay with us. More from Bloomberg Intelligence coming up after this.

6:13you're listening to the bloomberg intelligence podcast catch us live weekdays at 10 a.m eastern on apple carplay and android auto with the bloomberg business app listen on demand wherever you get your podcasts or watch us live on youtube let's talk to sam fazelli because it's monday that's what we do we talk health care and you want to talk health care let's talk to sam fazelli he's over there in london i think i haven't checked if he's bad i mean who the heck knows with these people over there in London. But he's the best there is out there, folks, on global healthcare, and we appreciate getting a few minutes of his time.

6:45Sam, this obesity story has become the story for your world. I mean, it's almost like, forget about some of these other issues you guys have been dealing with, whether, you know, other diseases and therapeutics and so on. It's all about obesity drugs. Talk to us about Novo Nordis. Stock taking it on the chin here. Yeah, hi, Paul. And just for actuality, I'm in France at the minute. See, told you. But only another 12 hours. Now, today's news from NovoNodisk is not about obesity. It's about a drug, semaglutide, in a pill form that they've tested in Alzheimer's disease. And the theory was, and there was some evidence, that people who were taking the very first version of the GLP-1 drug, so Victoza or Liraglutide, they had a lower risk of developing Alzheimer's when you looked at historic or retrospective data.

7:42And there's animal models, etc. So they thought that it's worth a try. And it didn't work out. They said that they're seeing some impacts in some biomarkers, etc. And we'll find out next week what biomarkers. But the trial didn't work out. And the question here is? Was the theory wrong? Or is the drug not good enough? Is the pill enough? And we know the pill doesn't do as well in obesity as the injection. Should they have tested the injection? That's a good question. And you mentioned that the ingredient here that we're paying attention to is semaglitude, which I hope I'm pronouncing correctly there.

8:17Does that mean that this ingredient and Alzheimer's are just a no-go from here on out? Or does there need to be more testing before we can determine that? Yeah, there needs to be more testing, but who's going to do that? I mean, having failed now, who's going to put the money in to test it? Now, Linnie does have an Alzheimer's business with a different set of drugs. And they have a more punchy product once weekly with a relatively easily administered pen. That would be interesting to see whether that helps. And, you know, so that you get much more drug in the body. Or maybe you redesign it a bit.

8:54So it really does depend on how much appetite for risk these companies have. And literally now with a literally just over a trillion dollar market cap, maybe they should give it a go. You know, it would be magic if this thing, it literally would be magic if this thing just helped so many different diseases. Sam, talk to us about just the market for dementia, Alzheimer's as one part of it. I would think that, A, it's a big market, and B, it's got to be a growing market with people living longer. How do you guys think about it and how do you play it if you're an investor? Yeah, it is a significant societal issue, number one.

9:32And, you know, I think there are not many families who would say that they haven't experienced it if they have older people in their extended family. So the market has humongous potential, but you need drugs that actually treat the disease. Remember, by the time you have Alzheimer's, i.e. a full-blown dementia of the Alzheimer type or other types, it's a bit late. That means there's a lot that's already happened. So you need to go early. And early means long, expensive trials. And Lili is doing that with their assets. So fingers crossed we'll find out in the next two or three years whether going early with these assets, Roche is doing it too, would be beneficial.

10:13Right. I mean, the tests with the pill form of Ozempic was definitely a lottery ticket. If it worked great, if not, we're back to the drawing board. Are there any effective treatments right now against dementia or Alzheimer's? well by effective i mean it's tough to say but there are drugs that lower this thing that is viewed as a as a critical part of the alzheimer's disease which is amyloid plaques in your brain um they do lower it lily's got that drug biogen's got an equivalent drug rosh is trying a similar approach and you do slow down the the degeneration you don't stop it you slow it down so what we really want is to stop people getting to that degeneration.

10:56Try and get them before they have full-blown Alzheimer's or dementia. So that's called mild cognitive impairment. Try and slow that down to give them another 10, 12, 20 years of dignified life. So where do you think we are on a time frame for something like that, Sam? Is that measured in a couple of years or more than that well so lily is literally trying that and um and and we'll find out whether and they have the better drug in in this space and we'll find out whether um um in the next two or three years remember these things are trials that need to be run until you start seeing a uh a difference um they get that to that point and of course then society has to decide well how are we going to pay for this how many people because there's a large market right how many people are we going want to treat with the prices of these drugs, whatever they are, even if it's$10 ,000 a year, right?

11:54And they are on their way to becoming worse. And we want to slow that down. You have 10 million people. I mean, this could be similar in terms of value to the obesity market. But you need the drug to do that. So let's wait and see. And Roche has got a new way of trying to do it. And they're going to go again also into phase three to test that out. All right, Sam, thanks so much for joining us. Always appreciate getting a few minutes of your time. Sam Fezzelli, Director of Research for Global Industries and Senior Pharmaceuticals Analyst at Bloomberg Intelligence. Stay with us. More from Bloomberg Intelligence coming up after this.

12:30You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Scarlett, one of the, I think the questions we get, or maybe discussion points we have over the last month or so, month and a half has been, is this a bubble? Is this an AI bubble? And I don't know, but I mean, the people who are supposed to know about this. We'll only know after the fact. After the fact, exactly right. But somebody who's supposed to talk about it, like present tense, is Michael Kasper, Senior U.S.

13:03Equity Strategist for Bloomberg Intelligence. So, Michael, I know you're having these conversations with your clients here. What are you saying? Bubble? No bubble as it relates to AI? Yeah, pretty much all the signposts for a bubble that we have identified so far are pointing towards no bubble, right? So if you look at the valuation picture of, say, the Mag7, so the hottest stocks today versus the hottest stocks in 2000, we're talking they're trading at about half the multiple Microsoft, Cisco, Intel, and Dell, the four-horsemen in the internet bubble we're trading at back at the top in 2000. And in fact, the Mag7's multiple has come down since 2021, so they're growing into their multiple.

13:39And you've obviously got a ton of fundamental support here. Earnings running well faster than normal at the end of these melt-up periods. So it's really pointing towards no bubble at the moment. Okay, that might be the case for the MAG-7, for the companies at the heart of the whole AI revolution. But what about the ones that are kind of on the periphery, on the side, and the profitless tech companies that we talk about that are getting wrapped up in everything? Yeah, so it's actually interesting you bring up profitless tech. My colleague in BI, Bree Daugherty, she does thematics for us. She has a thematics AI universe, and we've actually scanned that entire universe.

14:11And we're talking large caps, small caps, micro caps. There's three companies in there that are unprofitable in the entire AI universe of nearly 50 companies. So there's really not a lot of unprofitability, especially within the core AI themes. And that's another just feather in the cap for this not being a bubble. How about the big tech companies using debt to fund a lot of this? Does that get raised the radar at all? Yeah. So it's interesting that they might start dipping into debt markets. That was something that I read this morning on the terminal, actually. But so far, if you look at leverage ratios, right, so total debt to market cap or total debt to EBITDA, those are actually significantly lower than where they were in 2000.

14:55And we've frankly been delevering pretty consistently throughout the post-Great Financial Crisis period. So leverage is actually below norms for the S &P 500. For the Russell 2000s, it's pretty much closer to norms. So I'm not that worried about debt financing yet, right? So there's plenty of room for companies to take on debt here. Why are investors still so worried then? Why are they convinced that this is not sustainable? Yeah, I think it's a bit of a paranoia, right? We've gone up very far, very fast. And we did look at some previous melt-ups. So we're talking the lead-up to the Great Depression cycle, the internet bubble.

15:32Those are the classic melt-ups. our returns have been pretty fast, but they're still falling well short of that. So I think investors are a little bit worried that the returns have been so violent and so quick. And that's adding to a little bit of worry. And of course, worry is a good thing, right? So bubbles usually happen when nobody's worried about them. I like to think about 2000 and people always talk about, yeah, my taxi driver was telling me about some internet stock. We're just really not having that right now. There's still plenty of worry in the system. And that's a good thing for a bull market.

16:01Earnings pretty much done with the third quarter here. Are they enough to support this marketplace, do you think? Yeah, I think earnings were phenomenal, right? There were some, obviously, bumps in the road on a company-by-company basis. But again, we pretty much doubled the pace of what consensus expectations were. If you look at 2026 expectations, those are holding pretty firm. We're looking at about 13 % earnings growth for the year ahead. Again, comparing that to previous bubbles even, that's significantly higher than what we saw at the end. Bubbles are driven by FOMO, not fundamentals. and certainly consensus expectations are strong.

16:35And they're actually even strengthening in the Russell 2000, which has been an unloved group for quite some time. So things on the fundamental side looking pretty decent here. What about on the technical side? I keep reading about how the S &P 500 is still below its 50-day moving average, its short-term trend line, and it briefly fell below the 100-day moving average on Thursday. And because we are not going to get any fundamental data on the economy until after the FOMC decision, earning season is over, there aren't a whole lot of catalysts from here on out until maybe next year. Yeah, so one catalyst I'm looking at pretty intently is going to be the holiday spend, right?

17:11Like if that comes in a little bit better than we expect, that could be another catalyst for stocks. But certainly you mentioned the FOMC decision. I think a lot of this pullback has to do with Powell's hawkish comments about two weeks ago. You know, people just expecting a little more on the rate cut side than what we're going to get. And again, this just looks like a textbook pullback, right? We're down, what, maybe 4 % or 5 % from all-time highs on the S &P 500. On the Russell, it's approaching correction territory. But still, nothing really going as far as a bubble bursting. Are you looking at Bitcoin and crypto at all insofar as whether it's influencing equities or whether equities are influencing Bitcoin?

17:49Because there's a lot of talk about the linkage between tech stocks and Bitcoin. Yeah, I think Bitcoin is a good gauge of risk tolerance. I don't know about necessarily a fundamental linkage between Bitcoin and stocks outside of maybe, you know, the AI names. Who's leading who? I think, you know, stocks are the dog that wags the tail, right? And crypto is the tail here. But I think crypto is really kind of showing where the concerns lie in the equity markets and the risk is in the equity markets. And again, that seems to be more with the Fed. What is the Fed going to do? Obviously, Fed rate cuts would be good for Bitcoin.

18:25Everybody thinks it's pretty stable. So I think that's really showing where the pressure points are for stocks. All right, Mike, appreciate it. As always, Michael Casper, Bloomberg Intelligence Senior, U.S. equity research strategist, giving us thoughts on these markets here. AI bubble, he doesn't think so. So we'll keep an eye on that. The market's certainly trading higher today with the S &P up 1.4 % and the NASDAQ up 2.3%. Stay with us. More from Bloomberg Intelligence coming up after this.

18:55you're listening to the bloomberg intelligence podcast catch us live weekdays at 10 a.m eastern on apple carplay and android auto with the bloomberg business app listen on demand wherever you get your podcasts or watch us live on youtube all right let's go switch gears a little bit president trump when he came into office he was widely considered to be a deregulatory president, will allow a lot of industries maybe to consolidate. One of those industries is the broadcasting industry, the radio and TV business. But he was out with a tweet recently saying he maybe doesn't support that anymore. And that was a big U-turn for a lot of people, particularly in the television industry.

19:35So we want to go to the expert, Matthew Shettenhelm. He is the media litigation analyst for Bloomberg Intelligence. He's one of the best on the street folks, But his credibility with me took a big, big hit when I found out he does not carry cash. And for an old banker like me who's got a lot of cash in his pocket all the time, that was a problem. He believes in credit cards and therefore he's out with you? He's just the younger generation. They don't have cash. They just don't do the cash thing. Hey, Matt, how much of a surprise was it that President Trump tweets out that maybe he's not behind consolidation in the TV industry?

20:06You're never going to let me live that one down, Paul. But so it's a moderate surprise. So it's not a complete surprise because Newsmax has participated before the FCC and has been one of the few voices that said, don't do this. Don't deregulate this space. And what you really see here is President Trump latching on to an article written on Newsmax's platform opposing the easing of this national ownership cap. What's in play here is that there's current FCC regulation says no company can reach more than 39 percent of U.S. households. And companies like Nexstar and Sinclair want to go way beyond 39 percent.

20:54In fact, Nexstar has a pending deal before the FCC. They just filed their application on Thursday or Friday last week to acquire Tegna. That would take them to 70, 80 percent of the country. And it depends on the FCC deregulating in this space. So Trump latching on to Newsmax's opposition because he's concerned about the TV networks growing larger is a concern. It's a real risk. I'm not convinced yet that it's going to lead to real FCC policy. I think this FCC wants to deregulate in this space. And I think there's going to be a pushback against Trump's view on this. OK, so the FCC is headed by Brendan Carr, who's been very active in making sure that he's out there doing the president's bidding.

21:40Are you saying that Brendan Carr is going to defy President Trump? Yeah, so that's the big question here. The FCC used to operate as an independent agency, meaning even if the president had a view on something, the FCC could chart its own course. That's not going to work anymore. The way this FCC is operating, if the president takes a firm view on something, the FCC is not going to defy it because effectively the president can fire the FCC chairman then. And, you know, there's no no future job prospect if you defy the president. What I'm not convinced about is, you know, this was one social media post from President Trump and, you know, talking about concerns about letting the broadcast networks, ABC, CBS, Fox get bigger.

22:29What I think there could be now in, you know, on in back channels is some education from the FCC to the White House that says, hey, easing the national ownership cap, It would let Sinclair Next Star get bigger, probably, but it doesn't necessarily mean the broadcast networks will get bigger. There's still an independent check on that, even if we we ease this this cap. So ultimately, if Trump is is against this, the FCC is not going ahead with it, in my view. But I think there's still room for for Trump's position to evolve on this. So, I mean, the reality is, I mean, this is an industry, the broadcast television industry, that is arguably on life support vis-a-vis, forget about cable television, which itself is on life support.

23:10They survived that onslaught. Now it's just all about digital and social media. And I would think the industry would have an open, would have an effective argument, not just to the DOJ, but to the president as well. Absolutely. I mean, that's the case that the National Association of Broadcasters has made to the FCC, that these ownership restrictions, which come from the 1970s or even earlier than that, really make no sense in the world we live in today, where so much video that is consumed doesn't come from broadcast. It comes over the internet. And there are no artificial caps on how much those companies can reach.

23:51And broadcasters are left to try to fight with one hand tied behind their back with these ancient FCC rules on the books. And the Republicans at the FCC, Brendan Carr included, strongly agree with that message. And so it's going to be, I think, a little bit of a communication effort that needs to happen between the FCC and the White House. And the real question will be, how does that play out? Does Trump's social media post actually translate to real policy. I'm not convinced that it will yet. All right, Matt, appreciate it. As always, Matt Chittenholm, he's a media litigation analyst, Bloomberg Intelligence.

24:31He's based down there in D.C. This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 10 a.m. to noon Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.