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00:00Which assets will suffer the most in a taper tantrum. Hi Sherry. Thank you for having us. Yeah it could be a broad range of assets because you know in any type of phenomenon tantrum it's about positioning in the past a market that gets shock the most by the sudden policy change. I think by the way today from the minute said we didn't really get that shock. It was more to Bitcoin volatility that affected the markets more broadly at least in the initial stage. But if you think about you know if monetary policy suddenly changes it works through the currency and through interest rates. I think in initially staged and particularly U.S. credit as well as parts of the equity market will probably be affected by that. But it's also a testament of that if you can taper by purchases just like the Bank of England and Bank of Canada now are looking at that too or doing that. It is a testament that the economy is moving back to normal. And that should by itself lead to more normal interest rates also United States. We should eventually do see treasury yields go back to the vicinity of 2 percent of the venue. We want to get to that and also Bitcoin. But first given that we are seeing South Korea coming back from a holiday and continuing to be under pressure I wonder if this is the sort of shunning of risk assets in a pure the volatility when we saw global funds selling about a billion dollars worth of Korean stocks this month and most of it really through short selling after that ban was lifted. Yes indeed and it is mostly to foreign investors that represent that short sales actually it's up that something like that 87 percent of the outstanding short trades are foreign investors in Korea. And it only affects basically about 4 percent of the total trade said done in Korea. So I think that channel itself it may put some pressure on it. It's more like you saying it's just more of a risk aversion that we dealt with over the past 24 hours. That affects really I think the real cyclical parts of the market meaning onto the market that benefited so much from the pandemic are continue to be done under pressure and there's rotation out of it or there's a broad based selling of it. Either way I think that the broader volatility that we have from A basically was quite notable isn't having that kind of impact on markets before. So I think that was still the dominant feature as opposed to to the short selling. Ben I want to get more on what you thought of just that that the crazy session in Bitcoin even though I suppose if you pull it out from a longer historic perspective it wasn't really that crazy. But what does this tell you about the shifting nature of liquidity positions in the market right now. Two interesting shifts here Heidi because you know like you said we have this volatility in Bitcoin many times and the markets never effect that I think since 2020 the fall of 2020. Precisely. There was a broader acceptance of Bitcoin by the institutional investor base later on and also the retail investor base as the alternative asset classes a different safe haven all those definitions that has been given. And then when you do get to a point where there is in this case that was somewhat more of a regulatory threat against from the this case that the People's Bank of China VBAC that put more control over over Bitcoin trading in China. The other you do get that liquidity effect on that particular assets. And it's interesting how now this time really spilled over to the broader markets and in the case of us that our companies have taken a a bigger stake in Bitcoin as part of their balance sheets. And those companies do weigh in the index and therefore Bitcoin spills over to those shares and that spills over to the broader equity index. I think that could happen again unless these companies abandon Bitcoin. Yeah really interesting to see it's just that that correlation through. To what effect we see on even Treasury yields. Right. But in terms of the impact on the tech sector more broadly D. Then when you're looking at some of these names you need to now going forward consider their exposure to crypto. I guess you did that take into account but I wouldn't take that as a decision overall because in the end of the day Bitcoin will not cease to exist even though the China may put more regulatory constraints in China itself the other central banks European Central Bank or bank of thing that they're considering digital currency. But that's yet to be really official. So Bitcoin is here to stay at this moment so that the DAX sell off that we've had this year was I think much more about one the rotation from growth value at that standard idea as well as that there were many small cap that companies that were trading at significant overvaluation at think recognize that many of them had benefited from a pandemic environment and that environment is changing and therefore the valuation of these companies is changing. That I think is irrespective of bitcoin but that the fact that Bitcoin had this impact on Marcus today was I think singled out by few few companies that do have influence in a great way on the market at this moment. I think that's what you should be watching if those companies make decisions about the allocation to Bitcoin in one way or the other. And that would maybe change again the relationship between Bitcoin and broader market.

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Medley Global Advisors' Emons discusses the 'Crypto Tantrum'

Medley Global Advisors Ben Emons discusses the ferocious sell-off in Bitcoin along with his investment strategy. He speaks with Haidi Stroud-Watts and Shery Ahn on "Bloomberg Daybreak: Asia". (Source: Bloomberg)

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