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00:00When you talk about crypto what does everyone else at Guggenheim think they do they leave Ford hanging on every word. Well I guess because I'm probably the only person who spends enough looking at it. I mean it's it's you know Tom I was an early believer in crypto. I remember getting looking into Bitcoin first when it was at one hundred dollars. I did a presentation up at the Nantucket Project on crypto. You know how to deal with it how to invest in it. And I really thought that you know this is a viable investment vehicle. But one of my big concerns is that no one has cracked the paradigm in crypto. And when I say they cracked the paradigm it's used as a currency. Right. As you know the definition of a currency is that it's a medium of exchange. It's a store of value. It's a unit of account of the last 90 days. Not at all. And so we've learned that none of this stuff. Stable coins the whole bit. Everything is suspect. You're a really really bright guy. I want you to explain the divide between Alan Hour at the Bank of International Settlements who owns the high ground with Ken Rogoff and Harvard on the study of Bitcoin and the entire scarcity the derive scarcity of it with the community of Bitcoin that just seems miles apart and they won't read Alan our right now. Well I think look because Bitcoin and any any crypto currency at this point has not really established itself as a credible institutional investment. Right. It's really become the market of a bunch of yahoos and backwaters. And I know I'm already going to be plastered on Twitter and how I'm going to separate what I just said. Get back to your desk. Yes actually like Lisa's cell phone just melted down I think. But you know when you consider we have 19000 digital currencies or cryptos or whatever we want to call them today most of them are junk. They don't make any sense whatsoever. Do you have any crypto acid investments. We did. We had bitcoin. We bought it around twenty thousand. We sold it at forty thousand. And I really thought we were going to correct you know after we got to 60 I thought we would correct a 30. We got there. And then I began to look at it and say why are we stopping here. And so my latest work which is entirely technical because there's nothing else to look at here is that we were probably going to hit eight thousand dollars before what was that number 18000 until we totally flush. So what's going on. Holdings. No I mean if I were I'd be short. I'll go ahead and get a shot too. So you've been predictably bearish for a while wracking about how you think that the US is heading toward a recession but you've remained sanguine uncertain risk assets amid this because of the short term. Has that changed as people bring forward the slow slowing growth narrative. It definitely isn't the slowing growth narrative that caused me to to change. It was my time at Stanford a few weeks ago at the Hoover Central Bank conference and I saw the current Fed officials ex Fed officials and they uniformly were extremely hawkish. I engaged in opportunities to talk about the market and the functioning of the market and so on and so forth. The bottom line is is that short of a sudden collapse in equity prices I don't believe the Federal Reserve is going to respond. The words I kept saying is as long as the decline remains orderly we would like to see financial conditions tighten. And that that I think is the game plan in the land of Michael Barr and particularly in the land of John Taylor and the Taylor Rule. Obviously this is a whole original architecture for everybody involved in economics. But if a central bank blinks how is that expressed. Is it going to be expressed through dollar dynamics. Oh absolutely. I think if the Fed blinks we're going to make some news here. Give me a dollar call. Well I think as long as we stay the course on tightening which I think we will through the summer the dollar is going to do fine. But if the Fed blinks because of financial panic which I think there is a high probability of toward the second half of the year then I think that the dollar will come under pressure. What happens though if it doesn't. If the Fed doesn't blink because of that but because growth is actually slowing which is basically what people are pricing in right now. Right. But I think that for the Fed the dynamic is not the slowing growth. It's the inflation number. Right. And the the growth can slow and we can still have high inflation which you know Tom is very familiar with. We called it stagflation. And I don't buy into that whole dynamic. But I'm saying that. They're tightening I think financial conditions faster than they use a Taylor rule. Given the fiscal impulse we had of natural medical disaster right. Well I don't think so. And I think Tom what we're looking at here is more akin to the post Second World War period. So you're going to give me a 47 analogy here. Exactly. And the analogy is that we had 20 percent inflation in 1946. The Fed stopped expanding the balance sheet stop monetizing debt. Fiscal spending was reduced at the end of the war. We had supply shocks us as consumers looked to buy consumer goods at the end of the war. Factories were geared for war time and by 49 we had a mild recession. Stocks had pulled back 15 to 20 percent and then it went fine. It's the problem I'm seeing is that we're raising rates and we're going to shrink the balance sheet at the same time. And I can remember sitting I think with you on Bloomberg back in December of 2018 when the chair made his famous statement that the these shrinking of the balance sheet was on autopilot. And the next day we were mopping up from the Fed and the stock market was down 20 percent.

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Guggenheim’s Minerd on Crypto: ‘Everything Is Suspect'

Guggenheim Partners Global CIO Scott Minerd says cryptocurrencies haven't become a credible institutional investment, calling them the market of “a bunch of yahoos and backwaters” where "everything is suspect.” Speaking to Bloomberg Television at the World Economic Forum in Davos, Switzerland, Minerd also discusses Federal Reserve policy and outlook for the US dollar. (Source: Bloomberg)

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