♪ caroline: from bloomberg world headquarters in new york and right here in london, i'm caroline hyde. joe: i'm joe weisenthal. romaine: i romaine bostick. stocks do miniaturize, but the trendline on volume is down. joe: the question is, what'd you miss. caroline: meme stocks like gamestop and emc have come back to earth in last training

sessions, there is signs of a run-up in newest reddit rocket ships, like a rocketship maker. what are the many issues left? we are going to focus on how fintech and wall street approach this new breed of wall street trader. the u.s. treasury secretary janet yellen has called a meeting of regulators to deal into the events of the past week. on the platform side, robinhood and other silicon valley companies looking to disrupt finance are learning the hard way they need to stress-test the business world financial goals. one committee that poses regulatory liens longer than the others, successful history for paypal, reported earnings after the bell. joe: absolutely. paypal along with crypto, anything like this, fintech, phenomenal window that is part of the story, but not doing a whole lot after hours.

romaine: if you care about the numbers, but total payment volume is slightly above estimates. forecast is relatively in line with the midst, nothing earth shattering. when interesting thing, a lot of people were looking at what was going on with crypto and the strategy there. joe: joining us with more insight, the cofounder of the open money initiative and a principal of the venture capital firm slow ventures. thank you so much for joining us. nothing in the release about how many bitcoins they sold, but we know this is part of the story that so many of these legacy -- there were dominant player -- traditional fintech getting into crypto, etc. how big is that that you have these assets people accounted

for forever since the '90s opening up crypto availability? >> yeah, absolutely. things for having me. i would say that this is a huge thing for crypto. it's a huge win for bitcoin over the last several years that we have these distribution channels open to us that are so well-established and created the rails for retail to get in. now we are starting to see the flipside as welcome where it is a big boon to the companies themselves. i don't yet know what role crypto may or may not have played in this quarter's earnings, but we have analysts projecting a could contribute to more than a billion in revenue for paypal over the coming years. i am certainly myself optimistic that that may be the case. caroline: one of the other key

with fintech tonight, square making its move into crypto as well, but it is also interesting that they overhang the retail frenzy because cash out, which is theirs, is kind of arrival to robinhood. how much are you seeking investment opportunities in these companies? here in europe, a lot of general banking cases, where i can get money out of an atm wherever i want in europe without being hit with a big fee -- looking at investment as well, you have to be all things to all people now? jill: no, it is certainly an interesting trendline if you follow any of these companies, that they start in one area, whether it is retail payments, retail banking, even crypto itself, and over time expand

their offerings horizontally, such that they can be all things are at least many things to many people. i think that is how the financial sector has always developed. you see this on wall street as well, as investment banks and institutions have reached down to retail and vice versa. it does not at all surprised me. i think it is kind of a natural evolution. romaine: fintech committees -- how do i put this? -- are they doing anything innovative here? at the end of the date they are offering the same services that we got from traders and the banks and financial sectors, except they did it in a way that was a little more clever and made it easier to use, but at the end of the day, it is basically trading stocks are getting a loan or something like that? jill: yean, it's a great question. i don't think you can underestimate the innovation they are brought to bear at the user interface level.

if you look back or so long, the user experience and the interfaces interacting with financial products has been very painful for the retail consumer, whether we are talking about stock trading, talking about taking out loans, mortgages, things like that. all of these fintechs have revolutionized what that experience feels like, at sort of the top shiny, glossy layer. what you bring up a great point that many of these companies have not dived below the surface into the plumbing of what wall street still runs on and the legacy financial institutions still run on, and that is something that came to bear over the course of last week, where we have the robinhood ceo tweeting about a settlement. it is a point very worth mentioning that the plumbing has yet to be fixed even at all of these fintechs have slept a

glossy, shiny new user interface on things. but that in and of itself is an important innovation. joe: you know, i talked to someone recently, and the name is glen keane because my mindis completely fried and shot---name is blanking because my mind is completely fried and draghi state, but the physical banks used physical branches for interactions and that is really expensive. you guys out on the west coast have figured out how to replicate customer acquisition costs without building physical bank branches, and ultimately that is the difference, but that is a massive cost advantage. jill: i mean, look, this is something that the west coast, silicon valley, and specifically fintech gets criticized for, wanting to move fast and break things. as you and i have talked about coming joe, that is the not the

best thing to do when you talk about people's money and financial infrastructure. you cannot move past and break things in the same way. that said, there are healthy checks and balances and tensions being created between fintech and business models around what many would call growth and what many would access wider distribution and new customer bases, versus what we have seen from wall street and regulators have entrenched over the years. that is a healthy balance and it leads to painful moments as we saw from robinhood and public and many others last week. ultimately i think that it is what leads to progress and what will lead to more retail consumers being able to access more financial system. caroline: what's interesting is

that perhaps some of the analysts are coming out on the demise in some way of the issues in the tensions we have seen surrounding robinhood in particular has meant many are depending on the old model a little more time looking towards the bigger, deeper, more collateralized way of trading on the market much longer. do you think that is the problem for some of these pop-ups? they have more certainty around them? jill: i am personally not worried about that in this case because if you look at the situation last week, we saw td ameritrade go down as well, you saw schwab limiting what they could do. this was also about collateral requirements for the old guard. that was technology issues.

that was the inability of servers to keep up. we saw sites being disrupted not just from collateral. robinhood really created this revolution in many ways. robinhood set the standard, robinhood has driven the new business model that all of those brokers adopted themselves. robinhood issues were by no means specific either to it or fintechs and disruptors more broadly. caroline: also going to be digging a little bit more into the retail mania next. this is bloomberg. ♪

romaine: today we are focused on fintech and the fallout as it relates to what we have seen with robinhood. new u.s. treasury secretary janet yellen -- remember her, left from the past--blast from the past. joe: everyone is trying to figure out what to do about this crisis of people overpaying, trying to figure out if they broke any laws. regulators meeting with the sec and the new york fed in the first public effort to discuss gamestop. interestingly, and this is part of the conspiracy theories, which were baseless, all the stuff about yellen connected to citadel, connected robinhood, that kind of -- romaine: ah. caroline: we love a conspiracy theory. romaine: i just want to note, is there a way we can connect this to mario draghi? caroline: i'm going to.

it is always about italy at the end of the day. getting the old-school back. joe: this time it was gamestop and robinhood. let's bring back in jill carlson. it was kind of extraordinary. we think of robinhood as this disruptive tech company, and then we saw where the rubber meets the road when the ceo came out and did his tour. it's kind of like really zuckerberg where it didn't go that well. later on they had to explain all of these things about capital requirements, which most silicon valley apps never have to think about. what does that mean for fintech that suddenly in the world of growth, hyper growth, etc., they have to think about things like meeting capital requirements and all that stuff? jill: lord, i think it -- look, i think in many ways the system robinhood set up for itself

actually worked as intended last week, where they were able to minimize over the course of years now encryption for their customers to get on board. yes, part of that involved offering every customer that you can get into a debate around that, but that was objective number one four robinhood, to be able to grant access for frictionless access to the stock market for a new cohort of people. now they are feeling the growing pains that go along with that. you are bumping up against risk measures that kick in when there is too much volatility or growth and you are seeing behaviors within the market. i don't understand what the handwringing is about, because that is how the system is supposed to work. robinhood is supposed to be able to grow the market and encourage users to get on board and trade

the markets, and then robinhood is supposed to meet the collateral requirements, and if they can't, they hold trading on certain names. that is exactly what went down. there is a knock on question of what we do now, where do we go from here. should it be the case that we stick with the settlement and we all have to slow down and go back to the market structure market behaviors that have existed for a long time, or do we want to change the underlying system and move away from things that many in the industry would say are deeply outdated and certainly everyone i know on the west coast would agree, now that they have all woken up and realized what type of infrastructure wall street runs on. caroline: they have had to do a lot of education, and it is quite painful to now see they have this super bowl ad,

robinhood, and it mentions nothing of the recent disaster they had from a public relations point of view, trying to say that everyone is an investor. they have run fast and broken things, not only when it comes to the need of having to front trades when you have a lot of money from their accounts, but also before that, they promised accounts wouldn't have to sign off for regulators. when you are looking for these opportunities to invest, how much of you having to take on the risks that are involved in having to work around chelation and the fact that you are going to break -- work around regulation and the fact that you are going to break things? jill: i would disagree that this week was such a disaster for robinhood. i would say this goes to show that robinhood has done what it set out to do, which is to open up the market to those whole new cohort of retail traders.

i think robinhood has not broken any laws, they have not violated any standards. indeed, they have upheld them. sure, there was a scramble last week to meet the capital requirements that were being asked of them, but that is nothing new under the sun. that is nothing that other financial institutions have not run up against. caroline: new to the user base. jill: it's new to the user base, exactly, but the issue is that in many ways robinhood did too good of a job of extracting all the complexities for its user base, and it has been a wake-up call not only to these are based, but to investors in these types of companies and so forth of that, hey, you cannot just look at what is going on on the surface level. you have to look at the infrastructure it is built on i think and i hope that is

going to drive a lot of innovation in that infrastructure from a technology perspective, talking about financial plumbing. but i also hope it will drive just a reconsideration of the incentives that exist on wall street that have perpetuated things like the mandated settlements. joe: all right, jill carlson, cofounder of the open money initiative, thank you so much for coming on. really appreciate your perspective. she was on a recent episode of a podcast goes by tracy alloway and myself. coming up, the economy -- data showing signs it is picking up. what does that mean for joe biden's stimulus? we will talk about that next. ♪

caroline: so we all take a deep

breath and think about not robinhood for moment, and we think about what we might've missed today, and it goes back to the corporate minerals, economics get--the fundamentals, economics. joe, do we need $1.9 trillion when you have the adp figure such as today? joe: so much of the narrative is that we expect there to be a strong reopening in the spring or summer, but a slow winter. b but theut-- but it may not be as slow as people affected. adp employment -- services, very strong number, came ahead of expectations. housing is booming. they read all that the slowdown this winter has been as bad as people expected. joining us with more insight ,rich, why is this? why do things appear to be holding up better than economists feared?

>> well, first of all, you have to give some credit to the distemper stimulus december stimulus package. -- give some credit to the december stigmas package. money is showing up in some of the data tracked by the bank on debit cards. you have got to get some credit there. generally throughout this whole debacle, the economy has surprised us by proving to be more resilient than we thought. admittedly, things are very bad. the worst forecasts, like

double-digit unemployment by the end of this? richard: that's an interesting point. some of it was that in 2008 and 2009 crisis, there was something inherently off with the economy. there was big imbalances, large hidden debts, subprime, etc. this time, this is covid. it wasn't

♪ emily: i am emily chang in san francisco. this is "bloomberg technology" coming up, news that jeff bezos is stepping down as ceo of amazon reverberates through the tech industry. why now, and what will his successor andy jaffy's experience mean for competitors?