caroline: from bloomberg world headquarters, i'm caroline hyde. joe: i'm joe weisenthal. romaine: i'm romaine bostick. let's take a look at where the financial markets stand. concerns about inflation, concerns about taxes, and of course, concerns about rates rising took a bite out of u.s. equities. joe: and dogecoin too the question is, "what'd you miss?" romaine: you had to go there. caroline: if you are looking after the market shot, maybe it is a walk that coming from yellen.

there were worries throughout the day that we had this watchword of modest. the rally into the close, we ended up with a modest selloff. the nasdaq 100 recovering from a loss. the index posting its worst day into months. this is the volatility of the u.s. treasury secretary janet yellen said interest rates may have to rise modestly to prevent the economy from overheating. she seems, to be giving us context saying she's not pretty ring or recommending a rate rise. she seems to be trying to finesse what she was trying to say to the markets. we have not gotten an inflation problem. the fed will be there to help. we have to remember, when she speaks at such conferences, she was once fed chair. she carries weight. joe: we don't have an inflation problem but the fed would be there if so, but the fed will not need to be there. just a comment. i think people got excited. today was a more volatile day than we have seen in a while. we saw the stock market selling. we saw the vix gather a little

bit of steam today. it had gotten over 20. over 21 at one point. ending under 19.50. a little bit of an interesting day. certainly those yellen comments making things more interesting. for more on the day's action, let's bring in bloomberg markets reporter, pretty pooped out. interesting day. not that bad really. mostly concentrated in tech. kriti: that is where it started. this is a continuation of yesterday's move. the initial pain started off at the beginning. right at the open. he saw that isolated to the big tech names and chipmakers. then it spread. energy opened in the green. all 11 sectors in the red. i think that is extremely telling that you are starting to see this risk sentiment sour. especially when it comes to big tech that was doing so well last week. doing so well with those monster

earnings. , four sessions a 6% drop, that is something. romaine: we say that it is sour but a lot of this has to do with the macro story, and the monetary policy story here. we can make whatever jokes you want about yellen and her comments. but there is an idea or a skittishness that the prediction that the fed was not going to do anything until 2023, mid 2023, late 2023, that that is not really a lot. you now have to s this conversation about 2022. if you are yellen, maybe like this year. kriti: i think you nailed it. the reason people are sensitive to janet yellen's comments, we know she is supposed to be independent from the fed. but she made a comment, and hang chairman powell said this, that they think pretty similarly when it comes to the interest rate policies. for her to say that, i don't want to put any words in anyone's mouths, but it is a fair assess -- assumption to think that the fed is thinking along the same lines. she didn't say anything we

didn't know. it was just a comment. romaine: sushi is. kriti: it is the fact that she is saying this now, when we are not supposed to be thinking about thinking about this. the fact that how this relates back to tech. we did see tech selloff on those massive yield surges. yields are ticking higher, moving sideways. that could come at any moment. that is where you are going to see the bigger the stock, the heavier the impact. caroline: massive surges. our people bracing for a massive surges in volatility? the fact that we raised up almost above 20. are people trying to get ahead of this? kriti: it seems that way. . you are seeing profit. you are also seeing a little bit of -- consolidation is another. it seems like a lot of positioning ahead of the payrolls number in particular on friday. this looks interesting. you are seeing the selling in big tech, after their monster earnings, and ahead of payrolls. i think the church you have on your screen is such a great one.

you are starting to see people price and more volatility when it comes to those tech names that are already in such hot water. people are waiting to get rid of some of the monster gains they have made back in 2020. i think people are waiting for the right catalyst. whether it is the margin of the move and yields, whether it is chip shortages, or possibly a very big risk event on friday which is the job numbers. caroline: not even going to talk about where tesla might end up after saturday night live on saturday. kriti: that could move everything. caroline: dogecoin. coming up, animal spirits are alive and well in cryptocurrency world. just mentioning dogecoin. 50% again, crashing on the trading up. what is fueling the mania with our guest. he joins us next. this is bloomberg. ♪

>> i think folks when they come into this space, as they start to see these other things, i think it is a feature, not a bug that these different assets or nft's, they create momentum in the space. i think that is healthy to bring the space to new levels. i think it is a great thing overall. romaine: that was coinbase president and ceo -- coo emily choi. i spoke to her alongside a grayscale ceo. that was part of the bloomberg wealth summit. we talked about crypto. but really about this idea of it becoming a legitimate way to would diversify the portfolio. the idea that if some of the concerns of the past may not be valid today.

joe: and of course we had janet yellen weighing in, mentioning today, among other things, that we don't have a fully adequate crypto regulatory framework. caroline: tell that to the dogecoin buyers. joe: yeah. let's talk about diversification. they didn't lose any money today. let's bring in ryan selkis. you crypto guys, you talk about the fed all the time. censorship. doesn't that does show -- the dogecoin thing show it is a gambling game? ryan: you can say the same thing about the stock market and gamestop and what we saw on robinhood. there is a bigger trend to play which is more retail investors are buying into meme stocks, mean coins, and having fun with it. elon musk has quite the cold following. when people see that he is going on saturday night live, and he jokes the episode will be called the does father, and bunch of

people follow suit and have fun with it. from an outsiders perspective, it does look crazy. but dogecoin, if you take it with a grain of salt, is part of the broader market. it is not quite so outlandish. the asset class as a whole has performed incredibly, staggeringly well so far this year. romaine: yeah, it has. we also have activity here in some of the other crypto's out there. not just the ones that basically started specifically to be jokes. the rally that we have seen lately in a theory him and the other crypto's out there. i'm curious as to whether there is a fundamental story that is driving some of this. it is not all just hope and faith. ryan: exactly. i think if you look at some of the assets that have performed really well, if theory and being one of them, the decentralized finance assets being another that are in some cases up 15, 20

times, even year to date. a lot of it is driven by increased network activity. it is driving the fees to those token holders. there is going to be a new fork over the summer, and a new change in the system where the transaction fees are going to flow through to the holders. as they transition to prudent stakes. it is capital efficient asset that can be staked and used it to earn the fees passing through the system. that is the case for assets like maker, compound, some of these other centralized lending, decentralized derivative markets that are actually processing real transaction volumes in the tens of millions of dollars on an annualized basis. caroline: how much are you starting to see what drove bitcoin higher? talk of institutional players getting involved. they seem to be latching onto a theory. how soon until you see real institutional participation in these old coins, or in terms of

some of the real products that are being built? ryan: well, these things take multiple years and multiple cycles in some cases to come up the curve. the way i/o is think about it, you have overlying height cycles in crypto, and you don't just go from retail investors straight to the big banks and institutions. there is usually a specialist professional class that takes advantage of the opportunity first. in this case, it is the crypto funds that emerged in 2017, 2018, that invested in these assets. yes, we are starting to see institutional an option, serious interest in assets beyond bitcoin. if theory and primarily. we expect that is going to take a couple more years before larger money managers start dipping their toe in the water and we might be getting close to a tipping point where they take it seriously since we are looking at assets that command

50 billion plus valuations beyond just bitcoin and ethereum . joe: i'm sure you want to talk about stuff that is not dogecoin. but i want to go back to it for a second. you look at dogecoin's soaring and you look at basically any coin. you mentioned some of the protocols or coins that compound or whatever. and you say ok, there is some sort of serious thing happening. how do we know that it is not just someone going to the front page of your website and buying one of those coins, doge, ripple, bitcoin cash because they see an up arrow? how do we distinguish what is real and fun and speculative, versus what may be this infrastructure of a new kind of finance? ryan: i think it is both. what is the fair value of the stock? what is the fair value of the crypto asset? you look at bitcoin and you would say, that is a currency that is priced.

it is priced in comparison to gold or other scarce commodity. d5 assets are different. the ones that have been rallying this year has underlying unit economics that are interesting. you can look at them as if they are stocks and certain cases. they are not owned by a shareholder base. those network fees are real. there is interest that is accumulating to folks at provision capital for money markets. areas real capitals being earned by market makers providing liquidity's for decentralized exchanges. that is the big difference in the cycle and the 2017 cycle. 2017, the ico you before you -- euphoria. today, you will see a rising title including dogecoin, for better or for worse. most of the assets, they are in the top 50 this time around, actually produce real fees is a far cry from what we saw in the last cycle. romaine: i'm curious that in

this cycle we are in and the rise we have seen in bitcoin, and all of the other assets, there seems to be a direct negative correlation to how people view fiat currencies, the devaluation of the dollar, at least the percentage -- the perception of the devaluation of the dollar because of the stimulus, fiscal stimulus out there. if we ever get to a point, and it might not happen in our lifetime, where the fed decides to raise rates and normalize monetary policy, is that take the luster off of any -- off of crypto assets? ryan: i'm not sure. i think maybe temporarily. because as we have seen when the fed does tap the brakes on the market more generally, crypto is somewhat correlated to the risk on markets. i think over time, those will separate. there is so much fundamentally interesting activity happening

at the protocol level for all of these longtailed networks that is going to keep this rally going and this long-term speculator moving in the right direction. if you are asking me to give a trade recommendation, i'm not very good at it. i can tell you in five years, my outlook has not changed. romaine: all right. we will come back to you in five more years. i think we will invite him back before then. ryan selkis, cofounder and ceo of missouri. the debate over president biden's economic vision for the u.s. that is ramping up in washington. with the fate of the legislation in the hands of lawmakers, we will discuss. our guest will join us next. this is bloomberg. ♪

caroline: president biden unveiling his tax plan to help fund the trillions of dollars in spending to start his administration. one of the main parts of the plan that got a lot of attention, capital gains taxes being increased. there are larger parts he is looking at too. joe: i think you are right. and a lot of our viewers probably interested in the capital gains component, which is one of multiple new taxes that theoretically the white house would support. millionaires would pay 40% on capital gains, over 40% potentially. that would be after the asset is sold. a pretty big jump, in a way, collapsing the difference between labor and taxation and capital taxation. joining us with more insight, adam tooze from columbia university, professor of history, also author of the book "crash." thank you for joining us. let's start with in your view

come of this moment where the democrats control the white house, the senate, the house, albeit narrowly. we are coming out of a big economic hole. is this the moment to strike from a taxation perspective and try to use the tax code to address long-standing inequality? adam: i think it probably is. i don't think there will be many progressives in the u.s. or anywhere else, because this is a global agenda, the corporate taxation, that will object to what the biden administration is doing. they are pushing up tax rates on tax capital gains. they are hitting the top, 91% of american society, is one third of 1% that is going to be hit hard by this. they are pushing for a global tour -- global corporate tax rate of 21%. in the u.s., 28%. so yes, this is the agenda to go with. it is double-edged. these are simultaneously progressive tax increases. and i think that it has political logic in the sense that these enable them to

squeeze their spending programs past the obvious objectives in congress as well. romaine: i am curious, we know that intentions, when it comes to washington and lawmakers, don't always end up in results here. let's say we managed to see the taxes become law. be codified here. is there a sense that there is a plan to make sure that money is distributed in a way or redistributed in a way that actually achieves the goals that the biden administration says it wants to achieve? adam: that is the promise. that this is a double whammy. that they will act on the expenditure and revenue side in a progressive way. i think the progressive worry is harvesting those two things together ends up hobbling your investment program. because you cannot realistically expect to get the huge tax increases you would need to fund a genuine climate program. i think for those of us who are committed to the cause of energy transition, the american jobs

plan, the infrastructure plan is undersized. i think that has something to do with the way it is connected to the pay for logic. caroline: the pay for logic. i'm interested in the way you talk about redistribution. and the way in which you are saying perhaps, climate change is progressive, the nature of what biden is trying to do is not big enough. a lot of the effort remains within corporate america to take on and decide it is not only the right thing to do, and earn them in the right direction as well. how much do you think there is a hindrance of what is being done on the tax code for innovation, for companies to spend it in the right way? we have -- we had a ceo saying this would be detrimental. what are the arguments against that? adam: i think that is the argument you would expect with businesses. leave us with our profit. that is a very obvious play on their part. i think the administration is not just counting on that.

the third plank in their policy program is regulation. if you push them hard on where the real oomph is going to come from, they say it will come through clean energy regulation, which will require electricity, utilities, to achieve carbon neutrality by 2035. it is really -- the game is to balance those components. the investment side with the innovation that they hope will follow from that. the revenue raising side. and the regulatory aspect. all acting together. i do think they think that the capital is on their side. progressive american business can see the long run direction, and the capital is moving. they are not leaving it up to the goodwill of business. they are hoping these three levers will work. joe: we have interesting comments from treasury secretary yellen. kind of got walked back. i don't think people read much into them.

but perhaps that the spending, the aggressive stimulus might cause rates to rise. do you worry at all that whether it is the fed or the administration, that some of these signs of inflation, commodity prices rising, will cause policymakers to sort of lose their -- not have the stomach to go as big as they need to go and start to, even though they say they will look through that, and it will cause them to slow walk things a bit? adam: it was a really significant and telling moment. it was a big story circulating yesterday about yellen's role in the pay for logic and her hawkish and is on fiscal policy that got a lot of airplay. this morning, these comments which were walked back, we are in an extremely hectic nervous new cycle right now. i think it is indicative of that. that yellen felt it necessary to address her position. it is important to remind folks that she is no longer fed chair, but treasury secretary. the fed has to make it -- make up its own mind. i think they have done as much as they could to commit themselves to the idea that they

will tolerate inflation increases. the fed has said it is a target. we will welcome inflation over 2%, if that is what comes our way. the thing to worry about which is what we are worrying about a few weeks ago is how markets react. it is not so much fed talk, as the twitching in the bond market. if that story has died down, the attention is we will focus on the policymakers. in the longer run, we know the big movements in the bond markets that would be really forcing their hand and test them, it will not be the inflation numbers. joe: we will watch for that. our thanks to adam tooze, professor of history at, be a university. you can check out a more expensive conversation with professor tooze, on the post cap -- podcast that i host. caroline: wherever you do get them. i'm assuming you will be up late to might -- tonight watching what dogecoin does. joe: what else is there? romaine: there's nothing else

going on. you know what else is up? joe: bloomberg technology is up next. romaine: have a great evening. this is bloomberg. ♪ want your workout to be easier, more effective,

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>> from the heart of where innovation, money and power collide, in silicon valley and beyond, this is "bloomberg businessweek." with emily chang. emily: i'm emily chang in san francisco. this is "bloomberg technology." coming up in the next hour, a textile of sweeping u.s. markets. shares of apple, tesla and amazon all sink. zillow