caroline: from bloomberg's world headquarters in new york, i'm caroline hyde. joe: i'm joe weisenthal. caroline: s&p 500 at a record high. the russell 2000 gets a boost as we see this infrastructure deal seven to between republicans and democrats. the dollar is down 2/10 of a percent. the pound also lower. the banks easily clearing the

u.s. stress test. joe: let's bring in wall street -- bloomberg wall street correspondent sonali basak. it is all good now. the crisis is over. sonali: it is a historic moment coming out of such a big pandemic. now that they are all clear, what this means is you have morgan stanley who a week or so ago says they have an embarrassment of riches. they are ready to give capital back to shareholders. you have jp morgan saying they will continue to pay a healthy steady dividend as they continue to invest in their business. we are waiting for what those numbers will look like. they will announce sometime around the 28th when they are allowed to do so. jp morgan, they are expected to return the most in dividends. caroline: is it all about dividends? what about buybacks? sonali: they do have buybacks as well. it is a great question because it is more in terms of pure

funds. it is the bulk of the capital return plan. the net in the story is there are a lot of homemakers saying your ratios are low. we want to see you return this money in the form of loans. joe: under the current regulatory regime, flying colors, buybacks, dividends, all that. obviously, there are still politics in the world. there is still a potential for new regulation. what is the next thing that banking vectors need to be water? sonali: i would be watching loan ratios. how much are they lending relative to their balance sheets? they are going to have to justify to regulators if that is love and why. is it because of the rights they are charging? is it something else? i am not sure the data around that has been clear enough to give regulators an answer to be happy with. caroline: interest rates are taking up ever so slightly above

3%. how much are they lending out in terms of mortgages? how much are they loaning out to minorities who have been left behind? sonali: that is the big question. there are big communities being left hind in all of this. -- left behind in all of this. how does that pair with communities that have been left behind during this crisis in terms of small business loans? joe: do regulators or lawmakers have any enforcement or stakes they can use or is it more about moral suasion and making them look bad on the camera? sonali: they have carrots they can use. tax breaks. investments and the work they do can get them or work with the u.s. government. it can get them tax breaks. caroline: should nally has always got the inside track on these things. banks are going to be returning to investors.

they all cleared the u.s. stress test. coming up, we are going to be digging into have fed speak about inflation, the timeline and when you are to be tapering. bill dudley says you only need to listen to three people. >> the thing to pay attention to is the chairman, the vice chairman of the board of governors and the vice-chairman. the victory set the agenda for the market committee. ♪

joe: oh welcome back to wooded you miss. we take a look at the reason growing inflation debate and the divergent views on the timing for tapering.

the extreme reaction to the treasury markets after the hawkish surprise at the fomc meeting last week has investors looking to the fed to provide some calm. the spread between 30 year and five year treasurers plunged to the lowest level since late last year, fully erasing several months of reflationary steepening. >> it is easy to say the fed should tighten and i think they should. you will see a very sensitive market and a very sensitive economy. joe: the fed anticipates two interest rate increases by the unit -- by the end of 2023. >> much of the consensus of perm rational economic -- of professional economic foresters is we would have inflation at 2% this year. we have already had more inflation than that in the first five months of the year.

joe: there is a since the recent months of data have activated the inflation fighting white lead cells of the fed. >> there is upside risk to inflation. could go higher than what i have outlined here. we have to be ready on both signs to react. -- both sides to react. joe: for a while, it felt like the message from the fed was hopeful employment. some of the old thinking turning into undesirable high inflation has come back. chairman jay powell seemed to be ready. >> perhaps all of the overshoot of inflation comes from categories that are directly affected by the reopening of the economy. these effects have been larger than what we have expected and they may turn out to be more persistent then we expected -- more persistent than we expected. joe: drilling us with more

insight on all this, the bloomberg senior editor. we have heard a number -- a number of members of the fomc concerning about the inflation. is this the old fed that raised rates because it was so worried and silly need to preempt inflation? >> i don't think it is. i think that particular event has scarred the fed somewhat. i think jay powell who was a hawk back then is particularly scarred by that especially because of the jay powell pivot in early 2019 -- 2018 when they began raising rates. they said the market thought they were going to raise rates twice. they ended up raising rates four times the fourth time was a mistake. many people thought we were close to a recession.

jay powell backpedaled furiously. the take away for the fed was that they have to be very careful about how they unwind their stimulus. caroline: give us marks out of 10 on how careful they are being. are they doing the right job having an uber dovish chairman? >> i think you heard them talking about raising rates. we so a rafael bostic who was raising rates and thousand 22. bullard said his forecast was to 5%. after 3% this year, i would mean the average inflation would be to percent and going even higher in 2022. if that were the case, that would give the fatty cover to pivot to a more aggressive

tightening stance. just like the former new york fed president said, we should listening to williams. we should be listening to jay powell. other -- these other individuals are giving cover for the fed. joe: under bernanke, you had this phenomenon. to what degree, how does the consensus under jay powell compare? is powell doing a good job relative to predecessors of keeping a fair amount of consensus and singler opinion of this wide-ranging review? >> i get the impression he is. the most interesting question that is still unresolved is if you are going to have an average

inflation targeting regime, over what time span are you going to have that target echo they have not said anything about that. there are two reasons. one is they want to see how the data pans out the second is there may not be clarity among the members. they may not all agree. they are trying to coalesce around a specific data point before they actually come out. we read a crucial moment where we have almost maximum certainty because we are getting into this full reopening. they want to save their dry powder in terms of being very specific about what that timeframe is. caroline: the 579 billion-dollar infrastructure deal took the market by surprise how quickly they seemed to strike a deal.

do think the federal reserve has been factoring in that level of stimulus from a fiscal perspective? >> definitely not there is the whole concept of the monetary offset that would come into play. that is to the degree the fiscal response is stimulative, the monetary response does not need to be with a fair to review the structure -- the fact we are getting the infrastructure bill, that would give them cover potentially to move in on mortgage-backed security. you heard a lot of talk around mortgage-backed securities as the way they would start their tapering. i think that makes a lot of sense given how hot the market is. caroline: great to have you on the show. come join us somewhere. coming up, we have been delving right into -- what about crypto?

teaming up with ms em bx. we speak to the founder and ceo about why they are making such a marketing splash and what else they are doing. this is bloomberg. ♪

caroline: from fed to crypto, we turn our attention to digital coins. what a wild ride to the downside. joe: lately seeing some weakness. a big tumble in the last couple days. you see the bloomberg galaxy crypto index. joining us to discuss the market is the founder and ceo of crypto

derivatives exchange. thank you so much for joining us. you guys are going on such a splurge in the u.s. you are known as coinbase and getting the miami heat stadium and now becoming the official crypto partner of mlb. why the push and what do you see as the market opportunity in the u.s.? >> the big context behind the push is we are really proud of the products we have built. we don't -- we think they are the best products in the space. we are one of the newest crypto exchanges and we have a lot less name recognition. i think the biggest thing we are looking to do is it our name out there because we think people will love our product if they tried them but don't have the same ran name.

-- same brand name. caroline: who are you interested in? it feels if you're going into stadiums and gaming, it feels like it is a retail player. i also know you have been interested in institutional. you were built by traders and for traders. where is the sweet spot? >> historically, our biggest sweet spot has been the really highly engaged users. the people who think very hard about a platform to use. we put a lot of our effort into trying to build the best institutional grade liquidy platform we can in crypto. as we now start to look at the consumer demographic as well, we already have a really will bill back end technology. that makes it pretty easy for us to roll out a lot of products on the consumer side because we have all of the backing we need for them in terms of technology,

products and liquidity and everything else. it just makes it much easier on that side. we are excited to get involved in that game. it has not historically been our biggest source but we think there is a lot of room to move that space forward as well. you are exactly right. this is looking at a different demographic fan what has been the largest users so far of ftx. joe: is that the biggest selling point? every time there is stress or major volatility in the market or a rival exchange, people having trouble accessing it, you make a point on twitter about the changing liquidations policy. talk to us about what you see as the difference and why out of nowhere -- because a year-and-a-half ago, no one had heard of you. >> i think a lot of this is a combination of features. we spent a ton of time working

on our back end technology. this often is not present in the retail facing products. when you put stress on the systems, it is. if your technology is not top end, you're going to have downtime. we have had had -- we have had industry uptime should another thing is we have rolled out a lot of cool products. many of them have an international so far. on the international site, we have a lot of unique experiences. the 2020 contract for instance, which made $200 trillion in election night. we have a lot of eyes on a lot of cool features we are hoping to rollout the next year that we think will set us apart not just in terms of the stability and experience but in terms of the brits of -- the brits of offerings. caroline: what is attracting

attention to you is you have been able to be so nimble. the ability to hear what your customers want and have fun with it. as you raise more money, as institutional clients fund you, do you worry that will fall away a little bit, that you will have to become professional? >> it is a really good question. no. i do think we will get a lot of pressure to. i think we won't want to be professional in the ways that matter and that are meaningful. we try really hard to treat our customers well and with respect. what i think we are going to refuse the pressure to do is have massive sprawling growth in employee base in a way that is chaotic and reduces our ability to operate well. we would love to be way bigger in terms of workforce. we have demand for it.

we are -- we have tripled this year in employee base. we are not going to have thousands of people anytime soon. the reason is we are worried if we do that, we are not going to have the managerial capacity for it. we are going to grow as fast as we can while maintaining the culture that lets us do what we have to do but not at the expense of that. joe: ftx has been this huge success but your experience has gone beyond that. you are also a rapidly growing layer one platform. i mentioned bitcoin and theory of tiered is the goal of salon not to be better and is the vision that it could be at are then it one day? -- could be better than it one day? >> the goal is to be a launching

platform that could support a billion users. that could support 15% of the world's economic activity on it. what i am saying is the goal is to build a platform that could do that so that the technology is not bounding the growth from the get-go and it could get as big as it could make sense to get and hopefully provide a ton of value. that is the founding principle. it has found it in avoid of -- found innovative ways to do that. is it complementary or competitive? that depends on what your view of the goal of ethereum is. that is not contradictory with solarana being blockchain growth.

caroline: i would imagine if there is any regulator is right now, they would go, you want 15% ? how would you find that discussion going? do you think you will be allowed to get to that sort of scale when you have the u.s. thinking about a fed coin in china trying to promote its own? >> it is really hard to know. i have no clue as the real answer. there are so many variables. instead of thinking it is going to get there because that would be an insane thing to think -- to feel confident about, the way i think about it is the big upside is cases where you get to hundreds of millions of views. what that means when we are thinking of what to do now, we are ways away from that. the number of users is like 100,000. what that means right now is building the technologies such that you don't constrain yourself away from it. maybe it will happen.

maybe it will not. it will not reach as big as it could possibly get but it would be sad if you cross that list off -- cross that off your list immediately as hopeless. joe: when i look at ftx.com, it has all this cool stuff. when i look at the u.s. version, you can buy bitcoin. is this like the old poker where there is the cool site americans cannot access? >> yeah. right now, there are two sites. one of them has a lot more products. it is because of licensing. i want to phrase this -- i don't want to phrase this as a good bad thing. the u.s. has to take a license approach to everything tiered what we find ourselves here is in a situation where there are number of products that are supercool. the u.s. has not released clear licensing regime.

when you look at crypto futures, there is no crypto futures exchange license. caroline: so good speaking tear. founder and ceo of ftx. joe: bloomberg is up next. have a great evening. this is bloomberg. ♪

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