MAD MONEY 文字起こし 09JUN21 Crowdstrike CEO, A Closer Look At Tether & Former CFTC Chairman Timothy Massad

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https://www.stitcher.com/show/mad-money-w-jim-cramer-full-episode/episode/crowdstrike-ceo-a-closer-look-at-tether-former-cftc-chairman-timothy-massad-84593557

0:46
Hey, I'm crater Welcome to Mad Money. Welcome to quit merch. I'd be one of my friends just trying to make some money. My job is just to entertain you but educate and teach you so call me at one 807 43 CNBC or tweet me at Jim Cramer Believe it or not. prudence is virtue. I can't believe I have to say that on a financial television show. But let me the concept of prudence is under attack. Quitting on a state day like today dal dip 150 3.8 s&p just back slid point one 8% NASDAQ gets just down point. Oh 9%. Yep. Tonight, we need to talk about why being prudent with your money is a virtue, not advice. I wish I didn't have to be the adult in the room. But this is what the investment world has now come to. One of the first things I ever learned in this business, is it nobody ever got hurt taken a profit? I always thought that seemed like common sense. You wouldn't mind me when it actually dates back pre stock market dates to the days when I play the slots in Atlantic City with my mom. When we hit big, she'd say, Come on, Jimmy, let's go out and buy a sweater. She never wanted to give a big went back to the casino. Now when cashmere was on the line. And my ethos is that you have to do a lot of soul searching before you go against your mother. Quickly on these kinds of issues. Then, when I got to Goldman Sachs, one of my bosses Roy Zuckerberg called me in not long after I started out, because he noticed that I've been recommending some pretty aggressive ideas. He told me stocks aren't vacuum cleaners. If they break, you can't take them back, no warranty, so you got to be careful with your recommendations. That's where I got the phrase caveat emptor buyer beware when it comes to stop working. Finally, when I was at my old hedge fund, I learned from my trading partner Karen Kramer, a lesson that's become a key monitor here on Mad Money. And that is that bulls make money. Bears make money. But hogs, they get slaughtered. Now that's one of the oldest lessons on the trading desk. But it always seems to come to surprise to younger investors because they often don't realize that they are being hogs. When you trade like the hog, you tend to be come somebody else's ham or bacon long before you would have expected it. You can bet with stocks you can bet against stocks. But please, once you've made a lot of money, you take some to the bank.

3:05
These are core tenants for me. That's why five months ago, I called him from my hospital bed at NYU Langone and said it was time to ring the register on GameStop when the stock was at four bucks. So that's what that was common sense. But the main stock guys saw it as a declaration of war against them. I just ripped out my catheter. So I could have a little more focus. Remember at the time GameStop was up more than 1,700% remarkable run. So I'm thinking people should take something off the table I didn't even think was anything. I mean, not long. Not long before I went into surgery, it was for bursitis my spinal column. I didn't manage the short sellers in GameStop for being pigs. They watch the video game retailer stock down there near gwithian. But they kept betting against it assuming and be like ship Fisher bow. The shorts didn't take their gains while I had them. And they were obviously been pigs. And in January there's little pigs get slaughtered. Now suddenly, I was saying the same thing about the balls who watch their favorite stock go from the single digits to 400 truthfully is one of the best calls I ever made. GameStop swiftly thought a 40 bucks less than a month later. But the GameStop fanbase from Wall Street bets, it doesn't matter that I was correct. It's meaningless. to them. Anyone who recommend selling is the enemy. Which is why I've become a hated figure on Reddit Wall Street bets probably the most hated person in their universe. And that's the Betty sheet the ground. That's ground zero for meme stock investing. According to these younger investors, or at least I assume the younger given that it's all anonymous. Selling GameStop is just an outright sin. No matter how much money has been made. They hate those on the other side of the trade. Typically short sellers put us on baby boomer guys like me who cancel people that take some profits because of my core tenants. In other words, my learned behavior is worthless to these people who castigate anyone who tries to help them. Even when those people turn out to be right. It could have saved yourself a fortune if you sold GameStop and 400 and bought it back at 40. Now I understand risk, it's possible to be too prudent. But I'm not against GameStop or AMC at these levels, game stops currently below where I pulled your ring the register j right now getting hammered after hours trading wake up a terrific quarter frankly, management did so they'd said they'd sell maybe another 5 million shares and what's known as an at the money transaction, you probably won't even notice that, frankly, if you're in the stock, these companies now have the ability to reinvent themselves because higher stock prices have allowed them to raise capital. I like that. That said, if you've written them up from much lower levels it take a little off the table in these stories can always get dinged like GameStop is currently doing even though the numbers were good. And they're bringing in a couple of really sees an Amazon alumnus run the company. I'm talking about great people. He is also an FCC and Korean to the trading of the stock but it doesn't sound all that serious to me or would have been sent to justice or they certainly would have disclosed it in the agency contacted them may 26. And it's voluntary so I I'm not worried. Suffice it to say that nothing I heard will stop the people who like it from Wall Street that's continuing to buy the shares tomorrow morning. Now let's look at yesterday's meme stock though. For a second Wendy's. I like that stock rageous I like eating the ever more important I like the breakfast initiative. Well, I had a plan and they just expanded the United Kingdom. I liked it to continue to put the taste special with my wife's favorite the baking it yesterday when the stock was 2329 now I agree with Nelson Peltz, the chairman major shareholder who told me today he says the stock still undervalued. But if I told you, I would say less than to buy when he's 29. Okay, after been hyped by the website, and then I'm like the 25 is dead today. I feel terrible. Maybe in the world of Wall Street bets, I'd be applauded for liking the stock at any price. But I suspect somehow many of you would castigate me in this audience. Again, I'm not against risk. I think part of your portfolio should be spectrum, what I call your Mad Money. I am one of the only I know I'm the only talking head that I've ever seen who actively encouraging speculation, especially for younger investors about the whole lives ahead of them to make back any losses. However, the throng of Wall Street bets often thinks that you should be all in on whatever speculative heap they're in love with at the moment. And if you see, if for some reason, you think it's a bad idea what they're doing. Well, you better shut up or be like me and get taught. To me, income wise, this is not a game. People need money to live to go to school to pay for vacations for retirement. If you lose everything. You know what? That's a problem. Look, I'm not a total masochist. Just a partial. I have Rhino skin and I welcome criticism. I'm from Philadelphia. But that doesn't cut it. I've been in this business for 40 years time and again, I've seen the bulls make money bears make money but hogs get slaughtered. The Wall Street beds crew may not want to hear it to them. Not another I'm just out of touch baby, boom, that's all I am. But if they don't take some profits while they haven't, then sometimes they're gonna regret it. The bottom line, I can't believe I need to say this. But if you're trading stocks, the goal is actually to make money. And eventually that means you need to take some profits because it is prudent to preserve your gains and you don't have a profit until you take it off the table. Damon Kansas days

8:03
Hi, Jim. I wanted to know where you think Etsy is heading. I'm a seller on the site and everything that I've earned over the last 12 months from my Etsy shop I plowed back into purchasing shares in the company has now a good time to buy more or should I wait for a dip in the price?

8:17
Oh wait for definit see the stock just had a major run I think it's terrific company but it could come down without a problem. It's Josh sobers real good though. So then when it does come down, I want you to buy it. Let's go to Joseph in California, please show us.

8:30
Well, yeah, Jim first time caller and I loved your books. Ah, thank you, buddy. What's yours? You're welcome in the chicken sandwich wars, Tyson Foods, ticker. TSN. Supplies all sides, restaurants shut down TSN when market share by sending product into grocery stores, beat estimates every quarter. And I think they're going to beat him again. And now that they're reopening where they're expanding production, opening their first chicken plant 25 years in April, and their new CEO Donnie King is the chicken King at Tyson Foods and TSN just showcase new plant based.

9:00
Let's get Donnie came on because I've been biased against Tyson. But you know what new regime we bring him. Maybe we like Tyson, because I used to like it very, very much in the old days. All right. Stop trading. Patience is a virtue. Remember, both pairs make buddy hogs often get slaughtered. I'm having to trade it for two days of testimony from the CEO of colonial pipeline. We know cybersecurity more important than ever. So why can't cybersecurity stocks like CrowdStrike seem to catch a break? I'm talking with the CEO of this very good company, then I'm breaking down the not so stable world of stable coins and telling you why it could be time to with least stay focused on this difficult issue. And why some action the crypto market reminds former CFTC director Tim Masson of what happened during the 2008 financial crisis. Oh, you're not gonna want to miss this. So don't go against my MA and stay with crip

9:59
do Here's a second of Mad Money. Follow at Jim Cramer on Twitter. Have a question. Tweet, Cramer hashtag mad tweets, send Jim an email to Mad money@cnbc.com or give us a call at one 807 43 CNBC miss something head to Mad money.cnbc.com get an edge invest like a pro access CNBC live streams around the globe unparalleled access to CNBC experts actionable investor insight and ideas. start your free trial today@cnbc.com slash pro

10:46
tip to get some of these great cybersecurity stocks to get their groove back. Take CrowdStrike last week this cloud based cybersecurity player reported incredible corals on vacation but I still looked it up Believe me. And I thought it got big right? I'm going to stock hasn't gotten much traction beyond the initial eight point baths. Now. Look, I accept the fact that there's a rotation out there fast growing sector growth stocks being sold while she prefers the reopening place. But at some point, this is ridiculous. We know cybersecurity is a huge issue. We just had two days of testimony from the CEO of colonial pipeline who got dragged in front of Congress for leaving an essential piece of infrastructure vulnerable to a ransomware attack. We've had terrific interchanges with Palo Alto Networks. And she knows so important to now CrowdStrike in particular, is doing so well. In the last quarter, they gave us a strong top and bottom line beat 74% annual recurring revenue growth that's astounding, by the way, even better magic razor for your forecast. So could this stock make another run toward its February highs? I think this group is amazing. Let's check in with George Kurtz. He's the co founder, president ceo of CrowdStrike get a better read on the quarter and where his company's headed. Mr. Burns, welcome back to man money. Thank you, Jim. Alright, so George, I mean, you're wasting time in your, in your conference call you say at the same time ransomware as a service sites. Now we know software's and servers ransomware as a service, you're talking about, of course, criminal activity. And you are saying that even novice e criminals can run successful lucrative campaigns. Tell me one, how's that possible? And two, why are people hiring CrowdStrike to stop?

12:24
Well, Jim, you know about the subscription economy that certainly has moved to the to the bad guys, they've taken it to a new level ransomware as a service, you don't really have to know that much. They create the software packages, they create the way to exploit them, they offer it as a service and they even get a profit cut, based upon the amount of Ranson that you actually get back. So it's a very fluid and dynamic market. And as you've seen, there's tremendous impact beyond just the financial piece. But the business resiliency element, pipelines and meatpacking plants actually being impacted. And we do have a lot of customers, obviously, that are using CrowdStrike to protect themselves against this. And that certainly is an area of focus for us, you know, being able to prevent against ransomware and these sorts of attacks. And that's why we built CrowdStrike

13:11
well, is this like one of those situations where a bad guy goes into a parking lot, and he sees one car and it's almost all the buttons are Ganesh is another with the month, he says I'm not going to the ones with the buttons, again, I'm going for the ones where the doors are open. I mean, and you are the ones with the buttons down? Well,

13:29
that's certainly true in some cases. But what we've seen and we've talked about this a few years ahead of whenever, you know, this really broke is this, this movement towards enterprise ransomware. And, you know, years ago, not that many years ago, I should say it was you know, phishing email and you pay you $300 in Bitcoin and you move on. But now the adversaries are taking a page out of nation state actors, they're actually getting in there staging their ransomware. They're deploying it using things like Microsoft technology to actually deploy it, which is just normal systems management, software, activating it, and then creating a ransom for the company. So it's become a big game hunting as opposed to just traditional ransomware. But this is organized crime, and you've got the tools to stop it. Well, we've built CrowdStrike, using AI using the power of the cloud, collecting over 5 trillion signals per week so that we could identify these attacks, and we could stop them. And there's a reason why our customers are delighted with CrowdStrike is the reason why we're so far to the right in the Gartner Magic Quadrant. The reason why we're number one in IDC, modern endpoint is because the technology just works and it's easy to deploy and it has tremendous value for our customers.

14:46
So let's talk about this fortune 150 customer that you've got. The customer is trying to deploy Microsoft defender for over a year they found themselves frustrated. Why with complexity, cumbersome agents and resulting in less Then 1/3 of their endpoints protected. So in other words mean this is a major company offering a product that doesn't protect.

15:10
Well, and that's what we've seen, Jim is that a lot of companies are reluctant to buy from their OS manufacturer. They're busy building OSS and Word documents, and, you know, productivity apps, and those all those sort of things, if you will. And they're looking for a company that specializes in security and has a single agent single console and is built from the ground up. And Microsoft technologies legacy technology they bought in 2004, signature base, multiple consoles. And one of the things is it actually gives you different levels of protection, depending on the operating system versions, because they're dependent on the operating system to add capabilities to it. So that customer got frustrated, didn't have a good deployment went to CrowdStrike. seamless deployment, they're up and running and protected.

15:53
How many people had the system that colonial pipeline has? Well,

16:01
when you say system, I mean, there's a lot of colonial pipelines out there. There's a lot of old technology, OT environments are typically brittle, because they use old machines, we've seen windows 95, and use in some of these environments, and, you know, they become harder and harder to protect.

16:18
Well, the reason I'm asked that is because in the conference call, it seems like there's some people who are questioning what how many real clients are left. And you in a conference call, blow that up, say, let's not double what we have. There's 1000s and 1000s of people who need CrowdStrike. Right now, it's an it can be 10 times the number of customers you can currently have.

16:39
Absolutely, we're over 11,000 customers, and we're super proud of our growth on the customer count. But in the grand scheme of customers, that's a tiny fraction. If you look at some of our other competitors, or legacy competitors, over the years, they've had hundreds of 1000s of customers, when you think about all the small businesses, all the large enterprises, there is an anyone in this world who doesn't need cybersecurity big or small, you're going to need it because the threats are out there. We've seen the impact and everyone needs to protect themselves.

17:09
One last question, what would happen if the government said alright, no one's a lot the plate pay ransomware? If they do, we're going to prosecute you would that stop it?

17:17
I don't think it's going to stop it because they're just going to find another way to get paid. These folks behind ransomware and these sorts of attacks. It's a very well organized, well funded business of HR departments, they've got tech support, they've got multi language support, they're gonna find a way to get paid. And, you know, it's our job to be able to protect our customers and, and keep one step ahead of them.

17:39
All right, thank you for giving us a dose of reality. I think people just feel like that. It's one offer some weird governments. They got HR departments who could for them, and maybe they're treating their people well, while they whip our country off. George Kurtz CrowdStrike. co founder and CEO. Thank you so much for telling truth or man money. Thank you. Well, I don't know. I'm kind of stuck with a bad guys real bad. George Kurtz CrowdStrike, co founder and CEO and monies back here.

18:13
Coming on kryptos stuck in your craw. Don't make a move until you hear Kramer's take on one of the most critical crypto caveats out there. Next. Get an edge invest like a pro access CNBC live streams around the globe, unparalleled access to CNBC experts actionable investor insight and ideas start your free trial today@cnbc.com slash Pro.

18:48
I everyone's talking about cryptocurrency got a whole show tomorrow devoted to it. But we got to talk more about it. Because it's finally gotten so big that we need to start caring about the whole crypto ecosystem, not just whether it's a theory like Bitcoin, there's just too much money involved to ignore any potential vulnerabilities. Right now we've got some very smart people pointing to a major weakness in the system. I'm talking about so called stable coins. The Lars which is something called tether. These stable coins are pegged to traditional non digital assets in the US dollar bonds gold tethers grown to become the third largest cryptocurrency behind Bitcoin and Ethereum. And it's got a market cap of more than $16 billion with a big why do we care about this? Because tether is now a key source of liquidity for the entire cryptocurrency ecosystem. The irony of crypto is that most of these things are too volatile to use as currencies. Bitcoin was up about 10% which is great if you own a speculative asset, something I've recommended to you repeatedly. But that's kind of swing is terrible if you want to use Bitcoin as a medium of exchange, and that's where these stable coins like tether come in. tether More or less pegged to the dollar emphasis more or less. So you see lots of people trading between tether and Bitcoin or theorem, then using tether to conduct actual transactions often very leveraged in the last 24 hours tether accounted for roughly 14% of all Bitcoin trading volume, and nearly 16% of all theory and trading volume. Think of it as the biggest link between the crypto economy and the real economy. Now, though, incredibly thoughtful people, I'm talking about people like Timothy Massad, the former head of the Commodity Futures Trading Commission, and the guy who oversaw the Troubled Asset Relief Program during the Great Recession, are pointing out that there could be some serious flaws in the system. He's concerned about tether More on that later when we actually speak to him, and it's going to be ready for the break. And the company behind tether which is also named tether has been banned from doing business in New York by the state attorney general, that's a pretty draconian penalty given that New York is the home of Wall Street and what that means, then closer look. Now, before I get into the weeds, let me be clear, I am a huge believer and supporter of crypto, I think it is a good idea to put 5% of your portfolio in Bitcoin or aetherium. I think stable coins are a terrific idea. I have a portfolio of crypto, I'm not trying to attack crypto here, it's the opposite. I want a healthy crypto ecosystem, in part because of your investments and mine. So if there really is a problem with tether, it needs to be addressed. Maybe it needs to be routed out. Maybe transparency would make it so we're fine. So let's go over the issues. I told you tethers the link between the crypto economy the real economy, some experts are worried it's a weak link. The whole point of tether is that it's supposed to be backed by real assets. Originally, the companies behind the thing said I'm good, he's a lot of quarters, I gotta get this right. tethered currency is 100% backed by actual assets in our reserve account, and can be viewed and verified in real time. And quote, that in 2017, they started saying, quote, every tether is always backed one to one by traditional currency held in our reserves, and quote, The idea was that these were like digital dollars, you could move around even faster than regular currency. It's faster than a wire transfer. However, in early 2019, tether changed the language on its website. Quote, every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and from time to time may include other assets and receivables from loans made by tether to third parties, which may include affiliated entities and quote, now while tether still pegged one to one to the dollar, suddenly you have to wonder that pink be in jeopardy. A few months later, the New York Attorney General no slouch noticed that new language started coming after tether along with bitfenix which is this cryptocurrency exchange that's run by all the same people. These prosecutors allege that tether and bitfenix had commingled funds. Basically bitfenix lost money, so it borrowed hundreds of millions of dollars from tethers cash reserves, less than ideal, as part of the initial court proceedings tethers General Counsel revealed that their stable coin was only 74% backed by cash and equivalents. So tethers not just sitting on a big pile of cards. It's also got loans and securities, all that stuff, anything that makes it more risky. At this point, nearly half of their assets are in commercial paper, short term unsecured corporate debt. Now we don't know which corporations and even though tethers gigantic, we don't hear much about them playing in our very liquid commercial paper market, which is curious if at some point the economy goes into a tailspin, some of these corporations to pull their obligations tether might not be able to maintain that one to one pegged to the US dollar a little extreme but I thought more now earlier this year tether settled with case with the New York Attorney General and this has become a major point of controversy tether and supporters argue that it didn't do anything wrong at will the admit wrongdoing. It's true. They only got an $18 million. It naphthalene dollar slap on the wrist. That's not much. But they also got barred from trading with people in the state of New York. And when you go through the settlement, there is some wild stuff in here. First of all, the settlement agreement says that tether misrepresented the status of its reserves from late 2018 to 2019 misrepresented when they change the language on their website. Their sister copy this Be it fit X was 850 million to a Panamanian shadow bank, so they borrowed a fortune from tether. Remember both companies have the same CFO and for a while tethers coin was partially backed by that loan, although it has been paid back tether also agreed to start disclosing reserves on a quarterly basis. We got those numbers last month, but all they gave me was this one page document with two pie charts left that left more questions frankly than answers. Turns out only 3.9% of tethers reserves are an actual cash. If you want to be more generous by including treasury bills and reverse reverse repo notes. It's still only a little more than 10% just under 50% is commercial paper give don't know the names, given the size of tether that makes them one of the largest holders of commercial paper in the world. But why are the names there's nothing wrong with a stable coin backed by short term corporate debt. But we need to know whose debt we're dealing with, according to tend to the vast majority of his commercial papers rated 82 or above. I'd much rather have some actual numbers in the real issue is why not throw away too? What do we have to worry about? They'll just give us the breakdown.

25:15
Those are now telling us appointing an accounting firm in the Cayman Islands. In the Cayman Islands are beautiful. They issue an assurance opinion that gave them a clean bill of health, but that's not the same as real water. So how stable is tether? Honestly, I don't know. That's kind of the problem and tether has become a pillar of the crypto economy. Not only does it make up a huge percentage of Bitcoin aetherium chains, it's also frequently used as collateral for leverage trading. That's right. And there's a ton of leverage in the crypto system sometimes 100 to one leverage. So if there's ever a problem with tethers reserves, you can see a massive unwinding event instantly and there no regulators could step in to mitigate the damage. It's not like it's run by the Treasury Department fed. Of course, this is a low probability event, but it's not changing my belief from crypto, I'm in there both for speculation as a hedge against inflation, you would most likely only see a real run on tether if the Chinese shut down their crypto shadow economy could happen or if there's a huge downturn in the economy, jeopardizing some of that commercial paper, or if some further government investigation reveals things that the New York Attorney General somehow couldn't dig up to in two years. But given the importance of tether to the rapidly growing crypto economy we need more transparency especially as I am worried about China tether Why don't just open the kimono agree to be audited by a traditional us accounting firm, biggest not worried if China shuts down some mark their market? Bottom Line. When you get past all the complex terminology. This is a pretty simple issue, either tethers reserves or legitimate liquidity stable. That wouldn't be in question if we have more insight into what they're actually holding. That's why I'm begging them for more transparency. So we can put this whole thing to bed and erase what some very smart pro crypto people fear is the weakest unregulated link and otherwise very strong but unregulated chain. Total transparency takes the biggest words in the crypto world I love off the table, provided that what it shows is as legitimate as tether says it is, after all, that is why don't just show us when we come back more on the Curious Case of a gigantic, unregulated financial company that is so key to the crypto world as seen by Tim massive. Let's take some questions. Let's go to Alex in Maryland, Alex. Jim, pleasure to be on. So thank you. And I'm sorry, you're on the show.

27:28
Great, so great investment tips. Thank you. Talking about marathon digital ticker symbol ma Ra. Let me give you some facts. When Bitcoin was $90,000 Naira was trading above $40. It's now trading around $26 with good liquidity about 15 million trading shares per day. More recently spent some profits to increase mining power to 10.48 layman terms they're going from 30,000 miners to 100,000 miner machines. By the time all miners are operational, they'll be mining about 60 Bitcoin a day at the expense of $5,000. They've also lost in a contract with our electrical company to limit power costs. Assets include over 5500 bitcoins, obviously assuming Bitcoin saying that currently it's about $35,000 or higher. Okay.

28:26
Well, okay, look, I mean, that's just like an extreme spec on Bitcoin. I mean, to me if I want to take that rock it's interesting spec on Bitcoin. I'm not gonna say more than that, because I don't know the company. I mean, to me, if I want to know mining of Bitcoin, then it's a small part of Nvidia, because they haven't theory of mining cores at but maybe I'm too conservative for you. But I certainly blessed that if someone wants a play on crypto mining, hey, I like barrack that's a play on gold mining. Maybe a little disingenuous, alright, two things are very sure, tethers become a pillar of the crypto economy and the legitimacy of its reserves. Let's call them unclear and suboptimal, we need more transparency from them that much more Mad Money. My conversation about stable coins doesn't end here. I'm taking a closer look at the weakest link in the crypto chain with former CFTC director Tim masse, then what should you do with anecdotal evidence to this market? I'm gonna give you my take. And of course all your calls rapid Park tonight's edition of the lightning round. So stay with Kramer

29:42
just before the break that gave that primmer what many people consider to be the biggest risk to the crypto economy, the concerns about tether and also some other so called stable coins that are more or less pegged to real world assets. But this is a thorny two sided issue though. So I want to dig deeper with Timothy Massad. He's the Former Chairman of the commodities future trading commission, and the man who oversaw the Troubled Asset Relief Program at the Treasury Department during the financial crisis. It's now a research fellow at Harvard's Kennedy School of Government. This big massive published a piece arguing that if there's some kind of shock, these stable coins might experience a crisis, akin to what happened when a major money market fund broke the buck so to speak in 2008 because they owned a bunch of Lehman Brothers paper that suddenly became your worthless back then the Treasury Department saved the day by backstopping everything now, I gotta say, I don't see them doing that for cryptocurrency, because this topic is too important to ignore. And because I like cryptocurrency so much. Let's take a closer look with Tim Masson. To get his read on the tether situation. Mr. Massad, welcome back to Mad Money.

30:47
You ever it's great to be here. Thank you so much for having

30:49
both. Thank you, Tim. You know, I like crypto so much. And when I started reading about this tether, I said, Wow, I got to go to a man knows more than I do to find out whether the risk is real, and how it could really hurt people's let's say holdings in in in crypto, but more importantly, the world of crypto and whether it's stable enough because of tether, right?

31:14
Well, you know, tether has become very important in the plumbing of the crypto markets, you know, and it's grown to a $60 billion market cap and look, you know, some people think all of crypto is like gambling, right? And I wouldn't say that, but in that analogy, tethers kind of like the chips you get, you know, when you go to the cashier, and it makes it a lot easier to move from game to game. And you know, you don't you don't keep cashing in and out of dollars, you just move your value around each other. But the problem is what tether is doing with the money that you use to purchase the coins. And we now have a little bit of disclosure about that. And while in one way you could think of it like a money market fund, one token equals $1. It's supposed to be invested in very stable things. In fact, you know, they're investing in stuff that it's not clear whether they could really liquidate it quickly and liquidated at full value. So you know, as long as a lot of people aren't demanding their money back, there's not an issue. But if suddenly a lot of people did, I'm concerned there wouldn't be an issue.

32:17
Now when I, when I get the statements from the very nice people together, they tell me, Look, we've got much more transparency, you realize you've changed a lot. But then I read that New York, the ag settlement, when they basically got kicked out of Wall Street of New York, and to me 10, that's highly unusual. And you went to law school with me, in New York decides you can't do business here. Shouldn't we be more worried that most people are about this?

32:45
I think we should be and you know, some people might say, Oh, well, the ag didn't, didn't impose that bigger, fine. And that's true. But the important thing is the ag required some disclosure. And now when you look at that disclosure, that's when you get concerned, you know, 13% of their assets, this is 13% of 16 million is invested in secured loans, we have no idea what kind of loans those are or who they're to. Now they claim 50% is in commercial paper. That's a lot of commercial paper. But you know, I've talked to a couple of people who are involved in trading commercial paper, they're not sure they see tether in the market. So I don't know what commercial paper tether is buying. But you know, it's all a concern. So I think we need more disclosure.

33:28
Now, one of the things I think people are going to say is, who cares? I mean, this thing's not that big. Kim, I gotta tell you, I first heard this, I was shocked at how big tethers Yeah, yeah,

33:39
no, that's right. I mean, a lot of people would say all crypto, you know, it's it's let the buyer beware. It's caveat. And I don't take that view. First of all, you know, I think integrity in our financial markets is important, number one, number two, you never know, the linkages. And increasingly, the crypto world is more and more connected to the mainstream financial sector. And tether really is kind of tied into our payment system, if you will. It's a it's a digital dollar, in many ways. So I think we do need to be concerned. And I think, you know, we need a better framework of regulation for tether and other stable coins. And that could be like a money market fund, where you know, you can only claim it to stable coin. If you invest the money in highly high quality liquid assets. It could be bringing it within the banking sector, where it has to be issued with a bank and the bank has to have it backed by deposits. You can even say those deposits have to be parked at the Fed. There are other in between measures as well, but we need a better framework so that we can just be sure that there can't be a run on something like this. Well,

34:47
what do we do we've got a world that that really doesn't want regulation because they think regulation frankly, is not worth them prices printed on so to speak. And then revenue people you wouldn't I mean, I I like crypto very much when I started reading about this, I immediately called where I keep my crypto. And I said you're not involved with Canada, are you? And they said, No, what I said, Well, that's a relief to me. At the same time, there's most people say that I'm just being ridiculous that this is no chance that this could cause a risk. So Tim, how do we how do we really weigh the risks of the storm thing?

35:25
Right? Well, and you know, I think there are a lot of people holding tether who very much like the fact that it's not regulated that there's some opacity to it, you know, you don't know for sure what's going on, particularly because a lot of a lot of the money going into tether is coming from overseas, perhaps from countries that have, you know, capital controls or regulatory restrictions, that would not allow people to do what they're doing. Look, my view is always that, that in the long run a sound regulatory framework is better for financial markets. We've seen this movie over and over, you know, where people said, Oh, not to worry, you know, subprime mortgages and the derivatives on those, you know, it's small, it's outside of the mainstream banking system. And, you know, look what happened. I'm not saying we're due for that with crypto or with tether. I'm just saying, I think a sounder framework of regulation would be better in the long run for the development of this country. And I'm, you know, I'm perfectly happy that people invest in crypto, I don't know where it's going. But I think the technology is exciting. There could be potentially very important applications of the technology. I mean, look, we're suddenly talking about central bank digital currencies, that wouldn't have happened. But for Bitcoin, which led to things like stable coins, which is now causing, you know, central banks around the world to think about central bank digital currency. So that's all good financial innovation is good. But we need a good regulatory framework around.

36:55
Well, let's just leave it at that because that's exactly what I think would make everyone more comfortable with crypto. And that's what we need. I want to thank Tim Masson, former CFTC chairman and now Harvard Kennedy School research fellow. And yes, an old friend and classmate at Harvard Law. Tim, great to see you.

37:12
Jim, great to see you. Thank you so much, dad. You may have monies back get just chill. Chill master J. The chill man is in the house. He's happy. The lightning round is coming up when bad money returns. It is. And then No, it now is over. Are you ready? To go to march in Florida mark. Hi, Jim. It's nice to have you back. Oh, thank you Mark. What's going on? It's nice vacation with the family and what's going on?

37:53
Just one quick note First, the a woman called you yesterday and said she was calling from Dallas Cowboys country. The look on your face was priceless. Now, my question is it's an issue you had to see. You'll have reflux on recently and everything sounded great. I bought some and it jumped up. But with no bad news available. It's plummeted 12 and a half percent from its high on Friday. Should I ring the register?

38:20
I mean, there was some sort of music publisher suit here but what matters is I said when I was in Hampton with Scott with judge it's just a great long term story. I walk over how expensive is Prometheus and a great story Marsh in Ohio Marcia hi boo Yeah.

38:38
I got a sock I've had since before the pandemic and it's done nothing gpn Global payments network.

38:46
People love payments, stocks. I mean, I understand that they all have papers. I this is a very good company global payments. I'm recommending it is a burn could cut the IBM fire. Let's go to Stephen in New York, Steven. Hey, Jim, what's going on my brother? Not much going on there. Chief what's happening with you?

39:07
I'm very blessed and excited to be here. Special shout out to you my brother. Thank you. So I wanted to ask you about mine medicine. It's

39:18
mine medicine. I don't know my medicine Ben Scotto. My research director help me mine medicine. We got to get on that one now. Let's go to Joe in New York. Joe.

39:30
Hey, Jen, what's up? Good. Good to talk to you. Same joke from Brooklyn. Born San Miguel well we'll have a chicken finger together it's bad it's what's going on. Iowa Stryker Corporation strikers an excellent copy.

39:47
I like the device business very much I happen to like Medtronic was in Stryker, but that's a good one. Now we're gonna go to Nathan in Pennsylvania

39:54
and Nathan. Hey, Jim. I want to start off by letting you know that you are by far the best at to cater I've ever had my own

40:01
life. And that's the goal. Thank you. Thank you very much. must be from the east part of Pennsylvania. He knows that What's up? Hey, so what do you think of STEM incorporated? We looked into STEM into energy storage comm we liked it, we thought it's pretty proprietary. Some people say, Jim, you're a little aggressive on it, but it's kind of nice little run here. And that linjen version of that.

40:27
lightning round is sponsored by TD Ameritrade coming up, when it comes to your financial future, leave the anecdote stays up, tip of the cap to hard data, and the money it can make you if you know how to use it. Next.

40:53
In this business, we're taught that anecdotal information is worthless. But when you put enough anecdotes together, that's not just a bunch of disconnected stories. It's a data set, and it deserves to be taken seriously so that you can act on it even and buy a stock. So let me give you my anecdotes. Last night I interviewed a legend Bobby Cota who's run Activision Blizzard for 30 years. I've been 40 years ago, it hadn't pegged as genius immediately, but not this much of a genius. He and his team have created a series of incredible products that turn out to be more than just video games, and more than just a game of war. They're a new mode of human interaction. They're a way to stay in touch with people, even when you're separated by long distances. Not long after we talked about Call of Duty on air, I found my world abuzz with people wanting to tell me how they stay close with faraway friends and family members who they would have lost touch with not for the game. Everyone's my executive producers husband and their son to her husband's brother and his son. My stage director tells me doing the same thing that I go to bar same again on my small plate, Mexican restaurant and broken which I'll be tonight, and people tell me Wait a second, they to play the game with friends or relatives who they would have won since was touch with me, this has nothing to do with COVID. I didn't notice. So I'm not a gamer. It's not my world. But when I get that many people telling me about something, it makes me think that this is more than just an ephemeral phenomena, the more and when COVID ends. It's a new way to hang out with people who might be on the other side of the world. Why does this matter? Because it's a huge positive. Activision Blizzard stock has been stuck in a post COVID rut, meaning the big institutional money managers don't want to go near it. Because they believe the whole gaming industry will get hammered. Now that people can start going out again. They think the comparisons will be too difficult. The trajectory could put. I don't know i don't i don't i don't buy this anymore. When so many people in my own little world talk about how they've been playing to keep in touch with their families. Do you think this is smuggling in? Do you seriously believe the people who tasted these amazing lifelike games will say no, that's it time to put down the controller I'm calling them movies and walk as much as I like what out of marriage doing AMC to raise capital. I don't think that's going to occur. gaming's not going anywhere except for maybe up now I have the same thing happened with RVs and motorhomes. I do a piece about RVs featuring Thor industries yesterday, and I quickly discover a CEO I know who took an Airstream from Minneapolis to Palm Springs. He loved it. Sure the inspiration may have been COVID. But that rentals a powerful testament to the growth of these homes on wheels and yes for wealthy people. It wouldn't matter if hotels had kept blue prices stable, been able to maintain their cleanliness. I don't think they've done either. Then I learned that a close friend of mines family is tricking out old air streams marking them up finding eager buyers. This is post COVID people not during lockdown the changes real yet the stock of for industries the largest player in the industry. It certainly doesn't reflect this to adoption. Right now. Their backlog of wars equals an entire year's worth of production, but the stock's down 36 bucks from its highs and it's crazy. Now again, this could all be anecdotal. A bunch of people told me they like Call of Duty and other couple folks told me that I Garvey's maybe it's all meaningless. Then again, two years ago everyone was asking me about Bitcoin I dismissed it as meaningless. Well, that was a mistake. Good thing I decided it was empirical 12,000 hours. I don't want you to miss the next big thing because I worried my evidence was just too anecdotal, especially when the underlying fundamentals are just so darn strong. I'd like to say there's always a bull market somewhere. And I promise try to find it just for you right here on Mad Money. I'm Jim Cramer.