Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Tell me about New Orleans. I went to New Orleans
Speaker 2: where the streets sticky little yeah, and like get out
Speaker 2: of the knees and like the floor.
Speaker 3: It was scienti e. Sampling of the streets.
Speaker 2: How is the uh the vibe? The conference?
Speaker 3: It was good, you know, like I guess that I
Speaker 3: had this image of my mind in my mind if
Speaker 3: it's like a super fun conference and then at the
Speaker 3: end of the day it's an I'm a night lock conference.
Speaker 2: You know, I don't know what you're saying.
Speaker 3: We'll leave it to the readers, the listeners imagination.
Speaker 2: Well, I was in Las.
Speaker 1: Vegas, also sticky.
Speaker 2: Yes, Las Vegas is also grim, but.
Speaker 3: It was nice, like I don't want.
Speaker 2: Yeah, New Orleans is beautiful.
Speaker 3: Bourbon Street is a strange place, but nice. Yeah, it's good.
Speaker 2: There's mules pulling carriages.
Speaker 3: I didn't see mules pulling carriages a little like street car,
Speaker 3: like a little tram.
Speaker 2: Yeah, there was none of that in Las Vegas. But
Speaker 2: we went to the Titanic Museum, which for some reason
Speaker 2: is in Las Vegas, famously land locked, and it was
Speaker 2: a great conference. Got to talk shop with a lot
Speaker 2: of et F folks a lot of fans of the podcast, Yeah,
Speaker 2: which is cute.
Speaker 3: They're like, Katie, we like the podcast. All that we
Speaker 3: ask is more ETF content.
Speaker 2: Actually, yes, yeah, I did text that to you. Yeah,
Speaker 2: that was cute. Any other news, Yeah, I bought a
Speaker 2: house a house. Yeah, well, nothing's been signed, but they
Speaker 2: selected our offers, so we're really thrilled.
Speaker 3: Congratulation.
Speaker 2: Thank you. That's fun to laugh with a good friend.
Speaker 2: Should I tell the listeners that I'm pregnant, You're going
Speaker 2: to say.
Speaker 3: Should you tell the listeners you're a street address, but
Speaker 3: both the address of your house and the name and
Speaker 3: SOUCHI a security number.
Speaker 1: Of one on one.
Speaker 2: It doesn't No, she's not across the finish.
Speaker 3: Congratulations in your house and your pregnancy.
Speaker 4: Thank you.
Speaker 3: It was like, really, all the listeners where to send
Speaker 3: the baby gifts?
Speaker 2: Please don't send me anything, Please don't do that. But yeah,
Speaker 2: I needed a place to live because our rent, our
Speaker 2: lease is up at the end of May, and then
Speaker 2: I'm doing August. I love deadlines.
Speaker 3: We're gonna say the baby's name on this podcast.
Speaker 4: Julia.
Speaker 2: Her name is Julia?
Speaker 1: Really?
Speaker 2: Yeah? Have I not told you that.
Speaker 1: I don't know my mother's name is.
Speaker 3: I never do that.
Speaker 2: Yeah, I don't really get that. I've been cooking up
Speaker 2: this name for like the past decade. So I'm excited
Speaker 2: to finally have something to name Julia my mother's name is.
Speaker 4: I know.
Speaker 2: Actually I love the name August. Gus for sure. I
Speaker 2: have a horse name that my husband thinks that's weird.
Speaker 3: But it's weird because you have a horse named Gus,
Speaker 3: or because if you have a boy, you're going to
Speaker 3: give the boy the name of the horse.
Speaker 2: We're going to name a child after horse. Yeah, And
Speaker 2: he's like, we can't do that.
Speaker 3: In some sense, this is the least surprising thing I've
Speaker 3: ever heard.
Speaker 2: Yeah, but you know, it's just such a handsome name. August.
Speaker 3: Yeah. Good for a horse.
Speaker 2: Yeah, come on, it's a multi purpose.
Speaker 3: Hello, and welcome to the Money Stuff Podcast. You're a
Speaker 3: weekly podcast where you talk about stuff related to money.
Speaker 3: I'm Matt Levine and I read the Money Stuff column
Speaker 3: for Bloomberg Opinion.
Speaker 2: And I'm Katie Greifeld, a reporter for Bloomberg News and
Speaker 2: an anchor for Bloomberg Television.
Speaker 3: So we had a podcast last week about private credit.
Speaker 1: Huh, we sure did this week?
Speaker 2: Well, you can't get away from it. It's like every
Speaker 2: other Readspike on the Terminal is about private credit.
Speaker 3: Yeah. So what I'm seeing on our podcast last week
Speaker 3: was like, it's the bigges. It's the most important or
Speaker 3: most interesting or biggest story in finance. And who was
Speaker 3: it who said that? As a golden executive who said
Speaker 3: that that private the private markets clients love the Iran
Speaker 3: war because it destrides from their problems, which, yeah, sort
Speaker 3: of thing you don't say out loud, but.
Speaker 2: He did, and we're thankful for it.
Speaker 3: But here on this podcast, we're sticking.
Speaker 1: To private credit.
Speaker 2: Yeah, Apollo and Aries those were the big ones this week.
Speaker 3: Yeah, I think by it said it's increasing, right, the
Speaker 3: more bad headlines there are about with their all requests
Speaker 3: and bad redemption requests, the more the next one gets
Speaker 3: a bigger redemption request. So now Apollo and Areas both
Speaker 3: got like eleven plus percent redemption requests from their private
Speaker 3: business of album companies. Yeah, and they both stuck to
Speaker 3: their guns and said we'll give you back five percent
Speaker 3: and the rest you can come back next time.
Speaker 2: Yeah.
Speaker 3: So you know that's uh, that seems to be the.
Speaker 2: Playbook, which for everyone except that one.
Speaker 3: Plus yeah, a couple. There are a couple of exceptions.
Speaker 3: There's the Blackstone one where they pass the hat and
Speaker 3: cast out like nine percent by like raising money from
Speaker 3: Blackstone itself and some of its employees. And there's also
Speaker 3: like the Blue Owl obedc two to one, which is
Speaker 3: like they sort of limited it, but they also said
Speaker 3: they're winding it down and returning more capital, so it's
Speaker 3: like kind of a mixed bag. But yeah, most of them,
Speaker 3: I said, look, these are long term SI liquid vehicles.
Speaker 1: Yeah, the deal is.
Speaker 3: That you are locking up your money in illiquid assets
Speaker 3: in order to earn the higher returns that are maybe
Speaker 3: promised to liquid assets. And you can get a little
Speaker 3: bit of your money out, but like you can't get
Speaker 3: a lot of them your runny out. And that was
Speaker 3: the deal. How do you think, said in an interview.
Speaker 3: It's not like it's on page ninety two of the perspectives,
Speaker 3: it's on page one.
Speaker 1: Yeah, it's true, And.
Speaker 3: Like they were like, yeah, that's the deal. And if
Speaker 3: we if we cast more people out, that would be
Speaker 3: failing in our funuciar dity to the people who stay in,
Speaker 3: which is true for two reasons. One, it's like, oh,
Speaker 3: we have this like liquid stuff, and we're not gonna
Speaker 3: we don't want to do fire sales, and so we're
Speaker 3: going to keep the stuff and cash up people a
Speaker 3: little bit, but not sell loans to cash more people out.
Speaker 3: But the only reason it's true is, like, you know,
Speaker 3: this is what we talked about with the buzz. People
Speaker 3: have a lot of doubts about the marks and these funds. Yeah,
Speaker 3: people have a lot of doubts that when a private
Speaker 3: credit fund says it's NAV is whatever, that that NAV
Speaker 3: reflects like the actual market value of the loans. And
Speaker 3: so one concern you'd have is if you're running one
Speaker 3: of these funds is like if people come to you
Speaker 3: to cash out and you cash them at you cash
Speaker 3: them out at NAV, and if the NAV is way
Speaker 3: too high, then you're cashing them at way too high.
Speaker 3: You're giving them too much value, and then people who
Speaker 3: stay in the fund are getting diluted by you cashing
Speaker 3: these people out. And so when these fund managers say,
Speaker 3: is part of you know, our job as FIDI shares
Speaker 3: the people staying in the fund, we can't cash out
Speaker 3: more than five percent. Like that's true, but it's also
Speaker 3: like a little bit of a worrying thing to say,
Speaker 3: because it suggests that, like you also might be a
Speaker 3: little bit worried about your iyvay.
Speaker 4: Yeah.
Speaker 2: Well, so if you had super large redemptions that you redeemed,
Speaker 2: what are you selling to meet them? There was a
Speaker 2: quote in a Bloomberg story out this week from the
Speaker 2: global head of credit strategy over at City who said
Speaker 2: that if you start meeting redemptions that are too large,
Speaker 2: what does the surviving portfolio start to look like?
Speaker 3: It's like the least liquid. Yeah, weirdest cats and dogs
Speaker 3: in the portfolio probably right.
Speaker 2: Yeah, so that's fair.
Speaker 3: It is fair. I have a lot of sympathy with
Speaker 3: iry fix saying it's on page one of the perspective.
Speaker 3: It is right.
Speaker 2: Yeah, that's what this deal is.
Speaker 3: This is I liquid stuff. The role of this is
Speaker 3: this is you are a wealthy person. A small portion
Speaker 3: of your money is in ill liquid stuff that you
Speaker 3: won't need for years, and this is that, right, and
Speaker 3: so you shouldn't need the money. The private credit fund
Speaker 3: is in the business of writing through periods of volatility
Speaker 3: by not giving your money. Pack's like becoming clear this
Speaker 3: is the product working as intended. It's just that you know,
Speaker 3: people are mad about it.
Speaker 2: Yeah, functioning as sold.
Speaker 3: There's a great Bloomberg article. You know, there's like a
Speaker 3: phrase liquidity illusion, Yeah, which just an annoying phrase. A
Speaker 3: great Bloomberg article about people talking about liquidity confusion. Yeah,
Speaker 3: where they're like, you know, they quite like Blue Owl
Speaker 3: and Apollo people saying basically sort of saying, yeah, we
Speaker 3: don't know how these things were sold. Maybe the advisors
Speaker 3: didn't maybe highlight this enough. This is again what I
Speaker 3: was talking about last year.
Speaker 2: Yeah, I don't know, man, we did have that conversation,
Speaker 2: like where was the potential point of miscommunication? I have
Speaker 2: one of the Apollo quotes in front of me, so
Speaker 2: I'm going to read it. This was coming from Jim
Speaker 2: Zelter speaking at a conference that maybe the industry may
Speaker 2: have failed to clearly explain liquidity restrictions. Quote, certain distribution
Speaker 2: channels in certain parts of the globe may have not
Speaker 2: fully communicated the risks inherent to the asset class, he
Speaker 2: said in Melbourne. And so you have a mismatch right
Speaker 2: now in shorter term redemptions. Sheesh, I don't know what
Speaker 2: do you do about that certain.
Speaker 3: Parts of the globe. Is interesting because my impression is
Speaker 3: like that part of the globe is the USA, but
Speaker 3: I don't really know. My impression is Financial Advisor sold
Speaker 3: product that like there are a lot of like dentists
Speaker 3: in the US who are trying to get out of
Speaker 3: these things. Those dentists people were like literally sending made
Speaker 3: dentist forums discussing. Yeah, the fighter's private credit funds.
Speaker 2: We talked about this. I think when it comes to
Speaker 2: the Blackstone example, like Okay, yes they are functioning as designs,
Speaker 2: but it still doesn't feel good necessarily, And when you
Speaker 2: think about future fund raising, it's certainly the.
Speaker 3: Future fundraising is really interesting, right, One like fascinating thing
Speaker 3: and I wrote about this this week is that all
Speaker 3: these funds are getting like big redemption requests. They're also
Speaker 3: getting big ish inflows.
Speaker 1: Yeah, not as big for now for.
Speaker 3: Now, yeah, but like like really now now you're like
Speaker 3: I want in at NAV. It's just an interesting vibe
Speaker 3: because they're clearly people who are looking around and saying
Speaker 3: this is oversold, this is overblown, Like it's not as
Speaker 3: bad as it seems. We're gonna buy at the lows, right. So,
Speaker 3: like BoA's wine scene is like I'll pay sixty five
Speaker 3: cents on the dog, but the people who are sending
Speaker 3: their checks to these funds right now are paying NAVY.
Speaker 3: They're not buying a discounts, they're not buying it lows.
Speaker 3: They are just like, yeah, we trust that it's fine
Speaker 3: what we want in and it's just sort of a strange,
Speaker 3: like like non clearing market, right, Like all these people
Speaker 3: want out at NAV, they can't all get out. Other
Speaker 3: people want in at NAV. Why.
Speaker 2: I mean, there's been five billion dollars of inflows so
Speaker 2: far this quarter.
Speaker 3: Yeah, I think both the Apollo Fund and the Blackstone
Speaker 3: Fund that we talked about, they both had inflos that
Speaker 3: were kind of around the amount that they actually cashed out.
Speaker 3: So like the Apollo Fund got like around five percent
Speaker 3: infos paid out about five percent outflows. You know, got
Speaker 3: requests for like eleven percent outflows, and that's like seems
Speaker 3: to be kind of normal. Like their infos and outflows
Speaker 3: roughly matched when you cut out the outflows they didn't
Speaker 3: actually pay out.
Speaker 2: Yeah, I will say, I mean this quarter, we don't
Speaker 2: know what in the quarter, that's right, Yeah, that's right.
Speaker 2: Did any of them come in the last four weeks?
Speaker 2: I would like to know did you see this story?
Speaker 2: JP Morgan planning a private credit fund that allows seven
Speaker 2: point five percent redemption.
Speaker 3: That's a exelling, but that's like the credit card that
Speaker 3: has got to Yeah, I don't know that's what you
Speaker 3: want to lead with.
Speaker 2: They're leading with it.
Speaker 1: Well, I don't know.
Speaker 3: If that's that reassuring whatever.
Speaker 2: It's also public and private credit, so some of it
Speaker 2: will be in private.
Speaker 3: But the future fundraising stuff is really interesting, right because
Speaker 3: you know, two months ago, the whole story in private
Speaker 3: credit and private markets generally, it was like, we're going
Speaker 3: to open up the frown case. We're going to raise trillions.
Speaker 2: Of dollars from put this in your retirement accounts, and
Speaker 2: like this does not undermine the case for pretty good
Speaker 2: in your retirement account.
Speaker 3: It doesn't, but it does.
Speaker 2: Perception is everything, yes, everything in this business. And I
Speaker 2: don't know when it comes to future fund raising, maybe
Speaker 2: seven and a half percent redemption on a totally basis,
Speaker 2: maybe that'll ancise some of these you know word skeptical investors.
Speaker 3: Like somebody email me like, if this didn't exist, there
Speaker 3: weren't these BDCs, if there hadn't been this rise in
Speaker 3: private credit, all this stuff, all these loans would more
Speaker 3: or less exist in like highyield funds. All these companies
Speaker 3: that borrow from you know, Apollo and Areas and HPS
Speaker 3: and whatever would be borrowing from the bank loan or
Speaker 3: the high yield market, and there'd be like CLO funds
Speaker 3: and high yield funds would own the debt and when
Speaker 3: people got nervous about software apocalypse and whatever, they would
Speaker 3: cash out of those funds, and those funds would sell
Speaker 3: the debt and the price of the debt would go down,
Speaker 3: and we would have like a different possibly also bad situation. Right,
Speaker 3: Spreads would widen, prices would go down, people would get nervous,
Speaker 3: people would go like, you know, the debt of these
Speaker 3: companies is collapsing, but they'd all get their money back
Speaker 3: at whatever the mark was. You know, here it's like
Speaker 3: there hasn't been fi ourselves at the market is still
Speaker 3: functioning on the loan side, and then on the fund side,
Speaker 3: everyone's complaining they can't get the money out.
Speaker 4: Yeah.
Speaker 3: Do you want to turn tractly to Larry Think?
Speaker 2: Yeah, actually you mentioned Larry Think, and uh, you know,
Speaker 2: he's had a lot to say in the past week,
Speaker 2: some of it just in the written word. And you'll
Speaker 2: never believe this. He thinks that Americans should buy more stocks.
Speaker 3: It's so great I wrote about this. He's right in
Speaker 3: a very conceptual way, but also like as an index
Speaker 3: one manager. It is very much his book. But like
Speaker 3: you know, he wrote the letter as annual chairman's letter
Speaker 3: to investors. What he talks about, what's upon a time
Speaker 3: where we talked about ESG.
Speaker 2: Now it's talked about the climate.
Speaker 3: He talks about Yeah, like whatever's top of mind this year?
Speaker 3: It is neither iran nor private credit. Oh it is
Speaker 3: AIE a big popular top of mind thing. And he's like, yeah,
Speaker 3: what's going to happen with AI. It's going to put
Speaker 3: a lot of people out of work, you know, And
Speaker 3: it's like great classic stuff, right, It's like people are
Speaker 3: worried that AI is going to take all the jobs.
Speaker 3: What does it mean for AD to take all the jobs? Well,
Speaker 3: it means you don't have a job, and it also
Speaker 3: means that like the money that you would have gotten
Speaker 3: paid goes somewhere, and it probably goes to corporate profits.
Speaker 3: And so he writes in the letter, when we talk
Speaker 3: about the economic disruption of AI, most of the conversation
Speaker 3: is about jobs. But history suggests that transformative technologies create
Speaker 3: enormous value, and much of that value accrues to the
Speaker 3: companies that build and deploy them into the investors who
Speaker 3: own them. So it's like, look, in the future. He
Speaker 3: doesn't say this, I say this. In the future, there
Speaker 3: will be no jobs, but instead of jobs, there will
Speaker 3: be corporate profits. And so you as a person should
Speaker 3: transition from having a job to owning the shares of
Speaker 3: the companies that will make all the profits. How can
Speaker 3: you do that, Well, flacrock has index.
Speaker 1: Ones good news, good news.
Speaker 3: So I'm parodying this, but I also the kind of
Speaker 3: think it's true, right, I mean, if you were really
Speaker 3: worried about AI like significantly displacing human labor, right, that's
Speaker 3: a good problem, right, Like in a world where like
Speaker 3: robots do all of our work for us and we
Speaker 3: don't have to work, and we sit around and just.
Speaker 2: Like eat bon bons.
Speaker 3: Yeah, they consume the production that the robots produce. That's
Speaker 3: great in the aggregate, but then it's like, if you
Speaker 3: don't have any way to pay for the production that
Speaker 3: the robots produced, then that's bad for you. Yeah, And
Speaker 3: so how do you do that, Well, you give everyone
Speaker 3: a share in the companies that own the robots and
Speaker 3: then you're fine, and like how you do that? A
Speaker 3: classic story is universal basic income, which is basically like
Speaker 3: the government takes some money from the robot companies and
Speaker 3: gives it to you so you can pay for food
Speaker 3: and stuff. But like you know, they call that universal
Speaker 3: basic index fund ownership in other ways, like make sure
Speaker 3: that everyone owns a share of the index fund, and
Speaker 3: the index fund owns the companies that own the robots,
Speaker 3: and then it's fun.
Speaker 2: Yeah, well while there are still jobs. One of things
Speaker 2: proposals was that employers should basically set up emergency savings
Speaker 2: accounts of up to twenty five hundred dollars so that
Speaker 2: their staff can invest in the markets, which was slightly interesting.
Speaker 2: It's like a private side answer to Trump accounts or
Speaker 2: something along those lines, right, I mean.
Speaker 3: Like all this stuff is like it's sounds like aggreate.
Speaker 3: Conceptual level, it's like, yeah, well, all on the robots
Speaker 3: and then it'll be great. But then it's on practical level,
Speaker 3: it's like you'll have a twenty five hundred dollars emergency
Speaker 3: fund that will and share it on the robots, and
Speaker 3: then like, okay, how will you pay for food for
Speaker 3: the rest of your life.
Speaker 1: If one has jobs, don't worry about it.
Speaker 2: I will say, it's very easy to have the cynical
Speaker 2: take that. Yes, this is Larry Fink talking his own book, but.
Speaker 3: It's a good book. I mean his book is like
Speaker 3: everyone should own like a share of the economy, which
Speaker 3: like it, it's like a fine book.
Speaker 1: Yeah, but also propositions his.
Speaker 2: Starting point that AI is going to exacerbate wealth inequality.
Speaker 2: That's not controversial, you know, like silly.
Speaker 3: Version of it, which is that there will be no
Speaker 3: one will have any jobs anymore and we'll just eat
Speaker 3: what the robots produce. But like the non silly version
Speaker 3: is like, yeah, they'll be like you know, there'll be
Speaker 3: winners and losers from A.
Speaker 2: Yeah.
Speaker 3: Though, by the way, like exascerate inequality, it's unclear, like
Speaker 3: exactly what the dynamics are, right, And so one thing
Speaker 3: he writes about in the letter is that like the
Speaker 3: skilled trades, there are jobs that will be displaced by AI. Yeah,
Speaker 3: there'll be more and less displaced by AI, and like
Speaker 3: plumbers and electricians will be less displaced by AI. And
Speaker 3: in fact, you'll need a lot of electricians to maintain
Speaker 3: the data centers. Yeah, and like podcasters and index fund
Speaker 3: managers will be more displaced by AI, and so you know,
Speaker 3: it's unclear exactly how the inequality runs, but like you know,
Speaker 3: Mark Zuckerberg will do great.
Speaker 2: Yeah good, Just worried. But I was speaking to a
Speaker 2: Lapshaw this week. He co wrote the Sacrini piece that
Speaker 2: tanked the markets that one day in February. I was
Speaker 2: on vacation. He wrote a part three this week, and
Speaker 2: we talked to him on the television.
Speaker 3: Fair one.
Speaker 2: No, I mean we talked about it. So he had
Speaker 2: an interesting one. I don't know, I feel like part
Speaker 2: two was the one that really was it part two?
Speaker 2: But yeah, yeah, I was on vacation, so you know part.
Speaker 3: One was like the hipster breakfast that nobody read.
Speaker 2: Yeah, yeah, I was on vacation. So I was like,
Speaker 2: I'll just let this blow over. Fine, and then there
Speaker 2: was a war anyway, So he wrote that the AI
Speaker 2: complex and the consumer economy are increasingly on opposite sides
Speaker 2: of the same trade. Every investment today in an AI
Speaker 2: company or beneficiary carries an implicit short on the consumer economy,
Speaker 2: and I thought that was kind of interesting.
Speaker 3: What does that mean consumer economy?
Speaker 2: Because basically, if you're replacing human workers. That's a dollar
Speaker 2: of household income that's lost, so people will have less
Speaker 2: money to spend.
Speaker 3: I don't think that's an entirely coherent macro vision. I think, like,
Speaker 3: you know, this is what I think would say, like,
Speaker 3: in a world where AI takes over all jobs and
Speaker 3: therefore no people have income to pay for consumption, that's
Speaker 3: not good for open AI. They're good for like Nvidio's
Speaker 3: business model, Like you need someone to pay for the consumption,
Speaker 3: and so the sort of rejiggering of the economy to
Speaker 3: allow people to pay for the consumption in this world
Speaker 3: or no one has any jobs is a interesting and like,
Speaker 3: you know, a little bit stupid question, right, because it's
Speaker 3: all sort of like fad to say at this point,
Speaker 3: But like that's what I think is ready about, Like
Speaker 3: how do we restructure the economies that when no one
Speaker 3: has a job, they can still pay for consumption?
Speaker 4: Yeah?
Speaker 2: I mean, to this man's credit, he does right that
Speaker 2: this is not sustainable and it's not something that the
Speaker 2: AI complex, investors or society should want.
Speaker 1: Right.
Speaker 3: So, right, if you're open ai, you need people to
Speaker 3: pay twenty bucks a month to chat to your porn bot, right, Yeah,
Speaker 3: you need. That was a joke. They've they've pulled the
Speaker 3: porn bot.
Speaker 2: But yeah, thank you, thank you for saying that.
Speaker 3: But uh, you need buyers, consumers, and if it displaces
Speaker 3: everyone from their jobs, this is why, like Sam Altman
Speaker 3: talks about universal basic income, it's the same thing.
Speaker 2: It's Andrew Yang. Yeah, well, sure put some respect on
Speaker 2: his name.
Speaker 3: He doesn't run an AI company, but yes he might.
Speaker 2: Probably it's gonna be interesting to get back to Larry
Speaker 2: Think's annual letter for like two years straight. He was
Speaker 2: obviously hot on the climate. We don't talk about.
Speaker 1: ESG anymore, I know.
Speaker 2: So maybe this is going to solve all the doom
Speaker 2: and gloom.
Speaker 3: Uh, it's always like it's related to the ESG stuff, right.
Speaker 3: It's like Larry Think is in some deep sense like
Speaker 3: an index funded manager right at his background and like whatever,
Speaker 3: he sits atop this giant conflex that owns everything, and
Speaker 3: so he thinks about the world as a guy who
Speaker 3: owns everything, right, and so this year he's writing about
Speaker 3: everyone should own everything. But in previous years he's like,
Speaker 3: you know, if you're someone who owns everything, you can't
Speaker 3: be like focused on the cash those of one particular
Speaker 3: company you have to think about like society as a whole,
Speaker 3: and so YESG was an early way to do that
Speaker 3: where it's like, you know, the oceans rise, they'll wash
Speaker 3: away all by companies. Let's not have that, right, And
Speaker 3: they're like, is a different variant on a similar sort
Speaker 3: of way.
Speaker 2: Of thinking, Well, we'll reflect on this in two years.
Speaker 2: Maybe he top.
Speaker 3: Ticked it, maybe we'll go back to Yes.
Speaker 2: Would be so fun if you just continue.
Speaker 3: Right, gets selected and it's like, you know, it's really important,
Speaker 3: it's climate change.
Speaker 2: We're back.
Speaker 3: The Information reported that SpaceX might file to go public
Speaker 3: this week.
Speaker 1: Yeah, it hasn't happened yet.
Speaker 3: Well, actually they could. They might be able to file
Speaker 3: confidential aner. I don't think it's.
Speaker 2: Happened yet, but yeah, it's Thursday, so they have, you know,
Speaker 2: a little bit of time left in this week. Bloomberg
Speaker 2: News has reported this month, Yeah, such.
Speaker 3: Was almost the same as this week.
Speaker 2: Yeah, that's true. Bloomberg News also reported that now they're
Speaker 2: looking to raise seventy five billion dollars. Yeah, I'm wonder
Speaker 2: how high this number can go because the last figure
Speaker 2: that Bloomberg News reported was like fifty billion dollars Yeah.
Speaker 3: The interesting thing is, like it's not even the fifty
Speaker 3: or seventy five or whatever billion that is big. Like
Speaker 3: what's big is that there are a lot of investors
Speaker 3: who have written pretty big tickets in SpaceX. Slash XII,
Speaker 3: slash X is the whole mishmash of Elon companies. Yeah,
Speaker 3: and when this company goes public, like the first day,
Speaker 3: they'll sell whatever, seventy five billion dollars worth of stock.
Speaker 3: But then like soon after that there will be you know,
Speaker 3: trillion dollars of stock to sell. There'll be a lot
Speaker 3: of stock to sell, a lot of early investors and
Speaker 3: employees and Elon musks who want to sell stock and
Speaker 3: raise money. And so the information talked about, Like one
Speaker 3: thing that they're very focused on the IPO talks is
Speaker 3: figuring out the lock up structure. You know, who you
Speaker 3: do an IPO, You sell stock in the IPO all
Speaker 3: the big like insiders and early investors can't sell any
Speaker 3: more stock for six months, and then after six months
Speaker 3: their stock comes free and there's not like often a
Speaker 3: stock drop when everyone is able to sell and they
Speaker 3: all sell stock at once. And I think SpaceX wants
Speaker 3: to be more thoughtful, more aggressive, more something about that.
Speaker 3: So it's not just like sell nothing for six months
Speaker 3: and then cell trillion dollars with the stock in one day,
Speaker 3: And it's more like, you know, how can we structure
Speaker 3: that so we can get at the stock that people
Speaker 3: are going to want to get out And that's going
Speaker 3: to be interesting, right, There's gonna be a lot of
Speaker 3: turnover in the stock. Yeah, And like they're greening between
Speaker 3: the lines a little bit. All the index firms are
Speaker 3: like thinking about how to restructure stock indexes to allow
Speaker 3: SpaceX to get into their indexes earlier, so that it's
Speaker 3: essentially early investors can sell the index ones and like
Speaker 3: make that trade clear. So it's going to be it's
Speaker 3: gonna be.
Speaker 2: A lot of stock, yeah, particularly interested in the index
Speaker 2: side of things.
Speaker 1: Yeah, obviously, Yeah, people are mad about it.
Speaker 3: People are mad about like the index one.
Speaker 1: No, I don't know, YAX managers not.
Speaker 3: The index one. Is the index providers changing their rules
Speaker 3: like NASDAK is talking about changing the rules of the
Speaker 3: day is like one hundred and like even S and
Speaker 3: P is like you know, I mean we could that's basically.
Speaker 2: Yes, I could see. I was actually having this conversation yesterday.
Speaker 3: Like it was all the talk of the at the
Speaker 3: ATF country.
Speaker 2: No, but it should have been, honestly. But there's the
Speaker 2: idea out there that part of the reason you don't
Speaker 2: want freshly public companies in your index is because they
Speaker 2: need a period to season and like maybe get through
Speaker 2: some of the weirdness that you're talking about when it
Speaker 2: comes to lock ups, et cetera.
Speaker 3: Yeah, I know, but like but part of like the
Speaker 3: weirdness is just like straightforward to supplying to men stuff
Speaker 3: for it. You have like volatility because like the company
Speaker 3: goes public and then it's seasons or whatever for a
Speaker 3: little while, and then there's a day when everyone can
Speaker 3: sell their stock, and so the stock bounces around in
Speaker 3: anticipation of that day, and then after that day and
Speaker 3: then it settles down, and then like the there's another
Speaker 3: day when the nix Fens have to buy the stye
Speaker 3: and then it goes up, you know, and like if
Speaker 3: you can mush those things together, you reduce some of
Speaker 3: that volatility.
Speaker 1: Yeah, there's a day.
Speaker 3: Where like all the early investors can sell to s
Speaker 3: and P five hundred x fense and like you know
Speaker 3: that's volatile. Yeah, I don't know, it's like somebody exaggerated,
Speaker 3: But yeah.
Speaker 2: I guess we'll find out what these index overlords decide.
Speaker 2: But I feel like there were a few different SpaceX
Speaker 2: tentacles this week. You wrote about this one that, you know,
Speaker 2: when it was reported by the Information that SpaceX could
Speaker 2: file as soon as this week, you saw a bunch
Speaker 2: of space related and satellite stocks surge, including EchoStar.
Speaker 3: Yeah, so EchoStar is arguably a SpaceX treasury company.
Speaker 2: It's not really I was thinking about dats.
Speaker 1: Yeah, but it's a it's a real business, a real
Speaker 1: bit has like a.
Speaker 3: You know, direct TV and stuff, but it's like largely
Speaker 3: a collection of spectrum licenses that it's like in the
Speaker 3: process of selling off, and it's sold some of them
Speaker 3: for cash and some of them to SpaceX for like
Speaker 3: eleven billion dollars of SpaceX stock, And so if you
Speaker 3: zoom way out, it's like it's like kind of a
Speaker 3: pot of cash plus some SpaceX shares and you know,
Speaker 3: you can that's just the proxy for SpaceX, and so
Speaker 3: people have been sort of treating it as a proxy
Speaker 3: for SpaceX. It's come up a lot, and it went
Speaker 3: up when SpaceX was reported to be planning on i
Speaker 3: PAS soon the other space companies I.
Speaker 1: Don't really get I know, I know, surely if you've.
Speaker 3: Got a space portfillo, you got to sell some space
Speaker 3: companies to make room for SpaceX.
Speaker 1: Yeah.
Speaker 2: Yeah, so, I mean it wasn't as clean of an
Speaker 2: explanation for those ones. But in the case of EchoStar, okay,
Speaker 2: they have a bunch of SpaceX stock, what happens when
Speaker 2: SpaceX goes public? Like, how would the shareholders of echo
Speaker 2: Star sort of feel that?
Speaker 3: I don't know, I don't know what their plan is.
Speaker 3: I think to some extent people think of it as
Speaker 3: like a capital return play, where like they're selling Spectrum
Speaker 3: for cash and stock and events. You sort of end
Speaker 3: up with like a much smaller business and a big
Speaker 3: pile of cash and stock, and then you start thinking
Speaker 3: about how to return that cash and stock to shoulders.
Speaker 3: And the cash is fairly easy and the stock is
Speaker 3: not that hard, and so you end up somehow extracting
Speaker 3: some space stock out of a eco store or they
Speaker 3: sell it in cash.
Speaker 2: But that's exciting.
Speaker 3: Yeah.
Speaker 2: I was also excited to talk about this because there's
Speaker 2: a closed unfund angle here as well.
Speaker 3: Here's a closed unfund.
Speaker 1: Yeah, more than one.
Speaker 3: Maybe we taked ages ago about destiny d X y
Speaker 3: Z yeah, and this week or I guess last week,
Speaker 3: this insurging. There's the fund Rise Yes, innovation fund called
Speaker 3: which is natrating at like twelve hundred percent of navy
Speaker 3: or it was it was, Yeah, it's not a little bit.
Speaker 2: Stron came out with a short against it on Thursday.
Speaker 3: Is the short thesis this is trading at twelve hundred
Speaker 3: percent of navy.
Speaker 1: Basically, yeah, that's a good short thesis.
Speaker 2: Let's see. I'm oh yes, questions simple math and asset value.
Speaker 3: Simple mouth and has a value right right, So it's
Speaker 3: like it's a closed and fund. It's a small fund.
Speaker 3: It's like six hundred million dollars. It owns stock in
Speaker 3: like open AI, Anthropics, SpaceX, like.
Speaker 1: Big name, all the bill, the big ones.
Speaker 3: And it was like a privately managed, clothed in fund
Speaker 3: that has like gone public but most of its shares
Speaker 3: are locked up. So the actual like amount of stock
Speaker 3: that is available is like in the tens millions of
Speaker 3: dollars they've had more than ten percent of the shares
Speaker 3: are available, so it's not one hundreds of millions of dollars,
Speaker 3: And a lot of people want to own SpaceX anyway
Speaker 3: they can get it, and so there's a lot of
Speaker 3: demand for that, like relatively small stub of fundraise innovation
Speaker 3: fund stock, and not a lot of supply, and so
Speaker 3: it's trading it, you know, traded up to twelve hundred
Speaker 3: percent of NAV and at twelve hundred percent of NAV,
Speaker 3: you're not getting any SpaceX exposure. You're just getting exposure
Speaker 3: to the premium.
Speaker 2: Right that's said before, I have a great idea for
Speaker 2: Bill Lackman. Oh, he should put space X in his
Speaker 2: clothes and funds and then he won't have to worry
Speaker 2: about the discount.
Speaker 3: It's true, you know, someone pointing out to me there's
Speaker 3: SpaceX and all sorts of clothes end funds, including a
Speaker 3: blue Owl technology course, a little bit of SpaceX stock.
Speaker 1: And it's like, I feel.
Speaker 3: Like like one like important move that you can make
Speaker 3: in today's financial markets is like putting up a big
Speaker 3: sign saying, well, you own some SpaceX and then sort
Speaker 3: of see if people, you know, start paying a premium
Speaker 3: for your stock.
Speaker 2: Well, we'll see. I'm also curious to see what happens,
Speaker 2: obviously when SpaceX goes public, because a lot of these
Speaker 2: funds also are subject to a lock of period or
Speaker 2: at least a lot of the spbs.
Speaker 3: Wait, can I tell you an unrelated elon Musk thing.
Speaker 2: I was hoping you would.
Speaker 3: That is amazing.
Speaker 4: Tell me.
Speaker 3: Okay, So he lost the Securities Forrod trial this week
Speaker 3: or last week. He agreed to buy Twitter in twenty
Speaker 3: twenty two. He like backed out of the deal. He
Speaker 3: like tweeted publicly like the deal is temper around hold.
Speaker 3: The stock dropped. Eventually he had to close the deal.
Speaker 3: People who sold stock when he tweeted that sued for
Speaker 3: securities that it was a weird case. They sued in
Speaker 3: the a federal court in California, and they won. Last
Speaker 3: week He's lost the securitiest FROD case. Like the damages
Speaker 3: haven't been determined yet, but they could be billions of dollars.
Speaker 3: It's a little nuts. But anyway, this week, his lawyer,
Speaker 3: Alex Spira, sent a letter to the court basically saying,
Speaker 3: like we should have a mistrial. There is misconduct in
Speaker 3: the jury room. The juri had to fill out some
Speaker 3: form about like you know, like the stock drops and
Speaker 3: the one of the numbers on this forum was four
Speaker 3: dollars and twenty cents. Oh boy, and the letter this
Speaker 3: like insane letter, like this long passionate yet like legalistic
Speaker 3: letter that Alex Bira sent to the court is like
Speaker 3: they filled out all these numbers in black ink except
Speaker 3: for the four twenty, which they wrote in larger font
Speaker 3: and in blue ink to drive home the fact that
Speaker 3: it was four twenty, a number previously associated with the
Speaker 3: Elon Musk. Good lord, so someone said it to me,
Speaker 3: saying Elon Musk doesn't think four twenty is funny anymore.
Speaker 3: But it's like what a life he has? Any I've
Speaker 3: ever been more put upon the Elon Monk. People are
Speaker 3: just making fun of him at four twenty. Can imagine
Speaker 3: finding him liable for securities read it's weird that.
Speaker 2: Does any of it matter to him?
Speaker 3: Rationally? No, but like emotionally, I think very much so.
Speaker 3: And that was the Money Stuff Podcast.
Speaker 2: I'm Matt Levine and I'm Katie Greifeld.
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Speaker 3: The Money Stuff Podcast is produced by Moses Onam and
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