Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Okay, it's the last
Speaker 1: DAP school.
Speaker 2: I know. I saw on your Instagram.
Speaker 1: It was just of course, so that's the school for
Speaker 1: my children. And I've lived, you know, much of my
Speaker 1: adult life no longer and like the rhythms of the
Speaker 1: school year. But like then you have kids and you're like,
Speaker 1: why am I not on summer vacation. It just feels
Speaker 1: like it's summer vacation.
Speaker 2: Now they're gonna wake up tomorrow and what are they
Speaker 2: going to do?
Speaker 1: To the pool? Watch TV, watch the World Cup. Watching
Speaker 1: so much World Cup.
Speaker 2: That sounds so fun, but you haven't watched any World Cup.
Speaker 1: Oh my gosh, it's so good.
Speaker 2: Apparently the ratings are pretty good.
Speaker 1: It's great, Like it's it's been a good World Cup.
Speaker 1: And dang, I think I complained to you last week
Speaker 1: that like I think the USA placed tonight at.
Speaker 2: Ten o'clock, Like that's that's what happening.
Speaker 1: I prefer like a European World Cup where like I
Speaker 1: can watch all the games during the day. But it's
Speaker 1: been really good. It's been really fun to watch the kids,
Speaker 1: and I really feel like it is time for my
Speaker 1: summer vacation and I'll see you and I'll see you.
Speaker 2: And yeah, I mean i'll see you next week.
Speaker 1: Yeah, if I were taking a vacation a lot of time, because.
Speaker 2: You're that's true, a sabbatical of sorts, of a child
Speaker 2: bearing sabbatical, to be clearly. Yeah, I plan to have
Speaker 2: a great time.
Speaker 1: Everyone everyone plans that.
Speaker 3: Yeah.
Speaker 2: I know, as someone who's never had a baby before,
Speaker 2: I think I'm going to have a fanta time. It
Speaker 2: seems easy. I mean one seems easy, right as a
Speaker 2: parent of multiples. I don't know if I've talked about
Speaker 2: it on this podcast, but I really have just been
Speaker 2: approaching it like I'm getting a new puppy. I don't
Speaker 2: know how to take care of a human, but I
Speaker 2: can do a small animal.
Speaker 1: I mean, look, obviously it's not like getting a new puppy,
Speaker 1: but there's some continuum.
Speaker 2: Yeah, I mean, she can't talk, she can't really do much.
Speaker 2: She's like a little forest creature, right right.
Speaker 1: I feel like it's very possible that your child would
Speaker 1: turn into a little forest creature.
Speaker 2: I hope. So I'm really excited.
Speaker 1: In a month or so, you'll know, like or be pregnant.
Speaker 1: But like, yeah, we won't be like that was a
Speaker 1: weird dream.
Speaker 2: Then the party really start anyway, I guess we should
Speaker 2: do the podcast.
Speaker 1: Hello and welcome to the Money Stuff Podcast, your weekly
Speaker 1: podcast where we talk about stuff related to money. I'm
Speaker 1: Matt Levine and I write The Money Stuff com for
Speaker 1: Bloomberg Opinion.
Speaker 2: And I'm Katie Greifeld, a reporter for Bloomberg News and
Speaker 2: an anchor for Bloomberg Television.
Speaker 1: We almost had a vacation from SpaceX last week. I
Speaker 1: feel like we snuck in a little SpaceX.
Speaker 2: Yeah, I mean you have to.
Speaker 1: Write hardly a noticeable amount of SpaceX.
Speaker 2: And now we're going to talk about SpaceX a.
Speaker 1: Lot, well a medium that way too much a good amount. Yeah,
Speaker 1: like a segment of the show, did you know it's
Speaker 1: below two trillion dollars today? Or it was as of
Speaker 1: like one thirty or something.
Speaker 2: Yeah, it's been interesting to see the back and forth
Speaker 2: in these shares. I mean, who knows. I mean as
Speaker 2: someone who watches lines all day, yeah, talks about them
Speaker 2: for a.
Speaker 1: Living, right, I did sort of like you know, you
Speaker 1: have an ipo then like it's supposed to go up
Speaker 1: from there, and like this one has gotten up a
Speaker 1: little and now it's kind of done. It's not below
Speaker 1: the IPO price, but it's below like the first day,
Speaker 1: you know, closing price.
Speaker 2: Yeah, big time. I mean the IPO price is like
Speaker 2: one hundred and thirty.
Speaker 1: Five dollars fifty Thursday afternoon.
Speaker 2: Yeah, who knows what it'll be when we published this podcast.
Speaker 2: But there was a good thought experiment in the New
Speaker 2: York Times this.
Speaker 1: Week about SpaceX and Tesla merging big times. I don't
Speaker 1: think that's a New York Times thought exper No, I've
Speaker 1: seen that everywhere, and I don't want to say that
Speaker 1: like it was planted by SpaceX, but I do feel
Speaker 1: a little bit like they are dusting the waters for
Speaker 1: like that's the next thing that's going to happen the president.
Speaker 2: She's not the CEO. She was on CNBC on IPO
Speaker 2: Day talking about it.
Speaker 3: So there's no question that there's synergies between Tesla and
Speaker 3: SpaceX and our futures. Definitely, there's a convergence of kind
Speaker 3: of what we're all trying to accomplish in the future.
Speaker 2: That's our next president, Yeah, pretty much. It is really crazy.
Speaker 2: What are they waiting for?
Speaker 1: I think in general, if you work for Elon Musk,
Speaker 1: that need to like sleep and live a nice life
Speaker 1: as not you know, no one cares.
Speaker 2: But yeah, they did just do it. That's true.
Speaker 1: But just a minute ago.
Speaker 2: It's just funny because we're going to talk about this
Speaker 2: until it happens, and it.
Speaker 1: Feels like it's going to happen. Yeah, I feel like
Speaker 1: six months ago people were talking about this as a
Speaker 1: joke and now it's like, yep, that'll be next week.
Speaker 2: Well I feel like six months ago. I mean, who
Speaker 2: knows how fuzzy my timeline is, but the idea of
Speaker 2: them ipoing was still a who knows.
Speaker 1: I guess that's right. Yes, it was not fast. Yeah,
Speaker 1: they move on the merger thing. I mean, one answer
Speaker 1: to the question what are they waiting for is like,
Speaker 1: presumably a merger means an all stock merger because no
Speaker 1: one's gonna buy it. It's Tesla for cash. But like
Speaker 1: one answer that question might be that if SpaceX went
Speaker 1: public and its evaluation quickly rose to like, you know,
Speaker 1: four trillion dollars, then I think that would be more
Speaker 1: convenient for Musk. Like I think from Elon Musk's perspective,
Speaker 1: the more SpaceX is worth relative to Tesla, the better
Speaker 1: this is because he owns more of SpaceX, you know, yeah,
Speaker 1: and SpaceX is kind of the new baby, and so
Speaker 1: the more that like SpaceX is represented in the combined company,
Speaker 1: like probably that's more convenient for him. I don't know
Speaker 1: how much that matters, because he has super voting stock
Speaker 1: of SpaceX, and like he doesn't necessarily care that much
Speaker 1: about the charlder, so like it's probably fine to merge them.
Speaker 1: You know. Right now, SpaceX weth like two trillion dollars
Speaker 1: and Tesla's worth like one point four trillion dollars, so
Speaker 1: like almost a merger of equals, Like that's fine for him,
Speaker 1: But it would have been probably a little bit nicer
Speaker 1: if it was like, you know, three to one or something.
Speaker 2: So that's the Elon Musk perspective.
Speaker 1: Oh, which is the only person.
Speaker 3: Well.
Speaker 2: The New York Times did include some quotes from Tasha Kini.
Speaker 2: She's at ARC Investment Management, which obviously really likes Elon Musk.
Speaker 2: She made the point that ARC would prefer the merger
Speaker 2: took place after Tesla had become the dominant company in
Speaker 2: self driving taxis. She said it would be good for
Speaker 2: shareholders to see that take off before the merger. Theoretically,
Speaker 2: because I and she didn't say this, but I'm assuming
Speaker 2: because Tesla shares would be worth more.
Speaker 1: Yeah, I mean, like one thing that's going to happen
Speaker 1: is like SpaceX will do it's business, Tesla will do
Speaker 1: it's business. You know, ideally they would both go up, right,
Speaker 1: But one question you might have is like, in the
Speaker 1: next few months, a few years, whatever, will SpaceX go
Speaker 1: up more than Tesla? Will it become more valuable faster
Speaker 1: or slower than Tesla? Not the answer, But doesn't it
Speaker 1: feel like Elon Musk's attention and the world's attention is
Speaker 1: on SpaceX and data centers, AI and whatever, and not
Speaker 1: so much on the cars. Now there's AI stuff at
Speaker 1: Tesla there, they're making the robots, they're making the cars,
Speaker 1: all sorts of stuff, right, and so in you know,
Speaker 1: in a year, like could this have reversed? Then could
Speaker 1: Tesla be the hot company because it's the human ide robots. Maybe?
Speaker 1: But doesn't it kind of feel like his attention on
Speaker 1: SpaceX now and like the longer you wait, the verse
Speaker 1: it is for Tesla. Yeah, this is just a cosma.
Speaker 2: Yeah, No, it's a good point. He's always been the
Speaker 2: CEO of multiple companies, et cetera, et cetera. But it
Speaker 2: does feel like there's a clear favorite in his mind
Speaker 2: right now.
Speaker 1: Yeah. The only thing is that like Grock, but Crock is.
Speaker 2: That's also yes, how do I keep forgetting that that
Speaker 2: it's understandable X is XAI, which is, yeah, that's what
Speaker 2: it says.
Speaker 1: The other other thing is like I've gotten used for
Speaker 1: a long time to this model of Elon Musk of
Speaker 1: like he has a bunch of different companies and a
Speaker 1: bunch of different independent bats and he's somehow multitasking between
Speaker 1: all of them. But like that is changing, right, I mean,
Speaker 1: like he had Twitter and an AI company and a
Speaker 1: space company and now they're all one company. And then
Speaker 1: you know, you combine that with his car company, which
Speaker 1: is also like a separate solar company that he mushed
Speaker 1: into Tesla years ago, then like basically all of his
Speaker 1: scaled commercial stuff would be in one giant company, which
Speaker 1: is a real change from how he's been operating and
Speaker 1: also makes me wonder about like Neuralink and the boring
Speaker 1: company could be the only ones left probably missing one,
Speaker 1: but like I think those are the only big Elon
Speaker 1: Musk companies that would not be rolled up into this
Speaker 1: and so how long beforeror Neuralink gets folded into the
Speaker 1: AI behemoth. It's all change from back in the day.
Speaker 1: I had like a whole shpiel about like how Elon Musk,
Speaker 1: by keeping all of his businesses in separate bets, was
Speaker 1: somehow doing this like seven dimensional chess mastermind fundraising thing
Speaker 1: where he could tap the same investors for every company
Speaker 1: and like shift resources around without the constraints of running
Speaker 1: a public company. But like now it's just like, yeah,
Speaker 1: he's going to run a giant company, and that giant
Speaker 1: company will be a conglomerate, and he will allocate capital
Speaker 1: to whatever he thinks is the best business to have
Speaker 1: that capital, whether it's cars or humanoid robots, or space
Speaker 1: data centers or social media, yeah, ninos other things.
Speaker 2: When you put it like that, it is a sea change.
Speaker 1: Yeah, it's just like in many ways more.
Speaker 2: Normal, right, Like maybe he got tired. I don't know, that.
Speaker 1: Doesn't sound right given my general theory that sleep is
Speaker 1: not an impediment to doing anything in SpaceX. But yeah,
Speaker 1: it is more sensible, Yeah, to have one guy running
Speaker 1: one company or other than seven different companies.
Speaker 2: And one guy seven company.
Speaker 1: You know, every time he's like moving GPUs from Tesla
Speaker 1: to Xai or whatever dopes like me or writing columns
Speaker 1: being like you shouldn't be doing that, Like very good
Speaker 1: corporate governance, Like now it's fixed, right, if they're all
Speaker 1: one company, it's great corporate governance for him to move.
Speaker 2: Yeah, I want to talk a little bit about what
Speaker 2: could stop this merger. It's not going to be a
Speaker 2: shareholder lawsuit.
Speaker 1: Although I've written about like it's like a slim outside
Speaker 1: path to maybe a shareholder.
Speaker 2: Maybe Vanguard, maybe Fidelity. No, probably not. But the New
Speaker 2: York Times did raise the question, which it then batted down.
Speaker 2: But couldn't there be some sort of antitrust concern here
Speaker 2: that could be raised? They're both AI companies.
Speaker 1: I feel like in traditional anti trust you would say
Speaker 1: not really. I don't think that SpaceX is exactly in
Speaker 1: a real market power position in the sort of broad
Speaker 1: like AI lab business, and like it has a very
Speaker 1: leading position in launching rockets into space for sure, and Tesla,
Speaker 1: you know, arguably it's something in electric cars in the US,
Speaker 1: it's not you know, it's not a monopolist and electric cars,
Speaker 1: but like those are not overlapping businesses, right, Like the
Speaker 1: question is like are you combining to overlapping businesses in
Speaker 1: the same area. And I don't really think that's true.
Speaker 1: I think there's like beginning to be some rumblings of
Speaker 1: worry about like space access position and AI infrastructure, like
Speaker 1: especially they put the data centers in space, but like
Speaker 1: that doesn't really seem like an anti trust concern for
Speaker 1: combining the companies. But like, I think if this were
Speaker 1: a democratic administration, the combination of like two giant tech
Speaker 1: companies merging and like it being Elon Musk might raise
Speaker 1: anti trust concerns. But guess what, Yeah, so I don't
Speaker 1: see it. But you know, if Donald Trump is mad
Speaker 1: at Elon Musk that week, will there be an antro
Speaker 1: trust problem? Like maybe, and then like European.
Speaker 2: Anti trust you know, yeah, they're going to be all
Speaker 2: over it.
Speaker 1: They'll be all over it. He's not winning any friends there.
Speaker 1: And again, like a traditional anti dress analysis, like it
Speaker 1: doesn't seem like they're really emerging competing businesses, but who knows.
Speaker 2: I did want to also call out this nugget from
Speaker 2: the New York Times report because I didn't appreciate this.
Speaker 2: I knew about terrorfab so SpaceX and Tesla plan to
Speaker 2: jointly produce AI chips at a proposed factory called TERRAFAB
Speaker 2: also develop AI software through another project called macro Hard,
Speaker 2: which is obviously the opposite of Microsoft.
Speaker 1: I think he's been making that joke for years.
Speaker 2: Sounds stupid, I mean it's funny. It is funny. I
Speaker 2: didn't know about what I didn't know about macro Hard.
Speaker 1: I hate to give him one, but yeah, macro Hard,
Speaker 1: nodding wistfully.
Speaker 2: Oh, do you want to talk about Triller?
Speaker 1: Triller? Yeah? I do kind of want to talk about Trailler.
Speaker 2: So I went to your bio just before this podcast
Speaker 2: because I was like, all right, I have all my notes.
Speaker 2: Christmas guy again, matt Levine. No, I was like, I
Speaker 2: have all my notes. I just want to check one
Speaker 2: more thing. And then I saw you published about the
Speaker 2: SpaceX Treasury.
Speaker 1: Company treasury company. Baby.
Speaker 2: I audibly growned because I had completely forgotten about it. Yeah,
Speaker 2: but tell me about Triller.
Speaker 1: There's a SpaceX Treasury company, of course, called Triller. Yeah, yesterday,
Speaker 1: it's a fifteen million dollar market cap. It's like it's
Speaker 1: like one of these things where they're like, we provide
Speaker 1: social media stuff for such celebrities as and then it
Speaker 1: names three people who I'm like, yes, these people are
Speaker 1: all actually famous, but I don't know anything about them,
Speaker 1: nor do I remember their names. No, they do like
Speaker 1: some something in social media. And also they sell insurance
Speaker 1: in Hong Kong.
Speaker 2: Why who knows natural But so.
Speaker 1: A teeny company, teeny public lesi company, and they announced
Speaker 1: that they are acquiring a four hundred million dollar slug
Speaker 1: of SpaceX through like three layers of SPVs, so like
Speaker 1: they're acquiring shares in an SPV that on shares in
Speaker 1: an SPV that owns some like pre appo locked up
Speaker 1: SpaceX stock excellent, yes, and they're like, this will be
Speaker 1: a fun new treasury asset for US. Okay, it's like
Speaker 1: the digital asset treasury trade, which you know, at its
Speaker 1: peak last year. I was like, we talked.
Speaker 2: About this definitely.
Speaker 1: I was like, sure, you can like sell some stock
Speaker 1: to buy bitcoin, but like, there's so many other things
Speaker 1: in the world besides bitcoin. Someone did a game stop treasure.
Speaker 1: We talked about an art market treasure all sorts of stuff.
Speaker 1: Dinosaur bone, dinosaur bone treasury company. That was the title
Speaker 1: of an episode. And right, so instead of a dinosaur
Speaker 1: bone treasury company, they're doing a SpaceX treasury company. I
Speaker 1: love it.
Speaker 2: As you've already pointed out, they're at least a year
Speaker 2: late here, they're a year late.
Speaker 1: To the Dinosaur Bone treasury company trade. And also they're
Speaker 1: late to ooh, would you like access to SpaceX stock
Speaker 1: because you can just buy SpaceX.
Speaker 2: Stock seems easy.
Speaker 1: It's like not a very good reason, but a reason
Speaker 1: to have a bitcoin treasury company is that, like it
Speaker 1: is somewhat more difficult for a normal person to buy
Speaker 1: bitcoin than it is for a normal person to buy
Speaker 1: stock of strategy, Like not really you can buy bitcoin.
Speaker 1: You're robbing it app. But like maybe you don't have
Speaker 1: robbing It. Maybe maybe you had an old timey record
Speaker 1: where you can only buy stock and you're like, oh yeah, strategy,
Speaker 1: that's a good way to get bitcoin. But like anyone
Speaker 1: who can buy Triller can buy SpaceX because they're on
Speaker 1: the same stock exchange.
Speaker 2: Yes, well, it will be a fun experiment. It's a
Speaker 2: line I'll watch when on All, right, do we get
Speaker 2: this SpaceX out of our system? Meta Meta? Another New
Speaker 2: York Times article, Mark Zuckerberg, Now he's looking at prediction markets,
Speaker 2: specifically an app. There wouldn't be real money.
Speaker 1: Involved, right, I think it's called arena that has been
Speaker 1: reported from meta slash Facebook that allows you to do
Speaker 1: prediction markets, and I think the way it's supposed to
Speaker 1: work is like from NPR reporting, is that AI would
Speaker 1: come up with the markets and then also resolve the markets.
Speaker 1: Some meta AI model would be like, you know what
Speaker 1: we need as a prediction market on you know, Vner
Speaker 1: Taylor Slip get married and then here are the options
Speaker 1: and then like it'll take bets and then like it'll
Speaker 1: notice when she gets married and resolved bets or something
Speaker 1: like that.
Speaker 2: Fun.
Speaker 1: Yeah, So when you think about like Calshier poly market,
Speaker 1: like they're like, we're you know, building truth machines. We're
Speaker 1: building a financial market that real world companies can use
Speaker 1: the hedge their risk of things like you know, the
Speaker 1: next winning.
Speaker 2: A playoff game with a very straight But then like.
Speaker 1: The alternative model is like you have built a gambling platform.
Speaker 1: What is gambling? Gambling is providing entertainment for money, right,
Speaker 1: It's like, yeah, it's like giving people like the rush
Speaker 1: of excitement from betting on a game, and like in expectation,
Speaker 1: they lose money. But I've gone to Vegas and gambled
Speaker 1: and felt and lost money and felt fine because I
Speaker 1: was like, I'm spending this money on entertainment, right, and
Speaker 1: that's like that's the good case for gambling. And if
Speaker 1: that's your model, then it's like, well yeah, like if
Speaker 1: it's entertaining, maybe you can do it without the money.
Speaker 1: And Facebook are really good at harnessing human behavior to
Speaker 1: like give people dopamine heads in exchange for spending all
Speaker 1: of their time on Facebook's apps, and like that's what
Speaker 1: this is, right, That's why Calshei and polymarket have proved
Speaker 1: out a new form of human social behavior that keeps
Speaker 1: them glued to their apps all the time. And like,
Speaker 1: we want them to be glued to ara apps, so
Speaker 1: we're gonna launch an app that they'll be glued to,
Speaker 1: you know, making predictions.
Speaker 2: It is a smart move by Meta.
Speaker 1: It's quite grim in some ways.
Speaker 2: I mean for sure, I mean, like it better.
Speaker 1: To have fake money gambling than real money gambling. But
Speaker 1: like I don't know.
Speaker 2: The company is not ruled out eventual use of money
Speaker 2: according to the New Time, so that could be coming.
Speaker 2: I do like how how you wrote that Zuckerberg's point
Speaker 2: that this could be all thought of as addictive phone
Speaker 2: apps rather than financial instruments is true. Like again, like
Speaker 2: Calci and Polymarket will tell you with a straight face
Speaker 2: that you know we're creating or we're helping to find
Speaker 2: true economic information here, but it does feel like a
Speaker 2: sort of emperor has no close moment of Facebook is
Speaker 2: creating a prediction markets app.
Speaker 1: Yeah, a couple of things. One, everything's on a continuum, right,
Speaker 1: I mean, Robinhood. Their essential insight is stock trading is
Speaker 1: also like an addictive phone behavior, and so we can
Speaker 1: make it more addictive and more on your phone. True,
Speaker 1: everything is both right. The other thing I'll say is
Speaker 1: like the fact that Meta is in essentially the addictive
Speaker 1: phone apps business and looks at this and has big
Speaker 1: dollar signs in its thighs of like, ooh, this is
Speaker 1: an addictive phone app. That doesn't mean that it's not
Speaker 1: also serving some truth seeking function.
Speaker 2: Maybe maybe just thinking about Farmville, you know, which was
Speaker 2: another face book app that I.
Speaker 1: Loved, right and Farmville.
Speaker 2: I don't know if there was any truth seeking going
Speaker 2: on in the hours I spent on Farmville.
Speaker 1: Well, I hear you, But like, also I'm reading the
Speaker 1: Sebastian Malaby biography of Demi Sasabis. The Google Deep Mind
Speaker 1: Fighter and deep Mind spent a lot of time trying
Speaker 1: to solve games like early Atari, arcade games and StarCraft,
Speaker 1: all these like video games because and the reason they
Speaker 1: were doing that is partly because like they're gamers and
Speaker 1: they like video games, but partly it was like the
Speaker 1: way to develop and also prove the concept of like
Speaker 1: reinforcement learning machine artificial intelligence is to have it learned
Speaker 1: to play games at better than human standard, and so
Speaker 1: there's like real lessons to be learned from those games.
Speaker 1: That's probably not true of Farmville, but I do think
Speaker 1: that one thing that is probably going on, and Berne
Speaker 1: Hobart has a good newsletter about it on Thursday of
Speaker 1: this week is Meta is one an addictive phone app
Speaker 1: company and two AI company, and prediction markets in AI
Speaker 1: are pretty interesting. Wen't have our rights. Prediction markets try
Speaker 1: to quantify the magnitude of interesting uncertainty. That means they're
Speaker 1: implicitly taking the same form as the input to an
Speaker 1: AI model, given some information, make a prediction about what
Speaker 1: comes next. And so, like other people have talked to
Speaker 1: me about this, like using prediction markets to train AI
Speaker 1: is just sort of like an interesting corner of the world.
Speaker 1: It's like, we want to make computers that are good
Speaker 1: at understanding the world. We want to make computers that
Speaker 1: can buy stocks that I'll go up. We want to
Speaker 1: make computers that can cure cancer whatever. Like if the
Speaker 1: computers get better at like predicting the future based on
Speaker 1: the current data, like that is good for artificial intelligence.
Speaker 1: And maybe one way to give them training data is
Speaker 1: to have a bunch of Facebook people on their phone saying,
Speaker 1: you know, this is where I think Taylor shots will
Speaker 1: get married, and like the computers will learn from that.
Speaker 1: So like one possibility is that this is not so
Speaker 1: much a like engagement bait play from Meta and more
Speaker 1: a like AI training play. But it's really both. Yeah,
Speaker 1: Open AI, like four years ago, like their rhetoric was
Speaker 1: so utopian and ambitious, and then they're like, we're going
Speaker 1: to do ads and we're going to turn the dial
Speaker 1: on chat chpt to make it more engaging so that
Speaker 1: people spend more time with chat chpt. It's like everything
Speaker 1: is a social media company. Everything is an addictive phone
Speaker 1: app company, and so like you know, yeah, you make
Speaker 1: your AI better so that you can keep people engaged
Speaker 1: with your app for longer, so you can serve the
Speaker 1: more ads.
Speaker 2: Yeah, it's also grim, even more grim than Arena potentially.
Speaker 2: The New York Times reporting that Arena is just one
Speaker 2: of a handful of apps that Meta is currently trying out.
Speaker 1: The other one is macro hard.
Speaker 2: Macro Hard also Meta photos it photos. Yeah, it would
Speaker 2: create new types of media using AI. According to people
Speaker 2: familiar that, I don't think so.
Speaker 1: Great. It's like Sora, No it's not. I don't care.
Speaker 2: Yeah, no, I think SOA is a thing, but I don't.
Speaker 1: Sorry, it was the open A version of it. Yeah,
Speaker 1: you look at AI videos that we had.
Speaker 2: Made for you, similar to Macrohart. Something that I didn't
Speaker 2: appreciate until the New York Times told me about it
Speaker 2: was Meta has tried prediction markets. They were so early
Speaker 2: twenty twenty they released Forecast, which was a crowdsource prediction
Speaker 2: market app. It prompted people to make guesses about the
Speaker 2: world in the early days of covid. It eventually shut
Speaker 2: down in twenty twenty two. But man, this could have
Speaker 2: been Meta's market.
Speaker 1: Yeah, that wasn't even that early. Like I mean, people
Speaker 1: have been playing around with many prediction markets for a
Speaker 1: long time, but nobody really.
Speaker 2: Similar to AI. Like we've been talking about AI forever,
Speaker 2: but it feels like it only really exploded in the
Speaker 2: last couple of years.
Speaker 1: I do think that, like kylsh and Poling Market, did
Speaker 1: corrareck the good of making it more exciting? And do
Speaker 1: you know how they cracked that good?
Speaker 2: Tell me sports sports? There you go. I do just
Speaker 2: think it makes sense for meta. Good on you, Mark Zuckerberg.
Speaker 2: Maybe it'll work out better than Threads.
Speaker 1: I still look at Threads a lot. Really, I was
Speaker 1: constantly trying to push you to it, and then like
Speaker 1: it's like clean accent and it just serves you a
Speaker 1: series of rage bait and it's just like it's Mark Zuckerberg.
Speaker 1: There's the gap between like what you want to want
Speaker 1: and like your base revealed. The preferences is like the
Speaker 1: world's greatest exploiter of that gap, where like do I
Speaker 1: want to be looking at stuff on threads that makes
Speaker 1: me angry but just because it's stupid?
Speaker 3: Yeah?
Speaker 1: No, do I want that? No? Do I do it? Yes?
Speaker 1: And yet and like you know, is he making billions
Speaker 1: off of that? Probably private credit is to the thing.
Speaker 2: Yeah, there's been a ton of redemption requests. There is
Speaker 2: Morgan Stanley all, Yeah, they're all getting capped at five percent. Yea,
Speaker 2: it seems like that was working is design, Yeah, as
Speaker 2: the signs.
Speaker 1: But yeah, it's like what we talked about with buzz,
Speaker 1: which is that when you gate these or when you
Speaker 1: can't redemption to five percent, you create a backlog in
Speaker 1: the next quarter. People are like, I want want me.
Speaker 1: You have all the redemptions from that quarter plus all
Speaker 1: the like leftover runs in the previous quarter, and it
Speaker 1: keeps snowballing from there. So that's kind of happening.
Speaker 2: Yeah, so this will be a story that's with us
Speaker 2: for some time.
Speaker 1: Yeah, unless like people start being more confident about private
Speaker 1: credit or I don't know, man, I don't know.
Speaker 2: But JP Morgan says, Hey, so you don't like the
Speaker 2: whole quarterly redemption schedule, how about monthly liquidity?
Speaker 1: I love it. First of all, love is a strong word,
Speaker 1: like this.
Speaker 2: Is boring technical, you know, you love it.
Speaker 1: I love it.
Speaker 2: The sec also, I'm I mean, maybe they don't love it,
Speaker 2: but they're okay with it.
Speaker 1: Of course they're okay with it. Like the point is, like,
Speaker 1: there's a rule that says you have to offer quarterly liquidity.
Speaker 1: Jerry Morgan is like, well, monthly liquidity is not quarterly liquidity,
Speaker 1: but it is strictly better than quarterly liquidity. And this
Speaker 1: is like, yes, that's true, it's strictly better. And so
Speaker 1: they like waived the rule to how you can have
Speaker 1: monthly liquidity.
Speaker 2: Yeah.
Speaker 1: What I love about it is like one reason to
Speaker 1: do this is to like give people more liquidity, but
Speaker 1: I think another reason to do it is to actually
Speaker 1: have people demand less liquidity, right, and so, like one
Speaker 1: thing I was thinking is like if you offer quarterly redemptions,
Speaker 1: like that's like a big decision, right, If you don't
Speaker 1: get your money out of this quarter, you have to
Speaker 1: wait a whole quarter for like us to get worse
Speaker 1: before you can get your money out again. But if
Speaker 1: you offered like real time liquidity, then no one has
Speaker 1: any incentive to take money out now because in five
Speaker 1: seconds they can take money out. Right. Yeah, It's like
Speaker 1: monthly is somewhere in between.
Speaker 2: Yeah, perhaps I'm comfortable waiting a month to get my money,
Speaker 2: but I'm not comfortable waiting three months.
Speaker 1: It sounds less dire, you know. Yeah, there was all
Speaker 1: this worry for years, been worry about mutual funds which
Speaker 1: have daily liquidity, and about like the idea that you know,
Speaker 1: if stocks go down or bonds go down or whatever,
Speaker 1: then mutual fund investors will to add all their money back.
Speaker 1: And I was writing for years people are worried about
Speaker 1: bomb market liquidity. That's the one point to me. Like
Speaker 1: John Brooks in the sixties was writing about like there
Speaker 1: was a stock market crash, and everyone's like, oh, no,
Speaker 1: mutual funds, which were like newly invented will sell out
Speaker 1: their stock if there's a crash, And then it was fine. Yeah,
Speaker 1: And I think that like some of that is like
Speaker 1: people who know they can get daily liquidity or not,
Speaker 1: you know, they're not rushing for the exits, whereas like
Speaker 1: you know, people in these private credit funds are rushing
Speaker 1: for the exits. So maybe maybe monthly liquidity will solve
Speaker 1: that problem.
Speaker 2: I mean, they're all tailored towards retail investors, but this
Speaker 2: specific one is tailored towards retail investors. There was this
Speaker 2: shift after what happened in the first quarter. You saw
Speaker 2: a lot of firms talking up institutional investors like that's
Speaker 2: where the focus is. But JP Morgan still seems interested
Speaker 2: in courting that retail investor, right.
Speaker 1: I mean, you have to court the retail investor, right, like,
Speaker 1: the long game has to be we're going to sell
Speaker 1: privates to people with trillions of dollars in their prof
Speaker 1: one case. It just has to be the long game
Speaker 1: of everything correct. And so right now that retail capital
Speaker 1: seems to flighty and you're like, yeah, institutions still love us.
Speaker 1: It's great, but like you still have to be thinking
Speaker 1: about that long game. Also, there's an article this week
Speaker 1: in bloomerket about the private credit arbitrage trade getting momentum
Speaker 1: from advisors. Did you see this? No, so the arbitrage chairs.
Speaker 1: I don't love that phrase, but whatever the trade is. Like,
Speaker 1: if you are in a private, non traded business development
Speaker 1: company credit fund, you can ask for your money back
Speaker 1: and if you get it, which you know, there's caps
Speaker 1: on redumptions or whatever. But any money you do get back,
Speaker 1: you get back on one hundred cents on the dollar.
Speaker 1: You get it back at net asset value. That's the
Speaker 1: rule how these things work. Meanwhile, they are publicly traded BBCs,
Speaker 1: which are essentially the same assets the same fund as
Speaker 1: the private BDCs, or like, they're at least run by
Speaker 1: the same managers that have overlapping assets, and those trade
Speaker 1: it like you know, eighty seventy five cents on the dollar,
Speaker 1: and so a lot of people think, well, I should
Speaker 1: take my money out from the public one a one
Speaker 1: hundred cents on the dollar and then put it back
Speaker 1: into the same assets that's seventy five cents on the dollar.
Speaker 1: Because that's just saves me twenty five cents. That's a
Speaker 1: trade that, like was Winstein talked up on this podcast,
Speaker 1: that people have talked about and written about. But the
Speaker 1: Bloomer article this week is about financial advisors telling their
Speaker 1: clients to do that, which is fascinating to me because
Speaker 1: on the one hand, I don't want to give investment advice.
Speaker 1: I don't want to say that's good investing advice. There
Speaker 1: are pluses and minuses. The discount might get wider. You
Speaker 1: can't know that this is not really an arbitrage. The
Speaker 1: liber Artical quotes a guy named John Scott at CF
Speaker 1: Advisers saying, when the same credit manager is running a
Speaker 1: non traded BBC at its net asset value and I
Speaker 1: listed sibling fund it a twenty four to twenty seven
Speaker 1: percent discount, that's not a philosophical debate. That's a math problem.
Speaker 1: That's kind of right, right, like it's kind of a
Speaker 1: good trade, and so as a financial advisor, it kind
Speaker 1: of be who's you to tell people who do this trade?
Speaker 1: But also the whole non traded BDC product is kind
Speaker 1: of like financial advisors putting people into it, right, yeah,
Speaker 1: by financial advisor putting me into one, right, et cetera.
Speaker 1: And like, you know, you might ask why can non
Speaker 1: traded BDCs sell shares a one hundred cents on the
Speaker 1: dollar when traded ones sell shares it, you know, they
Speaker 1: traded eighty cents on the dollar. The answer is because
Speaker 1: your advisor is putting you into it. Why is your
Speaker 1: advisor putting into it? You know? Whyto advisors do anything? Right?
Speaker 1: And so it is funny to see this like the
Speaker 1: advisors shifting their clients out of the advisor product and
Speaker 1: into the like publicly available product. It's just like, yeah,
Speaker 1: at some point in the cycle, you're like, wait a minute,
Speaker 1: I'm going to give people good advice.
Speaker 2: Yeah right, Oh god, well that's cool.
Speaker 1: It's not investing advice. I'm not thinking it's good advice.
Speaker 1: I'm just saying a lot.
Speaker 2: Of it's on investing advices. Just the problem until a
Speaker 2: financial advisor tells you so not this podcast, right, that's right,
Speaker 2: that's right. Run it by your financial advisor.
Speaker 1: See what she says. And that was the Money Stuff Podcast.
Speaker 2: I'm Matt Levine and I'm Katie Greifeld.
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Speaker 1: The Money Stuff Podcast is produced by annam Aserakas, Moses
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