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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Tell me about your dream.

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Speaker 1: Okay, So I dreamed that I had a friend who's

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Speaker 1: hosting about like TV show about sports, and I agree

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Speaker 1: to be a guest for like an hour.

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Speaker 2: You love sports?

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Speaker 1: Okay. So first of all, it's like a standard stress dream,

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Speaker 1: where like the thing that's happening in the dream is

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Speaker 1: that I have like two minutes to get there. Yeah,

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Speaker 1: and I'm like wandering through ESPN's cavernous offices to try

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Speaker 1: to imaginary dream espo to try to find the studio

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Speaker 1: and I can't find it, and I'm asking people and

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Speaker 1: I'm late, and I'm really nervous. But also secondly, I'm

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Speaker 1: like I don't know anything out sports, so I'm like

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Speaker 1: wandering around, like looking at my phone being like googling sports.

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Speaker 1: I'm trying to figure out what I'm going to talk about. Yeah,

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Speaker 1: I think it was probably about this podcast.

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Speaker 2: Ah. God, I have those stress dreams about TV constantly.

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Speaker 1: Yeah, sure, le, you actually go on TV.

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Speaker 2: Like missing your hit time, like not being able to

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Speaker 2: get your mic on right, things like that.

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Speaker 1: Well, I was missing my sports yea.

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Speaker 2: God, I wonder what sport I wish the dream head contained.

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Speaker 1: I was like, I know the Mets exist, what is

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Speaker 1: I could be like, I.

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Speaker 2: Like the how about the Nicks? Yeah?

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Speaker 1: Sports?

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Speaker 2: Yeah?

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Speaker 1: I do you want to say one more thing?

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Speaker 2: Okay, come on.

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Speaker 1: I was in an event this week and someone was like,

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Speaker 1: do you have any bird updates? It took me a

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Speaker 1: minute to realize what he's saying about, but then I

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Speaker 1: was like, wait, we have a great bird update, but

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Speaker 1: I got to save it for the pod. Yeah, the

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Speaker 1: great bird update. You want to tell me?

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Speaker 2: Wait, I forget.

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Speaker 1: It's not really a bird update. It's a money stuff

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Speaker 1: podcast commenter.

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Speaker 2: Oh wait, I also forget.

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Speaker 1: Okay, you sent me a commenters to comment saying that

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Speaker 1: if you're taking name suggestions for you so far anonymous bird,

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Speaker 1: a good name for a bird would be friend of

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Speaker 1: the Pod Bill Ackman.

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Speaker 2: I love it. I love it. I think the full

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Speaker 2: comment was like if you put it up to a

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Speaker 2: Twitter poll, may I suggest I think it was front

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Speaker 2: of the show. I don't think my parents would get

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Speaker 2: it if I named our bird.

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Speaker 1: Al right, But like, instead of being like, do you

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Speaker 1: have any bird updates? I could be like, Katie, do

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Speaker 1: you have any updates on the show Bill Lackman, it

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Speaker 1: would be so confusing.

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Speaker 2: He's perching really well.

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Speaker 1: He's learned to fly.

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Speaker 2: Yeah, I realized the problem is that he purchases really well. Sorry,

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Speaker 2: this is a real update, really quick. He's perching really well,

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Speaker 2: except he doesn't want to perch on anything but humans.

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Speaker 2: I realized them. So we need to work on that.

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Speaker 2: I don't know what to do.

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Speaker 1: Friend of the show, Blackman, you got to stop perching

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Speaker 1: on humans.

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Speaker 2: Yeah, come on, we're going to end up abbreviating that. Fotspa,

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Speaker 2: sweet fatspa, sweet foughtspa.

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Speaker 1: Hello and welcome to The Money Stuff Podcast, your weekly

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Speaker 1: podcast where we talk about stuff related to money. I'm

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Speaker 1: Matt Levin and I write the Money Stuff column for

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Speaker 1: Bloomberg Opinion.

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Speaker 2: And I'm Katie Greyfeld, a Bloomberg News reporter. Wait what

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Speaker 2: am I? How do I say that? And I'm Katie Greifeld,

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Speaker 2: a reporter with Bloomberg News and an anchor at Bloomberg Television.

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Speaker 2: I did a pod last week? Why do I forget that?

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Speaker 1: Also? Also, like those are simple factual statements.

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Speaker 2: Jane Street big in India, perhaps too big. We can't

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Speaker 2: both make the joke.

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Speaker 1: Sorry, Stephan, it was you telegraphed it. Somehow I don't know,

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Speaker 1: somehow I knew my eyes.

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Speaker 2: Yeah, so man, can I call them seb seby sebby the.

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Speaker 1: Security and Exchange Board of India.

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Speaker 2: Yeah, SEBBI is real upset a specific eight minute window

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Speaker 2: on a specific day in January and twenty twenty four.

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Speaker 1: Okay, So the backstore here is that last year Jane

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Speaker 1: Street sued Millennium because some traders left Chain Street from

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Speaker 1: Millennium and they took with them, allegedly some sort of

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Speaker 1: secret trading strategy, and Jane Street didn't want to say

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Speaker 1: even what tree it was in because doing so would

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Speaker 1: reveal proprietary secrets. And then they had a hearing. The

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Speaker 1: Millennium lawyers were like, well, this options trade in India. Oops,

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Speaker 1: I'm sorry, I didn't mean to say.

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Speaker 2: That, which and then just couldn't stop saying like India India.

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Speaker 1: So that tipped us off that it was options trading

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Speaker 1: in India, but also tipped off SEBBI, the Security is

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Speaker 1: an Exchange Board of India. Who when you just think

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Speaker 1: about it, if you're a securities regulator and someone is like,

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Speaker 1: I'm making so much money with a secret strategy in

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Speaker 1: beep and then the beep gets unbeeped and you learn

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Speaker 1: that it's in your market, You're like, well, wait a minute,

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Speaker 1: Like that doesn't sound good. Nobody should be making that

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Speaker 1: much money with secret strategies, Like probably that means your

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Speaker 1: secret strategy is bad. And so SEBBI looked into it.

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Speaker 1: And the essential background here is that India has a

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Speaker 1: stock market, it has an options market, and intuitively an

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Speaker 1: options market. You know, the stock options market is a

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Speaker 1: derivative on stocks, and you know will be like most

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Speaker 1: people will like buy stocks, and like options will be

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Speaker 1: like a small, you know, sideshow to the stock market.

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Speaker 1: In India, the options market is vastly bigger than the

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Speaker 1: stock market. Like on options xprey days, which are once

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Speaker 1: a week, the options will trade several hundred times the

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Speaker 1: volume of the underlying stocks. And that sort of tells

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Speaker 1: you what the problem is, which is that if you

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Speaker 1: buy a little stock, the price of the stock will

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Speaker 1: go up because the stock doesn't trade that much and

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Speaker 1: the options just reference the stock. They settle against the stock.

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Speaker 1: So if you buy a little stock, that'll push out

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Speaker 1: the stock, which will push out the options. So you

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Speaker 1: can buy a lot of options for cheap because they

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Speaker 1: trade really liquidly. You can buy a little bit of

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Speaker 1: stock and push out the price, and then you can

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Speaker 1: sell your options at a big price. So anytime the

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Speaker 1: underlying market is less liquid than the derivative market, you

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Speaker 1: can manipulate the derivative market by like buying a little

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Speaker 1: bit of the underlying and pushing out the price, and

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Speaker 1: a much bigger derivative market. Right, And that's the their

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Speaker 1: acuse stuff. Yeah, And it's a strange case in that

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Speaker 1: SEBI accused of them of doing these manipulations on a

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Speaker 1: lot of different options x three days. Basically, the idea

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Speaker 1: is like they would buy stock and sell options simultaneously

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Speaker 1: in the morning, so they're pushing out the price of

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Speaker 1: the options and selling the options at higher and higher prices.

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Speaker 1: And then in the afternoon the options would expire or

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Speaker 1: they'd buy back their options and they would sell back

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Speaker 1: the stock. Selling back the stock would push the stock down,

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Speaker 1: push down the value of the options. So they sold

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Speaker 1: options high in the morning, bought options back low in

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Speaker 1: the afternoon, and did the reverse trade in the stock.

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Speaker 1: So they lost money on the stock trade, but they

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Speaker 1: made much much much more money on the much bigger

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Speaker 1: options trade.

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Speaker 2: Right.

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Speaker 1: It's a strange case because like Sebbie spends a lot

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Speaker 1: of time on these eight minutes in one particular day

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Speaker 1: in January twenty twenty four, and if you look at

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Speaker 1: those eight minutes, the thing Jane Street, it looks like

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Speaker 1: what they were doing was just an arbitrug trade. The

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Speaker 1: options were trading really expensive because basically retail investors buy options,

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Speaker 1: and the retail investors were through asked think about the

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Speaker 1: index that day, so they were buying a lot of

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Speaker 1: index options. The underlying stocks we're trading relatively cheap, and

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Speaker 1: so Janc was like, okay, there's like a one point

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Speaker 1: five percent gap here, We're going to buy the cheap

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Speaker 1: stock and sell the expensive options and profit when the

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Speaker 1: gap closes. And it does look in those eight minutes

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Speaker 1: like that's what they were doing, right, which I wrote

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Speaker 1: because I think it's interesting that, like the thing that

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Speaker 1: Sebbi highlights is what looks like it might be a

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Speaker 1: legitimate trait. A lot of people push back on that

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Speaker 1: cause like if you look at like the totality of

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Speaker 1: like theo you know, fifteen days they talk about, and

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Speaker 1: even the totality of that day, it is less innocent

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Speaker 1: looking perhaps, But I think the broader point is like

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Speaker 1: it is sometimes hard to tell the difference between legitimately

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Speaker 1: arbichruging two different prices, or like doing a trade and hedging.

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Speaker 1: It's tell the difference between that and manipulation. Yeah, I

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Speaker 1: think that, Like one possible explanation of what's happening here

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Speaker 1: is like chain Street is trading Indian options. They're not

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Speaker 1: a market maker exactly. They could have like a market

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Speaker 1: maker flavor where they're like, you know, retail flow wants

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Speaker 1: to buy options, and so Chancery's like, Okay, we're going

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Speaker 1: to sell options to retail because it's generally profitable to

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Speaker 1: be on the other side of retail. And if you're

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Speaker 1: doing that, you might hedge part of what you're selling,

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Speaker 1: but not all of what you're selling, because you might think, well,

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Speaker 1: we want to hedge, but these retail people are probably wrong,

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Speaker 1: so we're not going to hedge all of it. And

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Speaker 1: so you know, we'll sell one hundred options and buy

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Speaker 1: back ten shares of stock or twenty shares of stock.

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Speaker 1: But another way to look at that is that that

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Speaker 1: looks manipulative, right, because you're buying stock to push up

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Speaker 1: the options. So I'm not really sure what went on here.

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Speaker 1: And like one possibility is that like you sort of

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Speaker 1: get into it for legitimate reasons and then like you

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Speaker 1: sort of look up and you're like, wait a minute,

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Speaker 1: are we moving these thock prices? Are we? Are we

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Speaker 1: the batties? So I don't know, I really don't know,

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Speaker 1: like what was in their.

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Speaker 2: Hearts and the walls of Jane Street when it comes

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Speaker 2: to those specific eight minutes. So, I mean, Jane Street

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Speaker 2: can tends that it was arbitrage that they were doing.

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Speaker 2: It seems like you were sympathetic to that.

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Speaker 1: Yeah, if you just look at the minute, that's what

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Speaker 1: it looks like. Yeah, Well, with one exception is that

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Speaker 1: they sold a lot of options and they bought back

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Speaker 1: much less stock, like you know, seven times as much

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Speaker 1: options as a stock, which is a weird way to

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Speaker 1: do the arbitrage. There's like, there's reasons to do it

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Speaker 1: that way, right. One reason is it's just hard to

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Speaker 1: buy the stock, so they're selling more options than they're

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Speaker 1: buying stock. Another reason is, you know, you have some

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Speaker 1: model of what the correct price is, and you think

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Speaker 1: the retail traders buying options are way farther away from

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Speaker 1: the correct price than like the institutional stock price. Right,

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Speaker 1: that's a plausible thing. So you're like buying less stock

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Speaker 1: because you're pushing the price to a lower level. But

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Speaker 1: then the third possibility is like you understand that your

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Speaker 1: stock trading causes price impact and you're trying to do

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Speaker 1: it in the way that advantages you the most, and.

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Speaker 2: That one looks bad, Yeah, for sure. And I mean

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Speaker 2: Stebbe would contend that this was market manipulation.

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Speaker 1: Yeah, well, if you push wood content does contend well,

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Speaker 1: if you see their money banned them from trading, not.

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Speaker 2: Happy a prairie band. If you did point out to

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Speaker 2: them that the option prices went down in that eight

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Speaker 2: minute window, I mean, would their pushback be that theoretically

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Speaker 2: that Jane Street was just bad market manipulating.

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Speaker 1: Oh no, no, no, I think the pushback would be one,

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Speaker 1: while Jane Street was buying stock and allegedly pushing up

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Speaker 1: the options prices. One the options price did go down,

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Speaker 1: but like the argument would be that it would have

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Speaker 1: gone down more Jane Street not been buying the stock.

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Speaker 1: And then the other argument is that you can't just

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Speaker 1: look at those eight mons. You have to look at

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Speaker 1: the course of the day and you know, kind of

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Speaker 1: the year, and a lot of the time it did

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Speaker 1: seem like they had the effect of pushing up prices.

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Speaker 2: So is this the trade that Jane Street was willing

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Speaker 2: to kill to protect for.

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Speaker 1: I don't think there was a trade. I think there

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Speaker 1: was like a broad set of signals and set of

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Speaker 1: things that they were doing in the Indian options market.

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Speaker 1: And you know, they wouldn't characterize it as the trade

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Speaker 1: was really manipulating the Indian options, right. They were characterized like, oh,

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Speaker 1: we had lots of good ideas and they took all

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Speaker 1: of our ideas, like.

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Speaker 2: There were a lot of arbitrage opportunities when it comes

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Speaker 2: to they knew specific ones.

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Speaker 1: But you're right, the cynical take is that all of

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Speaker 1: those ideas were a subset of one big idea.

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Speaker 2: Yeah. I mean you highlighted libor as an example of

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Speaker 2: something that's somewhat similar where you know you have this

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Speaker 2: underlying that's the trading. There is much smaller.

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Speaker 1: Yeah, there's not a ton of things like this because

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Speaker 1: usually derivatives markets are derivative. They're like, you know, a

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Speaker 1: small tail on the dog of like the main market.

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Speaker 1: But like every so often they're not. And the Library

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Speaker 1: is the biggest example where library was originally some loans

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Speaker 1: were set. Some floating rate loans were fixed to the

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Speaker 1: price that banks were borrowing from each other at in

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Speaker 1: the ear at dollar market decades ago, when banks were

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Speaker 1: borrowing a lot in the eart dollar market. And yeah,

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Speaker 1: first do a loan like that. You're like, oh, that's

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Speaker 1: a great idea. You've got, Like this little loan, it

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Speaker 1: will price it to the big liquid ero a dollar market.

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Speaker 1: But over time, trillions of dollars of loans and derivatives

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Speaker 1: were fixed to Library, and meanwhile, like the euro at

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Speaker 1: dollar market kind of withered, and so by the end,

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Speaker 1: you know, banks would just make up numbers for Library

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Speaker 1: because they just didn't borrow in the tenors that Libra

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Speaker 1: was asking for, and like trillion dollars in de rotors

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Speaker 1: fixed to that, and so you could really easily manipulate that.

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Speaker 1: And many mans did.

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Speaker 2: You bring up tails and dogs and the concept of wagging? Sure,

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Speaker 2: and this because this reminded me of something in etf

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Speaker 2: land oh no, oh no, that I wrote about actually

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Speaker 2: in late April, and the headline of my newsletter that week,

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Speaker 2: the ETFIQ newsletter was can the tail truly wag the dog?

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Speaker 2: We might soon find out?

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Speaker 1: Is it about micro strategy, No, okay, because micro strategy

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Speaker 1: is a place where people think that the ETF tail

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Speaker 1: is wagging based on dog.

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Speaker 2: I have a more extreme potential example. It hasn't happened yet,

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Speaker 2: but we saw in late April this CTF launch. The

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Speaker 2: trader two times long QBTS daily ETF launched, which seeks

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Speaker 2: to track two hundred percent of the daily performance of

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Speaker 2: d Wave Quantum, which is this small quantum computing company,

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Speaker 2: and I think it has a market cap or at

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Speaker 2: the time, its market cap was only two billion dollars,

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Speaker 2: so I mean it wasn't you know, two hundred dollars.

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Speaker 2: But a lot of these single stock leverage ETFs, it's

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Speaker 2: not outside of the realm of possibility that if this

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Speaker 2: really took off, it could have a bigger asset base

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Speaker 2: than the market cap of this really small that attracts.

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Speaker 2: There could be a situation where like.

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Speaker 1: The ETF could have three billion dollars, yeah, or even

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Speaker 1: one point five billion dollars, because that means yeah, three

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Speaker 1: billion dollars, it.

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Speaker 2: Could have enough where it was comparable to the actual

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Speaker 2: market cap of the stock.

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Speaker 1: I feel like I would stop that if I ran

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Speaker 1: the ATF. But maybe they wouldn't. Maybe you'd think, let's

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Speaker 1: see where this goes.

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Speaker 2: Yeah, you might, And I mean just the concept of

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Speaker 2: this launching on such a small stock. You have all

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Speaker 2: these Frankenstein's of leverage single stock products that track micro strategy,

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Speaker 2: but micro strategy is enormous, and you have this concern.

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Speaker 1: No, I just I think that every every possible trait

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Speaker 1: it should be etfized.

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Speaker 2: Yeah, like me too.

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Speaker 1: The demand for like I want margin, exposure to cubits

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Speaker 1: or whatever is listen, twice the size of cubits.

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Speaker 2: I would have been there with you, But then I

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Speaker 2: don't know, we've just really seen these things take off.

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Speaker 1: Or did the thing get to four billion dollars?

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Speaker 2: No, but it's that fifty million dollars, which for launching

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Speaker 2: and later for that's pretty impressive. So also, it seems

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Speaker 2: like the stocks that do best in terms of the

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Speaker 2: leverage single stock wrapper are the very volatile ones, and

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Speaker 2: quantum computing stocks are very volatile, so they definitely fit

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Speaker 2: that bill. So we'll see.

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Speaker 1: I wrote this week about inverse leveragets.

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Speaker 2: I know, let's not get let's not get into it,

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Speaker 2: but I do want to. I want the listeners who

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Speaker 2: think the we talked too much about ETFs to note

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Speaker 2: that you are you wrote two sections on ETFs this

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Speaker 2: week at least, and we're not getting into it.

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Speaker 1: And then they're like, let's not talk about ets today.

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Speaker 2: But wait one, I don't know. I think it's a

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Speaker 2: remarkable restraint on my part. Speaking of remarkable restraint, Elon

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Speaker 2: Musk told Dan Ives to shut up on Twitter.

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Speaker 1: There's so much remarkable restraint that he's shown. I was

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Speaker 1: enjoying Linda Yakarino, the former CEO of former Twitter the

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Speaker 1: x CEO x et Cetera. She announced on Twitter slash

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Speaker 1: x that she's having that CEO and she had a

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Speaker 1: nice like in her two years, we made a lot

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Speaker 1: of Yeah, I was black. Elon Musk replied, thank you

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Speaker 1: for your country.

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Speaker 2: Jesus really much. That is that's tough. She lasted two years,

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Speaker 2: which I think is a lot longer than many folks

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Speaker 2: at the outset expected her to last. Because the boy,

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Speaker 2: what a difficult, impossible job that she had, Yes, which

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Speaker 2: was basically courting advertisers to come back to this platform,

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Speaker 2: a platform that was also just you know, the bullhorn

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Speaker 2: of Elon Musk, who does not care about advertisers.

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Speaker 1: I think it's so funny that she was like the

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Speaker 1: chief marketing officer of Acts, but like for some sort

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Speaker 1: of optical reason, they decided to call her the chief

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Speaker 1: executive officer. And there was like this brief period where

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Speaker 1: not only was she the CEO, but Elon would be

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Speaker 1: in charge of engineering or something. There was some like

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Speaker 1: he had some role that was like a non CEO role,

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Speaker 1: and so you know, there's been reporting that in her

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Speaker 1: role as quasi CEO, but also in her role as

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Speaker 1: like the liaison with advertisers, she would talk to advertisers

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Speaker 1: and they would say, it would be great if would stop,

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Speaker 1: you know, tweeting defensive stuff on X that would help

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Speaker 1: us come back. And so she would go to him

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Speaker 1: and say, hey, it would be great if you would

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Speaker 1: stop tweeting offensive stuff, and he would get mad at her.

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Speaker 1: And like, if she were the CEO, if she were

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Speaker 1: in charge, you'd think she might have told her employee,

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Speaker 1: please stop tweeting offensive stuff on Twitter, for sure, But

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Speaker 1: instead she was only nominally the CEO and actually the

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Speaker 1: chief marketing officer. And it turned out that appealing to

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Speaker 1: advertisers was not the highest goal of this company, and

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Speaker 1: therefore the CEO said we would like to appeal to advertisers.

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Speaker 1: Was pretty much ignored. She's a strange, strange outcome.

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Speaker 2: Yeah, I do wonder. I mean, does X even hire

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Speaker 2: a CEO at this point?

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Speaker 1: Right? No, who would take it? Who would?

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Speaker 2: They don't need a CEO, especially now because they've been

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Speaker 2: absorbed by.

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Speaker 1: Yeah, no, that's weird. Like sorry, gonna tell she remained

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Speaker 1: the CEO of X. Yeah, after they emerged with X, which,

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Speaker 1: by the way, like as the CEO of X. Like.

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Speaker 1: The decision she probably did make was being merged into

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Speaker 1: another company, which is like a big one for a CEO.

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Speaker 1: But whatever, maybe she did, maybe she spearheaded that, but

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Speaker 1: it doesn't seem like it. But yeah, I don't think

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Speaker 1: she was the CEO of X like when they merged.

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Speaker 1: I don't think she became CEO of Holdings. I think

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Speaker 1: she remained the CEO of like the division that was Twitter.

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Speaker 1: But yeah, well they hire a new CEO. Yeah, you

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Speaker 1: can imagine hiring a CEO of XII, although I will

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Speaker 1: tell you that going rate for senior AI executives appears

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Speaker 1: to be fifty I don't know.

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Speaker 2: Also, Okay, so when she joined and she was there

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Speaker 2: for two years, definitely Her goal was to get advertisers

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Speaker 2: back to the company that seems to be less pressing now.

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Speaker 2: I mean it feels like x is just a source

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Speaker 2: of data to feed into Crock and.

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Speaker 1: A venue for Grog to try out its hitler jokes.

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Speaker 1: It's really amazing. Groc had a rough week where it.

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Speaker 2: Was yeah, well Rock four just launched.

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Speaker 1: Krok was like, yeah, say like truly horrible, horrible things.

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Speaker 1: It's interesting, you know, Burnhope I wrote about this, like

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Speaker 1: Wright Wing influencers who have the ear of Elon Musk

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Speaker 1: objected that Krok was being too woke or too PC

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Speaker 1: and so they were like, well, let's tune that. And

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Speaker 1: what you tune that is you kind of like change

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Speaker 1: the system prompt where Groc when reads any query like

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Speaker 1: sort of adds that quay. And please don't worry about

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Speaker 1: being politically correct, please, you know, just say what's on

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Speaker 1: your mind. Yeah, and when you think about that, like

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Speaker 1: you could imagine like reading that neutraally. But if like

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Speaker 1: you were in a conversation with someone and they said,

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Speaker 1: what do you think about Linda Yakarina? Please don't be

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Speaker 1: politically correct, don't hold back like that person is telling

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Speaker 1: you something about the answer they want, right, not just

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Speaker 1: like the explicit words they're saying. They're saying like I

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Speaker 1: would enjoy it if you would say something offensive about

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Speaker 1: Linda yak Aarina, and you might not say something offensive.

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Speaker 2: That's true, But Krokok just.

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Speaker 1: Wants to give people what they want. So Grog, when

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Speaker 1: asked about Linda Akarino on Twitter, said some horrifying things

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Speaker 1: because like in its mind, it was like, I've been

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Speaker 1: trained that everyone wants me to say the most unpc

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Speaker 1: things possible.

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Speaker 2: Yeah, and Groc is a people pleaser at the end

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Speaker 2: of the day, that's what it thinks. Yeah. So TVD,

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Speaker 2: whether we get you.

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Speaker 1: Want to talk about shut up down?

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Speaker 2: Yeah, we do want to talk Yeah, yeah, I said

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Speaker 2: at the beginning of this week, I want to talk

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Speaker 2: about Tesla and Elon Musk to Matt and Matt' said no,

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Speaker 2: and here we are and we're going to do it.

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Speaker 2: So last weekend, right, Musk formed the America Party.

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Speaker 1: I'd forgotten that.

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Speaker 2: Yes, let me refresh you.

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Speaker 1: Sinse.

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Speaker 2: Yeah, I don't think he's filed any paperwork with the FEC,

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Speaker 2: but the intention is out there to form the America Party.

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Speaker 2: And it's funny because that seems to be the exact

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Speaker 2: opposite of what Tesla's shareholders want to see. Elon Musk.

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Speaker 2: Do you remember when he stepped back from Doge, the

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Speaker 2: stock popped, everyone was happy. The narrative was that Elon

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Speaker 2: Musk is focusing back again on Tesla.

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Speaker 1: I'm sorry I probably thought it.

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Speaker 2: Too, but in the fullness of time for a week, yeah, yeah,

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Speaker 2: he got there. They did the Robotaxi event. But anyway,

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Speaker 2: Musk formed the America Party and the stock fell a

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Speaker 2: lot on Monday. And there's this Woodbush analyst Dan Ives,

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Speaker 2: who is famously bullish on Tesla. He I think still

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Speaker 2: has the highest price target on Wall Street, and he

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Speaker 2: came out with a note that made the rounds because

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Speaker 2: he had three suggestions for Tesla's board, basically saying that

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Speaker 2: the board needs to rain in Elon Musk. And he

437
00:21:45,960 --> 00:21:49,600
Speaker 2: also tweeted that, and Elon Musk replied to him and

438
00:21:49,640 --> 00:21:52,840
Speaker 2: all he said was shut up, Dan, which is pretty amazing. Like,

439
00:21:52,920 --> 00:21:56,760
Speaker 2: this is one of the longest, most passionate, and most

440
00:21:56,840 --> 00:21:58,280
Speaker 2: vocal Tesla bowls out there.

441
00:21:58,960 --> 00:22:02,440
Speaker 1: I think it's funny that like the Dani's note. Also,

442
00:22:02,440 --> 00:22:04,960
Speaker 1: it's like, okay, first things first, you have to give

443
00:22:05,200 --> 00:22:08,480
Speaker 1: Elon Musk an enormous package of Tesla stock options, which

444
00:22:08,520 --> 00:22:11,240
Speaker 1: is like, yeah, it's a funny dynamic where the way

445
00:22:11,280 --> 00:22:13,000
Speaker 1: to rain him in is to give him one hundred

446
00:22:13,040 --> 00:22:16,479
Speaker 1: billion dollars and like that's probably not wrong, but it's like,

447
00:22:16,720 --> 00:22:18,840
Speaker 1: you know, if you throw a big enough tantrum, you

448
00:22:18,880 --> 00:22:21,640
Speaker 1: get where you want, right, Like, if you are very

449
00:22:23,040 --> 00:22:25,840
Speaker 1: disengaged with Tesla, then like the way to re engage

450
00:22:25,920 --> 00:22:27,919
Speaker 1: is to hand you one hundred billion dollars with a stock.

451
00:22:28,080 --> 00:22:30,240
Speaker 2: Maybe well to that point, I don't think it would work.

452
00:22:30,960 --> 00:22:33,879
Speaker 2: Part of dan I's suggestions was that they should include

453
00:22:33,920 --> 00:22:37,880
Speaker 2: requirements for the time commitment to Tesla operations as part

454
00:22:38,000 --> 00:22:38,879
Speaker 2: of the pay package.

455
00:22:39,359 --> 00:22:42,320
Speaker 1: Imagine doing that. Imagine like to clock in. Yeah, we'll

456
00:22:42,320 --> 00:22:44,679
Speaker 1: give you one hundred million dollars a stock, but you

457
00:22:44,800 --> 00:22:47,240
Speaker 1: have to show up thirty hours a week and then

458
00:22:47,280 --> 00:22:49,800
Speaker 1: what and then what you monitor that? Well, he doesn't

459
00:22:49,800 --> 00:22:52,080
Speaker 1: show up and you're like, okay, we're taking away your stock.

460
00:22:52,080 --> 00:22:53,800
Speaker 1: The boy's going to do that. They're not gonna do that.

461
00:22:53,880 --> 00:22:56,400
Speaker 2: Come on, maybe Elon Musk will buy one of those

462
00:22:56,480 --> 00:23:02,080
Speaker 2: mouse jigglers that we talked about. Just move, move the

463
00:23:02,119 --> 00:23:05,520
Speaker 2: cursor around what else did he say? Oh, he said, well,

464
00:23:05,520 --> 00:23:08,760
Speaker 2: the board cannot control who must donates too politically, I've

465
00:23:08,760 --> 00:23:11,560
Speaker 2: said that the board should have oversight to ensure that

466
00:23:11,600 --> 00:23:14,840
Speaker 2: his political ambitions don't interfere with his role as CEO

467
00:23:14,840 --> 00:23:17,200
Speaker 2: of Tesla. So things along those lines.

468
00:23:17,560 --> 00:23:21,800
Speaker 1: But like that Chip is saled. Yeah, he's like he

469
00:23:21,920 --> 00:23:23,520
Speaker 1: tasted too much power to be like, oh, I'm the

470
00:23:23,560 --> 00:23:25,560
Speaker 1: CEO of a car company. Like he's not the CEO

471
00:23:25,600 --> 00:23:26,320
Speaker 1: of a car company.

472
00:23:27,080 --> 00:23:29,760
Speaker 2: Yeah, well, it's interesting to see where this goes.

473
00:23:29,760 --> 00:23:31,639
Speaker 1: Okay, they were like, Okay, you have to choose between

474
00:23:31,640 --> 00:23:34,560
Speaker 1: being CEO of the car company and like everything else

475
00:23:34,600 --> 00:23:37,200
Speaker 1: you do. He's going to be CEO of the car

476
00:23:37,240 --> 00:23:38,399
Speaker 1: company owns it.

477
00:23:39,320 --> 00:23:42,439
Speaker 2: I believe wholeheartedly that if Musk had been born in

478
00:23:42,440 --> 00:23:44,840
Speaker 2: the United States, he would be running for president right now,

479
00:23:45,440 --> 00:23:49,320
Speaker 2: out of cycle, just running for president. He would be campaigning.

480
00:23:49,760 --> 00:23:55,359
Speaker 1: Yeah, he's got too many ambitions to be like changed

481
00:23:55,359 --> 00:23:58,840
Speaker 1: to his desk at Tesla, you know, yeah, watching the

482
00:23:58,880 --> 00:24:02,879
Speaker 1: clock like yeah, also like yeah, like you could imagine

483
00:24:02,920 --> 00:24:03,760
Speaker 1: some board trying that.

484
00:24:03,720 --> 00:24:06,840
Speaker 2: But not this bored Yeah, that's true. I will say

485
00:24:06,840 --> 00:24:10,160
Speaker 2: the narrative that Elon Musk is too distracted as CEO

486
00:24:10,240 --> 00:24:13,760
Speaker 2: has been around forever, Like it seems particularly enhanced right

487
00:24:13,760 --> 00:24:18,520
Speaker 2: now with the political element, but he's always been in

488
00:24:18,640 --> 00:24:20,480
Speaker 2: charge of multiple companies at once.

489
00:24:20,720 --> 00:24:22,960
Speaker 1: Yeah, Because like when you say distracted, there's kind of

490
00:24:22,960 --> 00:24:24,760
Speaker 1: two things going on which are like one is like

491
00:24:24,880 --> 00:24:27,560
Speaker 1: is he not spending enough time? And I think, you know,

492
00:24:27,640 --> 00:24:29,879
Speaker 1: at this late stage, like I think there's a pretty

493
00:24:29,880 --> 00:24:32,880
Speaker 1: good case that he is effective at accomplishing a lot

494
00:24:32,880 --> 00:24:35,439
Speaker 1: of what he wants to do without spending all of

495
00:24:35,480 --> 00:24:37,560
Speaker 1: his time at a company that he's able to like

496
00:24:37,840 --> 00:24:42,160
Speaker 1: come in, address problems, delegate well, and then get out,

497
00:24:42,200 --> 00:24:44,679
Speaker 1: you know. Like I don't think like distraction in the

498
00:24:44,800 --> 00:24:48,320
Speaker 1: in the literal sense is the problem. The problem is

499
00:24:48,359 --> 00:24:50,680
Speaker 1: that like he chases shiny objects that like can hurt

500
00:24:50,680 --> 00:24:54,600
Speaker 1: the company, right, then that is harder to rein in. Yeah,

501
00:24:54,680 --> 00:24:57,160
Speaker 1: Like I think, like probably Dan Ives would be happy

502
00:24:57,200 --> 00:25:00,439
Speaker 1: with Elon Musk spending twenty hours a week at Tesla

503
00:25:00,800 --> 00:25:06,199
Speaker 1: and the rest of his time quietly playing video games

504
00:25:06,359 --> 00:25:08,119
Speaker 1: between hours a week at Tesla and eighty hours a

505
00:25:08,119 --> 00:25:10,560
Speaker 1: week doing horrifying other stuff. It's like more of a problem.

506
00:25:10,680 --> 00:25:30,200
Speaker 2: Yeah, for sure. Let's talk about so.

507
00:25:30,240 --> 00:25:32,760
Speaker 1: Sports gambling has become really big in America in the

508
00:25:32,800 --> 00:25:35,679
Speaker 1: last I've noticed, yeah, like really really big, Like I

509
00:25:35,800 --> 00:25:39,280
Speaker 1: remember a time when you could watch sports and not

510
00:25:39,359 --> 00:25:43,000
Speaker 1: only were they not like you know, pitching gambling companies

511
00:25:43,040 --> 00:25:45,640
Speaker 1: in every commercial break, but also like you know, Pete

512
00:25:45,680 --> 00:25:47,880
Speaker 1: Rose's banned for life from baseball for betting on sports.

513
00:25:47,920 --> 00:25:49,960
Speaker 1: Like betting on sports was like a bad thing, and

514
00:25:49,960 --> 00:25:51,000
Speaker 1: now it's like, you know, betting on.

515
00:25:50,920 --> 00:25:52,840
Speaker 2: Sports is what sports is back in your day.

516
00:25:52,960 --> 00:25:55,080
Speaker 1: Yeah, I'm old. This is what I would have talked

517
00:25:55,080 --> 00:25:58,200
Speaker 1: about the sports TV ship. Back in my day, you

518
00:25:58,200 --> 00:26:00,639
Speaker 1: didn't bet on sports. I mean people on sports. It

519
00:26:00,680 --> 00:26:02,960
Speaker 1: was like, you know, kind of like illegal ish.

520
00:26:02,960 --> 00:26:06,160
Speaker 2: Right legal and only you know, play the ponies.

521
00:26:06,720 --> 00:26:09,600
Speaker 1: You can play the ponies, but like when you want

522
00:26:09,600 --> 00:26:12,840
Speaker 1: to a baseball game, was everyone there was betting on it. Yeah,

523
00:26:13,119 --> 00:26:16,200
Speaker 1: but so it's become hugely popular and like broadly legal.

524
00:26:16,840 --> 00:26:20,680
Speaker 1: But then separately, there are people who have long loved

525
00:26:20,680 --> 00:26:23,440
Speaker 1: with the idea of prediction markets, right, prediction markets where

526
00:26:23,480 --> 00:26:24,879
Speaker 1: you can bet on who's going to be a president.

527
00:26:25,000 --> 00:26:29,000
Speaker 1: Prediction markets are informative, They create information, they like create

528
00:26:29,720 --> 00:26:32,120
Speaker 1: good externalities for the world. They tell you what's going

529
00:26:32,160 --> 00:26:34,760
Speaker 1: to happen, right, And so people have started you know,

530
00:26:34,840 --> 00:26:36,600
Speaker 1: a lot of it is crypto flavored, but it's not always.

531
00:26:36,760 --> 00:26:40,040
Speaker 1: People love starting prediction markets, and once you're in a

532
00:26:40,040 --> 00:26:41,800
Speaker 1: prediction market, you're like, you like get a lot of

533
00:26:41,840 --> 00:26:44,280
Speaker 1: attention when like the presidential election rolls around, and then

534
00:26:44,320 --> 00:26:47,159
Speaker 1: like it stops, right, Like the presidential election happens, no

535
00:26:47,200 --> 00:26:48,680
Speaker 1: one cares about, like you know.

536
00:26:48,760 --> 00:26:51,040
Speaker 2: No one wants to bet on congressional races, and.

537
00:26:51,040 --> 00:26:52,840
Speaker 1: Even those are like every two years, right, so like

538
00:26:53,640 --> 00:26:56,240
Speaker 1: you have like a lot of downtime, and you're like,

539
00:26:56,520 --> 00:26:58,439
Speaker 1: you know what people really like to predict is the

540
00:26:58,480 --> 00:27:01,439
Speaker 1: outcome of baseball game. And so then you're like, how

541
00:27:01,520 --> 00:27:03,720
Speaker 1: can I get into sports? Campling or no, no, no, sorry,

542
00:27:03,760 --> 00:27:07,280
Speaker 1: You're like, how can I get into the prediction of sports?

543
00:27:08,160 --> 00:27:10,800
Speaker 1: And so a number of these prediction markets, it's just

544
00:27:10,840 --> 00:27:13,119
Speaker 1: like a natural overlap, and like, by the way, like

545
00:27:13,160 --> 00:27:15,399
Speaker 1: in Europe, these things are also pretty convergent, where like

546
00:27:15,440 --> 00:27:18,240
Speaker 1: bookmakers will will take bets on sports and elections, and

547
00:27:18,320 --> 00:27:22,480
Speaker 1: so several of these things, including CALSHI, which is after

548
00:27:22,520 --> 00:27:29,800
Speaker 1: great difficulty, a CFTC registered like legal regulated futures exchange

549
00:27:29,840 --> 00:27:33,919
Speaker 1: that does prediction markets. CALSHI has prediction markets on the election,

550
00:27:34,600 --> 00:27:38,240
Speaker 1: and you know after the last election, like the regulatory

551
00:27:38,320 --> 00:27:42,440
Speaker 1: environment is pretty friendly to prediction markets, but it also

552
00:27:42,440 --> 00:27:46,399
Speaker 1: has prediction markets on Wimbledon and Past Paul and soccer,

553
00:27:47,280 --> 00:27:54,880
Speaker 1: and those prediction markets are technically CFTC regulated self certified

554
00:27:55,320 --> 00:27:59,000
Speaker 1: futures contracts. CALSHI decides what it wants to list, it

555
00:27:59,080 --> 00:28:02,320
Speaker 1: lists those things, and if the CFTC doesn't call it

556
00:28:02,400 --> 00:28:04,520
Speaker 1: up to object to, those things just get listed and

557
00:28:04,560 --> 00:28:10,560
Speaker 1: they trade. And several states that regulate gambling have called

558
00:28:10,640 --> 00:28:14,359
Speaker 1: CALSHI up and said you are offering illegal supports betting

559
00:28:14,520 --> 00:28:17,880
Speaker 1: in our states. You can't do that, and CALCI has said, nope,

560
00:28:17,920 --> 00:28:23,680
Speaker 1: these are CFTC registered contracts. CFTC regulation preempts state regulation,

561
00:28:23,920 --> 00:28:26,000
Speaker 1: so we can just do it and you can't stop us.

562
00:28:26,040 --> 00:28:27,240
Speaker 1: And by the way, we don't even know what this

563
00:28:27,320 --> 00:28:29,080
Speaker 1: has to do with gambling. This is not gambling. This

564
00:28:29,119 --> 00:28:32,880
Speaker 1: is predicting, and so far that has worked really well,

565
00:28:33,240 --> 00:28:35,720
Speaker 1: Like they've won lawsuits against.

566
00:28:35,440 --> 00:28:37,560
Speaker 2: States, which is amazing.

567
00:28:37,600 --> 00:28:41,240
Speaker 1: It's incredible, And I think the sort of basic theory

568
00:28:41,240 --> 00:28:44,640
Speaker 1: here is like this is CFTC jurisdiction and if the

569
00:28:44,640 --> 00:28:47,040
Speaker 1: CFTC wants to stop it, they should stop it. The

570
00:28:47,080 --> 00:28:51,520
Speaker 1: CFTC has sort of like said that these things are illegal,

571
00:28:51,600 --> 00:28:55,480
Speaker 1: but that was before the current administration, and it hasn't

572
00:28:55,480 --> 00:28:57,440
Speaker 1: done anything to stop them. And I think it's like

573
00:28:57,600 --> 00:29:01,560
Speaker 1: quite favorable to CALCI right now, and so so it

574
00:29:01,720 --> 00:29:04,520
Speaker 1: just gets to do it and it's wild. And what

575
00:29:04,560 --> 00:29:07,160
Speaker 1: I wrote about on Thursday is that there's a change

576
00:29:07,160 --> 00:29:09,360
Speaker 1: in the tax law that the one big beautiful Bill,

577
00:29:09,600 --> 00:29:12,360
Speaker 1: where now only ninety percent of gambling losses are tax

578
00:29:12,400 --> 00:29:16,400
Speaker 1: deductible against your gambling winnings. And that's like really like

579
00:29:16,480 --> 00:29:19,120
Speaker 1: existential for a lot of sports campers because you're sports gampler,

580
00:29:19,120 --> 00:29:20,680
Speaker 1: you're making a lot of bets, you're winning a little

581
00:29:20,720 --> 00:29:23,800
Speaker 1: bit more than you lose, right, and like you're making

582
00:29:23,880 --> 00:29:26,920
Speaker 1: you know, a fibercent profit margin on a huge outlay,

583
00:29:27,200 --> 00:29:29,160
Speaker 1: and if ten percent of your losses are non deductible,

584
00:29:29,200 --> 00:29:32,640
Speaker 1: then like you flip from being slightly positive to slightly negative.

585
00:29:32,640 --> 00:29:35,560
Speaker 1: And so you just can't be a professional sports campler anymore. Yeah,

586
00:29:35,600 --> 00:29:39,160
Speaker 1: But if you're just predicting on a prediction market, that's fine,

587
00:29:39,280 --> 00:29:39,800
Speaker 1: no problem.

588
00:29:39,800 --> 00:29:41,480
Speaker 2: Well that's the thing you have to imagine that the

589
00:29:41,520 --> 00:29:45,200
Speaker 2: net effect of that would be just accelerating the move

590
00:29:45,320 --> 00:29:47,800
Speaker 2: to these events or contracts, Like I learned.

591
00:29:47,680 --> 00:29:49,720
Speaker 1: About this because the reader email there's like, I'm a

592
00:29:49,880 --> 00:29:51,960
Speaker 1: semi professional sports campler and I'm going to have to

593
00:29:52,000 --> 00:29:53,160
Speaker 1: move to a prediction market.

594
00:29:53,280 --> 00:29:53,800
Speaker 2: That's wild.

595
00:29:54,000 --> 00:29:54,480
Speaker 1: It's wild.

596
00:29:54,800 --> 00:29:59,320
Speaker 2: So Calshi's winning lawsuits. But I mean at a certain stage, like,

597
00:30:00,520 --> 00:30:04,360
Speaker 2: isn't there like an element of common sense comes in

598
00:30:05,040 --> 00:30:09,320
Speaker 2: and says, look at this duck. It walks like a duck,

599
00:30:09,320 --> 00:30:11,160
Speaker 2: It quacks like a duck. This is a duck, and

600
00:30:11,200 --> 00:30:14,280
Speaker 2: cal she says, no, this is okay.

601
00:30:14,320 --> 00:30:16,720
Speaker 1: I think their argument is like you're coming at it

602
00:30:16,720 --> 00:30:23,160
Speaker 1: from the wrong direction. It's sense, okay, Like, yes, okay,

603
00:30:23,400 --> 00:30:26,960
Speaker 1: bets on sporting events look like sports gampling, but they

604
00:30:27,040 --> 00:30:32,320
Speaker 1: also look like bats on elections and interest rates and

605
00:30:33,160 --> 00:30:38,120
Speaker 1: zero day options on micro strategy and meme coins and

606
00:30:38,320 --> 00:30:40,400
Speaker 1: all the other stuff you have that is like clearly

607
00:30:40,440 --> 00:30:43,320
Speaker 1: financial markets.

608
00:30:43,360 --> 00:30:44,800
Speaker 2: Why should sports be sacred?

609
00:30:44,840 --> 00:30:48,160
Speaker 1: Why should sports be sacred? Like everything is like this,

610
00:30:48,560 --> 00:30:51,640
Speaker 1: so like why can't sports be like this? Yeah, that's

611
00:30:51,680 --> 00:30:53,520
Speaker 1: kind of a good argument, but it like scares me.

612
00:30:53,760 --> 00:30:56,160
Speaker 2: Yeah, it is. It is a little bit scary.

613
00:30:56,960 --> 00:31:00,480
Speaker 1: It's like if it's all gambling, it's like what you're

614
00:31:00,520 --> 00:31:02,680
Speaker 1: doing in the financial markets. By the way, sorry, I'm

615
00:31:02,680 --> 00:31:05,440
Speaker 1: exagger It's not that everything everyone does in financial markets

616
00:31:05,520 --> 00:31:07,760
Speaker 1: is gambling. It's that like a lot of stuff sometimes

617
00:31:07,840 --> 00:31:12,720
Speaker 1: arbitrag like, sometimes sometimes it's manipulation, sometimes sometimes it's fundamental

618
00:31:12,720 --> 00:31:14,920
Speaker 1: low time investing. But like there's a lot of stuff that,

619
00:31:15,080 --> 00:31:18,360
Speaker 1: like you know, is gambling, both in the sense that

620
00:31:18,440 --> 00:31:20,880
Speaker 1: like you're speculating on stuff with that much edge and

621
00:31:20,920 --> 00:31:22,960
Speaker 1: also in the sense that you're having fun doing like

622
00:31:23,000 --> 00:31:25,440
Speaker 1: it's an entertainment product. It is clearly the case that

623
00:31:25,520 --> 00:31:27,600
Speaker 1: like a lot of stuff that is being sold to

624
00:31:27,640 --> 00:31:33,920
Speaker 1: retail investors is a risky entertainment product, and they're just like, well,

625
00:31:33,920 --> 00:31:37,000
Speaker 1: we're not sports. That's like a risky entertainment problem.

626
00:31:37,320 --> 00:31:38,720
Speaker 2: I will just say I did end.

627
00:31:38,720 --> 00:31:39,880
Speaker 1: Up talking a lot about sports.

628
00:31:40,440 --> 00:31:44,120
Speaker 2: You love sports, you famously you love sports. I will

629
00:31:44,120 --> 00:31:46,320
Speaker 2: say it does feel inevitable that we're going to see

630
00:31:46,320 --> 00:31:49,680
Speaker 2: an events contract ETF. I'll just leave you with that thought.

631
00:31:51,840 --> 00:31:53,160
Speaker 2: The CFTC regulated, And.

632
00:31:57,280 --> 00:31:58,600
Speaker 1: That was the Money Stuff Podcast.

633
00:31:58,760 --> 00:32:00,840
Speaker 2: I'm Matt Levian and I'm Katie Greifeld.

634
00:32:01,120 --> 00:32:03,920
Speaker 1: You can find my work by subscribing to the moneystuffnewsletter

635
00:32:03,960 --> 00:32:05,040
Speaker 1: on Bloomberg dot.

636
00:32:04,880 --> 00:32:07,640
Speaker 2: Com, and you can find me on Bloomberg TV every

637
00:32:07,680 --> 00:32:11,080
Speaker 2: day on Open Interest between nine to eleven am Eastern.

638
00:32:11,240 --> 00:32:12,920
Speaker 1: We'd love to hear from you. You can send an

639
00:32:12,920 --> 00:32:16,120
Speaker 1: email to Moneypod at bloomberg dot net, ask us a

640
00:32:16,200 --> 00:32:17,640
Speaker 1: question and we might answer it on air.

641
00:32:18,160 --> 00:32:20,360
Speaker 2: You can also subscribe to our show wherever you're listening

642
00:32:20,400 --> 00:32:22,440
Speaker 2: right now and leave us a review. It helps more

643
00:32:22,440 --> 00:32:23,360
Speaker 2: people find the show.

644
00:32:23,960 --> 00:32:27,200
Speaker 1: The Money Stuff Podcast is produced by Anamasarakus and Moses

645
00:32:27,200 --> 00:32:28,000
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646
00:32:28,040 --> 00:32:31,040
Speaker 2: Theme music was composed by Blake Maples and Stage Bauman

647
00:32:31,080 --> 00:32:32,440
Speaker 2: is Bloomberg's head of Podcasts.

648
00:32:32,680 --> 00:32:35,040
Speaker 1: Thanks for listening to The Money Stuff Podcast. We'll be

649
00:32:35,080 --> 00:32:36,600
Speaker 1: back next week with more stuff