WEBVTT - [Beeeep] $: Elon, Jane Street, Hunterbrook 0:00:03.160 --> 0:00:08.600 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:11.160 --> 0:00:13.880 Hello and welcome to The Money Stuff Podcast, your weekly 0:00:13.920 --> 0:00:17.759 podcast where we talk about stuff related to money. Hi'm 0:00:17.800 --> 0:00:20.840 Matt Levin. I read the Money Stuff column for Bloomberg Opinion. 0:00:21.079 --> 0:00:23.720 And I'm Katie Greifeld. I'm a reporter for Bloomberg News 0:00:23.720 --> 0:00:25.520 and an anchor for Bloomberg Television. 0:00:25.640 --> 0:00:26.880 It's the best day of our lives. 0:00:27.160 --> 0:00:29.560 It is the best day of our lives, which happens 0:00:29.600 --> 0:00:31.760 every day on Fridays. We have a lot to talk 0:00:31.800 --> 0:00:33.960 about today. We have to talk about Elon Musk. 0:00:34.080 --> 0:00:36.200 Of course, we had a whole week with that Elon Musk. 0:00:36.200 --> 0:00:37.760 I think, I know it was weird that we didn't 0:00:37.760 --> 0:00:39.279 get to it in the first week. So we'll talk 0:00:39.280 --> 0:00:42.360 about Elon Musk on that pay package fifty six billion dollars, 0:00:42.400 --> 0:00:44.919 and of course his issues with Delaware. We're also going 0:00:44.960 --> 0:00:49.479 to talk about Jane Street versus Millennium. You just published 0:00:49.479 --> 0:00:49.760 on this. 0:00:50.000 --> 0:00:52.000 By the time you heard this podcast, I will published 0:00:52.000 --> 0:00:54.640 on it roughly twenty four hours ago. Were recording it 0:00:54.680 --> 0:00:56.200 shortly after I published on it. 0:00:56.200 --> 0:00:58.600 It's Thursday right now, and Matt published twenty minutes ago. 0:00:58.640 --> 0:01:00.880 So this is the one I'm least prepared for. As 0:01:01.000 --> 0:01:03.960 we're also going to talk about Hunter Brook, the hedge 0:01:03.960 --> 0:01:11.240 fund that's also a newspaper question mark. Indeed, before we 0:01:11.280 --> 0:01:14.320 get into this week's topics, it's our second episode. 0:01:14.640 --> 0:01:16.560 It's our second episode. We got a lot of feedback 0:01:16.560 --> 0:01:17.360 on the first episode. 0:01:17.400 --> 0:01:19.360 We got a lot of feedback. A lot of it 0:01:19.400 --> 0:01:22.560 was about all of its comment that I made about 0:01:22.560 --> 0:01:26.400 the doped Olympics. Surprise, they already exist and they're funded 0:01:26.400 --> 0:01:27.119 by Peter Teel. 0:01:27.240 --> 0:01:29.120 Well, it don't exist, they're like launching. 0:01:29.400 --> 0:01:32.800 Yeah, the idea is out there, the enhanced Games that 0:01:32.880 --> 0:01:36.120 would have no drug testing. So if you didn't want 0:01:36.160 --> 0:01:38.400 to do it performance enhancing drugs, you could still enter. 0:01:38.440 --> 0:01:40.280 You would just lose, yes, or you could do the 0:01:40.280 --> 0:01:42.160 regular Olympics, which you'll still have drug testing. 0:01:42.280 --> 0:01:43.920 Yeah, and you'll probably still lose. 0:01:43.959 --> 0:01:46.840 I wonder if, like presumably day one, the best athletes 0:01:46.880 --> 0:01:48.360 will still do the regular Olympics. 0:01:48.480 --> 0:01:48.680 Yeah. 0:01:48.720 --> 0:01:50.720 I wonder how long it'll take for the Enhanced Olympics 0:01:50.720 --> 0:01:53.800 to have faster times and it jumps. 0:01:53.880 --> 0:01:55.400 It's a great question because if you're like. 0:01:55.320 --> 0:01:57.040 The tenth best track athlete and you do a lot 0:01:57.040 --> 0:01:58.800 of drugs are better than the best. 0:01:59.200 --> 0:02:03.680 You probably there's only one way to find out. 0:02:03.840 --> 0:02:04.200 Is going to do? 0:02:04.320 --> 0:02:07.960 These games need to happen. The event roster includes individual 0:02:08.040 --> 0:02:12.160 sports such as athletics meaning track and field, aquatics, gymnastics, 0:02:12.240 --> 0:02:15.760 strength and combat. I would watch these, but. 0:02:16.760 --> 0:02:21.400 What we don't have on that list is drissage. 0:02:21.560 --> 0:02:28.320 Trissage Yeah, for the uninitiated, dressage is horse dancing. Effectively, 0:02:28.440 --> 0:02:30.919 just go on YouTube look it up. It's a ridiculous 0:02:30.960 --> 0:02:33.680 sport that, for better or worse, I partake in. I'm 0:02:33.680 --> 0:02:36.399 not sure if when I enter the enhanced games, which 0:02:36.440 --> 0:02:39.200 I will, whether I take the drugs, the horse takes 0:02:39.200 --> 0:02:41.880 the drugs. Do we both take the drugs the drugs? 0:02:41.919 --> 0:02:44.600 Have you or your horse ever been like offered drugs? 0:02:44.600 --> 0:02:47.560 Has ever been a controversy at your dressage? 0:02:47.560 --> 0:02:50.680 We're not that good maybe in higher levels of the sport, 0:02:50.760 --> 0:02:55.440 but what we're doing, it's very loosely dressage. Let's talk 0:02:55.480 --> 0:03:01.079 about the time, moving gracefully along laon Musk. The big 0:03:01.120 --> 0:03:03.480 news this week is that Tesla came out with their 0:03:03.520 --> 0:03:07.160 proxy statement two items of interest. They're going to havesh 0:03:07.160 --> 0:03:11.120 shareholders to vote again on that twenty eighteen pay package 0:03:11.120 --> 0:03:13.400 of fifty six billion dollars that was voided by a 0:03:13.440 --> 0:03:16.720 Delaware judge, and related to that, they're going to vote 0:03:16.760 --> 0:03:20.919 on whether to move Tesla's state of incorporation from Delaware 0:03:21.000 --> 0:03:22.480 to Texas. What do you want to start with? 0:03:22.600 --> 0:03:26.320 They're inter related, yes, right, he got paid a giant 0:03:26.400 --> 0:03:29.200 snack of options in about twenty eighteen. Everyone says they're 0:03:29.200 --> 0:03:32.160 worth fifty six billion dollars. Whatever they're worth, like forty 0:03:32.160 --> 0:03:35.040 billion dollars, fifty billion dollars, just like a conventional number 0:03:35.040 --> 0:03:36.760 that people attached to it because you know, go up 0:03:36.800 --> 0:03:38.040 and down with the stock. But right now they're with 0:03:38.120 --> 0:03:41.640 forty billion dollars and judge took them away in January. 0:03:41.640 --> 0:03:43.680 I said that was too much to pay him, and 0:03:43.760 --> 0:03:46.160 it wasn't properly approved by the shareholders. And so they're 0:03:46.200 --> 0:03:48.920 going back to the shareholders to one get it properly 0:03:48.920 --> 0:03:51.520 approved and two never has to deal with a Delaware 0:03:51.560 --> 0:03:53.360 judge again because they're going to move to Texas. 0:03:53.560 --> 0:03:56.240 Like you said, these are two intimately related issues. But 0:03:56.280 --> 0:03:58.760 sticking with the pay package, which everyone is saying is 0:03:58.760 --> 0:04:01.520 fifty six billion dollars, maybe it's forty billion dollars. But 0:04:01.680 --> 0:04:04.560 the vote is in June. Yeah, are they going to 0:04:04.560 --> 0:04:06.240 approve it again these shareholders. 0:04:06.480 --> 0:04:08.960 I think, so the proxy quits a lot of letters 0:04:08.960 --> 0:04:11.720 from individual shareholders saying how much they love Elon Musk 0:04:11.720 --> 0:04:13.920 and how they're going to approve it, and also, by 0:04:13.960 --> 0:04:17.240 the way, letters from like Trope Price Right big shareholders too. 0:04:17.680 --> 0:04:19.440 It's interesting if you were a sharelder in like twenty 0:04:19.480 --> 0:04:21.880 twenty one, or even like December of last year, I 0:04:21.880 --> 0:04:23.800 think you would say this pay package was worth it. 0:04:23.839 --> 0:04:25.400 In twenty eighteen, they said we're going to pay you 0:04:25.480 --> 0:04:28.320 on Musk fifty six billion dollars if he takes the 0:04:28.320 --> 0:04:30.719 market cap of Tesla from like sixty billion dollars, like 0:04:30.720 --> 0:04:33.240 six hundred and fifty billion dollars, And at the time 0:04:33.279 --> 0:04:36.400 that seemed like a real stretch goal. And then he 0:04:36.440 --> 0:04:41.040 did it really quickly, and so all the shareholders got rich, 0:04:41.200 --> 0:04:43.080 like they made a lot of money on Tesla, and 0:04:43.120 --> 0:04:45.760 I think they felt the real sense of gratitude, and 0:04:45.880 --> 0:04:48.240 so I think very few shareholders were complaining about his 0:04:48.279 --> 0:04:50.960 pay package, but one did ensued. Right, Yes, I think 0:04:51.000 --> 0:04:53.520 the shareholders were happy with it. But now if you 0:04:53.600 --> 0:04:56.440 go back to them and say you want to approve 0:04:56.440 --> 0:04:58.800 it again, they could be like, we already got whatever 0:04:58.839 --> 0:05:00.600 he did. He did the stuff that made it a 0:05:00.640 --> 0:05:03.960 six hundred and fifty billion dollar company. So if we 0:05:03.960 --> 0:05:06.320 can get those past efforts for free, why shouldn't they 0:05:06.360 --> 0:05:08.040 get it for free? They feel grateful, but do they 0:05:08.040 --> 0:05:10.479 feel fifty six billion dollars grateful? But that's it. If 0:05:10.520 --> 0:05:12.719 you're a Tesla scholder at this point, you're playing a 0:05:12.760 --> 0:05:16.360 longer game, and rightly or wrongly, I think Tesla sholders 0:05:16.560 --> 0:05:21.560 assume that Elon Musk and his continued affection are essential 0:05:21.600 --> 0:05:24.000 to the value of Tesla's stock. And so if they 0:05:24.080 --> 0:05:26.640 vote down this paypack goods, Like will he quit in 0:05:26.720 --> 0:05:29.400 a huff? Maybe he's got a lot going on, right, 0:05:29.640 --> 0:05:32.080 He's got a lot of distractions, so he could quit 0:05:32.120 --> 0:05:37.120 in a huff. And although his mercurial stewardship has not 0:05:37.160 --> 0:05:38.719 been great for the stock price in the last couple 0:05:38.720 --> 0:05:40.200 of years, he quits in a huff, that's going to 0:05:40.279 --> 0:05:40.560 take the. 0:05:40.560 --> 0:05:43.239 Stock think, Yeah, I mean the stock's already down forty 0:05:43.279 --> 0:05:44.040 percent year today. 0:05:44.240 --> 0:05:46.600 Yeah, Like it's been a rough ride. But still I 0:05:46.640 --> 0:05:48.920 think they want him there. It's not like if they 0:05:49.000 --> 0:05:50.719 vote this down, he'll come back and be like, Okay, fine, 0:05:50.720 --> 0:05:52.680 can you be like two billion dollars? Like I think like, 0:05:52.720 --> 0:05:54.640 if they vote this down, he's going to be really mad, 0:05:54.760 --> 0:05:55.560 like really mad. 0:05:56.000 --> 0:05:58.120 I guess I have two kind of related points to 0:05:58.120 --> 0:06:00.520 that to what you're saying, what is the key man 0:06:00.680 --> 0:06:03.880 risk to Tesla? Like, how much does Tesla need Elon 0:06:04.000 --> 0:06:06.480 Musk at this point? Is something I think about all 0:06:06.520 --> 0:06:08.960 the time. This is an established company at this point. 0:06:09.080 --> 0:06:10.840 No, I agree with that, it's an established company that 0:06:10.880 --> 0:06:12.640 could probably operate on its own. It's not like the 0:06:12.640 --> 0:06:15.000 stock has been continuing to go out from strength to strength. 0:06:15.080 --> 0:06:17.000 It's been a rough time. I do think that there's 0:06:17.000 --> 0:06:19.440 probably still a valuation premium for Elon Musk, and I 0:06:19.440 --> 0:06:23.279 think like it's a somewhat retail heavy stocked a lot 0:06:23.320 --> 0:06:25.120 of people who like Elon Musk and the stock, and 0:06:25.200 --> 0:06:28.040 I think if he were to leave, that would be bad. 0:06:28.120 --> 0:06:29.840 But I'm not sure of that in the way that 0:06:29.880 --> 0:06:31.280 I might have been in like twenty twenty one. 0:06:31.560 --> 0:06:31.800 Yeah. 0:06:31.839 --> 0:06:33.560 I also think, by the way, whatever your sort of 0:06:33.560 --> 0:06:36.120 economic calculation, I do think that some of the sholders 0:06:36.120 --> 0:06:37.960 at least are like, we agreed to pay him to 0:06:38.000 --> 0:06:42.200 these options. We voted on it. A court in a 0:06:42.200 --> 0:06:47.120 weird technical opinion struck that down, and we don't think 0:06:47.120 --> 0:06:50.400 that's fair. We think it's like bad for corporate democracy 0:06:50.400 --> 0:06:52.880 and also bad for like fairness to Elon Musk, and 0:06:52.920 --> 0:06:54.960 so we're going to give him that fifty six billion 0:06:55.000 --> 0:06:57.719 dollars back anyway. I think there's probably some of that 0:06:57.800 --> 0:07:00.720 going on among some of the including some of the 0:07:00.760 --> 0:07:01.839 institutional shareholders. 0:07:02.040 --> 0:07:06.560 Even if this is approved, we'll just get avoided again. 0:07:06.600 --> 0:07:08.760 Like how does this work if they approve it again. 0:07:09.080 --> 0:07:12.360 It's a fascinating question, I think, and Tesla thinks the 0:07:12.400 --> 0:07:14.520 answer is that if they approve it again this time, 0:07:14.560 --> 0:07:17.240 it will stick, right, because what happened last time is 0:07:17.280 --> 0:07:19.800 they approved it and the judge found that the shaholders 0:07:19.800 --> 0:07:22.240 were not fully informed of all the conflicts of interest 0:07:22.680 --> 0:07:26.840 involved in setting his pay package. Now they're fully informed, 0:07:27.000 --> 0:07:29.600 in part because, like Tesla went back and gave disclosures, 0:07:29.600 --> 0:07:31.760 but also they just attached the judge's opinion to the 0:07:31.760 --> 0:07:34.239 proxy statement to be like anything that the judge found 0:07:34.240 --> 0:07:37.200 bad here, you can read it, right. So I think 0:07:37.200 --> 0:07:39.440 they have to be fully informed. There's no problem with 0:07:39.520 --> 0:07:44.160 the vote, but the law and this is not super clear, 0:07:44.440 --> 0:07:47.280 and they say in the proxy statement, we're not totally 0:07:47.360 --> 0:07:49.280 sure what the effect of this will be I think 0:07:49.280 --> 0:07:52.520 there's some argument that the disgruntled shareholder can sue again 0:07:53.160 --> 0:07:56.600 and the judge again gets to decide if the pay 0:07:56.640 --> 0:07:59.040 package is fair, and we kind of know she thinks 0:07:59.040 --> 0:08:01.440 it isn't, so it might get stricked down. But the 0:08:01.440 --> 0:08:02.640 other thing I want to say is that I don't 0:08:02.640 --> 0:08:04.840 know what the disgruntl cherold. There's a guy named Richard Tournetto. 0:08:04.840 --> 0:08:05.880 I don't know what he thinks. I don't know if 0:08:05.880 --> 0:08:07.400 he wants to do this again. But you know who 0:08:07.440 --> 0:08:11.679 cares his lawyers who when they won in the dellar 0:08:11.720 --> 0:08:14.400 A court and they streck down this fifty six billion 0:08:14.440 --> 0:08:16.440 dollar pay package. They went to the court and they said, 0:08:16.480 --> 0:08:18.920 we want five point six billion dollars worth of Tesla 0:08:18.960 --> 0:08:22.440 stock as a fee for this win. Right, And their 0:08:22.480 --> 0:08:25.560 theory is we saved shareholders all this money by clawing 0:08:25.600 --> 0:08:27.800 back the fifty six billion dollars from Elon Musk. If 0:08:27.800 --> 0:08:30.200 the shareholders give Elon Musk the fifty six billion dollars back, 0:08:30.200 --> 0:08:32.360 they haven't gotten the fee yet, right, it's still in court. Yeah, 0:08:32.440 --> 0:08:34.760 if they give the money back, what is their argument 0:08:34.800 --> 0:08:37.360 that they save the shareholders any money? Like, yeah, they've 0:08:37.400 --> 0:08:40.240 got a lot of money riding on the argument that 0:08:40.520 --> 0:08:43.320 Musk's compensation actually got clawed back, so they care. 0:08:43.600 --> 0:08:47.000 Yeah, let's talk about the second part of what happened Texas. 0:08:47.160 --> 0:08:49.240 Are they going to run into this problem again in 0:08:49.280 --> 0:08:52.920 Texas moving to Texas? What does that do for Tesla? 0:08:53.240 --> 0:08:56.240 They say that moving to Texas makes sense because they're 0:08:56.360 --> 0:08:59.200 big factories in Texas, their headquarters in Texas. Elon lives 0:08:59.240 --> 0:09:01.800 in Texas, and so they have to bet their incorporation 0:09:01.880 --> 0:09:04.280 to Texas because that just makes sense. No other company 0:09:04.280 --> 0:09:05.800 thinks that, right, Like, that's not really a thing. Like 0:09:05.840 --> 0:09:08.600 every company is incorporated in Delaware, and very few are 0:09:08.600 --> 0:09:12.120 located in Delaware. But it's what they say. The answer is, 0:09:12.160 --> 0:09:14.320 nobody knows. There's a lot of Delaware corporate law and 0:09:14.320 --> 0:09:16.720 there's not a lot of corporate law anywhere else because 0:09:16.840 --> 0:09:20.520 most big companies that have big lawsuits are incorporated in Delaware, 0:09:20.520 --> 0:09:22.520 and so that's where all the cases are. Tesla says, 0:09:22.520 --> 0:09:25.880 and it's proxy that they think the law in Texas 0:09:26.040 --> 0:09:28.280 is mostly the same as the law in Delaware. I 0:09:28.320 --> 0:09:33.480 think it's probably true. But everyone kind of assumes that 0:09:33.679 --> 0:09:38.400 if this had all happened in Texas, and if a 0:09:38.520 --> 0:09:41.120 shareholder had sued Elon Musk in Texas, they get back 0:09:41.120 --> 0:09:43.920 to the fifty six billion dollars, a Texas judge would 0:09:43.920 --> 0:09:46.560 have been like, Nah, Elon Musk can keep that money. 0:09:47.120 --> 0:09:50.760 There's no basis for assuming that nobody knows. It seems 0:09:50.760 --> 0:09:53.360 that way, and clearly Elon Musk assumes it, because as 0:09:53.440 --> 0:09:55.280 soon as the Delaware opinion came out, he's like, we're 0:09:55.320 --> 0:09:58.600 moving to Texas. By the way, that happened, the opinion 0:09:58.600 --> 0:10:00.280 came out and he was like, we're moving to says 0:10:00.360 --> 0:10:02.600 right away, was saying it on Twitter. But Tesla now 0:10:02.600 --> 0:10:04.920 and it's proxy statement has to explain why it's moving 0:10:04.920 --> 0:10:08.880 to Texas, and it describes this very thorough process that 0:10:08.960 --> 0:10:11.840 it did to evaluate moving to Texas. So it formed 0:10:11.840 --> 0:10:14.720 a special committee of independent directors. There's one person on 0:10:14.760 --> 0:10:15.319 the committee. 0:10:15.480 --> 0:10:16.440 Was his name Elon Musk. 0:10:16.480 --> 0:10:19.320 No, No, it's a truly independent director. Her name is Kathleen 0:10:19.360 --> 0:10:22.400 Wilson Thompson. The special committee met sixteen times for more 0:10:22.440 --> 0:10:24.960 than twenty six hours, says the proxy, which is like 0:10:25.240 --> 0:10:28.560 a fun thing to imagine, Like I first imagined it 0:10:28.600 --> 0:10:31.040 as like I met four hours today with the money 0:10:31.080 --> 0:10:33.280 stuff committee. Like I was like typing on my computer. 0:10:33.320 --> 0:10:34.880 I was like, oh, there's a meeting, But in fact 0:10:34.880 --> 0:10:37.040 she met with like her lawyers, so she did. There 0:10:37.080 --> 0:10:38.920 were real meetings, but just she was the only director 0:10:38.960 --> 0:10:43.440 at the meetings. But they the committee evaluated all fifty 0:10:43.440 --> 0:10:45.559 states to decide. It was like throwing darts, being like, 0:10:45.600 --> 0:10:47.520 which state should we move to, and like it just 0:10:47.559 --> 0:10:52.079 so happens that the best state turned out to be Texas. Coincidentally, 0:10:52.120 --> 0:10:53.880 the same thing that Elon Musk was treating about like 0:10:53.880 --> 0:10:56.360 two months ago. It's beautiful, so it worked out nicely. 0:10:56.600 --> 0:10:58.200 Yeah, it's good that it turned out that way. 0:10:58.280 --> 0:10:59.760 By the way, you asked you if the laws move 0:10:59.800 --> 0:11:03.080 with I wrote this before there's some small chance of 0:11:03.120 --> 0:11:06.679 a Delaware judge saying, no, you're not allowed to move 0:11:06.679 --> 0:11:10.160 to Texas because you're only moving to Texas to pay Elon. 0:11:10.040 --> 0:11:12.559 Muskmore and which seems reasonable. 0:11:12.600 --> 0:11:15.320 That is like a violation of your pretty shaddies to 0:11:15.360 --> 0:11:18.000 your Delaware shaholders, so we're going to stop you. I 0:11:18.040 --> 0:11:19.880 wrote that in like January. I thought that was like 0:11:19.960 --> 0:11:22.920 some extremely funny theoretical chance of that happening. Since then, 0:11:22.960 --> 0:11:24.840 there's been like a Delaware court decision that makes it 0:11:24.920 --> 0:11:28.240 less likely, So I don't think that's going to happen, 0:11:28.320 --> 0:11:29.520 but it would be really funny. 0:11:29.640 --> 0:11:31.360 So I have one point, and I also have a question. 0:11:31.520 --> 0:11:33.840 I guess I'll start with the point, and that is 0:11:33.880 --> 0:11:37.439 that there is like a human psychology component to this, 0:11:37.640 --> 0:11:41.440 because I remember when this happened in January that it 0:11:41.480 --> 0:11:45.240 was voided this pay package. My suggestion to Elon Musk 0:11:45.240 --> 0:11:47.800 would be, why don't you just have Tesla do a dividends. 0:11:47.960 --> 0:11:50.760 Mark Zuckerberg did that with Meta. Now he's going to 0:11:50.800 --> 0:11:53.599 make like seven hundred million dollars a year. Mark Zuckerberg 0:11:53.679 --> 0:11:56.319 obviously owns a lot more Meta share, so it makes 0:11:56.400 --> 0:11:59.240 more sense there. But you made the point to me 0:11:59.360 --> 0:12:02.920 that Elon mus isn't trying to make normal extremely wealthy 0:12:02.920 --> 0:12:07.440 man money. He has like insane aspirations that he needs 0:12:07.480 --> 0:12:08.200 all this money for. 0:12:08.400 --> 0:12:10.480 He owns a minority of Tesla. He's a controlling Cheryl 0:12:10.520 --> 0:12:12.120 everbody owns like twenty percent of the stock, so a 0:12:12.160 --> 0:12:14.320 dividend would go mostly to other people, and like they're 0:12:14.360 --> 0:12:16.120 not so rolling in cash, they could pay it like 0:12:16.160 --> 0:12:18.600 tens of billions of dollars or dividends. Mark Zuckerwood gets 0:12:18.600 --> 0:12:21.440 a dividend because he likes to go water skiing or 0:12:21.440 --> 0:12:23.440 whatever it is that he does, right, hoverboarding, He. 0:12:23.440 --> 0:12:25.800 Has cows, right house, Yeah. 0:12:25.520 --> 0:12:28.240 Archery, I don't know, all sorts of normal things hobbies, Yeah, 0:12:28.360 --> 0:12:31.439 like moderately expensive hobbies some of them. But Elon Musk's 0:12:31.440 --> 0:12:36.280 hobbies are like brain implants, going to Mars, buying Twitter. 0:12:36.840 --> 0:12:40.000 I'm forgetting a few, but like, he's not like looking 0:12:40.040 --> 0:12:42.040 to spend money on a nice vacation. He's looking to 0:12:42.040 --> 0:12:45.480 have tens of billions of dollars to fund going to Mars, 0:12:45.880 --> 0:12:48.920 and so he needs these giant pay packages every now 0:12:48.920 --> 0:12:50.439 and then to pursue his next ambition. 0:12:50.600 --> 0:12:52.600 You're not going to get that from your dividend checks. 0:12:52.640 --> 0:12:55.120 And then my question for you is what do you 0:12:55.120 --> 0:12:58.160 think is the most interesting way that this proxy vote 0:12:58.160 --> 0:13:01.560 could turn out? What would be the most interesting chain 0:13:01.559 --> 0:13:02.240 of events for you? 0:13:02.760 --> 0:13:05.160 Look, I love the idea of a Delaware court preventing 0:13:05.240 --> 0:13:07.600 Musk from leaving for Texas. I think that would be 0:13:07.640 --> 0:13:11.400 extremely funny. But I actually think the simpler answer is funnier, 0:13:11.440 --> 0:13:14.320 which is, if the shareholders vote this down, that's wild, 0:13:14.559 --> 0:13:17.040 Like he'll quit it a huff on Twitter like that day. Yeah, 0:13:17.240 --> 0:13:21.000 it'll be an amazing thread of tweets and it will 0:13:21.040 --> 0:13:26.000 be an amazing corporate tobaccle. Whatever time he's devoting to Tesla, 0:13:26.080 --> 0:13:28.400 he'll go and devote to some other wild thing and 0:13:28.400 --> 0:13:31.800 that'll be wild, and Tesla will like find its way, 0:13:31.840 --> 0:13:34.280 as you know, it'll get back that fifty million dollars 0:13:34.280 --> 0:13:36.120 and find its way as a company not controlled by 0:13:36.920 --> 0:13:39.520 a wild, wild sequence of events. 0:13:39.600 --> 0:13:42.040 Now, in my mind would be the most interesting scenario 0:13:42.080 --> 0:13:43.840 as well, and then we could truly find out what 0:13:43.920 --> 0:13:45.439 the Elon Musk premium. 0:13:45.040 --> 0:13:47.240 Is the thing about Elon Musk companies is that if 0:13:47.240 --> 0:13:49.400 you're an investor in Elon Musk companies, like you like 0:13:49.440 --> 0:13:51.640 Elon Musk, like that's just how it goes, right, Like 0:13:51.920 --> 0:13:54.120 you're not there because you like the assets but think 0:13:54.120 --> 0:13:56.240 they're mismanaged, Like you're there because you like Elon Musk. 0:13:56.559 --> 0:13:59.679 It would be really shocking for the investors in an 0:13:59.679 --> 0:14:02.559 Elon Musk company to vote against them in such a 0:14:02.600 --> 0:14:03.240 striking way. 0:14:03.440 --> 0:14:05.440 Do you want to talk about Elon Musk for like 0:14:05.480 --> 0:14:07.360 twenty five more minutes or do you think we should 0:14:07.400 --> 0:14:07.679 move on? 0:14:07.880 --> 0:14:11.320 I saw your look of like I have wrapped this 0:14:11.400 --> 0:14:14.800 up so nicely. And then Matt comes in with more stuff. 0:14:14.800 --> 0:14:16.480 I have some more stuff, but I'm gonna wrap it up. 0:14:16.559 --> 0:14:35.360 Never mind, Stay tuned, Stay tuned. There's always more, love, Katie. 0:14:35.360 --> 0:14:38.080 You're so impatient to get to James sain Street. Yeah. 0:14:38.120 --> 0:14:41.680 I don't really know why not that it's not super 0:14:41.720 --> 0:14:44.640 interesting set the scene for us, what's going on? 0:14:44.920 --> 0:14:48.040 So I wanted to talk you about this because Jane 0:14:48.040 --> 0:14:52.240 Street sued Millennium. Two Jane Street traders left Jane Street. 0:14:52.320 --> 0:14:55.480 They went to Millennium, and Jane Street thinks they took 0:14:55.560 --> 0:14:58.800 a complicated secret trade with them and are now making 0:14:58.840 --> 0:15:01.400 money for Millennium at the expensive Jane Street, and so 0:15:01.480 --> 0:15:03.800 they sued. I wanted to talk about it because the 0:15:03.840 --> 0:15:06.920 complaint is public, but it's heavily redacted because Jane Street 0:15:07.360 --> 0:15:09.760 is like, we have the secret trading strategy that's being 0:15:09.840 --> 0:15:11.360 ruined by someone else copying it. They don't want to 0:15:11.360 --> 0:15:13.040 say what the strategy is, right, but they have to 0:15:13.080 --> 0:15:14.600 say what it is. They just have to black it 0:15:14.680 --> 0:15:16.000 out in the publicly filed version. 0:15:16.080 --> 0:15:16.280 Yeah. 0:15:16.360 --> 0:15:18.120 So I want to read the complaint and all. 0:15:18.000 --> 0:15:19.480 The biopes go for it. 0:15:19.560 --> 0:15:21.680 Okay, I'm not really going to read the whole complaint, 0:15:21.760 --> 0:15:24.560 but they did a trading investigation. They had this idea 0:15:24.720 --> 0:15:28.280 and they like tested it out, and the results confirmed 0:15:28.320 --> 0:15:32.520 Jane Street's initial findings, notwithstanding their facial improbability, and revealed 0:15:32.520 --> 0:15:35.680 that the market was bibe for certain classes of trades 0:15:35.680 --> 0:15:38.280 in the presence of specific market signals and underline conditions. 0:15:38.360 --> 0:15:40.560 Probably we could have, like a podcast producer put a 0:15:40.600 --> 0:15:42.320 real beep over that, but I think I think I 0:15:42.320 --> 0:15:43.800 did a pretty pretty good peep. 0:15:44.040 --> 0:15:46.080 Yeah, No, that definitely was a beeB anyway. 0:15:46.080 --> 0:15:47.960 So, yeah, they have this trade. Yeah, we don't know 0:15:48.000 --> 0:15:48.400 what it is. 0:15:48.440 --> 0:15:49.440 I want to know what it is. 0:15:49.520 --> 0:15:51.240 So what we know about it is one that makes 0:15:51.280 --> 0:15:54.080 money like reliably for like some number of months at least. 0:15:54.400 --> 0:15:58.320 And two it's weird. Yeah, they really emphasize that it's weird. 0:15:58.440 --> 0:16:04.080 It's facial improbability, and they say that it was counterintuitive, unexpected, 0:16:04.280 --> 0:16:08.080 and initially met with significant skepticism and incredulity internally at 0:16:08.160 --> 0:16:10.840 Jane Street. It's really tantalizing. They're like, we found this 0:16:10.920 --> 0:16:13.640 trade that you would not believe. It's so crazy. They 0:16:13.680 --> 0:16:15.560 like discovered it in like the data and they all 0:16:15.600 --> 0:16:17.400 sat it on and being like this can't be real. 0:16:17.760 --> 0:16:19.560 And then they tested it for like a year and 0:16:19.600 --> 0:16:20.560 they go, wow, it's real. 0:16:20.920 --> 0:16:24.200 This is kind of silly. But reading about it and 0:16:24.240 --> 0:16:26.960 reading that line specifically made me think of like Rudolph 0:16:27.120 --> 0:16:30.000 the Red Nose reindeer, how everyone made fun of him 0:16:30.200 --> 0:16:33.720 and then his nose actually lit up and illuminated the 0:16:33.800 --> 0:16:36.280 night sky and they were like, Wow, this works. It's 0:16:36.320 --> 0:16:41.520 sort of a similar situation. Yes, something else in the 0:16:41.600 --> 0:16:46.160 Bloomberg News article, apparently Jane Street saw evidence that one 0:16:46.160 --> 0:16:48.680 of the traders who left in February he was using 0:16:48.680 --> 0:16:51.960 the strategy. They figured it out because Jane Street said 0:16:52.000 --> 0:16:54.360 that its profits from using the strategy fell by fifty 0:16:54.400 --> 0:16:57.000 percent in March, a drop, it said, could only be 0:16:57.120 --> 0:17:00.640 attributable to quote, the entrance of a competitor using the 0:17:00.680 --> 0:17:02.360 same strategy. What is this trade? 0:17:02.440 --> 0:17:05.520 It's apparently a trade where there's like capacity to make editor. 0:17:05.880 --> 0:17:07.400 I'm going to make up a number, make a million 0:17:07.440 --> 0:17:09.159 dollars a day, right, And Jane Sat was doing it 0:17:09.160 --> 0:17:10.600 and making a million dollars a day, right, and then 0:17:10.640 --> 0:17:12.119 Millennium starts to do it. Now that each make half 0:17:12.119 --> 0:17:12.920 a million dollars a day. 0:17:12.960 --> 0:17:14.800 Right. Yeah, Because it's not like they lost money because 0:17:14.800 --> 0:17:16.639 someone else started doing it. They're just they're not the 0:17:16.640 --> 0:17:19.359 only person in this market anymore. Whatever this market is. 0:17:19.440 --> 0:17:21.800 It's some sort of options market. It seems clear it's 0:17:21.840 --> 0:17:25.440 like some sort of options trade. Rumor is that it's 0:17:25.480 --> 0:17:27.280 not in the United States, but it is. 0:17:27.440 --> 0:17:28.760 How does this work? Are we ever going to find 0:17:28.760 --> 0:17:30.639 out what the trade is? Or is it just a secret? 0:17:30.680 --> 0:17:33.800 I'm going to keep asking. One of my favorite things 0:17:33.800 --> 0:17:36.480 about this complaint is that one of these traders leaves 0:17:36.560 --> 0:17:39.679 Jane straight from Millennium, and the complaint mentions how much 0:17:39.720 --> 0:17:42.000 money he's getting, because they're making the point like he's 0:17:42.000 --> 0:17:45.000 getting paid so much money. It can't be just because yeah, 0:17:45.000 --> 0:17:48.720 he's like whatever experience, whatever skill, he wouldn't be making 0:17:48.720 --> 0:17:51.360 that much money. He's getting paid that much money because 0:17:51.400 --> 0:17:53.320 he's bringing this Chaine Street trade. 0:17:53.160 --> 0:17:53.920 To the millign people. 0:17:54.000 --> 0:17:56.280 How much he's making, Yeah, the complaint says, based on 0:17:56.359 --> 0:17:59.200 conversations between shadow Wald and his colleagues at Jane Street, 0:17:59.400 --> 0:18:03.760