1 00:00:02,720 --> 00:00:07,240 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:08,240 --> 00:00:11,640 Speaker 2: I'm just saying, like something could like happen, right, something 3 00:00:11,760 --> 00:00:15,680 Speaker 2: crazy could happen, right, Something crazy could happen while we're 4 00:00:15,720 --> 00:00:18,640 Speaker 2: recording this and I have to go talk about it 5 00:00:18,680 --> 00:00:20,800 Speaker 2: in like fifty two minutes. 6 00:00:21,400 --> 00:00:24,239 Speaker 1: Is that exciting? Like you come in here an hour 7 00:00:24,320 --> 00:00:27,160 Speaker 1: before you go on television, and like you turn off 8 00:00:27,160 --> 00:00:29,240 Speaker 1: your phone. Obviously your phone is sitting right in front 9 00:00:29,280 --> 00:00:31,200 Speaker 1: of you, but like, let's pretend you turn off your 10 00:00:31,200 --> 00:00:33,919 Speaker 1: phone and focus entirely on the Money Stuff podcast, And 11 00:00:34,040 --> 00:00:36,440 Speaker 1: like what if something crazy happens and you get out 12 00:00:36,440 --> 00:00:37,760 Speaker 1: of if you're at like two fifty nine and you 13 00:00:37,800 --> 00:00:40,120 Speaker 1: go on air and they're like something crazy happening and 14 00:00:40,159 --> 00:00:41,640 Speaker 1: you're like yeah. 15 00:00:41,159 --> 00:00:43,879 Speaker 2: They're like Katie, quick break this headline about the asteroid 16 00:00:43,920 --> 00:00:48,280 Speaker 2: that took out California, and I'm like, we're receiving reports 17 00:00:48,800 --> 00:00:49,559 Speaker 2: or something like that. 18 00:00:50,560 --> 00:00:51,960 Speaker 1: I think you keep your life exciting. 19 00:00:52,760 --> 00:00:57,160 Speaker 2: I do love adrenaline, like I crave adrenaline, but you know, 20 00:00:58,440 --> 00:00:59,480 Speaker 2: sometimes I get tired. 21 00:00:59,760 --> 00:01:04,960 Speaker 1: Yeah, I'm pretty tired. I was out to a dinner 22 00:01:05,400 --> 00:01:09,240 Speaker 1: until like midnight last nightly six hours later than my 23 00:01:09,319 --> 00:01:11,880 Speaker 1: usual bedtime. So I'm in bad shape. 24 00:01:12,040 --> 00:01:15,520 Speaker 2: Yeah, that's crazy pants. Matt came over at nine in 25 00:01:15,560 --> 00:01:18,000 Speaker 2: the morning with a smile on his face, and I 26 00:01:18,040 --> 00:01:19,080 Speaker 2: was like, how are you upright? 27 00:01:19,440 --> 00:01:22,399 Speaker 1: I had a fun dinner last night, but it was 28 00:01:22,840 --> 00:01:25,680 Speaker 1: way past my bedtime. So now I'm going to do 29 00:01:25,720 --> 00:01:27,480 Speaker 1: this and then collapse. 30 00:01:27,720 --> 00:01:29,840 Speaker 2: No, then you're going to go watch the clothes on 31 00:01:29,880 --> 00:01:30,800 Speaker 2: Bloomberg Television. 32 00:01:32,600 --> 00:01:34,800 Speaker 1: Our body batteries are turning in different directions. You are 33 00:01:34,840 --> 00:01:38,920 Speaker 1: going to you're adrenaline filled asteroid reporting, and I'm going 34 00:01:38,959 --> 00:01:42,040 Speaker 1: to nap. I did go over to you yesterday and 35 00:01:42,080 --> 00:01:43,520 Speaker 1: asked if you knew where the nap rooms. 36 00:01:43,319 --> 00:01:45,000 Speaker 2: At bloom I can't tell you. 37 00:01:45,080 --> 00:01:46,880 Speaker 1: If there's bloom no naprooms at Bloomer. 38 00:01:46,920 --> 00:01:48,919 Speaker 2: If there's Bloomberg people listening, they don't exist. 39 00:01:49,000 --> 00:01:53,440 Speaker 1: No nap rooms. Hello, and welcome to the Money Stuff Podcast. 40 00:01:53,800 --> 00:01:56,280 Speaker 1: You're a weekly podcast where we talked about stuff really 41 00:01:56,440 --> 00:01:58,880 Speaker 1: to money. I'm Matt Levine. Am I right? The Money 42 00:01:58,880 --> 00:02:01,360 Speaker 1: Stuff column for Bloomber opens. 43 00:02:00,760 --> 00:02:03,400 Speaker 2: And I'm Katie Greifeld, a reporter for Bloomberg News and 44 00:02:03,400 --> 00:02:05,000 Speaker 2: an anchor for Boomberg Television. 45 00:02:06,320 --> 00:02:10,840 Speaker 1: Like we're in the like pest control season of the podcast. 46 00:02:11,680 --> 00:02:12,840 Speaker 2: We're talking about book. 47 00:02:13,040 --> 00:02:15,440 Speaker 1: There are like two hundred Bloomberg headlines on the last 48 00:02:15,480 --> 00:02:16,799 Speaker 1: three days about cockroaches. 49 00:02:17,000 --> 00:02:20,240 Speaker 2: Yeah, I feel like the jokes over. We've squeezed as 50 00:02:20,360 --> 00:02:23,680 Speaker 2: much Series a J cockroach as we can, so let's 51 00:02:23,680 --> 00:02:25,240 Speaker 2: give it a rest. It's been like in the title, 52 00:02:25,360 --> 00:02:27,880 Speaker 2: so many newsletters that I've gotten over the past four hours. 53 00:02:27,960 --> 00:02:29,840 Speaker 1: Yes, it will not be in the title of this podcast. 54 00:02:29,919 --> 00:02:32,480 Speaker 1: Un last week screw up. They're right. So Jamie Diamond 55 00:02:32,840 --> 00:02:37,160 Speaker 1: on the Jape Morion Earnings call used the very conventional metaphors. Yeah, 56 00:02:37,160 --> 00:02:39,799 Speaker 1: but when you see one cockroaches, there probably more. He's 57 00:02:39,800 --> 00:02:44,240 Speaker 1: talking about the First Brands and Tricolor bankruptcys failures. Yeah, 58 00:02:44,400 --> 00:02:48,880 Speaker 1: credit bad things, kabooms, kabooms actually the real word that 59 00:02:48,960 --> 00:02:51,920 Speaker 1: I love. And Mark Rowan said this, he said, it 60 00:02:51,960 --> 00:02:54,840 Speaker 1: does not surprise me that we were seeing late cycle accidents. 61 00:02:55,080 --> 00:02:56,960 Speaker 1: Accident is what you call this. Like the word for 62 00:02:57,000 --> 00:02:59,760 Speaker 1: what happened with First Brands and Tracklor was accident. Yeah, 63 00:03:00,440 --> 00:03:02,679 Speaker 1: you made some loans, you didn't get paid. 64 00:03:02,480 --> 00:03:04,560 Speaker 2: Back, Oops, you spilled the milk. 65 00:03:04,840 --> 00:03:08,120 Speaker 1: Just it's like accident is the term. But yeah, so 66 00:03:08,120 --> 00:03:11,160 Speaker 1: there have been some pretty big accidents in the credit space, 67 00:03:11,600 --> 00:03:14,359 Speaker 1: and one dumb thing that is happening is that there 68 00:03:14,440 --> 00:03:17,720 Speaker 1: is a dispute about whether they exist in the private 69 00:03:17,720 --> 00:03:20,240 Speaker 1: credit space or the public credit space. But I don't 70 00:03:20,280 --> 00:03:24,760 Speaker 1: think it's at all interesting, like at all. But basically 71 00:03:24,840 --> 00:03:26,280 Speaker 1: JP Diamond got on a call and it was like, 72 00:03:26,800 --> 00:03:29,480 Speaker 1: you see the problems with private credit because these you know, 73 00:03:29,520 --> 00:03:31,519 Speaker 1: companies on a bankround and then all the private credit 74 00:03:31,560 --> 00:03:33,960 Speaker 1: guys are like those are like publicly financed banks led 75 00:03:34,000 --> 00:03:36,800 Speaker 1: their deals, Like those are not and like they're not 76 00:03:36,840 --> 00:03:39,920 Speaker 1: like private credit private credit. They're not like direct loans 77 00:03:39,960 --> 00:03:42,480 Speaker 1: from like the classic. They're not like LBO, you know, 78 00:03:42,560 --> 00:03:45,520 Speaker 1: like the core of private credit. Like I don't know, 79 00:03:45,960 --> 00:03:49,600 Speaker 1: they were funded by funds, Like are they private credit 80 00:03:49,680 --> 00:03:51,800 Speaker 1: in some loose sense sure? Or some of them bank 81 00:03:51,920 --> 00:03:53,760 Speaker 1: led and like you know with their bonds Like yeah, 82 00:03:53,760 --> 00:03:55,600 Speaker 1: I don't know whatever. But the point is it's not 83 00:03:55,680 --> 00:03:58,560 Speaker 1: like JP Morgan making bank loans on its packs, and 84 00:03:58,600 --> 00:04:01,800 Speaker 1: it's not like core you know, direct credit. 85 00:04:01,880 --> 00:04:04,320 Speaker 2: Yeah. A funny detail in all of this is that 86 00:04:04,960 --> 00:04:08,080 Speaker 2: Jamie Diamond didn't specifically call out private credit. 87 00:04:08,320 --> 00:04:10,560 Speaker 1: Yeah, though he did talk about like BDC's. 88 00:04:10,080 --> 00:04:14,240 Speaker 2: Being yeah yeah, yeah, I know, but like it's not 89 00:04:14,320 --> 00:04:17,839 Speaker 2: like he said, like, oh, these guys made bad loans, 90 00:04:17,839 --> 00:04:20,120 Speaker 2: blah blah blah. He did talk a little bit about 91 00:04:20,160 --> 00:04:23,080 Speaker 2: you know, BDC's trading at a discount to their NAV 92 00:04:23,320 --> 00:04:24,640 Speaker 2: but I think. 93 00:04:24,440 --> 00:04:26,880 Speaker 1: It's just such as the efficient markets way. 94 00:04:26,880 --> 00:04:30,720 Speaker 2: I'm saying they made right, right, right, But it did 95 00:04:30,760 --> 00:04:33,520 Speaker 2: so happen that Mark Lipschultz of Blue Out was asked 96 00:04:33,560 --> 00:04:37,039 Speaker 2: about his comments and appears that he took them personally, 97 00:04:37,120 --> 00:04:40,160 Speaker 2: and that's where he told, of course JP Morgan to 98 00:04:40,200 --> 00:04:42,839 Speaker 2: look inwards and the banks to look inwards at their loans. 99 00:04:42,920 --> 00:04:45,279 Speaker 2: So it is this fun blame game that has played 100 00:04:45,279 --> 00:04:47,680 Speaker 2: out this week. I feel like we wouldn't be talking 101 00:04:47,680 --> 00:04:50,479 Speaker 2: about it so much had Jamie Diamond not said cockroaches. 102 00:04:50,520 --> 00:04:53,160 Speaker 2: I feel like that game is defin a good like 103 00:04:53,320 --> 00:04:56,040 Speaker 2: tangible illustration for us to all seize upon. 104 00:04:56,360 --> 00:04:58,039 Speaker 1: But it is like taking a step back, like it 105 00:04:58,120 --> 00:05:01,599 Speaker 1: is the case that like these accidents, as Mark running 106 00:05:01,600 --> 00:05:05,279 Speaker 1: call them, are like true like bubbly signs like you 107 00:05:05,320 --> 00:05:08,920 Speaker 1: don't make loans to like people who are double or 108 00:05:09,000 --> 00:05:11,800 Speaker 1: triple or one hundred times pledging their assets, which like 109 00:05:11,800 --> 00:05:13,680 Speaker 1: there are some allegation that no one really knows. There's 110 00:05:13,680 --> 00:05:16,680 Speaker 1: some allegations Tray Color and or First Brands were maybe 111 00:05:16,760 --> 00:05:19,640 Speaker 1: you know a little loose with collateral. You don't make 112 00:05:19,680 --> 00:05:23,800 Speaker 1: those loans unless you're really trying hard to make loans, right, 113 00:05:24,000 --> 00:05:25,960 Speaker 1: Like I wrote about, like one thing that I think 114 00:05:26,040 --> 00:05:28,080 Speaker 1: is interesting about first brands is like the people who 115 00:05:28,160 --> 00:05:29,720 Speaker 1: had a lot of exposure. You know, there's like this 116 00:05:29,839 --> 00:05:33,960 Speaker 1: Jefferis run fund. There's this like trade finance origination platform. 117 00:05:34,160 --> 00:05:37,520 Speaker 1: They have like enormous amounts of exposure specifically to first brands. 118 00:05:38,000 --> 00:05:39,839 Speaker 1: Like what does that mean? It means like you're running 119 00:05:39,839 --> 00:05:42,400 Speaker 1: a fund and you're like, you know, ideally you'd like 120 00:05:42,440 --> 00:05:45,479 Speaker 1: to have diversified you know, trade finance receivables or whatever, 121 00:05:45,520 --> 00:05:48,840 Speaker 1: but like you just need to find paper to put 122 00:05:48,880 --> 00:05:50,600 Speaker 1: into the fund. And if someone is like I'm going 123 00:05:50,640 --> 00:05:52,599 Speaker 1: to generate a lot of paper for you, then like 124 00:05:52,640 --> 00:05:54,640 Speaker 1: you'd love to deal with that person, right, Like you'd 125 00:05:54,640 --> 00:05:55,880 Speaker 1: love to deal with the first bend if they're like, 126 00:05:55,920 --> 00:05:58,000 Speaker 1: we can you know, sell you as much as you need, 127 00:05:58,560 --> 00:06:00,800 Speaker 1: And so it create some that is for people to 128 00:06:00,839 --> 00:06:03,400 Speaker 1: sell you as much paper as you need, which means 129 00:06:04,160 --> 00:06:08,440 Speaker 1: either becoming very overlevered to generate paper for you, or 130 00:06:09,000 --> 00:06:11,800 Speaker 1: just like writing fake paper or like you know, triple 131 00:06:11,800 --> 00:06:14,160 Speaker 1: pledging things so that they can like sell you more 132 00:06:14,200 --> 00:06:16,440 Speaker 1: stuff because they sell your stuff and you get the money, 133 00:06:16,480 --> 00:06:18,479 Speaker 1: and like that's you know, that's the trade they're in. 134 00:06:18,800 --> 00:06:23,560 Speaker 1: So it does feel very toppy. Yeah, like Mark Owen said, 135 00:06:23,560 --> 00:06:26,480 Speaker 1: accidents but also late cycle accidents, and like this is 136 00:06:26,600 --> 00:06:29,560 Speaker 1: a private credit thing, just the credit generally these days, 137 00:06:29,560 --> 00:06:33,360 Speaker 1: Like there's a lot of people going around being like, yeah, 138 00:06:33,560 --> 00:06:38,840 Speaker 1: it feels toffee. Yeah, we're going to keep doing it. Yeah, 139 00:06:39,160 --> 00:06:40,920 Speaker 1: you know. I think one of the most insightful things 140 00:06:41,000 --> 00:06:43,640 Speaker 1: ever said about finance was when Chuck Prince in two 141 00:06:43,640 --> 00:06:46,359 Speaker 1: thousand and seven said, as long as the music is playing, 142 00:06:46,360 --> 00:06:48,920 Speaker 1: you've got to get up and dance. Like that's what 143 00:06:48,960 --> 00:06:49,560 Speaker 1: it is, man. 144 00:06:49,839 --> 00:06:51,360 Speaker 2: We all know we're coming to the end of the song. 145 00:06:52,000 --> 00:06:54,000 Speaker 1: Like, if you're in the business of making loans, you 146 00:06:54,040 --> 00:06:57,080 Speaker 1: can't be like we're not making loans. Yeah, too many 147 00:06:57,600 --> 00:06:59,640 Speaker 1: loans are too frisky right now, We're not going to 148 00:06:59,720 --> 00:06:59,960 Speaker 1: do it. 149 00:07:00,080 --> 00:07:02,880 Speaker 2: Yeah, you can't do that yet. A dance, Yeah, got 150 00:07:02,880 --> 00:07:05,200 Speaker 2: a dance, even if it's slate cycle and you know 151 00:07:05,240 --> 00:07:08,480 Speaker 2: everyone's tired. It is interesting. I mean this has been 152 00:07:08,520 --> 00:07:11,160 Speaker 2: held up as an example of we are in a 153 00:07:11,240 --> 00:07:13,600 Speaker 2: toppy environment. So too, I said, we weren't going to 154 00:07:13,600 --> 00:07:16,400 Speaker 2: talk about open Ai, but the open Ai Walmart deal. 155 00:07:16,520 --> 00:07:18,760 Speaker 2: That has been a lot of hay has been made 156 00:07:18,800 --> 00:07:23,280 Speaker 2: on social media about how truly we've reached the top or. 157 00:07:23,240 --> 00:07:25,280 Speaker 1: Someone like the headline and something like, of course it's 158 00:07:25,280 --> 00:07:25,720 Speaker 1: a bubble. 159 00:07:25,880 --> 00:07:29,720 Speaker 2: Of course are here, we are in a bubble. I 160 00:07:29,720 --> 00:07:31,520 Speaker 2: do want to talk a little bit more about this 161 00:07:31,560 --> 00:07:35,360 Speaker 2: other comment that Mark Lipschultz said, because it seems like 162 00:07:35,440 --> 00:07:38,240 Speaker 2: he did take this very personally. One of the things 163 00:07:38,240 --> 00:07:40,640 Speaker 2: he said, when it comes to market caps, there are 164 00:07:40,680 --> 00:07:43,840 Speaker 2: people who have meaningful interests in the industry not continuing 165 00:07:43,840 --> 00:07:47,280 Speaker 2: to grow and succeed. Blackstone's market cap exceeds the market 166 00:07:47,280 --> 00:07:50,480 Speaker 2: cap of most financial institutions in the world today. It's 167 00:07:50,520 --> 00:07:53,440 Speaker 2: not as if that's not coming from someone, and of 168 00:07:53,480 --> 00:07:56,320 Speaker 2: course there are people who don't like it. Which is 169 00:07:56,320 --> 00:07:58,840 Speaker 2: interesting that he use Blackstone specifically and not Blue asl 170 00:07:58,920 --> 00:08:01,880 Speaker 2: But Blue Aule has a market cap of about twenty 171 00:08:01,920 --> 00:08:05,400 Speaker 2: five billion dollars. Blackstone is somewhere closer to two hundred 172 00:08:05,440 --> 00:08:08,760 Speaker 2: billion JP Morgan is over eight hundred billion. But this 173 00:08:08,840 --> 00:08:11,160 Speaker 2: is the point we've spoken about before, is how the 174 00:08:11,160 --> 00:08:15,640 Speaker 2: stock market values some of these private credit players even 175 00:08:15,640 --> 00:08:19,520 Speaker 2: though their assets are much smaller than like a traditional 176 00:08:19,520 --> 00:08:22,600 Speaker 2: asset manager or even the asset management arms of these banks. 177 00:08:23,120 --> 00:08:25,160 Speaker 1: Yeah. I think the point he's making is like when 178 00:08:25,160 --> 00:08:26,840 Speaker 1: he says that that market cup has to be coming 179 00:08:26,880 --> 00:08:29,880 Speaker 1: from somewhere, it's not like a comparison to the aum 180 00:08:29,920 --> 00:08:32,280 Speaker 1: of banks. It's a comparison to like their lending business. Right, 181 00:08:32,320 --> 00:08:34,760 Speaker 1: It's like, yeah, you know, I think he's making more broadly, 182 00:08:34,800 --> 00:08:37,720 Speaker 1: the point that like the business of making a lot 183 00:08:37,720 --> 00:08:41,400 Speaker 1: of categories of loans is shifting from being a thing 184 00:08:41,440 --> 00:08:44,360 Speaker 1: that banks, yeah, at least intermediate and under it, to 185 00:08:44,440 --> 00:08:48,520 Speaker 1: being a thing that is kind of being led and 186 00:08:48,559 --> 00:08:52,640 Speaker 1: originated and held in the balance sheets of private credit firms. Yeah, which, 187 00:08:52,800 --> 00:08:54,680 Speaker 1: again I don't know how interesting it is to like 188 00:08:54,720 --> 00:08:57,200 Speaker 1: debate about whether the problems you're seeing or like private 189 00:08:57,200 --> 00:09:01,079 Speaker 1: credit problems or bank problems. But like, on the one hand, 190 00:09:01,120 --> 00:09:03,320 Speaker 1: I think the private credit people make a good point, Like, 191 00:09:03,400 --> 00:09:06,320 Speaker 1: for I say this a lot, but like the funding 192 00:09:06,320 --> 00:09:09,240 Speaker 1: model of private credit is a lot more systemically stable 193 00:09:09,280 --> 00:09:11,800 Speaker 1: than the funding model of banks. Right, instead of having deposits, 194 00:09:11,800 --> 00:09:14,840 Speaker 1: you have long term equity capital. That seems good. The 195 00:09:14,840 --> 00:09:17,680 Speaker 1: private credit people will also argue that like they have 196 00:09:17,800 --> 00:09:21,040 Speaker 1: better underwriting incentives because they hold it on their books, 197 00:09:21,240 --> 00:09:24,040 Speaker 1: whereas banks obviously hold a lot of loans on their books, 198 00:09:24,040 --> 00:09:26,120 Speaker 1: but you think about a lot of what they do 199 00:09:26,280 --> 00:09:29,480 Speaker 1: is originate the distribute model, where they maybe have less 200 00:09:29,880 --> 00:09:32,880 Speaker 1: skin in the game on their underwriting. On the other hand, 201 00:09:33,520 --> 00:09:37,520 Speaker 1: thanks are regulated, and you do get the sense that 202 00:09:38,360 --> 00:09:43,680 Speaker 1: it is such a good fundraising environment for private credit firms, 203 00:09:43,720 --> 00:09:46,280 Speaker 1: such a frothy like if you want to sell your 204 00:09:46,280 --> 00:09:49,120 Speaker 1: private credit firm a lot of like traditional asset measures, 205 00:09:49,200 --> 00:09:53,360 Speaker 1: but it's like you do have some pressures to put 206 00:09:53,400 --> 00:09:55,400 Speaker 1: all this gusher of money to work, and that might 207 00:09:55,440 --> 00:09:57,040 Speaker 1: looseen your underwriting standards as well. 208 00:09:57,520 --> 00:10:01,280 Speaker 2: Can I say one more thing about cockroaches? By all means, 209 00:10:02,880 --> 00:10:06,760 Speaker 2: this is so gross, Yeah, Jamie Diamond. So first of all, 210 00:10:06,840 --> 00:10:09,840 Speaker 2: exactly what he said on the call was my antenna 211 00:10:09,920 --> 00:10:12,880 Speaker 2: goes up when things like this happens. And my first 212 00:10:12,920 --> 00:10:16,679 Speaker 2: reaction was, like an antenna like that on a cockroach. 213 00:10:17,800 --> 00:10:21,160 Speaker 1: You're saying he feels for the cockroaches, Well, it's just 214 00:10:21,400 --> 00:10:23,240 Speaker 1: he can put himself in the shoes of both the 215 00:10:23,320 --> 00:10:26,160 Speaker 1: lender and then he's gonna say the shoes of the cockroaches. 216 00:10:26,160 --> 00:10:28,800 Speaker 2: But perhaps he tipped his hands there. I don't know, 217 00:10:29,160 --> 00:10:31,839 Speaker 2: but cockroaches do have antennas, and so does Jamie Diamond. 218 00:10:45,520 --> 00:10:50,560 Speaker 2: What's a second on your priority list? Yeah, all right, 219 00:10:51,240 --> 00:10:56,560 Speaker 2: I didn't win again. Well, someone won the Nobel Peace Prize, 220 00:10:56,559 --> 00:10:59,480 Speaker 2: but also the Insider Trading Prize, but it wasn't inside 221 00:11:00,200 --> 00:11:00,800 Speaker 2: did somebody? 222 00:11:01,400 --> 00:11:04,079 Speaker 1: Somebody won the Nobel Peace Prize was Maria Corinam, a 223 00:11:04,120 --> 00:11:10,760 Speaker 1: shadow Venezuela and democracyativist. And also somebody won an amount 224 00:11:10,840 --> 00:11:14,200 Speaker 1: of money on polymarket some some Yeah, the sum appears 225 00:11:14,240 --> 00:11:17,359 Speaker 1: to be had fifty thousand dollars, which is like depends. 226 00:11:17,000 --> 00:11:20,240 Speaker 2: On your like, I could find something to do it. 227 00:11:20,520 --> 00:11:24,239 Speaker 1: It's not a bad payday for someone hanging out on polymarket. 228 00:11:24,320 --> 00:11:27,440 Speaker 1: It's not like institutional grade. You know, you can't like 229 00:11:27,720 --> 00:11:30,880 Speaker 1: run a hedge fund by like occasionally by once every 230 00:11:30,960 --> 00:11:33,880 Speaker 1: year making fifty thousand dollars on the Nobel Peace Prize winner. 231 00:11:34,000 --> 00:11:36,079 Speaker 1: But it's something, right, It's like, it's true, it's a 232 00:11:36,200 --> 00:11:38,960 Speaker 1: nice individual person's bet it. But anyway, there were some 233 00:11:38,960 --> 00:11:40,880 Speaker 1: suggestions that it was inside of treading because it was 234 00:11:40,880 --> 00:11:43,480 Speaker 1: done kind of right before the announcement, like in the 235 00:11:43,520 --> 00:11:45,800 Speaker 1: in the you know, hours later ampter then announcement and 236 00:11:45,840 --> 00:11:48,520 Speaker 1: in fact, a spokesman for the Norwegian No Balance Dude said, 237 00:11:48,920 --> 00:11:51,520 Speaker 1: we have noticed that some have made significant financial gains 238 00:11:51,559 --> 00:11:54,160 Speaker 1: by placing bets on this year's prize. We will investigate 239 00:11:54,160 --> 00:11:57,319 Speaker 1: whether this means that someone has unlawfully obtained information from us, 240 00:11:57,440 --> 00:12:00,240 Speaker 1: because presumably they knew before they announced it, right, And 241 00:12:00,320 --> 00:12:03,559 Speaker 1: so if like someone in the circle of trust that 242 00:12:03,640 --> 00:12:07,640 Speaker 1: the Norwegian Nobel Institute went and like placed an anonymous 243 00:12:07,640 --> 00:12:09,760 Speaker 1: crypto trade on polymarket, then would. 244 00:12:09,520 --> 00:12:12,600 Speaker 2: It have been amazing for what it's worth. Oh yeah, 245 00:12:13,200 --> 00:12:15,280 Speaker 2: real sign of the times anyway. 246 00:12:15,080 --> 00:12:16,640 Speaker 1: A real sign of the times. And then that's what 247 00:12:16,679 --> 00:12:19,920 Speaker 1: they seem to have thought happened, But it probably turns 248 00:12:19,920 --> 00:12:21,560 Speaker 1: out one never knows, because these things are all like 249 00:12:21,559 --> 00:12:23,880 Speaker 1: somewhat anonymous. But like, you know, there's an interview of 250 00:12:23,920 --> 00:12:25,520 Speaker 1: the guy who like allegedly did it, and he's like, 251 00:12:25,520 --> 00:12:27,199 Speaker 1: you know, you can look to the there's all this 252 00:12:27,360 --> 00:12:30,080 Speaker 1: public stuff basically like when they hit the button on 253 00:12:30,120 --> 00:12:33,480 Speaker 1: the announcement, Like there's a lot of assets on the website, 254 00:12:33,480 --> 00:12:36,079 Speaker 1: like there's a picture of my shadow for sure, and 255 00:12:36,600 --> 00:12:40,680 Speaker 1: they upload those assets before they hit the button, before 256 00:12:40,679 --> 00:12:42,680 Speaker 1: they like put out the actual press relief. And so 257 00:12:42,720 --> 00:12:45,960 Speaker 1: if you're like scraping the folder on the website that 258 00:12:46,000 --> 00:12:48,200 Speaker 1: has all the assets. You can see like you know, 259 00:12:48,320 --> 00:12:50,760 Speaker 1: something with her name in the web page, and then 260 00:12:50,800 --> 00:12:53,800 Speaker 1: you can make an informed pat and so that maybe 261 00:12:53,840 --> 00:12:54,720 Speaker 1: what happened. 262 00:12:54,360 --> 00:12:56,920 Speaker 2: Here that is really funny. Also to your point that 263 00:12:57,000 --> 00:13:00,320 Speaker 2: fifty grand is an institutional money, I have to imagine 264 00:13:00,360 --> 00:13:03,360 Speaker 2: that next year this inefficiency in the market won't exist, 265 00:13:03,720 --> 00:13:06,000 Speaker 2: Like maybe they'll hit the button and then they'll upload 266 00:13:06,040 --> 00:13:06,440 Speaker 2: the photo. 267 00:13:07,320 --> 00:13:09,520 Speaker 1: Yeah, there's some of this, like like this is a 268 00:13:09,600 --> 00:13:14,560 Speaker 1: trade that occasionally exists in US public company earnings. Yeah, 269 00:13:14,600 --> 00:13:18,040 Speaker 1: because you can, like, if you know, like the URL 270 00:13:18,200 --> 00:13:21,360 Speaker 1: of like last quarter's earnings, you can just like change 271 00:13:21,559 --> 00:13:24,640 Speaker 1: Q two to Q three in that URL and just 272 00:13:24,760 --> 00:13:28,200 Speaker 1: refresh that page until something pops up, which might be 273 00:13:28,200 --> 00:13:30,480 Speaker 1: before they officially announced earnings. Yeah, and so this is 274 00:13:30,520 --> 00:13:32,079 Speaker 1: like a well known enough trade that companies are a 275 00:13:32,120 --> 00:13:35,040 Speaker 1: little better about not doing that now. So right, you 276 00:13:35,080 --> 00:13:37,360 Speaker 1: think that like they will be a little bit more 277 00:13:37,440 --> 00:13:40,400 Speaker 1: information secure next year, or they won't. I don't know. 278 00:13:41,640 --> 00:13:43,480 Speaker 2: I mean maybe they're not that bothered, but I just 279 00:13:43,480 --> 00:13:45,960 Speaker 2: feel like that that body who. 280 00:13:45,880 --> 00:13:49,720 Speaker 1: Actually, like if you're the Nobel Institute and it turns 281 00:13:49,760 --> 00:13:53,840 Speaker 1: out that some junior staffer was using your information to 282 00:13:53,960 --> 00:13:56,560 Speaker 1: make fifty grand, you'll be annoyed with them. If it 283 00:13:56,640 --> 00:13:59,160 Speaker 1: turns out that someone on the committee that selects the 284 00:13:59,160 --> 00:14:01,319 Speaker 1: winner was betting on it, then you'll be really. 285 00:14:01,120 --> 00:14:03,439 Speaker 2: Annoyed bad because that's like, don't like that. 286 00:14:03,440 --> 00:14:05,840 Speaker 1: That's not insider trading. That's like you know market. 287 00:14:06,040 --> 00:14:07,520 Speaker 2: Right, that's like rigging the game. 288 00:14:07,600 --> 00:14:09,719 Speaker 1: That's rigging the game. It's like instead of betting on 289 00:14:09,720 --> 00:14:11,360 Speaker 1: who's going to win the Nobel Peace Prize, you're like 290 00:14:11,440 --> 00:14:13,520 Speaker 1: giving the Nobel Peace Prize to the person you bet on. 291 00:14:13,559 --> 00:14:16,520 Speaker 1: It seems really really bad. No allegation to that happened. 292 00:14:17,040 --> 00:14:18,880 Speaker 1: But if it's just like someone script your website, like 293 00:14:18,920 --> 00:14:19,880 Speaker 1: who cares? Give them the money? 294 00:14:19,880 --> 00:14:24,160 Speaker 2: Who cares? That's a very Kathy would out of referencing, 295 00:14:24,200 --> 00:14:26,240 Speaker 2: of course, last week's podcast No right. 296 00:14:26,360 --> 00:14:29,120 Speaker 1: No. I know people time out prediction markets. You know, 297 00:14:29,120 --> 00:14:31,200 Speaker 1: I've quoted chain Complain saying it's like their goal is 298 00:14:31,240 --> 00:14:35,840 Speaker 1: to help people understand and price the future, and people 299 00:14:36,040 --> 00:14:40,440 Speaker 1: really want prediction markets to create incentives to make the 300 00:14:40,520 --> 00:14:43,640 Speaker 1: world more informed, and it's like the ideal is like, 301 00:14:43,800 --> 00:14:45,400 Speaker 1: you know, you have a bet. I'm like, will Russia 302 00:14:45,440 --> 00:14:47,880 Speaker 1: invade Ukraine or whatever, right, and like you have people 303 00:14:47,920 --> 00:14:51,360 Speaker 1: who are really informed geopolitical analysts making bets, and then 304 00:14:51,400 --> 00:14:54,000 Speaker 1: you have like a Russian general making bets, and then 305 00:14:54,080 --> 00:14:56,560 Speaker 1: like you actually know right, and then like the market 306 00:14:56,800 --> 00:15:01,000 Speaker 1: implied odds are really informative, and so people can make 307 00:15:01,120 --> 00:15:04,560 Speaker 1: economic decisions based on this like probability that exists in 308 00:15:04,600 --> 00:15:07,360 Speaker 1: a prediction market. Like that's kind of an interesting ideal 309 00:15:07,520 --> 00:15:11,000 Speaker 1: and would be useful in a lot of purposes. And 310 00:15:11,480 --> 00:15:13,160 Speaker 1: you know, as we've talked about here, the problem with 311 00:15:13,240 --> 00:15:15,560 Speaker 1: that is like it's not clear. There is a lot 312 00:15:15,640 --> 00:15:19,200 Speaker 1: of dumb money on like yeah, the market of like, well, 313 00:15:19,280 --> 00:15:22,720 Speaker 1: Russia invade at Ukraine, and so it's hard to make 314 00:15:22,760 --> 00:15:25,000 Speaker 1: a lot of money. It's hard to be institutional grade, 315 00:15:25,000 --> 00:15:27,800 Speaker 1: and so like if you're a Russian general, you might 316 00:15:27,880 --> 00:15:29,880 Speaker 1: be like, well I can make ten thousand dollars and 317 00:15:29,960 --> 00:15:31,760 Speaker 1: possibly be shot, so I won't do it right. So 318 00:15:31,840 --> 00:15:34,640 Speaker 1: it's like it's like hard to incorporate information. And then 319 00:15:34,720 --> 00:15:36,480 Speaker 1: like you have examples like this where it's like whoever 320 00:15:36,560 --> 00:15:39,240 Speaker 1: this is like put a lot of work into figuring 321 00:15:39,320 --> 00:15:41,320 Speaker 1: out who was going to win the Nobel Prize twelve 322 00:15:41,360 --> 00:15:45,440 Speaker 1: hours early, and like one is that the sort of 323 00:15:46,160 --> 00:15:51,760 Speaker 1: fact that will inform anyone's economic decisions about like the 324 00:15:51,840 --> 00:15:53,760 Speaker 1: one's hedging who's going to win the Nobel Prize right. 325 00:15:54,280 --> 00:15:57,560 Speaker 1: Two is knowing it twelve hours early? That useful? And 326 00:15:57,560 --> 00:16:00,560 Speaker 1: then three like the reaction might be that they just 327 00:16:00,560 --> 00:16:02,960 Speaker 1: stop putting these assets on the web twelve hours early, 328 00:16:03,000 --> 00:16:03,440 Speaker 1: and then it's like. 329 00:16:03,440 --> 00:16:06,440 Speaker 2: Well, okay, yeah, the trade is something like you haven't. 330 00:16:06,280 --> 00:16:08,360 Speaker 1: Made anyone more informed about anything in any useful way. 331 00:16:08,400 --> 00:16:09,600 Speaker 1: It's just yeah, you get the money. 332 00:16:09,760 --> 00:16:11,560 Speaker 2: Yeah, well to that point, I mean you write in 333 00:16:12,320 --> 00:16:14,760 Speaker 2: your newsletter that the point is that the Nobel Peace 334 00:16:14,840 --> 00:16:17,200 Speaker 2: Prize prediction market is working the way it is supposed to. 335 00:16:17,480 --> 00:16:21,680 Speaker 2: It incentivizes people to find out information and incorporate it 336 00:16:21,800 --> 00:16:25,640 Speaker 2: into prices, which I agree with, but it feels kind 337 00:16:25,680 --> 00:16:30,240 Speaker 2: of unsatisfying because you think about the example of you know, 338 00:16:30,360 --> 00:16:34,360 Speaker 2: equity markets and a hedge fund analyst scraping a website 339 00:16:34,400 --> 00:16:37,880 Speaker 2: for earnings. Makes that market a little bit more efficient, 340 00:16:37,960 --> 00:16:42,880 Speaker 2: and then it informs how companies invest capital and allocate capital, 341 00:16:42,960 --> 00:16:46,240 Speaker 2: whereas here it's just someone now knows this early and 342 00:16:46,440 --> 00:16:49,200 Speaker 2: like there's no follow through on that, which is satisfying. 343 00:16:49,640 --> 00:16:51,760 Speaker 1: People care about who in the Nobel Prize, but it 344 00:16:51,880 --> 00:16:55,520 Speaker 1: doesn't have like economic consequences. They're not a lot of hedgers. 345 00:16:55,840 --> 00:17:00,400 Speaker 1: Yeah right, yeah, but you know this is like what 346 00:17:00,440 --> 00:17:02,600 Speaker 1: I've said about sports campling too. Right. It's like, if 347 00:17:02,640 --> 00:17:06,119 Speaker 1: you like create an ecosystem where people professional and like 348 00:17:06,200 --> 00:17:10,159 Speaker 1: semi professional and like just hardworking and smart people are 349 00:17:10,440 --> 00:17:15,440 Speaker 1: dabbling in prediction markets, then like there's possible spillover to 350 00:17:15,520 --> 00:17:19,359 Speaker 1: like economically meaningful prediction markets. Right, There's some possibility that 351 00:17:20,359 --> 00:17:24,240 Speaker 1: the people who spend eight hours building some scraping tools 352 00:17:24,280 --> 00:17:26,399 Speaker 1: to predict the novel PCE prize will then go on 353 00:17:26,600 --> 00:17:30,000 Speaker 1: to spend sixteen hours building scraping tools to predict the 354 00:17:30,080 --> 00:17:36,040 Speaker 1: next Russian invasion, right, because like the similarish skill sets. Maybe, yeah, maybe, 355 00:17:36,280 --> 00:17:40,000 Speaker 1: like maybe Russia's uploading its battle plans to a website. 356 00:17:40,000 --> 00:17:44,080 Speaker 1: Who knows. There's some notion that if prediction markets get 357 00:17:44,160 --> 00:17:49,800 Speaker 1: bigger and attract capital and skill, then ultimately the thing 358 00:17:49,880 --> 00:17:54,000 Speaker 1: you really want, which is that they inform people about 359 00:17:54,080 --> 00:17:57,760 Speaker 1: the probabilities of economically meaningful future events. Some possibly that 360 00:17:57,840 --> 00:18:02,520 Speaker 1: will come true. And like it's not in a straightforward 361 00:18:02,560 --> 00:18:05,360 Speaker 1: linear way where it's we start with the most important 362 00:18:05,400 --> 00:18:08,320 Speaker 1: markets and get really sos they get people to really 363 00:18:08,359 --> 00:18:10,800 Speaker 1: get predictions of the most important markets. It's we start 364 00:18:10,840 --> 00:18:12,960 Speaker 1: with places where you can make money, and then that 365 00:18:13,080 --> 00:18:15,320 Speaker 1: attracts money, and then that attracts more sophistication. 366 00:18:15,680 --> 00:18:19,359 Speaker 2: It probably also informs your behavior in other markets. Like 367 00:18:19,480 --> 00:18:22,359 Speaker 2: if the prediction market for who is Russia going to 368 00:18:22,480 --> 00:18:27,440 Speaker 2: invade next gets really informative and liquid, and you could 369 00:18:27,520 --> 00:18:30,320 Speaker 2: imagine watching that and then going and buying a bunch 370 00:18:30,320 --> 00:18:31,119 Speaker 2: of calls on oil. 371 00:18:31,760 --> 00:18:35,240 Speaker 1: Oh absolutely, although I mean right now, surely the oil 372 00:18:35,320 --> 00:18:37,960 Speaker 1: market is more predictive of geopolitical events. No, you know, 373 00:18:38,119 --> 00:18:39,399 Speaker 1: most prediction markets, but I don't know. 374 00:18:39,520 --> 00:18:42,640 Speaker 2: The frustrating thing about oil, it's my least favorite commodity 375 00:18:42,720 --> 00:18:47,000 Speaker 2: to talk about. It never prices in a sustainable risk premium. 376 00:18:47,359 --> 00:18:50,040 Speaker 2: So maybe you wouldn't buy calls on oil, or maybe 377 00:18:50,080 --> 00:18:52,920 Speaker 2: you would, I don't know, buy treasuries. 378 00:18:53,960 --> 00:18:55,760 Speaker 1: Right This is one of the arguments for prediction markets. 379 00:18:55,800 --> 00:18:58,960 Speaker 1: There's a lot of ways to implement predictions about future 380 00:18:59,040 --> 00:19:03,119 Speaker 1: geopolitical events. And what that means is that you can't 381 00:19:03,200 --> 00:19:05,520 Speaker 1: look at the price of oil or the price of 382 00:19:05,600 --> 00:19:08,800 Speaker 1: treasuries and read out a prediction about future events because 383 00:19:09,200 --> 00:19:12,280 Speaker 1: they kind of reflect a lot of different possible events. Yeah, 384 00:19:12,320 --> 00:19:15,439 Speaker 1: whereas if there's just like a contract, will Russia invade wherever, 385 00:19:16,000 --> 00:19:18,560 Speaker 1: then you can look at that contract and read off 386 00:19:18,600 --> 00:19:19,720 Speaker 1: the probability. Yeah. 387 00:19:19,920 --> 00:19:23,040 Speaker 2: It's like very pure pleasure. Yeah right, congratulations to. 388 00:19:25,200 --> 00:19:29,240 Speaker 1: Yeah, fifty grand probably less than the Nobel Peace Prize price. 389 00:19:29,800 --> 00:19:30,399 Speaker 2: How much is it? 390 00:19:30,520 --> 00:19:32,560 Speaker 1: I don't know. You get a gold medal. 391 00:19:32,960 --> 00:19:35,360 Speaker 2: That's pretty good. Yeah, A look at the satisfaction. 392 00:19:36,000 --> 00:19:37,040 Speaker 1: Yeah, it's pretty good. 393 00:19:37,280 --> 00:19:37,520 Speaker 2: Yeah. 394 00:19:38,600 --> 00:19:40,359 Speaker 1: I feel like winning the Nobel Piece prisence is in 395 00:19:40,440 --> 00:19:43,280 Speaker 1: some ways the worst. It's like, there's a decent chance 396 00:19:43,359 --> 00:19:44,960 Speaker 1: that you're like imprisoned or exiled. 397 00:19:45,400 --> 00:19:49,320 Speaker 2: That's true. But in the event that you're not, imagine 398 00:19:49,520 --> 00:19:53,240 Speaker 2: all the speaking engagements and fees that you can command. 399 00:19:53,440 --> 00:19:56,720 Speaker 1: That's okay, that's fair, that's fair, lucrative business winning a 400 00:19:57,040 --> 00:19:57,520 Speaker 1: piece press. 401 00:19:57,840 --> 00:19:59,720 Speaker 2: Okay, Well, a bunch of people are going to write 402 00:19:59,760 --> 00:20:00,600 Speaker 2: in and tell you how much. 403 00:20:00,960 --> 00:20:04,200 Speaker 1: Yeah, of course change. I think it's. 404 00:20:07,560 --> 00:20:09,479 Speaker 2: It's fun because we could google it. We're not going 405 00:20:09,520 --> 00:20:13,280 Speaker 2: to do that, right, just yeah, staring at me. 406 00:20:25,840 --> 00:20:27,840 Speaker 1: We're up to eighteen five stock trading. 407 00:20:28,040 --> 00:20:31,480 Speaker 2: Eighteen five, baby, but you know in twenty twenty six, 408 00:20:31,600 --> 00:20:33,280 Speaker 2: eventually we'll get to twenty three five? 409 00:20:33,880 --> 00:20:36,200 Speaker 1: Is a thing called the twenty four X Exchange, the 410 00:20:36,240 --> 00:20:39,400 Speaker 1: twenty four Exchange twenty four X National Exchange. The intuition 411 00:20:39,600 --> 00:20:41,520 Speaker 1: is that we want to trade stocks twenty four hours 412 00:20:41,520 --> 00:20:43,280 Speaker 1: a day, but like you can't do that because you 413 00:20:43,359 --> 00:20:47,760 Speaker 1: have to like restart the computers, so they're more modest. 414 00:20:47,800 --> 00:20:50,400 Speaker 1: Target is trading slacks twenty three hours a day, five 415 00:20:50,480 --> 00:20:54,560 Speaker 1: days a week, and their progress starts that as they 416 00:20:54,640 --> 00:20:57,080 Speaker 1: launched eighteen hour a day trading five days a week, 417 00:20:57,080 --> 00:20:58,879 Speaker 1: which is I feel like. 418 00:20:58,880 --> 00:20:59,960 Speaker 2: Their name should be twenty. 419 00:20:59,800 --> 00:21:02,760 Speaker 1: Three rec No, that's the thing, like if you're twenty 420 00:21:02,760 --> 00:21:04,919 Speaker 1: four twenty four, that's the number of hours in a day. 421 00:21:04,920 --> 00:21:07,800 Speaker 2: If you say twenty three, I feel like what I know, 422 00:21:08,000 --> 00:21:09,159 Speaker 2: But it's disingenuous. 423 00:21:09,600 --> 00:21:12,560 Speaker 1: Yes, that's why it's funny. Yeah, but like you know, 424 00:21:12,680 --> 00:21:14,639 Speaker 1: you're allowed to be funny anyway, though. But they're now 425 00:21:14,760 --> 00:21:16,159 Speaker 1: to eighteen hours, which is like, you know, kind of 426 00:21:16,240 --> 00:21:16,960 Speaker 1: like extended hours. 427 00:21:17,400 --> 00:21:18,200 Speaker 2: Really all you need. 428 00:21:18,680 --> 00:21:21,800 Speaker 1: I don't know, it's all I need. I as we've 429 00:21:21,880 --> 00:21:25,360 Speaker 1: established good about at six o'clock. But if you're, for instance, 430 00:21:25,840 --> 00:21:28,280 Speaker 1: in Japan and you want to trade American stocks, it 431 00:21:28,440 --> 00:21:29,840 Speaker 1: is convenient to be able to do it in the 432 00:21:29,880 --> 00:21:30,600 Speaker 1: middle of your day. 433 00:21:30,880 --> 00:21:33,600 Speaker 2: Yeah, I guess like it's a global market, yeah. 434 00:21:33,480 --> 00:21:36,800 Speaker 1: For American stocks and slacks generally, and so it does 435 00:21:37,200 --> 00:21:38,920 Speaker 1: kind of make sense that everyone should be able to 436 00:21:38,920 --> 00:21:39,520 Speaker 1: trade all the time. 437 00:21:39,960 --> 00:21:42,760 Speaker 2: Also, you know, maybe you're in Japan, maybe you're just 438 00:21:42,920 --> 00:21:44,200 Speaker 2: up at three in the morning. 439 00:21:44,800 --> 00:21:46,960 Speaker 1: Right, I try to be generous, like twenty four x 440 00:21:47,000 --> 00:21:49,040 Speaker 1: Exchange actually says, you know, this is for you know, 441 00:21:49,359 --> 00:21:53,120 Speaker 1: investors worldwide. And I don't really think that the paradigmatic 442 00:21:53,480 --> 00:21:56,680 Speaker 1: user of twenty four hour trading is someone drunk on 443 00:21:56,760 --> 00:21:59,840 Speaker 1: their computer at three am. But I kind of think 444 00:21:59,880 --> 00:22:02,199 Speaker 1: that I think about that person a lot. I think 445 00:22:02,280 --> 00:22:05,080 Speaker 1: that's a fun. Yeah, I'm not going to do it justice. 446 00:22:05,119 --> 00:22:08,040 Speaker 1: There's a famous great pit in like hedgehund market Wizards 447 00:22:08,119 --> 00:22:11,040 Speaker 1: the Jack Schueger book, where he interviews one hedgehund manager 448 00:22:11,080 --> 00:22:14,479 Speaker 1: who says, I want to hire people who wake up 449 00:22:14,520 --> 00:22:19,359 Speaker 1: early on Sunday morning and log in to poker sites 450 00:22:19,440 --> 00:22:22,640 Speaker 1: to pick off the drunks coming home in another time zone. Nice, 451 00:22:23,240 --> 00:22:27,159 Speaker 1: because what you're doing there is understanding where you have 452 00:22:27,240 --> 00:22:30,480 Speaker 1: the most edge and then just exploiting your edge, doing 453 00:22:30,520 --> 00:22:33,000 Speaker 1: it somewhat inconveniently for yourself in a just a cold 454 00:22:33,000 --> 00:22:36,280 Speaker 1: bloodedly rational way anyway, Right, there's some people in a 455 00:22:36,320 --> 00:22:38,000 Speaker 1: world of twenty four R trading who would come home 456 00:22:38,080 --> 00:22:40,040 Speaker 1: drunk from the bar at three am and be like, 457 00:22:40,200 --> 00:22:42,000 Speaker 1: all right, fire up Robin. 458 00:22:41,840 --> 00:22:46,160 Speaker 2: Hood's options, my single triple leverage EUTF now. 459 00:22:47,160 --> 00:22:50,280 Speaker 1: Yeah, and again, I don't think that's the main use 460 00:22:50,359 --> 00:22:52,440 Speaker 1: case for twenty four R trading, but it's the funniest 461 00:22:52,560 --> 00:22:53,359 Speaker 1: use case. Yeah. 462 00:22:53,840 --> 00:22:57,440 Speaker 2: Well, hopefully, you know, as this gets online, we'll figure 463 00:22:57,480 --> 00:23:01,440 Speaker 2: out who exactly the players at three am Eastern are. 464 00:23:02,080 --> 00:23:05,320 Speaker 2: It might be Japanese retail players. It might be people 465 00:23:05,440 --> 00:23:08,400 Speaker 2: drunk coming home from the barn. It might almost said barn, 466 00:23:09,000 --> 00:23:10,640 Speaker 2: I say that a lot more often than bar. 467 00:23:10,960 --> 00:23:12,760 Speaker 1: You come home from the barn more often than the bar. 468 00:23:15,359 --> 00:23:18,840 Speaker 2: Or it might be you know, sophisticated US investors looking 469 00:23:18,880 --> 00:23:20,800 Speaker 2: to pick off Japanese retail investors. I don't know. 470 00:23:20,920 --> 00:23:23,879 Speaker 1: Well, yeah, I mean. The other thing, like, the thing 471 00:23:23,960 --> 00:23:26,520 Speaker 1: that I think is interesting is we have this ecosystem 472 00:23:26,560 --> 00:23:30,639 Speaker 1: where a lot of news gets disclosed outside of regular 473 00:23:30,720 --> 00:23:34,920 Speaker 1: market hours because you don't want to be Traditionally, you 474 00:23:34,920 --> 00:23:37,720 Speaker 1: don't want to be in the situation of disclosing a 475 00:23:37,800 --> 00:23:41,960 Speaker 1: merger at ten am and everyone reacting to that sequentially 476 00:23:42,040 --> 00:23:43,560 Speaker 1: and like reading the press release and saying, oh, I 477 00:23:43,560 --> 00:23:46,400 Speaker 1: should buy the stock, and some people not having gotten 478 00:23:46,400 --> 00:23:49,680 Speaker 1: the press release yet and like selling it outdated prices. 479 00:23:50,040 --> 00:23:52,760 Speaker 1: It's just a mess. And so what everyone does is 480 00:23:52,800 --> 00:23:56,359 Speaker 1: they announce earnings at seven am or four or five pm, 481 00:23:56,880 --> 00:23:59,879 Speaker 1: so people have time to digest the earnings before the 482 00:24:00,000 --> 00:24:04,760 Speaker 1: stock opens for trading next And the purpose of after 483 00:24:04,880 --> 00:24:08,440 Speaker 1: hours trading really is to let people react to news 484 00:24:08,560 --> 00:24:11,320 Speaker 1: as it happens. So instead of, you know, if a 485 00:24:11,400 --> 00:24:14,760 Speaker 1: hurricane hits at midnight, instead of waiting until the next 486 00:24:14,840 --> 00:24:17,159 Speaker 1: day to dump your stocks, you can dump your stocks 487 00:24:17,200 --> 00:24:20,560 Speaker 1: at twelve oh one. And when you say that, I 488 00:24:20,600 --> 00:24:22,480 Speaker 1: think it's intuitively appealing to a lot of people. Oh 489 00:24:22,600 --> 00:24:24,639 Speaker 1: I can trade as soon as the thing happens. But 490 00:24:24,720 --> 00:24:28,400 Speaker 1: I think it's like kind of bad for retail investors. Yeah, 491 00:24:28,880 --> 00:24:32,200 Speaker 1: what it means is that instead of everyone reacting to 492 00:24:32,320 --> 00:24:34,879 Speaker 1: news at the same time, because you have a buffer 493 00:24:34,960 --> 00:24:36,879 Speaker 1: between when it's announced and when it can be traded, 494 00:24:37,240 --> 00:24:39,040 Speaker 1: you have people reacting to news as they get it, 495 00:24:39,280 --> 00:24:41,399 Speaker 1: as they analyze it, and so you're gonna have a 496 00:24:41,440 --> 00:24:43,800 Speaker 1: lot of people trading at wrong prices. And I do 497 00:24:43,920 --> 00:24:46,480 Speaker 1: think that's the point where that's the appeal of after 498 00:24:46,560 --> 00:24:50,480 Speaker 1: hours trading is like you'll just get more volatility, you'll 499 00:24:50,480 --> 00:24:53,720 Speaker 1: get more wrong prices. If you think you're skilled and 500 00:24:53,920 --> 00:24:56,440 Speaker 1: you enjoy a gamble or a game of skill, you'll 501 00:24:56,480 --> 00:24:59,560 Speaker 1: have more opportunities to log on at nine o'clock and 502 00:24:59,600 --> 00:25:01,919 Speaker 1: be like, I know what this news means, I'm going 503 00:25:02,000 --> 00:25:04,240 Speaker 1: to trade on it. I actually wrote this week about 504 00:25:04,400 --> 00:25:07,480 Speaker 1: the Meme ETF. Yeah, the Roundtole Meme Slack ETF that 505 00:25:07,600 --> 00:25:11,000 Speaker 1: was closed and then revived this week, and you know, 506 00:25:11,280 --> 00:25:13,440 Speaker 1: it was revived at the very small like the first 507 00:25:13,480 --> 00:25:15,800 Speaker 1: day of trading had it very small, Yeah, thousand dollars 508 00:25:15,840 --> 00:25:18,359 Speaker 1: a couple hundred thousand dollars on it, and it traded 509 00:25:18,440 --> 00:25:20,280 Speaker 1: kind of normally during the day, and then in the 510 00:25:20,400 --> 00:25:24,359 Speaker 1: after our session it shot up because like you know, 511 00:25:24,400 --> 00:25:26,920 Speaker 1: there's a few retail investors who are buying it, and 512 00:25:27,040 --> 00:25:29,760 Speaker 1: the marketmakers all went home because it was after I 513 00:25:29,880 --> 00:25:32,240 Speaker 1: was trading in this tiny little ETF, and so there's 514 00:25:32,280 --> 00:25:34,359 Speaker 1: no arbitrage mechanism, and so people are just buying it 515 00:25:34,520 --> 00:25:37,720 Speaker 1: at crazy premiums to nav which should not happen in 516 00:25:37,760 --> 00:25:41,240 Speaker 1: the ETF, but does if no professionals are awake. And 517 00:25:41,320 --> 00:25:43,160 Speaker 1: I think if you have like more twenty four hours trading, 518 00:25:43,200 --> 00:25:45,960 Speaker 1: there's gonna have more trading where no professionals are awake, 519 00:25:46,000 --> 00:25:47,919 Speaker 1: and things trading at wrong prices, and like people want 520 00:25:47,960 --> 00:25:48,639 Speaker 1: to trade it wrong. 521 00:25:48,560 --> 00:25:51,880 Speaker 2: Prices, You're gonna have uglier charts. Basically, Yeah, if. 522 00:25:51,800 --> 00:25:54,000 Speaker 1: You ugly tart means someone like made a very bad 523 00:25:54,080 --> 00:25:56,320 Speaker 1: trade and someone else made a very good trade. Yeah. 524 00:25:56,480 --> 00:25:58,080 Speaker 2: Well you touched on something that I think we've talked 525 00:25:58,080 --> 00:26:01,119 Speaker 2: about before. It is like, Okay, a world where you 526 00:26:01,240 --> 00:26:04,640 Speaker 2: do have twenty four or twenty three hour trading five 527 00:26:04,760 --> 00:26:07,440 Speaker 2: days a week, is whether or not you'd still get 528 00:26:07,680 --> 00:26:11,320 Speaker 2: like these windows around the open and the clothes where 529 00:26:11,320 --> 00:26:14,240 Speaker 2: everyone is sort of trained to trade the most. 530 00:26:14,359 --> 00:26:17,240 Speaker 1: I think you would, because professionals have a rhythm to 531 00:26:17,320 --> 00:26:20,639 Speaker 1: their day where they want to stop trading at the close. 532 00:26:20,720 --> 00:26:22,399 Speaker 2: You know, yeah, not all but like you know in 533 00:26:22,480 --> 00:26:23,760 Speaker 2: tix ones it's clinton time. 534 00:26:23,920 --> 00:26:26,639 Speaker 1: Yeah not even like to go home, but because like 535 00:26:26,680 --> 00:26:29,480 Speaker 1: you need a benchmark to mark against. And then also 536 00:26:29,680 --> 00:26:33,119 Speaker 1: just because of that like timing tradition, there is so 537 00:26:33,240 --> 00:26:35,639 Speaker 1: much concentrated liquidity there and so if you're a huge 538 00:26:36,040 --> 00:26:39,440 Speaker 1: investor who needs to move a lot of shares doing 539 00:26:39,600 --> 00:26:42,080 Speaker 1: that at the close is really useful. I do wonder, 540 00:26:42,800 --> 00:26:46,360 Speaker 1: you know, I never fully understood how crypto closes work 541 00:26:46,480 --> 00:26:49,119 Speaker 1: because crypto just sort of from day one as a 542 00:26:49,240 --> 00:26:50,679 Speaker 1: twenty four to seven market, and so. 543 00:26:52,560 --> 00:26:54,719 Speaker 2: For traditional currencies as well. 544 00:26:54,840 --> 00:26:57,080 Speaker 1: Yeah, that's right. Yeah, there's no like clothes, right, and 545 00:26:57,200 --> 00:27:00,480 Speaker 1: like in stocks, there's very clearly a close and a 546 00:27:00,600 --> 00:27:05,360 Speaker 1: lot of apparatus, you know, index funds and mutual fund 547 00:27:05,600 --> 00:27:08,919 Speaker 1: withdrawals and redemptions and benchmarks and everything are all kind 548 00:27:08,960 --> 00:27:12,479 Speaker 1: of organized around the clothes. And if you did move 549 00:27:12,560 --> 00:27:15,040 Speaker 1: to twenty four to seven training, if you just did 550 00:27:15,080 --> 00:27:17,879 Speaker 1: it in a natural, like nonpath dependent way, you'd be like, well, 551 00:27:17,920 --> 00:27:19,679 Speaker 1: when is the clothes? Yeah, I don't think that's ever 552 00:27:19,720 --> 00:27:21,040 Speaker 1: going to happen. I think it's always going to be 553 00:27:21,640 --> 00:27:24,119 Speaker 1: the main exchanges will have a close at four, And 554 00:27:24,240 --> 00:27:28,240 Speaker 1: even if the main exchanges offer you know, seventeen hours 555 00:27:28,320 --> 00:27:32,879 Speaker 1: of extended hours and everything is kind of technologically the 556 00:27:32,960 --> 00:27:35,680 Speaker 1: same during the regular session and the extended session, I 557 00:27:35,680 --> 00:27:37,959 Speaker 1: think there will still be a close that everyone can 558 00:27:38,000 --> 00:27:40,639 Speaker 1: point to and where a lot of liquidity will be concentrated. 559 00:27:40,920 --> 00:27:43,960 Speaker 2: Yeah. I feel that way too, Like I do struggle 560 00:27:44,000 --> 00:27:46,000 Speaker 2: to imagine a world where this is the norm. 561 00:27:46,200 --> 00:27:49,560 Speaker 1: It's just continuous, twenty four hour day, like nothing, no clothes. Yeah, 562 00:27:49,600 --> 00:27:49,880 Speaker 1: I don't. 563 00:27:49,960 --> 00:27:53,159 Speaker 2: That doesn't seem feels like it goes against just the 564 00:27:53,240 --> 00:27:54,320 Speaker 2: rhythm of being a human. 565 00:27:55,280 --> 00:27:59,560 Speaker 1: Yeah it does. It goes against like the stock markets rhythm. 566 00:28:00,240 --> 00:28:01,960 Speaker 1: I mean, you say the rhythm of being a human, 567 00:28:02,320 --> 00:28:04,479 Speaker 1: and I hear you. But like stock market, you can 568 00:28:04,560 --> 00:28:06,119 Speaker 1: buy an Amazon anytime you want, you know. 569 00:28:06,359 --> 00:28:08,479 Speaker 2: Yeah, I was going to say, I mean humans did 570 00:28:08,560 --> 00:28:11,560 Speaker 2: make the stock market, right, yeah. 571 00:28:11,480 --> 00:28:13,920 Speaker 1: Sure, yeah, no, right, right right. There is a human 572 00:28:14,000 --> 00:28:16,639 Speaker 1: rhythm and there is a computer rhythm, and like humans 573 00:28:16,680 --> 00:28:19,879 Speaker 1: have become adapted to the computer. And the stock market 574 00:28:20,000 --> 00:28:23,520 Speaker 1: is from a time of you show up there and 575 00:28:23,640 --> 00:28:27,200 Speaker 1: you leave to go have dinner, right, whereas like you know, 576 00:28:27,280 --> 00:28:29,480 Speaker 1: Amazon is from a time of computers and you log 577 00:28:29,560 --> 00:28:31,760 Speaker 1: in at midnight and buy something, right, And crypto is 578 00:28:31,800 --> 00:28:33,240 Speaker 1: from a time of computers, and so you log in 579 00:28:33,240 --> 00:28:35,600 Speaker 1: at midnight and buy a crypto. Yeah, And I think 580 00:28:35,760 --> 00:28:37,919 Speaker 1: that is creeping into the stock market, but I think 581 00:28:37,960 --> 00:28:39,880 Speaker 1: we're a long away from it entirely taking over the 582 00:28:39,920 --> 00:28:40,440 Speaker 1: stock market. 583 00:28:40,720 --> 00:28:42,200 Speaker 2: I did want to point out one thing that you 584 00:28:42,320 --> 00:28:46,720 Speaker 2: wrote which actually made me grateful for the environment that 585 00:28:46,840 --> 00:28:49,080 Speaker 2: we live in right now. You talk about how a 586 00:28:49,160 --> 00:28:52,160 Speaker 2: decade ago it was possible to think that investing would 587 00:28:52,400 --> 00:28:56,680 Speaker 2: gradually become doller and more efficient and more automated, and 588 00:28:56,760 --> 00:28:59,440 Speaker 2: that people would just let robots and professionals manage their 589 00:28:59,480 --> 00:29:03,200 Speaker 2: retirements and basically we wouldn't have any of the silliness 590 00:29:03,240 --> 00:29:03,760 Speaker 2: that we do now. 591 00:29:04,000 --> 00:29:05,520 Speaker 1: That was like when I said it was possible to 592 00:29:05,560 --> 00:29:07,560 Speaker 1: think that, Like I linked to something I wrote kind 593 00:29:07,600 --> 00:29:09,920 Speaker 1: of predicting that. So that was dumb. 594 00:29:10,440 --> 00:29:14,960 Speaker 2: That's fine, you called yourself out, But I occasionally get tired. 595 00:29:15,760 --> 00:29:19,160 Speaker 2: As discussed, we all get tired of the silliness and 596 00:29:19,200 --> 00:29:21,560 Speaker 2: the headlines. But I think that the world that you 597 00:29:21,680 --> 00:29:24,560 Speaker 2: described sounds a lot more tiresome. 598 00:29:24,760 --> 00:29:28,840 Speaker 1: So well, you say that as a person who goes 599 00:29:28,880 --> 00:29:31,000 Speaker 1: on TV to talk about financial news every day for 600 00:29:31,200 --> 00:29:31,800 Speaker 1: several hours. 601 00:29:31,840 --> 00:29:32,840 Speaker 2: Yeah, but you write about it. 602 00:29:32,920 --> 00:29:36,720 Speaker 1: Oh yeah, I agree. I agree, like all this dumb stuff. 603 00:29:37,680 --> 00:29:40,480 Speaker 1: You know, once every five times I write about memestocks 604 00:29:40,560 --> 00:29:42,320 Speaker 1: or crypti or whatever, I roll my asthm, like I 605 00:29:42,400 --> 00:29:44,240 Speaker 1: hate writing about this. Yeah, clearly, I was like, Wow, 606 00:29:44,240 --> 00:29:46,400 Speaker 1: at least that's something right about No, I agree. I 607 00:29:46,440 --> 00:29:49,959 Speaker 1: think it's a person as an investor, if you stopped 608 00:29:49,960 --> 00:29:52,920 Speaker 1: thinking about memestocks and like just you know, had like 609 00:29:53,080 --> 00:29:56,560 Speaker 1: robots perfectly investors, like reasonably perfectly investors stock and you 610 00:29:56,600 --> 00:29:58,960 Speaker 1: didn't worry about it. You could spend more time like 611 00:29:59,680 --> 00:30:00,480 Speaker 1: reading books. 612 00:30:00,680 --> 00:30:04,120 Speaker 2: Yeah right maybe right, Like it's a better world. 613 00:30:04,680 --> 00:30:07,320 Speaker 1: But it's works for you know, making jokes in a 614 00:30:07,360 --> 00:30:08,160 Speaker 1: financial new letter. 615 00:30:08,480 --> 00:30:09,120 Speaker 2: That's true. 616 00:30:10,360 --> 00:30:11,160 Speaker 1: That's what we're all here for. 617 00:30:11,560 --> 00:30:14,000 Speaker 2: I have to go talk about all the silly things 618 00:30:14,560 --> 00:30:17,680 Speaker 2: on the television, how fun and the asteroid if it 619 00:30:17,760 --> 00:30:18,160 Speaker 2: hit yet? 620 00:30:19,360 --> 00:30:27,680 Speaker 1: Luck with that? And that was the Money Stuff Podcast. 621 00:30:28,040 --> 00:30:30,120 Speaker 2: I'm Matt Levine and I'm Katie Greifeld. 622 00:30:30,360 --> 00:30:32,520 Speaker 1: You can find my work by subscribing to The Money 623 00:30:32,520 --> 00:30:34,520 Speaker 1: Stuffnewletter on Bloomberg. 624 00:30:34,080 --> 00:30:36,680 Speaker 2: Dot com, and you can find me on Bloomberg TV 625 00:30:36,880 --> 00:30:40,280 Speaker 2: every day on the close between three and five pm Eastern. 626 00:30:41,040 --> 00:30:43,040 Speaker 1: We'd love to hear from you. You can send an 627 00:30:43,080 --> 00:30:46,280 Speaker 1: email to money Pod at Bloomberg dot net ask us 628 00:30:46,320 --> 00:30:48,280 Speaker 1: a question. We might answer it on the air. 629 00:30:48,680 --> 00:30:51,240 Speaker 2: You can also subscribe to our show wherever you're listening 630 00:30:51,320 --> 00:30:53,160 Speaker 2: right now and leave us a review. It helps more 631 00:30:53,200 --> 00:30:54,000 Speaker 2: people find the show. 632 00:30:54,960 --> 00:30:58,600 Speaker 1: The Money Stuff Podcast is produced by Anamazarakus and Mooses On. 633 00:30:59,120 --> 00:31:01,080 Speaker 2: Our theme music was imposed by Blake. 634 00:31:00,920 --> 00:31:04,720 Speaker 1: Maples, Amy Keane as our executive producer. 635 00:31:04,720 --> 00:31:07,200 Speaker 2: And Sage Falman is Bloomberg's head of podcasts. 636 00:31:08,400 --> 00:31:10,840 Speaker 1: Thanks for listening to the Money Stuff Podcast. We'll be 637 00:31:10,920 --> 00:31:12,520 Speaker 1: back next week. Welcome our Stuff