WEBVTT - How the Snakes Dies: ICE, AMD, ARKK 0:00:02.720 --> 0:00:10.000 Bloomberg Audio Studios, podcasts, radio news. One day we're gonna 0:00:10.320 --> 0:00:11.640 touch on the thought situation. 0:00:11.920 --> 0:00:14.880 Jesus, but no, I'm too frou. 0:00:15.440 --> 0:00:16.599 We can have a possum update. 0:00:17.160 --> 0:00:19.720 Yeah, tell us about the possum. You cleaned it up. 0:00:19.800 --> 0:00:22.360 I cleaned it up. That's that's really the update. I 0:00:22.400 --> 0:00:25.000 don't want to say that this show is my therapy, 0:00:25.160 --> 0:00:28.240 because it is truly not that this show. 0:00:28.120 --> 0:00:29.520 Is what you talk about in therapy. 0:00:29.760 --> 0:00:33.040 But it isn't the case that, Like, as I was 0:00:33.120 --> 0:00:37.560 talking about the possum last week, I knew that editors 0:00:37.600 --> 0:00:40.800 were not going to cut it out and that I 0:00:41.040 --> 0:00:43.839 was using it as a commitment device to finally make 0:00:43.880 --> 0:00:46.120 myself just go out there and shovel up the dead 0:00:46.120 --> 0:00:49.080 possum in my heart. Im. That's if you didn't listen 0:00:49.080 --> 0:00:50.280 to the last week's episodes. 0:00:50.400 --> 0:00:53.559 Yeah, wow, this would be horrifying. Go back listen to 0:00:53.600 --> 0:00:55.600 that or don't interest it's interesting. 0:00:55.880 --> 0:01:00.400 This is just like this is the like skip ahead banter, Awa. Yeah, 0:01:00.400 --> 0:01:02.880 I cleaned up the possum. And then then my wife 0:01:02.960 --> 0:01:05.880 was like, I listen to your podcast, I learned about 0:01:05.880 --> 0:01:06.479 the possum. 0:01:06.920 --> 0:01:09.240 That's a good test to find out if your spouse 0:01:09.280 --> 0:01:13.520 listens and tests. I don't. I don't think Joe listens 0:01:13.560 --> 0:01:15.600 because he didn't call me out on the fact that 0:01:15.600 --> 0:01:17.880 I just wait for him to notice the vomit from the. 0:01:18.200 --> 0:01:22.399 See he knew that. Yeah, this is like densely packed 0:01:22.400 --> 0:01:23.200 with references. 0:01:23.440 --> 0:01:24.800 Yeah, a lot of callbacks. 0:01:24.920 --> 0:01:25.520 Yeah. 0:01:25.600 --> 0:01:29.000 He probably also knows that because sometimes I'll say, Hey, 0:01:29.360 --> 0:01:32.080 the cat vomited again, could you co get that right? 0:01:32.160 --> 0:01:36.440 And other times you'll be sitting pointedly facing away from 0:01:36.480 --> 0:01:39.600 the cat vomit and he'll be like, I know that, 0:01:39.720 --> 0:01:43.399 you know there's cat vomit there, and you're like, what, we. 0:01:43.400 --> 0:01:45.560 Have a cat psychological warfare. 0:01:47.040 --> 0:01:51.840 Hello, Welcome to the Money Stuff Podcast. You're Herley podcast 0:01:51.880 --> 0:01:53.720 where we talk about stuff. I led it to Money. 0:01:54.920 --> 0:01:56.840 I'm Matt Levine and I write The Money Stuff Colum 0:01:56.880 --> 0:01:58.240 from Bloomberg Opinion. 0:01:58.840 --> 0:02:01.440 And I'm Katie Greyfell, a reporter for Bloomberg News and 0:02:01.480 --> 0:02:03.480 an anchor for Bloomberg Television. 0:02:04.720 --> 0:02:14.600 Polly Market. Yeah, so Bloomberg News. How a story this 0:02:14.639 --> 0:02:18.799 week that Shane Coplin, the founder of Polymarket, is now 0:02:18.840 --> 0:02:22.239 the world's youngest self made billionaire, which. 0:02:22.040 --> 0:02:23.560 Is cool for him, definitely. 0:02:24.280 --> 0:02:28.160 Shane Coplin lives or used to live next door to 0:02:28.160 --> 0:02:30.040 a guy who throws a lot of book parties for 0:02:30.160 --> 0:02:33.040 finance books. Oh, so you can see him like all 0:02:33.080 --> 0:02:34.079 the finance book parties. 0:02:34.080 --> 0:02:35.359 That's your kind of hangout. 0:02:36.480 --> 0:02:39.760 Sadly, yes, and so yeah, I've seen Shane Coplin at book. 0:02:39.600 --> 0:02:41.440 Parties and you've rubbed elvas. 0:02:41.440 --> 0:02:45.280 I've rubbed Elvas. And when I saw that article, I 0:02:45.360 --> 0:02:50.239 thought youngest self made billionaire. I realized that Shane Coplin 0:02:50.320 --> 0:02:53.360 is the second world's youngest self made billionaire to be 0:02:53.400 --> 0:03:00.120 in my phone context. It's not like an entirely positive development. 0:03:01.000 --> 0:03:04.040 For right now. It is a positive development for Shane. 0:03:04.200 --> 0:03:05.600 Will continue to watch this space. 0:03:05.919 --> 0:03:08.240 It is also he did at the right order though 0:03:08.280 --> 0:03:10.600 first he was investigative by the government, and now he's 0:03:10.639 --> 0:03:11.720 a self made billionaire. 0:03:11.760 --> 0:03:13.480 I was going to say, I forgot that it was 0:03:13.560 --> 0:03:16.080 less than a year ago that his apartment was rated 0:03:16.080 --> 0:03:20.600 by the Yeah, fast forward to October twenty twenty five, 0:03:20.639 --> 0:03:23.560 he's super rich. ICE. Of course, the news from this 0:03:23.639 --> 0:03:25.680 week was that they invested. 0:03:25.400 --> 0:03:27.240 The inter Intercontinental Exchange. 0:03:27.320 --> 0:03:29.840 We're not we're using government names. 0:03:31.480 --> 0:03:33.880 ICE can mean a number of things. Anyway, gone anyway. 0:03:33.600 --> 0:03:39.040 Ice, the Intercontinental Exchange investing two billion dollars in polymarket. 0:03:39.120 --> 0:03:43.119 That gives it an eight billion dollar valuation. Pretty stunning. 0:03:43.240 --> 0:03:45.080 And it was just last week that we were talking 0:03:45.120 --> 0:03:50.000 about how prediction markets are eating everything and here we 0:03:50.080 --> 0:03:50.600 are keep. 0:03:50.560 --> 0:03:54.160 Going yeah right, it's funny, like I think of Calshi 0:03:54.200 --> 0:03:58.920 as a sports gambling site, piymarket, I don't know, probably 0:03:58.920 --> 0:04:02.600 market like feels a little pure. Yeah, you know this 0:04:02.760 --> 0:04:06.640 the bloomerg story about Shane Complin's like founding a polymarket. 0:04:07.600 --> 0:04:10.560 You know, he's like reading economics papers about prediction markets. 0:04:10.600 --> 0:04:12.400 I'm thinking this is too good an idea to just 0:04:12.480 --> 0:04:14.760 exist on white papers, and like I think he's like 0:04:15.560 --> 0:04:19.760 fully committed to the notion of Yeah, but like you know, 0:04:19.800 --> 0:04:22.840 they did get into sportscambling. Yeah, and I think that 0:04:23.880 --> 0:04:27.080 I'm not sure, but my sense is that it is 0:04:27.160 --> 0:04:30.440 hard to justify an eight billion dollar valuation for a 0:04:30.440 --> 0:04:35.680 prediction market that is just elections and uh, you know, 0:04:36.000 --> 0:04:37.680 who will be a time man of the person of 0:04:37.720 --> 0:04:40.039 the year and uh and uh, you know, like just 0:04:40.200 --> 0:04:43.720 fun predictions and not you know, for addicted sports candlers. 0:04:43.800 --> 0:04:46.720 I will say that, you know, if you had told 0:04:46.800 --> 0:04:49.520 me that Ice had outright bought poly Market for two 0:04:49.560 --> 0:04:52.080 billion dollars, I still would have been like, Wow, that's 0:04:52.520 --> 0:04:54.120 a lot of money. The fact that it does have 0:04:54.160 --> 0:04:56.360 this eight billion dollar valuation also stuck out to. 0:04:56.320 --> 0:05:00.960 Me, Right, I just think that that that valuation discounts 0:05:01.800 --> 0:05:03.960 a lot of growth in sports, yeah, and a lot 0:05:03.960 --> 0:05:07.480 of margins in sports and not the other thing. But 0:05:07.520 --> 0:05:10.520 I'm intrigued, right when you read the announcement, like and 0:05:10.640 --> 0:05:14.640 again when you read like Shane Coplan's public statements like like, yeah, 0:05:14.640 --> 0:05:17.159 there's sports, but like they're not they're not leaning on 0:05:17.200 --> 0:05:20.440 the sports. It's not like Robin Hood saying sportscambling is 0:05:20.440 --> 0:05:23.800 an emerging hasset class. Yeah, they're like, eh, we're like 0:05:23.880 --> 0:05:26.719 trying to find ways to understand and price the future. 0:05:26.760 --> 0:05:28.840 And I think that's like a noble go like like 0:05:28.880 --> 0:05:32.120 prediction markets, Like like he's not wrong that, like economists 0:05:32.160 --> 0:05:34.080 have talked about them for years, Like the idea of 0:05:34.160 --> 0:05:38.080 prediction markets, like providing a set of probabilities about the future, 0:05:38.520 --> 0:05:44.120 does seem really socially useful. And my sense was always 0:05:44.120 --> 0:05:46.600 that no one had cracked the nut, not of like 0:05:47.120 --> 0:05:50.320 creating trading infrastructure or making it legal, but then not 0:05:50.440 --> 0:05:53.880 of like making people want to trade it, such that 0:05:53.920 --> 0:05:55.919 there was like a big market, a big liquid market 0:05:55.960 --> 0:05:59.560 for it, such that professionals would have incentives to make 0:05:59.600 --> 0:06:03.440 prediction market prices correct, right, yeah, because like and once like, oh, 0:06:03.520 --> 0:06:06.320 let's gamble on whether like you know, the Ukraine War 0:06:06.360 --> 0:06:07.880 will end, like I mean, people are but like, it's 0:06:07.920 --> 0:06:11.039 not like a fun gambling product and so there's not 0:06:11.520 --> 0:06:13.560 a lot of money to be made if you have 0:06:14.160 --> 0:06:16.560 good insight into it. And so just the whole thing 0:06:17.000 --> 0:06:20.400 has never quite worked right, and like y US presidential 0:06:20.400 --> 0:06:23.080 elections where there's a lot of money, but otherwise it 0:06:23.120 --> 0:06:25.920 never never feels like it quite works in sports or 0:06:26.040 --> 0:06:29.560 you know, sports solve that problem. Yeah, people really want 0:06:29.560 --> 0:06:31.719 to gamble on sports, and there's a lot of dumb 0:06:31.720 --> 0:06:36.520 money and so there's a lot of value for smart 0:06:36.560 --> 0:06:39.200 money to bet against, and so you have incentives to 0:06:40.360 --> 0:06:43.880 build good sports prediction models and trade on polymarket and 0:06:43.920 --> 0:06:45.760 all kind of works. And then you know, the question 0:06:45.839 --> 0:06:49.600 is that does that spill over into the New York 0:06:49.600 --> 0:06:52.760 City mayor race or you know macroeconomic variables or like 0:06:52.880 --> 0:06:54.400 you know, the Grammys or whatever. 0:06:54.680 --> 0:06:56.800 Yeah, well I do like that. You brought up again 0:06:56.880 --> 0:07:00.320 the Grossman s tigletz paragdox in your call them on 0:07:00.400 --> 0:07:03.680 this specific item. You're calling back to another column that 0:07:04.000 --> 0:07:07.240 you know, maybe the way that we get to that 0:07:07.600 --> 0:07:14.040 societal useful information is through the avenue of sports betting 0:07:14.280 --> 0:07:17.000 and a lot of people making a lot of noise, right, 0:07:17.040 --> 0:07:17.600 Like the gross and. 0:07:17.560 --> 0:07:19.480 Said, what's paradox is the idea that like, you can't 0:07:19.520 --> 0:07:24.119 have efficient markets because then no one would have incentives 0:07:24.400 --> 0:07:29.560 to trade and make the markets efficient. Yeah, so Lassie 0:07:29.560 --> 0:07:32.920 Peterson says that you need efficiently inefficient markets. You need 0:07:32.960 --> 0:07:35.840 like just the right level of inefficiency to incentivize people 0:07:35.920 --> 0:07:39.800 to make them more efficient. And like the economisty of 0:07:39.800 --> 0:07:44.240 prediction markets is like people who have particular insight into 0:07:44.280 --> 0:07:47.600 like whether there'll be a war will like trade their insights, 0:07:47.800 --> 0:07:50.000 but like who will trade against them? Like who's just 0:07:50.080 --> 0:07:52.880 like randomly wandering around like, oh, I bet there won't 0:07:52.880 --> 0:07:54.720 be a war, and then like you know, get suckered 0:07:54.720 --> 0:07:58.800 by the policy experts and in the stock market, Like 0:07:58.880 --> 0:08:01.360 the answer to those questions they're super easy, right, The 0:08:01.400 --> 0:08:03.360 answer to like who will trade against the hedge fund 0:08:03.480 --> 0:08:07.240 is an index fund who is just blindly managing retirement 0:08:07.280 --> 0:08:09.400 money and needs to invest it in stocks, And so 0:08:09.440 --> 0:08:11.920 the hedge fund has like someone they know those trade against, 0:08:12.200 --> 0:08:15.400 or the answer is like you know a retail investor or, Like, 0:08:15.440 --> 0:08:18.560 there's a lot of straightforward answers to like who is 0:08:18.560 --> 0:08:21.320 on the other side of this trade that allow people 0:08:21.800 --> 0:08:25.880 with a lot of information to make money by trading 0:08:26.120 --> 0:08:29.960 and incorporating that information enter prices in prediction markets. It 0:08:30.000 --> 0:08:32.920 was never clear who those people were, right, Like, it's 0:08:32.920 --> 0:08:35.920 not a savings product, right, Like people don't put aside 0:08:35.960 --> 0:08:39.160 one hundred dollars a month in retirement savings in prediction markets, 0:08:39.520 --> 0:08:42.360 so there's no like uninformed flow to trade against there. 0:08:42.960 --> 0:08:46.880 And it has historically not been a super fun gambling market, 0:08:47.320 --> 0:08:49.480 like with the exception of presidential elections and a few 0:08:49.480 --> 0:08:52.960 other high profile things. But when you add sports, it 0:08:53.040 --> 0:08:55.959 becomes a fun gambling market, and then that just opens 0:08:56.000 --> 0:08:58.800 everything up, right, It allows people to make money making 0:08:58.840 --> 0:09:01.760 informed predictions at least on sports and then maybe at 0:09:01.800 --> 0:09:02.560 most of something else. 0:09:02.760 --> 0:09:05.480 Yeah, I mean just assume that the people who are 0:09:06.080 --> 0:09:08.480 betting on sports on the prediction market go into other 0:09:08.559 --> 0:09:12.559 markets such as I don't know, elections or weather or 0:09:12.640 --> 0:09:13.319 whatever else. 0:09:13.760 --> 0:09:15.559 Well, it's both, right, So it's like, on the one hand, 0:09:15.600 --> 0:09:20.600 like do you attract dumb money recreational gamblers to the platform, 0:09:20.920 --> 0:09:22.480 and then they're like, well, i'm here anyway, I might 0:09:22.520 --> 0:09:24.520 as well bet on election. Its like that seems plausible. 0:09:24.840 --> 0:09:26.600 And the other thing is like, you know, if you 0:09:26.720 --> 0:09:31.640 are a quantitative trading firm and you have historically traded 0:09:31.679 --> 0:09:35.559 like stocks and options, a lot of those people are 0:09:35.600 --> 0:09:39.880 now getting sports curious, right, Like they're building sports trading desks. 0:09:40.240 --> 0:09:44.480 They're like building models to price sports events. Because it's 0:09:44.520 --> 0:09:46.280 like kind of the same skill set, right, It's like 0:09:46.760 --> 0:09:48.760 taking machine learning and applying it to a bunch of 0:09:48.840 --> 0:09:50.559 data and like using it to predict the future. And 0:09:50.600 --> 0:09:53.040 it's like, well, you can do that with stocks, you 0:09:53.040 --> 0:09:54.839 can do it with sports. And there's a lot of 0:09:54.840 --> 0:09:58.960 money to made. And so some quant trading firms are 0:09:59.000 --> 0:10:04.000 either heading into the sports market making business or the 0:10:04.120 --> 0:10:07.760 traders are leaving to start sports market making businesses. And 0:10:08.520 --> 0:10:12.360 if those people who are trading on traditional sports books 0:10:12.440 --> 0:10:15.320 or who are like market making on calci, if those 0:10:15.360 --> 0:10:20.360 people start market making on polymarket in sports, it's like 0:10:20.400 --> 0:10:24.920 a relatively easy lift for them to add an election column, right, 0:10:24.960 --> 0:10:26.559 Like it's a whole new set of data analysis, but 0:10:26.559 --> 0:10:28.880 they're already plugged in, you know, they're already like now, 0:10:28.920 --> 0:10:33.319 the market structure works. So maybe if you're making money 0:10:33.320 --> 0:10:37.640 trading against recreational gamblers on sports and you see election 0:10:37.760 --> 0:10:39.520 prices that you think are out of line, you're like, well, 0:10:39.360 --> 0:10:41.439 I put a few million dollars on that election too. 0:10:41.559 --> 0:10:43.800 While I'm here, I might as well, Well it's just. 0:10:43.880 --> 0:10:45.360 Right, it's convenient there. 0:10:45.440 --> 0:10:49.880 Yeah, So what does ICE get out of this? I 0:10:49.960 --> 0:10:51.199 don't know, That's the thing. 0:10:51.240 --> 0:10:53.720 I mean, one answer is an investment, right, I mean 0:10:53.760 --> 0:10:54.240 there's two things. 0:10:54.320 --> 0:10:54.400 Right. 0:10:54.480 --> 0:10:57.240 It's like, if it's the future of sports gambling, that's valuable. 0:10:57.400 --> 0:11:00.240 And then like if like the way you trade your 0:11:01.320 --> 0:11:04.920 insights into like whether there will be inflation changes from 0:11:04.960 --> 0:11:10.080 like trading treasuries to like buying the inflation contract on polymarket, 0:11:10.440 --> 0:11:13.520 Like that's a big deal, right, And I don't know 0:11:13.600 --> 0:11:18.920 that that is a near term likely outcome. One, it's 0:11:18.960 --> 0:11:22.240 a possibility, and two becomes more likely when you partner 0:11:22.320 --> 0:11:26.120 with a big exchange firm, you know, like ICE now 0:11:26.480 --> 0:11:30.720 when they're thinking about like what kind of like macroeconomic 0:11:31.120 --> 0:11:35.080 products should we offer. Now, in addition to like interest 0:11:35.160 --> 0:11:39.440 rate futures and bond futures, they can offer predictions of 0:11:39.440 --> 0:11:42.000 inflation right, So that's one thing they get is like 0:11:42.040 --> 0:11:45.080 the that's like currently in the cards, right, Like the 0:11:45.120 --> 0:11:49.240 current situation is like they're going to distribute polymarket data, 0:11:49.559 --> 0:11:53.760 which is of interest to people who trade on and 0:11:53.800 --> 0:11:56.840 the other think it's tokenization, which who knows. That can 0:11:56.920 --> 0:11:59.319 mean a lot of things. Yeah, it could be like 0:12:00.600 --> 0:12:04.240 technological infrastructure for like trading ice products, where like instead 0:12:04.280 --> 0:12:08.560 of buying great futures, you buy great futures tokens, right, 0:12:09.040 --> 0:12:11.520 But it could also mean, like everyone talks a big 0:12:11.559 --> 0:12:14.760 game about stock tokenization. Everyone, it's a big game about 0:12:14.840 --> 0:12:16.280 tokenizing private companies. 0:12:16.360 --> 0:12:16.440 Right. 0:12:16.480 --> 0:12:18.800 There's a lot of stuff in that space, and like 0:12:20.000 --> 0:12:24.439 it is possible that Polymarket, which is crypton native and 0:12:24.600 --> 0:12:28.199 kind of fun, is better positioned to do some of 0:12:28.240 --> 0:12:31.160 those initiatives than like the New York Stock Exchange, right, 0:12:31.240 --> 0:12:33.720 which is the New York Stock Exchange, right, and which 0:12:33.760 --> 0:12:36.640 has like if you're the New York Stock Exchange, like 0:12:36.640 --> 0:12:39.160 we're gonna make everything tokenized. Like everyone who's already trading 0:12:39.200 --> 0:12:41.000 on the stock exchange is gonna be very annoyed. Yeah, 0:12:41.240 --> 0:12:42.880 Like Polymarket you can tokenize whatever they want. 0:12:43.040 --> 0:12:45.880 Tokenization has been on my list of things to actually 0:12:45.960 --> 0:12:50.160 think about for a while. See, but I haven't gotten there, Matt. 0:12:50.679 --> 0:12:54.000 I've written about it. It's funny. It's like, to me, 0:12:54.200 --> 0:12:58.480 tokenization means two things. Like one, there's like some amount 0:12:58.520 --> 0:13:02.839 of trading in tradition financial markets. You could change the 0:13:03.280 --> 0:13:05.839 back end of the market structure and make it so 0:13:05.960 --> 0:13:08.719 that instead of being on some company's ledgers, it's on 0:13:08.800 --> 0:13:12.240 a blockchain and you can call it tokenized. 0:13:11.760 --> 0:13:14.599 And it's all a little people that. 0:13:14.840 --> 0:13:16.960 Yeah, it's the sort of thing that like ten years ago, 0:13:17.000 --> 0:13:19.000 you'd be like, it'll be a different database for your 0:13:19.040 --> 0:13:20.920 interest rate futures. You'd be like, I don't care about that. 0:13:21.200 --> 0:13:23.360 But now it's like, oh, it's tokenized, right, So that's 0:13:23.360 --> 0:13:25.560 like like one thing is like the actual technological stuff, 0:13:25.960 --> 0:13:28.440 and like it's stuff about like how things work together 0:13:28.520 --> 0:13:30.079 and how like if you're an hedgephund you can like 0:13:30.760 --> 0:13:33.079 move your tokens from one platform to another, and like 0:13:33.160 --> 0:13:35.960 you can you know, live in the same blockchain environment 0:13:36.040 --> 0:13:37.640 for different kinds of trades, right, Like you can trade 0:13:37.679 --> 0:13:41.679 crypto against futures. I don't know, there's like that technological 0:13:41.760 --> 0:13:44.240 market structure stuff. And then like to me, it always 0:13:44.280 --> 0:13:46.880 seems like when people talk about tokenization what they're always 0:13:46.920 --> 0:13:50.760 talking about is getting around securities loss, and that's not 0:13:51.640 --> 0:13:55.720 always always true. I don't know that that's what Ice 0:13:55.800 --> 0:13:58.120 and polymarket are talking about. It's what Robin is talking 0:13:58.120 --> 0:14:00.480 about every time they talk about togonization, right, And it's like, 0:14:00.559 --> 0:14:03.240 you see, like people like we should tokenize private companies 0:14:03.280 --> 0:14:05.560 so that you can buy shares of private companies without 0:14:06.080 --> 0:14:08.040 having them have to go public. It's like, well, that's 0:14:08.120 --> 0:14:10.880 not how the securities laws works. But if we call 0:14:11.200 --> 0:14:13.280 a share a token, then they don't have to follow 0:14:13.320 --> 0:14:13.640 the law. 0:14:13.920 --> 0:14:15.040 Yeah, so he struck me as. 0:14:14.960 --> 0:14:18.319 Wrong, but it might turn out to be empirically correct. 0:14:18.360 --> 0:14:20.480 But anyway, so there's two kinds of organization. I've etten 0:14:20.520 --> 0:14:23.280 a lot about the bad regulatory arbitrage kind, but like 0:14:23.360 --> 0:14:28.440 it's possible, the technological kind is important, meaningful, we'll do something. 0:14:28.720 --> 0:14:31.320 Well, hopefully these initiatives will bear fruit and we can 0:14:31.400 --> 0:14:34.080 actually figure out what Ice and polymarket are talking about. 0:14:34.600 --> 0:14:36.840 Yeah, I will say that, I like, I have spent 0:14:37.120 --> 0:14:41.280 ten years writing about financial infrastructure firms saying we're doing 0:14:41.320 --> 0:14:42.560 a blockchain initiative. 0:14:43.000 --> 0:14:45.800 It's all about the tech, and then like five years later. 0:14:45.720 --> 0:14:47.720 They're like, we have stopped their blockchain initiative. 0:14:47.840 --> 0:14:50.640 Stop asking about it. We don't want to talk about. 0:14:50.360 --> 0:14:55.000 It, right, So it's puzzle tokenization. Is that it's puzzle tokenization. 0:14:55.080 --> 0:14:57.560 It's like we're putting the futures on the blockchain and 0:14:57.720 --> 0:15:01.760 then five years later we'll stop talking about it. Yes, 0:15:01.800 --> 0:15:03.840 I've thought a lot about taking anosition, but I don't 0:15:03.840 --> 0:15:05.560 have any I don't know what I mean. It's either. 0:15:20.240 --> 0:15:26.520 I feel like I talked about raboris on this show before. Yeah, yeah, 0:15:27.360 --> 0:15:32.280 the snake eating itself. Well, another way of saying that is, 0:15:32.600 --> 0:15:34.600 you know, all these big tech companies are just spending 0:15:34.640 --> 0:15:38.200 money in a circle, and this week I feel like 0:15:38.400 --> 0:15:42.320 that idea was really on display. When you think about 0:15:42.800 --> 0:15:46.080 open ai and a m D and the deal that 0:15:46.160 --> 0:15:51.240 they inked, it's great. Yeah. Yeah, So my understanding basically 0:15:51.560 --> 0:15:56.760 is that specifically with a m D, so they agreed 0:15:57.440 --> 0:16:00.120 to deploy a bunch of a m D chips and 0:16:00.240 --> 0:16:02.680 as part of that, they're also getting a bunch of 0:16:02.800 --> 0:16:04.880 warrants for AMD shares as well. 0:16:05.120 --> 0:16:07.280 Yeah, there's kind of two wild ass ways of it. 0:16:07.720 --> 0:16:10.720 I mean there's at least seventeen, but like two wild 0:16:10.760 --> 0:16:14.880 asspays of it. One is that open Ai has committed 0:16:14.920 --> 0:16:17.360 to spend I don't know the number, but it's like 0:16:17.480 --> 0:16:20.320 it's six gigawatts of chips. Yeah, and they've said it's 0:16:20.360 --> 0:16:22.520 like tens of billions of dollars per So the open 0:16:22.560 --> 0:16:24.440 eye is committed to spend something on the order of 0:16:24.480 --> 0:16:28.440 one hundred billion dollars buying chips from AIM and open 0:16:28.480 --> 0:16:32.040 A doesn't have one hundred billion dollars. No. One thing 0:16:32.080 --> 0:16:35.000 that is happening here is that the market has ascribed 0:16:35.120 --> 0:16:37.520 a value to open ai of like, you know, half 0:16:37.560 --> 0:16:43.440 a trillion dollars, and that value is sufficiently real that 0:16:43.640 --> 0:16:47.360 open and ai can like make financial commitments based on it. 0:16:47.440 --> 0:16:48.680 They can be like, yeah, we'll give you a hundred 0:16:48.680 --> 0:16:50.360 million dollars for your chips, and they're great, and it's 0:16:50.400 --> 0:16:52.120 like everyone's like, yeah, that'll work out right, But like 0:16:52.200 --> 0:16:55.600 there's no, it's not in the bank, Like that's like, yeah, 0:16:55.680 --> 0:16:57.800 it's five million dollars company, they'll find the money. And 0:16:58.240 --> 0:16:59.680 I don't think that's a wrong bet. It's just an 0:16:59.720 --> 0:17:03.560 interesting they're able to commit cash based not on the 0:17:03.640 --> 0:17:06.480 cash they have, but on their valuation. And then the 0:17:06.560 --> 0:17:09.080 other thing that's happening is that like when open ai 0:17:09.200 --> 0:17:12.480 says anything about anyone, the stock goes up. And so 0:17:12.560 --> 0:17:14.480 when Opening I announces a deal of like we're gonna 0:17:14.480 --> 0:17:17.200 send one hundred million dollars on AMTI chips, AMD stock 0:17:17.680 --> 0:17:22.399 very predictably goes up. And so knowing that as they 0:17:22.520 --> 0:17:26.480 negotiated the deal, they're like, what we should do is 0:17:27.720 --> 0:17:30.720 we should take your very predictable stock price rise and 0:17:30.880 --> 0:17:34.000 use that to pay for the chips. Right like, essentially, 0:17:34.320 --> 0:17:37.760 like AMD shareholders will get excited about AMD having this deal, 0:17:38.080 --> 0:17:40.440 and so we'll let the AMD shareholders pay for the chips. 0:17:40.640 --> 0:17:42.520 And so that's kind of what happened, which is that 0:17:43.960 --> 0:17:47.520 AMD stock we're recruiting this on Wednesday at a stock 0:17:47.600 --> 0:17:49.879 is up roughly one hundred billion dollars from where it 0:17:50.080 --> 0:17:54.359 was last Friday before they announced the deal, and you 0:17:54.440 --> 0:17:59.280 know that'll covers the chips. And open Ai, which as 0:17:59.320 --> 0:18:04.280 far as we know, plans to pay cash for these chips. Yeah, yeah, 0:18:04.560 --> 0:18:06.040 I don't think the deal is like we won't pay 0:18:06.080 --> 0:18:07.680 for the chips. The deals. We will pay for the chips. 0:18:07.840 --> 0:18:11.720 But Open Eye is getting warrants for roughly ten percent 0:18:11.840 --> 0:18:15.480 of AMD with like vesting conditions, but they're like penny 0:18:15.520 --> 0:18:17.320 warrants and so right Now, if you just assume they'll 0:18:17.359 --> 0:18:21.399 get all of the warrants, that's like a thirty seven 0:18:21.520 --> 0:18:25.760 billion dollar ish yeah, value transferred to open Ai. Yeah, 0:18:26.200 --> 0:18:30.240 which one will help pay for the cost of this contract. 0:18:30.960 --> 0:18:33.080 And two it is only fair because like they created 0:18:33.119 --> 0:18:34.920 all that extra value at AMD, right, Like they're the 0:18:34.960 --> 0:18:38.960 ones who by sprinkling their magic dust on AMD, we're 0:18:39.000 --> 0:18:40.959 able to make AMD more valuable. And so yeah, they 0:18:40.960 --> 0:18:42.520 get back half that value in warrants. 0:18:42.720 --> 0:18:46.040 Yeah. Well two things. So to your point that you 0:18:46.119 --> 0:18:50.720 know open ai mentions some sort of whatever with another company, 0:18:50.800 --> 0:18:52.679 a public company, their stare price goes up. 0:18:52.760 --> 0:18:52.960 Yeah. 0:18:53.000 --> 0:18:54.920 It makes me think about what we keep talking about 0:18:54.920 --> 0:18:59.399 in terms of the private and public markets converging. Obviously, 0:18:59.520 --> 0:19:02.760 open Ai famously is not public, but has been making 0:19:02.840 --> 0:19:06.080 a ton of waves in the public stock market. The 0:19:06.200 --> 0:19:08.640 other thing is, you know what we saw with open 0:19:08.680 --> 0:19:11.359 Ai and AMD this week isn't a one off. They 0:19:11.440 --> 0:19:14.440 have something similar with in Video, which of course is 0:19:14.520 --> 0:19:15.800 a direct rival of AMD. 0:19:16.400 --> 0:19:19.080 Yeah, it's like very different, but it's like from at 0:19:19.080 --> 0:19:21.000 a high level, the same thing, Right, it's like we 0:19:21.119 --> 0:19:23.359 have a partnership where I think in that case, in 0:19:23.440 --> 0:19:25.720 Video is investing in open Ai and then Yeah. 0:19:25.760 --> 0:19:28.200 In video agreed to invest as much as one hundred 0:19:28.200 --> 0:19:31.640 billion dollars in open Ai to help open ai fund 0:19:31.680 --> 0:19:35.760 a data center build out in Exchange. Open Ai committed 0:19:35.800 --> 0:19:39.480 to filling those data centers with millions of in Nvidia chips. 0:19:40.200 --> 0:19:42.520 This is a little bit old, but I was reading 0:19:42.800 --> 0:19:46.560 this piece from Michael sembelest Over at JP Morgan and 0:19:47.119 --> 0:19:49.520 he wrote this at the end of September. But it 0:19:49.640 --> 0:19:53.199 spiritually can apply to all of these deals that Oracle 0:19:53.280 --> 0:19:56.040 stock jump by twenty five percent after being promised sixty 0:19:56.119 --> 0:19:58.600 billion dollars a year from open Ai in amount of 0:19:58.680 --> 0:20:02.040 money open Ai doesn't earn yet to provide cloud computing 0:20:02.080 --> 0:20:05.320 facilities that Oracle hasn't built yet and which will require 0:20:05.560 --> 0:20:08.760 four point five gigwats of power, which is the equivalent 0:20:08.920 --> 0:20:13.240 of several Hoover dams. So it's easy, if you wanted 0:20:14.400 --> 0:20:17.879 to get scared and flustered, to build a case that 0:20:17.960 --> 0:20:19.760 there's a bubble being inflated right now. 0:20:20.920 --> 0:20:24.520 I don't disagree. It's unusually easy to like visualize the future, 0:20:24.640 --> 0:20:27.480 right It's usually easily to be like Ai is going 0:20:27.560 --> 0:20:31.159 to be huge, m It's going to transform every aspect 0:20:31.200 --> 0:20:33.600 of life. It's going to require a lot of power, 0:20:34.040 --> 0:20:36.480 and like that requirement is going to be so obvious 0:20:36.520 --> 0:20:38.080 that like we'll build the power plants. It's going to 0:20:38.160 --> 0:20:39.720 require a lot of data centers, and that requirement is 0:20:39.760 --> 0:20:41.280 going to be so obvious. We'll build the data centers 0:20:41.680 --> 0:20:45.400 and it's going to rake in oceans of money. Yeah, 0:20:45.400 --> 0:20:47.440 and that is so obvious that like the people who'll 0:20:47.440 --> 0:20:49.280 be raking in the money open AI I can just 0:20:49.320 --> 0:20:52.560 spend that money now, you know, Yeah, sixty billion dollars year, 0:20:52.600 --> 0:20:56.040 No problem, we'll get that, we'll up. Yeah, Like this 0:20:56.200 --> 0:20:58.080 is what capital markets are supposed to do, which is 0:20:58.160 --> 0:21:03.639 like discount the future. And here there's like unusually widespread 0:21:03.680 --> 0:21:06.560