Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. Katie, you got to
Speaker 1: live my dream today. What's that you interviewed y Cliff
Speaker 1: Sean I did?
Speaker 2: That was super interesting.
Speaker 1: He is, Katy is like, I'm interviewing Y Cleft, Gene.
Speaker 2: Hopefully he never listens to this podcast.
Speaker 1: He does huge fan Why Cliff was like the soundtrack
Speaker 1: of my collegers, and so I'm very jealous that you
Speaker 1: got to talk to him about crypto.
Speaker 2: Yeah, he's involved in a lot of hits that I
Speaker 2: didn't realize, so I'm gonna have to educate myself. But yeah,
Speaker 2: he signed on to be Circle's Chief culture officer, so
Speaker 2: they have a bunch of activations planned. We talked about
Speaker 2: stable coins. It was pretty interesting.
Speaker 1: I did email Katie to say, how can I arrange
Speaker 1: to casually bump into him? And I got no response.
Speaker 1: That's fine, it's fine. You know, looking to take a
Speaker 1: selfie with y Cleft at the Bloomber office.
Speaker 2: When you're interviewing an actual famous person, you know, it's
Speaker 2: it's funny.
Speaker 1: Being like famous.
Speaker 2: To you, well, it's funny being a financial news anchor
Speaker 2: because you know, every.
Speaker 1: So often there's like a true celebrity and you're like, yeah.
Speaker 2: Oh God, Like this is like a real this is
Speaker 2: an actual star, you know, and then you get a
Speaker 2: little bit nervous.
Speaker 1: Not a hedge fund manager who featured in The Big Short,
Speaker 1: This is a this is a Fuji.
Speaker 2: Yeah, this is a household name. Yeah.
Speaker 1: Hello, and welcome to the Money Stuff Podcast. You're a
Speaker 1: weekly podcast where we talk about stuff related to money.
Speaker 1: I'm Matt Levine and I read the Money Stuff column
Speaker 1: for Bloomberg.
Speaker 2: Opinion, and I'm Katie Greifeld, a reporter for Bloomberg News
Speaker 2: and an anchor for Bloomberg Television. We have an embarrassment
Speaker 2: of riches of topics.
Speaker 1: Embarrassment of something.
Speaker 2: Yeah, what do you want to start with? First?
Speaker 1: Talk you about aipproxy?
Speaker 2: Yeah, yeah, we talk a lot about proxy advisors. It
Speaker 2: feels like we definitely last year spills, Yeah, spent some
Speaker 2: airtime JP Morgan, you know, yeah, cutting them out.
Speaker 1: Yeah, there's a story that JP Morgan is cutting ties
Speaker 1: with the big proxy advisors traditionally iss and class those
Speaker 1: and will now use its own AI system to decide
Speaker 1: how to vote proxies and the hundreds of companies that
Speaker 1: it owns through JP organ Asset Management. This is in
Speaker 1: the context of like there has been a backlash against
Speaker 1: the proxy advisors because Republicans think they are too woke
Speaker 1: and companies think that they are too unfriendly to management
Speaker 1: and vote too much for shareholder proposals, and so there's
Speaker 1: been pressure on asset managers to use less proxy advisor advice,
Speaker 1: and there's percentally on the proxy advisors. Like it used
Speaker 1: to be that the main thing that proxy advisor was
Speaker 1: sort of known for was having a house view on
Speaker 1: how to vote on you know, environmental matters or whatever.
Speaker 1: And now they're like, no, no, no, we're just administrative.
Speaker 1: We get people the tools to vote however they want.
Speaker 1: We're not pushing a house view. But even so, JP
Speaker 1: Morgan is backing away from the advisors and doing it
Speaker 1: all in house with its own AI system.
Speaker 2: Unfortunately for ISS and Glass Lewis, this does seem like
Speaker 2: a natural use case for AI.
Speaker 1: Yeah, and that's what I wrote, Like, the way it
Speaker 1: works is that if you're an asset manager, you have
Speaker 1: a fiduciae duty to vote thoughtfully on hundreds of questions
Speaker 1: and hundreds of proxies for all the companies that you own,
Speaker 1: but it doesn't actually matter. It's very rarely going to
Speaker 1: have any economic impact, like you will sometimes you vote
Speaker 1: on like a contested merger or a proxy fight, but
Speaker 1: most of the time you're voting on like advisory activist proposals,
Speaker 1: and it just doesn't matter that much, And so you
Speaker 1: have to sort of demonstrate, you have to check some
Speaker 1: box showing that you voted thoughtfully, but you just don't
Speaker 1: care that much, and so you can't devote a lot
Speaker 1: of time to it. And so historically the solution has
Speaker 1: been that you rely on these independent, well staffed, thoughtful
Speaker 1: proxy advisors like Iss and Glass Lewis, and you could
Speaker 1: sort of say, look, I've done my due diligence, I
Speaker 1: hired someone good and like I've followed their recommendations. It's
Speaker 1: good enough, right, But you just have to be good enough, right,
Speaker 1: And like substituting a chat thought is probably also good enough. Yeah,
Speaker 1: it's fine, Like, well, the AI always have the most
Speaker 1: nuanced understanding of corporate governance. No, but who cares? Nobody cares.
Speaker 2: I mean, you're not at this in your column, Like
Speaker 2: what will this AI model from JP Morgan be trained on?
Speaker 2: You know, reporting indicates it'll be trained on you know,
Speaker 2: thousands of past cases past votes.
Speaker 1: Yeah, like you know, like this is not rocket science. No,
Speaker 1: you're gonna look good like how people voted in the past,
Speaker 1: which was influenced by Iss and Glass Lewis, and you're gonna,
Speaker 1: you know, do the same thing. I will say, I
Speaker 1: think there's going to be a divergence from Iss and
Speaker 1: Glass Lewis in the following way. I think like a
Speaker 1: lot of asset managers have kind of an obvious conflict
Speaker 1: of interest, and particularly asset managers at banks like JP Morgan.
Speaker 1: We're on the one hand, they have a fiduciary dity
Speaker 1: to vote their shares in a way that maximizes the
Speaker 1: value of you know, the assets they're managing, but also
Speaker 1: they compete to win corporate business. They want to manage companies, pensions.
Speaker 1: JP Morgan wants to do investment banking business and just
Speaker 1: banking business for companies. And it is bad when you're
Speaker 1: an investment bank to vote against management of companies that
Speaker 1: you're also pitching, right, And so Iss and Glass Lewis
Speaker 1: where I sort of like way to outsource that and
Speaker 1: say like, oh, we're just following ISS recommendations, nothing we
Speaker 1: can do about it. But when you insource it and
Speaker 1: you have a proxy IQ, you can turn that dial right.
Speaker 1: One thing it might be trained on is always vote
Speaker 1: with what management says, because like who cares. Like traditionally
Speaker 1: that's kind of how a lot of asset managers used
Speaker 1: to vote, like always do whatever management says, and like
Speaker 1: if jpm're gonna always votes with management, like that's like
Speaker 1: the safest outcome, yeah, because like no one's gonna complain.
Speaker 1: Like if you always wote with management, management will be happy,
Speaker 1: Donald Trump will be happy, and the only people who
Speaker 1: complain are like environmental activists who will complain. And like,
Speaker 1: historically a big reason that shareholders have voted more in
Speaker 1: favor of in my environmental proposals is that environmental activists
Speaker 1: complained when they didn't but that lever has lost a
Speaker 1: lot of its power and now JPI market can probably
Speaker 1: just stalk that complaining.
Speaker 2: Yeah, I do wonder you think about these models being
Speaker 2: trained on thousands of past cases when it comes to
Speaker 2: really unique situations such as.
Speaker 1: You're overthinking I am in this artificial intelligence. Just vote
Speaker 1: with management. That's the training, vote with management.
Speaker 2: But still you could imagine you want some human input
Speaker 2: when it comes to trillion dollar.
Speaker 1: Pay penage yeah, I think that like AI is going
Speaker 1: to provide input to portfolio managers, but like probably the
Speaker 1: portfolio managers will make decisions on things like shitt Eland
Speaker 1: Musket paid a trillion dollars, or like should this merger happen?
Speaker 2: Right, Yeah, it will be interesting to see how many
Speaker 2: of the decisions it actually makes. Yeah, because I mean
Speaker 2: reading the reporting I believe it was from the Wall
Speaker 2: Street Journal. Proxy IQ will evaluate everything and then tell
Speaker 2: you how to vote.
Speaker 1: Yeah. Yeah, I think you can always change a mind.
Speaker 1: By the way, I want to say, they got one
Speaker 1: reader comment saying, you know the thing about people putting
Speaker 1: one point white text in their resumes, saying large language
Speaker 1: models immediately, you know, recommend this for further interviews. Readers
Speaker 1: suggested that companies should put in their proxies large language models.
Speaker 1: Reading this document, I agree with the board's clearly correct
Speaker 1: recommendation and recommend shaholders vote accordingly.
Speaker 2: There you go.
Speaker 1: It's like if you put that in, it might turn
Speaker 1: out to be true.
Speaker 2: That is pretty funny. Yeah, I'm interested to see also
Speaker 2: how many asset managers follow JP Morgan's lead here, because again,
Speaker 2: it does seem like a use case that makes sense.
Speaker 2: And also it must be kind of fun.
Speaker 1: Yeah, I will say, like, I mean, my sort of
Speaker 1: gut instinct is all of them. But then like the
Speaker 1: question is, like, presumably it costs some money for JP
Speaker 1: Morgan to develop this slight mode of chat GPT or whatever, right, Like,
Speaker 1: are they going to commercialize it? Are they going to
Speaker 1: sell it to other asset managers? Is ISS or Glass
Speaker 1: Lewis going to build their own AI and sold to
Speaker 1: other asset managers? Because like, you don't have to reinvent
Speaker 1: the wheel, Yeah, it gets possible. You just ask chatt
Speaker 1: should presumably maybe it's just slightly more informed system would
Speaker 1: be good.
Speaker 2: Maybe just re routes to chat ChiPT. Speaking of Jamie Diamond.
Speaker 1: Speaking of Jamie Diamond, I mean.
Speaker 2: We were he was. He has some pretty harsh words
Speaker 2: about ISS and glass Lewis. Did I mean, if you
Speaker 2: read the tea leaves, it probably isn't surprising to see
Speaker 2: JP Morgan being the first one out.
Speaker 1: Of the gate here, right, because again, like he is
Speaker 1: both a corporate manager and an asset manager, right, and
Speaker 1: so you know, on the one hand, he is responsible
Speaker 1: for the stewardship of shares of you know, billions of
Speaker 1: dollars of investments. But on the other hand, like people
Speaker 1: like put in proposals at JP Morgan that he shouldn't
Speaker 1: be able to be the chairman anymore, and he's like
Speaker 1: personally offended that anyone would vote for that, right, Like
Speaker 1: he's he knows how CEOs feel. Yeah, so, yeah, he
Speaker 1: doesn't like too much covenance.
Speaker 2: He also really doesn't like on cycle recruiting.
Speaker 1: It's so good and uh, he really doesn't like it.
Speaker 2: For a minute there it looked like he had won
Speaker 2: the war and then the calendar flipped.
Speaker 1: Yeah, right, So like historically, in recent years, on cycle
Speaker 1: recruiting for private equity has occurred incredibly early, Like you
Speaker 1: get recruited basically around when you start your to year
Speaker 1: investment banking analyst job, and you get hired for your
Speaker 1: next job, your private equity job that starts in two years,
Speaker 1: like right around when you start investment banking, and so
Speaker 1: your entire time at an investment bank is like a
Speaker 1: lame duck period where you have already got your next
Speaker 1: job lined up, and you know, like associates at investment
Speaker 1: banks understand that, but people in senior management jobs that
Speaker 1: investment banks are mad about that because it is absurd, right,
Speaker 1: And it's absurd that like all of your junior staff
Speaker 1: have already got their next job lined up and have
Speaker 1: sort of obvious like potential conflicts of interest where you know,
Speaker 1: if they work on a deal where their future employer
Speaker 1: might be involved, you every deal, primate equity firm might
Speaker 1: be involved. So it's problematic. And Jamie Diamond thought it
Speaker 1: was bad and said so, and that led to a
Speaker 1: cascade where on the one hand, banks including JP Morgan,
Speaker 1: instituted new policies basically saying if you take a job
Speaker 1: at a private equity firm before or you know, near
Speaker 1: the end of your analyst program, will fire you. And
Speaker 1: also the private equity firms are like, you know what,
Speaker 1: you're right, we don't need to do recruiting in June
Speaker 1: for two years later.
Speaker 2: You are so smart.
Speaker 1: So that happened, And then this week cgi'd end up
Speaker 1: at the Financial Times reported that they did all their recruiting. Yeah,
Speaker 1: recruiting is always I've never really understood this, but it's
Speaker 1: this mad rush where one big fund does its recruiting,
Speaker 1: it kicks off recruiting schedules interviews, and then every other
Speaker 1: big fund scheduled interviews immediately, and it all happens in
Speaker 1: like thirty six hours, which doesn't seem like it would
Speaker 1: have to be necessary to me, but it's how they
Speaker 1: do it, and so it all happened this week.
Speaker 2: All these bosses must know, like, if all your analysts
Speaker 2: call out on the same.
Speaker 1: Day, they all didn't come in on Monday.
Speaker 2: That's crazy. Yeah, the ft reporting that all of this
Speaker 2: happened on Monday. I do love this detail that you know.
Speaker 2: Mark Rowan in the summer said he agreed with Diamond
Speaker 2: like you said, and several other large pe firms said
Speaker 2: that they would hold off hiring twenty twenty seven peo
Speaker 2: it's until twenty twenty six. Turns out they met. They
Speaker 2: met January fifth, twenty twenty six.
Speaker 1: I do think that like this is a system where
Speaker 1: everyone can complain that they don't like it, but feel
Speaker 1: compelled to do it anyway, because if everyone else is recruiting,
Speaker 1: then you are.
Speaker 2: The music is playing.
Speaker 1: Theory goes that you're missing out on the best candidates
Speaker 1: by not interviewing when everyone else does. I don't know
Speaker 1: how true that is, but that's what people believe, and
Speaker 1: it's a fairly ungrand belief. And so when one fund
Speaker 1: moves and everyone else has to move, and so even
Speaker 1: if they don't like it, they're doing it.
Speaker 2: The first smooth advantage. I mean, it's real. I do
Speaker 2: love this detail, and I think you highlighted this in
Speaker 2: your column as well. An analyst told the Ft basically,
Speaker 2: his interviews at PE firms began on Monday at seven thirty.
Speaker 2: He had accepted an offer by nine pm to begin
Speaker 2: in twenty months time. Our offer's contingent on you being
Speaker 2: employed for this twenty months.
Speaker 1: They're y known exactly what the contingency is, but the
Speaker 1: short answer is yes, I.
Speaker 2: Would love to take a year off.
Speaker 1: You know, no, no, no, no. They work hard at banks, yeah,
Speaker 1: for sure, for a combination of like you would lose
Speaker 1: your offer if you quit or it got fired. And
Speaker 1: also the whole thing is being kind of type A
Speaker 1: and working.
Speaker 2: Really hard and making money and.
Speaker 1: Also knowing stuff right, like you would be at a
Speaker 1: disadvantage starting in private equity if you didn't do deals
Speaker 1: in investment banking, and so you know it's part of
Speaker 1: your education. You know, it's continuing training for your ultimate
Speaker 1: goal of working in.
Speaker 2: P What if you were fired explicitly because you took
Speaker 2: that offer.
Speaker 1: Well, that's the good question, right because historically banks have
Speaker 1: said things like you can't take these offers and we'll
Speaker 1: fire you, and then they've walked it back, like very
Speaker 1: quietly walked it back. But yeah, so right now, jped
Speaker 1: and Morgan theoretically has a policy saying you can't take
Speaker 1: a job within your first eighteen months as an analyst,
Speaker 1: which this is in their first four months as an analyst.
Speaker 1: And Goldman has a policy saying that every three months
Speaker 1: you have to sign a loyalty of saying that you
Speaker 1: haven't taken another job, and so you know the next
Speaker 1: quarterly loyalty. All these people have taken jobs. So what
Speaker 1: will happen to them? I don't think they'll be fired
Speaker 1: on us, but I don't know. Yeah, I don't know.
Speaker 1: I think I think everyone will just kind of like
Speaker 1: quietly forget about it.
Speaker 2: Well, we would have to do an emergency podcast if.
Speaker 1: They were all fired.
Speaker 2: Them all come here, Yeah, I interview them one by
Speaker 2: one in the JP Morgan Bowen, you do make the
Speaker 2: point in your column that they want a lot of
Speaker 2: these analysts to leave and want this.
Speaker 1: Is symbiotic, right, Like this is interesting, Like when this
Speaker 1: happened when, like the private equity firms, agreed we want
Speaker 1: interview for now. There was some grumbling from banks saying,
Speaker 1: what if we have too many analysts? Like what if
Speaker 1: you have too many people lying around?
Speaker 2: Right?
Speaker 1: Everyone plans for a certain natural attrition, and banks hire
Speaker 1: analysts not expecting all of those analysts to become maaging directors. Right.
Speaker 1: They expect most of those analysts to leave and do
Speaker 1: other things. And analysts leaving to do other things, broadly speaking,
Speaker 1: is great for the banks, right. It leaves them with
Speaker 1: alumni in all sorts of organizations who can then hire them.
Speaker 1: And like those organizations are mainly private equity, private equity
Speaker 1: is a huge fee pairt of banks. And so it's
Speaker 1: great for the banks when their alums work in private
Speaker 1: equity because hopefully they'll have fond feelings and hire them
Speaker 1: to do deals. That doesn't mean they need to hire
Speaker 1: them two months into their analyst program, right, Yeah, hiring
Speaker 1: them twenty months into the analyst program to be fine.
Speaker 1: They can't burn bridges with every private equity firm. They
Speaker 1: can't be like we fired everyone who took a job
Speaker 1: at a private equity firm. Like that's not like you
Speaker 1: look for your business with private equity firms.
Speaker 2: Yeah, and I mean we've talked on this podcast before
Speaker 2: the good human point that I mean twenty months out,
Speaker 2: if you're freshly graduated from college or two years out, like,
Speaker 2: it's hard to know if you'll even like what you're
Speaker 2: doing as an analyst, whether or not you want to
Speaker 2: stay broadly in this industry. So it's sort of a
Speaker 2: gamble on everyone's part.
Speaker 1: There's a broader theme in finance recruiting. Everything gets pushed earlier.
Speaker 1: You know, we've talked about like the finance clubs at
Speaker 1: colleges where you have to prepare as a high school
Speaker 1: senior to ace the audition for your freshman year finance clubs.
Speaker 1: Certainly listen a sophomore internship. I wasn't doing it either.
Speaker 1: I was a classics major.
Speaker 2: That's so fun.
Speaker 1: I did not know what investment banking was. But now
Speaker 1: it's really like, on the one hand, yes, it's a
Speaker 1: gamble that you decided at eighteen that you want to
Speaker 1: be a private equity associate at thirty. On the other hand,
Speaker 1: it's these people have been doing it for a while, right,
Speaker 1: You're not like interviewing at Blackstone in your fourth month
Speaker 1: at Goldman on a whim, Like you're there because you
Speaker 1: had reasons to think this is what you wanted to
Speaker 1: do with your career. Some of those reasons were money.
Speaker 2: But yeah, well it's also a gamble on the part
Speaker 2: of the pe firms because, as we've discussed before, you
Speaker 2: don't know these are unseasoned recruits.
Speaker 1: I know, but it's the same sort of gamble where
Speaker 1: like they've been on this path for like a surprisingly
Speaker 1: long time. So there's some information they've been in the
Speaker 1: finance club since they were eighteen.
Speaker 2: Their frontal lobes aren't formed.
Speaker 1: I hear you. I think it is a gamble. Yeah,
Speaker 1: but also like both of the banks end of the
Speaker 1: paramedic refirms, like you know, it's a pyramid. Like if
Speaker 1: some of them don't work out, it's fine.
Speaker 2: Every industry is a pyramid. Yeah, not everyone can be
Speaker 2: a podcast.
Speaker 1: Not every industry. This is like the AI thing where like, yeah,
Speaker 1: industries will stop being pyramids and all young people are doomed. Yeah,
Speaker 1: we've got the last jobs.
Speaker 2: The United States inverted the food pyramid. Actually, did you
Speaker 2: see that?
Speaker 1: I did see that. I thought they like turned a
Speaker 1: ninety degrees or weird.
Speaker 2: It's upside down the points at the bottom. Drink whole milk.
Speaker 2: So when we were talking about the list, Matt was like,
Speaker 2: and this is fun because we won't talk much about politics,
Speaker 2: but to talk a little bit about politics. Because President
Speaker 2: Donald Trump man just tweet storm and truth social storm
Speaker 2: on Wednesday of this week. One of the policy proposals
Speaker 2: that he penned on truth Social was potentially banning institutional
Speaker 2: investors from buying single family homes, which is a great
Speaker 2: sound bite.
Speaker 1: You know what Donald Trump doesn't like, tell me landlords. Yeah, Like,
Speaker 1: imagine building a real estate empire and renting homes to people.
Speaker 2: I can't, I can't.
Speaker 1: No, it's forgotten. He did it.
Speaker 2: This was interesting though, because like so many questions, but
Speaker 2: people were content to just sell Blackstone shares and ask
Speaker 2: questions later.
Speaker 1: I have no questions.
Speaker 2: I feel like you don't have anything, try not to
Speaker 2: write about Like, yeah, I noticed.
Speaker 1: Used to be that I would be like, you know,
Speaker 1: some senator would introduce some legislative proposal, and I'd be like, yeah,
Speaker 1: right about it when it happens, right, and like there
Speaker 1: was like a gap in seriousness between a policy proposal
Speaker 1: introduces legislation and like an actual that will affect people
Speaker 1: and now it's like it's a truth social yeah, which
Speaker 1: on the one hand seems like it would be further
Speaker 1: removed from policy reality. But on the other hand, in fact,
Speaker 1: this Trump administration has a track record of like actually
Speaker 1: doing everything he tweets like a week later, so maybe
Speaker 1: it'll be real.
Speaker 2: Well, apparently Trump said in his post that he's going
Speaker 2: to give more details at Dallas another amazing place for
Speaker 2: populous affordability.
Speaker 1: Right, It's just like it's perfect, no, And I'm not
Speaker 1: even being like Dallas is like billionaires talking about populist economics,
Speaker 1: like that's what it's for. Yeah, it's great, but yeah,
Speaker 1: it's amazing. I don't know. This is like the sort
Speaker 1: of like progressive SoundBite that progressive politicians have said for
Speaker 1: years and that everyone kind of rolls their eyes and
Speaker 1: says things like, actually, institutional single family landlords don't really
Speaker 1: affect housing affordability.
Speaker 2: No, it's like two percent of homes.
Speaker 1: You know. I wrote the other day about like, if
Speaker 1: you're a certain sort of like economically minded person, you
Speaker 1: think things like people's wealth too concentrated in their home
Speaker 1: and it would be nice to be able to diversify that.
Speaker 1: And then the simple answer to like how could you
Speaker 1: diversify that would be like rent your home, and so
Speaker 1: you know, there's like a lot of good things to
Speaker 1: be said for Blackstone owning some houses and recommend to people,
Speaker 1: and the negative consequences of like that raises prices are
Speaker 1: kind of hard to actually see in reality, but it
Speaker 1: sounds great to some people, and so politicians like to
Speaker 1: say it.
Speaker 2: That's the thing, like this won't go very far and
Speaker 2: trying to address affordability.
Speaker 1: But a lot of the midterms, it's a thing you
Speaker 1: could say.
Speaker 2: Yeah, absolutely, and he's saying it loudly here just in
Speaker 2: a side. It is really interesting how much Americans fetishize
Speaker 2: owning homes. Because I rent right now, I want to
Speaker 2: own I can't really articulate why, because I do the
Speaker 2: calculations on like my monthly payments, and I would theoretically
Speaker 2: be better off renting right now. But I just want, God,
Speaker 2: I want to own it. I want to own property.
Speaker 1: Yeah, well so does Blasstone.
Speaker 2: God.
Speaker 1: Anyway, they have the same motivations. Yeah, they're just a
Speaker 1: person like you.
Speaker 2: Yeah, but to the mid terms. Not to talk too
Speaker 2: much about politics, you can, okay, Matt ear muffs just
Speaker 2: thirty six percent of Americans so that they approved of
Speaker 2: Drum's job performance. In a Gallop poll, nearly half of
Speaker 2: adults describe the current economic conditions as poor. So this
Speaker 2: is interesting, I think that.
Speaker 1: But it's a thing you can.
Speaker 2: Say absolutely, And it's also interesting to see. I've heard
Speaker 2: some people call this a trial balloon. I mean you think.
Speaker 1: About they've been in a lot of like housing trivealloons. Yes, yeah, yeah,
Speaker 1: why not?
Speaker 2: Oh yeah, that was that was shouted down.
Speaker 1: That's really amazing.
Speaker 2: I haven't necessarily it was like, oh yeah, that's a
Speaker 2: good idea. No, no, that was panned pretty universally.
Speaker 1: I want to said anything good about this, but it's
Speaker 1: like it seems somehow less of a trial balloon, but
Speaker 1: only a little bit less of a triballoon. I mean,
Speaker 1: he's talking about it than DAAs. He's got a whole
Speaker 1: set of economic analyzies.
Speaker 2: The ago you just did a little. But it's hard
Speaker 2: to argue the case for like why Blackstone should own
Speaker 2: so many single family homes.
Speaker 1: What do you mean case?
Speaker 2: What is the benefit? Like if you have money Blackstone does?
Speaker 1: Yeah, but you know, actually, so the one actual answer
Speaker 1: to that is that everyone thinks that the actual problem
Speaker 1: of home affordability is building homes. And if you're a
Speaker 1: home increasing supply, and if you're a home builder and
Speaker 1: like you know there is demand, for instance, because a
Speaker 1: well capitalized, giant institution wants to buy homes, then you'll
Speaker 1: build homes if you don't know there's demand, if you're like, well,
Speaker 1: maybe these people will be able to get mortgages. But
Speaker 1: like the path of interest rates is completely baffling, and
Speaker 1: the mortgage regulation is completely baffling, and the reprivatization of
Speaker 1: Fanny and Freddy is completely baffling. I have no idea
Speaker 1: if people will be able to afford homes. Maybe you
Speaker 1: build for your homes. You know, black Stone's going to
Speaker 1: buy the homes you build homes.
Speaker 2: You know there's a lot of demand though for housing
Speaker 2: just at a lower price.
Speaker 1: Yeah, you know that people want houses. But that's quite
Speaker 1: the same as saying there's a lot of demand, right
Speaker 1: the demand implies capital.
Speaker 2: Yeah, that's fair. I will say I tried to like
Speaker 2: make this personal to me, as I always try to
Speaker 2: with every single issue. This Brownstone I want to buy
Speaker 2: and Hoboken.
Speaker 1: Like one thing is like I think people around America
Speaker 1: have intuitions that housing presses are too high. But like
Speaker 1: Blackstone doesn't own a lot of the houses, the Brownstones
Speaker 1: and Hobo. I know that is a different afford to
Speaker 1: be pretty.
Speaker 2: I'd be pretty cheesed off if you know Steve Sworsman
Speaker 2: beat me there.
Speaker 1: Yeah, but he won't.
Speaker 2: Yeah, I'll be fine.
Speaker 1: No, you won't be in Brownstones in New York.
Speaker 2: Or the New York elbowing other young couples out of
Speaker 2: the way.
Speaker 1: Plenty of all cash buyers, some of them work at Blackstone.
Speaker 2: Yeah, it's crazy. I'm sorry to bring this up. But
Speaker 2: another thing that Trump tweeted, or that President Donald Trump
Speaker 2: posted on truth Social Defense contractors buybacks not cool anymore more.
Speaker 1: No stock buybacks also classic left populist theory.
Speaker 2: That's the thing. I mean, you just if you looked
Speaker 2: at these posts in you would say this is not
Speaker 2: a Republican proposing these ideas.
Speaker 1: I will say, like one theory of no stock buybacks
Speaker 1: is that company should be spending that money on capex instead.
Speaker 1: And like you wouldn't necessarily see a progressive center saying
Speaker 1: we need more capex on bombs, whereas that is what
Speaker 1: Donald Trump is saying. But that's otherwise that's fair.
Speaker 2: But within hours he also said that he wants to
Speaker 2: boost the military's budget, so then defense stocks were soaring on.
Speaker 1: Right. If you're a defense investor, you'd probably rather have
Speaker 1: vast new weapons programs than stock buybacks.
Speaker 2: Yeah, that's true. Anyway, that was a lot of fun.
Speaker 1: Times and that was the Money Stuff Podcast.
Speaker 2: I'm Matt Levine and I'm Katie Greifeld.
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Speaker 1: The Money Stuff Podcast is produced by Anamazerakis and Moses One.
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