1 00:00:03,880 --> 00:00:07,320 Speaker 1: Strap on your parachute. It's time for What Goes Up 2 00:00:07,560 --> 00:00:15,000 Speaker 1: with Sarah Ponzick and Mike Regan. Hello and welcome to 3 00:00:15,080 --> 00:00:18,880 Speaker 1: What goes Up, a Bloomberg Weekly Markets podcast. I'm Sarah Pons, 4 00:00:19,120 --> 00:00:21,200 Speaker 1: a reporter on the cross as That Team, and I'm 5 00:00:21,239 --> 00:00:24,200 Speaker 1: Mike Reagan, a senior editor at Bloomberg. Again. You can 6 00:00:24,200 --> 00:00:28,520 Speaker 1: think of me as the Yahoo chat room to Sarah's 7 00:00:28,560 --> 00:00:31,800 Speaker 1: Wall Street bets. I get to be a Wall Street bet. 8 00:00:32,520 --> 00:00:34,680 Speaker 1: I've got the power here. Joke might take a little 9 00:00:34,680 --> 00:00:36,560 Speaker 1: bit of thinking, but it's a good one, I promise. 10 00:00:36,640 --> 00:00:39,720 Speaker 1: I promised listeners. If you needed to get to explain, 11 00:00:39,800 --> 00:00:43,120 Speaker 1: give me a call and he'll give you his personal 12 00:00:43,159 --> 00:00:45,960 Speaker 1: number alongside the podcast hotline at the end of the show. 13 00:00:46,000 --> 00:00:50,519 Speaker 1: Just wait for it. But this week was really a 14 00:00:50,560 --> 00:00:54,360 Speaker 1: week like no other. A short squeeze for the record books, 15 00:00:54,520 --> 00:00:59,240 Speaker 1: shares of game Stop AMC costs, Bill the Bear and 16 00:00:59,400 --> 00:01:02,440 Speaker 1: others going to the moon to use the term and 17 00:01:02,520 --> 00:01:05,559 Speaker 1: now infamous sub credit that might just referenced called Wall 18 00:01:05,600 --> 00:01:07,440 Speaker 1: Street bets. I'm sure you've heard of it. By now 19 00:01:07,560 --> 00:01:11,200 Speaker 1: going private then making the foreum public once again, brokerage 20 00:01:11,240 --> 00:01:15,920 Speaker 1: is restricted trading and representative AOC and Senator Ted Cruz 21 00:01:16,000 --> 00:01:18,160 Speaker 1: actually agreed on something that had to do with the 22 00:01:18,160 --> 00:01:20,600 Speaker 1: stock market, and the list just goes on. Mike right, Sarah, 23 00:01:20,680 --> 00:01:23,319 Speaker 1: And you know, I think some of our listeners might 24 00:01:23,400 --> 00:01:26,560 Speaker 1: have game stop fatigue and Wall Street Bets fatigue. I've 25 00:01:26,560 --> 00:01:29,959 Speaker 1: gotten a few tweets saying, please, please do not make 26 00:01:30,000 --> 00:01:33,480 Speaker 1: any of the crazy things about game stopper Wall Street Bets. 27 00:01:33,600 --> 00:01:35,919 Speaker 1: I've got good news and bad news for those people. 28 00:01:36,400 --> 00:01:39,360 Speaker 1: My crazy thing will not be about Wall Street Bets, 29 00:01:39,400 --> 00:01:42,960 Speaker 1: but the whole podcast will be so so so good 30 00:01:42,959 --> 00:01:45,639 Speaker 1: news and bad news. But luckily for us, we've got 31 00:01:45,680 --> 00:01:49,040 Speaker 1: a really great guest to give us some insight on 32 00:01:49,160 --> 00:01:52,640 Speaker 1: all of this craziness. He's really one of the world's 33 00:01:52,680 --> 00:01:57,200 Speaker 1: leading experts on the complicated structure of the stock market, 34 00:01:57,760 --> 00:02:01,840 Speaker 1: where trades are getting executed dark pools and exchanges and 35 00:02:01,920 --> 00:02:05,760 Speaker 1: wholesalers like Citadel. He's the founder of the research firm, 36 00:02:05,840 --> 00:02:07,720 Speaker 1: the Tab Group, and for the last couple of years 37 00:02:07,720 --> 00:02:10,600 Speaker 1: we've been lucky enough to call him our colleague here 38 00:02:10,720 --> 00:02:15,280 Speaker 1: at Bloomberg. He is our head of market structure research 39 00:02:15,400 --> 00:02:18,560 Speaker 1: at Bloomberg Intelligence, and his name is Larry Tab. Larry, 40 00:02:18,560 --> 00:02:21,359 Speaker 1: Welcome to the show. Oh great to be here, Mike 41 00:02:21,400 --> 00:02:25,960 Speaker 1: and Sarah. Great so Larry. I let's obviously dig into 42 00:02:26,040 --> 00:02:28,680 Speaker 1: this whole game stop and Robin Hood and Wall Street 43 00:02:28,680 --> 00:02:32,440 Speaker 1: bet scenario. The question I keep getting, and I keep 44 00:02:32,440 --> 00:02:35,679 Speaker 1: asking people like yourself over and over again, is, um, 45 00:02:36,480 --> 00:02:39,840 Speaker 1: it's obviously been so wild these moves in these stocks, 46 00:02:39,840 --> 00:02:44,280 Speaker 1: hedge funds getting burned left and right, stocks up thousands 47 00:02:44,320 --> 00:02:47,760 Speaker 1: of percent in a month. It seems like on first 48 00:02:47,760 --> 00:02:51,000 Speaker 1: blush that there's something illegal going on here. But you know, 49 00:02:51,080 --> 00:02:54,079 Speaker 1: the more I look at it on these forums, it's 50 00:02:54,080 --> 00:02:57,680 Speaker 1: hard for me to really pinpoint anything illegal. I feel 51 00:02:57,680 --> 00:03:01,200 Speaker 1: like the regulators have have their work cut out for them. Um. 52 00:03:01,240 --> 00:03:04,480 Speaker 1: I mean imagine, if they dig far enough, maybe they'll find, 53 00:03:04,760 --> 00:03:07,600 Speaker 1: you know, something here or there. Um. But when you 54 00:03:07,639 --> 00:03:09,720 Speaker 1: have a brokerage like Robin Hood, who all of a 55 00:03:09,800 --> 00:03:14,360 Speaker 1: sudden starts restricting trading of some of these stocks and 56 00:03:14,680 --> 00:03:19,320 Speaker 1: interactive brokerage, um, you know, heightening their margin requirements both 57 00:03:19,360 --> 00:03:21,320 Speaker 1: on the on the short and the long end. I 58 00:03:21,320 --> 00:03:23,160 Speaker 1: feel like, all of a sudden, it's it's forcing the 59 00:03:23,240 --> 00:03:26,520 Speaker 1: issue to some degree with regulators that they have to 60 00:03:26,800 --> 00:03:30,040 Speaker 1: sort of get on the school board here somehow about 61 00:03:30,080 --> 00:03:32,320 Speaker 1: this issue. How do you sort of look at it 62 00:03:32,360 --> 00:03:35,920 Speaker 1: from the regulators standpoint, Um, is there anything they can do? 63 00:03:36,000 --> 00:03:40,400 Speaker 1: Is there anything they should do? Um? Yeah, the halting 64 00:03:40,400 --> 00:03:46,839 Speaker 1: of these stocks is not particularly nefarious. The issue has 65 00:03:46,880 --> 00:03:50,800 Speaker 1: to do a clearing and how the clearing mechanisms work. Basically, 66 00:03:50,920 --> 00:03:53,680 Speaker 1: stocks settled in a two day period and and in 67 00:03:53,720 --> 00:03:58,360 Speaker 1: those two days, the brokerages are responsible for ensuring that 68 00:03:58,440 --> 00:04:04,440 Speaker 1: those stocks set and so the question that becomes is, um, 69 00:04:04,600 --> 00:04:08,840 Speaker 1: they can't pledge their customers cash or securities to ensure 70 00:04:08,920 --> 00:04:10,880 Speaker 1: that they settle, so that they have to come up 71 00:04:10,880 --> 00:04:14,600 Speaker 1: with a basically a margin, you know, their margin, just 72 00:04:14,760 --> 00:04:17,840 Speaker 1: like you know, just like you know an individual investor's 73 00:04:17,880 --> 00:04:20,360 Speaker 1: margins if if they're doing margin loans or at they're 74 00:04:20,360 --> 00:04:22,560 Speaker 1: short or whatever. So they have to come up with 75 00:04:22,600 --> 00:04:25,520 Speaker 1: a bunch of capital to basically, you know, put aside 76 00:04:25,520 --> 00:04:27,960 Speaker 1: over at dt c C. And what dt c C 77 00:04:28,120 --> 00:04:30,640 Speaker 1: basically said is is that these stocks have become so 78 00:04:30,800 --> 00:04:34,680 Speaker 1: risky that you know, if you're buying Game Stop at 79 00:04:34,680 --> 00:04:37,920 Speaker 1: three sixty uh and tomorrow it's a one d are 80 00:04:37,960 --> 00:04:40,320 Speaker 1: you really going to pay three sixty for this um 81 00:04:40,360 --> 00:04:42,120 Speaker 1: if it goes down the one hundred. So they put 82 00:04:42,200 --> 00:04:45,760 Speaker 1: up the margin on a lot of these these uh 83 00:04:46,120 --> 00:04:49,800 Speaker 1: um you know, high flyers or whatever, uh so high 84 00:04:49,880 --> 00:04:53,040 Speaker 1: that they that the brokerages can't afford really the margin 85 00:04:53,160 --> 00:04:55,960 Speaker 1: to to set aside so their clients can actually even 86 00:04:55,960 --> 00:05:00,640 Speaker 1: buy this stuff. So it's not really caba all, it's 87 00:05:00,680 --> 00:05:04,400 Speaker 1: not really Robin Hood dwin fairious stuff. It's the DTC 88 00:05:04,600 --> 00:05:07,760 Speaker 1: s C saying this stuff is just too risky. We 89 00:05:07,800 --> 00:05:09,880 Speaker 1: don't trust that these guys have the cash to be 90 00:05:09,880 --> 00:05:12,520 Speaker 1: able to withstand settling these things two days from now, 91 00:05:12,560 --> 00:05:14,839 Speaker 1: because in two days, who knows what the price could 92 00:05:14,839 --> 00:05:18,840 Speaker 1: be could be zero, right, I mean, just and I'm 93 00:05:18,839 --> 00:05:20,360 Speaker 1: just gonna throw it out there because things are moving 94 00:05:20,400 --> 00:05:23,680 Speaker 1: so quickly these days. We record on Thursday. So in 95 00:05:23,720 --> 00:05:26,360 Speaker 1: the morning on Thursday, for example, game Stop shares are 96 00:05:26,360 --> 00:05:28,800 Speaker 1: trading above five hundred dollars a share, and then all 97 00:05:28,839 --> 00:05:31,640 Speaker 1: of a sudden we're back down towards one hundred dollars 98 00:05:31,640 --> 00:05:34,720 Speaker 1: a share. So so it's just things are moving at 99 00:05:34,760 --> 00:05:37,120 Speaker 1: such a quick pace. So I want to double down 100 00:05:37,120 --> 00:05:39,599 Speaker 1: on something you just said. There's obviously a lot of 101 00:05:39,720 --> 00:05:44,200 Speaker 1: rumors swirling around that maybe the hedge funds got together, 102 00:05:44,440 --> 00:05:47,360 Speaker 1: or Citadel or the market makers got together and are 103 00:05:47,400 --> 00:05:50,520 Speaker 1: are telling Robin Hood and the other brokers that they 104 00:05:50,520 --> 00:05:53,479 Speaker 1: have to halt trading on these sites. And you've also 105 00:05:53,520 --> 00:05:56,760 Speaker 1: seen the likes of AOC and Ted cruz Uh and 106 00:05:56,880 --> 00:05:59,960 Speaker 1: Dave Portnoy of Barstool Sports come out and kind of 107 00:06:00,040 --> 00:06:02,120 Speaker 1: shooes you this and say this is an issue. We 108 00:06:02,120 --> 00:06:04,240 Speaker 1: need to look into this. It shouldn't be allowed. So 109 00:06:04,279 --> 00:06:07,360 Speaker 1: what you're saying is there's a structure issue behind the scenes, 110 00:06:07,760 --> 00:06:10,560 Speaker 1: and it's not up to the brokers. So no, it 111 00:06:10,600 --> 00:06:13,440 Speaker 1: has to do with how how securities are cleared and 112 00:06:13,520 --> 00:06:18,080 Speaker 1: so UM basically I buy something today, it settles in 113 00:06:18,160 --> 00:06:21,839 Speaker 1: two days. Basically there's an IOU out there for two 114 00:06:21,920 --> 00:06:25,839 Speaker 1: days that somebody has to basically put cash behind UM. 115 00:06:25,960 --> 00:06:28,920 Speaker 1: And it can't be UM me the individual investor that 116 00:06:29,000 --> 00:06:31,920 Speaker 1: my broker can't take my cash to pledge against their 117 00:06:32,040 --> 00:06:35,440 Speaker 1: overall health or their overall margin account. It's got to 118 00:06:35,440 --> 00:06:38,239 Speaker 1: be capital, you know that the that that the broker 119 00:06:38,279 --> 00:06:42,960 Speaker 1: puts up. And given the increase in capital and the 120 00:06:43,000 --> 00:06:46,440 Speaker 1: increase in risk in clearing these items, they up the 121 00:06:46,480 --> 00:06:50,839 Speaker 1: capital ratio for these tremendously and and none of the 122 00:06:50,880 --> 00:06:54,720 Speaker 1: brokers can afford the risk in case the price of 123 00:06:54,800 --> 00:06:57,200 Speaker 1: this goes down and basically wipes out all their clients, 124 00:06:57,200 --> 00:06:59,440 Speaker 1: and they don't have any cash to basically settle the trades, 125 00:07:00,160 --> 00:07:04,080 Speaker 1: you know, Larry, Unfortunately, uh, we live in the golden 126 00:07:04,120 --> 00:07:06,800 Speaker 1: age of the conspiracy theory as as I'm sure you 127 00:07:06,920 --> 00:07:13,200 Speaker 1: know in politics as well as markets, and obviously people 128 00:07:13,280 --> 00:07:19,000 Speaker 1: looking very heavily now at the role of a wholesaler 129 00:07:19,080 --> 00:07:24,000 Speaker 1: like Citadel Um. Citadel obviously being an unusual situation in that, 130 00:07:24,200 --> 00:07:25,920 Speaker 1: you know, half the firms a hedge fund, half the 131 00:07:25,960 --> 00:07:30,640 Speaker 1: firms a market maker wholesaler um. So walk us through 132 00:07:30,720 --> 00:07:34,720 Speaker 1: how their market making sideworks. I mean, my understanding is 133 00:07:34,760 --> 00:07:39,320 Speaker 1: basically Robin hood sends all their orders to Citadel, who 134 00:07:39,360 --> 00:07:43,760 Speaker 1: pays them a fee, not all of them, but a percentage, uh, 135 00:07:43,800 --> 00:07:47,400 Speaker 1: to Citadel and firms like that who who these orders 136 00:07:47,440 --> 00:07:49,800 Speaker 1: never actually make it to a stock exchange. They're matched 137 00:07:50,120 --> 00:07:54,760 Speaker 1: by these internalizers, as they're called. My impression is, you know, 138 00:07:54,960 --> 00:07:57,280 Speaker 1: maybe they're making I don't know what half a cent 139 00:07:57,720 --> 00:08:02,400 Speaker 1: a share something like that in this way less so, 140 00:08:04,200 --> 00:08:06,600 Speaker 1: you know, and they the reason it's lucrative to them though, 141 00:08:06,600 --> 00:08:08,600 Speaker 1: is they're just getting so much fune. I mean, they're 142 00:08:08,640 --> 00:08:12,080 Speaker 1: they're getting however, many millions or even a billion shares 143 00:08:12,120 --> 00:08:15,200 Speaker 1: a day. I guess to to some of these, Um, 144 00:08:15,240 --> 00:08:17,720 Speaker 1: but I don't wonder. You know, it's got to be 145 00:08:17,720 --> 00:08:19,960 Speaker 1: a tough time to be Ken Griffin with all this 146 00:08:20,280 --> 00:08:23,120 Speaker 1: uh scrutiny. You know of a business that, okay, on 147 00:08:23,280 --> 00:08:26,560 Speaker 1: one side of the businesses is bailing out a hedge 148 00:08:26,600 --> 00:08:29,480 Speaker 1: fund that got run over by these day traders. The 149 00:08:29,480 --> 00:08:32,000 Speaker 1: other side of the business is making a lot of 150 00:08:32,000 --> 00:08:35,559 Speaker 1: money by matching the orders. Um. I mean, is there 151 00:08:35,559 --> 00:08:37,839 Speaker 1: a case to be made for for separating the hedge 152 00:08:37,840 --> 00:08:40,000 Speaker 1: fund from the market making business? Do you think that 153 00:08:40,160 --> 00:08:41,679 Speaker 1: is kind of where this is going that there might 154 00:08:41,679 --> 00:08:44,559 Speaker 1: be certain calls for that. I think that's Ken Griffin's view. 155 00:08:44,679 --> 00:08:47,280 Speaker 1: There's been rumors for years that they're trying to take 156 00:08:47,320 --> 00:08:51,240 Speaker 1: the market maker the security side of the business public. 157 00:08:51,760 --> 00:08:55,760 Speaker 1: So uh, currently the security side of the business is 158 00:08:55,800 --> 00:08:58,360 Speaker 1: mostly in New York or moving down to Florida. The 159 00:08:58,400 --> 00:09:03,800 Speaker 1: hedge funds still in Chicago and elsewhere. They run pretty separately. Um. 160 00:09:04,000 --> 00:09:07,280 Speaker 1: You know, Uh, Joe McCain runs the equities business over 161 00:09:07,320 --> 00:09:09,800 Speaker 1: at the security side. Yeah, he's in Chicago every once 162 00:09:09,800 --> 00:09:12,960 Speaker 1: in a while, but it's a pretty separate business. Now. Yeah, 163 00:09:13,400 --> 00:09:15,199 Speaker 1: people are saying Oh yeah, you know we're going to 164 00:09:15,280 --> 00:09:18,480 Speaker 1: get you know, Citadel, because you know we're gonna do 165 00:09:18,520 --> 00:09:22,760 Speaker 1: all this game stop trading and it's gonna run over Citadel. UM. 166 00:09:22,800 --> 00:09:25,240 Speaker 1: It's you know, it could hurt the hedge fund side 167 00:09:25,280 --> 00:09:28,600 Speaker 1: if they're short. But UM market makers don't lose money 168 00:09:28,640 --> 00:09:31,520 Speaker 1: on their trading. What they're doing is they're selling liquidity 169 00:09:31,640 --> 00:09:36,319 Speaker 1: UM and and when UM spreads widen and the and 170 00:09:36,440 --> 00:09:40,760 Speaker 1: the valuable liquidity becomes more precious, they actually make money. 171 00:09:40,840 --> 00:09:45,079 Speaker 1: So UM the security side of the business of Citadel 172 00:09:45,160 --> 00:09:48,920 Speaker 1: or Virtu or two Sigma or uh Susquehanna g One 173 00:09:49,160 --> 00:09:52,760 Speaker 1: g One Execution, which is the other major market maker, 174 00:09:53,559 --> 00:09:55,440 Speaker 1: I'm saying they have. They had a pretty good week. 175 00:09:55,600 --> 00:09:59,280 Speaker 1: They've had a pretty good year. Uh. The in fact, 176 00:10:00,120 --> 00:10:03,120 Speaker 1: the financials for Citadel securities were leaked for last year 177 00:10:03,160 --> 00:10:06,000 Speaker 1: and I think they made six point seven billion last year, 178 00:10:06,440 --> 00:10:09,160 Speaker 1: which is up from I think like a billion or 179 00:10:09,200 --> 00:10:13,360 Speaker 1: two maybe a year or two ago. So UM, I'm 180 00:10:13,360 --> 00:10:18,480 Speaker 1: not sure they're harden Ken Griffin too much more fuel 181 00:10:18,559 --> 00:10:21,880 Speaker 1: for the redditors. So I was I was hoping, Larry, 182 00:10:21,920 --> 00:10:24,880 Speaker 1: because you've done so much work on on price improvement 183 00:10:24,920 --> 00:10:27,520 Speaker 1: and payment for order flow. If you could kind of 184 00:10:27,559 --> 00:10:31,520 Speaker 1: break down for us at our listeners how this actually 185 00:10:31,960 --> 00:10:35,000 Speaker 1: works here, because I know there's there's Before any of 186 00:10:35,000 --> 00:10:37,360 Speaker 1: this happened, there's been a lot of back and forth 187 00:10:37,880 --> 00:10:42,199 Speaker 1: about how, yes, Robin Hood's all about democratizing investing, then 188 00:10:42,200 --> 00:10:45,000 Speaker 1: they're going ahead and selling all their customers orders and 189 00:10:45,080 --> 00:10:49,560 Speaker 1: Citadel's profiting anybody any anytime anybody says anything about democratizing 190 00:10:49,559 --> 00:10:51,600 Speaker 1: Wall Street, you would need to run the other direction. 191 00:10:51,679 --> 00:10:57,880 Speaker 1: That's okay, But I'll talk about payment for water flow 192 00:10:57,880 --> 00:11:00,520 Speaker 1: and how those mechanics were and how this stuff and 193 00:11:00,559 --> 00:11:03,559 Speaker 1: why this stuff is not you know that nefarious. It's 194 00:11:03,600 --> 00:11:07,800 Speaker 1: not perfect, but it's not in the fairest um the 195 00:11:08,200 --> 00:11:11,720 Speaker 1: market UM the market has become. The market now is 196 00:11:11,720 --> 00:11:14,640 Speaker 1: not NASDAC in New York, with NASDACK stocks trading in 197 00:11:14,720 --> 00:11:17,240 Speaker 1: NASDAC and New York stocks trading in New York. There 198 00:11:17,240 --> 00:11:21,400 Speaker 1: are sixteen different exchanges. Those exchanges are mostly located in 199 00:11:21,480 --> 00:11:25,480 Speaker 1: three different areas in northern New Jersey. UM and there's 200 00:11:25,480 --> 00:11:27,960 Speaker 1: a lot of back and forth and trading between all 201 00:11:28,000 --> 00:11:31,480 Speaker 1: these exchanges. There are thirty two dark pools UM and 202 00:11:31,679 --> 00:11:36,480 Speaker 1: and there's a whole fragment, fragmented world. The way that 203 00:11:37,320 --> 00:11:40,280 Speaker 1: the way the SEC regulates exchanges is generally there's a 204 00:11:40,320 --> 00:11:43,480 Speaker 1: minimum a minimum tick size of a penny. For a 205 00:11:43,480 --> 00:11:46,280 Speaker 1: lot of the stocks trading at a penny, that spread 206 00:11:46,360 --> 00:11:49,880 Speaker 1: is too wide, UM that that they'd actually traded less 207 00:11:49,880 --> 00:11:54,719 Speaker 1: than a penny if if UM, if they were allowed UM. 208 00:11:54,800 --> 00:11:58,600 Speaker 1: And so what happens is market makers can can actually 209 00:11:58,840 --> 00:12:01,640 Speaker 1: improve the price of these things. Now getting back to 210 00:12:01,679 --> 00:12:05,280 Speaker 1: the market overall um because of all this electronics and 211 00:12:05,320 --> 00:12:11,280 Speaker 1: complexity um uh. The market, the lit markets are really 212 00:12:11,320 --> 00:12:15,480 Speaker 1: geared for institutions. And so if you're posting a price 213 00:12:15,800 --> 00:12:18,559 Speaker 1: on Nastack or New York or CEBO or any one 214 00:12:18,559 --> 00:12:21,000 Speaker 1: of the sixteen exchanges, you have to be ready that 215 00:12:21,040 --> 00:12:24,720 Speaker 1: it's going to get executed by you know, Stevie Cohen 216 00:12:24,880 --> 00:12:29,559 Speaker 1: or some very sophisticated, very smart guy UM or some 217 00:12:29,760 --> 00:12:31,680 Speaker 1: very large guy like Fidelity is going to come in 218 00:12:31,720 --> 00:12:34,240 Speaker 1: and buy a million shares. So so you have to 219 00:12:34,240 --> 00:12:38,400 Speaker 1: be prepared when you're when your quotes are accessible to everybody, 220 00:12:38,440 --> 00:12:42,280 Speaker 1: that you're going to get hit by the most sophisticated 221 00:12:42,280 --> 00:12:44,760 Speaker 1: guy in the world. And so your quote better be 222 00:12:45,040 --> 00:12:47,440 Speaker 1: your quote better be good, and it better be ready 223 00:12:48,000 --> 00:12:51,400 Speaker 1: for for the market to move forward. That said, when 224 00:12:51,400 --> 00:12:53,920 Speaker 1: you or I or Mike or Sarah or whoever come 225 00:12:53,960 --> 00:12:57,040 Speaker 1: in and buy their hundred shares of game stopper. You know, 226 00:12:57,320 --> 00:13:01,640 Speaker 1: let's say Apple, Um, you know you're hunter chairs of 227 00:13:01,679 --> 00:13:03,679 Speaker 1: Apple or your five shares of Apple are not going 228 00:13:03,720 --> 00:13:07,400 Speaker 1: to influence the price of Apple. So in effect, the 229 00:13:07,440 --> 00:13:10,320 Speaker 1: price that's being displayed on Apple is actually too wide 230 00:13:11,080 --> 00:13:15,439 Speaker 1: because it's geared for the institutions. Because of this, um, 231 00:13:15,880 --> 00:13:18,839 Speaker 1: market makers who know that that waterflow is coming from 232 00:13:18,960 --> 00:13:21,760 Speaker 1: Robin Hood, or it's coming from e Trade or coming 233 00:13:21,800 --> 00:13:25,040 Speaker 1: from Schwab, they know that it's not a million shares 234 00:13:25,120 --> 00:13:28,880 Speaker 1: behind it. It's not Stevie Cohen hitting the enter button. Um. 235 00:13:28,960 --> 00:13:31,240 Speaker 1: You know, they might not know it's Sarah or Larry 236 00:13:31,280 --> 00:13:34,480 Speaker 1: or Mike, but they know it's a retail guy. And 237 00:13:34,480 --> 00:13:36,520 Speaker 1: and because of that, they can actually give you a 238 00:13:36,600 --> 00:13:41,000 Speaker 1: better price than they can give Stevie comb Um. And 239 00:13:41,120 --> 00:13:45,880 Speaker 1: so they can price it better and so um, the 240 00:13:46,320 --> 00:13:49,319 Speaker 1: pot of money that they make on your apple trade 241 00:13:49,360 --> 00:13:53,960 Speaker 1: gets split basically three ways. One a portion goes to them. 242 00:13:54,040 --> 00:13:57,760 Speaker 1: They keep it for making you know, for servicing your waterflow. 243 00:13:59,040 --> 00:14:04,359 Speaker 1: The the other balance is broken out into price improvement. 244 00:14:05,280 --> 00:14:08,199 Speaker 1: When you get your your your share price back from 245 00:14:08,200 --> 00:14:10,880 Speaker 1: your execution. A lot of times you'll see fractions to 246 00:14:10,960 --> 00:14:14,920 Speaker 1: the right of pennies. Um, that means that your price 247 00:14:15,000 --> 00:14:17,439 Speaker 1: got improved. That means you've got a better price than 248 00:14:17,640 --> 00:14:21,960 Speaker 1: then was displayed in the marketplace. Um, that price improvement 249 00:14:22,000 --> 00:14:24,200 Speaker 1: goes to you. And then a little bit of that 250 00:14:24,600 --> 00:14:27,720 Speaker 1: what's left over from from from that profit the market 251 00:14:27,760 --> 00:14:30,040 Speaker 1: maker makes, goes back to the broker to pay for 252 00:14:30,080 --> 00:14:33,040 Speaker 1: that order and that's that's payment for water flow. Now, 253 00:14:33,120 --> 00:14:35,720 Speaker 1: payment for order flow tends to be about a quarter 254 00:14:36,320 --> 00:14:39,120 Speaker 1: of what's not kept by the wholesaler. So you've got 255 00:14:39,120 --> 00:14:42,200 Speaker 1: the whole salar portion, and then you've got the price 256 00:14:42,240 --> 00:14:46,920 Speaker 1: improvement and the payment for waterflow of that bucket. The 257 00:14:47,000 --> 00:14:50,080 Speaker 1: broker usually gets a quarter of that, and two thirds 258 00:14:50,080 --> 00:14:52,320 Speaker 1: of that or three quarters of that goes to the client. 259 00:14:52,360 --> 00:14:55,160 Speaker 1: In terms of those little pennies or subpennies that go 260 00:14:55,240 --> 00:14:59,120 Speaker 1: to the people say oh that's demnimous. It's not necessarily dementimous. 261 00:14:59,200 --> 00:15:01,680 Speaker 1: It's adds up to you know, billions dollars a year. 262 00:15:03,440 --> 00:15:05,800 Speaker 1: It's just you know, shows up in your accounts for 263 00:15:05,840 --> 00:15:17,120 Speaker 1: actions of assent. Yeah, Larry, I wanted to get back 264 00:15:17,120 --> 00:15:20,320 Speaker 1: to that you mentioned the dt c C, the Depository 265 00:15:20,400 --> 00:15:24,000 Speaker 1: Trust and Clearing corp UM, and it sounds like, um, 266 00:15:24,040 --> 00:15:26,560 Speaker 1: you're thinking that robin Hood probably got a call from them, 267 00:15:26,600 --> 00:15:30,680 Speaker 1: and that is sort of what motivated Uh. Chances are 268 00:15:31,360 --> 00:15:33,960 Speaker 1: m robin Hood got a call from their clearing firm, 269 00:15:34,080 --> 00:15:37,600 Speaker 1: who got a call from DCCC. Right, So, I mean 270 00:15:37,840 --> 00:15:42,840 Speaker 1: would that lead you to expect more discount brokerages to 271 00:15:42,840 --> 00:15:45,200 Speaker 1: to follow suit and restrict these talks? I mean, does 272 00:15:45,240 --> 00:15:48,200 Speaker 1: it depend how well capitalized you are as as a brokerage. 273 00:15:48,240 --> 00:15:50,440 Speaker 1: I guess it depends on how well capitalized you are. 274 00:15:50,480 --> 00:15:53,440 Speaker 1: It also it depends on what your your percentage of 275 00:15:53,520 --> 00:15:56,840 Speaker 1: volume of If you know, if you're only doing shares 276 00:15:56,880 --> 00:15:58,680 Speaker 1: of one of these names, it's not a big deal. 277 00:15:58,760 --> 00:16:02,080 Speaker 1: But if you're doing a billion shares, then you're probably 278 00:16:02,240 --> 00:16:06,240 Speaker 1: need to pony up some more margin. So it really 279 00:16:06,280 --> 00:16:09,400 Speaker 1: depends on your mix a client basis. So I kind 280 00:16:09,400 --> 00:16:11,880 Speaker 1: of you know, if you think about it, you know, 281 00:16:12,080 --> 00:16:15,200 Speaker 1: is Bank of America, Merrill Lynch or their clients you know, 282 00:16:15,400 --> 00:16:18,480 Speaker 1: you know being funneled into the game stop Probably not 283 00:16:19,240 --> 00:16:23,000 Speaker 1: um so if you know, but if you're in the 284 00:16:23,120 --> 00:16:27,000 Speaker 1: Merry Trade or robin Hood or whatever, you know or 285 00:16:27,040 --> 00:16:30,120 Speaker 1: it could very well be. And those are the brokerages 286 00:16:30,160 --> 00:16:32,920 Speaker 1: that at this point have placed the restrictions. It seems 287 00:16:32,920 --> 00:16:34,960 Speaker 1: so it's the customer base that would be trading these 288 00:16:34,960 --> 00:16:38,520 Speaker 1: types of shares, which makes sense. I also just wanted 289 00:16:38,560 --> 00:16:40,080 Speaker 1: to get your take clear. I mean, there's been a 290 00:16:40,160 --> 00:16:42,320 Speaker 1: lot of talk this year or not this year, this 291 00:16:42,400 --> 00:16:46,560 Speaker 1: week about the stock market feeling like it's broken, that 292 00:16:46,680 --> 00:16:51,360 Speaker 1: we shouldn't be seeing shares of costs or game stop 293 00:16:51,520 --> 00:16:55,800 Speaker 1: or a MC we shouldn't be able to see markets 294 00:16:55,880 --> 00:16:58,520 Speaker 1: move like this, And there's been a lot of comparisons 295 00:16:58,560 --> 00:17:00,800 Speaker 1: made to the late nineties and the dot com bubble, 296 00:17:01,200 --> 00:17:05,560 Speaker 1: But have you ever seen anything like this? And is 297 00:17:05,600 --> 00:17:10,520 Speaker 1: the market equipped to kind of go forwards? If if 298 00:17:10,560 --> 00:17:12,680 Speaker 1: this is going to continue? And let me put in, Sara, 299 00:17:12,800 --> 00:17:14,920 Speaker 1: this this week actually lasted a full year, so you're 300 00:17:14,960 --> 00:17:16,960 Speaker 1: right on your right on both terms. That thank you, 301 00:17:17,040 --> 00:17:23,640 Speaker 1: It's that is true. I think five I think every 302 00:17:23,800 --> 00:17:26,439 Speaker 1: every week, you know, in the last year and a 303 00:17:26,440 --> 00:17:31,800 Speaker 1: half has felt like a whole year. So I'm I'm 304 00:17:31,840 --> 00:17:35,520 Speaker 1: tempted to say though that with everyone weighing in this week, 305 00:17:35,560 --> 00:17:38,159 Speaker 1: I mean, jaw Rule was even coming out the rapper 306 00:17:38,320 --> 00:17:41,119 Speaker 1: talking about this, I mean already feels weirder to me. 307 00:17:43,240 --> 00:17:46,959 Speaker 1: St started to stopping your question there, Sarah, I've forgotten 308 00:17:47,000 --> 00:17:51,360 Speaker 1: what it is. I've ruined the whole thing here and shortly, 309 00:17:52,080 --> 00:17:56,480 Speaker 1: have you ever seen this before? I have not seen 310 00:17:56,520 --> 00:17:59,439 Speaker 1: this before. Um. You know, you've got to kind of 311 00:17:59,440 --> 00:18:02,240 Speaker 1: harken back to the Pets that got pets dot com 312 00:18:02,359 --> 00:18:09,040 Speaker 1: days of the of the thousand's, but it wasn't like this, um. 313 00:18:09,119 --> 00:18:11,119 Speaker 1: And is the market broken? No, the market is not 314 00:18:11,240 --> 00:18:13,560 Speaker 1: really broken. This is what markets do. When there's a 315 00:18:13,560 --> 00:18:15,879 Speaker 1: lot of buying demand, the price goes up, and when 316 00:18:15,880 --> 00:18:17,960 Speaker 1: there's a lot of selling demand, the price goes down. 317 00:18:18,560 --> 00:18:21,560 Speaker 1: Are there issues with short selling rules and riggings show 318 00:18:21,720 --> 00:18:24,159 Speaker 1: and some of the infrastructure the price should be looked at? 319 00:18:24,200 --> 00:18:28,119 Speaker 1: Should should affirm or should a company be a hundred 320 00:18:28,200 --> 00:18:33,240 Speaker 1: and forty or of its float be short? You got 321 00:18:33,280 --> 00:18:35,679 Speaker 1: us think that there's some problem with rig show and 322 00:18:35,720 --> 00:18:38,199 Speaker 1: borrows and locates and things like that, which is basically 323 00:18:38,280 --> 00:18:42,960 Speaker 1: the mechanism you need to actually go short. Um. Uh, 324 00:18:43,000 --> 00:18:45,600 Speaker 1: you know that. You know, it seems like that would 325 00:18:45,640 --> 00:18:49,199 Speaker 1: be a good place to look first off, But the market, 326 00:18:49,240 --> 00:18:51,760 Speaker 1: that's what the market does. The market responds to buying 327 00:18:51,800 --> 00:18:55,240 Speaker 1: and selling pressure. And and people are saying, oh, get 328 00:18:55,320 --> 00:18:58,600 Speaker 1: rid of those electronic market makers, blah blah blah, we 329 00:18:58,640 --> 00:19:00,600 Speaker 1: should go back to the days when stch lists were 330 00:19:00,600 --> 00:19:02,920 Speaker 1: on the floor. Well, those guys got arrested and taken 331 00:19:02,960 --> 00:19:06,600 Speaker 1: away for handcuffs, you know. And um, you know, and 332 00:19:06,600 --> 00:19:09,080 Speaker 1: and put it this way, nobody no market makers in 333 00:19:09,119 --> 00:19:12,119 Speaker 1: the business to provide liquidity at a loss. They're not 334 00:19:12,280 --> 00:19:16,919 Speaker 1: there to basically let you profit and pillage their balance sheet. Um, 335 00:19:16,960 --> 00:19:19,359 Speaker 1: They're going to react as quickly as they can to 336 00:19:19,920 --> 00:19:22,280 Speaker 1: the buying and selling pressure to find what the new 337 00:19:22,320 --> 00:19:26,560 Speaker 1: price should be. That's what markets do. And and you know, 338 00:19:27,119 --> 00:19:29,720 Speaker 1: back in the the fractional trading days, those guys were 339 00:19:29,760 --> 00:19:32,960 Speaker 1: making a killing on every trade get relatively, you know, 340 00:19:33,000 --> 00:19:35,520 Speaker 1: if you compare it to the spreads now. But you know, 341 00:19:35,840 --> 00:19:37,880 Speaker 1: you you mentioned the pets dot com And I made 342 00:19:37,880 --> 00:19:42,200 Speaker 1: the joke about the Yahoo chatboards at the beginning. I mean, 343 00:19:42,240 --> 00:19:44,800 Speaker 1: it's it's similar in a way. You know. I remember 344 00:19:44,880 --> 00:19:48,159 Speaker 1: lurking in those chat rooms twenty years ago when I 345 00:19:48,160 --> 00:19:50,240 Speaker 1: worked at a different news service and didn't have access 346 00:19:50,280 --> 00:19:52,240 Speaker 1: to a Bloomberg, just trying to figure out what's moving 347 00:19:52,240 --> 00:19:55,800 Speaker 1: each individual stock. I mean, I guess it's it's sort 348 00:19:55,840 --> 00:20:00,080 Speaker 1: of just the natural evolution of the hive mind, the 349 00:20:00,080 --> 00:20:03,200 Speaker 1: the hive trader mind to some degree. Well that that's 350 00:20:03,240 --> 00:20:05,800 Speaker 1: actually a really interesting question because if if you would 351 00:20:05,800 --> 00:20:08,160 Speaker 1: have done this ten years ago, it would have been 352 00:20:08,200 --> 00:20:10,480 Speaker 1: a Long Island boiler room shop and it would have 353 00:20:10,480 --> 00:20:13,760 Speaker 1: been done. It would have been done, you know, by 354 00:20:13,800 --> 00:20:17,640 Speaker 1: talking up ant ant selma, you know, go buy some 355 00:20:17,800 --> 00:20:21,600 Speaker 1: stock that doesn't really exist, or you know, now now 356 00:20:21,640 --> 00:20:24,239 Speaker 1: you got basically the same thing going on, you know, 357 00:20:24,760 --> 00:20:28,280 Speaker 1: you know, short squeeze on game stop by all three, um. 358 00:20:28,320 --> 00:20:32,119 Speaker 1: You know, is you know, you know, what's the difference 359 00:20:32,119 --> 00:20:34,720 Speaker 1: between that and being done and being done in a 360 00:20:34,960 --> 00:20:38,320 Speaker 1: you know, Long Island boiler room. I don't know. I 361 00:20:38,320 --> 00:20:41,359 Speaker 1: think SEC's I think that's a you know, that's an 362 00:20:41,400 --> 00:20:43,840 Speaker 1: interesting thing for the SEC to look at. Is this 363 00:20:43,880 --> 00:20:46,840 Speaker 1: market manipulation. I remember in the early days of cell 364 00:20:46,880 --> 00:20:49,320 Speaker 1: phones you used to get random text pump and dump 365 00:20:49,359 --> 00:20:52,560 Speaker 1: text messages saying, you know, by by this this and 366 00:20:52,600 --> 00:21:10,840 Speaker 1: that stock, let's just pretend play play make believe for 367 00:21:10,880 --> 00:21:13,280 Speaker 1: a minute here, and we'll pretend I'm Joe Biden and 368 00:21:13,320 --> 00:21:15,080 Speaker 1: I just called you up and I said, Larry, what 369 00:21:15,119 --> 00:21:17,840 Speaker 1: the heck do I do about this? I don't understand it. 370 00:21:17,880 --> 00:21:20,520 Speaker 1: I know something's wrong. Can I fix this? Do I 371 00:21:20,560 --> 00:21:22,640 Speaker 1: need to fix this? You know what? What's what's your 372 00:21:22,640 --> 00:21:26,600 Speaker 1: response to Joe? What's my response to Joe? I think 373 00:21:26,680 --> 00:21:30,680 Speaker 1: as adviser of the president promoted Larry, it's long overdo 374 00:21:31,800 --> 00:21:35,199 Speaker 1: Overdo I have enough pressure being from under now? You know? 375 00:21:35,240 --> 00:21:39,320 Speaker 1: Now I got to Biden. Um, you know, I think 376 00:21:39,359 --> 00:21:41,880 Speaker 1: this is what I would be looking at his rig show. 377 00:21:42,080 --> 00:21:44,560 Speaker 1: You know, let's you know, let's start off with, you know, 378 00:21:44,920 --> 00:21:47,520 Speaker 1: is the short side of this business operating properly and 379 00:21:47,800 --> 00:21:51,040 Speaker 1: where they you know, because that's kind of what started it. 380 00:21:51,200 --> 00:21:53,960 Speaker 1: It was like, oh there, you know this company, this 381 00:21:54,119 --> 00:21:58,199 Speaker 1: float is a short or short let's go charge it. 382 00:21:58,800 --> 00:22:01,480 Speaker 1: The second thing may actually be, you know what, you know, 383 00:22:01,520 --> 00:22:04,520 Speaker 1: what happened you know on Thursday, is maybe we can 384 00:22:04,560 --> 00:22:07,280 Speaker 1: speed up the settlement process. Because if you can speed 385 00:22:07,359 --> 00:22:09,720 Speaker 1: up the settlement process, then the marchin we don't have 386 00:22:09,760 --> 00:22:12,600 Speaker 1: these issues with you know, basically you know, stopping out 387 00:22:12,680 --> 00:22:15,679 Speaker 1: the brokers from letting you trade these names. But in 388 00:22:15,760 --> 00:22:19,919 Speaker 1: terms of the market structure, you know, it's hard to 389 00:22:20,760 --> 00:22:22,879 Speaker 1: it's hard to say that there are things wrong with 390 00:22:22,960 --> 00:22:25,400 Speaker 1: it and that you know, when a lot of people 391 00:22:25,440 --> 00:22:27,320 Speaker 1: come and buying, the price goes up, When a lot 392 00:22:27,320 --> 00:22:29,679 Speaker 1: of people sell, the price goes down. You know, you 393 00:22:29,720 --> 00:22:32,359 Speaker 1: have callers on these from the exchanges to stop them. 394 00:22:32,400 --> 00:22:35,000 Speaker 1: If they're volatile, you might want to tighten some of 395 00:22:35,000 --> 00:22:38,000 Speaker 1: them so that there are more stops. So, but I 396 00:22:38,000 --> 00:22:41,600 Speaker 1: don't think that's the problem. These aren't These aren't air pockets, 397 00:22:41,640 --> 00:22:44,679 Speaker 1: these aren't order book abnormalities. That's making this. This is 398 00:22:44,920 --> 00:22:48,800 Speaker 1: clearly buying and selling demand. You know. The other issue 399 00:22:48,880 --> 00:22:51,560 Speaker 1: is the linkage is possibly between the options and the 400 00:22:51,600 --> 00:22:56,680 Speaker 1: equities market, but I'm not that seems what happens there 401 00:22:56,800 --> 00:22:58,600 Speaker 1: is that if you buy an option, then it gets 402 00:22:58,680 --> 00:23:01,320 Speaker 1: hedged in the equity side. That's actually that's what That's 403 00:23:01,320 --> 00:23:04,080 Speaker 1: a good thing. That's that's how the markets supposed to work. 404 00:23:04,480 --> 00:23:06,680 Speaker 1: So I'm not sure you want to do anything there. 405 00:23:08,359 --> 00:23:11,280 Speaker 1: I'm not I'm not sure there's some massive amounts of 406 00:23:11,359 --> 00:23:15,800 Speaker 1: change I would make. Um. You know, you know people 407 00:23:15,840 --> 00:23:18,800 Speaker 1: are allowed to pay stupid prices for things. You know, 408 00:23:19,359 --> 00:23:23,040 Speaker 1: you go into the local convenience store milk is you 409 00:23:23,080 --> 00:23:25,840 Speaker 1: know three times would cost in the supermarket. Are you're 410 00:23:25,840 --> 00:23:28,879 Speaker 1: not supposed to be able to you know, charge charge that. 411 00:23:29,680 --> 00:23:32,800 Speaker 1: Actually in the stock market, UM, it's way better than that, 412 00:23:32,880 --> 00:23:36,639 Speaker 1: because you can go to any one of the sixteen exchanges, 413 00:23:36,640 --> 00:23:41,520 Speaker 1: you'll all pay the same price. So so I'm not 414 00:23:41,600 --> 00:23:45,400 Speaker 1: sure there's a ton of stuff to do. Stand clear 415 00:23:45,520 --> 00:23:50,520 Speaker 1: of the craziest things we saw in markets this week. Well, Sarah, 416 00:23:50,680 --> 00:23:53,480 Speaker 1: I believe we did get a voicemail into the what 417 00:23:53,600 --> 00:23:58,160 Speaker 1: Goes Up hotline. This is a message for what throes 418 00:23:58,240 --> 00:24:02,920 Speaker 1: up And this is something crazy that happened on the 419 00:24:02,920 --> 00:24:06,960 Speaker 1: Australian Stock Exchange this week. Uh. There is a ticker 420 00:24:07,400 --> 00:24:10,600 Speaker 1: on that exchange g m E, which is a Perth 421 00:24:10,560 --> 00:24:15,679 Speaker 1: based resources, a Perth based minor, and the ticker is 422 00:24:15,720 --> 00:24:18,880 Speaker 1: the same as a ticker in the US that has 423 00:24:18,880 --> 00:24:21,760 Speaker 1: been going a little crazy this week. And on January 424 00:24:21,880 --> 00:24:26,120 Speaker 1: twenty second, UH just over four hundred thousand shares were traded, 425 00:24:26,359 --> 00:24:32,359 Speaker 1: but on January eighteen million shares were traded and the 426 00:24:32,400 --> 00:24:36,080 Speaker 1: stock reached a fifty two week high of twelve cents. 427 00:24:37,000 --> 00:24:40,440 Speaker 1: So this is a this is a um a penny 428 00:24:40,440 --> 00:24:44,400 Speaker 1: stock UH with a sort of a not very well 429 00:24:44,440 --> 00:24:48,119 Speaker 1: known minor. And the chief executive has spoken to the 430 00:24:48,119 --> 00:24:51,399 Speaker 1: Australian Financial Review and basically said, we have no idea 431 00:24:51,440 --> 00:24:54,520 Speaker 1: what was going on. We think that um, in the 432 00:24:54,640 --> 00:24:58,439 Speaker 1: future there may be some rocket potential. But there was 433 00:24:58,480 --> 00:25:01,240 Speaker 1: no real statement from the compan me to explain why, 434 00:25:01,960 --> 00:25:05,239 Speaker 1: uh this doc did this on Thursday, except for the 435 00:25:05,320 --> 00:25:09,399 Speaker 1: fact that uh, some people might have thought that it 436 00:25:09,600 --> 00:25:15,960 Speaker 1: was called g M E For another reason, I for one, 437 00:25:16,440 --> 00:25:19,800 Speaker 1: never get tired of wrong ticker trade stories. It's it's 438 00:25:19,800 --> 00:25:22,240 Speaker 1: it's a great h a great of the crazy thing 439 00:25:22,359 --> 00:25:28,120 Speaker 1: genre for sure, classic ticker confusion. And I'll also point out, 440 00:25:28,200 --> 00:25:32,159 Speaker 1: and maybe this is just a coincidence, but whereas you 441 00:25:32,240 --> 00:25:36,119 Speaker 1: had gm E Resources in Australia going crazy because it 442 00:25:36,160 --> 00:25:38,679 Speaker 1: has the same ticker as game Stop in the US. 443 00:25:39,119 --> 00:25:42,119 Speaker 1: Even in the US, if you look at companies that 444 00:25:42,400 --> 00:25:47,200 Speaker 1: all start their ticker with two bees, so BlackBerry, build 445 00:25:47,200 --> 00:25:49,879 Speaker 1: a Bear, BBW, bed bath and beyond b b B, 446 00:25:50,000 --> 00:25:52,040 Speaker 1: why it makes you wonder like, do we have some 447 00:25:52,080 --> 00:25:58,480 Speaker 1: fat fingers there? How does that happen? Yeah? Stunks? I 448 00:25:58,480 --> 00:26:01,800 Speaker 1: think the answer is stunks. Let's me answer to everything. 449 00:26:03,119 --> 00:26:07,200 Speaker 1: Also a shout out to uh the Twitter users short 450 00:26:07,280 --> 00:26:10,800 Speaker 1: term capital Management great Twitter name at term mg M 451 00:26:10,840 --> 00:26:15,440 Speaker 1: two pointed out record volume on Wednesday, almost twenty four 452 00:26:15,480 --> 00:26:17,440 Speaker 1: billion shares. I believe it was Larry. Yeah. You ever 453 00:26:17,480 --> 00:26:22,320 Speaker 1: think you'd see a twenty billion share day? Yeah, I 454 00:26:22,359 --> 00:26:24,880 Speaker 1: don't know, they don't. I have a surprise we haven't 455 00:26:24,880 --> 00:26:28,280 Speaker 1: seen it sooner because because really the record the record 456 00:26:28,359 --> 00:26:33,440 Speaker 1: day was UM. The record day before this was uh 457 00:26:35,040 --> 00:26:38,720 Speaker 1: uh so when you look at at total volumes UM, 458 00:26:38,760 --> 00:26:41,280 Speaker 1: you know, the high was out of the global financial crisis, 459 00:26:41,320 --> 00:26:46,480 Speaker 1: we did UM nineteen billion point seven shares. Then uh 460 00:26:46,520 --> 00:26:50,560 Speaker 1: you know, the next UM was was UM end of 461 00:26:50,600 --> 00:26:54,840 Speaker 1: February early March of last year when the pandemic just 462 00:26:55,320 --> 00:26:58,840 Speaker 1: decimated the whole market place. And then the real volume 463 00:26:58,920 --> 00:27:02,960 Speaker 1: day is yesterday Game stop. So so so which one 464 00:27:02,960 --> 00:27:06,240 Speaker 1: of these three days don't look like each other? You know? Um, 465 00:27:06,280 --> 00:27:10,119 Speaker 1: you know January, you know, the global financial crisis or 466 00:27:10,200 --> 00:27:13,000 Speaker 1: the pandemic. You know, I don't know how much for 467 00:27:13,080 --> 00:27:14,720 Speaker 1: the S a T. Guys are are going to get 468 00:27:14,760 --> 00:27:20,080 Speaker 1: that one, right? Yeah? If Game Stopped makes its way 469 00:27:20,119 --> 00:27:22,600 Speaker 1: into the economics textbooks and that, I don't know. I 470 00:27:22,640 --> 00:27:25,879 Speaker 1: think I might retire at that point. But uh and 471 00:27:25,960 --> 00:27:28,439 Speaker 1: I do want to remind our listeners to of course, 472 00:27:28,480 --> 00:27:31,160 Speaker 1: you can give us a call on our podcast hotline. 473 00:27:31,200 --> 00:27:34,440 Speaker 1: That number is six or six three two four three 474 00:27:34,520 --> 00:27:36,680 Speaker 1: four nine. Oh, and you can leave us a voice 475 00:27:36,680 --> 00:27:38,560 Speaker 1: smail and maybe we'll play it on the show, just 476 00:27:38,880 --> 00:27:41,760 Speaker 1: like we recently heard yep. And of course you can 477 00:27:41,760 --> 00:27:44,359 Speaker 1: tweet at us, at podcasts or at Sarah and I 478 00:27:44,400 --> 00:27:46,200 Speaker 1: will give you our handles at the end of the show. 479 00:27:46,240 --> 00:27:48,560 Speaker 1: And that's where I got mine. This week, Sarah, I'm 480 00:27:48,640 --> 00:27:52,760 Speaker 1: going to to the Twitter user at Jeff Billbrow at 481 00:27:52,840 --> 00:27:56,280 Speaker 1: Jeff Underscore Bill Brow in New Zealand. We've we've we've 482 00:27:56,280 --> 00:27:58,640 Speaker 1: mentioned him on the show before. He's pretty good at this. 483 00:27:58,800 --> 00:28:02,280 Speaker 1: And uh, hes us something in my favorite asset class, 484 00:28:02,359 --> 00:28:05,720 Speaker 1: the the alternative asset class. And when I say alternative, 485 00:28:05,800 --> 00:28:09,400 Speaker 1: I really mean alternative. This I guess is you could 486 00:28:09,440 --> 00:28:13,400 Speaker 1: consider in the alternative commodity space. Um. So, you might 487 00:28:13,440 --> 00:28:16,760 Speaker 1: be a little too young to remember the show Cheers, 488 00:28:16,840 --> 00:28:19,800 Speaker 1: the sitcom Cheers that might be before your time. I 489 00:28:19,960 --> 00:28:21,960 Speaker 1: know of it, but I can't say I've ever actually 490 00:28:22,000 --> 00:28:26,120 Speaker 1: watched it. Larry remembers it. Larry might remember the episode 491 00:28:26,119 --> 00:28:30,160 Speaker 1: where the Cliff the mailman found a potato that looked 492 00:28:30,160 --> 00:28:33,960 Speaker 1: like Nixon and it was, uh, you know, basically the 493 00:28:34,000 --> 00:28:37,120 Speaker 1: whole topic of the show. Well, this story is courtesy 494 00:28:37,200 --> 00:28:40,960 Speaker 1: a c Net and it's about a rock that looks 495 00:28:41,000 --> 00:28:45,560 Speaker 1: like the Cookie Monster from Sesame Street. It's a chunk 496 00:28:45,600 --> 00:28:49,320 Speaker 1: of blue agget and if you cut the I get 497 00:28:49,360 --> 00:28:52,640 Speaker 1: down the middle, it looks and I'm not I'm not exaggerating. 498 00:28:52,720 --> 00:28:55,320 Speaker 1: This thing looks exactly like Cookie Monster with the Google 499 00:28:55,360 --> 00:28:57,680 Speaker 1: eyes and everything. It's hard to do with justice on 500 00:28:57,760 --> 00:29:02,280 Speaker 1: a on an audio only podcast, but Google, I don't know, 501 00:29:02,320 --> 00:29:04,640 Speaker 1: Cookie Monster Rock or aged or something. You'll find a 502 00:29:04,640 --> 00:29:08,520 Speaker 1: bunch of stories on it. Um found in Brazil last fall, 503 00:29:08,760 --> 00:29:11,600 Speaker 1: will summer in Brazil, I guess, uh, or spring in Brazil, 504 00:29:12,840 --> 00:29:16,360 Speaker 1: of course, Sarah. It's already been sold once. Um. The 505 00:29:16,360 --> 00:29:21,000 Speaker 1: guy who owns it now is a guy named Mike Bowers. Uh. 506 00:29:21,160 --> 00:29:22,760 Speaker 1: He had an awesome quote in the story that was 507 00:29:22,840 --> 00:29:24,840 Speaker 1: something like, you know, I've seen a lot of cookie 508 00:29:24,840 --> 00:29:27,320 Speaker 1: Monster rocks in my day, but this is the most 509 00:29:27,360 --> 00:29:30,560 Speaker 1: perfect Cookie Monster rock. I don't know if I've ever 510 00:29:30,560 --> 00:29:33,719 Speaker 1: seen a Cookie Monster rock before in my life. So 511 00:29:33,760 --> 00:29:36,920 Speaker 1: he's getting he's getting offer sward, of course. So you 512 00:29:36,920 --> 00:29:39,040 Speaker 1: know what time it is, It's it's time to play 513 00:29:39,080 --> 00:29:45,000 Speaker 1: prices right here, Sarah, considering how frothy markets are right now, 514 00:29:45,040 --> 00:29:49,080 Speaker 1: what would you pay for not just any cookie rock 515 00:29:49,200 --> 00:29:52,960 Speaker 1: monster rock, but the perfect cookie Monster Rock. Well, I 516 00:29:53,000 --> 00:29:54,560 Speaker 1: have a question, and you might not know the answer 517 00:29:54,600 --> 00:29:56,600 Speaker 1: to this, but do we know what material the rock 518 00:29:56,720 --> 00:29:59,000 Speaker 1: is made of? Because that's got to impact value. It's 519 00:29:59,080 --> 00:30:01,600 Speaker 1: blue AGGT A gate. I'm not sure A G A T. 520 00:30:01,840 --> 00:30:05,600 Speaker 1: I'm not sure how you pronounce it. Yeah, the raw 521 00:30:05,640 --> 00:30:07,800 Speaker 1: material I think is irrelevant here we're talking about the 522 00:30:07,840 --> 00:30:11,720 Speaker 1: cookie monster. Um, but of course that I'm not sure 523 00:30:11,720 --> 00:30:15,640 Speaker 1: you're gonna make a ring out of blue egg it. Yeah. 524 00:30:16,040 --> 00:30:19,760 Speaker 1: So okay, so last week I really low balled it. 525 00:30:20,600 --> 00:30:25,560 Speaker 1: This time, I'm really gonna up a rock that looks 526 00:30:25,560 --> 00:30:30,680 Speaker 1: like the cookie Monster. I'm gonna go with eight thousand dollars, 527 00:30:31,000 --> 00:30:33,960 Speaker 1: eight thousand dollars. I'm gonna keep a poker face, Larry, 528 00:30:34,080 --> 00:30:37,440 Speaker 1: What is your bid for the perfect Cookie Monster? Can 529 00:30:37,480 --> 00:30:40,640 Speaker 1: remember prices right, rules are in effect, So you can 530 00:30:40,680 --> 00:30:43,600 Speaker 1: go one dollar or twenty eight thousand and one dollars. So, 531 00:30:43,600 --> 00:30:45,480 Speaker 1: so what's my bit or what do I think the 532 00:30:45,480 --> 00:30:48,440 Speaker 1: greater full theories? So is the greater greater full theory? 533 00:30:48,680 --> 00:30:51,240 Speaker 1: And and and it's truly truly a greater full in 534 00:30:51,240 --> 00:30:55,760 Speaker 1: this case I think is appropriate. I don't know. That's 535 00:30:55,800 --> 00:30:57,720 Speaker 1: a pretty good bid. I don't know. I've been thirty 536 00:30:57,800 --> 00:31:01,120 Speaker 1: five grand. I got gonna buy this. I'm gonna arb 537 00:31:01,240 --> 00:31:03,880 Speaker 1: this trade and sell to one of you guys ten grand. 538 00:31:04,640 --> 00:31:06,320 Speaker 1: What I would pay for it is, you know, I 539 00:31:06,320 --> 00:31:08,160 Speaker 1: don't know what what did pet Rocks go for? But 540 00:31:08,280 --> 00:31:13,120 Speaker 1: that's again before Sarah again, before Sarah was born, the 541 00:31:13,600 --> 00:31:17,400 Speaker 1: fields pet Rock I know, I know pet Rocks. Well, 542 00:31:17,640 --> 00:31:19,920 Speaker 1: you know it's you might you guys might be right though, 543 00:31:19,960 --> 00:31:23,880 Speaker 1: because the the bid is ten grand. This guy hasn't 544 00:31:23,880 --> 00:31:26,480 Speaker 1: disclosed his his offer price though, so so it could 545 00:31:26,520 --> 00:31:28,840 Speaker 1: be high. He hasn't sold it yet, so very very 546 00:31:28,880 --> 00:31:31,400 Speaker 1: a liquid market for cookie months. And I have a 547 00:31:31,440 --> 00:31:36,080 Speaker 1: Beanie Baby that I can sell. And I still have 548 00:31:36,200 --> 00:31:40,360 Speaker 1: my Pokemon cards that was revilable. I think, I know, 549 00:31:40,520 --> 00:31:41,800 Speaker 1: I need to check I need to check out. I 550 00:31:41,800 --> 00:31:43,520 Speaker 1: don't think I have any valuable is going to be 551 00:31:43,560 --> 00:31:47,320 Speaker 1: a billionaire, I know it, don't you know what? That's 552 00:31:47,360 --> 00:31:50,120 Speaker 1: the truth. That's the truth, all right. I know we've 553 00:31:50,240 --> 00:31:54,240 Speaker 1: been talking about crazy things all podcasts long, though, but Larry, 554 00:31:54,280 --> 00:31:57,840 Speaker 1: do you have anything else? You know? I My craziest 555 00:31:57,880 --> 00:32:00,120 Speaker 1: thing is, you know how how a bunch of rag 556 00:32:00,280 --> 00:32:04,320 Speaker 1: tank guys living in their mom's basement could basically bankrupt 557 00:32:04,400 --> 00:32:08,280 Speaker 1: the hedge fund. You know, um, you know, in my world, 558 00:32:08,360 --> 00:32:10,600 Speaker 1: it doesn't get a whole lot more crazy there, crazier 559 00:32:10,680 --> 00:32:15,600 Speaker 1: than that. Yeah, that's true. You know. To your point though, 560 00:32:15,640 --> 00:32:19,040 Speaker 1: who shorts of stock that's already a short interests? I 561 00:32:19,120 --> 00:32:21,920 Speaker 1: just don't get it if the value is thirty and 562 00:32:22,000 --> 00:32:25,760 Speaker 1: you think it's zero, Alright, I'm not. I'm not going 563 00:32:25,800 --> 00:32:27,680 Speaker 1: to let myself off the hook though, because I feel 564 00:32:27,720 --> 00:32:30,040 Speaker 1: like I was about to get passed by and not 565 00:32:30,200 --> 00:32:32,360 Speaker 1: have to share a crazy thing. And it's happened before. 566 00:32:32,440 --> 00:32:36,800 Speaker 1: But I'm not gonna not gonna slide away that easily. Uh. 567 00:32:37,440 --> 00:32:40,840 Speaker 1: This is also just within this year round of craziness. 568 00:32:40,960 --> 00:32:47,800 Speaker 1: This week, but also on Wednesday, thirty million call options traded, 569 00:32:47,840 --> 00:32:50,360 Speaker 1: as we talked about hash equity trading volume, but that 570 00:32:50,480 --> 00:32:54,800 Speaker 1: was also a record by far um Well that that 571 00:32:54,920 --> 00:32:57,400 Speaker 1: actually could be a whole another podcast. I'm gonna be 572 00:32:57,480 --> 00:33:00,920 Speaker 1: writing some something about you know how this with these options, 573 00:33:01,000 --> 00:33:05,160 Speaker 1: all this stuff comes together, especially around game stop. That's 574 00:33:05,320 --> 00:33:10,320 Speaker 1: it's insane. The great Gamma squeeze of We'll have to 575 00:33:10,320 --> 00:33:11,960 Speaker 1: get you back on for that, because that's that would 576 00:33:11,960 --> 00:33:14,880 Speaker 1: be a good one. That'd be interesting. Uh yeah, we'll 577 00:33:14,880 --> 00:33:16,960 Speaker 1: certainly have to have you back, Larry. Let us know 578 00:33:17,040 --> 00:33:19,080 Speaker 1: when it's out. But Larry Tad, thank you so much 579 00:33:19,120 --> 00:33:22,320 Speaker 1: for joining the show, especially in what was a week 580 00:33:22,360 --> 00:33:25,520 Speaker 1: to remember. Sarah am I happy to be happy to 581 00:33:25,600 --> 00:33:27,560 Speaker 1: join it, happy to be on the Bloomberg team, and 582 00:33:27,920 --> 00:33:31,680 Speaker 1: call me whenever I'm in the pandemic. I'm not going anywhere, 583 00:33:33,760 --> 00:33:36,000 Speaker 1: None of us are. I haven't been going anywhere for 584 00:33:36,080 --> 00:33:47,240 Speaker 1: twenty years, Larry, What Goes Up We'll be back next week. 585 00:33:47,680 --> 00:33:50,320 Speaker 1: Until then, you can find us on the Bloomberg Terminal, 586 00:33:50,440 --> 00:33:54,160 Speaker 1: website and app, or wherever you get your podcasts. We'd 587 00:33:54,200 --> 00:33:55,880 Speaker 1: love it if you took the time to rate and 588 00:33:56,040 --> 00:33:58,880 Speaker 1: review the show on Apple Podcasts so more listeners can 589 00:33:58,920 --> 00:34:01,680 Speaker 1: find us. And you can find us on Twitter, follow 590 00:34:01,720 --> 00:34:05,520 Speaker 1: me at at Sarah Pontzack Mike is a reaganonymous, and 591 00:34:05,680 --> 00:34:10,080 Speaker 1: you can also follow Bloomberg Podcasts at Podcasts. Also thank 592 00:34:10,120 --> 00:34:12,279 Speaker 1: you to Charlie Pellett of Bloomberg Radio and the voice 593 00:34:12,280 --> 00:34:15,080 Speaker 1: of the New York City Subway System. What Goes Up 594 00:34:15,160 --> 00:34:18,120 Speaker 1: is produced by Tobra Foreheads. The head of Bloomberg Podcast 595 00:34:18,280 --> 00:34:21,239 Speaker 1: is Francesco Levie, thanks for listening, See you next time.