WEBVTT - Voluntary Nudge Nudge: IEEPA, TROW, FX 0:00:02.720 --> 0:00:08.959 Bloomberg Audio Studios, Podcasts, radio News. If you watched our 0:00:09.039 --> 0:00:11.360 video podcast, you saw us in the fancy studio of it. 0:00:11.440 --> 0:00:12.880 Now we're in the other studio. 0:00:13.039 --> 0:00:15.400 Yeah, we're in the little box on the fourth floor 0:00:15.400 --> 0:00:18.520 of Bloomberg. The women's order room is right there, and 0:00:18.560 --> 0:00:21.840 I often play music to myself because I usually have 0:00:21.920 --> 0:00:24.720 time alone in there, and sometimes I think there's probably 0:00:24.760 --> 0:00:26.599 people recording a podcast right next door. 0:00:26.680 --> 0:00:29.480 Yeah, we're definitely in the partially soundproofed recording studio. 0:00:29.880 --> 0:00:34.400 It could it could be you think being soundproof is binary. 0:00:34.840 --> 0:00:36.040 Oh, I would never think that. 0:00:36.320 --> 0:00:39.760 I I mean, ideally it would be. This room is 0:00:39.760 --> 0:00:41.760 not soundproofish. 0:00:41.920 --> 0:00:43.600 No, it has a lot of patting on the walls, 0:00:43.600 --> 0:00:47.360 but a lot of sirens in the background. Hello, and 0:00:47.400 --> 0:00:50.599 welcome to the Money Stuff Podcast. You're a weekly podcast 0:00:50.640 --> 0:00:54.560 where we talk about stuff related to money. I'm Matt 0:00:54.640 --> 0:00:57.560 Levine and I write the Money Stuff column for Bloomberg Opinion. 0:00:58.040 --> 0:01:00.680 And I'm Katie Greifeld, a reporter for Blomberg News and 0:01:00.720 --> 0:01:02.279 an anchor for Bloomberg Television. 0:01:03.360 --> 0:01:05.680 I feel like people get mad at me because I 0:01:05.720 --> 0:01:07.680 am not very good at like sitting at the right 0:01:07.680 --> 0:01:09.440 distance from the mic, and I end up like yo 0:01:09.520 --> 0:01:11.960 yoing around and so I get closer and further from 0:01:12.000 --> 0:01:14.480 the mic. But this mic is really vibrating toward and 0:01:14.480 --> 0:01:18.279 away from it because one time it's not entirely my fault. 0:01:18.440 --> 0:01:20.240 Yeah, we're not familiar with these mics. 0:01:20.240 --> 0:01:21.360 Mike is on a pendulum. 0:01:21.440 --> 0:01:23.280 Yeah, it does feel like it is shaking a little bit, 0:01:23.319 --> 0:01:25.399 but that's fine. You know, maybe the lad a little 0:01:25.840 --> 0:01:28.679 new vibrato. Maybe the audience will appreciate that. 0:01:29.000 --> 0:01:29.960 They do love vibrada. 0:01:32.560 --> 0:01:35.920 But you know what, the US Court of Appeals for 0:01:35.959 --> 0:01:41.200 the Federal Circuit on Friday does not necessarily love. They're 0:01:41.240 --> 0:01:44.080 still illegal, as you laid out. Yeah, they're saying in 0:01:44.120 --> 0:01:46.080 place though, Right, we. 0:01:46.000 --> 0:01:49.880 Live in a weird world where like the government does 0:01:49.920 --> 0:01:53.520 a lot of stuff that's illegal, and the courts are like, well, 0:01:54.240 --> 0:01:58.480 this is illegal, but we can't stop you. So I 0:01:58.520 --> 0:02:01.240 don't know. It's very depressing. District Court a while back 0:02:01.400 --> 0:02:05.000 ruled that the broad Trump tariffs are illegal because, as 0:02:05.040 --> 0:02:07.400 I've written a number of times, the US Constitution is 0:02:07.440 --> 0:02:10.520 really clear that Congress has the power to impose taxes. 0:02:11.440 --> 0:02:13.960 Doesn't like, that's like a really core part of the Constitution, 0:02:14.480 --> 0:02:18.680 And so when the president announces swooping new taxes without 0:02:18.840 --> 0:02:24.240 any legislation does seem very illegal, and the court found 0:02:24.280 --> 0:02:28.440 it illegal, and the government appealed, and this week the 0:02:28.480 --> 0:02:31.280 appeals court, the Court for the Federal Circuit, agreed that 0:02:31.320 --> 0:02:34.240 those tariffs remain illegal. And the way it works is that, 0:02:34.320 --> 0:02:39.320 like the government's position is that there's a statute called AEPA, 0:02:39.400 --> 0:02:44.760 the International Emergency Economic Powers Act, Yes, got it, And 0:02:44.800 --> 0:02:49.639 AIPA gives the president some powers to deal with unusual 0:02:49.639 --> 0:02:54.400 and extraordinary threats from abroad by doing any number of things, 0:02:54.480 --> 0:03:00.360 including regulate importation. And the government argued, well, if the 0:03:00.400 --> 0:03:03.760 president can regulate importation, that means he can impose tariffs 0:03:03.760 --> 0:03:08.200 on imports, and because trade deficits are an emergency, he 0:03:08.240 --> 0:03:11.760 can declare an emergency and impose tariffs to stop trade deficits. 0:03:12.919 --> 0:03:14.720 And there are a lot of holes in that argument, 0:03:15.320 --> 0:03:18.400 one of which is that, as the appeals court wrote, 0:03:18.720 --> 0:03:22.079 saying that you can regulate importation does not actually mean 0:03:22.280 --> 0:03:24.679 that you can impose taxes. And as they point out, 0:03:25.080 --> 0:03:28.360 the sec the Securitiest Exchange Commission, has the power to 0:03:28.480 --> 0:03:31.520 regulate financial market activity, but that doesn't give it the 0:03:31.520 --> 0:03:35.680 power to make up new taxes because that's part of 0:03:35.720 --> 0:03:38.840 financial markets. Yeah, Like the sec has regulatory power, but 0:03:38.920 --> 0:03:42.520 not tax inventing power yea. And so similarly here, the 0:03:42.520 --> 0:03:45.160 president doesn't have the power to invent new taxes or 0:03:45.200 --> 0:03:47.920 so the appeals Court held, but it also state its 0:03:48.000 --> 0:03:49.760 ruling because it's kind of got appealed to the Supreme 0:03:49.800 --> 0:03:51.400 Court and nobody knows it'll happen there. 0:03:51.680 --> 0:03:54.320 Yeah, I mean President Trump didcide this week that they're 0:03:54.360 --> 0:03:57.240 going to ask the Supreme Court for an expedited ruling, 0:03:57.360 --> 0:03:58.280 So we'll see. There. 0:03:58.560 --> 0:04:02.720 There's a pretty consistent situation where the president loses in 0:04:02.800 --> 0:04:06.280 lower courts because the lower courts follow a precedent inside 0:04:06.320 --> 0:04:08.119 this is illegal, and then he gets the Supreme Court, 0:04:08.120 --> 0:04:10.560 and the Supreme Court is the more flexible you have precedents, 0:04:10.680 --> 0:04:13.200 so they tend to let him duty once. So we'll see. 0:04:13.280 --> 0:04:15.720 We'll see. Anyway, the scope period this covers most of 0:04:15.760 --> 0:04:19.680 President Trump's tariffs. There are some specific sections that he's 0:04:19.839 --> 0:04:22.120 used which are a little bit more cumbersome. 0:04:22.200 --> 0:04:24.800 Yeah, Congress has a long history of delegating tariff power 0:04:24.800 --> 0:04:27.520 to the president. There are specific statutes doing that, saying, 0:04:27.720 --> 0:04:29.919 you know, for particular industries or for particular reasons you 0:04:29.920 --> 0:04:33.240 can impose tariffs, and usually there's like an administrative process 0:04:33.279 --> 0:04:34.839 where they have to like go through some sort of 0:04:35.240 --> 0:04:39.000 review in fact finding before imposing tariffs. And so the 0:04:39.040 --> 0:04:41.360 Trump administration has done a little of that, and that 0:04:41.480 --> 0:04:44.839 stuff is fine. But most of their tariffs though, you 0:04:44.839 --> 0:04:49.480 know what they call reciprocal tarffs tariffs, but whatever, most 0:04:49.480 --> 0:04:52.040 of that is opposed with no kind of fact finding. 0:04:52.080 --> 0:04:56.320 A review based on AIPA and IEPA pretty clearly doesn't 0:04:56.320 --> 0:04:57.719 give them the power tom post tars. 0:04:57.839 --> 0:05:00.880 Yeah. Yeah, so the terrorists are saying in place. Now, 0:05:00.920 --> 0:05:03.400 we'll see what the Supreme Court does. But it is 0:05:03.520 --> 0:05:06.680 fun to game plan what would happen if the majority 0:05:06.680 --> 0:05:08.680 of the tariffs had to be rolled back. I mean, 0:05:08.680 --> 0:05:11.840 you think about where that would leave the US, first all, 0:05:11.839 --> 0:05:14.719 when it comes to negotiating trade deals, et cetera. Obviously, 0:05:14.720 --> 0:05:16.640 that would put the US in a worse position. 0:05:16.480 --> 0:05:18.520 Sort of, right, I mean, like it depends on what 0:05:18.560 --> 0:05:19.640 you think is worse or better. 0:05:20.160 --> 0:05:25.000 Stick if you can't a stick to. 0:05:24.000 --> 0:05:25.800 Trade like we did, you know, a year. 0:05:25.680 --> 0:05:29.680 Ago, I don't think that that's necessarily the goal of this. 0:05:30.960 --> 0:05:34.119 If they're trying to pursue you know, the world. 0:05:34.120 --> 0:05:36.560 You're trying to pursue no free trade. And by the way, 0:05:36.560 --> 0:05:38.520 like there's still some you know, as you said, there's 0:05:38.600 --> 0:05:41.960 other statutes that I give him some tariffing and frankly 0:05:41.960 --> 0:05:45.000 there's you know, but those are the possibility of going 0:05:45.000 --> 0:05:48.440 to Congress and asking for tarifs, like it's a Republican 0:05:48.440 --> 0:05:51.560 controlled Congress and like you could imagine Trump saying tariffs 0:05:51.600 --> 0:05:55.440 are good and getting Congress to fulfill its constitutional role 0:05:55.480 --> 0:05:56.360 of passing terrors. 0:05:56.600 --> 0:05:59.440 Yeah. The problem that probably the Oval offices with all 0:05:59.440 --> 0:06:01.400 of that is that would just take more time. It's 0:06:01.440 --> 0:06:03.520 not as easy as sending a truth social. 0:06:03.240 --> 0:06:06.120 Posts of course, of course. Yeah, that's the problem that 0:06:06.400 --> 0:06:09.000 the Oval Office is with it. Many people would say 0:06:09.320 --> 0:06:11.240 it's good to have a rule of anyway. 0:06:11.320 --> 0:06:13.000 Anyway, we'll see what the Supreme Court does. 0:06:13.120 --> 0:06:15.039 Yeah, there's a lot of stuff. Like to me, like 0:06:15.200 --> 0:06:19.560 the interesting gaming out what would happen is if they 0:06:20.320 --> 0:06:23.279 agree with the lower courts that the tariffs are illegal, 0:06:23.760 --> 0:06:27.200 does that make them refundable? Because you know they're in 0:06:27.200 --> 0:06:29.640 place now. The government is collecting tens of billions of 0:06:29.680 --> 0:06:33.120 dollars a month from Yeah, lots, you know, lots of 0:06:33.160 --> 0:06:33.839 boats coming. 0:06:33.680 --> 0:06:36.160 In and thirty billion dollars in July. 0:06:36.279 --> 0:06:40.039 Actually, and like what happens if those tariffs are all illegal? 0:06:40.160 --> 0:06:41.680 Do they have to pay them money back? 0:06:41.839 --> 0:06:44.680 Yeah, that's a good question, right, it seems very hard. 0:06:44.720 --> 0:06:47.159 And in fact I read about this on Thursday. There 0:06:47.160 --> 0:06:49.080 are you can go to the prediction markets, you know, 0:06:49.200 --> 0:06:53.919 to Calshier polymarket, and they give odds for the Supreme 0:06:53.920 --> 0:06:56.640 Court upholding the tariffs, and then they're like fifty to fifty, 0:06:56.640 --> 0:07:00.040 which seems right, right Court, But the odds of the 0:07:00.080 --> 0:07:02.120 chans of the tariffs being refunded are lower than that. 0:07:02.160 --> 0:07:05.360 They're lower than fifty to fifty because there's some sense 0:07:05.400 --> 0:07:09.960 that even if the tariffs are illegal, it's like kind 0:07:09.960 --> 0:07:13.240 of hard to unscramble that egg. And yeah, just say okay, 0:07:13.320 --> 0:07:15.240 going forward, no more tariffs, but like you don't have 0:07:15.240 --> 0:07:17.200 to refund them, yeah, if you do have to refund 0:07:17.240 --> 0:07:20.080 them to be one of the really interesting questions is 0:07:20.560 --> 0:07:24.400 if you are an importer who paid tariffs and you 0:07:24.480 --> 0:07:27.600 somehow pass those tariffs along, right, like you charged your 0:07:27.640 --> 0:07:30.680 customers or you like didn't explicitly charge them, but you 0:07:30.760 --> 0:07:34.440 raised prices, Like do you have to refund them if 0:07:34.480 --> 0:07:37.320 you're like just the company that raised prices to consumers 0:07:37.320 --> 0:07:39.480 because of tariffs, and then like you got all the 0:07:39.480 --> 0:07:41.680 tariffs back, Like, are consumer is going to be mad? 0:07:41.760 --> 0:07:43.080 Are you going to have to refund them the money? 0:07:43.160 --> 0:07:47.080 It's like an interesting tariff effect is like it is 0:07:47.120 --> 0:07:49.960 hard to unscramble even if you refund the actual tariffs. 0:07:50.080 --> 0:07:53.480 Yeah, I mean you could say I've already raised my prices, 0:07:53.480 --> 0:07:54.800 I might as well just keep them here. 0:07:55.440 --> 0:07:58.040 Oh yeah, yeah, yeah. 0:07:58.120 --> 0:08:01.240 It is interesting to think about some of that. There 0:08:01.280 --> 0:08:03.960 was an interesting column from former New York Fed President 0:08:03.960 --> 0:08:07.160 Bill Dudley on the Terminal sometime this week saying that, 0:08:07.720 --> 0:08:10.080 you know, if you do game plan out this scenario, 0:08:10.200 --> 0:08:13.640 the tariffstary, illegal, et cetera, what does that mean for companies? 0:08:13.680 --> 0:08:16.679 His view is that companies are going to be slower 0:08:16.720 --> 0:08:19.240 to pass on their cost increases if we do have 0:08:19.280 --> 0:08:22.720 this wildly swinging pendulum. And what that means for the 0:08:22.760 --> 0:08:26.880 Federal Reserve is a fun thought exercise. Is inflation transitory? 0:08:27.360 --> 0:08:31.000 Once again, seems like a difficult environment to make policy in, 0:08:31.120 --> 0:08:35.000 but probably not any more difficult than it is right now. 0:08:35.200 --> 0:08:36.839 I was going to say, there's a really distinct lack 0:08:36.840 --> 0:08:39.400 of clarity on tireffs, both in terms of their legality 0:08:39.480 --> 0:08:42.040 and in terms of what the negotiated rights will be. Yeah, 0:08:42.080 --> 0:08:44.360 and I was going to say that at the Supreme 0:08:44.360 --> 0:08:48.120 Court definitively rules that the AJEPA illegal, then you get 0:08:48.160 --> 0:08:50.480 more clarity. But that's not really true, right, because then 0:08:50.480 --> 0:08:52.440 they go back and use other statutes, and it's like 0:08:52.920 --> 0:08:56.520 it just takes a more drawn out, more complicated process 0:08:56.600 --> 0:09:00.800 with further legal challenges. And yeah, yeah myself, out of 0:09:00.800 --> 0:09:02.480 that sounds it's all pretty grim. 0:09:02.600 --> 0:09:05.400 Yeah, it is pretty grim. It's also grim just for 0:09:05.840 --> 0:09:09.480 the US government and the fiscal outlook sort of well, 0:09:09.720 --> 0:09:14.200 Scott Vesson, Treasury Secretary Scott Besson has projected that tariffs 0:09:14.240 --> 0:09:17.120 are supposed to bring in like five hundred billion dollars 0:09:17.200 --> 0:09:20.720 in a year in annual income. They would have a 0:09:20.760 --> 0:09:21.480 hole there. 0:09:21.920 --> 0:09:25.640 Yeah, But like the US fiscal outlook is a long 0:09:25.720 --> 0:09:31.720 term outlook, and if you think as most economists still 0:09:31.760 --> 0:09:36.120 seem to think that tariffs are bad for the US economy, 0:09:36.480 --> 0:09:40.360 which is a separate from the legality question. But again, 0:09:40.400 --> 0:09:43.040 most economists think that not Scott Bessant, not Donald Trump, 0:09:43.080 --> 0:09:46.640 but most economists think that tariffs are not really helping 0:09:46.760 --> 0:09:50.319 economic growth. If you think that, then getting rid of 0:09:50.360 --> 0:09:53.400 the tariffs is good for fiscal sustainability, right because like 0:09:53.440 --> 0:09:56.400 in the long run, right, like fiscal sustainability is driven 0:09:56.440 --> 0:09:59.280 by like the economist's capacity rather than like the particular 0:09:59.360 --> 0:10:00.560 text rate on. Yeah. 0:10:01.440 --> 0:10:04.360 Just in terms of though bringing down the budget deficit, 0:10:05.000 --> 0:10:08.760 it does hurt there. This was part of the pillars 0:10:08.800 --> 0:10:12.200 that US treasure Secretary Scott Best and put in place, Like, yeah, 0:10:12.720 --> 0:10:15.640 plants have been built around this revenue coming in to 0:10:15.720 --> 0:10:18.440 the government's coffers and taking that out would I don't know. 0:10:18.600 --> 0:10:21.320 Yeah, no, it's it's like super disruptive, yeah, right, Like 0:10:21.400 --> 0:10:24.800 on the one hand, you could imagine a court somewhat 0:10:24.840 --> 0:10:28.800 unconstrained by precedent on law saying it would be so 0:10:28.920 --> 0:10:31.480 disruptive to the government to take away this thirty billion 0:10:31.480 --> 0:10:33.920 dollars a month of revenue source that we're just gonna 0:10:34.000 --> 0:10:37.360 benever backwards not to do it. It really is what 0:10:37.400 --> 0:10:40.120 the constitution says, is said Congress system post taxes, Right, 0:10:40.280 --> 0:10:42.360 it's a really important part of the constitutional structure. And 0:10:42.360 --> 0:10:44.680 it's like, you know, there's hundreds of years of history 0:10:44.720 --> 0:10:48.160 of like kings and executives in wanting to raise taxes, 0:10:48.240 --> 0:10:51.439 and the only constraint on them being the legislature's power 0:10:51.640 --> 0:10:55.800 to raise taxes. And so for the Supreme Court to say, eh, 0:10:56.160 --> 0:10:57.840 it's like too important for the president to be able 0:10:57.840 --> 0:11:00.200 to impost whatever taxes he wants. It's like really a 0:11:00.240 --> 0:11:03.480 shocking change in the constitutional structure. But here we are. 0:11:03.640 --> 0:11:05.800 Maybe the government can make up what they're not making 0:11:05.800 --> 0:11:09.520 a terror revenue from their stakes in US companies. Maybe 0:11:09.520 --> 0:11:12.319 that's the future we're rattling towards. 0:11:13.559 --> 0:11:16.040 How did this get more depressing? It's true that the 0:11:16.040 --> 0:11:19.400 Trump administration has found many new revenue sources, like owning 0:11:19.440 --> 0:11:22.560 ten percent of Intel. This is a real tangent, But like, 0:11:22.640 --> 0:11:24.640 I do think that one model that people have is that, 0:11:24.679 --> 0:11:27.040 like the US government has a twenty percent stake in 0:11:27.080 --> 0:11:30.000 every company because it taxes twenty percent of their earnings. 0:11:30.600 --> 0:11:32.600 If you take an additional ten percent stake and Intel, 0:11:32.640 --> 0:11:35.080 then that's like kind of an additional tax, but whatever, 0:11:35.559 --> 0:11:38.720 that's not really a tax. It's fine, but right. I mean, 0:11:38.760 --> 0:11:43.320 the other like truly novel revenue source that the Trump 0:11:43.360 --> 0:11:47.000 administration has found, not for the government but for Trump 0:11:47.040 --> 0:11:51.760 personally is cryptos shitandingg it and like you could probably 0:11:51.800 --> 0:11:54.480 make thirty billion dollars a month telling US government crypto 0:11:54.679 --> 0:11:55.120 that's true. 0:11:55.160 --> 0:11:57.800 I thought you were gonna bring up the revenue share 0:11:58.000 --> 0:12:01.319 that has been floated with AMD in video, but that's 0:12:01.400 --> 0:12:04.680 you know, the crypto she innigans is probably a much 0:12:04.679 --> 0:12:07.040 more short thing. I don't think that the Trump family 0:12:07.120 --> 0:12:07.520 is giving that. 0:12:07.679 --> 0:12:10.240 You like Intel and AMD and video. 0:12:10.240 --> 0:12:12.960 It's like we talked about this on the podcast. 0:12:13.120 --> 0:12:14.600 I don't write about it. It's not that fun. But 0:12:14.640 --> 0:12:17.760 like these are all like voluntary taxating. They're like voluntary taxes, right, 0:12:17.760 --> 0:12:19.640 they're like, yeah, Talald Trump goes to like in video 0:12:19.640 --> 0:12:21.559 and it's like, hey, you give you ten percent of 0:12:21.559 --> 0:12:26.839 your revenue? No, And they're like yes, no, well no 0:12:26.960 --> 0:12:29.079 they I mean right, like they're thinking, no, I don't 0:12:29.120 --> 0:12:31.480 want to give you ten percent of my revenue. But like, yeah, 0:12:31.640 --> 0:12:35.120 you know there's like a certain like nice chip company here, 0:12:35.440 --> 0:12:37.640 anything were to happen to it, right, Like if you 0:12:37.720 --> 0:12:40.480 replaced the tariffs of voluntary tariffs, like how much revenue 0:12:40.480 --> 0:12:44.439 would you collect? Like not none? Yeah, it's like voluntary 0:12:44.600 --> 0:12:45.520 like nudge nudge. 0:12:45.679 --> 0:12:49.600 I don't know enough about a MD's situation to pine 0:12:49.600 --> 0:12:52.840 on it too confidently, but at least in video Bloomberg 0:12:52.880 --> 0:12:56.680 had an interview with Invidia CFO last week, and she 0:12:56.760 --> 0:12:59.800 said something along the lines of, I haven't seen anything, 0:12:59.800 --> 0:13:03.040 I haven't signed anything. We're not giving up fifteen percent 0:13:03.080 --> 0:13:10.000 of our Chinese chip revenue yet, so I might be editorializing. 0:13:10.040 --> 0:13:12.000 I don't know if she said it with that much passion. 0:13:14.000 --> 0:13:15.359 Happened to that Chinee. 0:13:16.360 --> 0:13:20.640 Well, I don't know even if Chinese companies are going 0:13:20.679 --> 0:13:22.720 to be able to continue buying it. Apparently the Chinese 0:13:22.760 --> 0:13:27.280 government reportedly has encouraged companies not to buy American chips. 0:13:27.400 --> 0:13:45.640 But anyway, Charlie move long, what tickles your fancy to 0:13:45.679 --> 0:13:51.320 talk about? Second? This week my old haunts Coldman Goldman. 0:13:51.920 --> 0:13:53.720 I am excited to talk about this. This is a 0:13:53.720 --> 0:13:54.200 weird one. 0:13:54.400 --> 0:13:57.120 Yeah, it's sort of. It's not that way, it's like 0:13:57.200 --> 0:13:59.920 it seems weird. It's weird in detail, but like effectively, 0:14:01.000 --> 0:14:04.400 every week on this podcast we talk about some sort 0:14:04.440 --> 0:14:07.440 of deal where a big traditional asset manager is buying 0:14:07.679 --> 0:14:09.840 like an alterative asset manager, like a private markets are 0:14:09.880 --> 0:14:12.520 just partnering, or a private manager is buying a traditional 0:14:12.520 --> 0:14:15.120 manager or a private manager and a traditional manager or 0:14:15.160 --> 0:14:17.880 partnering to do like an ETF or whatever. And this 0:14:18.000 --> 0:14:22.400 week it is Goldman partnering with Tierro Price and no 0:14:22.400 --> 0:14:25.800 one's buying each other. Golden's buying a little too. Yeah, 0:14:25.920 --> 0:14:28.360 they're buying a billion dollars of Tiro in the inn 0:14:28.400 --> 0:14:29.000 open market. 0:14:29.120 --> 0:14:31.280 To be clear, The weird part, at least from where 0:14:31.280 --> 0:14:33.360 I'm sitting, is that Goldman will make a series of 0:14:33.360 --> 0:14:36.200 open market purchases to a mass up to three point 0:14:36.240 --> 0:14:38.520 five percent of TIRO stock. That's as much as one 0:14:38.560 --> 0:14:41.480 billion dollars. That would make them, I think, one of 0:14:41.480 --> 0:14:44.440 the top five biggest shareholders in Tiro. Why do they 0:14:44.440 --> 0:14:45.880 have to go through all that? Why can't they just 0:14:45.920 --> 0:14:48.760 do a little jv A partnership. 0:14:48.960 --> 0:14:51.800 I don't know. We are in a moment where there's 0:14:51.800 --> 0:14:55.280 a lot of momentum behind alts managers by alts managers, 0:14:55.320 --> 0:14:59.760 I mean, you know KKR, Apollo, you know Blackstone. But also, 0:15:00.040 --> 0:15:01.280 and I think we've talked about this on the pod 0:15:01.280 --> 0:15:03.640 and I've certainly written about it, like Goldman is very much, 0:15:03.720 --> 0:15:05.120 very much wants to be an altimage. 0:15:05.200 --> 0:15:06.720 We've talked about it, and you know. 0:15:07.080 --> 0:15:10.560 Look it is right, it like it runs alternative assets fun, 0:15:10.640 --> 0:15:12.640 you know, it manages assets well. 0:15:12.560 --> 0:15:16.480 Didn't it use that to justify the pay packages for 0:15:16.640 --> 0:15:17.920 David Suleman and John Waldron. 0:15:18.320 --> 0:15:21.200 Like, Goldman is an investment bank and it's also it 0:15:21.240 --> 0:15:24.160 manages a lot of money for institutions that it invests 0:15:24.200 --> 0:15:27.120 in alternative assets, and it's been a big business for 0:15:27.160 --> 0:15:29.280 a long time. So it's not quite the same as 0:15:29.320 --> 0:15:31.040 like KKR, but it's you know, it's like they think 0:15:31.040 --> 0:15:31.400 that they can. 0:15:31.640 --> 0:15:33.200 Well I was going to ask who is the alts 0:15:33.240 --> 0:15:34.600 manager in this scenario? 0:15:35.680 --> 0:15:38.680 And it's funny, right because like Tiro actually owns a 0:15:38.720 --> 0:15:41.720 private credit manager. Yeah. Cool, But if you read the 0:15:41.720 --> 0:15:44.080 press release in this deal, it's like it kind of 0:15:44.160 --> 0:15:50.280 says we're bringing goldbn's ALTS assets to Tiro's retail and 0:15:50.320 --> 0:15:53.720 retirement distribution. And then Okayill is like we're here too, 0:15:55.520 --> 0:15:57.880 because I think how I read that? But right, so 0:15:57.920 --> 0:15:59.520 Goldman is I think the alts manager here, and that 0:15:59.600 --> 0:16:01.840 they do you know, they raise a lot of money 0:16:01.880 --> 0:16:04.280 to invest in alts and you know they do that 0:16:04.320 --> 0:16:07.440 from institutions and they do that from their private wealth clients. Yeah. 0:16:07.240 --> 0:16:11.400 The story and private credit and private equity these days 0:16:11.520 --> 0:16:16.280 is like trying to find like true retail distribution, trying 0:16:16.280 --> 0:16:19.200 to sell through financial advisors and in particularly trying to 0:16:19.200 --> 0:16:21.920 sell to fore own K plans. Yeah, And Tiro has 0:16:21.960 --> 0:16:24.280 a lot of furrow and K business, and like they 0:16:24.280 --> 0:16:27.080 do target dated funds for own case, right, And if 0:16:27.080 --> 0:16:29.400 you can put private assets into target date funds, like 0:16:29.400 --> 0:16:31.840 that's a no brainer, right, It's like it's exactly the 0:16:31.880 --> 0:16:37.520 liquidity profile you want and you're selling alts assets to 0:16:37.680 --> 0:16:40.800 your giant pool of retirement savers. Yeah. I mean Tiro 0:16:40.920 --> 0:16:43.680 is like very much classic Like, Okay, they have some alts, 0:16:43.720 --> 0:16:49.480 but like they're very much a classic traditional long only 0:16:49.520 --> 0:16:52.960 activity manage mutual fund manager. And that is a tough business, right, 0:16:53.040 --> 0:16:55.560 I mean the Bloomberg article about this tie up mentions 0:16:55.560 --> 0:16:57.560 that Tiro has had like two hundred billion dollars of 0:16:57.640 --> 0:17:00.600 client outflows. Yeah, their stock is down fifty from where 0:17:00.600 --> 0:17:02.920 it wasn't twenty twenty one. It's a tough business to 0:17:02.960 --> 0:17:05.320 beg in. And you know everyone in that business is 0:17:05.359 --> 0:17:07.080 like looking around and me like, how can we get 0:17:07.119 --> 0:17:08.600 into privates because the fees are better? 0:17:08.840 --> 0:17:12.080 Yeah, Well that's the thing. I guess. I'm surprised that 0:17:12.160 --> 0:17:16.000 this search led them to Tiro, which isn't entirely fair. 0:17:16.040 --> 0:17:18.840 The Bloomberg News article does also point out that two 0:17:18.960 --> 0:17:21.320 thirds of Tiro's assets are in retirement funds. They're one 0:17:21.320 --> 0:17:23.840 of the largest firms in that part of the market. 0:17:23.920 --> 0:17:27.560 Everyone in privates wants retail distribution. This gets back to 0:17:27.600 --> 0:17:30.200 your question about why do they have to buy three 0:17:30.240 --> 0:17:30.640 point five? 0:17:30.880 --> 0:17:33.280 Yeah, is it just because the stock was on sale? 0:17:33.400 --> 0:17:35.200 To your point, I think it's the stock was on self. 0:17:35.240 --> 0:17:37.160 But I think a lot of it is like if 0:17:37.160 --> 0:17:40.400 you're Tiro, you know, you're like every alt manager wants 0:17:40.400 --> 0:17:43.520 to distribute through every four O, one K channel, and 0:17:44.119 --> 0:17:48.119 we want a real partnership with Goldlan rather than just 0:17:48.200 --> 0:17:53.440 like letting them stuff their funds into our clients. Right, 0:17:54.040 --> 0:17:56.440 And what does a real partnership mean. Well, I think 0:17:56.480 --> 0:18:00.720 it means like giving Golden some incentive of to have, 0:18:01.080 --> 0:18:03.200 you know, some upside in Tiro stock, so that Golvin 0:18:03.200 --> 0:18:04.480 has some incentives. 0:18:03.960 --> 0:18:05.440 To actually skin in the game. 0:18:05.640 --> 0:18:09.199 Yeah. Actually, you know, not just like used to as 0:18:09.200 --> 0:18:11.000 a dumping ground for its products, but like try to 0:18:11.040 --> 0:18:12.320 you know, be a real partnership. 0:18:12.480 --> 0:18:12.680 Yeah. 0:18:12.680 --> 0:18:14.200 I think that's like it makes sense to say you 0:18:14.200 --> 0:18:15.040 should buy some stock. 0:18:15.240 --> 0:18:18.280 Yeah. It is interesting because I mean you think about 0:18:18.280 --> 0:18:20.320 some of the other partnerships that we've talked about on 0:18:20.359 --> 0:18:24.040 this show. You have Vanguard and Wellington with Blackstone that's 0:18:24.240 --> 0:18:28.000 just partnering on fun. State Street has partnered with Apollo. 0:18:28.800 --> 0:18:30.960 Like Van Garden. State Street are not in the same 0:18:31.000 --> 0:18:37.120 position as like the traditional active management firms Wellington. Well, yeah, 0:18:38.600 --> 0:18:42.199 come on, I was saying, yeah, yeah, right, I mean, 0:18:42.240 --> 0:18:44.760 like I think of it as like the investment world 0:18:45.000 --> 0:18:48.439 now is like focused on alts and index ones, and 0:18:48.760 --> 0:18:51.920 if you're a traditional active manager, it's really hard. And 0:18:52.000 --> 0:18:54.399 so you can get into indexing, but that's like you 0:18:54.440 --> 0:18:56.320 know that stuff, isn't it get into Yeah, and so 0:18:56.440 --> 0:18:57.919 you get into get adults. 0:18:58.000 --> 0:19:01.399 Yeah, I'm interested to see how this turns out, to 0:19:01.400 --> 0:19:02.879 see this sort of transaction to. 0:19:03.359 --> 0:19:20.280 Call my eye, deal contingent hedges. 0:19:20.920 --> 0:19:23.400 Are we only talking about currency hudges here? 0:19:23.680 --> 0:19:25.639 You can do deal contingent rates hudges? 0:19:25.800 --> 0:19:29.320 Okay, yeah, spiritually similar, It's possible. 0:19:28.880 --> 0:19:31.480 That someone somewhere has done a deal contingent oil hedge. 0:19:32.960 --> 0:19:37.360 Yeah maybe, yeah, but no, I mean it's mostly currency 0:19:37.520 --> 0:19:40.040 and occasionally rate. So like you're a company, you're buying 0:19:40.040 --> 0:19:40.760 another company. 0:19:40.840 --> 0:19:41.920 I'm a business man. 0:19:43.280 --> 0:19:45.800 You buy another company, you sign a deal to buy 0:19:45.800 --> 0:19:48.880 the company, and it's closing in like six months, and 0:19:49.240 --> 0:19:50.879 if it's in a foreign country, you might have to 0:19:51.000 --> 0:19:52.480 get a lot of foreign currency and you want to 0:19:52.480 --> 0:19:54.440 lock in your currency rate today, but if the deal 0:19:54.440 --> 0:19:58.280 doesn't close, you don't want to have liability for that currency. 0:19:58.480 --> 0:20:00.879 Similarly like you might lock in your bar in cost today, right, 0:20:00.920 --> 0:20:04.440 like you might hedge with treasuries to hadge your you know, 0:20:04.680 --> 0:20:07.639 interest rates in some months, but if the deal doesn't closed, 0:20:07.640 --> 0:20:09.879 you don't need that interest rate hedge anymore. And so 0:20:10.160 --> 0:20:12.639 there's a long time banking product of deal contingent hedges 0:20:12.640 --> 0:20:14.399 where you go to your investment bank that did the 0:20:14.440 --> 0:20:16.600 merger for you and you say, I would like to 0:20:17.080 --> 0:20:19.439 hedge my currency risk or my rates risk or whatever, 0:20:19.920 --> 0:20:22.320 but I want to lock in my rates today, and 0:20:22.359 --> 0:20:24.480