1 00:00:03,120 --> 00:00:12,719 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Let's get go in here. 2 00:00:13,119 --> 00:00:14,240 Speaker 1: Enough chit chat, let's go. 3 00:00:14,280 --> 00:00:16,880 Speaker 2: We're on the cloth a right, I have so much 4 00:00:16,880 --> 00:00:21,320 Speaker 2: more chit chat. Hello, and welcome to The Money Stuff Podcast, 5 00:00:21,680 --> 00:00:25,280 Speaker 2: your weekly podcast where we talk about stuff related to money. 6 00:00:26,120 --> 00:00:28,320 Speaker 2: I'm Matt Levine and I write the Money Stuff column 7 00:00:28,320 --> 00:00:29,240 Speaker 2: for Bloomberg Opinion. 8 00:00:29,440 --> 00:00:32,000 Speaker 1: And I'm Katie Greifeld, a reporter for Bloomberg News and 9 00:00:32,040 --> 00:00:33,599 Speaker 1: an anchor for Bloomberg Television. 10 00:00:33,800 --> 00:00:35,760 Speaker 2: Katie, it's good to be back putting out this week. 11 00:00:35,920 --> 00:00:39,960 Speaker 1: I'm so excited to see you in person, not pixelated. 12 00:00:40,240 --> 00:00:43,120 Speaker 1: We're talking about short sellers, We're talking about Bill Lackman. 13 00:00:43,560 --> 00:00:46,840 Speaker 1: We're also talking about drama at the Bureau of Labor Statistics. 14 00:00:47,120 --> 00:00:50,160 Speaker 2: Dramas maybe a generous term for it. Drama, Yeah, drama, 15 00:00:50,200 --> 00:00:54,600 Speaker 2: drama scan, dramatic intrigues, short. 16 00:00:54,360 --> 00:00:58,080 Speaker 1: Sellers, short sellers. I have to say, so the way 17 00:00:58,080 --> 00:00:59,840 Speaker 1: that I prepare for this podcast, and we can cut 18 00:00:59,880 --> 00:01:03,200 Speaker 1: this if it's boring. I listened to it text to speech. 19 00:01:03,280 --> 00:01:05,800 Speaker 1: I put your columns in text to speech and then 20 00:01:05,840 --> 00:01:08,240 Speaker 1: this robot voice spits them out. And so I was 21 00:01:08,280 --> 00:01:11,880 Speaker 1: listening to activist shorts can still have fun and that 22 00:01:12,720 --> 00:01:15,800 Speaker 1: legal disclaimer from Carrysdale Capital, And I was so confused 23 00:01:16,120 --> 00:01:18,720 Speaker 1: because I was like, did Matt write this? It kind 24 00:01:18,720 --> 00:01:22,039 Speaker 1: of read like you wrote it, just the tone of 25 00:01:22,080 --> 00:01:23,119 Speaker 1: this legal disclaimer. 26 00:01:23,240 --> 00:01:27,280 Speaker 2: You know, I have not taken any steps to confirm this, 27 00:01:27,520 --> 00:01:32,320 Speaker 2: but I did feel a little bit like this disclaimer 28 00:01:32,440 --> 00:01:34,080 Speaker 2: was somewhat influenced by money stuff. 29 00:01:34,280 --> 00:01:36,760 Speaker 1: It was like a column, So let me take a 30 00:01:36,800 --> 00:01:39,800 Speaker 1: step back, okay, carrysale, right, let me take a further 31 00:01:39,840 --> 00:01:41,039 Speaker 1: step back. Okay, for sure. 32 00:01:41,120 --> 00:01:44,560 Speaker 2: Andrew left Active a short. Tried about him on the 33 00:01:44,600 --> 00:01:47,600 Speaker 2: podcast a while back. He was charged criminally with like 34 00:01:48,160 --> 00:01:50,560 Speaker 2: doing securities ride because he was a short. Look, he 35 00:01:50,600 --> 00:01:52,640 Speaker 2: would short a stock. You would publish a report saying 36 00:01:52,640 --> 00:01:55,600 Speaker 2: the stock is bad, it'll go down, and then the 37 00:01:55,640 --> 00:01:58,200 Speaker 2: stock would go down because people would read the report. 38 00:01:58,240 --> 00:02:00,680 Speaker 2: And then he would buy back the stock he had shorted. 39 00:02:00,680 --> 00:02:02,520 Speaker 2: He would cover his short, and he make a profit. 40 00:02:02,720 --> 00:02:06,200 Speaker 2: And the sec and the Department of Justice didn't like 41 00:02:06,240 --> 00:02:08,919 Speaker 2: this because they thought that he was sort of deceiving 42 00:02:08,960 --> 00:02:11,640 Speaker 2: investors because he would say, oh, I'm sure that stock 43 00:02:11,720 --> 00:02:13,040 Speaker 2: is going to zero, and then the stock would go 44 00:02:13,040 --> 00:02:16,040 Speaker 2: down ten percent. He'd buy back his short. It was like, oh, 45 00:02:16,080 --> 00:02:20,160 Speaker 2: he's not really conveying his true opinion because he's buying back. 46 00:02:20,200 --> 00:02:22,200 Speaker 2: He's just trying to manipulate the market. He's not trying 47 00:02:22,240 --> 00:02:25,720 Speaker 2: to make money by finding companies that are really going 48 00:02:25,760 --> 00:02:28,320 Speaker 2: to zero. He's trying to make money by convincing other 49 00:02:28,360 --> 00:02:30,239 Speaker 2: people to sell the stock and then he's going to 50 00:02:30,280 --> 00:02:32,280 Speaker 2: buy back for them. It's like a reverse pumpit dump. 51 00:02:32,760 --> 00:02:34,880 Speaker 2: A lot of people think this is kind of a 52 00:02:34,919 --> 00:02:40,119 Speaker 2: wild theory because it's not like he's obligated to keep 53 00:02:40,120 --> 00:02:42,480 Speaker 2: his short on until the company goes to zero, right, 54 00:02:42,919 --> 00:02:45,560 Speaker 2: and his reports, you don't have disclaimers that are like 55 00:02:45,960 --> 00:02:47,760 Speaker 2: we can trade on the security is at any time, 56 00:02:47,880 --> 00:02:51,880 Speaker 2: no promises, right. But you know, there's like some bad 57 00:02:51,960 --> 00:02:54,320 Speaker 2: facts and like there's some bad emails that sort of 58 00:02:54,320 --> 00:02:58,040 Speaker 2: suggest that maybe he did overly enjoy his influence over 59 00:02:58,120 --> 00:03:00,600 Speaker 2: retail traders. And there are a couple cases where like 60 00:03:00,639 --> 00:03:02,040 Speaker 2: you would go on TV and they'd say have you 61 00:03:02,080 --> 00:03:03,760 Speaker 2: covered your short and its say like no, not really, 62 00:03:03,760 --> 00:03:06,640 Speaker 2: and then like they argue he had. So that's the 63 00:03:06,680 --> 00:03:09,200 Speaker 2: Andrew Left story. I think that when he was arrested 64 00:03:09,240 --> 00:03:11,600 Speaker 2: that kind of like cast a Paul over the activist 65 00:03:11,600 --> 00:03:16,240 Speaker 2: short community because everyone who does this, who like shorts 66 00:03:16,240 --> 00:03:18,440 Speaker 2: a stock and then publishes a negative report about it. 67 00:03:19,240 --> 00:03:23,400 Speaker 2: They all have disclaimers of the back saying we reserve 68 00:03:23,440 --> 00:03:25,280 Speaker 2: the right to buy back at any time. And I 69 00:03:25,360 --> 00:03:29,280 Speaker 2: think my impression is that the business model has always 70 00:03:29,320 --> 00:03:32,760 Speaker 2: involved a certain amount of that of covering. Right. If 71 00:03:32,840 --> 00:03:34,239 Speaker 2: you do a really good job in the report and 72 00:03:34,280 --> 00:03:36,200 Speaker 2: the stock goes down twenty percent on the first day, 73 00:03:36,680 --> 00:03:39,200 Speaker 2: you will be tempted to say, well, I'm going to 74 00:03:39,280 --> 00:03:41,080 Speaker 2: take some risk off, right. I did my job. I 75 00:03:41,120 --> 00:03:43,480 Speaker 2: want to get paid for it now. Maybe this company 76 00:03:43,520 --> 00:03:45,320 Speaker 2: will go to zero in a year, but I don't 77 00:03:45,320 --> 00:03:46,840 Speaker 2: want to lock up all my capitol. I don't take 78 00:03:46,840 --> 00:03:48,520 Speaker 2: that risk. I'm going to take some money off now. 79 00:03:48,680 --> 00:03:52,520 Speaker 2: And so I think that when the SEC brought this 80 00:03:52,600 --> 00:03:54,520 Speaker 2: case against Left, that was sort of scary to a 81 00:03:54,520 --> 00:03:56,280 Speaker 2: lot of these short sellers. And so anyway, this week 82 00:03:56,480 --> 00:03:59,560 Speaker 2: Carrisdale and other activist short seller Carrystelle published a negative 83 00:03:59,560 --> 00:04:02,760 Speaker 2: report on the Lumen and they have this disclaimer at 84 00:04:02,760 --> 00:04:07,040 Speaker 2: the back that is one written like I'm going to 85 00:04:07,160 --> 00:04:09,360 Speaker 2: arrogantly say some what money stuff style too? 86 00:04:09,640 --> 00:04:11,920 Speaker 1: If you like money stuff, you'll lost di. 87 00:04:12,640 --> 00:04:15,960 Speaker 2: And I cudited extensively. Two is you know a response 88 00:04:16,000 --> 00:04:18,320 Speaker 2: directly to the left case, and three is just like 89 00:04:19,360 --> 00:04:22,360 Speaker 2: sort of like lays out more clearly what the business 90 00:04:22,360 --> 00:04:24,520 Speaker 2: model might be. And so it says things like, perhaps 91 00:04:24,520 --> 00:04:27,120 Speaker 2: I would help investors to just assume the following. Assume 92 00:04:27,120 --> 00:04:28,920 Speaker 2: we have shorted lots and lots of the stock of 93 00:04:28,960 --> 00:04:32,040 Speaker 2: the covered assurer, that is Lumen, immediately prior to publication, 94 00:04:32,240 --> 00:04:33,880 Speaker 2: and assume we will buy lots and lots of the 95 00:04:33,920 --> 00:04:36,600 Speaker 2: stock of women to cover our short position immediately subsequent 96 00:04:36,600 --> 00:04:37,360 Speaker 2: to pupl equations. 97 00:04:37,480 --> 00:04:37,640 Speaker 1: Right. 98 00:04:37,880 --> 00:04:40,080 Speaker 2: So they've always said we reserved the right to buy 99 00:04:40,120 --> 00:04:41,560 Speaker 2: back ers not but now they're saying, just assume we 100 00:04:41,600 --> 00:04:44,200 Speaker 2: bought back the stock. There's also some other like so 101 00:04:44,360 --> 00:04:46,920 Speaker 2: in the absence of second by second trading updates, just 102 00:04:47,000 --> 00:04:49,520 Speaker 2: assume that is exactly what we'll do. Then you won't 103 00:04:49,600 --> 00:04:52,400 Speaker 2: be er defrauded or something like that. 104 00:04:52,400 --> 00:04:56,440 Speaker 1: That was when I almost crashed my car. But I 105 00:04:56,560 --> 00:04:59,320 Speaker 1: was listening to this while driving and it was read 106 00:04:59,320 --> 00:05:00,919 Speaker 1: to me in this rope voice, and I was like, 107 00:05:00,960 --> 00:05:03,000 Speaker 1: did the robot mess up? Or did they really just 108 00:05:03,080 --> 00:05:03,400 Speaker 1: put that. 109 00:05:03,640 --> 00:05:04,960 Speaker 2: An error in the text. 110 00:05:05,200 --> 00:05:05,760 Speaker 1: So funny. 111 00:05:05,880 --> 00:05:08,200 Speaker 2: Yes, So there's like there's morely that it's like a 112 00:05:08,320 --> 00:05:11,280 Speaker 2: very sarcastic legal disclaimer. Yeah, and I think it's a 113 00:05:11,320 --> 00:05:14,599 Speaker 2: good response to the SEC case because once you have 114 00:05:14,680 --> 00:05:17,840 Speaker 2: that disclaimer, they can't really very a case against you, right. Yeah, 115 00:05:17,960 --> 00:05:20,040 Speaker 2: really elated it out there, and it is sort of 116 00:05:20,080 --> 00:05:24,520 Speaker 2: like a sarcastic defense of the activist short business model. Also, 117 00:05:25,360 --> 00:05:27,120 Speaker 2: the other thing that happened is that Luman was down 118 00:05:27,200 --> 00:05:29,680 Speaker 2: fourteen point five percent when they published this report, right, 119 00:05:29,720 --> 00:05:32,599 Speaker 2: So the report had an impact. And one thing that 120 00:05:32,640 --> 00:05:35,120 Speaker 2: the SEC is saying and the Andrew Left case is 121 00:05:35,160 --> 00:05:39,400 Speaker 2: that when he allegedly deceived people about what he was doing, 122 00:05:39,680 --> 00:05:42,680 Speaker 2: he was buying back the shorts while saying he was 123 00:05:42,839 --> 00:05:45,599 Speaker 2: short forever. I think that's like a little bit of 124 00:05:45,600 --> 00:05:48,479 Speaker 2: a weird claim, right, because I think that what happened 125 00:05:48,520 --> 00:05:51,640 Speaker 2: is that people would sell those stocks that Andrew Left 126 00:05:51,760 --> 00:05:54,920 Speaker 2: recommended against because they thought he was right, or because 127 00:05:54,920 --> 00:05:56,840 Speaker 2: they thought he had a good track record, or because 128 00:05:56,839 --> 00:05:58,359 Speaker 2: they thought other people would copy him, right, but not 129 00:05:58,400 --> 00:06:00,400 Speaker 2: because they really thought he was going to be short 130 00:06:00,400 --> 00:06:04,159 Speaker 2: the whole time. And here Carristelle is like, assume we 131 00:06:04,240 --> 00:06:06,200 Speaker 2: are not short anymore, and they still had a big 132 00:06:06,200 --> 00:06:08,599 Speaker 2: effect on the stock, right, which suggests that like the 133 00:06:08,800 --> 00:06:11,640 Speaker 2: effect that activist short sellers have is much more about 134 00:06:11,720 --> 00:06:13,599 Speaker 2: like the content of the reports than it is about 135 00:06:13,600 --> 00:06:15,480 Speaker 2: people trying to copy their trades, because these people are 136 00:06:15,520 --> 00:06:17,640 Speaker 2: you know, when we talked about Andrew Left, what I 137 00:06:17,640 --> 00:06:19,320 Speaker 2: said is like he's a guy on Twitter, Like, yeah, 138 00:06:19,360 --> 00:06:22,040 Speaker 2: he's not running a multi billion dollar hedge fund. People 139 00:06:22,080 --> 00:06:24,120 Speaker 2: are not copying their trades because I think they are 140 00:06:24,600 --> 00:06:26,400 Speaker 2: huge lucrative hedgehom manage. 141 00:06:26,440 --> 00:06:28,160 Speaker 1: His investor letters are addressed to him. 142 00:06:28,400 --> 00:06:30,360 Speaker 2: Yeah, they're copying the trades because I think they get 143 00:06:30,400 --> 00:06:32,800 Speaker 2: them right. And here again like Caroristelle, like you know, 144 00:06:33,080 --> 00:06:35,479 Speaker 2: is not a huge fund, but people seem to have 145 00:06:35,520 --> 00:06:38,960 Speaker 2: found the report convincing, even as Carrostel is emphatically saying 146 00:06:39,000 --> 00:06:39,920 Speaker 2: just assume we've covered it. 147 00:06:39,920 --> 00:06:42,920 Speaker 1: Short I want to talk about another short selling story 148 00:06:42,920 --> 00:06:45,560 Speaker 1: that dropped this week because it feels like, I don't know, 149 00:06:45,640 --> 00:06:51,279 Speaker 1: earlier this year, there was a lot of obituaries being 150 00:06:51,279 --> 00:06:55,400 Speaker 1: written about short selling. You know, Jim Chainos, Yeah, forever. 151 00:06:55,160 --> 00:06:56,960 Speaker 2: It's been since like GameStop people have been writing. 152 00:06:57,120 --> 00:07:00,880 Speaker 1: Yeah. But Carson Block launched his first law only fond, 153 00:07:00,920 --> 00:07:02,719 Speaker 1: which felt really like a sign of the times. So 154 00:07:02,760 --> 00:07:05,599 Speaker 1: you had Carastale, you also had Hindenburg coming out against 155 00:07:05,600 --> 00:07:07,719 Speaker 1: super Micro. Just in this past week, it feels like, 156 00:07:08,480 --> 00:07:10,160 Speaker 1: and maybe it's just because I've been paying attention to 157 00:07:10,200 --> 00:07:11,920 Speaker 1: it more since we talk about it a lot, but 158 00:07:12,000 --> 00:07:14,880 Speaker 1: it feels like we are seeing more short selling campaigns 159 00:07:15,000 --> 00:07:18,040 Speaker 1: come to life and make a splash in this market. 160 00:07:18,280 --> 00:07:19,840 Speaker 2: Yeah. Well, I think a little of it is like 161 00:07:19,920 --> 00:07:21,720 Speaker 2: a reaction to the left case and they're like yeah, 162 00:07:21,760 --> 00:07:24,640 Speaker 2: They're like we're still here, like like it can't intimidate 163 00:07:24,720 --> 00:07:26,720 Speaker 2: us too much. I think an interesting thing about the 164 00:07:26,800 --> 00:07:29,360 Speaker 2: left case is like I think that that business model 165 00:07:29,520 --> 00:07:32,560 Speaker 2: is okay. The business model, like we short the stock, 166 00:07:32,760 --> 00:07:35,080 Speaker 2: we publish negative things on it, and then we buy 167 00:07:35,120 --> 00:07:38,480 Speaker 2: back because we take that first day reaction to our 168 00:07:38,520 --> 00:07:41,480 Speaker 2: report and like we're not in it for the long term. 169 00:07:41,520 --> 00:07:43,680 Speaker 2: We're in it for what we hope is a good report, 170 00:07:44,120 --> 00:07:47,320 Speaker 2: and the stock goes down, we take our profits, and 171 00:07:47,360 --> 00:07:49,880 Speaker 2: then we do this again and again and hopefully like 172 00:07:49,920 --> 00:07:52,000 Speaker 2: we have enough of a track record that like, you know, 173 00:07:52,040 --> 00:07:55,560 Speaker 2: we have some long term interest, because it only works 174 00:07:55,600 --> 00:07:57,080 Speaker 2: if we have a track record, right, Like we're not 175 00:07:57,120 --> 00:07:58,640 Speaker 2: our report is not going to move down the stock 176 00:07:58,960 --> 00:08:01,280 Speaker 2: if we keep being wrong. So I think that's like 177 00:08:01,320 --> 00:08:05,360 Speaker 2: a legitimate business model and My impression from like years 178 00:08:05,360 --> 00:08:07,440 Speaker 2: of like kind of following these guys and talking to 179 00:08:07,440 --> 00:08:10,240 Speaker 2: these guys occasionally is that that's not like an uncommon 180 00:08:10,320 --> 00:08:14,120 Speaker 2: business model. It's sort of understood in the activist short community. 181 00:08:14,160 --> 00:08:15,680 Speaker 2: They're like, yeah, you take some profits on the first 182 00:08:15,760 --> 00:08:17,960 Speaker 2: day because like you're you know, you run a small fund, 183 00:08:18,040 --> 00:08:20,760 Speaker 2: and yeah, and like why would you take you know, 184 00:08:21,320 --> 00:08:23,680 Speaker 2: short selling is a really risky business. And if you 185 00:08:23,760 --> 00:08:27,200 Speaker 2: can take a profit on the first day and not 186 00:08:27,680 --> 00:08:29,720 Speaker 2: sort of hold it until the stock goes to zero 187 00:08:29,760 --> 00:08:31,520 Speaker 2: and get like in fights with the company and all 188 00:08:31,560 --> 00:08:33,959 Speaker 2: this stuff, why wouldn't you take some risk off the table. 189 00:08:34,520 --> 00:08:36,840 Speaker 2: But I think that it is probably the case that 190 00:08:36,880 --> 00:08:40,280 Speaker 2: the SEC case against Andrew left probably some people didn't 191 00:08:40,360 --> 00:08:43,400 Speaker 2: understand that aspect of the business model and were surprised. Yeah, 192 00:08:43,440 --> 00:08:45,959 Speaker 2: and sort of thought that if an activist short seller 193 00:08:45,960 --> 00:08:47,839 Speaker 2: said the stock is going to zero, like they were 194 00:08:47,840 --> 00:08:49,800 Speaker 2: going to hold their short position until the stock went 195 00:08:49,840 --> 00:08:51,600 Speaker 2: to zero. And like one thing in the in the 196 00:08:51,640 --> 00:08:57,000 Speaker 2: Caristel disclaimer is like we sometimes publish reports on companies 197 00:08:57,000 --> 00:08:59,280 Speaker 2: that we think are worth zero dollars. We have never 198 00:08:59,440 --> 00:09:01,920 Speaker 2: held a short position until the company went to zero. 199 00:09:02,280 --> 00:09:04,199 Speaker 2: But yeah, a thing that the SEC did was call 200 00:09:04,240 --> 00:09:06,680 Speaker 2: attention to this business model, and like maybe the equilibrium 201 00:09:06,720 --> 00:09:09,240 Speaker 2: going forward as everyone understands the business model, no one 202 00:09:09,320 --> 00:09:13,040 Speaker 2: is deceived, you know, or allegedly deceived by people covering 203 00:09:13,080 --> 00:09:15,800 Speaker 2: on the first day, but it continues to kind. 204 00:09:15,600 --> 00:09:19,480 Speaker 1: Of work, and maybe we get more fantastically written legal 205 00:09:19,520 --> 00:09:21,600 Speaker 1: disclaimers out of it. That would be pretty good too. 206 00:09:21,800 --> 00:09:24,720 Speaker 2: Yeah, I mean, like the way this business works is 207 00:09:25,880 --> 00:09:30,920 Speaker 2: you are good at writing, good at being inflammatory, good 208 00:09:30,960 --> 00:09:33,360 Speaker 2: at getting publicity, right, That's how this business works, and 209 00:09:33,400 --> 00:09:35,160 Speaker 2: so like you'll get good disclaimers, which. 210 00:09:35,080 --> 00:09:37,240 Speaker 1: Reminds me, well, two points. We haven't talked about hunter 211 00:09:37,280 --> 00:09:37,920 Speaker 1: Brook in a while. 212 00:09:38,880 --> 00:09:39,439 Speaker 2: We're still there. 213 00:09:39,480 --> 00:09:40,079 Speaker 1: How do you say it? 214 00:09:40,720 --> 00:09:43,360 Speaker 2: Hunter Brook? All right? Right, right right? Hunter Brook the 215 00:09:43,440 --> 00:09:45,160 Speaker 2: newspaper that is also a hedge fund that is also 216 00:09:45,160 --> 00:09:47,720 Speaker 2: a website whose name doesn't have value because. 217 00:09:47,559 --> 00:09:49,520 Speaker 1: The skill set that you just described, being good at 218 00:09:49,520 --> 00:09:52,000 Speaker 1: writing and being splashy sounds a lot like a journalist, 219 00:09:52,080 --> 00:09:54,840 Speaker 1: and Hunter Brook is an interesting hybrid between those two. 220 00:09:54,880 --> 00:09:57,640 Speaker 2: Oh yeah, and like there's always been overlap between investigative 221 00:09:57,679 --> 00:09:59,960 Speaker 2: journalism and like opinion journalism and shortzellers. 222 00:10:00,040 --> 00:10:02,600 Speaker 1: We asked the question the other week, who's hated more 223 00:10:02,679 --> 00:10:05,880 Speaker 1: journalists are short sellers, but also quickly on the super 224 00:10:05,880 --> 00:10:11,839 Speaker 1: Micro short report. So basically, hint, Hinterbrook, No, no, no, Hindenburg, 225 00:10:12,080 --> 00:10:18,760 Speaker 1: Hinden never mind Hindenburg was Basically the basis of their 226 00:10:18,960 --> 00:10:24,600 Speaker 1: short was that their investigationvealed glaring accounting red flags, evidence 227 00:10:24,640 --> 00:10:29,360 Speaker 1: of undisclosed related party transactions, sanctions and export control failures 228 00:10:29,360 --> 00:10:33,320 Speaker 1: and customer issues. So super Micro said that they don't 229 00:10:33,320 --> 00:10:36,839 Speaker 1: comment on rumors and speculations. But then I think the 230 00:10:36,840 --> 00:10:39,280 Speaker 1: next day or the day after the next day, super 231 00:10:39,320 --> 00:10:42,880 Speaker 1: Micro delayed their ten K filing, and I just thought 232 00:10:42,920 --> 00:10:45,040 Speaker 1: that was interesting in light of you writing about how 233 00:10:45,160 --> 00:10:48,720 Speaker 1: cool accounting is this week, it kind of ties in 234 00:10:48,800 --> 00:10:50,360 Speaker 1: and now we have an accounting booboo. 235 00:10:50,840 --> 00:10:54,120 Speaker 2: Yeah. I mean, you know, the activist short business model 236 00:10:54,280 --> 00:10:57,480 Speaker 2: is like they're filling a real need, right. It's like 237 00:10:57,679 --> 00:11:00,560 Speaker 2: if a company is messing up its account and like 238 00:11:01,040 --> 00:11:03,720 Speaker 2: someone notices that and says it publicly, like that can 239 00:11:03,800 --> 00:11:04,520 Speaker 2: have a big effect. 240 00:11:04,600 --> 00:11:07,720 Speaker 1: Well, unless the accounting industry rebearns itself, we might have 241 00:11:08,320 --> 00:11:11,160 Speaker 1: more short campaigns for years and years to comb Yeah. 242 00:11:10,960 --> 00:11:12,920 Speaker 2: I'll say something about that. So I wrote about accounting 243 00:11:12,960 --> 00:11:15,720 Speaker 2: this week. I wrote like I sort of like appreciation 244 00:11:15,800 --> 00:11:18,680 Speaker 2: of accountants, because there was riffing on a business inside 245 00:11:18,720 --> 00:11:21,120 Speaker 2: our article saying that like kids these days don't want 246 00:11:21,120 --> 00:11:23,600 Speaker 2: to be accountants. And I got a bunch of emails 247 00:11:23,640 --> 00:11:26,640 Speaker 2: from accountants saying thank you for appreciating my art. But 248 00:11:26,679 --> 00:11:28,480 Speaker 2: I got one from a guy saying, like, you know, 249 00:11:28,559 --> 00:11:32,200 Speaker 2: there's actually, like there's some studies of the sort of 250 00:11:32,200 --> 00:11:35,960 Speaker 2: long run demand for accountancy degrees. And one of the 251 00:11:35,960 --> 00:11:39,400 Speaker 2: big drivers of people into accounting was Enron. Like when 252 00:11:39,480 --> 00:11:44,120 Speaker 2: Enron failed in like a sea of accounting scandals, everyone 253 00:11:44,160 --> 00:11:45,559 Speaker 2: like looked at that, or like a lot of young 254 00:11:45,559 --> 00:11:46,760 Speaker 2: people looked at that, and they're like, I want to 255 00:11:46,760 --> 00:11:49,520 Speaker 2: be an accountant, which is fascinating. So anyway, he's like, yeah, 256 00:11:49,520 --> 00:11:51,400 Speaker 2: that we just need another big accounting scandal and the 257 00:11:51,440 --> 00:11:53,280 Speaker 2: accountancy will come right back there, you go. 258 00:11:53,640 --> 00:11:54,160 Speaker 1: I like that. 259 00:11:54,160 --> 00:11:54,960 Speaker 2: I'll tice together. 260 00:12:08,520 --> 00:12:10,200 Speaker 1: How about Bill Ackman? 261 00:12:10,720 --> 00:12:11,280 Speaker 2: How about him? 262 00:12:11,559 --> 00:12:15,120 Speaker 1: Oh my gosh. So the Financial Times reported that he's 263 00:12:15,160 --> 00:12:18,760 Speaker 1: seeking to resurrect the initial public offering of the Pershing 264 00:12:18,920 --> 00:12:23,080 Speaker 1: Square USA by offering sweeteners to early investors. Can you 265 00:12:23,320 --> 00:12:26,960 Speaker 1: imagine my delight at seeing the story cross from The 266 00:12:26,960 --> 00:12:30,360 Speaker 1: Financial Times At nine to twelve am Eastern this morning, 267 00:12:30,720 --> 00:12:31,400 Speaker 1: on Thursday. 268 00:12:31,840 --> 00:12:34,360 Speaker 2: I can imagine your delight. I think I shared it. 269 00:12:34,440 --> 00:12:34,640 Speaker 1: Yeah. 270 00:12:34,640 --> 00:12:36,520 Speaker 2: We both were sort of like, what will we talk 271 00:12:36,559 --> 00:12:40,080 Speaker 2: about on this podcast and then and then the answer 272 00:12:40,160 --> 00:12:41,680 Speaker 2: came to us. Yeah, sweeteners. 273 00:12:41,960 --> 00:12:44,000 Speaker 1: So let's talk about some of the sweeteners again. This 274 00:12:44,040 --> 00:12:46,680 Speaker 1: is according to reporting from the Financial Times. According to 275 00:12:47,280 --> 00:12:50,679 Speaker 1: several people familiar with the matter, some of them are 276 00:12:50,800 --> 00:12:54,120 Speaker 1: the right to buy extra shares in the vehicle in 277 00:12:54,160 --> 00:12:57,720 Speaker 1: the future at a fixed price through Warrens. But according 278 00:12:57,720 --> 00:13:00,960 Speaker 1: to the Financial Times, the real prize could be if 279 00:13:01,000 --> 00:13:03,800 Speaker 1: you invest in Pershing Square USA, the closed end fund, 280 00:13:04,080 --> 00:13:06,520 Speaker 1: you could get rights to buy into the eventual IPO 281 00:13:06,960 --> 00:13:08,120 Speaker 1: of the actual hedge fund. 282 00:13:08,440 --> 00:13:10,640 Speaker 2: Yeah, the hedge on management company, right, right, So we 283 00:13:10,679 --> 00:13:13,679 Speaker 2: talked about this when the Pershing Square USA IPO got 284 00:13:13,800 --> 00:13:18,160 Speaker 2: delayed postponed with true tron would be a rude. 285 00:13:17,920 --> 00:13:20,640 Speaker 1: Word, okay, forget, I said, temporarily. 286 00:13:20,160 --> 00:13:25,760 Speaker 2: With drown rather than the problem was that people didn't 287 00:13:25,760 --> 00:13:27,760 Speaker 2: want to pay full price for the shares, and you 288 00:13:27,840 --> 00:13:29,880 Speaker 2: can't really sell the shares at a discount, right Again, 289 00:13:29,920 --> 00:13:32,240 Speaker 2: a normal IPO, you just negotiate the price and if 290 00:13:32,240 --> 00:13:33,840 Speaker 2: people want to pay less than you think the company 291 00:13:33,960 --> 00:13:36,040 Speaker 2: is worth, then like you do that. But with this, 292 00:13:36,200 --> 00:13:38,839 Speaker 2: they're raising money to invest, and so you can't really 293 00:13:38,880 --> 00:13:40,720 Speaker 2: sell the shares at a discount because then you don't 294 00:13:40,720 --> 00:13:43,079 Speaker 2: get as much money as you wanted to invest. And 295 00:13:43,920 --> 00:13:45,839 Speaker 2: that was a real problem. And so they went back 296 00:13:45,880 --> 00:13:47,240 Speaker 2: to the drawing board and they're like, how do we 297 00:13:47,280 --> 00:13:50,480 Speaker 2: give people a sweetener so that they'll put in fifty 298 00:13:50,559 --> 00:13:53,480 Speaker 2: dollars for me to invest fifty dollars and they'll feel 299 00:13:53,520 --> 00:13:56,440 Speaker 2: like they're getting a discount. And there are a couple 300 00:13:56,480 --> 00:13:59,320 Speaker 2: of ways to do that. One way is to actually 301 00:13:59,320 --> 00:14:02,160 Speaker 2: give them a discount by putting in cash from Pershing Square. 302 00:14:02,640 --> 00:14:05,080 Speaker 2: Another way to do it is to give them ownership. 303 00:14:05,080 --> 00:14:06,520 Speaker 2: And I think we talked about this last time. The 304 00:14:06,600 --> 00:14:09,040 Speaker 2: obvious asset that you can put into this IPO is 305 00:14:09,360 --> 00:14:12,319 Speaker 2: some of the management company. The management company has a 306 00:14:12,400 --> 00:14:15,319 Speaker 2: recent valuation. They sold ten percent of it at a 307 00:14:15,360 --> 00:14:17,439 Speaker 2: ten billion dollar valuations. We have some idea of what 308 00:14:17,520 --> 00:14:21,040 Speaker 2: the management company is supposed to be worth, so sophisticated investors, 309 00:14:21,600 --> 00:14:24,000 Speaker 2: the management company has plans to go public perhaps by 310 00:14:24,080 --> 00:14:26,040 Speaker 2: next year. When you say we'll give you a bit 311 00:14:26,040 --> 00:14:28,320 Speaker 2: of the management company, there's like a path to that 312 00:14:28,480 --> 00:14:32,640 Speaker 2: being monetizable, and they have it coming around. There's like 313 00:14:32,640 --> 00:14:35,080 Speaker 2: an alignment of incentives where it's like someone emailed me 314 00:14:35,440 --> 00:14:37,360 Speaker 2: when they pulled the IPO, like they could do what 315 00:14:37,560 --> 00:14:41,120 Speaker 2: Vanguard does. Vanguard is a mutual, it's owned by the 316 00:14:41,240 --> 00:14:43,760 Speaker 2: investors in its funds. You pay fees to Vanguard, but 317 00:14:43,920 --> 00:14:46,480 Speaker 2: like you have an alignment of incentives because you kind 318 00:14:46,520 --> 00:14:48,360 Speaker 2: of get the fees back as an owner of the company. 319 00:14:48,760 --> 00:14:50,400 Speaker 2: Pershing Square would be like a little like that too, 320 00:14:50,440 --> 00:14:53,680 Speaker 2: where Pershing Square USA holders would also own the management company. 321 00:14:54,120 --> 00:14:56,880 Speaker 2: So that makes sense as a sweetener, like you give 322 00:14:56,920 --> 00:14:59,960 Speaker 2: them some of the management company. It's a little awkward 323 00:15:00,160 --> 00:15:03,640 Speaker 2: because part of the point of the Pershing Square USI IPO, 324 00:15:04,080 --> 00:15:07,720 Speaker 2: it's like, raise a lot of assets for Pershing Square 325 00:15:08,000 --> 00:15:09,680 Speaker 2: so that it's management company will be worth a lot 326 00:15:09,720 --> 00:15:11,880 Speaker 2: of money, so that they can do an IPO of 327 00:15:11,960 --> 00:15:13,800 Speaker 2: the management company that will raise a lot of money 328 00:15:14,160 --> 00:15:17,480 Speaker 2: for Pershing Square and its owners and its investors, and 329 00:15:17,880 --> 00:15:20,480 Speaker 2: giving away some of the management company to get the 330 00:15:20,600 --> 00:15:22,720 Speaker 2: Pershing Square US ideal done. It's like a little bit 331 00:15:22,760 --> 00:15:24,840 Speaker 2: of a setback, yeah, but you know you could do it. 332 00:15:25,200 --> 00:15:26,880 Speaker 2: And then the third option you can do is you 333 00:15:26,920 --> 00:15:29,240 Speaker 2: can give people optically a discount. You can give them 334 00:15:29,360 --> 00:15:33,840 Speaker 2: warrants to buy more shares of Pershing Square USA, which 335 00:15:33,840 --> 00:15:35,760 Speaker 2: I don't think is that appealing. Yeah, that's why the 336 00:15:35,880 --> 00:15:38,080 Speaker 2: ft says, like the real prize is the management company, 337 00:15:38,440 --> 00:15:40,480 Speaker 2: because like just giving them warrants, it's still the same 338 00:15:40,560 --> 00:15:42,520 Speaker 2: pot of money. You're just like slicing it a different 339 00:15:42,520 --> 00:15:44,920 Speaker 2: ways to try to, you know, see if people will 340 00:15:45,000 --> 00:15:45,440 Speaker 2: like that more. 341 00:15:45,880 --> 00:15:49,040 Speaker 1: So, I mean, where does this leave you on the 342 00:15:49,200 --> 00:15:53,040 Speaker 1: question of whether you just be better off waiting here? 343 00:15:53,080 --> 00:15:55,240 Speaker 1: I mean, is this enough to answer for what? So 344 00:15:55,600 --> 00:15:58,040 Speaker 1: for waiting for it to actually trade at a discount? 345 00:15:58,360 --> 00:16:01,000 Speaker 2: Oh, it's just like a matter of price, right, Like 346 00:16:01,680 --> 00:16:03,280 Speaker 2: you're getting a discount. Right, So if you put in 347 00:16:03,360 --> 00:16:05,480 Speaker 2: fifty dollars in a structure where like you get back 348 00:16:05,920 --> 00:16:08,440 Speaker 2: your person Square USA share plus a warrant to buy 349 00:16:08,520 --> 00:16:12,600 Speaker 2: the management company, then you're getting a fifty dollars claim 350 00:16:12,680 --> 00:16:14,480 Speaker 2: on a pot of money that Bi Lackman is investing, 351 00:16:14,680 --> 00:16:19,200 Speaker 2: and you're also getting some percentage of the management company 352 00:16:19,240 --> 00:16:21,160 Speaker 2: that is worth some amount of money, right, And then 353 00:16:21,200 --> 00:16:23,440 Speaker 2: you just negotiate the price, right, Like if the managing 354 00:16:23,480 --> 00:16:25,640 Speaker 2: company is worth ten billion dollars and like people want 355 00:16:25,680 --> 00:16:28,280 Speaker 2: a ten percent discount and persons Square a USA is 356 00:16:28,360 --> 00:16:30,360 Speaker 2: raising five billion dollars and you just do the math 357 00:16:30,400 --> 00:16:32,040 Speaker 2: and be like, well, you know, then they need five 358 00:16:32,120 --> 00:16:33,880 Speaker 2: hundred million dollars and like that's five percent of the 359 00:16:33,880 --> 00:16:35,720 Speaker 2: managing company, you know whatever, right, and then you can 360 00:16:35,800 --> 00:16:38,080 Speaker 2: negotiate what the valuation of the management company is. But 361 00:16:38,240 --> 00:16:40,520 Speaker 2: there's a path to getting a deal done. So, like 362 00:16:41,400 --> 00:16:46,880 Speaker 2: when the IPO starts trading, it will probably trade at 363 00:16:46,880 --> 00:16:49,200 Speaker 2: a discount to its net asset value, but the net 364 00:16:49,240 --> 00:16:51,760 Speaker 2: asset value will be more than fifty dollars per share, right, 365 00:16:51,760 --> 00:16:53,920 Speaker 2: because it'll be the fifty dollars you put in plus 366 00:16:54,400 --> 00:16:56,920 Speaker 2: whatever bit of the management company they put in. So 367 00:16:57,000 --> 00:16:58,720 Speaker 2: if the net asset value is like fifty five dollars 368 00:16:58,760 --> 00:17:00,400 Speaker 2: and a trades at fifty dollars, then you should buy 369 00:17:00,440 --> 00:17:01,640 Speaker 2: it for fifty dollars in the IPI. 370 00:17:01,840 --> 00:17:04,520 Speaker 1: So does it also get you back to twenty five 371 00:17:04,560 --> 00:17:05,199 Speaker 1: billion dollars? 372 00:17:06,520 --> 00:17:07,560 Speaker 2: I don't think so. 373 00:17:08,040 --> 00:17:10,920 Speaker 1: It's a big like a big pot of money. 374 00:17:11,240 --> 00:17:13,640 Speaker 2: Right. That's the other important point here is that at 375 00:17:13,680 --> 00:17:16,000 Speaker 2: some point there was discussion of raising twenty five billion 376 00:17:16,000 --> 00:17:16,879 Speaker 2: dollars in this IPO. 377 00:17:17,359 --> 00:17:20,280 Speaker 1: And it's a tall order. 378 00:17:20,720 --> 00:17:23,840 Speaker 2: It's a tall order, and you know, and like if 379 00:17:23,880 --> 00:17:25,879 Speaker 2: the discount needs to be ten percent. Then you need 380 00:17:25,960 --> 00:17:28,120 Speaker 2: to put in Like, if you're raising five billion dollars, 381 00:17:28,119 --> 00:17:29,720 Speaker 2: you need to put in five hundred million dollars worth 382 00:17:29,760 --> 00:17:31,880 Speaker 2: of stuff to give people the discount. If you're raising 383 00:17:31,920 --> 00:17:33,159 Speaker 2: twenty five billion dollars, you have to put in two 384 00:17:33,200 --> 00:17:35,359 Speaker 2: point five billion dollars worth of stuff. It costs you 385 00:17:35,480 --> 00:17:38,440 Speaker 2: more r The other interesting thing in the ft article 386 00:17:38,560 --> 00:17:42,200 Speaker 2: is that in the previous round, part of the incentive 387 00:17:42,320 --> 00:17:45,200 Speaker 2: to put in your money was that they would waive 388 00:17:45,320 --> 00:17:47,840 Speaker 2: the management fees for the first year of the fund, 389 00:17:48,560 --> 00:17:51,520 Speaker 2: and now in a revised version, they might not waive 390 00:17:51,600 --> 00:17:54,040 Speaker 2: the management fees. Yeah, in part because you're maybe getting 391 00:17:54,040 --> 00:17:56,040 Speaker 2: shares of the management company, which you share the management 392 00:17:56,080 --> 00:18:00,400 Speaker 2: fees anyway. But yeah, like, whatever they do to get 393 00:18:00,480 --> 00:18:02,520 Speaker 2: people into this fund is going to cost the pushing 394 00:18:02,560 --> 00:18:06,399 Speaker 2: square money and so they will make back some of 395 00:18:06,440 --> 00:18:07,480 Speaker 2: it by charging more fees. 396 00:18:07,640 --> 00:18:09,800 Speaker 1: You know, I think they should just launch an ETF. 397 00:18:09,960 --> 00:18:12,080 Speaker 1: I know that they're not going to. I know it. 398 00:18:12,240 --> 00:18:14,000 Speaker 2: I know it. You traded a discout. 399 00:18:14,040 --> 00:18:16,560 Speaker 1: You're right, it wouldn't It would easily solve that problem. 400 00:18:17,080 --> 00:18:19,240 Speaker 2: You know. It's an idea that I've poo pooed because 401 00:18:19,320 --> 00:18:21,520 Speaker 2: the whole plant here is permanent capital to make long 402 00:18:21,600 --> 00:18:24,960 Speaker 2: term investments, and ETF doesn't do that. But you're right that, 403 00:18:25,200 --> 00:18:27,639 Speaker 2: like it would solve the main problem they're trying to 404 00:18:27,720 --> 00:18:29,240 Speaker 2: solve now it's just trading at a discount. 405 00:18:29,440 --> 00:18:34,199 Speaker 1: Yeah, and I understand why investors such as Bill Ackman 406 00:18:34,440 --> 00:18:37,480 Speaker 1: and issuers in general would like the closed end fund 407 00:18:37,480 --> 00:18:42,040 Speaker 1: structure for that appeal of permanent capital, but investors clearly 408 00:18:42,359 --> 00:18:45,320 Speaker 1: prefer ETFs. I mean, if you take a look at 409 00:18:46,080 --> 00:18:49,480 Speaker 1: closed end fund assets, they've been camped out at the 410 00:18:49,520 --> 00:18:51,760 Speaker 1: same level. I think it's like three hundred billion dollars 411 00:18:51,840 --> 00:18:54,640 Speaker 1: in the US for a long time now. There's been 412 00:18:54,800 --> 00:18:57,640 Speaker 1: no growth there, even through all of these market cycles. 413 00:18:57,880 --> 00:18:59,720 Speaker 2: Yeah, the Bill Lackman pictures like, this is not a 414 00:18:59,800 --> 00:19:01,800 Speaker 2: c is then fund. This is sort of like Berkshire 415 00:19:01,800 --> 00:19:05,480 Speaker 2: Hathaway Analytic, Like this is a company that happens to 416 00:19:05,560 --> 00:19:08,560 Speaker 2: be structured as I closed then fund, and but it is. 417 00:19:10,040 --> 00:19:11,720 Speaker 2: It's like, I'm not sure that that's right. 418 00:19:11,960 --> 00:19:14,360 Speaker 1: Yeah, let me just fact check that number. It's either 419 00:19:14,400 --> 00:19:15,800 Speaker 1: three hundred or five hundred. 420 00:19:16,080 --> 00:19:17,159 Speaker 2: We're gonna leave all of this in. 421 00:19:18,920 --> 00:19:21,920 Speaker 1: Come on, Matt, do something fun. I don't talk about 422 00:19:21,920 --> 00:19:26,440 Speaker 1: the economy. Either she's right, it's three hundred billion. 423 00:19:26,560 --> 00:19:30,040 Speaker 2: Oh yeah, all of it, all of it. If you 424 00:19:30,119 --> 00:19:32,320 Speaker 2: had been wrong, you would have had to like just 425 00:19:32,560 --> 00:19:32,800 Speaker 2: edit it. 426 00:19:34,160 --> 00:19:38,639 Speaker 1: But I was gonna follow up a salad anyway. The 427 00:19:38,760 --> 00:19:53,879 Speaker 1: point being close end funds are really small b LS, 428 00:19:54,200 --> 00:19:57,440 Speaker 1: the BLS, the Bureau of Labor Statistics. What is going 429 00:19:57,480 --> 00:20:01,800 Speaker 1: on over there? I don't know, Absolutely a monkey business. 430 00:20:03,400 --> 00:20:06,240 Speaker 1: I'm trying to think what I can say on this podcast. 431 00:20:07,000 --> 00:20:12,760 Speaker 1: So the payroll revisions data covering April twenty twenty three 432 00:20:12,960 --> 00:20:16,960 Speaker 1: through March twenty twenty four, there was hyper focus on 433 00:20:17,160 --> 00:20:20,240 Speaker 1: these revisions, and ultimately they were huge. It shows that 434 00:20:20,320 --> 00:20:22,879 Speaker 1: payrolls are likely going to be revised down by over 435 00:20:22,960 --> 00:20:26,480 Speaker 1: eight hundred thousand jobs in those twelve months through March. 436 00:20:26,600 --> 00:20:30,760 Speaker 1: But just the singular focus on this specific report was 437 00:20:30,800 --> 00:20:33,560 Speaker 1: already ridiculous, and then it was made even more ridiculous 438 00:20:33,920 --> 00:20:35,960 Speaker 1: by the fact that it was supposed to come out 439 00:20:36,320 --> 00:20:39,000 Speaker 1: at ten am. One half of this podcast is on 440 00:20:39,200 --> 00:20:42,639 Speaker 1: live TV at that time, and it's me It didn't 441 00:20:42,680 --> 00:20:46,000 Speaker 1: come out until ten thirty three am. But people are 442 00:20:46,040 --> 00:20:46,880 Speaker 1: getting a piecemeal. 443 00:20:47,280 --> 00:20:51,400 Speaker 2: I have seen your filibustering skills in this podcast. Were 444 00:20:51,440 --> 00:20:54,280 Speaker 2: you like just talking about we called that for thirty 445 00:20:54,320 --> 00:20:54,760 Speaker 2: three minutes. 446 00:20:54,920 --> 00:20:57,680 Speaker 1: We call it tap dancing. I was on air with 447 00:20:57,760 --> 00:20:59,880 Speaker 1: Matt Miller and Shannali Basic, so we at least had. 448 00:20:59,760 --> 00:21:01,800 Speaker 2: Each and it was like sitting at me like, yeah, 449 00:21:01,800 --> 00:21:02,119 Speaker 2: where's that. 450 00:21:02,280 --> 00:21:04,639 Speaker 1: Yeah, we were kind of you know, by ten minutes 451 00:21:04,680 --> 00:21:07,920 Speaker 1: in you're like, okay, well something is strange here. We 452 00:21:08,000 --> 00:21:11,040 Speaker 1: still don't have this data. We're waiting on it. There 453 00:21:11,160 --> 00:21:13,679 Speaker 1: was some funky trading going on as well. I mean, 454 00:21:13,760 --> 00:21:16,040 Speaker 1: in the grand scheme of life, it didn't amount to anything, 455 00:21:16,119 --> 00:21:18,359 Speaker 1: but you know, you had the S and P five hundred, 456 00:21:18,480 --> 00:21:20,879 Speaker 1: you had bond yield zigging and zagging. Because people were 457 00:21:20,960 --> 00:21:23,959 Speaker 1: getting it piecemeal. That was the crazy thing. People, as 458 00:21:24,040 --> 00:21:27,760 Speaker 1: we know now were calling up the BLS and the 459 00:21:27,840 --> 00:21:31,640 Speaker 1: BLS was telling them the number right. 460 00:21:31,600 --> 00:21:34,520 Speaker 2: Because apparently what happened is they had the numbers. The 461 00:21:34,840 --> 00:21:38,119 Speaker 2: BLS employees were able to see the numbers. There was 462 00:21:38,200 --> 00:21:41,040 Speaker 2: a technical glitch on the website, so the website didn't 463 00:21:41,080 --> 00:21:43,320 Speaker 2: have the numbers, but the internal people had the numbers, 464 00:21:43,880 --> 00:21:47,720 Speaker 2: and the data was embargoed until ten am, and so 465 00:21:47,840 --> 00:21:50,520 Speaker 2: at like ten fifteen, if you called BLS, you might 466 00:21:50,640 --> 00:21:52,639 Speaker 2: reach a person who was like, oh, the embargoes off, 467 00:21:52,680 --> 00:21:54,160 Speaker 2: I can give you the numbers, even though it wasn't 468 00:21:54,200 --> 00:21:56,240 Speaker 2: on the website yet, So like some people called and 469 00:21:56,320 --> 00:21:58,800 Speaker 2: got the numbers, and other people didn't call, and we're 470 00:21:58,840 --> 00:22:01,240 Speaker 2: like refreshing the webpage and didn't get the numbers. 471 00:22:01,440 --> 00:22:04,399 Speaker 1: So reading the reporting after the fact, it seems like 472 00:22:04,480 --> 00:22:08,720 Speaker 1: there were several communication failures over at the BLS about 473 00:22:08,800 --> 00:22:13,359 Speaker 1: how they would handle external inquiries. I will say that 474 00:22:13,840 --> 00:22:16,760 Speaker 1: going through this experience, this is where lockups are your 475 00:22:16,840 --> 00:22:20,640 Speaker 1: friend when it comes to economic data releases. There used 476 00:22:20,720 --> 00:22:24,760 Speaker 1: to be lockups for things such as the jobs reports 477 00:22:24,760 --> 00:22:27,399 Speaker 1: such as CPI, where you know news agencies would get 478 00:22:27,440 --> 00:22:30,840 Speaker 1: them in advance. That went away during the pandemic. But 479 00:22:30,960 --> 00:22:33,160 Speaker 1: that wouldn't have even helped us in this situation because 480 00:22:33,160 --> 00:22:38,360 Speaker 1: this is such usually not that substantial data, or it's 481 00:22:38,480 --> 00:22:41,639 Speaker 1: like second or third tier data being generous. This was 482 00:22:41,760 --> 00:22:43,960 Speaker 1: never even subject to a lock up, so it's ridiculous 483 00:22:43,960 --> 00:22:46,159 Speaker 1: that we even cared this much. But there was a 484 00:22:46,200 --> 00:22:47,119 Speaker 1: better way to do this. 485 00:22:48,080 --> 00:22:51,520 Speaker 2: Sort of right, I mean, like this is like I 486 00:22:51,640 --> 00:22:53,520 Speaker 2: appreciate the effort to sort of publish it on the 487 00:22:53,600 --> 00:22:55,480 Speaker 2: website to everyone all at once. 488 00:22:55,640 --> 00:22:57,359 Speaker 1: Right, If you can't do that you know, you have 489 00:22:57,400 --> 00:22:58,600 Speaker 1: to be able to do it. Yeah. 490 00:22:58,840 --> 00:23:01,320 Speaker 2: I think there's an interesting thing in financial markets where like, 491 00:23:01,880 --> 00:23:04,440 Speaker 2: on the one hand, you want to reward people for 492 00:23:04,560 --> 00:23:07,360 Speaker 2: doing work, for doing research, like trying to find stuff out, 493 00:23:07,520 --> 00:23:09,520 Speaker 2: because that's the point of financial markets. It's to make 494 00:23:09,560 --> 00:23:12,320 Speaker 2: prices more efficient for people to find stuff out and 495 00:23:12,880 --> 00:23:15,040 Speaker 2: then have them reflected in prices. On the other hand, 496 00:23:15,080 --> 00:23:16,480 Speaker 2: you want things to be fair, right, So you don't 497 00:23:16,520 --> 00:23:19,240 Speaker 2: want like people to find stuff out by playing golf 498 00:23:19,240 --> 00:23:21,040 Speaker 2: with the company ceo and being like, sorry, you didn't 499 00:23:21,040 --> 00:23:24,320 Speaker 2: e merger and like finding out inside information, right, and 500 00:23:24,440 --> 00:23:26,280 Speaker 2: so like there's this effort to make it a level 501 00:23:26,280 --> 00:23:28,800 Speaker 2: playing field, but you also do want to incentivize people 502 00:23:28,960 --> 00:23:33,399 Speaker 2: to get information. So it didn't work here. They were 503 00:23:33,480 --> 00:23:35,560 Speaker 2: trying to make it a level playing field and they failed. 504 00:23:35,920 --> 00:23:38,000 Speaker 2: But I do really appreciate the people who and it 505 00:23:38,040 --> 00:23:40,159 Speaker 2: didn't come out At ten o'clock, we're like, well, I 506 00:23:40,200 --> 00:23:42,399 Speaker 2: guess I'll make a phone call. You should do that. 507 00:23:42,960 --> 00:23:43,520 Speaker 2: It should work. 508 00:23:43,680 --> 00:23:47,199 Speaker 1: You sound like an editor, Yeah, right, exactly, yeah, exactly, 509 00:23:47,440 --> 00:23:49,240 Speaker 1: telling your reporter to just pick up. 510 00:23:49,240 --> 00:23:51,960 Speaker 2: Like pick up the phone, you know, and like the 511 00:23:52,040 --> 00:23:54,520 Speaker 2: way financial markets work now is a lot of people 512 00:23:54,680 --> 00:23:57,600 Speaker 2: probably have automated trading algorithms that were scraping the you know, 513 00:23:57,720 --> 00:23:59,560 Speaker 2: BLS website at ten o'clock and you. 514 00:23:59,560 --> 00:24:02,720 Speaker 1: Know, thirty three minutes straight mines. 515 00:24:02,560 --> 00:24:06,240 Speaker 2: Just refreshing the website, and the people who picked up 516 00:24:06,280 --> 00:24:09,880 Speaker 2: the phone had an advantage over those computer traders for once, 517 00:24:09,960 --> 00:24:12,600 Speaker 2: you know, So I don't know, I appreciate the people 518 00:24:12,640 --> 00:24:14,360 Speaker 2: who picked up the phone. It's one of these where 519 00:24:14,400 --> 00:24:16,280 Speaker 2: like if you didn't get this information before I was 520 00:24:16,280 --> 00:24:18,040 Speaker 2: out on the website, Like, yeah, it's like a little 521 00:24:18,080 --> 00:24:20,680 Speaker 2: embarrassing in hindsight, Yeah, like you should have called. 522 00:24:20,840 --> 00:24:22,360 Speaker 1: I guess part of the reason I'm being so hard 523 00:24:22,400 --> 00:24:24,760 Speaker 1: on the BLS is because it has been not a 524 00:24:24,840 --> 00:24:26,040 Speaker 1: great year for them, well right. 525 00:24:26,000 --> 00:24:28,399 Speaker 2: Because they've previously like done the opposite, and they put 526 00:24:28,400 --> 00:24:29,920 Speaker 2: it up on the website before it was supposed to 527 00:24:29,920 --> 00:24:30,119 Speaker 2: be up. 528 00:24:30,320 --> 00:24:34,040 Speaker 1: Oh yeah, CPI data too, Like I'm dunking on this 529 00:24:34,160 --> 00:24:39,280 Speaker 1: payroll revisions release, but CPI data is absolutely I mean, 530 00:24:39,640 --> 00:24:41,960 Speaker 1: now we're all really focused on the labor market, of course, 531 00:24:42,080 --> 00:24:44,399 Speaker 1: but the CPI prints for the last four years have 532 00:24:44,520 --> 00:24:48,400 Speaker 1: been the most important piece of data that you can get, 533 00:24:48,720 --> 00:24:50,960 Speaker 1: and they put it on the website thirty minutes early 534 00:24:51,240 --> 00:24:51,560 Speaker 1: in May. 535 00:24:51,840 --> 00:24:53,680 Speaker 2: I was a little unclear on that they put some 536 00:24:53,760 --> 00:24:55,600 Speaker 2: stuff on the website a little early, but like there 537 00:24:55,720 --> 00:24:57,760 Speaker 2: was no weird trading in it ahead of it, right, 538 00:24:57,880 --> 00:25:00,720 Speaker 2: Like I think it was like they if identified a 539 00:25:00,840 --> 00:25:02,720 Speaker 2: glitch where they published it early, but it wasn't like 540 00:25:02,840 --> 00:25:03,840 Speaker 2: the market got it early. 541 00:25:04,000 --> 00:25:09,080 Speaker 1: Even still even still even still also super users, super users, 542 00:25:09,080 --> 00:25:13,919 Speaker 1: the fact that they didn't have clear communication on how 543 00:25:14,000 --> 00:25:19,040 Speaker 1: to handle external inquiries after the super users debacle, it 544 00:25:19,160 --> 00:25:20,000 Speaker 1: raises an eyebrow. 545 00:25:20,359 --> 00:25:23,080 Speaker 2: Yeah, the super users debacle is when like people would 546 00:25:23,320 --> 00:25:26,200 Speaker 2: get enhanced color on economic. 547 00:25:25,840 --> 00:25:28,720 Speaker 1: Being a host today, Oh yeah, I've just rippen through 548 00:25:28,800 --> 00:25:31,280 Speaker 1: these explain super users. 549 00:25:31,720 --> 00:25:34,199 Speaker 2: I forget they would release economic data and like they 550 00:25:34,240 --> 00:25:37,640 Speaker 2: would give like further color to a list of economists 551 00:25:37,680 --> 00:25:40,760 Speaker 2: and like you know, hedge funds or whatever who bothered 552 00:25:40,800 --> 00:25:43,560 Speaker 2: to sign up. Right, this is again it's like, you know, 553 00:25:43,640 --> 00:25:45,479 Speaker 2: it's like a little meaning scandal, but it's also it's 554 00:25:45,560 --> 00:25:49,120 Speaker 2: like these people are public servants. Like if you call 555 00:25:49,520 --> 00:25:51,600 Speaker 2: the Bureau labor Stahysics and say I'd like to know 556 00:25:51,720 --> 00:25:54,440 Speaker 2: more about CPI, they'll tell you more. Yeah, And the 557 00:25:54,520 --> 00:25:57,359 Speaker 2: people who have an economic interest in trading on macro 558 00:25:57,480 --> 00:25:59,600 Speaker 2: data would say Hey, I'd like to be on your 559 00:25:59,640 --> 00:26:02,120 Speaker 2: email where you explain things more, and the people who 560 00:26:02,119 --> 00:26:03,879 Speaker 2: didn't didn't, right, And so the people who signed up 561 00:26:03,880 --> 00:26:06,480 Speaker 2: for the email list got better information, and I don't know, 562 00:26:06,600 --> 00:26:09,560 Speaker 2: I sort of feel like they deserved better information. 563 00:26:09,720 --> 00:26:11,600 Speaker 1: This actually brings me neatly to a point that I 564 00:26:11,640 --> 00:26:13,960 Speaker 1: should make, because again I've been pretty harsh on the 565 00:26:14,000 --> 00:26:17,080 Speaker 1: BLS here, But if we think back to this super 566 00:26:17,240 --> 00:26:21,040 Speaker 1: user's debacle, one of the reasons why it even happened 567 00:26:21,160 --> 00:26:23,920 Speaker 1: was because, yes, you can ask the BLS questions and 568 00:26:24,000 --> 00:26:27,119 Speaker 1: the BLS can answer you, but the BLS doesn't have 569 00:26:27,320 --> 00:26:32,359 Speaker 1: enough resources to answer each individual one. So this specific economists. 570 00:26:32,400 --> 00:26:35,159 Speaker 1: I believe it was an economist thinking was I'll just 571 00:26:35,200 --> 00:26:38,160 Speaker 1: put everyone on a list. And I remember last week, 572 00:26:38,240 --> 00:26:41,960 Speaker 1: after the payrolls revision debacle, I was speaking to Claudia 573 00:26:42,080 --> 00:26:45,280 Speaker 1: sam who's a former freed economist, and I asked her 574 00:26:45,320 --> 00:26:48,840 Speaker 1: what this meant for BLS credibility, and she said, it's 575 00:26:48,920 --> 00:26:52,520 Speaker 1: absolutely inexcusable, of course, but at the same time, like 576 00:26:52,600 --> 00:26:58,280 Speaker 1: the BLS is underfunded, they're under resource constraints, and you know, 577 00:26:58,359 --> 00:26:59,920 Speaker 1: something like this is bound to happen if you don't 578 00:27:00,040 --> 00:27:02,320 Speaker 1: give them the proper support. So here we are. 579 00:27:02,960 --> 00:27:04,320 Speaker 2: Yeah, here we are. 580 00:27:04,800 --> 00:27:09,480 Speaker 1: Sorry BLS, they're going through it. Katie is our you 581 00:27:09,800 --> 00:27:12,080 Speaker 1: need to raise Yeah, yeah, here I am. 582 00:27:14,400 --> 00:27:15,840 Speaker 2: And that was the Money Stuff Podcast. 583 00:27:16,040 --> 00:27:18,000 Speaker 1: I'm Matt Levian and I'm Katie Greifeld. 584 00:27:18,400 --> 00:27:20,440 Speaker 2: You can find my work by subscribing to The Money 585 00:27:20,480 --> 00:27:22,280 Speaker 2: Stuff newsletter on Bloomberg. 586 00:27:21,920 --> 00:27:24,200 Speaker 1: Dot com, and you can find me on Bloomberg TV 587 00:27:24,440 --> 00:27:28,080 Speaker 1: every day on Open Interest between nine to eleven am Eastern. 588 00:27:28,480 --> 00:27:30,199 Speaker 2: We'd love to hear from you. You can send an 589 00:27:30,200 --> 00:27:33,399 Speaker 2: email to Moneypot at Bloomberg dot net, ask us a 590 00:27:33,480 --> 00:27:34,880 Speaker 2: question and we might answer it on air. 591 00:27:35,400 --> 00:27:37,560 Speaker 1: You can also subscribe to our show wherever you're listening 592 00:27:37,640 --> 00:27:39,639 Speaker 1: right now and leave us a review. It helps more 593 00:27:39,680 --> 00:27:40,520 Speaker 1: people find the show. 594 00:27:41,240 --> 00:27:44,000 Speaker 2: The Money Stuff Podcast is produced by Anna Maserakus and 595 00:27:44,119 --> 00:27:45,239 Speaker 2: Moses onbem Our. 596 00:27:45,320 --> 00:27:47,199 Speaker 1: Theme music was composed by Blake Maples. 597 00:27:47,480 --> 00:27:50,040 Speaker 2: Brandon Francis nuinim is our executive producer, and. 598 00:27:50,119 --> 00:27:52,040 Speaker 1: Stage Bauman is Bloomberg's head of Podcasts. 599 00:27:52,400 --> 00:27:54,720 Speaker 2: Thanks for listening to The Money Stuff Podcast. We'll be 600 00:27:54,800 --> 00:28:03,480 Speaker 2: back next week with more stuff. The Bilber