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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: All right, Matt Pye, Wow, you're back.

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Speaker 1: Hello, Hello, and welcome to the same recording session.

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Speaker 2: I like it when we spend time.

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Speaker 1: Yeah. Yeah, it was impressed the first time. Now it's like, oh, yes,

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Speaker 1: we're recording two money stuffs for two separate reads. It

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Speaker 1: was not even impressed the first time.

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Speaker 3: No.

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Speaker 1: Right, other people have also recorded more than one thing

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Speaker 1: at a time.

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Speaker 3: Yeah.

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Speaker 2: I guess you know the fact that we're so charmed

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Speaker 2: by this, or at least I am.

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Speaker 1: You're like a professional, you know, recorder of media. I

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Speaker 1: guess you only do lived.

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Speaker 2: I know that's the thing I'm used to. The light

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Speaker 2: is red and my heart is racing.

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Speaker 1: But this is very chilling, right me me still an

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Speaker 1: amateur at all all recorded media.

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Speaker 2: Let's do this in twenty minutes.

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Speaker 1: Oh wow, Hey, I don't know about that. Hello, and

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Speaker 1: welcome to the Money Stuff Podcast, your weekly podcast where

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Speaker 1: were talking about stuff related to money. I'm Matt Levine

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Speaker 1: and I wrote the Money Stuff column for.

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Speaker 2: Bloomberg Opinion, and I'm Katie Greifeld, a reporter for Bloomberg

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Speaker 2: News and an anchor for Bloomberg Television, and today is

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Speaker 2: mail bag. You didn't sing.

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Speaker 1: No, I didn't sing. Come, I cued you to sing it.

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Speaker 1: That's all we need.

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Speaker 2: That's true. I took it. Okay, so let's get right

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Speaker 2: into it.

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Speaker 3: Yeah, mail bag, nail bag from Josh.

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Speaker 1: I saw this tweet about securities law. As to DoorDash,

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Speaker 1: a blooming onion from outback steakhouse, you pay a fixed

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Speaker 1: price now and receive it later. It is therefore a

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Speaker 1: futures contract and thus illegal under the onion future side

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Speaker 1: question our DoorDash orders a futures contract and therefore subject

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Speaker 1: to securities law? This question? Okay, So, first of all,

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Speaker 1: onion futures are not securities. They're commodities. But famously, basically

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Speaker 1: every commodity can be traded on a futures exchange, including

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Speaker 1: things that are not commodities like interest rates and sports bets.

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Speaker 1: But the only things that cannot be traded on futures

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Speaker 1: exchanges are motion picture receipts.

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Speaker 2: Oh.

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Speaker 1: Yes, part of the Onion Futures Act add onions. Onion

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Speaker 1: futures cannot be traded because there's like a famous story

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Speaker 1: in like the fifties of someone cornering the market for onions,

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Speaker 1: and like Congress got so mad that they banned trading

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Speaker 1: of onion futures. So if you doored ash a blooming onion,

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Speaker 1: have you violated that that law? Okay, this is a

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Speaker 1: great question because the difference between future and spot is

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Speaker 1: actually quite legally meaningful and quite vague. The answer is no.

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Speaker 1: So if you order an onion now and it arrives

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Speaker 1: in an hour, that is not a futures contract. That's

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Speaker 1: a spot delivery. You have just ordered an onion on

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Speaker 1: the spot market. Interesting, but there's no clear distinction between

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Speaker 1: spot and features. It seems like, you know, the CFTC

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Speaker 1: says is that a spot conduct is one that is

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Speaker 1: intended to be physically settled within a few days. So

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Speaker 1: if you order an onion now to be delivered, you know,

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Speaker 1: you like order from a grocery store and like it's

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Speaker 1: going to be delivered to you in three days, it's

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Speaker 1: probably hard.

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Speaker 2: Yeah, yeah, right.

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Speaker 1: If you're like set up an instagrat order for like

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Speaker 1: next week, it's probably one. There's a retail provision in

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Speaker 1: the in the commodities that uses twenty eight days as

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Speaker 1: a dividing line, which is sometimes used as a rule

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Speaker 1: of thumb.

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Speaker 2: That's really interesting because I feel like from Amazon, you

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Speaker 2: can subscribe to onions and you can interesting, Yeah, you

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Speaker 2: can get onions delivered to you on a schedule.

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Speaker 1: Interesting.

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Speaker 2: I think that you can do that with cat food.

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Speaker 1: This is definitely not legaland and I think probably nobody's

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Speaker 1: going to enforce that. I don't think I trut that

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Speaker 1: as a futures conduct. That feels very spot. But you're right.

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Speaker 1: It's one reason it feels very spot is because I

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Speaker 1: believe that Amazon will well, you know, if like the

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Speaker 1: price is changed, they'll change the price. Like I think

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Speaker 1: that they they don't lock in if you do a

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Speaker 1: subscribe and save, you don't lock in the price for

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Speaker 1: it until the end of time.

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Speaker 2: Interesting.

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Speaker 1: So like it's essentially a new series of spot contracts.

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Speaker 2: Everything I've never actually done. Subscribe and save, I order

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Speaker 2: never never for an onion or yeah, yeah, that'd be interesting,

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Speaker 2: and then engineer the onion market so that price has

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Speaker 2: changed dramatically.

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Speaker 1: So I think about this a lot because in stocks

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Speaker 1: it's actually it's the other way around. Like there is

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Speaker 1: a very legally sensitive thing in stock trading, which is

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Speaker 1: naked short selling. If you promise me that you will

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Speaker 1: deliver me Tesla shares, I promise tomorrow, and you don't

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Speaker 1: have the Tesla shares, or you don't like have reasonable

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Speaker 1: basis to believe that you can borrow those Tesla shares,

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Speaker 1: you have committed a naked short selling, and people get

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Speaker 1: really really mad about that. But if you promise to

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Speaker 1: deliver me Tesla shares in a year, you do not

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Speaker 1: have to borrow the shares. That's a future or a

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Speaker 1: forward contract, and that doesn't count. And this is extremely

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Speaker 1: not legal advice. But no one knows what the dividing

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Speaker 1: line between a like spot sale and a future sale

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Speaker 1: of stock is. But again, it's like it's in the

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Speaker 1: like I think I used to use a rule of

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Speaker 1: thumb of ten days. It's something like that. It's like,

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Speaker 1: if you say you're gonna deliver me tell the stock

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Speaker 1: tomorrow or in a week, that's probably a spot sale

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Speaker 1: and you need to have a low kate to borrow

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Speaker 1: the stock, or else you're committing naked short selling and

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Speaker 1: you're in trouble. But if you say two weeks or

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Speaker 1: a month or a year, then it's a forward contract

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Speaker 1: and it's legal. So it's the opposite like an onion's

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Speaker 1: a forward contract is illegal and stocks naked spot contract

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Speaker 1: is illegal.

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Speaker 2: We spent seven minutes on this question.

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Speaker 1: Okay, you're really you're really going to hold me to

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Speaker 1: twenty minutes of this episode? All right?

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Speaker 4: Mail mail bag from Daniel.

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Speaker 1: Why don't the underwriters for IPA seem to factor in

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Speaker 1: retail menia? It seems like something you could do as

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Speaker 1: an underwriter is have an analyst through the due diligence,

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Speaker 1: spend thousands of hours in Excel cunching the numbers, get

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Speaker 1: a fair valuation for the stock, and then when you

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Speaker 1: have the final number, the managing product can just multiply

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Speaker 1: it by two because a bunch of retail traders will

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Speaker 1: buy it anyway. But they don't seem to do that,

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Speaker 1: even though it seems like it would make sense. Also,

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Speaker 1: who gets fired when a company trades on its first

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Speaker 1: day at two hundred percent above the IPO press and

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Speaker 1: who gets to retire and buy a yacht? So this

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Speaker 1: is about Figma.

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Speaker 2: I think yes, I was about to bring up Figma,

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Speaker 2: because that's exactly what happens.

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Speaker 1: Right. So Figma, by the time this areas will have

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Speaker 1: done an IPO about two weeks ago. But Figma did

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Speaker 1: an IPO where it's sold stock at thirty three dollars

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Speaker 1: a share and like it bounced to like one hundred

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Speaker 1: and twelve or something in the firstance. And every time

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Speaker 1: that happens, people and make people, I mean Bill Gurley

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Speaker 1: specifically go on Twitter to complain about IPO Pops and

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Speaker 1: how the company left money on the table, right, And

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Speaker 1: people who work in capital markets and people who work

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Speaker 1: at Figma do not think that way. Right, Like Figma

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Speaker 1: and it's venture capitalists, we're very happy to leave money

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Speaker 1: on the table.

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Speaker 2: Yeah, talk more because this is inevitably going to happen again.

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Speaker 1: It's happened for decades. Yeah, people who have Bill Curley

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Speaker 1: is complained about for decades. It's it's just like so

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Speaker 1: from Figma's perspective, they are a company with a shareholder base,

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Speaker 1: and they're shifting their shareholder base quite dramatically, right, They're

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Speaker 1: going from these venture capitalists who own them in the

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Speaker 1: private markets to public investors who own them in the

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Speaker 1: public markets. And if your pigmacy you have a relationship

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Speaker 1: with your investors, I'm getting a whole new set of investors.

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Speaker 1: I want a relationship with them. I want good investors.

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Speaker 1: I want investors who I think are in it for

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Speaker 1: the long term and will be supportive of me, and

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Speaker 1: will be like good advisors and will be you know,

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Speaker 1: not flighty, and not get mad at me if like

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Speaker 1: the stock goes down one day, and who believe in

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Speaker 1: my long term vision? And so you go out and

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Speaker 1: meet with a bunch of investors and there's some that

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Speaker 1: you like, and then they say, I'll buy the stock

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Speaker 1: at this price. You know, okay, great, here have a

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Speaker 1: lot of the stock. And then some other people at

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Speaker 1: like Citadel will buy it at a higher price. And

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Speaker 1: I don't want those guys. I don't want the long

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Speaker 1: term guys. And so you pick and like the Bloomberg

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Speaker 1: had in this, like there were specific long term investors

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Speaker 1: they wanted in the stock, and if they raised the price,

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Speaker 1: they could easily get the deal done, but they would

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Speaker 1: lose those people. And they're like, no, I'd rather have

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Speaker 1: those people and the stock they're selling in this deal

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Speaker 1: just doesn't matter in the long term. What matters in

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Speaker 1: the long term is like their long term relationship with

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Speaker 1: their investor base and with the capital markets, and giving

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Speaker 1: everyone a pop on the first day makes investors love you,

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Speaker 1: and so it's just better for like the long term

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Speaker 1: business and similarly, you know, speaking about it was the

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Speaker 1: company sold some stock and then sheraldon you know, the

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Speaker 1: venture capitalists and like executives sold some stock and those

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Speaker 1: people you know did fine, like they made money, and

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Speaker 1: then the rest of their stock because they didn't sell

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Speaker 1: all their stock, The rest of their stock is now

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Speaker 1: worth a lot because the stock traded up, and having

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Speaker 1: the stock trade up makes it easier for them to

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Speaker 1: sell stock in the future, and they're happy with that.

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Speaker 1: This is why you know, everyone is happy with an

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Speaker 1: IPO pot because like they didn't need that money that much, right, Like, yeah,

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Speaker 1: the amount of money they left on the table is

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Speaker 1: not that important compared to like setting up the long

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Speaker 1: term relationship. That's like the short answer to like the

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Speaker 1: who gets fired question, the answer, no one gets fired.

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Speaker 1: And particularly like what would be bad is if the

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Speaker 1: bankers and this does happen, honestly, if the bankers went

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Speaker 1: to Figma and we're like, you cannot price as a

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Speaker 1: penny above thirty three. The book is really weak right here,

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Speaker 1: and we don't think it'll trade well at thirty three,

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Speaker 1: and Figmas like, we really wanted thirty five. But if

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Speaker 1: you insist, and then it traded up to one hundred

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Speaker 1: and twelve, Like the bankers look really stupid. That's what

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Speaker 1: happened here. Like what happened here is they're like we're

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Speaker 1: forty times covered, like there's a ton of demand, but

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Speaker 1: these investors will be out above thirty three and figumas,

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Speaker 1: Like I'd rather have those investors like they were fully

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Speaker 1: informed here, reasonably, fully important. The other thing I want

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Speaker 1: talking about is Daniel's original question is why don't they

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Speaker 1: factor in retail mania? They do, but it is an

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Speaker 1: interesting question. Like my impression is that when I was

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Speaker 1: an ECM banker, you know, a decade ago, retail was

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Speaker 1: a pretty small part of the experience of doing an IPO,

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Speaker 1: and you thought of institutions as price letters. And then

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Speaker 1: you get like you expected a little bump from retail

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Speaker 1: because like the day after the deal prices, all the

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Speaker 1: retail people who couldn't get into the dealer will want

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Speaker 1: to buy, and so they'll be like a nice lift there.

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Speaker 1: But it's not. It's not a mania. And now I

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Speaker 1: think e CM bankers equity couple of markets bankers are

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Speaker 1: having to figure out how to think about meme stocks

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Speaker 1: and retail mania. Yeah, it's not so much in the

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Speaker 1: IPO business. It's in the like going to companies that

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Speaker 1: might be meme stocks and saying you should really haven't

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Speaker 1: at the market stock offering setup, because if if a

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Speaker 1: meme hits, you want to be able to sell us

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Speaker 1: talking to it. And so I've talked to ESM bankers

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Speaker 1: and like there are thinking about how to capitalize on

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Speaker 1: retail insanity. It's not natural to them, like they you know,

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Speaker 1: they spend all day talking to big institutional managers and

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Speaker 1: to then also lurk on Reddit boards is a bit

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Speaker 1: of a shift.

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Speaker 2: It's funny, but that's just a fact of life. Now.

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Speaker 1: Yeah, I haven't noticed, so they aren't thinking about it.

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Speaker 1: It's just like it's a mentality shift.

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Speaker 3: Yeah, mail mail bag, I really like this question from Tony.

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Speaker 1: Okay, yeah, me too.

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Speaker 2: Okay, I'm going to try to read it.

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Speaker 1: Do it.

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Speaker 2: If bitcoin treasury companies are priced irrationally as alternatives to ETFs,

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Speaker 2: does that suggest a publicly traded company with a treasury strategy.

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Speaker 2: It's a good alternative for alternatives that don't easily fit

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Speaker 2: into an ETF. Fine art treasury company, diamonds and gems

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Speaker 2: treasury company. Not actually Onion's futures treasury company, et cetera.

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Speaker 2: This is a really interesting idea.

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Speaker 1: So there is a gold treasure company. You wrote about it.

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Speaker 1: It's called biosig because it's like a biotech company that

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Speaker 1: you know, they got bored of being a aotech company

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Speaker 1: and they're like, we're gonna.

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Speaker 2: Buy a lot of gold, yeah, which is not the

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Speaker 2: trade that a lot of people are making. I feel

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Speaker 2: like biotech is more interesting than gold.

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Speaker 1: But anyway, they're not like pivoting to being a gold miner.

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Speaker 1: They're just buying a lot of gold and they're a

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Speaker 1: treasury company. So yes, it's like an ETF. And right,

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Speaker 1: the thought process that Tony had is the thought process

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Speaker 1: that a lot of CEO's of small biotech companies have had,

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Speaker 1: which is that if you're a bitcoin treasury company, your

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Speaker 1: stock trades that two times give or take, you're a

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Speaker 1: NAV yeah, and that's much better than being an ETF,

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Speaker 1: where you trade pretty rigorously at one time you're an AV.

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Speaker 1: And so every crypto person has started a crypto treasury

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Speaker 1: company because you can, you know, double the value of

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Speaker 1: your crypto. And then people look around they're like what

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Speaker 1: else can we do that too? And gold seems to

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Speaker 1: be part of the answer. This company, it's like the

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Speaker 1: fundraise is weird, so it's hard to tell what their

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Speaker 1: premium is, but they do seem to be trading at

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Speaker 1: a premium to the value of the gold.

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Speaker 2: Yeah, didn't games Stop by diamond like some sort of miners.

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Speaker 1: Oh no, no, amc about a gold mine. But that

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Speaker 1: was that was long before the treasury company.

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Speaker 2: That was something that was just.

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Speaker 1: The comedy thing. But no, actually some company bought Game Stop.

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Speaker 1: Stock is a treasury right, which you can't really Stock

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Speaker 1: is one thing you can't really do because if you're

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Speaker 1: one hundred percent of stock treasury company, you're an investment company.

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Speaker 1: And this doesn't work. Yeah, but Tony is right that,

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Speaker 1: like bio saying, is zones gold but it like wants

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Speaker 1: to be a commodity treasury company. But like other the

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Speaker 1: world is your oyster. Anything that you can think of

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Speaker 1: that you want to be a treasury company of, you

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Speaker 1: can try it.

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Speaker 2: This is so exciting, right, So there's two.

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Speaker 1: Problems with it, maybe one of the two problems. One

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Speaker 1: problem is you have to sell it to retail, right,

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Speaker 1: like crypto, this is like a known playbook and it's

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Speaker 1: kind of a little thin, right, Everyone says the same things,

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Speaker 1: like we're gonna, you know, do investor education and like

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Speaker 1: modernize the payment system, and like eventually people stop believing it,

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Speaker 1: and so like the premium and crypto is like slowly eroding. Yeah,

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Speaker 1: but you have to tell a new story with a

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Speaker 1: new thing, and gold is like a crypto adjacent story.

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Speaker 2: Right, I'm not excited about gold.

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Speaker 1: No, I understand, but you're not excited about bitcoin. Try

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Speaker 1: companies necessarily.

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Speaker 2: Either, maybe, well, but I'm more excited by the idea

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Speaker 2: of you could have a treasury company for fine art

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Speaker 2: for example.

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Speaker 1: Right, So you need a story and the story needs

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Speaker 1: to appeal to a lot of people, and those people

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Speaker 1: ideally or like retail weirdos on Reddit, but like there's

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Speaker 1: a lot of stories you can tell, yeah on or

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Speaker 1: it's a great.

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Speaker 2: Song dinosaur bones, dinosaur bones.

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Speaker 1: The other thing you need to do, Like a treasury

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Speaker 1: company is not really about the thing crypto or gold

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Speaker 1: or fine art or whatever. What a treasury company is.

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Speaker 1: What micro strategy is is a company that has stock

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Speaker 1: that trades above it's net asset value, and it sells

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Speaker 1: stock and above the net asset value, and it buys

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Speaker 1: more assets and it's just a flywheel. I read some

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Speaker 1: paper that called it a creative dilution. The more stock

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Speaker 1: you sell, the more value you create for your shareholders,

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Speaker 1: because like you're selling stock for two hundred dollars and

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Speaker 1: then buying two undred dollars s worth of stuff than

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Speaker 1: your stock has gone up by four hundred dollars. That's

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Speaker 1: a great trade. Yeah, it has nothing to do with

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Speaker 1: the underlying thing. It has to do with the amount

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Speaker 1: of high you can get and then like with investors

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Speaker 1: buying into that you know, repeated process. So if you

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Speaker 1: can do that, like that's the first step is can

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Speaker 1: you get people to pay one hundred percent premium to

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Speaker 1: an asset value? If you can, anything you buy, it's

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Speaker 1: going to be a good strategy. It's going to work, right, Like,

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Speaker 1: it's going to be a good trade for shareolders. But

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Speaker 1: that relies on you know, the original shareholders buying for

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Speaker 1: two times an av Yeah, and the question is can

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Speaker 1: you sell that story? And I do think that Tony

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Speaker 1: is right that you can sell that story for things

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Speaker 1: other than crypto. I think gold seems to kind of work.

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Speaker 1: I think so m should definitely do a Diamond's one

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Speaker 1: fine art whatever. But like onions, probably not, but like

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Speaker 1: I don't know, probably not.

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Speaker 2: On onions. I am excited because you can put gold

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Speaker 2: in an ETF. You can also put crypt.

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Speaker 1: You can't sell it at two percent of NAV.

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Speaker 2: I know that's really important. No, I want to see

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Speaker 2: them put an asset that you can't put into an

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Speaker 2: ETF into a treasury company such as fine.

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Speaker 1: Art, but I think the private credit treasure company.

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Speaker 4: There you go, mail bag, mail bag Duncan.

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Speaker 2: Duncan has a multiple part aer here. No it's not,

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Speaker 2: it's got two parts.

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Speaker 1: Well, why aren't there formalized hedging markets for sports outcomes?

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Speaker 1: I must imagine there are chains of bars and restaurants

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Speaker 1: concentrated in areas associated with sports venues. Those locations position

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Speaker 1: them to benefit from additional home games incremental spending associated

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Speaker 1: with large victories, but only in positive outcomes. Bars around

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Speaker 1: Wrigleyfield in Chicago be interested in hedging the risk associated

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Speaker 1: with potentially ten plus more home outings in a season

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Speaker 1: if they make the playoffs. So this is a question.

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Speaker 1: This comes up a lot weirdly, like there are now,

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Speaker 1: as I mentioned, futures exchanges where you can trade futures

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Speaker 1: on things like will the Cubs win tonight, and in

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Speaker 1: the ordinary course you would say, oh, yes, that's sports gambling,

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Speaker 1: but it's very important to a lot of people, including

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Speaker 1: it Robinhood and also Calshie and also other prediction markets.

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Speaker 1: It's very important to a lot of people to say no, no, no,

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Speaker 1: that's not sports gampling. That's a futures market. And what

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Speaker 1: makes a thing a futures market rather than a sports book.

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Speaker 1: Part of the answer is, like in theory, in a

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Speaker 1: futures market, you are trading or betting against other participants

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Speaker 1: in the market rather than against the book. This is

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Speaker 1: not actually important like actual sports books, like you can

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Speaker 1: have a sports book website where like the people taking

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Speaker 1: the other side of the bet are market makers, and

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Speaker 1: like on a futures exchange, the people taking the other

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Speaker 1: side of the bet are probably market makers. So it's

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Speaker 1: not as different as it seems. Like technically, yeah, if

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Speaker 1: you go to a sports book, you're betting against the

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Speaker 1: sports book. If you're going to a futures exchange, you're

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Speaker 1: betting against other participants in the futures exchange. But the

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Speaker 1: other thing that makes it different is there's this sense

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Speaker 1: that futures exchanges offer like some sort of real economic

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Speaker 1: benefit other than gambling. And when you think about sports futures, like,

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Speaker 1: what is that benefit, Well, hedging is the best answer.

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Speaker 1: And so you will regularly see people say, oh, yeah,

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Speaker 1: of course we should have a sports prediction market on

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Speaker 1: a regulated futures exchange because bars near Wrigley Field needs

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Speaker 1: to heads to the risk of not making the playoffs

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Speaker 1: and you know, not having ten more home games to

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Speaker 1: sell beer at. And this always struck me as absurd,

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Speaker 1: but it is true that, like, you know, there's like

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Speaker 1: some tiny marginal hedging benefit, and that tiny marginal hedging benefit,

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Speaker 1: theoretical hedging benefit is the wedge that people use to

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Speaker 1: justify futures markets as sports scambling platforms. I once hurt,

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Speaker 1: like I won't start to a person at who works

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Speaker 1: in the sports features business who said, well, you know,

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Speaker 1: there's like big brands that sign multimillion dollar marketing deals

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Speaker 1: with you know, tennis stars, and like their performance in

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Speaker 1: tennis tournaments is economically material to like Nike or whatever,

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Speaker 1: so they should be able to hedge that in the

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Speaker 1: sports futures market, right, So sure, why not? So that's

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Speaker 1: why that's why this is all happening, right, Like the

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Speaker 1: reason that there are increasingly legal and popular sports futures

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Speaker 1: exchange is because they can be like, no, it's not gambling,

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Speaker 1: it's for bars to hedge.

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Speaker 2: Yeah, totally innocent. Great question. Duncan mail Bag nail Bag

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Speaker 2: Leo also has a question, and his question is that

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Speaker 2: I just opened a no penalty CD at my bank

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Speaker 2: and I'm trying to figure out how this product makes

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Speaker 2: any sense for the bank. The terms are basically that

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Speaker 2: it's about twenty five basis points higher interest than their

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Speaker 2: high yield savings with a fixed rate, and your money

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Speaker 2: is locked up for the first week and after that

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Speaker 2: you can withdraw all your money, including to date earned interest,

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Speaker 2: at any time. But you have to take out all

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Speaker 2: your money at once. How is this a higher yield

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Speaker 2: product than a.

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Speaker 1: Savings Yeah, okay, this is like all of retail finance. Yeah,

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Speaker 1: is like this, this is credit card rewards and everything. Right,

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Speaker 1: this is the business of a bank. Is like monetizing

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Speaker 1: depositor inattention. We talked about, I think on the podcast

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Speaker 1: the CFPB case against Teple. Right, so Capital One they

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Speaker 1: offered this highild saving account called three sixty Savings and

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Speaker 1: it had a high yield and people put their money

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Speaker 1: into it, and then after a while they started lowering

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Speaker 1: the yield, or I guess they lowered the yield one

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Speaker 1: like rates cent to zero and they just didn't bring

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Speaker 1: it back up. And instead of what they did is

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Speaker 1: they launched a knew high yeld saving the account called

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Speaker 1: three sixty Performance Savings that did have a high yield,

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Speaker 1: and so they could advertise the high yield on the

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Speaker 1: new account to new customers and bring in new customers

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Speaker 1: with competitive rates. But the old customers, who didn't notice

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Speaker 1: that they were getting low rates, just continued to get

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Speaker 1: low rates. Yes, you just do this forever you get

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Speaker 1: in trouble, although not anymore. They were briefly in trouble,

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Speaker 1: but then they weren't. But this is everything, right the

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Speaker 1: point of you know, Leo was asking about a no

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Speaker 1: penalty CD where he basically gets a higher rate than

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Speaker 1: a savings account, but his money isn't actually locked up

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Speaker 1: like traditionally a CD your money is locked up for

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Speaker 1: three months or six months or whatever. Right then this

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Speaker 1: is one where your money is not locked up, so

436
00:20:52,840 --> 00:20:54,359
Speaker 1: it's really like a savings account, but it has a

437
00:20:54,440 --> 00:20:57,159
Speaker 1: higher yield than your saving account. The reason they're offering

438
00:20:57,200 --> 00:21:01,239
Speaker 1: that is because they are hoping that you will think

439
00:21:01,320 --> 00:21:04,240
Speaker 1: of it as a CD and you will forget and

440
00:21:04,280 --> 00:21:07,640
Speaker 1: you won't take your money out even if rates go up,

441
00:21:07,960 --> 00:21:10,359
Speaker 1: and so they will get the advantage of paying you

442
00:21:10,400 --> 00:21:12,760
Speaker 1: a lower rate and it will feel to them like

443
00:21:12,800 --> 00:21:14,679
Speaker 1: a CD, and they will get the sort of like

444
00:21:14,760 --> 00:21:18,320
Speaker 1: financial benefits of a CD. And if you are ruthlessly

445
00:21:18,359 --> 00:21:23,359
Speaker 1: attentive and value maximizing, you will get some profit out

446
00:21:23,400 --> 00:21:25,600
Speaker 1: of this at the expense of the bank. But the

447
00:21:25,640 --> 00:21:27,840
Speaker 1: bank is playing a statistical game. They figure most of

448
00:21:27,840 --> 00:21:29,560
Speaker 1: their clients will not do that, and so they will

449
00:21:29,600 --> 00:21:32,080
Speaker 1: make money on it. Yeah, it's also probably a rates bet,

450
00:21:32,119 --> 00:21:33,840
Speaker 1: like they're probably just betting that rates will go down

451
00:21:33,840 --> 00:21:35,480
Speaker 1: and so it won't cost them anything, right, Like it's

452
00:21:35,480 --> 00:21:38,879
Speaker 1: like a ya, they're making a directional bet. But the

453
00:21:38,920 --> 00:21:42,040
Speaker 1: main thing is just like they expect people not to.

454
00:21:41,680 --> 00:21:43,840
Speaker 2: Maximize it paying attention.

455
00:21:43,600 --> 00:21:46,639
Speaker 1: Leoh, and this is like everything. The credit card rewards

456
00:21:46,640 --> 00:21:50,440
Speaker 1: are like the classic case where every credit card product

457
00:21:50,520 --> 00:21:56,000
Speaker 1: has really high rewards on some category of spending. And

458
00:21:56,040 --> 00:21:59,320
Speaker 1: if you are a ruthless maximizer and there are people

459
00:21:59,359 --> 00:22:01,359
Speaker 1: there are four am where people do this. Right, if

460
00:22:01,400 --> 00:22:04,800
Speaker 1: you're a ruthless maximizer, you will use your gas credit

461
00:22:04,800 --> 00:22:07,119
Speaker 1: card only to buy gas, and you'll use your dining

462
00:22:07,160 --> 00:22:09,080
Speaker 1: credit card only to pay for meals, and you'll use

463
00:22:09,080 --> 00:22:11,920
Speaker 1: your travel credit or only for travel, and you'll get

464
00:22:12,119 --> 00:22:14,000
Speaker 1: a very high rate of cash back on all of

465
00:22:14,040 --> 00:22:16,560
Speaker 1: your purchases, and you will cost each of your credit

466
00:22:16,600 --> 00:22:19,080
Speaker 1: card issuers money. But almost no one is like that.

467
00:22:19,119 --> 00:22:21,760
Speaker 1: Almost everyone picks one credit card and uses it for everything,

468
00:22:21,960 --> 00:22:23,800
Speaker 1: and they get high cash back on one category of

469
00:22:23,840 --> 00:22:25,720
Speaker 1: spending and nothing on or like low cash back on

470
00:22:25,760 --> 00:22:28,520
Speaker 1: the other categories. And the issuers make money. And this

471
00:22:28,640 --> 00:22:32,119
Speaker 1: is like so clearly statistically true that the issuers have

472
00:22:32,119 --> 00:22:34,480
Speaker 1: a great business even though if you're the one person

473
00:22:34,560 --> 00:22:37,560
Speaker 1: who does it right, you'll make money. And so there

474
00:22:37,600 --> 00:22:39,280
Speaker 1: are forums and money stuff for you doers who are

475
00:22:39,320 --> 00:22:43,000
Speaker 1: probably like more maximizing than like the average customer. The

476
00:22:43,040 --> 00:23:00,840
Speaker 1: bank makes money on the average customer. All right, we

477
00:23:00,920 --> 00:23:01,720
Speaker 1: have a few more questions.

478
00:23:01,760 --> 00:23:03,480
Speaker 2: We have some rapid fire questions.

479
00:23:03,960 --> 00:23:09,240
Speaker 4: All nail bag.

480
00:23:09,640 --> 00:23:13,200
Speaker 1: Henry asks, what is your spirit security? Like a spirit animal,

481
00:23:13,320 --> 00:23:14,119
Speaker 1: but a security.

482
00:23:14,680 --> 00:23:17,600
Speaker 2: So now I'm worried it's a commodity. I was going

483
00:23:17,680 --> 00:23:22,000
Speaker 2: to say, cattle, futures, commodities. Yeah, so let's just kind

484
00:23:22,040 --> 00:23:26,159
Speaker 2: of grim. Yeah, but you know, don't you sometimes just

485
00:23:26,240 --> 00:23:29,040
Speaker 2: feel like a beaten mule.

486
00:23:31,080 --> 00:23:33,440
Speaker 1: That's still different from a slaughtered cow.

487
00:23:34,600 --> 00:23:37,720
Speaker 2: What's your spirit security?

488
00:23:38,240 --> 00:23:42,040
Speaker 1: My spirit security is feline Prides, which is I believe

489
00:23:42,119 --> 00:23:45,760
Speaker 1: trademarked by Merrill Lynch. I was an equity link security

490
00:23:45,800 --> 00:23:46,600
Speaker 1: STRUCTURER at.

491
00:23:46,480 --> 00:23:50,280
Speaker 2: A bank and name the bank, And there's.

492
00:23:50,119 --> 00:23:52,960
Speaker 1: A formula acuaity link security called a mandatory convertible unit,

493
00:23:53,000 --> 00:23:57,400
Speaker 1: which is ferociously complicated. Basically, it's like a variable share

494
00:23:57,480 --> 00:24:02,679
Speaker 1: forward contract stocked by this bond that gets remarketed at

495
00:24:02,680 --> 00:24:05,960
Speaker 1: the end of the forward term. It's so complicated. But

496
00:24:06,119 --> 00:24:10,320
Speaker 1: also in the glory days of derivative structuring, these things

497
00:24:10,359 --> 00:24:13,159
Speaker 1: had to have names and they had to have acronyms,

498
00:24:13,240 --> 00:24:15,280
Speaker 1: right like now they're called the mandatary and verbal units.

499
00:24:15,400 --> 00:24:18,200
Speaker 1: But there's some flavor I don't remember the exact details,

500
00:24:18,480 --> 00:24:21,879
Speaker 1: but some flavor of mandatory convertible units that were I

501
00:24:21,960 --> 00:24:25,240
Speaker 1: believe trademarked by Marilynch that were called feline prides, which

502
00:24:25,240 --> 00:24:30,240
Speaker 1: stood for something like flexible equity linked come on pries

503
00:24:30,359 --> 00:24:35,080
Speaker 1: is like preferred yea remarketed equity and strata. I made

504
00:24:35,080 --> 00:24:36,760
Speaker 1: it up like that's not what it's not for, but

505
00:24:36,800 --> 00:24:39,200
Speaker 1: you can look it up. Maybe it probably exists money

506
00:24:39,200 --> 00:24:41,800
Speaker 1: stuff called but yeah. Feline prides were a form of

507
00:24:41,880 --> 00:24:47,080
Speaker 1: mandatory converbal unit that were complicated enough as a security

508
00:24:48,040 --> 00:24:52,640
Speaker 1: but incredible, like the pinnacle of acronymic work of all

509
00:24:52,640 --> 00:24:54,760
Speaker 1: of financed was feline prids.

510
00:24:54,760 --> 00:25:02,639
Speaker 2: Man mail Bag, I like this question. I have a

511
00:25:02,680 --> 00:25:05,359
Speaker 2: short answer here. How does Katie feel about being described

512
00:25:05,359 --> 00:25:08,159
Speaker 2: by Google as an Internet personality rather than, say, a

513
00:25:08,200 --> 00:25:12,560
Speaker 2: financial journalist. I like that because it suggests I have

514
00:25:12,600 --> 00:25:14,840
Speaker 2: a personality, so I'm fine with it.

515
00:25:14,960 --> 00:25:17,000
Speaker 1: Yeah, I would probably be happy with I don't know

516
00:25:17,040 --> 00:25:20,400
Speaker 1: how I'm described by Google, but Internet personalities. Yeah, it's

517
00:25:20,400 --> 00:25:22,760
Speaker 1: pretty much the pinnacle of careers these days.

518
00:25:22,840 --> 00:25:24,080
Speaker 2: I feel great, Mike.

519
00:25:25,760 --> 00:25:28,600
Speaker 4: Mail Bag, nail Bag.

520
00:25:28,920 --> 00:25:31,560
Speaker 1: And from Joel. I have a question for Katy our

521
00:25:31,600 --> 00:25:34,040
Speaker 1: business I should read this and anchor voice, but I can't.

522
00:25:34,720 --> 00:25:36,160
Speaker 2: I'm not trained to put on the mask.

523
00:25:36,680 --> 00:25:39,080
Speaker 1: I have a question for Katie. Our business news network

524
00:25:39,119 --> 00:25:42,320
Speaker 1: anchors specifically trained on vocal patterns designed to make everything

525
00:25:42,359 --> 00:25:44,760
Speaker 1: sound tense and serious. When I listen to you on

526
00:25:44,800 --> 00:25:47,159
Speaker 1: the podcast, they don't notice this. However, I happen to

527
00:25:47,160 --> 00:25:49,840
Speaker 1: catch you on Bloomberg TV while traveling, and you sounded different.

528
00:25:50,280 --> 00:25:52,840
Speaker 1: It fits the pattern I hear on CNBC, Fox Business,

529
00:25:52,840 --> 00:25:55,080
Speaker 1: et cetera. But I've never observed this on other live

530
00:25:55,240 --> 00:25:57,879
Speaker 1: TV news formats in a sustained way. Maybe it's just me.

531
00:25:58,400 --> 00:26:01,120
Speaker 2: I love this question, and I ever really thought about it,

532
00:26:01,200 --> 00:26:05,040
Speaker 2: and I don't think I've ever been trained for me.

533
00:26:06,560 --> 00:26:09,000
Speaker 2: Maybe I should have been. So there's different types of

534
00:26:09,000 --> 00:26:12,159
Speaker 2: speaking that you do on air as as an anchor.

535
00:26:13,520 --> 00:26:16,199
Speaker 2: There's reading from the prompter, you know, when you're just

536
00:26:17,040 --> 00:26:19,960
Speaker 2: reading the intro to a guest or straight news, and

537
00:26:20,000 --> 00:26:22,480
Speaker 2: then there's the voice that you use while asking questions.

538
00:26:22,960 --> 00:26:26,040
Speaker 2: And by the way, I come up with my own questions.

539
00:26:26,080 --> 00:26:28,359
Speaker 2: I get this question a lot, actually, like do they

540
00:26:28,400 --> 00:26:33,840
Speaker 2: write questions for you? And it's like, no, they don't anyway. Yeah,

541
00:26:33,920 --> 00:26:37,439
Speaker 2: if you're reading from the prompter, prompter is written in

542
00:26:37,480 --> 00:26:39,840
Speaker 2: such a way that you kind of naturally fall into

543
00:26:39,960 --> 00:26:43,919
Speaker 2: like the anchor voice. Also, I don't know, I just

544
00:26:43,920 --> 00:26:46,520
Speaker 2: feel like it's osmosis. Like I'm sitting next to people

545
00:26:46,560 --> 00:26:48,919
Speaker 2: who have also been anchoring for a lot longer than me,

546
00:26:48,960 --> 00:26:50,720
Speaker 2: and they talk in that voice, so you kind of

547
00:26:50,800 --> 00:26:53,480
Speaker 2: just talk in that voice. And then when you're asking

548
00:26:53,520 --> 00:26:56,919
Speaker 2: someone a question, just the I don't know, just the

549
00:26:57,000 --> 00:26:59,879
Speaker 2: stage of television. You talk differently than you would on

550
00:26:59,880 --> 00:27:02,680
Speaker 2: a podcast. But then even if I'm on TV, the

551
00:27:02,760 --> 00:27:05,000
Speaker 2: way that I'm answering a question is different than the

552
00:27:05,000 --> 00:27:08,000
Speaker 2: way I'm asking a question. I think just the fact

553
00:27:08,000 --> 00:27:11,280
Speaker 2: that I'm on this podcast and I'm talking versus asking

554
00:27:11,320 --> 00:27:13,840
Speaker 2: a question or answering a question, this is more of

555
00:27:13,880 --> 00:27:16,960
Speaker 2: a conversation. So I sound more like a normal human.

556
00:27:17,040 --> 00:27:20,720
Speaker 2: But I haven't. No one told me to talk that way.

557
00:27:21,040 --> 00:27:22,920
Speaker 2: It's just kind of what you do, you know.

558
00:27:23,280 --> 00:27:25,600
Speaker 1: It's just like natural selection. Yeah, if you didn't talk

559
00:27:25,640 --> 00:27:27,000
Speaker 1: that way, you wouldn't be on television.

560
00:27:27,080 --> 00:27:27,439
Speaker 2: Yeah.

561
00:27:27,480 --> 00:27:29,720
Speaker 1: Do you think that you make everything sound tense and serious?

562
00:27:30,440 --> 00:27:33,359
Speaker 2: I try not to. I mean, if it's a tense

563
00:27:33,359 --> 00:27:37,359
Speaker 2: and serious means yeah, I mean you do speak with

564
00:27:37,440 --> 00:27:42,960
Speaker 2: some urgency on TV. I realize. Sort of a weird

565
00:27:43,000 --> 00:27:46,600
Speaker 2: fact of being on television is that time feels different

566
00:27:46,640 --> 00:27:50,520
Speaker 2: on television, Like ten seconds. If someone says ten seconds.

567
00:27:50,520 --> 00:27:52,720
Speaker 2: In my ear, there's so much you can say in

568
00:27:52,760 --> 00:27:56,200
Speaker 2: ten seconds if you're on TV, yes, if you're in

569
00:27:56,240 --> 00:27:56,680
Speaker 2: real life.

570
00:27:56,720 --> 00:27:58,040
Speaker 1: I don't do a lot of TV, but I have

571
00:27:58,200 --> 00:28:00,960
Speaker 1: noticed that, Yeah, like a three minute time feels like

572
00:28:01,000 --> 00:28:01,400
Speaker 1: an hour.

573
00:28:01,640 --> 00:28:04,760
Speaker 2: Yeah, like even when they're counting down five four, three,

574
00:28:05,040 --> 00:28:07,840
Speaker 2: Like I know I should probably be tagging saying this

575
00:28:07,880 --> 00:28:10,600
Speaker 2: is Boomberg at three, but you really don't need to

576
00:28:10,600 --> 00:28:14,240
Speaker 2: say it until two, you know, So it really warps

577
00:28:14,280 --> 00:28:17,240
Speaker 2: your sense of time. And I think that that urgency

578
00:28:17,640 --> 00:28:20,160
Speaker 2: can sometimes show up in sounding serious.

579
00:28:20,760 --> 00:28:22,520
Speaker 1: No, I know what you mean, because because you said

580
00:28:22,560 --> 00:28:25,639
Speaker 1: we're going to do this segment in twenty minutes, yeah,

581
00:28:25,359 --> 00:28:26,280
Speaker 1: later passed it.

582
00:28:27,119 --> 00:28:30,120
Speaker 2: I could have said so many words in this time.

583
00:28:31,160 --> 00:28:33,439
Speaker 2: All right, that was fun. I think we'll air this.

584
00:28:33,640 --> 00:28:36,240
Speaker 1: Yeah sounds good. All right, so we'll see you in

585
00:28:36,280 --> 00:28:37,000
Speaker 1: two weeks.

586
00:28:37,359 --> 00:28:38,880
Speaker 2: I hope you're having fun on vacation.

587
00:28:39,120 --> 00:28:45,040
Speaker 1: Yeah, yeah, right right. It's now possibly August fifteenth. Then

588
00:28:45,600 --> 00:28:48,240
Speaker 1: we'll be back on August possibly twenty ninth. I don't

589
00:28:48,240 --> 00:28:48,600
Speaker 1: even know.

590
00:28:48,800 --> 00:28:49,040
Speaker 2: See you.

591
00:28:49,080 --> 00:28:55,600
Speaker 1: Then we'll see you sometimes. And that was the Money

592
00:28:55,600 --> 00:28:56,360
Speaker 1: Sluf Podcast.

593
00:28:56,520 --> 00:28:58,560
Speaker 2: I'm Matt Levian and I'm Katie Greifeld.

594
00:28:58,880 --> 00:29:01,680
Speaker 1: You can find my work by subscribing to the moneystuffnewsletter

595
00:29:01,720 --> 00:29:03,440
Speaker 1: on Bloomberg dot com.

596
00:29:03,400 --> 00:29:05,920
Speaker 2: And you can find me on Bloomberg TV every day

597
00:29:05,960 --> 00:29:09,280
Speaker 2: on Open Interest between nine to eleven am Eastern we'd

598
00:29:09,280 --> 00:29:10,160
Speaker 2: love to hear from you.

599
00:29:10,160 --> 00:29:12,920
Speaker 1: You can send an email to Moneypod at bloomberg dot net,

600
00:29:13,440 --> 00:29:15,400
Speaker 1: ask us a question, and we might answer it on air.

601
00:29:15,880 --> 00:29:18,080
Speaker 2: You can also subscribe to our show wherever you're listening

602
00:29:18,120 --> 00:29:20,160
Speaker 2: right now and leave us a review. It helps more

603
00:29:20,160 --> 00:29:21,040
Speaker 2: people find the show.

604
00:29:21,720 --> 00:29:24,959
Speaker 1: The Money Stuff Podcast is produced by Anamasarakus and Moses

605
00:29:24,960 --> 00:29:25,719
Speaker 1: onam Our.

606
00:29:25,760 --> 00:29:28,600
Speaker 2: Theme music was composed by Blake Maples and Stage Bauman

607
00:29:28,640 --> 00:29:30,000
Speaker 2: is Bloomberg's head of Podcasts.

608
00:29:30,280 --> 00:29:32,600
Speaker 1: Thanks for listening to The Money Stuff Podcast. We'll be

609
00:29:32,680 --> 00:29:34,200
Speaker 1: back next week with more stuff