Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: All right, Matt Pye, Wow, you're back.
Speaker 1: Hello, Hello, and welcome to the same recording session.
Speaker 2: I like it when we spend time.
Speaker 1: Yeah. Yeah, it was impressed the first time. Now it's like, oh, yes,
Speaker 1: we're recording two money stuffs for two separate reads. It
Speaker 1: was not even impressed the first time.
Speaker 3: No.
Speaker 1: Right, other people have also recorded more than one thing
Speaker 1: at a time.
Speaker 3: Yeah.
Speaker 2: I guess you know the fact that we're so charmed
Speaker 2: by this, or at least I am.
Speaker 1: You're like a professional, you know, recorder of media. I
Speaker 1: guess you only do lived.
Speaker 2: I know that's the thing I'm used to. The light
Speaker 2: is red and my heart is racing.
Speaker 1: But this is very chilling, right me me still an
Speaker 1: amateur at all all recorded media.
Speaker 2: Let's do this in twenty minutes.
Speaker 1: Oh wow, Hey, I don't know about that. Hello, and
Speaker 1: welcome to the Money Stuff Podcast, your weekly podcast where
Speaker 1: were talking about stuff related to money. I'm Matt Levine
Speaker 1: and I wrote the Money Stuff column for.
Speaker 2: Bloomberg Opinion, and I'm Katie Greifeld, a reporter for Bloomberg
Speaker 2: News and an anchor for Bloomberg Television, and today is
Speaker 2: mail bag. You didn't sing.
Speaker 1: No, I didn't sing. Come, I cued you to sing it.
Speaker 1: That's all we need.
Speaker 2: That's true. I took it. Okay, so let's get right
Speaker 2: into it.
Speaker 3: Yeah, mail bag, nail bag from Josh.
Speaker 1: I saw this tweet about securities law. As to DoorDash,
Speaker 1: a blooming onion from outback steakhouse, you pay a fixed
Speaker 1: price now and receive it later. It is therefore a
Speaker 1: futures contract and thus illegal under the onion future side
Speaker 1: question our DoorDash orders a futures contract and therefore subject
Speaker 1: to securities law? This question? Okay, So, first of all,
Speaker 1: onion futures are not securities. They're commodities. But famously, basically
Speaker 1: every commodity can be traded on a futures exchange, including
Speaker 1: things that are not commodities like interest rates and sports bets.
Speaker 1: But the only things that cannot be traded on futures
Speaker 1: exchanges are motion picture receipts.
Speaker 2: Oh.
Speaker 1: Yes, part of the Onion Futures Act add onions. Onion
Speaker 1: futures cannot be traded because there's like a famous story
Speaker 1: in like the fifties of someone cornering the market for onions,
Speaker 1: and like Congress got so mad that they banned trading
Speaker 1: of onion futures. So if you doored ash a blooming onion,
Speaker 1: have you violated that that law? Okay, this is a
Speaker 1: great question because the difference between future and spot is
Speaker 1: actually quite legally meaningful and quite vague. The answer is no.
Speaker 1: So if you order an onion now and it arrives
Speaker 1: in an hour, that is not a futures contract. That's
Speaker 1: a spot delivery. You have just ordered an onion on
Speaker 1: the spot market. Interesting, but there's no clear distinction between
Speaker 1: spot and features. It seems like, you know, the CFTC
Speaker 1: says is that a spot conduct is one that is
Speaker 1: intended to be physically settled within a few days. So
Speaker 1: if you order an onion now to be delivered, you know,
Speaker 1: you like order from a grocery store and like it's
Speaker 1: going to be delivered to you in three days, it's
Speaker 1: probably hard.
Speaker 2: Yeah, yeah, right.
Speaker 1: If you're like set up an instagrat order for like
Speaker 1: next week, it's probably one. There's a retail provision in
Speaker 1: the in the commodities that uses twenty eight days as
Speaker 1: a dividing line, which is sometimes used as a rule
Speaker 1: of thumb.
Speaker 2: That's really interesting because I feel like from Amazon, you
Speaker 2: can subscribe to onions and you can interesting, Yeah, you
Speaker 2: can get onions delivered to you on a schedule.
Speaker 1: Interesting.
Speaker 2: I think that you can do that with cat food.
Speaker 1: This is definitely not legaland and I think probably nobody's
Speaker 1: going to enforce that. I don't think I trut that
Speaker 1: as a futures conduct. That feels very spot. But you're right.
Speaker 1: It's one reason it feels very spot is because I
Speaker 1: believe that Amazon will well, you know, if like the
Speaker 1: price is changed, they'll change the price. Like I think
Speaker 1: that they they don't lock in if you do a
Speaker 1: subscribe and save, you don't lock in the price for
Speaker 1: it until the end of time.
Speaker 2: Interesting.
Speaker 1: So like it's essentially a new series of spot contracts.
Speaker 2: Everything I've never actually done. Subscribe and save, I order
Speaker 2: never never for an onion or yeah, yeah, that'd be interesting,
Speaker 2: and then engineer the onion market so that price has
Speaker 2: changed dramatically.
Speaker 1: So I think about this a lot because in stocks
Speaker 1: it's actually it's the other way around. Like there is
Speaker 1: a very legally sensitive thing in stock trading, which is
Speaker 1: naked short selling. If you promise me that you will
Speaker 1: deliver me Tesla shares, I promise tomorrow, and you don't
Speaker 1: have the Tesla shares, or you don't like have reasonable
Speaker 1: basis to believe that you can borrow those Tesla shares,
Speaker 1: you have committed a naked short selling, and people get
Speaker 1: really really mad about that. But if you promise to
Speaker 1: deliver me Tesla shares in a year, you do not
Speaker 1: have to borrow the shares. That's a future or a
Speaker 1: forward contract, and that doesn't count. And this is extremely
Speaker 1: not legal advice. But no one knows what the dividing
Speaker 1: line between a like spot sale and a future sale
Speaker 1: of stock is. But again, it's like it's in the
Speaker 1: like I think I used to use a rule of
Speaker 1: thumb of ten days. It's something like that. It's like,
Speaker 1: if you say you're gonna deliver me tell the stock
Speaker 1: tomorrow or in a week, that's probably a spot sale
Speaker 1: and you need to have a low kate to borrow
Speaker 1: the stock, or else you're committing naked short selling and
Speaker 1: you're in trouble. But if you say two weeks or
Speaker 1: a month or a year, then it's a forward contract
Speaker 1: and it's legal. So it's the opposite like an onion's
Speaker 1: a forward contract is illegal and stocks naked spot contract
Speaker 1: is illegal.
Speaker 2: We spent seven minutes on this question.
Speaker 1: Okay, you're really you're really going to hold me to
Speaker 1: twenty minutes of this episode? All right?
Speaker 4: Mail mail bag from Daniel.
Speaker 1: Why don't the underwriters for IPA seem to factor in
Speaker 1: retail menia? It seems like something you could do as
Speaker 1: an underwriter is have an analyst through the due diligence,
Speaker 1: spend thousands of hours in Excel cunching the numbers, get
Speaker 1: a fair valuation for the stock, and then when you
Speaker 1: have the final number, the managing product can just multiply
Speaker 1: it by two because a bunch of retail traders will
Speaker 1: buy it anyway. But they don't seem to do that,
Speaker 1: even though it seems like it would make sense. Also,
Speaker 1: who gets fired when a company trades on its first
Speaker 1: day at two hundred percent above the IPO press and
Speaker 1: who gets to retire and buy a yacht? So this
Speaker 1: is about Figma.
Speaker 2: I think yes, I was about to bring up Figma,
Speaker 2: because that's exactly what happens.
Speaker 1: Right. So Figma, by the time this areas will have
Speaker 1: done an IPO about two weeks ago. But Figma did
Speaker 1: an IPO where it's sold stock at thirty three dollars
Speaker 1: a share and like it bounced to like one hundred
Speaker 1: and twelve or something in the firstance. And every time
Speaker 1: that happens, people and make people, I mean Bill Gurley
Speaker 1: specifically go on Twitter to complain about IPO Pops and
Speaker 1: how the company left money on the table, right, And
Speaker 1: people who work in capital markets and people who work
Speaker 1: at Figma do not think that way. Right, Like Figma
Speaker 1: and it's venture capitalists, we're very happy to leave money
Speaker 1: on the table.
Speaker 2: Yeah, talk more because this is inevitably going to happen again.
Speaker 1: It's happened for decades. Yeah, people who have Bill Curley
Speaker 1: is complained about for decades. It's it's just like so
Speaker 1: from Figma's perspective, they are a company with a shareholder base,
Speaker 1: and they're shifting their shareholder base quite dramatically, right, They're
Speaker 1: going from these venture capitalists who own them in the
Speaker 1: private markets to public investors who own them in the
Speaker 1: public markets. And if your pigmacy you have a relationship
Speaker 1: with your investors, I'm getting a whole new set of investors.
Speaker 1: I want a relationship with them. I want good investors.
Speaker 1: I want investors who I think are in it for
Speaker 1: the long term and will be supportive of me, and
Speaker 1: will be like good advisors and will be you know,
Speaker 1: not flighty, and not get mad at me if like
Speaker 1: the stock goes down one day, and who believe in
Speaker 1: my long term vision? And so you go out and
Speaker 1: meet with a bunch of investors and there's some that
Speaker 1: you like, and then they say, I'll buy the stock
Speaker 1: at this price. You know, okay, great, here have a
Speaker 1: lot of the stock. And then some other people at
Speaker 1: like Citadel will buy it at a higher price. And
Speaker 1: I don't want those guys. I don't want the long
Speaker 1: term guys. And so you pick and like the Bloomberg
Speaker 1: had in this, like there were specific long term investors
Speaker 1: they wanted in the stock, and if they raised the price,
Speaker 1: they could easily get the deal done, but they would
Speaker 1: lose those people. And they're like, no, I'd rather have
Speaker 1: those people and the stock they're selling in this deal
Speaker 1: just doesn't matter in the long term. What matters in
Speaker 1: the long term is like their long term relationship with
Speaker 1: their investor base and with the capital markets, and giving
Speaker 1: everyone a pop on the first day makes investors love you,
Speaker 1: and so it's just better for like the long term
Speaker 1: business and similarly, you know, speaking about it was the
Speaker 1: company sold some stock and then sheraldon you know, the
Speaker 1: venture capitalists and like executives sold some stock and those
Speaker 1: people you know did fine, like they made money, and
Speaker 1: then the rest of their stock because they didn't sell
Speaker 1: all their stock, The rest of their stock is now
Speaker 1: worth a lot because the stock traded up, and having
Speaker 1: the stock trade up makes it easier for them to
Speaker 1: sell stock in the future, and they're happy with that.
Speaker 1: This is why you know, everyone is happy with an
Speaker 1: IPO pot because like they didn't need that money that much, right, Like, yeah,
Speaker 1: the amount of money they left on the table is
Speaker 1: not that important compared to like setting up the long
Speaker 1: term relationship. That's like the short answer to like the
Speaker 1: who gets fired question, the answer, no one gets fired.
Speaker 1: And particularly like what would be bad is if the
Speaker 1: bankers and this does happen, honestly, if the bankers went
Speaker 1: to Figma and we're like, you cannot price as a
Speaker 1: penny above thirty three. The book is really weak right here,
Speaker 1: and we don't think it'll trade well at thirty three,
Speaker 1: and Figmas like, we really wanted thirty five. But if
Speaker 1: you insist, and then it traded up to one hundred
Speaker 1: and twelve, Like the bankers look really stupid. That's what
Speaker 1: happened here. Like what happened here is they're like we're
Speaker 1: forty times covered, like there's a ton of demand, but
Speaker 1: these investors will be out above thirty three and figumas,
Speaker 1: Like I'd rather have those investors like they were fully
Speaker 1: informed here, reasonably, fully important. The other thing I want
Speaker 1: talking about is Daniel's original question is why don't they
Speaker 1: factor in retail mania? They do, but it is an
Speaker 1: interesting question. Like my impression is that when I was
Speaker 1: an ECM banker, you know, a decade ago, retail was
Speaker 1: a pretty small part of the experience of doing an IPO,
Speaker 1: and you thought of institutions as price letters. And then
Speaker 1: you get like you expected a little bump from retail
Speaker 1: because like the day after the deal prices, all the
Speaker 1: retail people who couldn't get into the dealer will want
Speaker 1: to buy, and so they'll be like a nice lift there.
Speaker 1: But it's not. It's not a mania. And now I
Speaker 1: think e CM bankers equity couple of markets bankers are
Speaker 1: having to figure out how to think about meme stocks
Speaker 1: and retail mania. Yeah, it's not so much in the
Speaker 1: IPO business. It's in the like going to companies that
Speaker 1: might be meme stocks and saying you should really haven't
Speaker 1: at the market stock offering setup, because if if a
Speaker 1: meme hits, you want to be able to sell us
Speaker 1: talking to it. And so I've talked to ESM bankers
Speaker 1: and like there are thinking about how to capitalize on
Speaker 1: retail insanity. It's not natural to them, like they you know,
Speaker 1: they spend all day talking to big institutional managers and
Speaker 1: to then also lurk on Reddit boards is a bit
Speaker 1: of a shift.
Speaker 2: It's funny, but that's just a fact of life. Now.
Speaker 1: Yeah, I haven't noticed, so they aren't thinking about it.
Speaker 1: It's just like it's a mentality shift.
Speaker 3: Yeah, mail mail bag, I really like this question from Tony.
Speaker 1: Okay, yeah, me too.
Speaker 2: Okay, I'm going to try to read it.
Speaker 1: Do it.
Speaker 2: If bitcoin treasury companies are priced irrationally as alternatives to ETFs,
Speaker 2: does that suggest a publicly traded company with a treasury strategy.
Speaker 2: It's a good alternative for alternatives that don't easily fit
Speaker 2: into an ETF. Fine art treasury company, diamonds and gems
Speaker 2: treasury company. Not actually Onion's futures treasury company, et cetera.
Speaker 2: This is a really interesting idea.
Speaker 1: So there is a gold treasure company. You wrote about it.
Speaker 1: It's called biosig because it's like a biotech company that
Speaker 1: you know, they got bored of being a aotech company
Speaker 1: and they're like, we're gonna.
Speaker 2: Buy a lot of gold, yeah, which is not the
Speaker 2: trade that a lot of people are making. I feel
Speaker 2: like biotech is more interesting than gold.
Speaker 1: But anyway, they're not like pivoting to being a gold miner.
Speaker 1: They're just buying a lot of gold and they're a
Speaker 1: treasury company. So yes, it's like an ETF. And right,
Speaker 1: the thought process that Tony had is the thought process
Speaker 1: that a lot of CEO's of small biotech companies have had,
Speaker 1: which is that if you're a bitcoin treasury company, your
Speaker 1: stock trades that two times give or take, you're a
Speaker 1: NAV yeah, and that's much better than being an ETF,
Speaker 1: where you trade pretty rigorously at one time you're an AV.
Speaker 1: And so every crypto person has started a crypto treasury
Speaker 1: company because you can, you know, double the value of
Speaker 1: your crypto. And then people look around they're like what
Speaker 1: else can we do that too? And gold seems to
Speaker 1: be part of the answer. This company, it's like the
Speaker 1: fundraise is weird, so it's hard to tell what their
Speaker 1: premium is, but they do seem to be trading at
Speaker 1: a premium to the value of the gold.
Speaker 2: Yeah, didn't games Stop by diamond like some sort of miners.
Speaker 1: Oh no, no, amc about a gold mine. But that
Speaker 1: was that was long before the treasury company.
Speaker 2: That was something that was just.
Speaker 1: The comedy thing. But no, actually some company bought Game Stop.
Speaker 1: Stock is a treasury right, which you can't really Stock
Speaker 1: is one thing you can't really do because if you're
Speaker 1: one hundred percent of stock treasury company, you're an investment company.
Speaker 1: And this doesn't work. Yeah, but Tony is right that,
Speaker 1: like bio saying, is zones gold but it like wants
Speaker 1: to be a commodity treasury company. But like other the
Speaker 1: world is your oyster. Anything that you can think of
Speaker 1: that you want to be a treasury company of, you
Speaker 1: can try it.
Speaker 2: This is so exciting, right, So there's two.
Speaker 1: Problems with it, maybe one of the two problems. One
Speaker 1: problem is you have to sell it to retail, right,
Speaker 1: like crypto, this is like a known playbook and it's
Speaker 1: kind of a little thin, right, Everyone says the same things,
Speaker 1: like we're gonna, you know, do investor education and like
Speaker 1: modernize the payment system, and like eventually people stop believing it,
Speaker 1: and so like the premium and crypto is like slowly eroding. Yeah,
Speaker 1: but you have to tell a new story with a
Speaker 1: new thing, and gold is like a crypto adjacent story.
Speaker 2: Right, I'm not excited about gold.
Speaker 1: No, I understand, but you're not excited about bitcoin. Try
Speaker 1: companies necessarily.
Speaker 2: Either, maybe, well, but I'm more excited by the idea
Speaker 2: of you could have a treasury company for fine art
Speaker 2: for example.
Speaker 1: Right, So you need a story and the story needs
Speaker 1: to appeal to a lot of people, and those people
Speaker 1: ideally or like retail weirdos on Reddit, but like there's
Speaker 1: a lot of stories you can tell, yeah on or
Speaker 1: it's a great.
Speaker 2: Song dinosaur bones, dinosaur bones.
Speaker 1: The other thing you need to do, Like a treasury
Speaker 1: company is not really about the thing crypto or gold
Speaker 1: or fine art or whatever. What a treasury company is.
Speaker 1: What micro strategy is is a company that has stock
Speaker 1: that trades above it's net asset value, and it sells
Speaker 1: stock and above the net asset value, and it buys
Speaker 1: more assets and it's just a flywheel. I read some
Speaker 1: paper that called it a creative dilution. The more stock
Speaker 1: you sell, the more value you create for your shareholders,
Speaker 1: because like you're selling stock for two hundred dollars and
Speaker 1: then buying two undred dollars s worth of stuff than
Speaker 1: your stock has gone up by four hundred dollars. That's
Speaker 1: a great trade. Yeah, it has nothing to do with
Speaker 1: the underlying thing. It has to do with the amount
Speaker 1: of high you can get and then like with investors
Speaker 1: buying into that you know, repeated process. So if you
Speaker 1: can do that, like that's the first step is can
Speaker 1: you get people to pay one hundred percent premium to
Speaker 1: an asset value? If you can, anything you buy, it's
Speaker 1: going to be a good strategy. It's going to work, right, Like,
Speaker 1: it's going to be a good trade for shareolders. But
Speaker 1: that relies on you know, the original shareholders buying for
Speaker 1: two times an av Yeah, and the question is can
Speaker 1: you sell that story? And I do think that Tony
Speaker 1: is right that you can sell that story for things
Speaker 1: other than crypto. I think gold seems to kind of work.
Speaker 1: I think so m should definitely do a Diamond's one
Speaker 1: fine art whatever. But like onions, probably not, but like
Speaker 1: I don't know, probably not.
Speaker 2: On onions. I am excited because you can put gold
Speaker 2: in an ETF. You can also put crypt.
Speaker 1: You can't sell it at two percent of NAV.
Speaker 2: I know that's really important. No, I want to see
Speaker 2: them put an asset that you can't put into an
Speaker 2: ETF into a treasury company such as fine.
Speaker 1: Art, but I think the private credit treasure company.
Speaker 4: There you go, mail bag, mail bag Duncan.
Speaker 2: Duncan has a multiple part aer here. No it's not,
Speaker 2: it's got two parts.
Speaker 1: Well, why aren't there formalized hedging markets for sports outcomes?
Speaker 1: I must imagine there are chains of bars and restaurants
Speaker 1: concentrated in areas associated with sports venues. Those locations position
Speaker 1: them to benefit from additional home games incremental spending associated
Speaker 1: with large victories, but only in positive outcomes. Bars around
Speaker 1: Wrigleyfield in Chicago be interested in hedging the risk associated
Speaker 1: with potentially ten plus more home outings in a season
Speaker 1: if they make the playoffs. So this is a question.
Speaker 1: This comes up a lot weirdly, like there are now,
Speaker 1: as I mentioned, futures exchanges where you can trade futures
Speaker 1: on things like will the Cubs win tonight, and in
Speaker 1: the ordinary course you would say, oh, yes, that's sports gambling,
Speaker 1: but it's very important to a lot of people, including
Speaker 1: it Robinhood and also Calshie and also other prediction markets.
Speaker 1: It's very important to a lot of people to say no, no, no,
Speaker 1: that's not sports gampling. That's a futures market. And what
Speaker 1: makes a thing a futures market rather than a sports book.
Speaker 1: Part of the answer is, like in theory, in a
Speaker 1: futures market, you are trading or betting against other participants
Speaker 1: in the market rather than against the book. This is
Speaker 1: not actually important like actual sports books, like you can
Speaker 1: have a sports book website where like the people taking
Speaker 1: the other side of the bet are market makers, and
Speaker 1: like on a futures exchange, the people taking the other
Speaker 1: side of the bet are probably market makers. So it's
Speaker 1: not as different as it seems. Like technically, yeah, if
Speaker 1: you go to a sports book, you're betting against the
Speaker 1: sports book. If you're going to a futures exchange, you're
Speaker 1: betting against other participants in the futures exchange. But the
Speaker 1: other thing that makes it different is there's this sense
Speaker 1: that futures exchanges offer like some sort of real economic
Speaker 1: benefit other than gambling. And when you think about sports futures, like,
Speaker 1: what is that benefit, Well, hedging is the best answer.
Speaker 1: And so you will regularly see people say, oh, yeah,
Speaker 1: of course we should have a sports prediction market on
Speaker 1: a regulated futures exchange because bars near Wrigley Field needs
Speaker 1: to heads to the risk of not making the playoffs
Speaker 1: and you know, not having ten more home games to
Speaker 1: sell beer at. And this always struck me as absurd,
Speaker 1: but it is true that, like, you know, there's like
Speaker 1: some tiny marginal hedging benefit, and that tiny marginal hedging benefit,
Speaker 1: theoretical hedging benefit is the wedge that people use to
Speaker 1: justify futures markets as sports scambling platforms. I once hurt,
Speaker 1: like I won't start to a person at who works
Speaker 1: in the sports features business who said, well, you know,
Speaker 1: there's like big brands that sign multimillion dollar marketing deals
Speaker 1: with you know, tennis stars, and like their performance in
Speaker 1: tennis tournaments is economically material to like Nike or whatever,
Speaker 1: so they should be able to hedge that in the
Speaker 1: sports futures market, right, So sure, why not? So that's
Speaker 1: why that's why this is all happening, right, Like the
Speaker 1: reason that there are increasingly legal and popular sports futures
Speaker 1: exchange is because they can be like, no, it's not gambling,
Speaker 1: it's for bars to hedge.
Speaker 2: Yeah, totally innocent. Great question. Duncan mail Bag nail Bag
Speaker 2: Leo also has a question, and his question is that
Speaker 2: I just opened a no penalty CD at my bank
Speaker 2: and I'm trying to figure out how this product makes
Speaker 2: any sense for the bank. The terms are basically that
Speaker 2: it's about twenty five basis points higher interest than their
Speaker 2: high yield savings with a fixed rate, and your money
Speaker 2: is locked up for the first week and after that
Speaker 2: you can withdraw all your money, including to date earned interest,
Speaker 2: at any time. But you have to take out all
Speaker 2: your money at once. How is this a higher yield
Speaker 2: product than a.
Speaker 1: Savings Yeah, okay, this is like all of retail finance. Yeah,
Speaker 1: is like this, this is credit card rewards and everything. Right,
Speaker 1: this is the business of a bank. Is like monetizing
Speaker 1: depositor inattention. We talked about, I think on the podcast
Speaker 1: the CFPB case against Teple. Right, so Capital One they
Speaker 1: offered this highild saving account called three sixty Savings and
Speaker 1: it had a high yield and people put their money
Speaker 1: into it, and then after a while they started lowering
Speaker 1: the yield, or I guess they lowered the yield one
Speaker 1: like rates cent to zero and they just didn't bring
Speaker 1: it back up. And instead of what they did is
Speaker 1: they launched a knew high yeld saving the account called
Speaker 1: three sixty Performance Savings that did have a high yield,
Speaker 1: and so they could advertise the high yield on the
Speaker 1: new account to new customers and bring in new customers
Speaker 1: with competitive rates. But the old customers, who didn't notice
Speaker 1: that they were getting low rates, just continued to get
Speaker 1: low rates. Yes, you just do this forever you get
Speaker 1: in trouble, although not anymore. They were briefly in trouble,
Speaker 1: but then they weren't. But this is everything, right the
Speaker 1: point of you know, Leo was asking about a no
Speaker 1: penalty CD where he basically gets a higher rate than
Speaker 1: a savings account, but his money isn't actually locked up
Speaker 1: like traditionally a CD your money is locked up for
Speaker 1: three months or six months or whatever. Right then this
Speaker 1: is one where your money is not locked up, so
Speaker 1: it's really like a savings account, but it has a
Speaker 1: higher yield than your saving account. The reason they're offering
Speaker 1: that is because they are hoping that you will think
Speaker 1: of it as a CD and you will forget and
Speaker 1: you won't take your money out even if rates go up,
Speaker 1: and so they will get the advantage of paying you
Speaker 1: a lower rate and it will feel to them like
Speaker 1: a CD, and they will get the sort of like
Speaker 1: financial benefits of a CD. And if you are ruthlessly
Speaker 1: attentive and value maximizing, you will get some profit out
Speaker 1: of this at the expense of the bank. But the
Speaker 1: bank is playing a statistical game. They figure most of
Speaker 1: their clients will not do that, and so they will
Speaker 1: make money on it. Yeah, it's also probably a rates bet,
Speaker 1: like they're probably just betting that rates will go down
Speaker 1: and so it won't cost them anything, right, Like it's
Speaker 1: like a ya, they're making a directional bet. But the
Speaker 1: main thing is just like they expect people not to.
Speaker 2: Maximize it paying attention.
Speaker 1: Leoh, and this is like everything. The credit card rewards
Speaker 1: are like the classic case where every credit card product
Speaker 1: has really high rewards on some category of spending. And
Speaker 1: if you are a ruthless maximizer and there are people
Speaker 1: there are four am where people do this. Right, if
Speaker 1: you're a ruthless maximizer, you will use your gas credit
Speaker 1: card only to buy gas, and you'll use your dining
Speaker 1: credit card only to pay for meals, and you'll use
Speaker 1: your travel credit or only for travel, and you'll get
Speaker 1: a very high rate of cash back on all of
Speaker 1: your purchases, and you will cost each of your credit
Speaker 1: card issuers money. But almost no one is like that.
Speaker 1: Almost everyone picks one credit card and uses it for everything,
Speaker 1: and they get high cash back on one category of
Speaker 1: spending and nothing on or like low cash back on
Speaker 1: the other categories. And the issuers make money. And this
Speaker 1: is like so clearly statistically true that the issuers have
Speaker 1: a great business even though if you're the one person
Speaker 1: who does it right, you'll make money. And so there
Speaker 1: are forums and money stuff for you doers who are
Speaker 1: probably like more maximizing than like the average customer. The
Speaker 1: bank makes money on the average customer. All right, we
Speaker 1: have a few more questions.
Speaker 2: We have some rapid fire questions.
Speaker 4: All nail bag.
Speaker 1: Henry asks, what is your spirit security? Like a spirit animal,
Speaker 1: but a security.
Speaker 2: So now I'm worried it's a commodity. I was going
Speaker 2: to say, cattle, futures, commodities. Yeah, so let's just kind
Speaker 2: of grim. Yeah, but you know, don't you sometimes just
Speaker 2: feel like a beaten mule.
Speaker 1: That's still different from a slaughtered cow.
Speaker 2: What's your spirit security?
Speaker 1: My spirit security is feline Prides, which is I believe
Speaker 1: trademarked by Merrill Lynch. I was an equity link security
Speaker 1: STRUCTURER at.
Speaker 2: A bank and name the bank, And there's.
Speaker 1: A formula acuaity link security called a mandatory convertible unit,
Speaker 1: which is ferociously complicated. Basically, it's like a variable share
Speaker 1: forward contract stocked by this bond that gets remarketed at
Speaker 1: the end of the forward term. It's so complicated. But
Speaker 1: also in the glory days of derivative structuring, these things
Speaker 1: had to have names and they had to have acronyms,
Speaker 1: right like now they're called the mandatary and verbal units.
Speaker 1: But there's some flavor I don't remember the exact details,
Speaker 1: but some flavor of mandatory convertible units that were I
Speaker 1: believe trademarked by Marilynch that were called feline prides, which
Speaker 1: stood for something like flexible equity linked come on pries
Speaker 1: is like preferred yea remarketed equity and strata. I made
Speaker 1: it up like that's not what it's not for, but
Speaker 1: you can look it up. Maybe it probably exists money
Speaker 1: stuff called but yeah. Feline prides were a form of
Speaker 1: mandatory converbal unit that were complicated enough as a security
Speaker 1: but incredible, like the pinnacle of acronymic work of all
Speaker 1: of financed was feline prids.
Speaker 2: Man mail Bag, I like this question. I have a
Speaker 2: short answer here. How does Katie feel about being described
Speaker 2: by Google as an Internet personality rather than, say, a
Speaker 2: financial journalist. I like that because it suggests I have
Speaker 2: a personality, so I'm fine with it.
Speaker 1: Yeah, I would probably be happy with I don't know
Speaker 1: how I'm described by Google, but Internet personalities. Yeah, it's
Speaker 1: pretty much the pinnacle of careers these days.
Speaker 2: I feel great, Mike.
Speaker 4: Mail Bag, nail Bag.
Speaker 1: And from Joel. I have a question for Katy our
Speaker 1: business I should read this and anchor voice, but I can't.
Speaker 2: I'm not trained to put on the mask.
Speaker 1: I have a question for Katie. Our business news network
Speaker 1: anchors specifically trained on vocal patterns designed to make everything
Speaker 1: sound tense and serious. When I listen to you on
Speaker 1: the podcast, they don't notice this. However, I happen to
Speaker 1: catch you on Bloomberg TV while traveling, and you sounded different.
Speaker 1: It fits the pattern I hear on CNBC, Fox Business,
Speaker 1: et cetera. But I've never observed this on other live
Speaker 1: TV news formats in a sustained way. Maybe it's just me.
Speaker 2: I love this question, and I ever really thought about it,
Speaker 2: and I don't think I've ever been trained for me.
Speaker 2: Maybe I should have been. So there's different types of
Speaker 2: speaking that you do on air as as an anchor.
Speaker 2: There's reading from the prompter, you know, when you're just
Speaker 2: reading the intro to a guest or straight news, and
Speaker 2: then there's the voice that you use while asking questions.
Speaker 2: And by the way, I come up with my own questions.
Speaker 2: I get this question a lot, actually, like do they
Speaker 2: write questions for you? And it's like, no, they don't anyway. Yeah,
Speaker 2: if you're reading from the prompter, prompter is written in
Speaker 2: such a way that you kind of naturally fall into
Speaker 2: like the anchor voice. Also, I don't know, I just
Speaker 2: feel like it's osmosis. Like I'm sitting next to people
Speaker 2: who have also been anchoring for a lot longer than me,
Speaker 2: and they talk in that voice, so you kind of
Speaker 2: just talk in that voice. And then when you're asking
Speaker 2: someone a question, just the I don't know, just the
Speaker 2: stage of television. You talk differently than you would on
Speaker 2: a podcast. But then even if I'm on TV, the
Speaker 2: way that I'm answering a question is different than the
Speaker 2: way I'm asking a question. I think just the fact
Speaker 2: that I'm on this podcast and I'm talking versus asking
Speaker 2: a question or answering a question, this is more of
Speaker 2: a conversation. So I sound more like a normal human.
Speaker 2: But I haven't. No one told me to talk that way.
Speaker 2: It's just kind of what you do, you know.
Speaker 1: It's just like natural selection. Yeah, if you didn't talk
Speaker 1: that way, you wouldn't be on television.
Speaker 2: Yeah.
Speaker 1: Do you think that you make everything sound tense and serious?
Speaker 2: I try not to. I mean, if it's a tense
Speaker 2: and serious means yeah, I mean you do speak with
Speaker 2: some urgency on TV. I realize. Sort of a weird
Speaker 2: fact of being on television is that time feels different
Speaker 2: on television, Like ten seconds. If someone says ten seconds.
Speaker 2: In my ear, there's so much you can say in
Speaker 2: ten seconds if you're on TV, yes, if you're in
Speaker 2: real life.
Speaker 1: I don't do a lot of TV, but I have
Speaker 1: noticed that, Yeah, like a three minute time feels like
Speaker 1: an hour.
Speaker 2: Yeah, like even when they're counting down five four, three,
Speaker 2: Like I know I should probably be tagging saying this
Speaker 2: is Boomberg at three, but you really don't need to
Speaker 2: say it until two, you know, So it really warps
Speaker 2: your sense of time. And I think that that urgency
Speaker 2: can sometimes show up in sounding serious.
Speaker 1: No, I know what you mean, because because you said
Speaker 1: we're going to do this segment in twenty minutes, yeah,
Speaker 1: later passed it.
Speaker 2: I could have said so many words in this time.
Speaker 2: All right, that was fun. I think we'll air this.
Speaker 1: Yeah sounds good. All right, so we'll see you in
Speaker 1: two weeks.
Speaker 2: I hope you're having fun on vacation.
Speaker 1: Yeah, yeah, right right. It's now possibly August fifteenth. Then
Speaker 1: we'll be back on August possibly twenty ninth. I don't
Speaker 1: even know.
Speaker 2: See you.
Speaker 1: Then we'll see you sometimes. And that was the Money
Speaker 1: Sluf Podcast.
Speaker 2: I'm Matt Levian and I'm Katie Greifeld.
Speaker 1: You can find my work by subscribing to the moneystuffnewsletter
Speaker 1: on Bloomberg dot com.
Speaker 2: And you can find me on Bloomberg TV every day
Speaker 2: on Open Interest between nine to eleven am Eastern we'd
Speaker 2: love to hear from you.
Speaker 1: You can send an email to Moneypod at bloomberg dot net,
Speaker 1: ask us a question, and we might answer it on air.
Speaker 2: You can also subscribe to our show wherever you're listening
Speaker 2: right now and leave us a review. It helps more
Speaker 2: people find the show.
Speaker 1: The Money Stuff Podcast is produced by Anamasarakus and Moses
Speaker 1: onam Our.
Speaker 2: Theme music was composed by Blake Maples and Stage Bauman
Speaker 2: is Bloomberg's head of Podcasts.
Speaker 1: Thanks for listening to The Money Stuff Podcast. We'll be
Speaker 1: back next week with more stuff