Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Hello and welcome to
Speaker 1: The Money Stuff Podcast. You're a weekly podcast where we
Speaker 1: talk about stuff related to money. I'm Matt Levian and
Speaker 1: I write the Money Stuff column for Bloomberg Opinion.
Speaker 2: And I'm Katie Greifeld, a reporter for Bloomberg News and
Speaker 2: an anchor for Bloomberg Television.
Speaker 1: That's Today. It was an all tariffs episode of The
Speaker 1: Money suff.
Speaker 2: I actually would be the most prepared out in any
Speaker 2: episode that we've ever done.
Speaker 1: We're talking about tariffs, non fought for forty eight hours.
Speaker 2: I was actually at my Grandmam's apartment last night, or
Speaker 2: I guess in the afternoon.
Speaker 1: Talking about taffs.
Speaker 2: Well, I was with my dad, and my dad and
Speaker 2: I both were like, can we turn on the TV?
Speaker 2: My grandma was like sure, yeah, so we watched it
Speaker 2: with her. No, yeah, the Rose Garden. Anyway, we're not
Speaker 2: talking about tariffs. We are talking about a conservative leaning
Speaker 2: news network.
Speaker 1: That in public conservative leading. Yeah.
Speaker 2: Yeah, I don't know what news Max does. I probably should.
Speaker 1: They're a television channel that I know.
Speaker 2: I've never watched them.
Speaker 1: They've take out the vast territory to the far right
Speaker 1: of Fox News is.
Speaker 2: My understanding of it, them, you know, and their IPO.
Speaker 2: At one point they had a market value of over
Speaker 2: thirty billion dollars, which had them more valuable than Fox
Speaker 2: for a brief moments of time. The stock has since
Speaker 2: started to come back to earth.
Speaker 1: I don't pretend to understand this anymore. Yeah, the meme thing,
Speaker 1: like the meme ipo thing. I think of this in
Speaker 1: comparison to Trumpet Media and technology grew up the other
Speaker 1: let's say, right wing media network. Maybe that also has
Speaker 1: a very high valuation relative to its fairly low revenue
Speaker 1: and net loss, and trump Media is owned by people
Speaker 1: who are like, yeah, great, but like News is probably
Speaker 1: owned by Thomas Pettif, who, in addition to being a
Speaker 1: billionaire Republican downer, is also like a trader, you know,
Speaker 1: Like he's the founder of Attractor Breakers, So like the ft.
Speaker 1: You got him on the phone and he was like,
Speaker 1: he said, he was stunned by the price. I think
Speaker 1: newsbacks is a great company, and it's going to have
Speaker 1: a very bread feature, but I think that it does
Speaker 1: not warrant this high price. It was just like, you know,
Speaker 1: in addition to being a real billionaire, he's like a
Speaker 1: billion dollars worth of Newsmax stock.
Speaker 2: Yeah, he owns the second largest steak. It was at
Speaker 2: one point worth at least five point four billion dollars.
Speaker 2: I wonder if he's sold.
Speaker 1: I think he's locked up. Really, I think like to
Speaker 1: ask him, like, are you going to sell? And you
Speaker 1: know I can change before the long most big sharelders
Speaker 1: are locked up in IPOs like that. And it's funny,
Speaker 1: like for the same reason that the thigh prices, some
Speaker 1: of the commentary that you'll read from enthusiasts is not
Speaker 1: always well informed. And I read someone being like, what
Speaker 1: will Newsmacks do with all of this capital while they
Speaker 1: use it to become the next big media, Like they're
Speaker 1: not getting any capital. It's just like the stock is
Speaker 1: trading in the secondary market. You know, there's like a
Speaker 1: real move among meme stocks that if your stock is meaning,
Speaker 1: you should get off at the market stock offering so
Speaker 1: you can raise money from the people who are buying
Speaker 1: your stock in the secondary market and pushing out the price.
Speaker 1: But you can't do that a week after your IPO
Speaker 1: R three days after your ip Newsmax is not selling
Speaker 1: any stock. I mean they sold stock at ten dollars
Speaker 1: before the run in the stock. But they're not making
Speaker 1: any money from this. This is just secondary training.
Speaker 2: They're not making money in general. They lost seventy two
Speaker 2: million dollars.
Speaker 1: These are separate things. If you're a meme stock, you
Speaker 1: don't make money in your business. Do you make money
Speaker 1: selling stock? But they're not even doing that.
Speaker 2: I'm old fashioned, mad, I like to go back to
Speaker 2: the That's true. I guess it's hard to predict what
Speaker 2: will become a meme stock. I would not have guessed
Speaker 2: that Newsmax was a candidate.
Speaker 1: No, not really really.
Speaker 2: Apparently, Chris Ruddy, though the CEO, was going on like
Speaker 2: cable news and pitching the IPO, which I didn't know.
Speaker 2: Had I known that, maybe I.
Speaker 1: Would to a TV channel.
Speaker 2: Yeah, that's true, but he was going on others, not
Speaker 2: Bloomberg News. To the best of my knowledge. On the podcast,
Speaker 2: I that's true, Chris Heiretti, if you're listening, I want
Speaker 2: to talk a little bit about the mechanics of this IPO.
Speaker 2: I was chatting with Bailey Lipschultz Bloomberg News about this.
Speaker 2: He's my go to guy. Yeah, on funky things. He
Speaker 2: also covers IPOs, which is a really poetic intersection. So
Speaker 2: this was a regulation A plus it's a mini ipo.
Speaker 1: Okay, mini ipo?
Speaker 2: Yeah yeah, I didn't know that. And the reason I
Speaker 2: found out is because I have another Matt in my
Speaker 2: professional life. His name is Matt Miller, and he was like, wow,
Speaker 2: the bank must have really mispriced this. And Billy made
Speaker 2: the good point that because it's a reggae plus ipo,
Speaker 2: they can only raise up to seventy five million, So
Speaker 2: it's not like this was mispriced or anything.
Speaker 1: I mean, you can solve your shares. Who are the banks?
Speaker 2: Oh, I'm so excited. Do you ask Digital Offering LLC? Oh? Yeah, yeah,
Speaker 2: Business Insider. I don't think you've seen this yet. Business Insider,
Speaker 2: just as we're talking about this on a Thursday, published
Speaker 2: a story titled Meet the tiny investment bank behind Newsmax's
Speaker 2: rip roaring stock debut. Laguna Beach, California based Digital Offering
Speaker 2: LLC was the bank behind this. Can I tell you
Speaker 2: more facts about them?
Speaker 1: I want to hear all of the facts about them.
Speaker 2: I'll tell you at least three. They have ten full
Speaker 2: time registered banker, three of whom act as principal investment bankers.
Speaker 2: They typically advise companies valued at a billion dollars or less.
Speaker 2: Those are actually all the facts I have. But I
Speaker 2: have a quote from Mark Alenowitz. I hope I'm saying
Speaker 2: his name correctly. He's a managing director there. He said,
Speaker 2: the Newsmax, as you might predict, has been huge for them.
Speaker 2: The small cap community knows who we are, but the
Speaker 2: rest of Wall Street didn't. But now they're on the map.
Speaker 1: So I'm still highly open the idea that the bank's
Speaker 1: miss priced today because like I used to be an
Speaker 1: equity capital markets banker, I think of like, well you
Speaker 1: do an IPO is you go out to institutional accounts
Speaker 1: and you build a book of institutional accounts and you
Speaker 1: put some stuff with retail. But you go to an
Speaker 1: institution and you're like, well we lost seventy million dollars
Speaker 1: one hundred seventy million over revenue. There's some cap to
Speaker 1: the valuation you're going to get, right, And if you
Speaker 1: trade on the secondary market to retail, there is not
Speaker 1: that cap or any cap right, Like you can be
Speaker 1: a thirty billion dollar company for briefly if you have
Speaker 1: those kind of numbers. And so if you go to
Speaker 1: institutional investors and say this is going to be a
Speaker 1: memes talks that are prising it at two hundred dollars,
Speaker 1: they will laugh at you. By the way, I don't
Speaker 1: want to say black Ben tried that, but like.
Speaker 2: A little bit, a little bit friend of the show.
Speaker 1: Front of the show, Black they did it. But I
Speaker 1: don't think that's the case here because the Reggae plus
Speaker 1: offering done by a small bank might have been you know,
Speaker 1: it was for the small cap community. It's not like
Speaker 1: they're selling this to fidelity necessarily. Yeah, so maybe they
Speaker 1: did misprice it as a meme matter. I don't know.
Speaker 2: I don't know. Well, it'll be interesting to see their
Speaker 2: follow up to the newsmac's debut digital offering LLC.
Speaker 1: It does feel like a real golden age for like
Speaker 1: a certain sort of like banker who is happy to
Speaker 1: work with memestock companies. Right, stuff going on? Does it
Speaker 1: going on that, like, you know, not necessarily everything wants
Speaker 1: to be doing.
Speaker 2: I don't know, I feel like the golden age might
Speaker 2: have been twenty twenty one, like these are like the
Speaker 2: kind of thing or yeah, obviously you're still having some
Speaker 2: memes stock IPOs, but there's just not a lot of
Speaker 2: IPOs and I don't know.
Speaker 1: A lot of that's right, looking at a relative golden
Speaker 1: age for the yeah memes stock bankers compared to the
Speaker 1: you know, large cap it's true tech bankers.
Speaker 2: Everyone else could talk about circle you know what to
Speaker 2: also in IPOs, this one hasn't happened yet, but it's
Speaker 2: going to theoretically circle of stable coin fame has filed
Speaker 2: for an IPO.
Speaker 1: Yeah, they filed like a long time ago, but their
Speaker 1: filing became public this day. They filed like under yeah,
Speaker 1: another special IPO rule, which is you can file confidentially,
Speaker 1: but now they're unconfidential, so you can read their filings.
Speaker 2: Got some numbers. One hundred and fifty six million dollars,
Speaker 2: that's their net in. That's on revenue of one point
Speaker 2: six eight billion dollars in twenty twenty four. My only
Speaker 2: simple question for you is how does the stable coin
Speaker 2: make money? Is that just because they're backed.
Speaker 1: By how they're making Yeah, that's it. So oh yeah,
Speaker 1: it's the best business in the world. And it's actually like,
Speaker 1: it was surprising to me that their margins are so low,
Speaker 1: and it's it's a little interesting why their margins aren't
Speaker 1: one hundred percent. Yeah, but no they make money by
Speaker 1: like they take tens of billions of dollars of deposits
Speaker 1: from customers. You know, I read about this. They don't
Speaker 1: directly put it in T bills because I think my
Speaker 1: explanation would be like that is too much of like
Speaker 1: a banking function or a financial services function, and they're
Speaker 1: like a fintech. So what they do is they take
Speaker 1: all the money and they put it in a black
Speaker 1: Rock money market fund that puts it in T bills.
Speaker 2: That's amazing.
Speaker 1: Effectively, they put it in T bills and they pay
Speaker 1: black Rock to be a sort of like adults custodian
Speaker 1: in their T bills. Yeah, they put someone in bank accounts,
Speaker 1: but it's like eighty five percent T bills. They say
Speaker 1: they make a discount to sover, but they kind of
Speaker 1: make T bill rits and then they pay as a
Speaker 1: first cut zero percent interest to their customers. Now it's
Speaker 1: like quite right, it's basically right. So they're making you know,
Speaker 1: four percent or so on tens of billions of dollars,
Speaker 1: and that might be a slight exaggeration, but it's like,
Speaker 1: you know, they're making a lot of money, and then
Speaker 1: where does it go? I mean some of it is
Speaker 1: like they have expenses because they are a tech company.
Speaker 1: They're building for sure, technological infrastructure to transfer stable coins
Speaker 1: on the blockchain, et cetera, outside et cetera. Another big
Speaker 1: part of it is like everyone knows this is a
Speaker 1: good business model. It's not quite it's quite a business
Speaker 1: a winner take all business model, but it's a little
Speaker 1: bit like you want to be the most liquid stable coin,
Speaker 1: and so they are paying platforms to be like a
Speaker 1: preferred stable coin, so like they're the stable coin of coinbase,
Speaker 1: and like there's a partnership with coinbase, and if their
Speaker 1: coins are held on coin Base, like they're paying Coinbase
Speaker 1: a lot of the interest. Right, They're paying fees to
Speaker 1: buyance to be on binance, So there's some amount of like,
Speaker 1: you know, this is a good business, and so the
Speaker 1: customer acquisition cost is kind of they're paying something.
Speaker 2: But it feels like it's only a good business when
Speaker 2: rates are high.
Speaker 1: So, right, it's such an interesting business because it's stumbled
Speaker 1: into being a good business. It started. The stable coin
Speaker 1: business started when rates were low, and everyone was like, well,
Speaker 1: it's fine if we don't get paid interest, because it
Speaker 1: was interested. You know, you don't get interest on our
Speaker 1: savings accounts, on our money market account. So it's fine. Yeah,
Speaker 1: And now the rates are high and you do get
Speaker 1: interest on your money market account, and the stablegin issuers
Speaker 1: are raking in money, and there are reasons that you
Speaker 1: can't just easily natively get that interest on your stable coin. Yeah.
Speaker 1: Think one reason is, like you know, that's like historically
Speaker 1: not how it developed, and like you know, the biggest
Speaker 1: stablekind issuers have ever liquidity advantage and they don't want
Speaker 1: to pay interest. But another reason is, like there's securities,
Speaker 1: a lot problems with doing it. If you were paying
Speaker 1: interest on a stable clin it's not in like the
Speaker 1: sort of crypto e gray area where it's probably fine.
Speaker 1: It's a money market fund and it's security. And I
Speaker 1: mean this is at least the sec theory as of
Speaker 1: four months ago. And one thing that I have written
Speaker 1: for a long time is that clearly people are going
Speaker 1: to just start issuing interest sparing stable coins that are
Speaker 1: you know, registered money market funds that trade on a blockchain.
Speaker 1: And if you look at the Circle IPO documents, like
Speaker 1: they talk about that, like they have an issuer that
Speaker 1: does that that has like a small money market fund
Speaker 1: and they are doing essentially an intersparing stable coin that
Speaker 1: you can convert into like their regular coin. And they
Speaker 1: kind of hint and I'm sure that there will be
Speaker 1: more of that and like ultimately some of this, like
Speaker 1: free money, will be returned to customers.
Speaker 2: Why am I thinking of black Rock and Securitized don't
Speaker 2: they have something everyone has?
Speaker 1: Yeah, has a tokenized market fund circle I think owns
Speaker 1: a company that does it in addition to like having
Speaker 1: their stablegoin money out of black Rock fund. Yeah, everyone's
Speaker 1: doing it. Franklin Templeton did it, like in twenty nineteen.
Speaker 1: I watched their Recognize one remember that, Yeah, And I
Speaker 1: was like, why is it not called the Benjamin And
Speaker 1: no one had a good answer.
Speaker 2: I am excited to see how this is received when
Speaker 2: it eventually does become public, because I know, you know,
Speaker 2: you think about all the other like crypto equities. I
Speaker 2: imagine this is going to trade similarly to the price
Speaker 2: of bitcoin, even though maybe it shouldn't if it's I mean,
Speaker 2: it's really just a money market fund with a lot
Speaker 2: of I mean, like you know, as a first cut.
Speaker 1: Their business is kind of like what is the market
Speaker 1: cap of like their coins outstanding and like the market
Speaker 1: cap of stable coins outstanding does have a lot to
Speaker 1: do with like demand for crypto.
Speaker 2: Yeah, that's true. It's not as direct though, as like
Speaker 2: no micro strategy owns a ton of points, so it's
Speaker 2: not exactly a proxy. It's obviously not.
Speaker 1: A pricy for bitcoin. I always think about like Golden
Speaker 1: used to say that, like their business is at on
Speaker 1: global GDP, and like the stable grend business is a
Speaker 1: bet on like crypto GDP. Right, like if if crypto
Speaker 1: is booming, like there will be more demand for stable
Speaker 1: clins Now they're separately like a competitive dynamic and table
Speaker 1: coins where like they might lose out to other stable coins.
Speaker 1: And there's like the business model of like we get
Speaker 1: interest and don't pay. Interest might be compressed and they
Speaker 1: might have to pay more interest, like you know probably
Speaker 1: speaking like the more crypto there is, the more people
Speaker 1: will want their stable colin.
Speaker 2: I wonder like what the pitch to buy circle shares is,
Speaker 2: especially if we have billions.
Speaker 1: Of dollars we get paid interest.
Speaker 2: That we don't pay, interest rates go down, Like what's
Speaker 2: the point.
Speaker 1: The pitch is? Like we are building the future of
Speaker 1: financial infrastructure, Like there's like the real upside case is
Speaker 1: like five years, the way that you normally pay for
Speaker 1: stuff will be with a regulated US stable clin instead
Speaker 1: of venmo or credit cards or checks or whatever. You
Speaker 1: will boop some circle coins to someone, right, Like, that's
Speaker 1: the upside case.
Speaker 2: It's kind of coin to think we'll still be here
Speaker 2: in five years. Yeah, right, man. You know we were
Speaker 2: talking about right leaning like social media networks boy x X,
Speaker 2: Twitter x X now part of x a I holdings. Yes, man,
Speaker 2: so I obviously immediately thought of you on.
Speaker 1: The chronic layer of Elon Musk's mergers and this technically.
Speaker 2: Yeah, I thought about texting you, but I was it
Speaker 2: was done.
Speaker 1: You spared me, right. I remember saying that it seems like.
Speaker 2: This though, isn't like that huge of a deal, Like
Speaker 2: this didn't rock your world as much as some might
Speaker 2: have expected it to.
Speaker 1: It's the biggest mn A deal this year. Yeah, and
Speaker 1: the second biggest, actually maybe the first biggest is Elon
Speaker 1: Musk's very biggest I mean like from like the Bloomberg table,
Speaker 1: which counts announced deals including announced hostile deals. And the
Speaker 1: biggest deal this year is Elon's deal to BioPen Ai,
Speaker 1: which is not a deal. It's just a bid, and
Speaker 1: it's not it's not really a bit, it's a piece
Speaker 1: of warm. It's hard. But the second biggest is this deal,
Speaker 1: which is a let's say forty five billion dollar acquisition
Speaker 1: or like a you know, one hundred and twenty five
Speaker 1: billion dollar total enterprise value of the all stock merger.
Speaker 1: It's pretty big deal, except it's like, you know, it's
Speaker 1: two companies he owns, or now one company that owns.
Speaker 2: I want to talk about valuations a little bit sure,
Speaker 2: because it kind of feels like the Xai valuation. You
Speaker 2: could poke a lot of holes in it.
Speaker 1: So a couple of things. So XAI, the Ai company,
Speaker 1: bought x the Twitter company, in an all stock deal.
Speaker 1: So xa I assumed let's say twelve million dollars of
Speaker 1: Twitter debt, and it paid let's say thirty three billion
Speaker 1: dollars of stock for x What is thirty three billion
Speaker 1: dollars worth of stock?
Speaker 2: Mean?
Speaker 1: Well, it means if you value Xai at eighty billion dollars,
Speaker 1: then you give Twitter, you know, thirty three eightieths of that,
Speaker 1: and that's thirty three billion dollars worth of stock. You
Speaker 1: don't have to believe eitheraluation. What actually happened was that, like,
Speaker 1: they merged at a ratio, right, the people who owned
Speaker 1: Xai got eighty one hundred and thirteen so of the company,
Speaker 1: and the people who owned Twitter got thirty three hundred
Speaker 1: and thirteens of the company. And that was the ratio
Speaker 1: that happened. They could have been worth eighty dollars and
Speaker 1: thirty three dollars right, or they could have been worth
Speaker 1: eighty billion dollars and thirty three billion dollars or any
Speaker 1: other number in that ratio. So you don't have to
Speaker 1: believe the valuations. And it's interesting, like the last round
Speaker 1: where Xai raised cash, it was like, I think at
Speaker 1: a fifty one billion.
Speaker 2: It was fifty one billion in December. You did point
Speaker 2: out that in mid February, Bloomberg reported that Xai was
Speaker 2: canvassing potential investors for a ten billion dollar funding round
Speaker 2: that would value it at seventy five billion dollars. But
Speaker 2: I think that happened.
Speaker 1: X raised money recently at a you know, I've been
Speaker 1: saying thirty three and forty five thirty three million dollar
Speaker 1: equity evaluation, forty five billion dollars enterprise eye, Like that
Speaker 1: was a weird round. And one thing about it is
Speaker 1: like Elon Musk put in some money, and in hindsight,
Speaker 1: you could sort of be like, well, they were doing
Speaker 1: that to like print a trade at that price, so
Speaker 1: they could justify doing the merger at that price, because
Speaker 1: like you know, there was like talk of like X
Speaker 1: being down fifty percent from where he bought it, and
Speaker 1: I think it's nice for him to close it out
Speaker 1: at the price that he paid for it. Yeah, but
Speaker 1: like you know, you don't have to believe any of
Speaker 1: those valuations because in a rough sense, like what happened
Speaker 1: here was that Elon Musk owns two companies and he's
Speaker 1: mushed them into one company. It doesn't matter what the
Speaker 1: valuation was. Now that's not quite true because there are
Speaker 1: minority shareolders in both companies, but like they're like along
Speaker 1: for the ride. They don't they don't get us say
Speaker 1: that they're not going to complain about the valuations of
Speaker 1: any of these things.
Speaker 2: So I mean, are there any anti trust concerns here
Speaker 2: at all?
Speaker 1: Like ABC anything I mentioned, Like you know, usually you
Speaker 1: have some delay between signing and closing because you have
Speaker 1: to like fill out anti trust forms. But someone pointed
Speaker 1: out they're both owned by the same guy. Anyway, So
Speaker 1: there's really no antigie concerns in many respects. The thing
Speaker 1: to say I had this deal is those companies were
Speaker 1: already the same company, So it doesn't really matter for antitrust,
Speaker 1: or for fiduciary duties, or for valuation or for anything
Speaker 1: else that they're emerging, Right, It's just like, yeah, sure,
Speaker 1: it's like he's reshuffling the paperwork for his own companies. Yeah.
Speaker 1: The one thing I'll say is, like why did he
Speaker 1: merge them? One possible answer is that these are kind
Speaker 1: of the same business and so like one reason that
Speaker 1: I think Elon Musk has a bunch of separate companies
Speaker 1: for all of the different ideas is like you want
Speaker 1: to have like the companies have some focus and have
Speaker 1: the employees of these companies have shares or options in
Speaker 1: like their one companies. They're really motivated to do a
Speaker 1: good job for that one company. And so like Tesla
Speaker 1: and SpaceX are doing different things, so like move people
Speaker 1: between them, but like you want to pay the Tesla
Speaker 1: people in Tesla options and the SpaceX people and SpaceX options.
Speaker 1: And I think that like there was a reason to
Speaker 1: separate x and XAI because like AI was really hot
Speaker 1: and he wanted to like raise money and like get
Speaker 1: employees and pressed doing AI. But like increasingly I think
Speaker 1: that they're the same business, which is that you collect
Speaker 1: a lot of data like natural language of data and
Speaker 1: information from the Twitter user corpus, right, and then you
Speaker 1: feed that into models that are built by AI engineers
Speaker 1: who work at XAI, and then you produce a large
Speaker 1: language model you distribute through Twitter, right, Like their model
Speaker 1: is distributed. It's like a.
Speaker 2: I know what GROC is is because of Twitter obviously,
Speaker 2: but that's like that's not weird.
Speaker 1: Like every AA company is different, like trying to figure
Speaker 1: out business models, but like a lot of stuff is
Speaker 1: like there's a consumer distribution right where like open ai
Speaker 1: among other products, sells access to you know, you could
Speaker 1: like subscribe and have chat GPT, right and you pay
Speaker 1: the fee every month to have like the consumer version
Speaker 1: of Chat GPT and GROC is like that, and like
Speaker 1: their distribution is through X and so it's increasing and
Speaker 1: it's like this is the same business. It's like the
Speaker 1: inputs and like the outputs are through X and like
Speaker 1: the model in the middle has done through so like
Speaker 1: everyone should be kind of working for the same goals.
Speaker 1: And like motivated the same way. So we should merge
Speaker 1: it so that like the employees are getting incentivized, yeah,
Speaker 1: to help the whole system.
Speaker 2: Well, it's a nice reminder that like nothing truly matters.
Speaker 2: And I guess that my experience on X as a
Speaker 2: user won't change, So I'm not particularly fussed about this.
Speaker 2: I do want to go to the second element in your.
Speaker 1: People were like, you know, like I wrote about this,
Speaker 1: I got a lot of people have been like, but
Speaker 1: now they're going to like steal all your data. They
Speaker 1: are It's like they already were, like they all like
Speaker 1: the commercial relationship like already existed X. I was already
Speaker 1: paying X for like data and distribution, and like it
Speaker 1: was already standing all your data sort of using all
Speaker 1: of your data for sure. So there's no there's no
Speaker 1: real change, I don't think.
Speaker 2: I do want to go to the second element in
Speaker 2: the Musk Mars conglomerate that you penned. You're right, nothing
Speaker 2: is permanent, and if one of the company succeeds while
Speaker 2: another one has some temporary struggles, the winner can subsidize
Speaker 2: or buy the loser. Talking about Musk's portfolio of different companies, this.
Speaker 1: Is like Tesla acquired Solar City years ago and a
Speaker 1: deal that people suit over and they kind of kind
Speaker 1: of looked like a ballout of some Yeah.
Speaker 2: Well you could see the reverse logic and like Tesla
Speaker 2: buying Xai in a distant reality because Tesla is really
Speaker 2: in the hurt locker. But I don't think Xai could
Speaker 2: buy Tesla. It still has a market cap of something.
Speaker 1: They're saying buying it would be a merger. Merger, would
Speaker 1: be a stock merger, and I think it would be
Speaker 1: hard for a number of reasons, one of which is,
Speaker 1: like I just made the case that x and xaire
Speaker 1: the same business. Yes, this is a different business.
Speaker 2: Yes that's true.
Speaker 1: He's overlap or you're doing AI stuff to make the
Speaker 1: self driving cars, but it's a pretty different business.
Speaker 2: Hasn't he said that he wants Tesla to be an
Speaker 2: AI company.
Speaker 1: I might, Well, it is an AI self driving car
Speaker 1: comp company, but it's very different, you know, but the
Speaker 1: way there's some overlap, but it's not the same business
Speaker 1: model or distribution. But then also like this deal is
Speaker 1: so easy because they're private companies. M M. There are
Speaker 1: shoulders other than him and both of these companies, but
Speaker 1: like they're there because they him. They're not going to complain.
Speaker 1: Dessa is a different situation, right, Like, every shareholder in
Speaker 1: XAI or x is there because they like trust Elon
Speaker 1: Musk and they want him to do stuff right, and
Speaker 1: they will give him a lot of leeway to do
Speaker 1: the stuff he thinks is good. Many vocal retail investors
Speaker 1: vocal institutional investors too, and Tesla are like that, but
Speaker 1: not all of them. No, Like, the one thing that
Speaker 1: exists in Tesla is there are people who like really
Speaker 1: don't like Elon Musk who will buy Tesla stock in
Speaker 1: order to be able to complain about Elon Musk. Right,
Speaker 1: Like I read this week about the controller of the
Speaker 1: City of New York, Right, Like New York Pension funds
Speaker 1: own a lot of Tesla stock. This is not because
Speaker 1: they're huge Elon Musk fans, right, Some of it is
Speaker 1: because they're like sort of indexy. Yeah, but also you
Speaker 1: just do it to be like, I'll keep an eye
Speaker 1: on that Elon Musk character. All own some of his stock,
Speaker 1: and so like the controllers sent a letter to like
Speaker 1: the legal department of the pension fund saying we should
Speaker 1: sue Elon Musk because he is distracted by his role
Speaker 1: in the government, and he is advocating policies that are
Speaker 1: bad for Tesla, and like you know, they're like you say,
Speaker 1: Tesla's in the hard locker. It's because like you know,
Speaker 1: there's like boycotts and and stuff because people don't like.
Speaker 2: That's one part of it.
Speaker 1: But yeah, yeah, sure, right right.
Speaker 2: The ha'd some pretty ugly delivery numbers, which I think some.
Speaker 1: People, including the control of this city of New York,
Speaker 1: would say is in part due to slackening demand because
Speaker 1: people are mad at Elon Musk's politics.
Speaker 2: Right, I'm also anti EV, and I think that I
Speaker 2: don't know they've reached their addressable market on the.
Speaker 1: Side, all right, But like if you think about the
Speaker 1: people who are like in the addressable market or like
Speaker 1: people are like I love an EV and the people
Speaker 1: who are like I also love far right politics, like
Speaker 1: you know, there's some disjunction there anyway, though, So like
Speaker 1: the New York might sue for like securities fraud for doage,
Speaker 1: which is you know, a real everything is security. But anyway,
Speaker 1: my point is only that Tesla, if it were to
Speaker 1: merge with XAI, would be all SARTs of lawsuits that
Speaker 1: you don't have when it's all private companies.
Speaker 2: That's true. Well, I guess it would make more sense
Speaker 2: with SpaceX since they both make things that go fast.
Speaker 2: But that's a gross over simplification.
Speaker 1: There was that time I think all the time that
Speaker 1: Elion must treated that the next Tess the model would
Speaker 1: have rocket posters and be able to fly, And like
Speaker 1: there were articles that were like, how feasible? Is this
Speaker 1: just a public company saying this stuff? And you know
Speaker 1: this is like seven years ago?
Speaker 2: Did he mean it back when it happened things mattered
Speaker 2: back then?
Speaker 1: Well?
Speaker 2: No, no, a little bit seven years ago.
Speaker 1: I actually don't know, might be any number of years ago.
Speaker 1: It's more than three in.
Speaker 2: Less than fifteen pre pandemic. That's why I think about things.
Speaker 1: Should we talk about substitute teachers?
Speaker 2: We absolutely should. Have you seen lately what substituted teachers
Speaker 2: in Maryland are making?
Speaker 1: Seven million dollar.
Speaker 2: Louise? What are we doing?
Speaker 1: Yeah, So there's a story about like a Maryland state
Speaker 1: audit of like the Prince George's County school system that
Speaker 1: found various administrative errors, sloppiness, And the one that I
Speaker 1: was drawn to is that a substitute teacher taught for
Speaker 1: like three days, and they entered this teacher's information into
Speaker 1: the system to some them like a you know, check
Speaker 1: for their few days of work. And they put the
Speaker 1: teacher's ID number into the hours worked field, and the
Speaker 1: ID number had more digits than you want in the
Speaker 1: hours work field. And so they sent the person a
Speaker 1: check for seven million dollars. And they noticed that fifty
Speaker 1: days later and asked for it back, and the teacher
Speaker 1: gave it back. And I just like to do it.
Speaker 1: Imagine what this person did. You've seen this person on
Speaker 1: the gender of the teacher. I imagine what the teacher
Speaker 1: did in those fifty days, and so do my readers.
Speaker 1: There's a lot of emails about this. Most of them
Speaker 1: were to the effect of, you take that money, you
Speaker 1: put it in a money market fund. Fifty days later,
Speaker 1: when they ask for the money back, you give it back,
Speaker 1: and you keep the thirty to fifty thousand dollars spending
Speaker 1: exactly how you count the tens of thousand dollars of
Speaker 1: interest is yours to keep. You're briefly the owner of
Speaker 1: seven million dollars. But you you know, you can collect
Speaker 1: interest on seven million dollars, and it's a meaningful amount
Speaker 1: of money.
Speaker 2: Absolutely, that's like.
Speaker 1: The most reasonable thing that you can do with it.
Speaker 1: The other thing that someone sent me was like, you
Speaker 1: should go to a trading firm. This is someone who
Speaker 1: works like a trading firm. He's like, you should go
Speaker 1: to like an insurance company or trading firm and buy
Speaker 1: insurance on this. You should be like, I will give
Speaker 1: you this person's had like three and a half million dollars,
Speaker 1: three and a half million dollars, and if they come
Speaker 1: to me for the money back, you give them seven
Speaker 1: million dollars, and if they don't, you keep the three
Speaker 1: and a half million dollars. So you're paying an insurance
Speaker 1: rooom for. Are they going to ask you for the
Speaker 1: money back? Now? I don't think any trading firm would
Speaker 1: do that at fifty percent odds, But you could give
Speaker 1: them like six point eight million dollars and someone might
Speaker 1: take that trade and then you keep the two hundred thousand.
Speaker 1: You know, the trade you can do.
Speaker 2: Maybe I would love to know what this person actually did,
Speaker 2: though I don't think that we can get this person
Speaker 2: on the podcast out.
Speaker 1: On their checking account for Are you sure? No, that's sure?
Speaker 2: I mean, this is the whole point of what we're reading.
Speaker 2: But you are magic seven million dollars, You're just an
Speaker 2: ordinary person. You just leave it in your checking account.
Speaker 1: You weren't magic, you were mistakenly paid it. Yeah, Now
Speaker 1: there's a range of things you can do. You can
Speaker 1: call the school system and be like, you mistakenly paid
Speaker 1: me seven million dollars. Teachers seems not to have done that.
Speaker 1: There's a number where I would do that. You know,
Speaker 1: if I was accidentally paid, you know, an extra two
Speaker 1: hundred dollars, I would probably call. Really I don't know,
Speaker 1: I mean, but.
Speaker 2: Yeah, I don't think I would have noticed.
Speaker 1: If I were accidentally paid an amount that I noticed,
Speaker 1: but that would not materially change my life, like really
Speaker 1: materially change my life. I would probably call and be like, hey,
Speaker 1: I'm a nice person, let's sort this error out. But
Speaker 1: it's not really does like, let's see where.
Speaker 2: This goes, right, See, I'm the exact opposite of you.
Speaker 2: If it was it's hard to do this without talking
Speaker 2: about numbers. If it was seven million dollars, I would
Speaker 2: probably call because that is so egregiously an error. There's
Speaker 2: like no way I'm going to be able to keep this.
Speaker 2: If it was far less than that, like not enough
Speaker 2: to change my life, but enough that I could might.
Speaker 2: If it was enough to buy worth a young Greenborough horse,
Speaker 2: I would probably not call about it.
Speaker 1: But like that, when you spend it on the horse,
Speaker 1: you would like the next day go out and buy
Speaker 1: a horse.
Speaker 2: Well, I'd have to find the horse first, you know, Okay,
Speaker 2: like while you're.
Speaker 1: Test riding, there's a good chance that the last for
Speaker 1: the money bag.
Speaker 2: That's true. That's true. I wouldn't spend it immediately, but
Speaker 2: I would start the process.
Speaker 1: The choice is not like you call and say, hey,
Speaker 1: there's an error here, or you keep the money forever. Yeah,
Speaker 1: Like there's the vast middle ground if you don't call
Speaker 1: and you worry, right, which is what this person did, right,
Speaker 1: that's not keeping that money.
Speaker 2: I probably would not spend it immediately, like in any situation,
Speaker 2: but I'm not really an impulse sure.
Speaker 1: My favorite reader email about this, yeah, came from someone
Speaker 1: who worked at a bank and got overpaid. He was
Speaker 1: mistakenly paid like a bonus or something, and it was
Speaker 1: like not seven million dollars, but it was. I think
Speaker 1: he was like a young person. I don't know. It
Speaker 1: was tens of thousands of dollars, and he says he
Speaker 1: consulted an employment layer and learned about the time period
Speaker 1: for letches, which is a legal concept of like basically,
Speaker 1: how long do you have to wait before you don't
Speaker 1: have to worry about anymore. It's like a statute of
Speaker 1: limitations for stuff like this. And the lawyer told him
Speaker 1: it was six years. Wow. He waited out the six years.
Speaker 2: Wow.
Speaker 1: And he's like at the end, I threw a claim
Speaker 1: has lapsed party. That's awesome because they didn't ask.
Speaker 2: The money bag man. That is a great email. But
Speaker 2: like I just.
Speaker 1: Imagine like the mindset of like this money has been
Speaker 1: mistakenly deposited my account. Let me ask a lawyer, like
Speaker 1: I reade one's about the city group error and one, yeah,
Speaker 1: I know when they send the nine hundred million dollars
Speaker 1: to Hedgehunds that were mad at them, and the Hedgehts
Speaker 1: kept it. I wrote about the Hedgehunds consulting finders keepers
Speaker 1: lawyers because like they did actually like bring a claim,
Speaker 1: being like no, we're allowed to keep the money. But
Speaker 1: like there are finders keepers layers out there in the world,
Speaker 1: and you can consult one and be like you have
Speaker 1: six years. If you get through six years, you can
Speaker 1: keep the money. And he did.
Speaker 2: I would love to have gone to that party.
Speaker 1: That sounds like a party.
Speaker 2: Yeah, that's a good theme. I love a theme. That's
Speaker 2: a good one. It's a good man.
Speaker 1: It's not I got a mistaken bonus. It's six years later.
Speaker 1: They haven't asked for my mistaken bonus back. It's so good.
Speaker 2: I wonder if you told the bank, oh, it's not.
Speaker 1: That's a good point. Probably not, but now they know
Speaker 1: I should say this is not legally pace.
Speaker 2: I have no idea what the city group.
Speaker 1: I know that would be too perfect. Hi. Yeah, yeah,
Speaker 1: siting here. Check. And that was the Money Stuff Podcast.
Speaker 2: I'm Matt Levian and I'm Katie Greifeld.
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Speaker 1: Stuff newsletter.
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