WEBVTT - Hour of Slurping

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News. I do think weather

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<v Speaker 1>trading is I wrote this week about a guy who

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<v Speaker 1>was thinking about buying weather futures to hedge golf bets

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<v Speaker 1>on the sports Yeah platform that he ran, because that

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<v Speaker 1>makes a lot of sports bets are correlated with weather.

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<v Speaker 1>And so if you're a sports betting platform, one of

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<v Speaker 1>your correlated like systemic risks, is weather risks, so you

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<v Speaker 1>might as well trade rain futures or whatever.

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<v Speaker 2>I mean. The weather is absolutely a factor when it

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<v Speaker 2>comes to horse racing, which is one of the most

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<v Speaker 2>popular or one of the oldest forms of sports betting. Okay,

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<v Speaker 2>you know you have certain horses that are mutters, You're right,

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<v Speaker 2>who really love racing and the wet and other horses

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<v Speaker 2>just don't even want to touch it. Yeah, right, but

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<v Speaker 2>they have to, right well, because of the abuse.

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<v Speaker 1>Hello and welcome to the Money's Love Podcast, your weekly

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<v Speaker 1>podcast where we talk about stuff related to my I'm

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<v Speaker 1>Matt Levine and I write the Money Stuft column for.

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<v Speaker 2>Bloomberg Opinion, and I'm Katie Greifeld, a reporter for Bloomberg

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<v Speaker 2>News and an anchor for Bloomberg Television.

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<v Speaker 1>Katie, there's a new bird in town, not thoughts but

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<v Speaker 1>your fallen friends. But no new bird ai yeah, formerly

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<v Speaker 1>currently now as all birds.

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<v Speaker 2>I you know, love that they kept the bird. Maybe

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<v Speaker 2>they only did it.

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<v Speaker 1>It doesn't matter.

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<v Speaker 2>It matters, Maden, it matters, and I just I'm charmed

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<v Speaker 2>with their I love this story. I love I love

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<v Speaker 2>the price action around this story. It reminds me, reminds

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<v Speaker 2>me of a simpler time in twenty twenty one, when

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<v Speaker 2>meme stocks were raging and you could just pivot into

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<v Speaker 2>crypto or blockchain with seemingly few credentials and your stock

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<v Speaker 2>would sotore. And here we are in twenty twenty six

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<v Speaker 2>and that game is still alive.

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<v Speaker 1>Right, the classic was I think it was earlier.

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<v Speaker 2>Than twenty twenty one, It definitely was.

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<v Speaker 1>It was like twenty seventeen. I want to say it

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<v Speaker 1>was the real pinnacle of the blockchain stuff. Where Long

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<v Speaker 1>island iceed tea company by the way, the non alcohol

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<v Speaker 1>it's very funny name.

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<v Speaker 2>Also confusing, yeah, very confused.

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<v Speaker 1>Yeah, but lyland iceed Tea, so good lyland iceed Tea

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<v Speaker 1>company pivoted to being a blockchain company and they kept

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<v Speaker 1>like the Long Yeah, they became Long blockchain amazing. Their

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<v Speaker 1>blockchains are going to be actual anyway they're talking about.

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<v Speaker 1>The thing about like pivoting to blockchain in twenty seventeen

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<v Speaker 1>is that like it was all kind of like blank space.

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<v Speaker 2>It did feel novel.

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<v Speaker 1>Oh I'm going to launch a crypto. People were like, O, yeah, sure,

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<v Speaker 1>Like doaje cooin was worth billions of dollars, Like okay,

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<v Speaker 1>you as well as anyone else, right, Uber and Ai? Yeah,

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<v Speaker 1>pivoting into AI infrastructure, They're gonna, you know, by pus

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<v Speaker 1>from Nvidia and put them in data centers and rent

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<v Speaker 1>them out to run computer workloads for why on I'll

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<v Speaker 1>tell you why not? Because like that takes a lot

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<v Speaker 1>of money. It's not like crypto like that is a

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<v Speaker 1>business for Iti. It's like open eyes talking about a

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<v Speaker 1>trillion dollars of commitments. That is a business where people

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<v Speaker 1>are like a huge superstructure of financing has been built

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<v Speaker 1>up to allow people to build gigantic data centers and

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<v Speaker 1>source in video chips years in advance and like get

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<v Speaker 1>all of these things to work together. And it is

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<v Speaker 1>quite capital intensive, yes, and quite credit dependent. And new

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<v Speaker 1>Bird you know it was formerly all birds. It is

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<v Speaker 1>selling the sneaker business the brand and the I don't know, ip, Yeah,

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<v Speaker 1>it's selling the sneaker business for selling like thirty nine

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<v Speaker 1>million dollars to someone else, and we'll have that cash,

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<v Speaker 1>which it has already said it will dividend some or

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<v Speaker 1>all of it to serrelders. And then it announced they

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<v Speaker 1>financing which has a headline number of fifty million dollars,

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<v Speaker 1>although really only five million of it has committed the

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<v Speaker 1>rest of the investments. It's kind of like, you know,

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<v Speaker 1>millions of dollars, which will you know, get you twenty

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<v Speaker 1>minutes of a data center. But it's not an obvious

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<v Speaker 1>AI infrastructure.

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<v Speaker 2>But to that point, because there are sale side analysts

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<v Speaker 2>who cover this company.

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<v Speaker 1>Well quit well like I've done with this.

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<v Speaker 2>William Blair an William Blair analyst Dylan Cardon says that

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<v Speaker 2>a fifty million dollar investment is quote a drop in

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<v Speaker 2>the bucket in the broader neo cloud market where most

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<v Speaker 2>companies run Capex budgets well into the billions of dollars.

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<v Speaker 2>And he also dropped his.

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<v Speaker 1>Coverage trillions and fifty million is even a number state whatever,

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<v Speaker 1>And yeah.

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<v Speaker 2>He doesn't cover the company anymore, right, he dropped his coverage, right,

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<v Speaker 2>probably because he.

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<v Speaker 1>Covers moved to a farm upstate. He is done.

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<v Speaker 2>I've seen it all.

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<v Speaker 1>I just like that's what I would do.

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<v Speaker 2>Yeah.

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<v Speaker 1>He also take a baseball that to my computer and

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<v Speaker 1>be done with the stock analyst game.

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<v Speaker 2>He also attributed most of this move to some compilation

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<v Speaker 2>of a very shallow float, automated momentum, and unchecked hype.

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<v Speaker 1>Probably also some short squeeze. Yeah, maybe also some short squeeze.

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<v Speaker 1>Lesson is don't I mean it was chazillion fund companies

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<v Speaker 1>to zero, but yeah, no, I mean it's hype, it's

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<v Speaker 1>it doesn't feel I don't think maybe I'm wrong. I

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<v Speaker 1>don't think that there are a ton of retail investors

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<v Speaker 1>or professional investors, but certainly not professionals. I don't think

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<v Speaker 1>there are a ton of retail investors who like, wake

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<v Speaker 1>up and read that press for this, and I'm like,

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<v Speaker 1>oh boy, this is like the next big AI play.

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<v Speaker 1>This is going to go to a trillion dollars. I

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<v Speaker 1>need to get in on this earlier. I'm gonna buy

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<v Speaker 1>some new bird stock maybe or some Yeah. But I

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<v Speaker 1>think a lot of people are like, oh, this is

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<v Speaker 1>a great headline. Other people are going to read this.

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<v Speaker 1>I think it's almost all like like recursive, self referential

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<v Speaker 1>game of hot potato, right, Like no one's being fooled,

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<v Speaker 1>just someone as the last person to buy.

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<v Speaker 2>Yeah, I've been kind of thinking of it as doing

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<v Speaker 2>it for the plot, like it's funny buying some bird stock.

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<v Speaker 2>At this moment.

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<v Speaker 1>It was definitely possible, at any point yesterday that you

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<v Speaker 1>would not be the last one out, the last one in. Right,

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<v Speaker 1>It's definitely possible that would keep going up, So you

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<v Speaker 1>know whatever.

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<v Speaker 2>Yeah, well you talked yesterday.

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<v Speaker 1>We're recording this on Thursday. Wednesday was the day that

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<v Speaker 1>all Birds and said it was new Birds, and its

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<v Speaker 1>stock went up like five hundred percent.

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<v Speaker 2>It was so good.

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<v Speaker 1>It's down a bit on Thursday. We had a lot

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<v Speaker 1>of still like way up from Tuesday.

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<v Speaker 2>I had a lot of fun talking about it on television. Obviously, sure, sure, okay,

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<v Speaker 2>so we're talking about retail investors, but they do have

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<v Speaker 2>that unnamed institutional investor who is making that yeah, fifty

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<v Speaker 2>million dollar commit I had.

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<v Speaker 1>Some guesses in my mind, but I didn't write them down,

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<v Speaker 1>and then someone else send me a different guest that

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<v Speaker 1>was probably more informant.

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<v Speaker 3>It's not like black Crock, Okay, no, it's video. I

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<v Speaker 3>don't think I don't know it would be right.

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<v Speaker 1>I feel like I'm doing it for the plot.

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<v Speaker 2>I feel like Johnson might just say we're doing this

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<v Speaker 2>because it's funny.

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<v Speaker 1>I did a little googling to see if he was

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<v Speaker 1>like non for wearing all birds, because like all birds

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<v Speaker 1>are like in their head out.

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<v Speaker 2>Did you wear all Birds? Okay, my husband had a pair.

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<v Speaker 2>They look nice. Actually, this is crazy. I don't know

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<v Speaker 2>if you would want me to say this, but I

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<v Speaker 2>am so. I visited my parents in Florida for Easter,

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<v Speaker 2>and my husband keeps some shoes at their house, like

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<v Speaker 2>we have just random shoes at their house, and my

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<v Speaker 2>dad stepped out in a pair of like vintage all Birds.

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<v Speaker 2>I was like, are you wearing Joe's shoes? And turns

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<v Speaker 2>out he was. This must have been a signal you

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<v Speaker 2>know this, and I do not think so. I don't

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<v Speaker 2>think he qualifies as an institutional investor. I should have

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<v Speaker 2>done something with this information, because are like three.

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<v Speaker 1>Weeks later this is a valuable signal. Yeah, yeah, no,

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<v Speaker 1>there's definitely like there are some funds that do these

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<v Speaker 1>sorts of weird convertibles in micro gap stocks that are

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<v Speaker 1>about to pivot to I don't want to say meme

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<v Speaker 1>status exactly, but not not meme status. Yeah, like memish,

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<v Speaker 1>and you know some of them do very well. I

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<v Speaker 1>mean the classic is I wrote a lot about when

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<v Speaker 1>Bad Bathroom Beyond did a big convertible structure kind of

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<v Speaker 1>like this one with Hudson Bay Capital. Hutson Bay made

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<v Speaker 1>like one hundred millions, like tens hundreds of millions of dollars.

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<v Speaker 1>I take it selling stock on behalf of bed bath

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<v Speaker 1>and Beyond as it trickled. That's way to bankruptcy. So

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<v Speaker 1>there's definitely some money to be made doing weird floating

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<v Speaker 1>strike convertible bonds for companies that are kind of just

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<v Speaker 1>kicking around. But like when you pair it with the

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<v Speaker 1>pivot to AI, it's really quite exciting.

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<v Speaker 2>Yeah.

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<v Speaker 1>I don't fully understand how the institutional investor monetizes this.

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<v Speaker 1>Like classically, the convertible becomes convertible, and you convert some

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<v Speaker 1>you get some stock, you sell it. So it's very

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<v Speaker 1>possible they have made no money yet and they're waiting

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<v Speaker 1>to like go through all of the process and actually

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<v Speaker 1>fund the thing and get the stock. I think it's

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<v Speaker 1>probably hard to short the stock right now, which is

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<v Speaker 1>so it's hard for them to make any money, to

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<v Speaker 1>have made any money so far. And you know there's

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<v Speaker 1>a bit of a melting ice cube element here where Yeah,

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<v Speaker 1>if you announce this pivot, you want to be selling

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<v Speaker 1>stock like today. You don't want to be like eh

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<v Speaker 1>in like six to eight weeks when the deal closes.

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<v Speaker 2>Yea selling stock because you want to capitalize.

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<v Speaker 1>I know what's going to happen.

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<v Speaker 2>I do like your strategy that you put together finding

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<v Speaker 2>ten near defunct public companies, right.

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<v Speaker 1>Because this is not like a winner take all market

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<v Speaker 1>where like, yeah, new Bird AI is going to dominate

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<v Speaker 1>the data center market, there's plenty of room for ten

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<v Speaker 1>other companies you.

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<v Speaker 2>Haven't heard of, and you've got to diversify.

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<v Speaker 1>Got a diversify. The Watch Journal today an article about

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<v Speaker 1>how Barney's the story is coming back. But as a

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<v Speaker 1>department store is like, oh, come on, they gotta do

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<v Speaker 1>an AI pivot. And I realized they're not a public company,

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<v Speaker 1>so it doesn't make sense. But but there was also

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<v Speaker 1>impressed with this today miseum. So two weeks ago they

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<v Speaker 1>put it up I don't know, but they put it

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<v Speaker 1>out a pressure this seekco Myseum brings free, private social

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<v Speaker 1>network to ten thousand weddings where every guest becomes the photographer.

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<v Speaker 1>Oh yeah, so there's there's their business model as of

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<v Speaker 1>two weeks ago. The company. Wednesday of this week, Myseum

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<v Speaker 1>rebrands as miseum dot ai to align with full suite

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<v Speaker 1>of technology and social media platforms. I think they just

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<v Speaker 1>added dot ai to their name, Like, I don't think

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<v Speaker 1>they're making a substantive change to their rewarding for yeah,

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<v Speaker 1>all thattwork, but by adding dot ai, their stock doubled

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<v Speaker 1>on Thursday.

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<v Speaker 2>This is the new data.

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<v Speaker 1>Well, it's the new pivots of crypti, which was the

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<v Speaker 1>new pivot to dot com.

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<v Speaker 2>In terms of everything for this moment in time, this

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<v Speaker 2>is working and.

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<v Speaker 1>You're still right that was the like twenty twenty four things.

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<v Speaker 2>Yeah, like say that you're now you're accumulating cryptotoken your choice.

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<v Speaker 1>Yeah, I can't video chips, which harder to do.

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<v Speaker 2>Yeah, I don't know. We'll see how long there's juice

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<v Speaker 2>to squeeze here.

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<v Speaker 1>Dad's we're like very intense for like I don't know,

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<v Speaker 1>three six months. I feel like this is like three

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<v Speaker 1>to six days.

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<v Speaker 2>But maybe about hours.

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<v Speaker 1>I mean, the thing is like the AI boom has legs, right,

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<v Speaker 1>So like there's definitely like miseum going a day after

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<v Speaker 1>all birds. It feels like a flash in the pan.

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<v Speaker 1>But like in six months if someone's like we're pivoting

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<v Speaker 1>to AI infrastructure, will it work? Maybe? I don't know.

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<v Speaker 2>It is weird that you know, this is only happening

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<v Speaker 2>now in terms of like the market reaction, the market

0:11:52.080 --> 0:11:54.720
<v Speaker 2>embrace here because you know, we've been talking about AI

0:11:54.840 --> 0:11:58.520
<v Speaker 2>has been the conversation for at least two years now.

0:11:59.040 --> 0:12:01.680
<v Speaker 1>Right Again, it's from crypto. You can't just like wake

0:12:01.720 --> 0:12:03.160
<v Speaker 1>up one day like where are going to be a

0:12:03.320 --> 0:12:07.640
<v Speaker 1>you know, frontier AI model, Like there is like a

0:12:08.280 --> 0:12:10.840
<v Speaker 1>winner take all element here where people are giving a

0:12:10.840 --> 0:12:15.160
<v Speaker 1>lot of money to fund people who have real AI

0:12:16.160 --> 0:12:19.360
<v Speaker 1>chops and not you know, random sneaker companies. The ill

0:12:19.400 --> 0:12:21.360
<v Speaker 1>say is that like the pivots AI thing, when you

0:12:21.360 --> 0:12:23.640
<v Speaker 1>look at the actual like neo clouds, like the companies

0:12:23.640 --> 0:12:27.079
<v Speaker 1>that are you know in this business, several of them

0:12:27.360 --> 0:12:30.360
<v Speaker 1>did in fact pivot from crypto. Right, Yeah, there's a

0:12:30.480 --> 0:12:34.920
<v Speaker 1>very traditional like crypto minding to AI neocloud path where

0:12:34.920 --> 0:12:37.000
<v Speaker 1>basically like you were like, we're going to get it

0:12:37.040 --> 0:12:40.360
<v Speaker 1>really into mining crypto and what that entailed in like

0:12:40.400 --> 0:12:44.520
<v Speaker 1>twenty twenty one was building data centers and acquiring a

0:12:44.520 --> 0:12:47.560
<v Speaker 1>lot of like Nvidia GPUs and then you happen to

0:12:47.559 --> 0:12:52.120
<v Speaker 1>be really well set up to become an AI infrastructure provider. Yeah,

0:12:52.120 --> 0:12:56.080
<v Speaker 1>when crypto crashed and AI took off, so is the

0:12:56.080 --> 0:12:59.040
<v Speaker 1>stock market has rewarded pivots to AI of the past. Yeah,

0:12:59.040 --> 0:13:02.320
<v Speaker 1>but from people who you know, chips servers.

0:13:04.800 --> 0:13:07.920
<v Speaker 2>Well, there's new Bird on the street. At least I

0:13:07.960 --> 0:13:10.080
<v Speaker 2>feel like this whole story. I mean, we'd still be

0:13:10.120 --> 0:13:11.240
<v Speaker 2>talking about it, but it's.

0:13:11.240 --> 0:13:12.400
<v Speaker 1>It didn't have a bird.

0:13:13.679 --> 0:13:16.160
<v Speaker 2>It's made more fun by the fact that we're talking

0:13:16.160 --> 0:13:19.120
<v Speaker 2>about new Bird AI. Matt fear Not, I know you

0:13:19.160 --> 0:13:21.640
<v Speaker 2>were wondering what the etf angle is here, and I

0:13:21.720 --> 0:13:22.520
<v Speaker 2>have one for you.

0:13:22.679 --> 0:13:23.400
<v Speaker 1>Is theirs?

0:13:24.120 --> 0:13:28.120
<v Speaker 2>No, it's the meme TF. Sure, apparently the memetf It's

0:13:28.160 --> 0:13:33.880
<v Speaker 2>from Roundtail. It was resurrected. It's already bought into all birdstock, which.

0:13:34.640 --> 0:13:38.160
<v Speaker 1>Like yes Wednesday, or like before Wednesday.

0:13:38.480 --> 0:13:43.000
<v Speaker 2>I think on Wednesday. Well, here's the reporting. Here's the reporting.

0:13:43.280 --> 0:13:46.040
<v Speaker 2>Round Hill Investments, which has a meme stock eat TF

0:13:46.080 --> 0:13:48.480
<v Speaker 2>that was rolled out to capture such moves was one

0:13:48.520 --> 0:13:51.280
<v Speaker 2>buyer of all Birds at the start of the training day.

0:13:52.040 --> 0:13:54.120
<v Speaker 2>Do you want to hear from the CEO? Well, here's

0:13:54.120 --> 0:13:56.920
<v Speaker 2>what he had to say. A shoe company rebranding as

0:13:56.920 --> 0:13:59.960
<v Speaker 2>an AI compute infrastructure play is the kind of narrative

0:14:00.080 --> 0:14:03.880
<v Speaker 2>if that ignites retail enthusiasm. The spike in retail sentiment,

0:14:04.040 --> 0:14:06.800
<v Speaker 2>coupled with a sharp increase in trading volume and elevated

0:14:06.840 --> 0:14:10.520
<v Speaker 2>volatility around Bird following its AI pivot are exactly the

0:14:10.559 --> 0:14:13.120
<v Speaker 2>signals the meme METF is designed to capture in real time.

0:14:13.760 --> 0:14:15.880
<v Speaker 1>Fine, whatever, Like he runs an ETF, It's fine, he

0:14:15.880 --> 0:14:18.280
<v Speaker 1>can capture those signals in real What I will say

0:14:18.559 --> 0:14:22.200
<v Speaker 1>is that if you were like an active meme investor, Yeah,

0:14:22.280 --> 0:14:25.080
<v Speaker 1>which look he is, but whatever, if you're an active

0:14:25.080 --> 0:14:28.680
<v Speaker 1>meme investor, the time to buy all Bird stock is

0:14:29.360 --> 0:14:32.880
<v Speaker 1>before And on the one hand, how would you know

0:14:33.040 --> 0:14:33.720
<v Speaker 1>this was coming?

0:14:33.840 --> 0:14:34.360
<v Speaker 2>How would you know?

0:14:34.480 --> 0:14:38.280
<v Speaker 1>On the other hand, this is a small public company

0:14:38.360 --> 0:14:42.920
<v Speaker 1>with a like retail facing brand name with like some

0:14:43.080 --> 0:14:48.160
<v Speaker 1>nostalgic value, that has already announced that's selling actual business

0:14:48.520 --> 0:14:51.840
<v Speaker 1>and is just a public company listing. Just a public

0:14:51.840 --> 0:14:54.200
<v Speaker 1>company listing right now has a lot of option value,

0:14:54.280 --> 0:14:56.680
<v Speaker 1>right like just having a public company listing and not

0:14:56.760 --> 0:14:58.920
<v Speaker 1>having anything particularly useful to do with it. If you

0:14:59.000 --> 0:15:02.560
<v Speaker 1>have just a public listing nothing else, and you're like, welp,

0:15:03.160 --> 0:15:04.840
<v Speaker 1>we've done what we need to do here. We're gonna

0:15:04.840 --> 0:15:07.320
<v Speaker 1>shut this down. You are wasting shareholder money. You gotta

0:15:07.320 --> 0:15:09.120
<v Speaker 1>do is be like, we've got a public listing. We're

0:15:09.120 --> 0:15:10.680
<v Speaker 1>gonna do it. Dad, We're gonna do an ai P.

0:15:10.800 --> 0:15:13.840
<v Speaker 1>We're gonna do some nonsense, right, And so these guys

0:15:13.840 --> 0:15:16.200
<v Speaker 1>did some nonsense. And if you had been like, well,

0:15:16.360 --> 0:15:19.680
<v Speaker 1>this is a shell public company listing, we're gonna see

0:15:19.680 --> 0:15:21.120
<v Speaker 1>what nonsense they get up to, you would have made

0:15:21.160 --> 0:15:23.080
<v Speaker 1>a lot of money. Mm hmm. Whatever.

0:15:23.120 --> 0:15:24.760
<v Speaker 2>It's fine, some any thing about it in the future.

0:15:24.800 --> 0:15:28.160
<v Speaker 2>For all the mean.

0:15:27.440 --> 0:15:29.320
<v Speaker 1>Maybe you can only buy actual memes stacks, but if

0:15:29.320 --> 0:15:31.960
<v Speaker 1>you're just like a person looking to invest the memesas

0:15:32.000 --> 0:15:34.240
<v Speaker 1>you should, you should buy them before they become memes.

0:15:34.240 --> 0:15:39.400
<v Speaker 1>This is like son advice, boy, oh boy, don't do that.

0:15:39.440 --> 0:15:57.360
<v Speaker 1>I obviously don't do that. So excellent shareholder wedding. Yeah,

0:15:57.400 --> 0:16:00.000
<v Speaker 1>there's like a lot of retail shareholders they try to

0:16:00.440 --> 0:16:03.080
<v Speaker 1>never vote their shares because it's a waste of time

0:16:03.680 --> 0:16:06.760
<v Speaker 1>to investor to vout their shares, and so this sometimes

0:16:06.800 --> 0:16:10.240
<v Speaker 1>annoy is corporate managers because what you have is like

0:16:10.320 --> 0:16:13.200
<v Speaker 1>the only people who vote are institutional investors, and sometimes

0:16:13.200 --> 0:16:18.720
<v Speaker 1>those institutional investors are ornery, or they care about governance

0:16:18.720 --> 0:16:23.120
<v Speaker 1>stuff that companies don't care about, or traditionally they care

0:16:23.160 --> 0:16:26.840
<v Speaker 1>about ESG stuff the companies don't care about and excellent.

0:16:26.880 --> 0:16:29.640
<v Speaker 1>In fact, a few years ago, a very small activist

0:16:29.640 --> 0:16:31.720
<v Speaker 1>share they're called Engine number one, ran a proxy fight

0:16:31.800 --> 0:16:34.800
<v Speaker 1>basically over there like climate transition plans. They won the

0:16:34.840 --> 0:16:38.080
<v Speaker 1>proxy fight and they got a director elected to Excellon's board.

0:16:38.360 --> 0:16:41.000
<v Speaker 1>It's very embarrassing for Exon. And they won the proxy

0:16:41.000 --> 0:16:42.160
<v Speaker 1>fight not because they had a lot of shoes, but

0:16:42.200 --> 0:16:43.960
<v Speaker 1>because they you know, they got some interest from like

0:16:44.080 --> 0:16:47.960
<v Speaker 1>the sort of black rocks and state streets of the world. Who.

0:16:48.040 --> 0:16:49.760
<v Speaker 2>You know, it was also very of the time.

0:16:49.840 --> 0:16:51.720
<v Speaker 1>Yeah who At the time, we're like, oh, yes, g

0:16:52.840 --> 0:16:55.280
<v Speaker 1>we love that, right, and so now this is all

0:16:55.600 --> 0:17:00.160
<v Speaker 1>in the distant past, but Extend never really got over it. Like,

0:17:00.680 --> 0:17:02.160
<v Speaker 1>you know, a couple of years ago they got to

0:17:02.320 --> 0:17:05.840
<v Speaker 1>like some sort of like activist proposal and their shareolder proposal,

0:17:06.119 --> 0:17:08.560
<v Speaker 1>and they sued the proponents to stop them from doing it.

0:17:08.680 --> 0:17:09.439
<v Speaker 2>I grudge.

0:17:09.560 --> 0:17:11.720
<v Speaker 1>They really have a grudge. And so one thing they

0:17:11.760 --> 0:17:17.000
<v Speaker 1>did I think, like last September was they announced this

0:17:17.000 --> 0:17:19.840
<v Speaker 1>new program where if you're a retail shareholder, you can

0:17:20.000 --> 0:17:22.600
<v Speaker 1>just submit standing instructions to let the board vote your

0:17:22.600 --> 0:17:26.040
<v Speaker 1>shares the way the board wants to. People got mad

0:17:26.080 --> 0:17:29.840
<v Speaker 1>about this because like it's obviously designed to the ward

0:17:30.040 --> 0:17:31.920
<v Speaker 1>esga and try to board power, which I understand, but

0:17:31.960 --> 0:17:34.720
<v Speaker 1>I also like really expected because like the retail shoolders

0:17:35.000 --> 0:17:37.119
<v Speaker 1>are not going to vote to waste the time. So

0:17:37.200 --> 0:17:40.560
<v Speaker 1>this is like solving that problem. And the retail shareholders

0:17:40.600 --> 0:17:45.640
<v Speaker 1>probably do want to do what the board wants to do,

0:17:45.680 --> 0:17:48.120
<v Speaker 1>and probably don't want to do what like black Rock

0:17:48.240 --> 0:17:51.480
<v Speaker 1>wants to do, probably have like less esg commitment than

0:17:51.520 --> 0:17:53.840
<v Speaker 1>like the big institution manager. And so right now the

0:17:53.840 --> 0:17:56.240
<v Speaker 1>institution's vote and the retail shoulders don't vote, and so

0:17:56.359 --> 0:18:00.920
<v Speaker 1>the institutions have a lot of sway because they vote

0:18:01.000 --> 0:18:03.280
<v Speaker 1>and they might have different preferences from the retail shareolders.

0:18:03.280 --> 0:18:04.840
<v Speaker 1>And this is a way for Excellent to say, Okay,

0:18:04.840 --> 0:18:07.280
<v Speaker 1>retail shareholders, if your preference is just do whatever the

0:18:07.280 --> 0:18:10.000
<v Speaker 1>board wants, you can just do that and then we'll

0:18:10.080 --> 0:18:12.320
<v Speaker 1>vote your shares for you, and we'll sort of recapture

0:18:12.320 --> 0:18:14.840
<v Speaker 1>some voting power from the institutions. I think is like

0:18:15.560 --> 0:18:17.880
<v Speaker 1>annoying if you're an institutional investor or like a fan

0:18:17.920 --> 0:18:19.840
<v Speaker 1>of governance or a fan of ESG. But I think

0:18:19.840 --> 0:18:22.040
<v Speaker 1>it's kind of a smart call by accent And you

0:18:22.080 --> 0:18:24.000
<v Speaker 1>could never have done this in the past because, like

0:18:24.080 --> 0:18:26.360
<v Speaker 1>I think, it's easy to characterize it as being undemocratic.

0:18:26.760 --> 0:18:30.560
<v Speaker 1>And in the current SEC. Excellon went to the SEC

0:18:30.640 --> 0:18:32.200
<v Speaker 1>and said, can we do this? And the current SEC

0:18:32.359 --> 0:18:35.320
<v Speaker 1>was like absolutely, you know, like because the current SEC

0:18:35.440 --> 0:18:38.640
<v Speaker 1>does not like the influence of Black Crock and EESG

0:18:38.840 --> 0:18:42.040
<v Speaker 1>and proxy advisors and all that stuff. So Excellon was

0:18:42.080 --> 0:18:45.879
<v Speaker 1>able to do this, and they are now they have

0:18:45.920 --> 0:18:48.879
<v Speaker 1>their proxy season, their proxy has come out and so

0:18:48.920 --> 0:18:52.040
<v Speaker 1>they're doing it. You can submit your standing instructions to

0:18:52.080 --> 0:18:54.840
<v Speaker 1>the board to vote. But meanwhile they got a shareholder

0:18:54.880 --> 0:18:59.600
<v Speaker 1>proposal from the New York City Comptroller, a classic opponent

0:18:59.680 --> 0:19:01.000
<v Speaker 1>of everything.

0:19:00.640 --> 0:19:03.159
<v Speaker 2>That Xcells Governance stands are right.

0:19:03.560 --> 0:19:07.720
<v Speaker 1>And they say, no, it's not fair for you to

0:19:07.760 --> 0:19:11.720
<v Speaker 1>have only one set of standing instructions that is, you know, vote. However,

0:19:11.720 --> 0:19:14.440
<v Speaker 1>the board wants you should have other standing instructions such

0:19:14.480 --> 0:19:16.160
<v Speaker 1>as vote against.

0:19:15.720 --> 0:19:17.720
<v Speaker 2>Whatever the board wants in all situations.

0:19:18.040 --> 0:19:21.080
<v Speaker 1>Yeah, I love it. You should have, like, if you have,

0:19:21.200 --> 0:19:23.320
<v Speaker 1>like the option for retail trailers to always vote with

0:19:23.320 --> 0:19:25.240
<v Speaker 1>the board, you should also give them the equivalent option

0:19:25.280 --> 0:19:26.040
<v Speaker 1>to always vote.

0:19:25.840 --> 0:19:28.119
<v Speaker 2>Against the board, or an option like fifty to fifty

0:19:28.240 --> 0:19:28.480
<v Speaker 2>you know.

0:19:28.640 --> 0:19:29.280
<v Speaker 1>Just a coin.

0:19:29.440 --> 0:19:29.800
<v Speaker 2>Yeah right.

0:19:30.080 --> 0:19:32.879
<v Speaker 1>They do actually say they should include a range of

0:19:32.920 --> 0:19:35.879
<v Speaker 1>possible voting options, such as independent voting options based on

0:19:35.920 --> 0:19:40.560
<v Speaker 1>standing instructions, a general against management policy, and or customized policies.

0:19:40.560 --> 0:19:42.080
<v Speaker 1>They don't mention coin flipping, but that would be a

0:19:42.080 --> 0:19:42.359
<v Speaker 1>good one.

0:19:42.440 --> 0:19:42.880
<v Speaker 2>Yeah.

0:19:42.920 --> 0:19:46.400
<v Speaker 1>Anyway, we'll see if this passes. It won't pass. Excellon

0:19:46.440 --> 0:19:49.399
<v Speaker 1>has recommended against it, saying, in part, like, it would

0:19:49.400 --> 0:19:53.679
<v Speaker 1>not be consistent with our fiduciary duties to let to

0:19:53.840 --> 0:19:56.320
<v Speaker 1>like give people an instruction to always vote the way

0:19:56.320 --> 0:19:58.200
<v Speaker 1>we think they shouldn't vote. It's like, you know, the

0:19:58.200 --> 0:19:59.960
<v Speaker 1>board is a fiducia. They're like trying to tell you

0:20:00.040 --> 0:20:03.040
<v Speaker 1>about the right way, right theory. They if they give

0:20:03.080 --> 0:20:04.600
<v Speaker 1>you the option to always vote the wrong way, that

0:20:04.600 --> 0:20:05.120
<v Speaker 1>seems bad.

0:20:05.320 --> 0:20:05.520
<v Speaker 2>Yeah.

0:20:06.200 --> 0:20:08.320
<v Speaker 1>I loved it as a piece of trawling.

0:20:08.800 --> 0:20:11.000
<v Speaker 2>Yeah, I mean I also like it on the part

0:20:11.080 --> 0:20:15.440
<v Speaker 2>of the New York City Controller's Office. Yeah, good game

0:20:15.480 --> 0:20:18.560
<v Speaker 2>to both sides. I was reading a Morning Star reaction

0:20:18.720 --> 0:20:21.640
<v Speaker 2>piece and very on brand from morning Star. They're also

0:20:21.800 --> 0:20:25.719
<v Speaker 2>not a big fan of Exon's ideal here, but there

0:20:25.720 --> 0:20:28.959
<v Speaker 2>were some interesting I kind of like it, excellent likes

0:20:29.000 --> 0:20:30.119
<v Speaker 2>it and Matt Levine and.

0:20:30.200 --> 0:20:32.720
<v Speaker 1>The sect of a lot of big fans, but yeah,

0:20:32.880 --> 0:20:33.719
<v Speaker 1>not a lot of opinion.

0:20:33.720 --> 0:20:37.920
<v Speaker 2>Con Well, morning Star points out that the company reports

0:20:37.920 --> 0:20:40.640
<v Speaker 2>that forty percent of its shares are held by retail investors,

0:20:40.680 --> 0:20:44.080
<v Speaker 2>and seventy five percent of those shareholders don't cast votes

0:20:44.119 --> 0:20:47.000
<v Speaker 2>on the proxies. Forty percent is super high.

0:20:47.200 --> 0:20:48.119
<v Speaker 1>Yeah right.

0:20:48.280 --> 0:20:51.320
<v Speaker 2>Also, morning Star went into a little bit how if

0:20:51.359 --> 0:20:54.439
<v Speaker 2>you look on Exxon's at Exon's marketing materials for this,

0:20:54.520 --> 0:20:58.240
<v Speaker 2>they talk about just like what a pain this is

0:20:58.400 --> 0:21:02.720
<v Speaker 2>for retail shareholders. They say that the average retail investor

0:21:02.720 --> 0:21:05.640
<v Speaker 2>would have to dedicate a full year of full time

0:21:05.680 --> 0:21:07.720
<v Speaker 2>work to briefly study and vote on each of the

0:21:07.760 --> 0:21:10.720
<v Speaker 2>twenty eight thousand items in the proxy of the companies

0:21:10.720 --> 0:21:13.760
<v Speaker 2>in the Russell threeenty and twenty twenty four, assuming they

0:21:13.840 --> 0:21:16.280
<v Speaker 2>only spent five minutes on each item, which sounds like

0:21:16.359 --> 0:21:18.240
<v Speaker 2>an exaggeration, right, I.

0:21:18.240 --> 0:21:22.320
<v Speaker 1>Mean, like nobody owns every very single individual stock in

0:21:22.320 --> 0:21:24.600
<v Speaker 1>the wrestle three thousand. Yeah, that's not a reasonable thing

0:21:24.640 --> 0:21:27.440
<v Speaker 1>to do. You might own a Wrestle three thousand index fund, yeah,

0:21:27.480 --> 0:21:30.439
<v Speaker 1>and not vote, But it would be very weird to

0:21:30.440 --> 0:21:33.840
<v Speaker 1>buy all three thousand individual stocks and vote. But next

0:21:33.840 --> 0:21:37.199
<v Speaker 1>sounds right, like it's irrational to spend any time more Correctionally,

0:21:37.280 --> 0:21:41.200
<v Speaker 1>It's true you wouldn't actually spend a year reading proxy materials.

0:21:40.760 --> 0:21:44.280
<v Speaker 2>But someone might or not a full yek. But I

0:21:44.280 --> 0:21:45.800
<v Speaker 2>don't know, I don't There are people.

0:21:45.600 --> 0:21:49.080
<v Speaker 1>Whose job is to read and vote, like giant asset managers.

0:21:49.119 --> 0:21:52.040
<v Speaker 1>I picture hundreds of billions or dollars with a stock.

0:21:51.960 --> 0:21:54.560
<v Speaker 2>In my mind's I I see like, you know, kind

0:21:54.600 --> 0:21:57.359
<v Speaker 2>of elderly man stooped over his kitchen table just reading

0:21:57.359 --> 0:22:00.280
<v Speaker 2>proxy materials. There are they can take about at.

0:22:00.200 --> 0:22:05.080
<v Speaker 1>Him sometimes and they like to their proposal proponents, right,

0:22:05.480 --> 0:22:07.560
<v Speaker 1>people who are like what can I try to get

0:22:07.560 --> 0:22:09.560
<v Speaker 1>Exxon to do? And they spend a lot of time

0:22:09.640 --> 0:22:13.560
<v Speaker 1>rating process. Yeah, but Exon does not care about them, No,

0:22:13.760 --> 0:22:17.080
<v Speaker 1>it hates them them.

0:22:17.160 --> 0:22:19.879
<v Speaker 2>It actually cares a lot in a negative place, like.

0:22:20.200 --> 0:22:38.600
<v Speaker 1>It like stays up all my being angry at them.

0:22:38.720 --> 0:22:39.800
<v Speaker 2>Do you know what is important?

0:22:40.160 --> 0:22:40.640
<v Speaker 1>Coffee?

0:22:40.760 --> 0:22:44.480
<v Speaker 2>Coffee. I was so charmed by this story in the

0:22:44.480 --> 0:22:50.560
<v Speaker 2>Wall Street Journal by Crystal her talking about Nisies coffee rooms.

0:22:50.640 --> 0:22:53.240
<v Speaker 2>It has an elite coffee tasting force. I feel like

0:22:53.280 --> 0:22:56.399
<v Speaker 2>we've also talked about this general idea. Basically, they have

0:22:56.440 --> 0:23:01.040
<v Speaker 2>to have people to set the ratings on US futures

0:23:01.080 --> 0:23:03.760
<v Speaker 2>markets prices for various types of coffee, so they have

0:23:03.800 --> 0:23:06.720
<v Speaker 2>to verify right any future markets work.

0:23:07.160 --> 0:23:10.480
<v Speaker 1>The way many agricultural commodity of futures markets work is

0:23:10.520 --> 0:23:14.160
<v Speaker 1>that you can take physical delivery of your futures. And

0:23:14.200 --> 0:23:17.080
<v Speaker 1>if you buy coffee futures, you might get physical delivery

0:23:17.080 --> 0:23:21.919
<v Speaker 1>of coffee in a nicy bonded warehouse. Yeah, a nice ice.

0:23:22.000 --> 0:23:26.680
<v Speaker 1>Intercontinental Exchanges owns nicy in an ice bonded warehouse, and

0:23:28.200 --> 0:23:31.960
<v Speaker 1>that coffee has to meet certain quality standards in order

0:23:32.000 --> 0:23:34.159
<v Speaker 1>for the whole thing to work, for the futures to

0:23:34.200 --> 0:23:36.720
<v Speaker 1>actually reflect to coffee prices, and in order for that

0:23:36.760 --> 0:23:39.040
<v Speaker 1>coffee to meat quality standards. There's a room on the

0:23:39.040 --> 0:23:41.560
<v Speaker 1>eighth floor of the New York Stock Exchange where thirty

0:23:41.600 --> 0:23:45.040
<v Speaker 1>eight mostly fifty something year old men.

0:23:45.400 --> 0:23:49.520
<v Speaker 2>Yeah, and they sniff and they slurp.

0:23:50.600 --> 0:23:53.879
<v Speaker 1>So okay. A real peeve of mine and journalism is

0:23:53.920 --> 0:23:58.480
<v Speaker 1>that people, often like discussing people like eating soup or

0:23:58.560 --> 0:24:01.840
<v Speaker 1>drinking drinks, will say slurping, And I'm like, why does

0:24:01.880 --> 0:24:03.200
<v Speaker 1>it have to be slurping? Why do you have to

0:24:03.240 --> 0:24:05.960
<v Speaker 1>emphasize the sound? Like that's not how people eat. But

0:24:06.040 --> 0:24:08.760
<v Speaker 1>in this case, I cannot fault it because they are

0:24:08.800 --> 0:24:12.920
<v Speaker 1>required to noisily slurp the coffee because like apparently that's

0:24:12.920 --> 0:24:14.159
<v Speaker 1>how you, you know, get the.

0:24:14.680 --> 0:24:16.160
<v Speaker 2>Full floor of the flavor.

0:24:16.400 --> 0:24:18.960
<v Speaker 1>And so they play loud music to drown out the

0:24:19.160 --> 0:24:23.240
<v Speaker 1>horrifying sound of thirty eight men slurping coffee.

0:24:23.000 --> 0:24:25.440
<v Speaker 2>Sounds that I've tried to get into this podcast when

0:24:25.440 --> 0:24:26.680
<v Speaker 2>you eat soup.

0:24:26.720 --> 0:24:29.440
<v Speaker 1>Yes, that's true. We're not going to am going to

0:24:29.520 --> 0:24:31.920
<v Speaker 1>do that because we'll be immediately removed from the air.

0:24:32.160 --> 0:24:33.879
<v Speaker 1>The other thing that is amazing in the story is

0:24:33.880 --> 0:24:38.160
<v Speaker 1>that there are photographs, yeah, somewhat alarming photographs of people

0:24:38.400 --> 0:24:41.080
<v Speaker 1>mid spit, spitting out the coffee that they've slopped. It's

0:24:41.160 --> 0:24:45.280
<v Speaker 1>really it's like, it's not all glamorous and I fans.

0:24:44.920 --> 0:24:48.880
<v Speaker 2>I know we've talked about Morgan's the the pub. Yes,

0:24:49.200 --> 0:24:51.560
<v Speaker 2>in JP Morgan's new building which I still want to

0:24:51.600 --> 0:24:54.320
<v Speaker 2>go to. Well, I've been there many times. I want

0:24:54.359 --> 0:24:57.199
<v Speaker 2>to take the podcast there. I want to take this

0:24:57.359 --> 0:24:59.000
<v Speaker 2>podcast to.

0:25:00.200 --> 0:25:04.399
<v Speaker 1>Like a din of ac DC and slurping.

0:25:05.440 --> 0:25:09.480
<v Speaker 2>That sounds insane. It sounds like the worst you've ever heard.

0:25:10.119 --> 0:25:13.760
<v Speaker 2>But you might say this sounds like the best job ever.

0:25:13.960 --> 0:25:17.879
<v Speaker 1>Oh I wouldn't, Oh, I might like honestly, like, I

0:25:18.040 --> 0:25:20.080
<v Speaker 1>love my job so much.

0:25:20.240 --> 0:25:20.960
<v Speaker 2>Yeah, and my.

0:25:21.000 --> 0:25:23.320
<v Speaker 1>Only complaint is that sometimes, you know, we said on

0:25:23.320 --> 0:25:25.720
<v Speaker 1>an open piet office, we do, and sometimes someone near

0:25:25.760 --> 0:25:26.679
<v Speaker 1>me is eating an apple.

0:25:26.920 --> 0:25:28.520
<v Speaker 2>That must really tick you off.

0:25:28.680 --> 0:25:31.840
<v Speaker 1>Imagine like I could not tolerate this coffee slurping job.

0:25:31.920 --> 0:25:34.359
<v Speaker 2>I could absolutely do it, but apparently not a lot

0:25:34.400 --> 0:25:35.119
<v Speaker 2>of people are doing it.

0:25:35.160 --> 0:25:37.960
<v Speaker 1>It's very well because it's partly because like it's not

0:25:38.000 --> 0:25:40.320
<v Speaker 1>a real job. It's like apparently most of them are

0:25:40.359 --> 0:25:43.480
<v Speaker 1>either retired or like after they finish their hour of slurping,

0:25:43.560 --> 0:25:44.400
<v Speaker 1>they go to a real job.

0:25:44.480 --> 0:25:47.119
<v Speaker 2>Like you know for sure it's their side hustle.

0:25:47.640 --> 0:25:52.000
<v Speaker 1>Yeah, it's like it's like it's an their commodity trading job.

0:25:52.000 --> 0:25:54.000
<v Speaker 1>But it's not like their it's not how they make money.

0:25:54.160 --> 0:25:56.399
<v Speaker 1>They must get paid, Yeah, you get paid. It's not

0:25:56.440 --> 0:25:57.199
<v Speaker 1>like maybe I.

0:25:57.200 --> 0:25:59.480
<v Speaker 2>Could do that before the you know, quick hour before

0:25:59.480 --> 0:26:00.520
<v Speaker 2>the show exactly.

0:26:00.720 --> 0:26:02.200
<v Speaker 1>The other reason there aren't that many of them is

0:26:02.240 --> 0:26:04.720
<v Speaker 1>because it's a very hard exam. Yes, but the Master

0:26:04.840 --> 0:26:06.400
<v Speaker 1>SA exam but for coffee.

0:26:06.480 --> 0:26:10.440
<v Speaker 2>Yeah, so only about five to eight percent of test

0:26:10.440 --> 0:26:14.400
<v Speaker 2>takers will typically pass each time the test it is administered.

0:26:15.000 --> 0:26:18.000
<v Speaker 2>But it's a four day exam. It's only given once

0:26:18.640 --> 0:26:21.680
<v Speaker 2>every five years or so, which is nuts. And if

0:26:21.680 --> 0:26:24.720
<v Speaker 2>you it's not like I don't know, if I don't know.

0:26:24.800 --> 0:26:27.960
<v Speaker 1>One room, yeah, I know. But compared it to the

0:26:28.000 --> 0:26:30.119
<v Speaker 1>Masters AA exam, where like there's a lot of like

0:26:30.440 --> 0:26:32.600
<v Speaker 1>people who want that credential so they can do various

0:26:32.640 --> 0:26:34.280
<v Speaker 1>jobs in the wine world. Like there's one job in

0:26:34.280 --> 0:26:36.800
<v Speaker 1>the coffee world where you need this credential and it's

0:26:36.800 --> 0:26:37.960
<v Speaker 1>like kind of a part time job.

0:26:38.320 --> 0:26:41.359
<v Speaker 2>Yeah, but even still, you'd think that it's just as

0:26:41.400 --> 0:26:43.159
<v Speaker 2>difficult to hold it once a year as it is

0:26:43.200 --> 0:26:44.040
<v Speaker 2>every five years.

0:26:44.160 --> 0:26:45.119
<v Speaker 1>I'm not sure that's true.

0:26:45.440 --> 0:26:47.920
<v Speaker 2>So that's apparently a big This is why we need

0:26:47.960 --> 0:26:50.080
<v Speaker 2>to go to the room and talk to the people

0:26:50.080 --> 0:26:50.480
<v Speaker 2>in the room.

0:26:50.680 --> 0:26:51.920
<v Speaker 1>The other thing I want to say about the exam

0:26:52.080 --> 0:26:54.200
<v Speaker 1>is like I read a lot about like this linkage

0:26:54.240 --> 0:27:00.000
<v Speaker 1>between financial futures and like the underlying commodity in the warehouse.

0:27:00.440 --> 0:27:05.040
<v Speaker 1>And I often point out that because almost no not no,

0:27:05.160 --> 0:27:08.679
<v Speaker 1>but almost no futures settle for physical delivery that has

0:27:08.680 --> 0:27:11.160
<v Speaker 1>actually then taken out of the warehouse and used in industry,

0:27:11.880 --> 0:27:14.680
<v Speaker 1>like very few of them settle that way, I would

0:27:14.720 --> 0:27:16.760
<v Speaker 1>have some expectation that the quality of the stuff in

0:27:16.800 --> 0:27:21.000
<v Speaker 1>the warehouses would be lower than the quality used by

0:27:21.520 --> 0:27:25.800
<v Speaker 1>industrial users. Like yeah, if you're a coffee roaster, you

0:27:25.840 --> 0:27:28.520
<v Speaker 1>will try to get the best beans delivered directly to

0:27:28.600 --> 0:27:30.960
<v Speaker 1>you from the farmer or whatever. And the beans that

0:27:31.000 --> 0:27:34.159
<v Speaker 1>are like, yeah, they're fine, get delivered to the stock

0:27:34.240 --> 0:27:37.720
<v Speaker 1>exchange warehouse, right because those are not likely to be

0:27:37.840 --> 0:27:42.320
<v Speaker 1>used immediately in making coffee, to be used to underlie

0:27:42.560 --> 0:27:44.880
<v Speaker 1>financial futures contracts. And in fact, there was a great

0:27:44.880 --> 0:27:46.320
<v Speaker 1>story that I read about a couple of years ago,

0:27:46.960 --> 0:27:50.639
<v Speaker 1>twenty twenty three. The way the grading worked is, among

0:27:50.680 --> 0:27:53.200
<v Speaker 1>other things, there's an age penalty where if the coffee

0:27:53.240 --> 0:27:55.360
<v Speaker 1>has been in the warehouse for too long it is

0:27:55.400 --> 0:27:57.560
<v Speaker 1>not as valuable. You get a discount when you deliver

0:27:57.600 --> 0:28:00.360
<v Speaker 1>it into a futures contract for somewhat obvious reason, which

0:28:00.400 --> 0:28:03.639
<v Speaker 1>is the yeah, it tastes bad still, right, But the

0:28:03.800 --> 0:28:07.040
<v Speaker 1>rules allowed you to take coffee out of the warehouse, yeah,

0:28:07.080 --> 0:28:09.040
<v Speaker 1>and then put it back in and get it regraded

0:28:09.240 --> 0:28:11.639
<v Speaker 1>and you got rid of their age penalty because it

0:28:11.800 --> 0:28:15.119
<v Speaker 1>was for futures. It wasn't for making coffee anyway. This

0:28:15.160 --> 0:28:17.200
<v Speaker 1>is obviously not entirely true, because some of the stuff

0:28:17.200 --> 0:28:19.480
<v Speaker 1>in the Future's warehouse does get taken out and used

0:28:19.480 --> 0:28:21.440
<v Speaker 1>to make coffee in you know, and it is a

0:28:21.520 --> 0:28:25.040
<v Speaker 1>source of supply for actually industrial users. But it's just

0:28:25.080 --> 0:28:27.639
<v Speaker 1>like you wouldn't think that like the premium on freshness

0:28:27.640 --> 0:28:30.959
<v Speaker 1>and quality at the Stock Exchange warehouse would be the highest,

0:28:32.119 --> 0:28:34.640
<v Speaker 1>which is why it's fascinating that they need thirty eight

0:28:34.680 --> 0:28:37.720
<v Speaker 1>testers who go through this rigorous testing to grade this coffee,

0:28:38.120 --> 0:28:40.680
<v Speaker 1>because it's like like these are like, you know, the

0:28:40.720 --> 0:28:43.400
<v Speaker 1>elite coffee tasters of the world, but they're not like

0:28:44.160 --> 0:28:48.720
<v Speaker 1>working for like three star restaurants. They're working for like, yeah,

0:28:48.720 --> 0:28:50.320
<v Speaker 1>it's going to go on the warehouse and it's going

0:28:50.400 --> 0:28:51.800
<v Speaker 1>to be for futures. Contracts.

0:28:51.840 --> 0:28:52.600
<v Speaker 2>Just love the game.

0:28:52.680 --> 0:28:56.080
<v Speaker 1>Really, It's it's very admirable that that they care so much.

0:28:56.280 --> 0:28:56.360
<v Speaker 2>You know.

0:28:56.400 --> 0:29:00.080
<v Speaker 1>I've written about like Nickel Futures, where like JV. Moore

0:29:00.080 --> 0:29:02.560
<v Speaker 1>gonna have had some nickel, whereas that turned out to

0:29:02.600 --> 0:29:05.200
<v Speaker 1>be rocks. It didn't matter. It didn't matter with this coffee.

0:29:05.200 --> 0:29:06.840
<v Speaker 1>They like lovingly grade the coffee.

0:29:06.920 --> 0:29:08.640
<v Speaker 2>I know. I want to talk about the test a

0:29:08.640 --> 0:29:11.720
<v Speaker 2>little more of the test because it's three stages, right

0:29:12.440 --> 0:29:15.280
<v Speaker 2>stiff the beans, Well, let me tell you, well, actually.

0:29:15.320 --> 0:29:17.040
<v Speaker 1>Written test sniff, beans, drink up.

0:29:17.160 --> 0:29:19.880
<v Speaker 2>First part, you're correct, it's a written portion. You know,

0:29:19.920 --> 0:29:24.200
<v Speaker 2>your test on rules and regulations regarding coffee grading. Second portion,

0:29:24.440 --> 0:29:26.680
<v Speaker 2>which is more than three hours long, your test on

0:29:26.720 --> 0:29:29.840
<v Speaker 2>your ability to grade the coffee based on factors such

0:29:29.840 --> 0:29:31.040
<v Speaker 2>as smelling and color.

0:29:31.680 --> 0:29:34.480
<v Speaker 1>And then this is I think not brood coffee. I

0:29:34.520 --> 0:29:38.680
<v Speaker 1>think the second part is like beans, yes, and the cups.

0:29:38.800 --> 0:29:41.240
<v Speaker 2>If you pass those two portions, and if you fail,

0:29:41.320 --> 0:29:42.960
<v Speaker 2>you have to go back to the beginning. You can't

0:29:42.960 --> 0:29:45.920
<v Speaker 2>like retake the second portion. But if you pass those

0:29:46.040 --> 0:29:50.280
<v Speaker 2>two portions, you have a cupping exam, which is smelling, tasting,

0:29:50.280 --> 0:29:54.840
<v Speaker 2>and spinning coffee in front of proctors, right, yeah, in.

0:29:54.800 --> 0:29:57.120
<v Speaker 1>Front of every part of the coffee process.

0:29:57.480 --> 0:29:58.960
<v Speaker 2>Yeah, well, not every part.

0:29:59.440 --> 0:30:02.840
<v Speaker 1>The article mentions to even get to the exam, you

0:30:02.920 --> 0:30:05.560
<v Speaker 1>have to have some like relevant background often as a

0:30:05.560 --> 0:30:08.680
<v Speaker 1>commodity trader, and they're like, definitely not as a barista.

0:30:09.080 --> 0:30:11.560
<v Speaker 2>Yeah, because actually that is hard.

0:30:11.560 --> 0:30:13.200
<v Speaker 1>Much more relevant than commodity trading.

0:30:13.240 --> 0:30:16.640
<v Speaker 2>But actually it's a quote that being a barista absolutely

0:30:17.040 --> 0:30:17.840
<v Speaker 2>does not count.

0:30:18.120 --> 0:30:21.400
<v Speaker 1>It has to be more relevant than trading commodities at

0:30:21.400 --> 0:30:24.360
<v Speaker 1>a computer. But whatever, Yeah, that's what expert.

0:30:24.520 --> 0:30:27.960
<v Speaker 2>That was my intuition as well. But again, once we're

0:30:27.960 --> 0:30:30.280
<v Speaker 2>in the room, we can ask them all these questions. Yeah,

0:30:30.360 --> 0:30:33.080
<v Speaker 2>apparently there's a lot of pent up demands to take

0:30:33.120 --> 0:30:36.880
<v Speaker 2>the test. The test is this night, yeah right, the

0:30:36.960 --> 0:30:39.560
<v Speaker 2>test is this month. This month's every five years test,

0:30:39.720 --> 0:30:44.040
<v Speaker 2>and the Wall Street Journal reports that the last time

0:30:44.240 --> 0:30:47.360
<v Speaker 2>that the test was administered, there were only about twenty candidates.

0:30:47.400 --> 0:30:52.080
<v Speaker 2>But apparently there's been a swell of interest. So rest

0:30:52.080 --> 0:30:56.160
<v Speaker 2>easy your warehouse coffee that's backing your coffee futures.

0:30:56.160 --> 0:31:00.640
<v Speaker 1>Assume there are other like are there like pork belly tasters,

0:31:00.800 --> 0:31:04.160
<v Speaker 1>corn futures, you know, frozen orange juice tasters.

0:31:04.320 --> 0:31:07.360
<v Speaker 2>You know, if they had this rigorous process applied to

0:31:07.480 --> 0:31:11.480
<v Speaker 2>nickel kickers, there are nic kickers.

0:31:12.560 --> 0:31:15.040
<v Speaker 1>After the JP Morgan thing, they did actually send out

0:31:15.200 --> 0:31:18.600
<v Speaker 1>good commodity analysts to kick all the nickel and that's

0:31:18.640 --> 0:31:20.920
<v Speaker 1>funny in the warehouses. But but yeah, no, I mean

0:31:20.960 --> 0:31:24.120
<v Speaker 1>like like there's a lot of uh delicious as your

0:31:24.360 --> 0:31:27.959
<v Speaker 1>agricultural commodities. I wonder if there's like a similarly ring,

0:31:29.280 --> 0:31:33.120
<v Speaker 1>you know, fraternity of tasters, Yeah, sugar tasters. Yeah, like

0:31:33.240 --> 0:31:39.080
<v Speaker 1>kids said that's that dust, they wouldn't. I've written recently

0:31:39.080 --> 0:31:41.600
<v Speaker 1>about the salad oils, you know, the salad oil scandal. No,

0:31:41.880 --> 0:31:45.800
<v Speaker 1>this company in like the sixties, it was like getting

0:31:45.800 --> 0:31:48.800
<v Speaker 1>a lot of apparently like soybean oil had just been invented,

0:31:49.160 --> 0:31:51.960
<v Speaker 1>and so like there's a craze for soybean oil. Crazy, yeah,

0:31:51.960 --> 0:31:54.600
<v Speaker 1>craze for sobeing oil. And this company that got hundreds

0:31:54.600 --> 0:31:56.880
<v Speaker 1>of millions or millions of dollars of financing against that

0:31:57.320 --> 0:32:01.720
<v Speaker 1>stock of soybean oil. And like the banks would be like, oh, yeah,

0:32:01.760 --> 0:32:03.280
<v Speaker 1>we we'll lend you a millions of dollars aginst your

0:32:03.280 --> 0:32:05.080
<v Speaker 1>sobe No, but we gotta go check on the soybean oil.

0:32:05.080 --> 0:32:06.280
<v Speaker 1>And so they went and they looked at the tanks

0:32:06.280 --> 0:32:08.520
<v Speaker 1>and the tanks were full, and they're like, eah, it's

0:32:08.560 --> 0:32:10.360
<v Speaker 1>a full tank of slovino. But in fact it was

0:32:10.840 --> 0:32:13.280
<v Speaker 1>salt water with like a few inches of soybean oil

0:32:13.360 --> 0:32:16.800
<v Speaker 1>on top of god. So it collapsed and scandal and

0:32:17.600 --> 0:32:18.960
<v Speaker 1>people lost a lot of money.

0:32:18.760 --> 0:32:21.680
<v Speaker 2>That would never happen on the floor of the New

0:32:21.760 --> 0:32:22.600
<v Speaker 2>York Sock Exchange.

0:32:22.680 --> 0:32:26.400
<v Speaker 1>I'll tell you one more story. To Anchor Television, I

0:32:26.480 --> 0:32:30.600
<v Speaker 1>mentioned that it comes back to your interests. I mentioned

0:32:30.960 --> 0:32:33.920
<v Speaker 1>the salad oil scandal, and someone emailed me about how

0:32:33.960 --> 0:32:35.920
<v Speaker 1>like they worked at a bank in like the eighties

0:32:36.040 --> 0:32:38.480
<v Speaker 1>or something, and they're like, we were told like two

0:32:38.520 --> 0:32:41.000
<v Speaker 1>stories about commodity financing. One was the salad oil scandal

0:32:41.040 --> 0:32:43.640
<v Speaker 1>and the other was that our bank had loaned a

0:32:43.680 --> 0:32:49.360
<v Speaker 1>lot of money against frozen shrimp and there was some

0:32:49.480 --> 0:32:52.880
<v Speaker 1>scandal and default and that was why they served so

0:32:53.000 --> 0:32:56.360
<v Speaker 1>much shrimp in the bank's cafeteria. I love the idea

0:32:56.480 --> 0:33:00.480
<v Speaker 1>that the bank made loans secured by frozen shrimp and

0:33:00.520 --> 0:33:02.360
<v Speaker 1>the lens defaulted and so the bank was like, we're

0:33:02.360 --> 0:33:04.000
<v Speaker 1>going to eat the shrimp and then they ate the show.

0:33:04.000 --> 0:33:04.880
<v Speaker 2>You're gonna liquidate it.

0:33:04.920 --> 0:33:07.640
<v Speaker 1>So maybe that's what the coffee at Morgan's Papa is doing.

0:33:15.320 --> 0:33:16.920
<v Speaker 1>And that was the Money Stuff podcast.

0:33:17.200 --> 0:33:19.320
<v Speaker 2>I'm Matt Levine and I'm Katie Greifeld.

0:33:19.480 --> 0:33:21.600
<v Speaker 1>You can find my work by subscribing to The Money

0:33:21.640 --> 0:33:24.160
<v Speaker 1>Stuff newsletter on Bloomberg dot com.

0:33:23.960 --> 0:33:26.400
<v Speaker 2>And you can find me on Bloomberg TV every day

0:33:26.440 --> 0:33:29.360
<v Speaker 2>on the Clothes between three and five pm Eastern.

0:33:30.080 --> 0:33:32.080
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0:33:32.120 --> 0:33:35.360
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0:33:35.360 --> 0:33:37.360
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0:33:37.720 --> 0:33:40.280
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0:33:40.360 --> 0:33:42.240
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0:33:42.240 --> 0:33:43.120
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0:33:44.040 --> 0:33:48.360
<v Speaker 1>The Money Stuff Podcast is produced by Anamasarakis, Moses ONAM

0:33:48.760 --> 0:33:49.960
<v Speaker 1>and Alexis Hot.

0:33:50.400 --> 0:33:52.640
<v Speaker 2>Our theme music was composed by Blake Maples.

0:33:53.400 --> 0:33:56.840
<v Speaker 1>Amy Keen is our executive producer. Thanks for listening to

0:33:56.840 --> 0:33:59.280
<v Speaker 1>The Money Stuff Podcast. We'll be back next week with

0:33:59.480 --> 0:34:00.000
<v Speaker 1>more stuff