Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: I'm having a horrible week. Let me tell you about it.
Speaker 2: I heard it gets worse, It gets worse. I was
Speaker 2: getting on the subway and I was looking at my
Speaker 2: phone as one does, and I didn't notice in time
Speaker 2: that there was a just huge pool of oatmeal on
Speaker 2: the floor of the subway car. When I'm ninety percent
Speaker 2: confident it was oatmeal, I'll tell you why. There was
Speaker 2: a lid next to it, so I don't know. Maybe
Speaker 2: someone vomited and then threw a lid down, but I'm
Speaker 2: hoping that it was oatmeal. Anyway, it splotted up the
Speaker 2: back of my jeans. That was yesterday. I was walking
Speaker 2: with my lunch in my hand and just stepped in
Speaker 2: dog feces. Just I'm so upset. I hate this city.
Speaker 2: It's horrible here. You have to always be on high alert,
Speaker 2: and I'm tired of it. Man, I'm just I'm worn down.
Speaker 1: Yeah, since I moved to the suburbs, I have not
Speaker 1: necessarily seen a decrease in my incidence of stepping on
Speaker 1: gross things.
Speaker 2: Yeah, but I feel like you're part of the dog community.
Speaker 1: Yeah, sure, bringing on myself.
Speaker 2: I'm kind of asking for it, but I'm not. I'm
Speaker 2: specifically not in the dog community. I have a cat,
Speaker 2: and I moved to New Jersey, so I try to
Speaker 2: avoid disgusting things, and I just I can't. It all
Speaker 2: found me this week and bad luck comes in three.
Speaker 2: So something hideous is going to happen.
Speaker 1: You're going to step on something real bad.
Speaker 2: Something is going to step on me. I don't know.
Speaker 1: Hello, and welcome to the Money Stuff Podcast, your weekly
Speaker 1: podcast where we talk about stuff related to money. I'm
Speaker 1: Matt Levine and I write the Money Stuff column for
Speaker 1: Bloomberg Opinion.
Speaker 2: And I'm Katie Greifeld, a reporter for Bloomberg News and
Speaker 2: an anchor for Bloomberg Television.
Speaker 1: You know who else is having a bad week?
Speaker 2: The list goes on.
Speaker 1: I was gonna say Donald Trump, but there's no real
Speaker 1: reason to think that Donald Trump's tariffs have a bad
Speaker 1: day Wednesday in the US Supreme Court because they're illegal,
Speaker 1: and every court that has considered them found them illegal.
Speaker 1: And the Supreme Court has generally been more willing to
Speaker 1: let Donald Trump do illegal things than other courts are, because,
Speaker 1: like you know, the other courts, there's like a law,
Speaker 1: the law, and the Supreme Court is like, yeah, we
Speaker 1: get to make up the law. So they've been a
Speaker 1: little more generous. But it seems like from the oral
Speaker 1: argument on Wednesday, it seems like they might have hit
Speaker 1: their limit on Donald Trump's universal tariffs.
Speaker 2: Yeah, it's funny. It seems like skepticism was the word
Speaker 2: of the day, I think, almost every meeting.
Speaker 1: So you can't really tell what they think from the
Speaker 1: oral argument, so you have to write that they were skeptical.
Speaker 2: Yeah, yeah, asked skeptical questions, things along those lines. Yeah,
Speaker 2: we're talking about the nineteen seventy seven International Emergency Economic
Speaker 2: Powers Act AIPA, if you will. So Donald Trump says
Speaker 2: that it's in the interest of national security that he's
Speaker 2: basically able to levy blanket tariffs around the globe. And
Speaker 2: that's what's in question right now, defining the limits of
Speaker 2: this nineteen seventies law.
Speaker 1: Yeah, normal people and lawyers and economists believe that tariffs
Speaker 1: are taxes because they are, and the US Constitution says
Speaker 1: that only Congress can impose taxes. And in APA, Congress
Speaker 1: gave the president the power to regulate importation in an emergency,
Speaker 1: but it doesn't say you can tax them. And it
Speaker 1: seems to me and many other people, and probably five
Speaker 1: or so justices of the Supreme Court, that that does
Speaker 1: not give Donald Trump the power to unilatterally impose taxes
Speaker 1: on the imports of every country in the world. Donald
Speaker 1: Trump disagrees, and in the Supreme Court argument, his lawyer
Speaker 1: Solicitor General, argued that these are not taxes. They're not
Speaker 1: designed to raise rev and the goal of the tariffs
Speaker 1: is to make everyone. Essentially, actually said the fact they
Speaker 1: raise revenue is only incidental. The tariffs would be most
Speaker 1: effective if no person ever paid them, because there were
Speaker 1: no imports.
Speaker 2: I think amazing.
Speaker 1: Yeah, but no one believes that, certainly not Donald Trump,
Speaker 1: who has talked about how much revenue they're raising, and
Speaker 1: certainly not the strim Court.
Speaker 2: So you know, yeah, I feel like it's been pretty
Speaker 2: nakedly a goal of the tariffs is to raise tariff
Speaker 2: revenue and trying to shrink the budget.
Speaker 1: Justice it sure, because they're at tax Yeah, so it's
Speaker 1: very hard to argue that, and they tried, and it
Speaker 1: doesn't seem like it went that well.
Speaker 2: Yeah, again, we don't know what they were thinking. We
Speaker 2: might get a decision by the end of the year,
Speaker 2: which is exciting. But I have a quote here from
Speaker 2: Chief Justice John Roberts saying that the tariffs were quote
Speaker 2: an imposition of taxes on Americans, and that has always
Speaker 2: been the core power of Congress. That's a direct quote.
Speaker 2: And then you also it's literally.
Speaker 1: Read a front of the Constitution, like the Constitution is
Speaker 1: like an actual favorite you can read right, you actually
Speaker 1: see that. It says Congress has a parat advice.
Speaker 2: I've carused it now and again a lot of amendments. Anyway,
Speaker 2: this is really enough front, right up front. And then
Speaker 2: you had Trump appointed justices as well, Neil Gorsuch and
Speaker 2: Amy Cony Barrett apparently also asking skeptical questions as well.
Speaker 2: But again it's very hard to know.
Speaker 1: It's hard to know. Neil Gorsuch, I have a certain
Speaker 1: personal fondness for no goar, such pause, go on. I
Speaker 1: think you talked about this on the podcast, But my
Speaker 1: wife argued a case in the Supreme Court that was
Speaker 1: a non delegation doctrine in case. The non delegation doctrine
Speaker 1: has been around for a long time. Basically, it says
Speaker 1: that Congress can't just hand over its powers to the
Speaker 1: executive branch without giving it an intelligible principle how to
Speaker 1: regulate that doctrine has been around for a while, but
Speaker 1: never really worked for the last hundred years. Like, the
Speaker 1: Supreme Court has never found a violation of the non
Speaker 1: delegation doctrine. It's never said Congress deligated too much power here,
Speaker 1: But Neil Gorsuch believes in it and has like tried
Speaker 1: to find violations of it and has like dissented from
Speaker 1: decisions including on and Following My Wife and saying that,
Speaker 1: like the non delegation doction should have some real power.
Speaker 1: And it seems here that if Congress intended to delegate
Speaker 1: the power to unilaterally tax all imports forever to the president,
Speaker 1: that would be quite a striking delegation that would perhaps
Speaker 1: exceed the ability of Congress to delegate, so like there's
Speaker 1: natural reason to think that he would oppose these tariffs. Similarly,
Speaker 1: John Roberts invented the thing called the major questions doctrine,
Speaker 1: which has become a big part of Supreme Court jurist prudence,
Speaker 1: even though he kind of made it up a few
Speaker 1: years ago. And in the major questions doctrine, basically it's like,
Speaker 1: if Congress is going to give the executive like some
Speaker 1: huge new power. It has to do so clearly. And
Speaker 1: here AIPA gives the president the power to regulate imports,
Speaker 1: which is not taxing them. So it doesn't seem like
Speaker 1: it does it clearly.
Speaker 2: Yeah.
Speaker 1: So like if you look at you know, if you count,
Speaker 1: like three liberal justices are going to sign out. One
Speaker 1: John Roberts loves his major question doctrine, and one new
Speaker 1: of course such loves his non delegation doctrine. You kind
Speaker 1: of get to the doors being stricked down.
Speaker 2: Yeah, which is interesting and exciting because the question has
Speaker 2: also been raised, would reimbursement.
Speaker 1: Oh yeah, have to happen?
Speaker 2: What on earth would that possibly look like?
Speaker 1: Right? If you just went to the Supreme Court, you know,
Speaker 1: a year ago and asked them would this pay legal?
Speaker 1: I think they'd all say no, Yeah, but it's already happened,
Speaker 1: right for sure, it's already raised hundreds of billions of
Speaker 1: dollars or whatever, and so unscrambling the egg is really hard,
Speaker 1: and I don't know what will happen. I will say
Speaker 1: that you could imagine the government being like it would
Speaker 1: be impossible to pay refunds. And that's the reason not
Speaker 1: to strike this down. And they haven't done that. They've
Speaker 1: been like, yeah, I would pay refunds. Yeah, I do
Speaker 1: think anythink that's a little interesting, is that if you
Speaker 1: think about the incidents right, like on the one hand,
Speaker 1: like I don't think consumers have paid a lot of
Speaker 1: these times.
Speaker 2: Yeah, it seems like so far companies have you know,
Speaker 2: a lot.
Speaker 1: Of the costs. So pretty strong consensus is that tariffs
Speaker 1: have not been passed on to consumers nearly as much
Speaker 1: as economists expected. And I don't know exactly there isn't
Speaker 1: for that. Some of it it's just like a you know,
Speaker 1: good profit environment, and some of it is like everyone's
Speaker 1: a little bit waiting and seeing and like if the
Speaker 1: tariffs continued forever, they might pass them on.
Speaker 2: But the yeah, what happens.
Speaker 1: But at the same time, like if there are refunds,
Speaker 1: I don't know who gets the refunds. I think a
Speaker 1: lot of like the importers have sold refund claims to
Speaker 1: like hedge funds. Yeah, this is a real Wall Street
Speaker 1: trade where like some banks have been arranging trades where
Speaker 1: hedge funds will buy refund claims it like forty cents
Speaker 1: on the dollar. And if the stream court strikes them down,
Speaker 1: then like they get their money, and if it doesn't
Speaker 1: then they lose the forty cents on the dollar. So
Speaker 1: it would be more interesting if the tariffs like had
Speaker 1: been passed on to consumers and then they were like
Speaker 1: ultimately a transfer of money from consumers to hedge funds. Yeah,
Speaker 1: but instead I think there's just a transfer of money
Speaker 1: from companies stage funds.
Speaker 2: Well. Amy Coney Barrett did ask the lawyer for the
Speaker 2: small businesses that sued basically how the process would work
Speaker 2: should the terroriffs be overturned. His answer was that if
Speaker 2: they are overturned, then businesses may seek the return of
Speaker 2: the billions already paid to the US Treasury. So in
Speaker 2: that scenario, like the businesses have sold them.
Speaker 1: Yeah, there's some interesting questions about whether the government would
Speaker 1: stone while a hedge fund that has bought Tireff claims,
Speaker 1: you know, yeah, but probably it'd be fine. Probably some
Speaker 1: hedgehunds are going to do well out of this.
Speaker 2: So the most interesting possibility for this podcast is that
Speaker 2: these terrafts are overturned.
Speaker 1: Well, yes, and then a hedge fund sues the government
Speaker 1: for a refund that the government says now and it
Speaker 1: goes to the Supreme courtly, that's a fun one.
Speaker 2: It's a fun one.
Speaker 1: That's a fun be interested in a tiff refund hedge
Speaker 1: fund case.
Speaker 2: I do want to put some numbers around the terriff
Speaker 2: revenue so far, because I think it's interesting. Apparently it's
Speaker 2: helped bring the national budget deficit down to one point
Speaker 2: seven eight trillion dollars for the most recent fiscal years.
Speaker 2: That's a drop of two per from twenty twenty four,
Speaker 2: which is good news. But you think about the overall
Speaker 2: trajectory of spends and tax cuts, it's probably not going
Speaker 2: to really change things that much.
Speaker 1: But even still, but else it's getting reversed.
Speaker 2: Maybe maybe we don't know that right.
Speaker 1: And like again, like the government can't argue about this.
Speaker 1: They can't be like, we need these tariffs to keep
Speaker 1: the deficit down. Yeah, I mean they can. They can
Speaker 1: say it, but they can't say it in the Supreme
Speaker 1: Court because to the Supreme Court, they're saying, this isn't attack.
Speaker 1: We're not raising revenue, so we can't talk about the revenue.
Speaker 2: Yeah. Well, kind of reminds me of the situation with
Speaker 2: Nvidia and AMD chips in terms of the idea was
Speaker 2: floated that the government would take a cut of Chinese revenues,
Speaker 2: like the revenue that they.
Speaker 1: Need in China, like a reverse taff.
Speaker 2: Yeah, but it's also like, how do you argue that's
Speaker 2: for national security that also seems to be just nakedly revenue.
Speaker 2: It's crazy.
Speaker 1: It's like you can tell advanced technology to our enomy
Speaker 1: as lone as we got to cut.
Speaker 2: Yeah right, cony up, what do you want to talk
Speaker 2: about next?
Speaker 1: Met Sarah?
Speaker 2: I love this story so much drama in the healthcare.
Speaker 2: I'm an ice bace for this very hot, promising obesity startup,
Speaker 2: met Sarah.
Speaker 1: Yeah, it's good to have an obesity drug.
Speaker 2: Yeahs I wish I had won.
Speaker 1: Yeah. So, Metsarah is a like US biotech company that
Speaker 1: has an obesity drug that seems to be promising.
Speaker 2: Not on the market yet, no, but it did recently
Speaker 2: complete a mid stage trial.
Speaker 1: Yeah. So it's a promising but not yet commercialized the
Speaker 1: obesity drug. And Pfizer, a big US from a company
Speaker 1: that had a notable failure in trials of it's obesity drug. Yeah,
Speaker 1: and it's kind of like adrift without an obesity drug,
Speaker 1: agreed to buy met Sarah in September and since then,
Speaker 1: no Nordisk, which you know is a giant Danish pharmaceutical
Speaker 1: company that notably makes ozepic yep and we go vi yes,
Speaker 1: has come in with a higher bid for Metsarah, which
Speaker 1: surest all has interesting drama. But secondly, because Novo has
Speaker 1: the leading obesity drugs, there's a huge anti trust problem
Speaker 1: with it buying met Sarah. Yeah, and met Sarah with
Speaker 1: the board of directors is choosing between a higher offer
Speaker 1: from Novo that might not go through or a lower
Speaker 1: offer from Pfizer that has like very little anti trust risk.
Speaker 1: And Nova got around that problem, or thinks it got
Speaker 1: around that problem, or probably got around that problem by
Speaker 1: basically paying the money upfront. So instead of like signing
Speaker 1: a deal and going to get anti trust approval and
Speaker 1: when you get anti trust approval paying the money for
Speaker 1: the shares, Novah is just going to hand over the
Speaker 1: money upfront. It's going to be dividended out to met
Speaker 1: Sarah shareholders like as soon as they signed the deal,
Speaker 1: and then Nova will get back like sort of this
Speaker 1: like debtlike claim, so that if they get a distress approval,
Speaker 1: the deal will close and nov will end up owning Metsarah.
Speaker 1: And if it doesn't close, then Metsarah can sell itself
Speaker 1: to someone else, and Nova gets the first like six
Speaker 1: point five billion dollars of proceeds. It's a very weird structure.
Speaker 2: It is super weird. I had to reread it a
Speaker 2: number of times, and then listening to you describe it,
Speaker 2: I feel like I need to go back and play
Speaker 2: it again.
Speaker 1: Yeah. Basically, they're just paying for the company, even if
Speaker 1: they can't end up buying the company, which is wild.
Speaker 2: It's a very bold move by Novo. You mentioned that
Speaker 2: they have the leading of a BCD drug. I will
Speaker 2: put an asterisk there that they have seeded market share
Speaker 2: to Eli Lilly in the US. So they're trying to
Speaker 2: regain grounds.
Speaker 1: Okay, so one possible is they're trying to regain ground
Speaker 1: by getting Metsara's awesome new drugs.
Speaker 2: Yeah.
Speaker 1: Pfizer has a different theory, which is that they don't
Speaker 1: care about this drug. They're just trying to catch and
Speaker 1: kill it. They're trying to prevent Pfiser from getting an
Speaker 1: ibcit drug by doing this deal where where they will
Speaker 1: lock up met Sarah in like trying to get regulatory
Speaker 1: approvals for two years. And Pfizer says the deal with
Speaker 1: Nova will never close, They'll never get an anti trust approval,
Speaker 1: but like it'll take so long that the actual purpose
Speaker 1: of this deal is to prove ad pviser from buying it,
Speaker 1: so sort of like maintain Nova's position. So that's Pfizer's view.
Speaker 1: They've sued in multiple courts. They kind of lost around
Speaker 1: this week Deliery Chancery Court refused to stop Metsarah from
Speaker 1: taking the Nova deal, but you know there's still lawsuits
Speaker 1: kicking around.
Speaker 2: Yeah, that is a very cynical take. I feel like
Speaker 2: the fact that it's not Eli Lilly doing this maybe, Yeah.
Speaker 1: It's a cynical take. I mean, it's very weird to
Speaker 1: pay for the company up front, even if you might
Speaker 1: not get it right. And like one possibility is that
Speaker 1: Novo is like, we don't think there's how much anti
Speaker 1: trust risk. We understand Metsarah is worried about it, so
Speaker 1: we're going to bear that risk ourselves by paying everything
Speaker 1: up front. But are other possibilities that everyone thinks there's
Speaker 1: a lot of anti trust risk and they're like, we
Speaker 1: don't even care if we don't get the company.
Speaker 2: Yeah, I will say we heard from the CFO of
Speaker 2: Novo talking about why they wanted this company, and they're
Speaker 2: promising drug in particular, and the CFO said that they're
Speaker 2: particularly interested in Metsarah's amelin targeting drug. Okay, if anyone
Speaker 2: falling along at home is really well versed in this stuff.
Speaker 2: Apparently amelin is another potential target in obesity treatment, and
Speaker 2: just on Thursday, actually Eli Lilly said that it's amelin
Speaker 2: targeting helped patients lose up to twenty point one percent
Speaker 2: of their body weight over forty eight weeks. So I
Speaker 2: don't know, like Pfizer has their take, but Novo seems
Speaker 2: to have their own.
Speaker 1: Right, you can't fully believe the extremely cynical take of
Speaker 1: like never spending billions of dollars just the stobviser from
Speaker 1: getting out of PCD DUG that's adviser also has like
Speaker 1: a sort of like patriotic argument. Yeah, like you know,
Speaker 1: kind of playing to the Trump Justice Department. Should in
Speaker 1: an American company end up buying this American obesity rather
Speaker 1: than giving it to the Danish And.
Speaker 2: The government's going to be like what if we got
Speaker 2: a golden chair perhaps something along those lines, perhaps a
Speaker 2: kind of revenue.
Speaker 1: I'm sorry, because like this is what's going to happen.
Speaker 2: Yes, this is.
Speaker 1: Totally what's going to happen.
Speaker 2: Speaking of drama, this has nothing to do with obesity.
Speaker 1: Well, the story about a guy who's been five hundred
Speaker 1: thousand dollars on his personal.
Speaker 2: Chef talk about a fat wallets. So stupid.
Speaker 1: Yeah, I think about Like so, uh, Sam bankman Fred
Speaker 1: had his appeal this week. Oh yeah, it didn't go well. Oh,
Speaker 1: I mean we don't know the result that skeptical.
Speaker 2: Questions, skeptical skepticism.
Speaker 1: And Sam bankman freet has said that all of his
Speaker 1: problems started when he handed over control of FTX to
Speaker 1: people who are running it in bankruptcy, file for bankruptcy,
Speaker 1: and like someone else takes over the company.
Speaker 2: That was the starting point of well, that was.
Speaker 1: In the starting pipe. He was like, I could have
Speaker 1: recovered before that, but then after they took over the company,
Speaker 1: like the new CEO has an incentive to throw the
Speaker 1: old management under the bus, right and find as many
Speaker 1: problems as possible. And I was thinking about that because like,
Speaker 1: so we're going to talk about First Brands, which is
Speaker 1: a auto parts conglomerate that went bankrupt and this week
Speaker 1: sued its former CEO and soul shareholder Patrick James, for
Speaker 1: various alleged badness basically like doing a lot of fraud
Speaker 1: to borrow from various like factoring companies, and like taking
Speaker 1: all of that money and giving it to himself and
Speaker 1: spending it on seventeen exotic cars, lavish homes and Malibu
Speaker 1: and the Hampton's six figure bills for a celebrity chef
Speaker 1: other stuff like that. And I just think about it
Speaker 1: because like it's the same kind of dynasm where like
Speaker 1: you file for bankruptcy, like essentially a bankruptcy firm takes
Speaker 1: over the company and they're like, you know, let's be
Speaker 1: as negative as possible about the previous management, and so
Speaker 1: do you know they seem to have found a lot
Speaker 1: of stuff. Yeah, but you know you have to be
Speaker 1: a little skeptical, right because like they were running the
Speaker 1: company on behalf of the creditors, right, and like this
Speaker 1: is a company that was one hundred percent owned by
Speaker 1: Patrick James, and so they're like he used it as
Speaker 1: his personal piggy bank. He absolutely did, Like of course
Speaker 1: he did, because he owned the company, and so he
Speaker 1: didn't like follow a lot of like formalities, and like
Speaker 1: when he needed money, he just sent himself some money
Speaker 1: from the company, and now they want all that money
Speaker 1: back to pay to the creditors, right, and so they're like, oh,
Speaker 1: he did lots of fraud. Like I guess I believe them,
Speaker 1: But it's just like and it's an interesting dynamic, like
Speaker 1: so incentives to say he did lots of fraud.
Speaker 2: If I own one hundred percent of an autoparts supplier,
Speaker 2: I can take the money out and buy cars.
Speaker 1: Well, the question is who's going to object to that?
Speaker 1: And if there are no other soulders in the ordinary course,
Speaker 1: no one's going to object it. Now if the company
Speaker 1: goes extremely bankrupt, the creditors are going to object it.
Speaker 1: They're gonna be like giving back the money, and they're
Speaker 1: going to look very carefully to see if you did
Speaker 1: anything bad. And I do think that like they found
Speaker 1: that he did bad stuff in terms of like I mean,
Speaker 1: like the real allegation here is that most of their
Speaker 1: borrowing was secured by invoices. So I could sell auto
Speaker 1: parts to like a car dealership, and they get an
Speaker 1: invoice and they'd borrow against the invoice from like a
Speaker 1: factoring company. They would like send over lists of thousands
Speaker 1: of invoices to borrow the money and they would just
Speaker 1: change the numbers on the lists to get more money,
Speaker 1: and like that's fraud if that's true, right, Like that's
Speaker 1: really bad. And so the creditors have like allegedly found
Speaker 1: a lot of that. But then there's just like the
Speaker 1: other question of like, if you have a company that
Speaker 1: borrows money, can you take money out of the company?
Speaker 1: And it's like, well, it depends on what the credit
Speaker 1: agreements say, and like they make a lot of noise
Speaker 1: about how he didn't follow a lot of formalities, but
Speaker 1: they don't say like it was forbidden by the credit agreements.
Speaker 1: I don't know. So I don't mean to defend him.
Speaker 2: I feel I mean, I feel like someone listening cold
Speaker 2: because I know you want to know.
Speaker 1: I just think it's an interesting dynamic that the creditors
Speaker 1: have every incentive to look for fraud, and that they
Speaker 1: are like, he took money out of this company, which
Speaker 1: leads like, fine, if you you know it's his own company,
Speaker 1: but it's not his own company because he like borrowed
Speaker 1: a lot of money.
Speaker 2: Yeah.
Speaker 1: That said, I do want to emphasize that the stuff
Speaker 1: they say about crossing out the numbers on the invoices
Speaker 1: and writing much larger numbers is really bad fraud.
Speaker 2: Yeah, like much larger numbers, adding a digit maybe too. Yeah.
Speaker 1: Yeah, Like there's an example in the complaint of like
Speaker 1: they patch together two million dollars worth of invoices, like
Speaker 1: thousands of invoices that total two million dollars, and they
Speaker 1: change them to make them eleven million dollars. Yeah, they
Speaker 1: borrowed eleven million dollars. Like that's really bad.
Speaker 2: Yeah, that's super bad. That's flagrant if you really think
Speaker 2: about it. I do wonder if anyone in his family
Speaker 2: was like, Patrick, you run an auto part supplier. How
Speaker 2: do you have so many houses? How do you have
Speaker 2: so many car.
Speaker 1: No, it's a big it's not like a yeah, but
Speaker 1: even still think a multi billion dollar conglomerate of auto
Speaker 1: parts supplayers.
Speaker 2: Yeah, that's true, But I don't know with the benefit
Speaker 2: of hindsight, it seems a little sketchy.
Speaker 1: But I know he's a billionaire. I gotten myself into
Speaker 1: this anyway, I think completely innocent.
Speaker 2: I do think it's interesting that I don't know. It
Speaker 2: feels like every week more news breaks about first brands
Speaker 2: and the unraveling here.
Speaker 1: Even before I went bankrupt, like people are raising concerns
Speaker 1: about double pledging, and like, yeah, it makes sense that,
Speaker 1: Like when their bankruptcy team did a Friends of examination,
Speaker 1: they're like, oh wow, there's tons of double pledging here.
Speaker 2: Yeah. You aptly linked to a Wall Street Journal report
Speaker 2: talking about how now you have a lot more firms,
Speaker 2: perhaps suggesting that we should up our due diligence. There
Speaker 2: was an interesting report too from the Financial Time today
Speaker 2: talking about how UPS is going to liquidate its funds
Speaker 2: with major first brands exposure. Apparently they have a fund
Speaker 2: specializing in invoice finance, specifically at O'Connor that is owned
Speaker 2: by UBS in the process of being sold to Canter Fitzgerald,
Speaker 2: which is pretty funny just in terms of obviously when
Speaker 2: the steal was signed in May, things were much different.
Speaker 1: And invoice financing fund now not so much.
Speaker 2: Yeah, and they're even liquidating a high grade fund that
Speaker 2: invested in invoices linked to less receive companies without any
Speaker 2: first brand's exposure. But right also, no one's like.
Speaker 1: Looking to get into like invoice financing right this minute.
Speaker 1: I will say, you know, I've talked about diligence on
Speaker 1: this sort of thing where you know, it's literally like
Speaker 1: you send over an Excel file with thousands of invoices
Speaker 1: and then they just send you the money. I'm like,
Speaker 1: you're edit that excel file. I will say I got
Speaker 1: at least two emails that included the word blockchain.
Speaker 2: Oh, you know, that's what we've found a use case.
Speaker 1: Whether or not it's blockchain, it does kind of feel
Speaker 1: like we have the technology to not just take it
Speaker 1: on faith that that's just a pile of PDFs is real.
Speaker 1: But not everyone deploys that technology. And you know, there's
Speaker 1: a lot of trust in the financial system and sometimes
Speaker 1: sometimes people buy seventeen exotic cars on the back of
Speaker 1: that trust.
Speaker 2: It's really funny. Blockchain does seem like an obvious answer here,
Speaker 2: But don't put that in there.
Speaker 1: Nope, we're putting them in.
Speaker 2: No, oh, invoice financing funds. I don't know you say
Speaker 2: that now, Maybe isn't a great time for them. I
Speaker 2: want to read the story in like the next three
Speaker 2: months about someone coming in and moving aggressively here, because
Speaker 2: what was what was that?
Speaker 1: It's a real business, Like, yeah, I feel like people
Speaker 1: only ever talk about it when someone goes up in
Speaker 1: a flaming pile of fraud. But like it's a real business. Yeah,
Speaker 1: it's mostly fine.
Speaker 2: It kind of reminds me of the credit sweet blob.
Speaker 2: Wasn't it eighty ones? What am I trying to remember?
Speaker 1: I don't know what credits. We had that Green Soul problem,
Speaker 1: which was with the invoice financing from.
Speaker 2: No, I'm definitely not thinking would.
Speaker 1: Not oh the at ones in that Yeah, yeah, because
Speaker 1: credit series wiped out billions of dollars of at ones
Speaker 1: and for like twenty minutes people were like, I'll never
Speaker 1: buy an at one again, and then like the at
Speaker 1: one market came roaring back. Yeah, yes, I have to
Speaker 1: say that. Like the day that was happening and people
Speaker 1: were like, I'll never buy an at one again. I'm
Speaker 1: pretty sure I wrote in a column like they will
Speaker 1: definitely buy eight ones.
Speaker 2: Next week, and they did.
Speaker 1: The credit market has no memory whatsoever.
Speaker 2: Maybe that will happen with I think, yeah, voice finance advice.
Speaker 1: Financing, Like I don't think that like invoice financing will
Speaker 1: be dead, but like I think people might do a
Speaker 1: little bit more to a divillidence for a while. And
Speaker 1: that was the Money Stuff podcast.
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