Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to the Money Stuff Podcast. You're a
Speaker 2: weekly podcast where we talk about stuff related to money.
Speaker 2: I'm Matt Levian, I write the Money Stuff column for
Speaker 2: Bloomberg Opinion.
Speaker 1: And I'm Katie Greifeld. I'm a reporter for Bloomberg News
Speaker 1: and an anchor for Bloomberg Television.
Speaker 2: Katie, what do you got today?
Speaker 1: We have a meaty show. We're going to talk about, oh,
Speaker 1: it's a twenty four to seven stock trading potentially what
Speaker 1: that world might look like. Then we're going to talk
Speaker 1: about the FTC and non competes, the FTC continuing to
Speaker 1: be aggressive on a multitude of topics. Then we're going
Speaker 1: to talk about gold bars, which I'm quite excited about,
Speaker 1: and the arbitrage opportunities that don't exist.
Speaker 2: My readers love in arbitrave twenty four seven stock trading.
Speaker 1: Well, there's twenty four to seven, and then there's the
Speaker 1: possibility that there's around the clock trading just on weekdays, which.
Speaker 2: Is a little more humane.
Speaker 1: Yes, exactly, I was actually exactly going to say humane,
Speaker 1: but maybe we should set the scene that this comes
Speaker 1: from a Financial Times article that Nise took a survey.
Speaker 2: They're like, hey, if we had twenty four seven trading,
Speaker 2: would you trade twenty four seven or twenty four five.
Speaker 2: I think the survey had a bunch of options. Yeah,
Speaker 2: it's like twenty four hours a day, seven days a week.
Speaker 2: Both neither and.
Speaker 1: I don't believe that we have the results of that survey,
Speaker 1: which feel key.
Speaker 2: I mean, it's not a public survey, it's for their
Speaker 2: own information. But the reason they're doing it is because
Speaker 2: there is pressure on it. Right. Someone started to think
Speaker 2: called the twenty four exchange, that's meant to be a
Speaker 2: twenty four hour I think it's actually twenty three hours
Speaker 2: a day, And all the retail brokerages are moving to
Speaker 2: offer extended hour overnight trading because a lot of robin
Speaker 2: Hood customers would really like to be able to trade
Speaker 2: stocks at three am.
Speaker 1: Yeah.
Speaker 2: So Nice sees where the market is going and is
Speaker 2: asking its customers about it.
Speaker 1: Yeah, and I guess that kind of answers the question
Speaker 1: of who would this before, and it would be for
Speaker 1: pajame traders, retail folks.
Speaker 2: I think it would be for a lot of pajama
Speaker 2: trating retail folks. The crypto market has been twenty four
Speaker 2: to seven. Part of what's causing this is like crypto
Speaker 2: is twenty four to seven, and people like, oh yeah,
Speaker 2: twenty four seven trading can work. And you look at crypto, right,
Speaker 2: they're like peaks when Asian markets wake up and when
Speaker 2: European markets wake up. So I think some of this
Speaker 2: might be for like news happens in Asia in like
Speaker 2: the US overnight and people can go and trade American stocks.
Speaker 2: A lot of it is for pajama traders.
Speaker 1: I was gonna say, and who am I, But I
Speaker 1: feel like the crypto market is that where we should
Speaker 1: be taking our cues from in terms of twenty four
Speaker 1: to seven trading.
Speaker 2: I mean, I'm not sure that crypto has necessarily provided
Speaker 2: great lessons for like real financial markets. Real financial markets
Speaker 2: have patterns that come from technology of two hundred years ago,
Speaker 2: and sometimes it takes a sort of brand new market
Speaker 2: to cast aside that technology and say, wait a minute,
Speaker 2: we have the computers to trade twenty four seven, so
Speaker 2: let's just do it.
Speaker 1: Thinking about the effects that this could have. Again, in
Speaker 1: this hypothetical scenario where there's twenty four to five or
Speaker 1: twenty four to seven trading, what the effects on liquidity
Speaker 1: might be are really interesting because in normal market hours
Speaker 1: in the US, it's the open and the close is
Speaker 1: when you get the most volume. But if there's not
Speaker 1: an open and there's not a close, where are the
Speaker 1: liquidity clusters?
Speaker 2: I suspect the answer is the open and the close.
Speaker 2: I suspect, By the way, like Nicey and Ethic exchanges
Speaker 2: offer extended hour trading, and it starts structural, but it's
Speaker 2: in part just like tradition, like people know that nine
Speaker 2: thirty and four are the times when everyone trades, and
Speaker 2: so there are auctions then, and that's when liquidity clusters,
Speaker 2: and you can trade ten minutes before the opening auction
Speaker 2: or ten minutes after what the opening auction does collect liquidity.
Speaker 2: I suspect that it won't be a crypto exchange where
Speaker 2: it's we just turn it on and it goes forever. Yeah,
Speaker 2: it'll be like Nicey, where there's a nine to thirty
Speaker 2: auction and a four o'clock auction and trading during the
Speaker 2: day and then after hour there's some other thing that's
Speaker 2: like the overnight session, but it's like a little deprecated
Speaker 2: so people understand where the main sources of liquidity are.
Speaker 1: I root for chaos in general. I'm interested to see
Speaker 1: what three am would look like on a twenty four
Speaker 1: to five exchange, what shenanigans would happen around that time.
Speaker 2: Presumably it's mostly pajama trading, retail traders interacting with one
Speaker 2: or two very nervous electronic market makers. And then, like
Speaker 2: every so often, the catastrophe happens overnight and like big
Speaker 2: traders rushed to sell and the stock crashes because there's
Speaker 2: no deep liquidity provision. Yeah, you'll see a lot more
Speaker 2: flash crashes because like fewer people are going to be
Speaker 2: putting in quotes at three am, so.
Speaker 1: The charts will get super fun, even.
Speaker 2: Like one big retail trader could crash the slack. Although
Speaker 2: you say that the charts like even now, if you
Speaker 2: look at like the Bloomberg charts, they are the nine
Speaker 2: thirty to four o'clock session. There's trading after hours, but
Speaker 2: everyone kind of understands that it doesn't count. You root
Speaker 2: for chaos. I've been advocating for years that the stock
Speaker 2: market should move to half an hour a day. The
Speaker 2: large bulk professional trading occurs at the opening in the close.
Speaker 2: If you don't have any like particular reason, right if
Speaker 2: you're just like if you're a mutual fund with outflows
Speaker 2: or whatever, Like you did try to get the closing
Speaker 2: print right. You're looking to trade where there's the most
Speaker 2: liquidity if you don't have any special information, and if
Speaker 2: you concentrate all the liquidity at one time, you get
Speaker 2: more efficient prices. If you've spread the liquidity over twenty
Speaker 2: four hours, it like all gets worse. One thing I
Speaker 2: was thinking about is if you do go to twenty
Speaker 2: four hour trading, that probably moves some liquidity away from
Speaker 2: like two pm right right, and so then it has
Speaker 2: the effect of possibly concentrating even more trading at the
Speaker 2: open end close, because people are like, oh, there's twenty
Speaker 2: four hours of trading in the day, there's two real events,
Speaker 2: and everything else is like a ghost town. So I
Speaker 2: might as well only trade at the open up the close.
Speaker 1: That would be a fun effect if it worked out
Speaker 1: that way.
Speaker 2: It would be even from a reader suggesting that there
Speaker 2: should just be one auction a day. Everyone could put
Speaker 2: in their bids in the auction and like you'd clear
Speaker 2: the stock at whatever the clearing price of the auction was,
Speaker 2: and then you'd try it again tomorrow.
Speaker 1: Beautiful.
Speaker 2: That is very appealing to me because it would give
Speaker 2: people up free time, right, you wouldn't have to trade
Speaker 2: all the time. The other advantage of that is it
Speaker 2: cuts down on the cost of intermediation. I'm not sure,
Speaker 2: but I think that if you go to twenty four
Speaker 2: hour trading, then the high frequency trading firms of the
Speaker 2: world are going to make more money because they're going
Speaker 2: to be trading with retail traders at three am, and
Speaker 2: in the aggregate that'll be noise trading, but liquidity will
Speaker 2: be very thin, and they'll charge a lot for spreads, right,
Speaker 2: I mean, like the point of a high frequency trader
Speaker 2: is that there are a lot of people want to
Speaker 2: buy stock. There a lot of people want to sell stock.
Speaker 2: They don't come to the market at exactly the same time,
Speaker 2: and so some electronic market maker is buying from the
Speaker 2: people who want to sell, holding the stock for a
Speaker 2: second or a minute or an hour, and then selling
Speaker 2: it to people who want to buy. If you spread
Speaker 2: out the trading, there's just more of that. There's like
Speaker 2: more people coming in at different times, and more money
Speaker 2: for high frequency traders to make because they are doing
Speaker 2: more of that intermediaty trades in time, whereas if you
Speaker 2: put all of the trading in one auction, then all
Speaker 2: the people want to buy, all of the people want
Speaker 2: to sell meat at that one second, and you don't
Speaker 2: have any need for like electronic and mediation.
Speaker 1: There are your two extremes.
Speaker 2: Those are your two extremes. And like the modern like
Speaker 2: retail stock trading boom, the like meme stock boom. Yeah,
Speaker 2: people are so mad at the Citadel Securities of the world.
Speaker 2: They're so mad at the hyper concy traders, but they
Speaker 2: also want to trade stock at three. Yeah. The memestock
Speaker 2: boom has been great for those hyper concut traders, right
Speaker 2: because they're getting all this order flow to trade with,
Speaker 2: while all these retail traders are so mad at at
Speaker 2: Ceditel Securities. This is the same thing where it's like
Speaker 2: this thing that caters to retail traders, I think will
Speaker 2: be very good for the electronic market makers.
Speaker 1: So they need each other.
Speaker 2: Yeah. I think some of the memestock traders have a
Speaker 2: somewhat faulty understanding of how Citital Securities makes money. I
Speaker 2: think that if you have twenty four hour trading, it's
Speaker 2: gonna be really good for those guys. And if you
Speaker 2: don't like those Guys, if you think that it's bad
Speaker 2: that these intermediaries make so much money trading stocks, which
Speaker 2: I don't really think but like a lot of people do,
Speaker 2: then collapsing it to one single point of trading would
Speaker 2: be good for making traders.
Speaker 1: Then what would the financial television anchors talk about all day?
Speaker 2: I was going to say maybe the same thing, but
Speaker 2: of course.
Speaker 1: I just talk about it market more.
Speaker 2: Oh yeah, Bomberker could do it to one auction a day.
Speaker 2: Corporate earnings.
Speaker 1: Yeah, it raises the question. I mean you think about
Speaker 1: what happened with what was it left last earnings cycle
Speaker 1: with the typo in their release and things went crazy,
Speaker 1: but it was after hours, so the charts were still clean.
Speaker 2: Yeah. I mean, it's like a really traveling possibility about
Speaker 2: twenty four seven trading is like if you had real
Speaker 2: twenty four seven trading where I was like, oh, it's
Speaker 2: like fake and deprecated, but it's like the market is
Speaker 2: just open all the time. Then like when would companies
Speaker 2: put out news?
Speaker 1: Yeah, and the government too.
Speaker 2: Right now, there's this norm of like six and a
Speaker 2: half hours of market hours, and during market hours you
Speaker 2: try not to put out market moving news because one
Speaker 2: if you get it wrong. The stakes are horrible or
Speaker 2: really high. But like two, if you put out news
Speaker 2: at ten am, someone's going to see it first. Someone's
Speaker 2: going to trade on it ahead of someone else. And
Speaker 2: like the person who sees at first is going to
Speaker 2: be someone who is paying for like the fastest data
Speaker 2: connections to the exchanges. It's systematically going to be not
Speaker 2: the retail trader.
Speaker 1: Right. I have an idea, Well, companies should release their
Speaker 1: earnings at three am, and if you really care, you're
Speaker 1: going to be up and we can still have normal
Speaker 1: ish hours. Agree that it'll still be nine thirty and
Speaker 1: four pm is when most of the trading happens. But
Speaker 1: then you have goblin hours.
Speaker 2: But if you're like a hedge fund, you're you're awake
Speaker 2: in goblin hours and like someone's winning and someone's losing.
Speaker 1: That's great, not for them, I know, but no, you
Speaker 1: have goblin hours, and it'll be subverted where you have
Speaker 1: all the professionals, all the hedge funds, they're trading in
Speaker 1: the overnight session, and then the normal session will just
Speaker 1: be kind of boring in retail.
Speaker 2: Look, I mean, news happens right now and some people
Speaker 2: react to and the it is faster than others. But
Speaker 2: it is not the case that there's a race to
Speaker 2: react to every piece of corporate earnings news, right or
Speaker 2: every economic data point, because most of those things come
Speaker 2: out outside of market hours, and you can't really have
Speaker 2: that race, right if you have true market hours twenty
Speaker 2: four hours a day, then like you do have that
Speaker 2: race every time news comes out, and it's a socially
Speaker 2: wasteful race, right. If you ask hedge funds like, what
Speaker 2: socially valuable thing do you do, They're like, oh, we
Speaker 2: make prices more efficient. It's like, yeah, understanding earnings news
Speaker 2: and buying stocks that are undervalued is like a good thing,
Speaker 2: but racing to do that at three am, one second
Speaker 2: ahead of another hedge fund is like you should just
Speaker 2: go to bed and wake up at nine thirty and
Speaker 2: do it.
Speaker 1: I wish that I had the Financial Times article pulled up,
Speaker 1: because wasn't it one of the questions that was asked
Speaker 1: in the survey was would the time you spend thinking
Speaker 1: about overnight trading be better spent thinking about trading during
Speaker 1: normal hours or yeah?
Speaker 2: I think it was like I think it was something
Speaker 2: like should we stop asking you about this?
Speaker 1: Yeah?
Speaker 2: It was like with the time that nicey spends thinking
Speaker 2: about overnight try to be better spent on something else.
Speaker 2: If trading was one second to day, hedge funds would
Speaker 2: still have incentives to understand companies and understand what might
Speaker 2: move their prices and incorporate all the information into their
Speaker 2: one trade a day. But at twenty four to seven trading,
Speaker 2: it's like you're spending a lot of time optimizing, Like
Speaker 2: when you're waking up, you're thinking about things other than
Speaker 2: the fund.
Speaker 1: Mental Again, I root for chaos, but I feel like
Speaker 1: at least this conversation has talked me into maybe we
Speaker 1: should just stick to normal hours, or maybe we should
Speaker 1: just be open for half an hour a day.
Speaker 2: I feel like I haven't adequately emphasized the main benefit
Speaker 2: of half an hour day, which is like everyone would
Speaker 2: get to relax more and spend more time with their families.
Speaker 1: We like watch financial TV.
Speaker 2: Well, I mean when I say everyone, I include financial
Speaker 2: news anchors, and that you would also.
Speaker 3: Have less to do in a nice Yeah, maybe non competes.
Speaker 2: So we talked about last week about how I did
Speaker 2: not take full advantage of my gardening.
Speaker 1: And now maybe you never will ever again.
Speaker 2: Now, maybe no one will ever get gardening leave again.
Speaker 1: God. Yeah. The FTC. Interesting move here about basically erratic
Speaker 1: non competes. Yes, except for senior executives only barely.
Speaker 2: Yeah. Basically, the FTC voted this week to ban all
Speaker 2: non competes forever. If you're a senior executive you currently
Speaker 2: have a non compete, it's enforceable. But otherwise they voted
Speaker 2: to get rid of non competes. One important thing here
Speaker 2: is it's a good chance this doesn't ever happen. Right,
Speaker 2: the FDC voted to do it. It goes into effect
Speaker 2: in about six months, but there are already like multiple
Speaker 2: lawsuits against it, and even the FTC. There are five
Speaker 2: FTC commissioners. Two of them voted against it, and they
Speaker 2: both said in their votes against that this is not
Speaker 2: going to pass muster with the courts, and we can
Speaker 2: talk about the FDC's authority for it.
Speaker 1: I mean, I am interested in that because my first
Speaker 1: reaction was like why, and also why the FTC and
Speaker 1: why is the FTC focusing on this? Shouldn't they be
Speaker 1: like trying to stop Tapestry from buying Capri and other things.
Speaker 2: The FTC was in the business of stopping unfair methods
Speaker 2: of competition. Right, Like, we mostly think of it as
Speaker 2: anti trust, right, but it's also like false advertising and
Speaker 2: like other kinds of fraud. And they think that non
Speaker 2: competes are an unfair method of competition, and you can
Speaker 2: see why, right. I mean, like one thing that they
Speaker 2: talk about in the rule and in the public statements
Speaker 2: is non competes can stop people from leaving a company
Speaker 2: to start a new business. So it's like a very
Speaker 2: direct way for a company to prevent new businesses coming
Speaker 2: out to compete with them.
Speaker 1: Right.
Speaker 2: The rule really mentions doctors a lot, Like doctors are
Speaker 2: an important case. Doctors will often have non competes, and
Speaker 2: if you're a doctor and you leave your practice, you
Speaker 2: have to like sometimes move to a different state to
Speaker 2: continue practicing medicine, and like to the extent the FTC
Speaker 2: is in the business of protecting consumer choice and lowering
Speaker 2: consumer prices. That seems like it would be bad for
Speaker 2: consumers that they can't get a doctor because the doctor
Speaker 2: had to move away, So it makes sense that it's
Speaker 2: the FTC. Yeah, the FDC, this is not something they've
Speaker 2: done before, and their authority for it is a little unclear,
Speaker 2: and their ability to make rules about it is unclear. Yeah,
Speaker 2: and you know, we live in a judicial climate where
Speaker 2: when agencies are like, we're going to make new rules
Speaker 2: to regulate things we've never regulated before, it's hard to
Speaker 2: imagine the current Supreme Court saying Okay, great, sounds good.
Speaker 1: Right.
Speaker 2: It just feels like that's the sort of thing that
Speaker 2: modern courts don't like.
Speaker 1: So some pretty big question marks over authority here. And
Speaker 1: maybe this won't even happen, But I mean, this was
Speaker 1: a good reminder that at least I almost exclusively think
Speaker 1: about non competes in the context of the financial industry.
Speaker 1: But if you take a look at some of the
Speaker 1: examples that the FDC used. You wrote about the powerwasher
Speaker 1: who said, all I know is powerwashing. These business owners
Speaker 1: all want me to sign a non compete clause. They
Speaker 1: also cited someone who works in the asphalt industry, a bartender,
Speaker 1: and as you were saying, a physician in rural underserved Appalasia.
Speaker 1: So I don't know, that was a nice reminder.
Speaker 2: They've been like media reports about non competes in the
Speaker 2: fast food industry. It's really it is pretty widespread.
Speaker 1: Yeah, the FTC had some numbers there too that nearly
Speaker 1: twenty percent of workers are subject to non competes today,
Speaker 1: and their estimate is that it would increase US earnings
Speaker 1: by at least four hundred billion dollars over the next
Speaker 1: ten years to abolish non competes. A lot of readers
Speaker 1: emailed in about PE non competes, PE purchase non competes.
Speaker 2: I got like a couple of emails from readers being like,
Speaker 2: I work in private equity and we buy companies, and
Speaker 2: a lot of the companies that private equity buyers are like,
Speaker 2: it's like asset lights, some guy operating in business, right,
Speaker 2: And so when you buy that business, you're sort of
Speaker 2: buying the person. And if you pay that person twenty
Speaker 2: million dollars to take over his business and then he
Speaker 2: leaves and sets up another business, he'll probably take all
Speaker 2: the customers with him, because it's like it's just him, yeah,
Speaker 2: and you're out twenty million dollars for nothing. And so
Speaker 2: seeing the headline of like FTC bands on competes, people
Speaker 2: got really worried that would make it impossible to buy
Speaker 2: and sell sort of one person small businesses. But there
Speaker 2: is an exception for that, like the if you're signing
Speaker 2: a non compete in connection with the sale of a business,
Speaker 2: then that's enforceable.
Speaker 1: So rest easy.
Speaker 2: And you don't even have to be the owner of
Speaker 2: the business. You know, if you have like a twenty
Speaker 2: person company, like all the people in the company can
Speaker 2: sign a non compete and it's still unforceable because you know,
Speaker 2: what you're selling is the people in the business. So
Speaker 2: there you go. Rest easy. I want to say one other.
Speaker 1: Thing, yeah, and you should.
Speaker 2: So the way it works is like they banned future
Speaker 2: non competes, but they also say all current non competes
Speaker 2: don't work, they're not enforceable. And so one thing in
Speaker 2: the rule is that if you're a company that has
Speaker 2: non competes, you have to send a notice to all
Speaker 2: of your workers saying your non competes are no longer enforceable,
Speaker 2: and like they actually have like language and the rule
Speaker 2: of like this is what you have to put in
Speaker 2: the email. My impression is that there are a lot
Speaker 2: of non competes that are already illegal. In most states,
Speaker 2: non competes are allowed, but they have to be reasonable,
Speaker 2: and a lot of people sign unreasonable non competes. And
Speaker 2: my impression is that companies write these illegal non competes
Speaker 2: because they figure everyone sees this contract, and they're scared
Speaker 2: and they're not going to go work for a competitor
Speaker 2: because they don't want to get sued, and they don't
Speaker 2: know enough about the law. They don't know if that
Speaker 2: the non compete is illegal, And so you can get
Speaker 2: a lot of mileage out of a non compete as
Speaker 2: a company by just writing it down and like never
Speaker 2: trying to enforce it. Even if it's not enforceable. You
Speaker 2: can just say you can't compete, and then most people won't.
Speaker 2: So the FDC wants to solve that problem by saying
Speaker 2: you have to send all of your employees a letter
Speaker 2: saying your non compute is unenforceable. Go ahead and compete,
Speaker 2: but garden leave.
Speaker 1: I know that you had a bad experience. That also
Speaker 1: sounds really nice.
Speaker 2: A lot of people in normal jobs think non competes
Speaker 2: are bad because they just restrict their ability to get
Speaker 2: a new job. But in finance you're like, oh, no,
Speaker 2: I have to spend six months not working and getting
Speaker 2: paid for me I can Finance people are like, I
Speaker 2: kind of like the I like the noncompete status quo.
Speaker 2: I was trying to figure out what happens to that.
Speaker 2: In finance, it's like what tools do you have as
Speaker 2: a financial firm to prevent people from competing. So one
Speaker 2: is like you have a noncompete, which is maybe now illegal,
Speaker 2: but I think the way that things normally work currently
Speaker 2: is that like you have gardening leave, which is normally structured.
Speaker 2: I think as you continue to be employed at the firm,
Speaker 2: and they pay you your base salary, and you stay
Speaker 2: there for some period, not going into work, not having
Speaker 2: access to like the email system, getting pay your base salary,
Speaker 2: and then eventually you leave. There's a litt unclear how
Speaker 2: you would actually force that because I think that the
Speaker 2: way finance works is that you have a non compete,
Speaker 2: and so when you quit, you say I'm quitting, and
Speaker 2: they're like, stay for your six month notice period and
Speaker 2: will pay you. And if you say no, I don't
Speaker 2: want to do that, they say, we have a non compete.
Speaker 2: So you can't actually leave at the other firm anyway.
Speaker 2: So it's like both like the employment terms and the
Speaker 2: non compute. If the non compete goes away, it's not
Speaker 2: totally clear to me that you could enforce the gardening
Speaker 2: leave because you can be like, oh, you need to
Speaker 2: provide six months notice to quit, and then someone is like,
Speaker 2: I quit, I have at will employment in New York.
Speaker 2: I'm quitting with no notice. And it's not clear how
Speaker 2: much they can force you to stick to your six
Speaker 2: month notice period if you don't want to get paid,
Speaker 2: if you want to go to your new firm, which
Speaker 2: if that became the norm, your new firm would insist
Speaker 2: on it, then you wouldn't be able to get your
Speaker 2: gardening leaf. Yeah, so I think you can do it.
Speaker 2: I think you can write employment contracts. Let's say you
Speaker 2: have to give six month notice. But it's a little
Speaker 2: trickier than having the non compete as well.
Speaker 1: That's interesting to hear because I mean, reading your column
Speaker 1: and the description of notice period, I was like, oh, well,
Speaker 1: then we'll just do that.
Speaker 2: Yeah. I think that might be where it shakes that,
Speaker 2: but I'm not totally sure. I think it might be
Speaker 2: harder to enforce that if people really want to leave
Speaker 2: without their gardening leave. Now you can imagine everyone having
Speaker 2: this sort of gentleman's agreement of we're all going to
Speaker 2: take our gardening leaf. The real hard chargers don't always
Speaker 2: want to take the gardening leave.
Speaker 1: Well, it sort of reminds me this discussion very loosely
Speaker 1: about like the eternity leave. Maybe we can cut this.
Speaker 1: But like, if you can get some alpha by not
Speaker 1: taking your paternity leave and like showing how hardcore and
Speaker 1: dedicated you are, maybe the gardening leave will kind of
Speaker 1: turn into that I'm so dedicated and I'm so eager
Speaker 1: to just get going, I'm not going to take gardening leave.
Speaker 1: Will become a thing.
Speaker 2: Nobody says to their new employer, I'm taking gardening leave.
Speaker 2: I'll see you in six months. Everyone always conveys the
Speaker 2: impression that they're so sorry about the gardening leave and
Speaker 2: they'd really like to get started right away, and then
Speaker 2: they like go home and you know, sit on the
Speaker 2: couch and are happy. But I think if it became
Speaker 2: possible to not take the gardening leave, then I think
Speaker 2: that would become the requirement. Yes, this ties into the
Speaker 2: twenty four seven trading, right. You need a certain amount
Speaker 2: of rests from your financial job. Gardening, believe is a
Speaker 2: nice way.
Speaker 1: To get that. Like life is just hurtling towards relentlessly
Speaker 1: just being on all the time.
Speaker 2: I think that that is certainly the message of twenty
Speaker 2: four seven trading. And like my impression is that there
Speaker 2: are a minority of people in finance who've gotten really
Speaker 2: good at optimizing for gardening leave. You like, quit your job,
Speaker 2: spend six months on gardening leave, you start your new job,
Speaker 2: you're like, ah, I gotta go back to that other job.
Speaker 1: Yeah.
Speaker 2: Quit After a month, you get like nine months of
Speaker 2: gardening leave.
Speaker 1: It can be like so good. I mean you linked
Speaker 1: to that tweet about LinkedIn profile. The guy did that
Speaker 1: and his descriptions were so funny. It was winter while
Speaker 1: he was gardening leaving, so he just saw on his
Speaker 1: couch and read books which came from trees, so it
Speaker 1: was still a form of gardening.
Speaker 2: It's a nice benefit of the financial career. You get
Speaker 2: the occasional sabbatical in the form of gardening leave, and
Speaker 2: it would be sad I think for a lot of
Speaker 2: people if it went away.
Speaker 1: Not The only way to get a lot of time
Speaker 1: off is to have a child.
Speaker 2: Spoken like someone just not a children. I don't think
Speaker 2: most people think of ford to leave us time off.
Speaker 1: Yeah. Maybe, did you know Accornable's fargo costco shoppers spend
Speaker 1: two hundred million dollars a month on gold. That is crazy.
Speaker 2: Some of that must be because they want.
Speaker 1: To go Yeah, right. Some of it also, gold has
Speaker 1: gone a lot more expensive, yeah, right.
Speaker 2: Some of it is like gold hoarding for whatever reason.
Speaker 2: Some of it is correct financial speculation should just.
Speaker 1: Be buying ETFs.
Speaker 2: But you know something something about holding an actual gold.
Speaker 1: Bar instead of.
Speaker 2: If you want like gold, you want gold, you don't
Speaker 2: want ants, you're.
Speaker 1: Actually tapping into like a very real tension.
Speaker 2: Absolutely, yeah, absolutely.
Speaker 1: Sounds like it's attention you're familiar with.
Speaker 2: Oh, I've I've encountered people who want to buy gold,
Speaker 2: but some people who buy gold from Costco are doing
Speaker 2: it for credit card.
Speaker 1: Reward points and we're trying.
Speaker 2: Or trying they're doing it for credit card reward points.
Speaker 2: But I wrote about this because the Most Journal had
Speaker 2: an article about Costco gold and it started with this
Speaker 2: guy who bought a lot of gold from Costco for
Speaker 2: credit card points and then he tried to resell it
Speaker 2: and he got less than he paid for it, and
Speaker 2: I hate he was like, oh my Margins. You know,
Speaker 2: he was very sad, And I wrote in general, the
Speaker 2: great consumer financial arbitrage is like if you can buy
Speaker 2: a thing that you can resell for the same price
Speaker 2: you paid for it, and if you can put it
Speaker 2: on your credit card, then like you can get your
Speaker 2: credit card points, and you know, you have a sort
Speaker 2: of a perpetual motion machine where you can like manufacture
Speaker 2: credit card points without spending any money. And I said
Speaker 2: something like this is the great consumer financial arbitrage. But
Speaker 2: it's hard to do because credit card companies are aware
Speaker 2: of this, right, and they try to crack down on it.
Speaker 2: And of course, my readers, is that something like a
Speaker 2: shudder to think of all the creddits that must all
Speaker 2: the subreddits that must exist about buying costco cold for
Speaker 2: credit card points. I got so many emails people are like,
Speaker 2: people like, this is how I manufacture credit card points.
Speaker 2: Like a lot of people pointed out that in like
Speaker 2: twenty ten, the US Mint really wanted people to start
Speaker 2: using dollar coins because the dollar coin is like more
Speaker 2: cost effactor for the Mint than the dollar bill, and
Speaker 2: so they were like, we're going to be like Europe
Speaker 2: and transition to the dollar coin. And so they were
Speaker 2: like trying to encourage people to get and use dollar coins.
Speaker 2: And one way they did that was they let you
Speaker 2: buy dollar coins like sacks of dollar coins for a
Speaker 2: dollar each with free shipping, which is they're heavy and
Speaker 2: you could do it on your credit card, and so
Speaker 2: people are like, I'm gonna buy one thousand dollar coins
Speaker 2: on my credit card. I'm gonna get ten dollars or
Speaker 2: twenty dollars of credit card rewards. They're gonna arrive at
Speaker 2: my house. I'm gonna put them directly in the card,
Speaker 2: drive them to the bank to positive in the bank,
Speaker 2: paying my credit card bill with that. And so the
Speaker 2: US Mint did not get what it wanted, which was
Speaker 2: like circulating use of the dollar coins, because everyone was
Speaker 2: just taking them to the bank to pay their credit
Speaker 2: card bills. People got a lot of airline miles out
Speaker 2: of it. Eventually they shut it down.
Speaker 1: But yeah, you know, and I.
Speaker 2: Think the Mint was like losing money on each transaction.
Speaker 1: Right because they I would imagine that they were.
Speaker 2: The way credit card rewards work is that the seller
Speaker 2: pays a fee of one and a half percent to
Speaker 2: the credit card company. And so here the MINT is
Speaker 2: paying one and a half percent to the credit card company,
Speaker 2: which is giving it back to you in the form
Speaker 2: of airline models, and the Mint is losing one and
Speaker 2: a half cents on every dollar coin. Yeah, so eventually
Speaker 2: they shut that.
Speaker 1: I will say, like reading the Wall Street Journal, article
Speaker 1: and then your column. I was thinking, I don't know,
Speaker 1: maybe these people just trying to flip it too fast.
Speaker 1: I mean gold prices, well, right.
Speaker 2: With gold, you're not buying a dollar quint. Right with gold,
Speaker 2: you're buying a thing that could go up.
Speaker 1: Yeah, it's been going up quite a bit over the
Speaker 1: past few months. But then I read there was an
Speaker 1: anecdote in the Wall Street Journal article about Luke Gribe.
Speaker 1: I hope I'm pronouncing his name right. He's of Southeast Michigan.
Speaker 1: He waited almost a decade to make a profit on
Speaker 1: his gold bar. He sold his one ounce credit sweet
Speaker 1: bar for twenty three hundred and fifty dollars in April.
Speaker 1: Not bad. That's after he paid fifteen hundred dollars for
Speaker 1: back in twenty fifteen. Was it worth it?
Speaker 2: I feel like if you bought the smp'd have done.
Speaker 2: But yeah, the cold bar.
Speaker 1: Yeah, it's a lot of thinking. I would just buy
Speaker 1: an ETF with a credit card. I don't know.
Speaker 2: I do want to mention another credit card awards story, which,
Speaker 2: as you should somewhere you reminded of this. I actually
Speaker 2: wrote about it in the past. There's this I who's
Speaker 2: a experimental physicist and who was like, how can I
Speaker 2: build a perpetual motion machine? So he hit an Amex
Speaker 2: ames a lot of these credit cards. The way it
Speaker 2: works is like they pay like one percent cash back,
Speaker 2: but they give you like extra bonuses on certain categories
Speaker 2: of spending to like encourage you to use their card more.
Speaker 2: And so Amex was giving him five percent cash back
Speaker 2: at grocery stores. So he'd get a grocery stores. He
Speaker 2: would buy gift card like Visa prepaid gift cards at
Speaker 2: the grocery stores, and he would get his five percent
Speaker 2: cash back on these Visa prepaid gift cards. He would
Speaker 2: take the gift cards and buy money orders. He would
Speaker 2: take the money orders and deposit them in his bank.
Speaker 2: He use the money in the bank to pay his
Speaker 2: credit card bills. So it was just like a sort
Speaker 2: of like closed loop of exchanging money for money for
Speaker 2: money beautiful. And he got five percent on the credit
Speaker 2: card transactions. He had to pay a little bit for
Speaker 2: the gift card, he had to pay a little bit
Speaker 2: for the money orders, but all in all he made
Speaker 2: like three percent millions and millions and millions of dollars
Speaker 2: worth of prepaid gift cards. Like every time he went
Speaker 2: to the grocery store, he bought like all their gift cards.
Speaker 2: He made I think three hundred thousand dollars of profit
Speaker 2: three hundred three hundred ten thousand dollars of profit. And
Speaker 2: then we know about this because the IRS wanted him
Speaker 2: to pay taxes in his games for this trade. And
Speaker 2: he was like, no, long standing IRS rules are that
Speaker 2: credit card cash back or just the discount. They're not income,
Speaker 2: they're just like reducing your expenses, and so you don't
Speaker 2: have to pay taxes on them. And he actually won
Speaker 2: in tax card. So he had this like three hundred
Speaker 2: thousand dollars of arbitrage income that he didn't have to
Speaker 2: pay taxes on.
Speaker 1: See that sounds more worth it than less than a
Speaker 1: thousand dollars over ten years.
Speaker 2: Sure, cold is in some way and an efficient way
Speaker 2: to do it, because it's heavy, right. Gift cards are lighter, right,
Speaker 2: And so a lot of people find ways to buy
Speaker 2: cash equivalents on credit cards and then max that out
Speaker 2: as much as possible before the credit card company shuts
Speaker 2: it down.
Speaker 1: I have two points here specifically on gold, not on
Speaker 1: credit cards. Okay, you make the point that gold is heavy,
Speaker 1: and it is heavy and actually in one of the articles,
Speaker 1: according to j M bullion, shipping fees can be as
Speaker 1: much as forty dollars for an ounce of gold, so
Speaker 1: it is expensive to ship it around, and then insurance
Speaker 1: on the shipping that's another forty dollars.
Speaker 2: Gold is heavy, but an ounce of gold I think
Speaker 2: weighs an ounce.
Speaker 1: Yeah, I know, but if you're shipping more than one
Speaker 1: ounce of gold, it's going to add up there.
Speaker 2: Sure.
Speaker 1: The other point is that we were talking about ETFs
Speaker 1: and gold ETFs. The largest gold etf is GLD, and
Speaker 1: it's been shipping fees, no shipping fees for gold ETFs.
Speaker 1: But the gold is in a vault underground in London,
Speaker 1: which I'm fascinated by. I would like to go to
Speaker 1: the vault, but you can't go to the vault as
Speaker 1: a journalist.
Speaker 2: Okay, interesting, Yeah, but.
Speaker 1: There are a lot I remember. Actually how we got
Speaker 1: there was because GLD skyrocketed and assets at one point
Speaker 1: during the pandemic. Everyone wanted it and it just grew
Speaker 1: so much, and there were a ton of conspiracy theories
Speaker 1: out there, probably on Reddit too, about whether they actually
Speaker 1: had the gold to back it up. Sure, but it's
Speaker 1: in London. Underground. But you can't go to the vault.
Speaker 1: None of us can go to the vault.
Speaker 2: You here, how suspicious this ound. I know white people
Speaker 2: are buying gold bars at Costco rather than GLD.
Speaker 1: It makes sense.
Speaker 2: Then you have it.
Speaker 1: Do you trust State Street? Apparently a lot of people didn't.
Speaker 2: I do, because my life is integrated into the modern
Speaker 2: financial system. If I didn't trust the modern financial system
Speaker 2: and I wanted to own gold instead, I wouldn't want
Speaker 2: to own gold through State Street in a vault that,
Speaker 2: like crack reporter Katie Graefel couldn't even get into.
Speaker 1: I did ask a stupid question at the time because
Speaker 1: assets in the CTF were going crazy, so they were
Speaker 1: having to buy a lot of gold. Well, I said,
Speaker 1: is there enough room in the vault? We're like, yes,
Speaker 1: of course, Like gold.
Speaker 2: Is right, gold bar right.
Speaker 1: So there's plenty of room in this spot.
Speaker 2: It's like it's like a room this size, and it's
Speaker 2: just like a little pile on the corner.
Speaker 1: I just always thought of greenots, and that's what I
Speaker 1: had in my mind.
Speaker 2: That was the Money Stuff podcast.
Speaker 1: I'm Matt Levin and I'm Katie Greifeld.
Speaker 2: You can find my work by subscribing to The Money
Speaker 2: Stuff newsletter on Bloomberg dot.
Speaker 1: Com, and you can find me on Bloomberg TV every
Speaker 1: day between ten and eleven am Eastern.
Speaker 2: We'd love to hear from you. You can send an
Speaker 2: email to Moneypod at Bloomberg dot net, ask us a
Speaker 2: question and we might answer it on air.
Speaker 1: You can also subscribe to our show wherever you're listening
Speaker 1: right now and leave us a review. It helps more
Speaker 1: people find the show.
Speaker 2: The Money Stuff Podcast is produced by Anamsarakus and Moses
Speaker 2: and am.
Speaker 1: Our theme music was composed by Blake Maples.
Speaker 2: Brandon Francis Nannim is our executive producer, and.
Speaker 1: Sage Bauman is Bloomberg's head of Podcasts.
Speaker 2: Thanks for listening to The Money Stuff Podcast. We'll be
Speaker 2: back next week with more stuff.