WEBVTT - Reptile Brain: ???, GS, XXI

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>So it's a beautiful day in New York City. I'm

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<v Speaker 2>having real lizard thoughts, you know what I mean, Like,

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<v Speaker 2>I want to believe what you mean. Okay, let me explain.

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<v Speaker 2>I want to believe I'm more complex than Oh, the

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<v Speaker 2>sun is shining and the air feels good, but I'm

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<v Speaker 2>not because when it's nice outside the weather, I am

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<v Speaker 2>immediately so much happier. So in that way, I kind

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<v Speaker 2>of feel like a lizard. Just simple.

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<v Speaker 1>Yes, I thought we were gonna tire the fact that

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<v Speaker 1>you have plans to leave this podcast and go home

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<v Speaker 1>and take your.

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<v Speaker 2>Turtles out to the roof to some I have some

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<v Speaker 2>baby turtles in my apartment that I've been taking care of.

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<v Speaker 2>This is what reptile brains. I've been taking care of

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<v Speaker 2>them over the course of the winter, and they're going

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<v Speaker 2>to be going back outside very soon. That's where they

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<v Speaker 2>primarily live. But anyway, it's nice to take them to

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<v Speaker 2>the roof and feed them their mealworms in the sunshine.

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<v Speaker 2>They tend to like that.

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<v Speaker 1>You and they both signing yourselves.

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<v Speaker 2>Yeah, pretty much warming our scales.

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<v Speaker 1>Hello and welcome to The Money Stuff Podcast, your weekly

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

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<v Speaker 1>Matt Levian and I write The Money Stuff Colum for

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<v Speaker 1>Bloomberg Opinion.

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

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<v Speaker 2>an anchor for Bloomberg Television.

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<v Speaker 1>It's another all tariffs edition of the Money Stuff podcast.

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<v Speaker 2>Yeah, you know, it started as a joke and then

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<v Speaker 2>it got really real. It's hard to talk about anything

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<v Speaker 2>other than what is going on with the US trade policy.

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<v Speaker 1>Yeah, we're gonna try. Yeah, It's like it's not really

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<v Speaker 1>an all tariffs.

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<v Speaker 2>But it's like at least a third tariff's maybe half

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<v Speaker 2>a certain.

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<v Speaker 1>Amount of what is going on in the world.

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<v Speaker 2>I feel like we need to say what day we're

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<v Speaker 2>recording it, since it changes so much. We'll talk about

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<v Speaker 2>whether or not that is the strategy. But we are

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<v Speaker 2>recording this on a Thursday. It's the twenty fourth of April.

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<v Speaker 1>When last I looked, the market was up today.

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<v Speaker 2>Yeah, after being yesterday, Yeah, and the day before.

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<v Speaker 1>It's not literally a first in the last three months,

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<v Speaker 1>but it feels like that.

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<v Speaker 2>Well, it's funny that we're rallying so hard right now

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<v Speaker 2>because you have China on one hand insisting that the

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<v Speaker 2>US and China are not talking, that negotiations aren't currently happening,

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<v Speaker 2>they do not exist. And then you have President Trump

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<v Speaker 2>saying that no, they had a meeting this morning, and

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<v Speaker 2>then a reporter asked him the follow up, what administration

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<v Speaker 2>officials were involved in discussions? Who are you talking to?

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<v Speaker 2>And Trump said, it.

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<v Speaker 1>Doesn't matter who they is. We may reveal it later.

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<v Speaker 2>But they had meetings this morning, and we've been meeting

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<v Speaker 2>with China. So it's unclear what is actually what is

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<v Speaker 2>actually going on, whether or not the US and China

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<v Speaker 2>actually are talking. But it seems like the market just

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<v Speaker 2>really wants the Trump administration to blink and is rallying

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<v Speaker 2>merrily along hoping that they have right.

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<v Speaker 1>It's so odd that, like the explicit statements from Trump

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<v Speaker 1>as candidate and as president were tariffs are great, let's

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<v Speaker 1>have lots of them, and the market in the lead

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<v Speaker 1>up to his inauguration clearly, like very heavily discounted that. Yeah,

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<v Speaker 1>and then the Liberation Day happened in the market crash

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<v Speaker 1>realizing that in fact, he was serious about tariffs, and

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<v Speaker 1>now we're right back to.

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<v Speaker 2>Nah, he can't be serious about tariffs. Yeah, it feels

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<v Speaker 2>very like first Trump administration where this sort of mantra

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<v Speaker 2>was to take Trump seriously but not literally. And it

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<v Speaker 2>feels like we're back there.

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<v Speaker 1>Yes, and like we say, the all tariffs episode. But

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<v Speaker 1>I feel like the other sort of big thing hanging

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<v Speaker 1>over this week anyway, is firing Trump Powell. Yeah, get

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<v Speaker 1>rid of FED independence.

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<v Speaker 2>Yeah that was pretty well.

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<v Speaker 1>It also seems to have been walked back, but who knows.

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<v Speaker 2>Yeah, so Trump, in denying that he had any intention

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<v Speaker 2>to fire trum Powell said that the media ran away

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<v Speaker 2>with it. But you did have Kevin Hassett, who is

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<v Speaker 2>the top White House economist, say last Friday that Trump

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<v Speaker 2>is looking at options here when it comes to removing

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<v Speaker 2>Jerome Pal. So it wasn't entirely just the media.

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<v Speaker 1>Right. Also, he's like been in truth, so I was

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<v Speaker 1>tallying about stupid.

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<v Speaker 2>Yeah, said he can't wait for his termination.

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<v Speaker 1>Yeah right. You combine like the legal team studying Rais

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<v Speaker 1>to fire him and Trump saying how bad he is.

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<v Speaker 2>In both situations, both when it comes to trade and

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<v Speaker 2>the possibility of removing Pal from the FED. It kind

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<v Speaker 2>of feels like Trump is just negotiating with the markets,

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<v Speaker 2>like seeing how far the markets will let him go

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<v Speaker 2>before long dated treasury yields skyrocket higher, which you've seen

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<v Speaker 2>that happen, and then you see the Trump administration back off.

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<v Speaker 2>But someone made the point today that it kind of

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<v Speaker 2>feels like every time we see a little bit of

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<v Speaker 2>green in the equity markets because maybe there's hope that

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<v Speaker 2>we're going to get to a more reasonable place on trade,

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<v Speaker 2>that it seems like the Trump administration has felt more

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<v Speaker 2>emboldened by that, and we just enter this cycle again.

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<v Speaker 2>But it's on the third day of the rally.

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<v Speaker 1>People talking about the phrase the Trump put gets turned around, right, So,

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<v Speaker 1>like you have like the classic like Powell put or

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<v Speaker 1>whatever the Fed chairs at the time. You know, the

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<v Speaker 1>idea that if things get bad, the federal step in

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<v Speaker 1>to rescue the market, and so there's some floor under

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<v Speaker 1>stock prices. My impressions that people think of the Powell

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<v Speaker 1>put as being like kind of close to at the money,

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<v Speaker 1>where like, you know, if you're the Fed, you're interested

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<v Speaker 1>in steady economic growth, and like any sign of wabbling

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<v Speaker 1>in the market is a negative. The Trump put that

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<v Speaker 1>we've maybe seen this week feels like it's quite far

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<v Speaker 1>out of the money. You know, It's like things have

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<v Speaker 1>to go really off the rails to have the trump

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<v Speaker 1>put kick in. And also, like you just said, it's

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<v Speaker 1>like it's not just a floor. It's like yeah, right,

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<v Speaker 1>Like if the market gets too good, it's like, oh,

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<v Speaker 1>we have weird stuff. Right, the market gets too bad,

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<v Speaker 1>you stop the word stuff. It's like a it's like

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<v Speaker 1>a carter. It's like a like a call spread.

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<v Speaker 2>Yeah, that's I don't know. It's a very tactical market.

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<v Speaker 2>It makes for some real tactical trading strategies.

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<v Speaker 1>I had a headline this week that was like, at

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<v Speaker 1>least the market isn't boring, and so we're back. You're like, yeah,

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<v Speaker 1>it's great if you're trading this market. And it's like, yeah,

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<v Speaker 1>I got like a high vacancy trading for like you know,

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<v Speaker 1>like it's so good for some people. Yeah, right, Like

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<v Speaker 1>if you're a degenerate gambler, if you're a market maker,

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<v Speaker 1>probably this is great, right, Like market makers that I

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<v Speaker 1>have on volatility, some of them blow up on volatility,

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<v Speaker 1>but yeah, a lot of them, it's probably great. And

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<v Speaker 1>then if you're like a you know, like a manufacturing

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<v Speaker 1>CEO trying to decide whether to.

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<v Speaker 2>Build a factory or you know, or to hire or

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<v Speaker 2>fire people. Yeah, it's been interesting. And some of the

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<v Speaker 2>earnings reports you've seen companies, you know, you report your

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<v Speaker 2>numbers and you give guidance. You've had a lot of

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<v Speaker 2>firms either downgrade their guidance, pull their guidance all together.

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<v Speaker 2>You've seen a few companies come out with like a

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<v Speaker 2>range of options for what could happen, like different blueprints

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<v Speaker 2>for different scenarios, which I think is kind of one

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<v Speaker 2>of the airlines didn't. I wish I could remember, But

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<v Speaker 2>I mean, what else can you do? It's impossible to

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<v Speaker 2>forecast what six months from now will look like.

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<v Speaker 1>My intuition is that that's just that, right that like

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<v Speaker 1>being able that's a stupid saying. Being able to plan

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<v Speaker 1>six months ahead is useful for business, right, Yeah, Like

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<v Speaker 1>an economy wide basis, you would rather have businesses generally

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<v Speaker 1>be able to plan basic macroeconomic building blocks six months

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<v Speaker 1>ahead than not, right, Yeah, And so one possibility is

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<v Speaker 1>that this is all error, right, Like they're just like

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<v Speaker 1>they're not doing a good job of stewarding the economy, right,

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<v Speaker 1>which seems to me like probably the correct analysis. But

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<v Speaker 1>like people want there to be some sort of plan here, right,

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<v Speaker 1>They want there to be some sort of explanation here

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<v Speaker 1>that is more satisfying than like they keep changing their

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<v Speaker 1>mind or they don't really know what they're doing, or

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<v Speaker 1>the messaging is just treamly ud clear for no reason.

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<v Speaker 2>Yeah.

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<v Speaker 1>I don't know if that is though.

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<v Speaker 2>Yeah, the end game is a question that comes up

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<v Speaker 2>a lot when it comes to, you know, the shifting

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<v Speaker 2>trade winds coming out of the administration. I mean, we

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<v Speaker 2>know that Trump loves tariffs, We know that they want

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<v Speaker 2>to rebalance the global trade landscape. What that actually means

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<v Speaker 2>seems to be sort of shifting goalposts.

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<v Speaker 1>I think I've read a few times, Like one way

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<v Speaker 1>to interpret their statements and actions is that they want

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<v Speaker 1>America to be reindustrialized, to find like they say, but

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<v Speaker 1>also like definancialized, right, Like shifting from having a lot

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<v Speaker 1>of foreigners selling goods to us getting cash and investing

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<v Speaker 1>it in US financial assets, shifting to like investing the

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<v Speaker 1>cash they get into US you know, manufactured goods. Right. Yeah,

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<v Speaker 1>so we're selling fewer financial assets, and like the financial

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<v Speaker 1>sector becomes a less important part of the American economy

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<v Speaker 1>relative to like manufacturing. Right. That's one way I think

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<v Speaker 1>to interpret some of the stuff that Trump Economic team

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<v Speaker 1>does and says, But then you look at the actual

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<v Speaker 1>effect and it's like, if you were going to high

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<v Speaker 1>your kids are training, frame like, this is amazing. There's

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<v Speaker 1>so much volatility. And then if you were at a manufacturer,

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<v Speaker 1>you're like, this is terrible. There's so much volatility.

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<v Speaker 2>Well, also, you don't know if these tariffs are going

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<v Speaker 2>to stick, like you have no visibility into that. And

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<v Speaker 2>there's also the very real question of what incentivizes a

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<v Speaker 2>company to bring manufacturing back to the US. The Whirlpool

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<v Speaker 2>CEO said on their earnings call this week that first

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<v Speaker 2>of all, they think that actually they're going to benefit

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<v Speaker 2>from tariffs. But the CEO, even with that in mind,

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<v Speaker 2>said that twenty percent tariffs aren't going to you know,

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<v Speaker 2>move factories away from China. And you think about like

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<v Speaker 2>about one hundred and perhaps, but you think about, you

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<v Speaker 2>know a lot of these pharma companies who make their

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<v Speaker 2>drugs in Ireland, for example, they're probably not going to

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<v Speaker 2>shift those factories to the US. They're probably just going

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<v Speaker 2>to have to accept that things cost more now. So

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<v Speaker 2>I don't know if tariffs are the way to incentivize

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<v Speaker 2>bringing manufacturing back versus tax breaks for example.

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<v Speaker 1>One thing that is happening here is that it seems

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<v Speaker 1>so haphazard as a way of encouraging manufacturing, right, Like,

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<v Speaker 1>if you wanted to encourage manufacturing, you would do things

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<v Speaker 1>like not imposed tariffs on raw materials and intermediate goods

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<v Speaker 1>so that you could make it easier for people to

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<v Speaker 1>start factories here. But like you're constantly reading stories about

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<v Speaker 1>like people who run factories here who like find that

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<v Speaker 1>like their inputs have gone up because of tariffs, and

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<v Speaker 1>so they can't run their factories anymore. Yeah, it's just

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<v Speaker 1>it's it's not like a industrial policy designed to support manufacturing.

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<v Speaker 1>It's like tariffs are good.

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<v Speaker 2>Yeah, I don't know.

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<v Speaker 1>People want there to be an explanation that is like

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<v Speaker 1>a human you know, either like clever or like galaxy

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<v Speaker 1>brain bad. Like one reason for the recent the rally

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<v Speaker 1>the last couple of days is like Scott Bessant giving

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<v Speaker 1>a speech at a closed door investor some it saying basically,

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<v Speaker 1>we're gonna have like a thaw in the China situation.

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<v Speaker 2>Very we're scandalized by that, and like it's definitely like

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<v Speaker 2>you can definitely read like takes that are like this

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<v Speaker 2>is like corruption and the whole thing is like for

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<v Speaker 2>cronyism and to like give the favored people, you know,

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<v Speaker 2>a lot of volatility trade and a lot of inside

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<v Speaker 2>information about what the decisions will be, which is honestly

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<v Speaker 2>like a more optimistic view than my view, which is

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<v Speaker 2>that people just.

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<v Speaker 1>Change their mind constantly and are not really yeah planning

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<v Speaker 1>that nefariously far ahead.

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<v Speaker 2>Well, the cynical takeout there too is that you know,

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<v Speaker 2>Trump changes his mind based on who he lost. I

0:11:29.679 --> 0:11:32.000
<v Speaker 2>don't know. I don't think you got notes from Neil

0:11:32.040 --> 0:11:35.080
<v Speaker 2>Duddo of Renaissance Macro No, okay. He had a really

0:11:35.080 --> 0:11:38.520
<v Speaker 2>interesting note oubt this week that he used the NT

0:11:38.800 --> 0:11:42.080
<v Speaker 2>function on his Bloomberg terminal, which is way to chart

0:11:42.120 --> 0:11:44.800
<v Speaker 2>news trends. He found that since the beginning of March,

0:11:44.840 --> 0:11:46.600
<v Speaker 2>the S and P five hundred has shed a total

0:11:46.679 --> 0:11:49.520
<v Speaker 2>of seven hundred and nineteen points on days that Howard

0:11:49.559 --> 0:11:53.319
<v Speaker 2>Lutnik and Peter Navarro have been the biggest story. By contrast,

0:11:53.440 --> 0:11:55.920
<v Speaker 2>if Besson has been the biggest story on the day,

0:11:55.960 --> 0:11:57.880
<v Speaker 2>the S and P five hundred has advanced a total

0:11:57.920 --> 0:12:01.160
<v Speaker 2>of fifty two points. So he concludes Bessen is good

0:12:01.160 --> 0:12:04.160
<v Speaker 2>for about one percentage point up on the S and p.

0:12:04.200 --> 0:12:06.920
<v Speaker 2>Five hundred. By contrast, the others are a drag of

0:12:06.960 --> 0:12:10.520
<v Speaker 2>about thirteen and a half percentage points. So I mean

0:12:10.559 --> 0:12:13.920
<v Speaker 2>those are the dueling forces. All three of those men

0:12:14.000 --> 0:12:15.480
<v Speaker 2>are dueling for Trump's attention.

0:12:16.120 --> 0:12:18.360
<v Speaker 1>Yeah, I mean there's a story about like Lutnik and

0:12:18.400 --> 0:12:21.760
<v Speaker 1>Bessant actually rushing into drum when Navarro was like in

0:12:21.800 --> 0:12:29.360
<v Speaker 1>the right. You might imagine someone thinking, we have the

0:12:29.400 --> 0:12:30.959
<v Speaker 1>guy who's good for the economy, and we have the

0:12:31.000 --> 0:12:32.760
<v Speaker 1>guys who are bad for the economy, So let's turn

0:12:32.760 --> 0:12:34.400
<v Speaker 1>out the dial and the guy who's good for the economy.

0:12:34.440 --> 0:12:37.920
<v Speaker 1>But I don't think that's your description of what's going

0:12:37.920 --> 0:12:38.320
<v Speaker 1>on here.

0:12:38.559 --> 0:12:41.240
<v Speaker 2>Yeah, it seems like Bessen at least looking at the

0:12:41.280 --> 0:12:43.520
<v Speaker 2>reporting from this week, and things shift all the change.

0:12:43.559 --> 0:12:47.000
<v Speaker 2>But apparently, you know, Bessen had a big hand according

0:12:47.000 --> 0:12:50.640
<v Speaker 2>to people familiar and talking Trump off the ledge when

0:12:50.640 --> 0:12:53.760
<v Speaker 2>it comes to firing Jerome Palell. Also, like you said,

0:12:53.760 --> 0:12:56.240
<v Speaker 2>there was that story that when Peter Navarro was at

0:12:56.240 --> 0:12:58.920
<v Speaker 2>the White House cafeteria or something along those lines, that

0:12:59.000 --> 0:13:02.760
<v Speaker 2>him and Lutnix in We'll see. I mean, I don't

0:13:02.800 --> 0:13:04.560
<v Speaker 2>know how to segue to this point, but I do

0:13:04.640 --> 0:13:07.800
<v Speaker 2>want to make the point that Besson is also apparently,

0:13:07.840 --> 0:13:10.240
<v Speaker 2>you know, playing a leading role in trade talks with Japan.

0:13:10.320 --> 0:13:13.080
<v Speaker 2>He's also expressed that he would like the US to

0:13:13.760 --> 0:13:17.000
<v Speaker 2>basically make agreements with its allies on trade and then

0:13:17.000 --> 0:13:20.280
<v Speaker 2>they'll all approached China as a group. But it seems

0:13:20.320 --> 0:13:23.520
<v Speaker 2>like that is very much not happening, because on Thursday

0:13:23.640 --> 0:13:26.840
<v Speaker 2>you had two different stories drop One was that Japan

0:13:27.120 --> 0:13:29.920
<v Speaker 2>is going to resist Trump's efforts to form a trade

0:13:29.960 --> 0:13:32.679
<v Speaker 2>block against China, and then you also had a story

0:13:32.679 --> 0:13:37.920
<v Speaker 2>about how the EU and Beijing are basically in talks.

0:13:38.360 --> 0:13:42.400
<v Speaker 1>Right like one analysis that I saw of the Liberation

0:13:42.480 --> 0:13:47.120
<v Speaker 1>Day situation, right or Trump announced enormous, fake reciprocal tariffs

0:13:47.160 --> 0:13:48.240
<v Speaker 1>on every country.

0:13:48.000 --> 0:13:51.240
<v Speaker 2>Incredibly I was with my grandmother, as discussed.

0:13:50.760 --> 0:13:53.520
<v Speaker 1>And then in a fairly short time period walk them

0:13:53.520 --> 0:13:55.760
<v Speaker 1>all back, except he raised tariffs on.

0:13:55.760 --> 0:13:57.400
<v Speaker 2>China one hundred and forty five percent.

0:13:57.800 --> 0:14:01.080
<v Speaker 1>One reading of that was that Trump had just announced

0:14:01.280 --> 0:14:04.280
<v Speaker 1>giant TIFFs on China and also like small towers on

0:14:04.280 --> 0:14:06.880
<v Speaker 1>the rest of the world. Then everyone would have been

0:14:06.920 --> 0:14:09.360
<v Speaker 1>shocked and trade would have shifted away from the US

0:14:09.400 --> 0:14:12.480
<v Speaker 1>to China. But by instead doing it in this shocking

0:14:12.480 --> 0:14:14.800
<v Speaker 1>Liberation Day way and then walking to that all back.

0:14:15.679 --> 0:14:18.880
<v Speaker 1>He primed people to think, oh, this could be a

0:14:18.920 --> 0:14:22.680
<v Speaker 1>lot worse, and in fact he's only targeting China, so

0:14:22.840 --> 0:14:27.240
<v Speaker 1>we should make deals at the US and cut out China.

0:14:27.640 --> 0:14:30.760
<v Speaker 1>And so this was a sort of shock therapy way

0:14:30.800 --> 0:14:34.440
<v Speaker 1>to reorient the talks to make it a essentially trade

0:14:34.480 --> 0:14:36.120
<v Speaker 1>block of the rest of the world, or at least

0:14:36.120 --> 0:14:38.880
<v Speaker 1>the US and its allies, with China on the outside, right,

0:14:38.880 --> 0:14:41.040
<v Speaker 1>So it was a way to accomplish exactly that sort

0:14:41.040 --> 0:14:44.000
<v Speaker 1>of like, you know, make deals with everyone else and

0:14:44.040 --> 0:14:48.920
<v Speaker 1>then have the upper hand against China. And I don't

0:14:48.960 --> 0:14:51.240
<v Speaker 1>know that was a reading of what happened, but it

0:14:51.240 --> 0:14:54.240
<v Speaker 1>doesn't seem to have. No particularly had that effect. And

0:14:54.840 --> 0:14:57.080
<v Speaker 1>because you're optimistic to think it'll have, you have to

0:14:57.080 --> 0:14:59.800
<v Speaker 1>be like like, oh, people are so relieved and so

0:15:00.040 --> 0:15:02.120
<v Speaker 1>happy that the tariffswordt as bad as we thought that

0:15:02.200 --> 0:15:04.720
<v Speaker 1>now they'll be rushing to negotiate with Donald Trump. But

0:15:04.760 --> 0:15:07.080
<v Speaker 1>the alternative reading is people will be like, this was

0:15:07.160 --> 0:15:10.200
<v Speaker 1>so erratic and chaotic that we should be rushing to

0:15:10.240 --> 0:15:13.560
<v Speaker 1>negotiate with China because like they're predictable.

0:15:13.760 --> 0:15:16.520
<v Speaker 2>Yeah, that's the thing. I mean, I could definitely see

0:15:16.520 --> 0:15:20.560
<v Speaker 2>the argument for that strategy, but the narrative also exists

0:15:20.560 --> 0:15:23.040
<v Speaker 2>out there that no, the US is just an unreliable

0:15:23.080 --> 0:15:26.360
<v Speaker 2>trading partner, and who knows if you agree to a

0:15:26.440 --> 0:15:28.760
<v Speaker 2>deal that it'll stick. I mean, you think about what's

0:15:28.760 --> 0:15:32.600
<v Speaker 2>going on with Canada and Mexico right now, the USMCA,

0:15:33.560 --> 0:15:37.400
<v Speaker 2>that was Trump's trade deal and now apparently it's just

0:15:37.440 --> 0:15:38.040
<v Speaker 2>been ripped up.

0:15:38.120 --> 0:15:40.560
<v Speaker 1>Yeah, yeah, right, And it's related to the point about

0:15:40.760 --> 0:15:43.680
<v Speaker 1>insane volatility in the market right like, none can plan ahead.

0:15:44.440 --> 0:15:48.760
<v Speaker 1>This is not an administration that places any value on predictability.

0:15:49.560 --> 0:15:53.640
<v Speaker 1>And in a lot of domain spritability is really useful.

0:15:54.080 --> 0:15:56.200
<v Speaker 2>It's going to be interesting to see what access like

0:15:56.240 --> 0:15:59.560
<v Speaker 2>this stabilization mechanism. It seems like the bond market does

0:15:59.600 --> 0:16:02.200
<v Speaker 2>have some with Donald Trump, so bond investors.

0:16:02.480 --> 0:16:04.960
<v Speaker 1>I think the sample size of that is small.

0:16:04.680 --> 0:16:07.280
<v Speaker 2>It's small. There was also an interesting note doubt from

0:16:07.520 --> 0:16:10.000
<v Speaker 2>thinking Chada over at Deutsche Bank. So he lowered his

0:16:10.120 --> 0:16:12.480
<v Speaker 2>s and P five hundred target to sixty one fifty

0:16:12.600 --> 0:16:15.880
<v Speaker 2>from seven thousand, sixty one to fifty. Sounds incredible to

0:16:15.920 --> 0:16:18.200
<v Speaker 2>a lot of people right now because we're like at

0:16:18.200 --> 0:16:21.280
<v Speaker 2>fifty five hundred on the SMP five hundred. But he

0:16:21.520 --> 0:16:24.960
<v Speaker 2>said that if you start to see approval ratings drop,

0:16:25.440 --> 0:16:28.360
<v Speaker 2>then that might cause an actual I forget the word

0:16:28.360 --> 0:16:30.840
<v Speaker 2>he used, but that's when you might actually see things

0:16:30.840 --> 0:16:33.120
<v Speaker 2>calm down. Maybe that will be the over.

0:16:33.040 --> 0:16:36.000
<v Speaker 1>Some I've seen that. Secondly, I don't know why that's

0:16:36.000 --> 0:16:36.800
<v Speaker 1>a mechanism.

0:16:37.080 --> 0:16:39.160
<v Speaker 2>I mean, the pushback to that point is that, Okay,

0:16:39.200 --> 0:16:41.640
<v Speaker 2>he's in his second term. He's not going to run again.

0:16:41.800 --> 0:16:45.120
<v Speaker 2>Unless he does, that's also an open question. So who knows.

0:16:45.120 --> 0:16:47.720
<v Speaker 1>Maybe he decides to run again, approval ratings will not

0:16:47.760 --> 0:16:48.560
<v Speaker 1>be an impediment.

0:16:48.840 --> 0:16:53.200
<v Speaker 2>No, no, But I mean there is some momentum building

0:16:53.240 --> 0:16:55.960
<v Speaker 2>behind that idea that if you see approval ratings drop

0:16:56.000 --> 0:16:58.600
<v Speaker 2>in a big way, maybe Trump would soften his stance.

0:16:58.680 --> 0:17:00.080
<v Speaker 1>I'll think the other side of that, I think I

0:17:00.120 --> 0:17:02.320
<v Speaker 1>would rate the bond market above appropal ratings. But I

0:17:02.360 --> 0:17:03.080
<v Speaker 1>don't know what I know.

0:17:04.280 --> 0:17:06.480
<v Speaker 2>Okay, Well, goodbye everyone, goodbye?

0:17:06.760 --> 0:17:07.840
<v Speaker 1>Oh wait, other things?

0:17:08.000 --> 0:17:23.679
<v Speaker 2>Oh right, right right? What else is there going on?

0:17:24.000 --> 0:17:27.959
<v Speaker 2>Golden Goldman? The good thing is that David Solomon and

0:17:28.040 --> 0:17:30.840
<v Speaker 2>John Waldron are going to be paid a lot of money.

0:17:31.320 --> 0:17:33.560
<v Speaker 1>What does a lot of money mean? I mean they're

0:17:33.560 --> 0:17:39.280
<v Speaker 1>getting paid. It means they got their eighty million dollars

0:17:39.320 --> 0:17:40.200
<v Speaker 1>special retention.

0:17:40.400 --> 0:17:42.320
<v Speaker 2>I got to tell you, I was, you know, biting

0:17:42.320 --> 0:17:43.560
<v Speaker 2>my nails over this one.

0:17:43.920 --> 0:17:46.560
<v Speaker 1>It was closed, like both of the big Chryler advisory

0:17:46.600 --> 0:17:49.320
<v Speaker 1>firms said they shouldn't get them.

0:17:49.480 --> 0:17:51.680
<v Speaker 2>And still they won sixty six percent of the vote.

0:17:51.680 --> 0:17:53.159
<v Speaker 1>Though it's not that high.

0:17:53.480 --> 0:17:55.520
<v Speaker 2>It is down from I think it was in the

0:17:55.560 --> 0:17:56.880
<v Speaker 2>eighties the last time.

0:17:57.240 --> 0:17:59.520
<v Speaker 1>You get on Pivot.

0:18:00.119 --> 0:18:02.360
<v Speaker 2>We don't have the exact summer kind of a loss

0:18:02.600 --> 0:18:04.639
<v Speaker 2>I prepared. So I want to tell you last year,

0:18:04.760 --> 0:18:07.280
<v Speaker 2>Golden won eighty six percent of the vote from shareholders,

0:18:07.359 --> 0:18:10.800
<v Speaker 2>despite also opposition from Glass Lewis.

0:18:10.880 --> 0:18:13.879
<v Speaker 1>Yeah, these guys get paid sort of market rates for

0:18:14.320 --> 0:18:17.439
<v Speaker 1>big bank CEOs, right. I think David Solom got thirty

0:18:17.560 --> 0:18:19.879
<v Speaker 1>nine million dollars last year and Waldron got thirty eight

0:18:19.880 --> 0:18:22.480
<v Speaker 1>million dollars, which is like, you know, comparable to like

0:18:22.520 --> 0:18:25.520
<v Speaker 1>a Jamie Diamond or whatever. And so getting an extra

0:18:25.560 --> 0:18:29.240
<v Speaker 1>eighty million dollar bonus just for being good guys and

0:18:29.280 --> 0:18:33.240
<v Speaker 1>wanting them to stick around seems high, right, Like they're

0:18:33.240 --> 0:18:35.080
<v Speaker 1>getting paid market rate. It's like, why do they need

0:18:35.080 --> 0:18:39.120
<v Speaker 1>the extra bonus? And part of the answer is, literally,

0:18:39.160 --> 0:18:42.640
<v Speaker 1>like Waldron, who is the number two at Goldman, there's

0:18:42.640 --> 0:18:45.320
<v Speaker 1>a reporting that he was approached by Apollo to come

0:18:45.440 --> 0:18:50.320
<v Speaker 1>be some sort of high up executive there and offered

0:18:50.680 --> 0:18:53.879
<v Speaker 1>what the article character has that's life changing money even

0:18:53.920 --> 0:18:56.840
<v Speaker 1>for him, which is like, I don't know if I

0:18:56.920 --> 0:18:59.239
<v Speaker 1>made thirty eight million dollars a year, you would need

0:18:59.240 --> 0:19:00.600
<v Speaker 1>a lot of money to in my life. But I

0:19:00.600 --> 0:19:01.399
<v Speaker 1>think they offered him that.

0:19:01.480 --> 0:19:03.560
<v Speaker 2>Well, it's like, I don't just want my great great

0:19:03.600 --> 0:19:06.520
<v Speaker 2>grandchildren to be well off. I want their great great

0:19:06.560 --> 0:19:08.720
<v Speaker 2>grandchildren to also do well, right.

0:19:08.640 --> 0:19:11.480
<v Speaker 1>Like, I don't have a conception of how your life

0:19:11.520 --> 0:19:14.200
<v Speaker 1>could change above making thirty eight million.

0:19:14.240 --> 0:19:16.359
<v Speaker 2>Well, that's just a lack of imagination, I know.

0:19:16.960 --> 0:19:19.479
<v Speaker 1>And I should I should, I should be thinking bigger.

0:19:19.520 --> 0:19:21.520
<v Speaker 1>But anyways, he was offered life changing money, and he

0:19:21.600 --> 0:19:23.560
<v Speaker 1>decided to stay because, yeah, he likes Goldvin it's a

0:19:23.560 --> 0:19:26.320
<v Speaker 1>good place whatever. Yeah, but also because they were like, yeah,

0:19:26.359 --> 0:19:27.840
<v Speaker 1>I we'll find out I any paid more. Right, So

0:19:27.840 --> 0:19:29.280
<v Speaker 1>they got't paid any million dollars more.

0:19:29.440 --> 0:19:32.600
<v Speaker 2>Something that I find interesting is I like to imagine

0:19:32.600 --> 0:19:35.360
<v Speaker 2>how you know, the rest of Goldman feels about that.

0:19:35.400 --> 0:19:38.280
<v Speaker 2>You had Mike Mayo from Wells Fargo say that this

0:19:38.320 --> 0:19:41.359
<v Speaker 2>could be alienating to Goldman's workforce. He said, that before

0:19:41.359 --> 0:19:43.760
<v Speaker 2>the vote, and in one of the articles written by

0:19:43.880 --> 0:19:47.640
<v Speaker 2>Todd Gillespie, he did write that under Solomon's tenure, payouts

0:19:47.640 --> 0:19:49.919
<v Speaker 2>for its top brass have been a thorny issue that

0:19:50.080 --> 0:19:53.320
<v Speaker 2>until now was mostly expressed by the bank's partner class.

0:19:53.520 --> 0:19:56.720
<v Speaker 2>Some privately grumbled that packages for its leaders were excessive

0:19:56.760 --> 0:19:59.320
<v Speaker 2>relative to the firm's performance, and the awards being set

0:19:59.320 --> 0:20:00.760
<v Speaker 2>aside for the rest to the staff.

0:20:01.080 --> 0:20:02.920
<v Speaker 1>Yeah. So one thing I've written about a lot over

0:20:02.960 --> 0:20:05.800
<v Speaker 1>the last few years is like Golbin has long had

0:20:05.840 --> 0:20:09.280
<v Speaker 1>this partnership culture where there's a group of people who

0:20:09.280 --> 0:20:12.199
<v Speaker 1>are called partners. They're not exactly like partners in the

0:20:12.240 --> 0:20:13.080
<v Speaker 1>classic sense, but.

0:20:13.000 --> 0:20:14.600
<v Speaker 2>They were like they're sort of.

0:20:14.600 --> 0:20:17.360
<v Speaker 1>Successors to the partners when Goldman was a private partnership,

0:20:17.800 --> 0:20:22.320
<v Speaker 1>and they sort of viewed the firm as a continuation

0:20:22.359 --> 0:20:24.320
<v Speaker 1>of that partnership where the partners had a big say

0:20:24.320 --> 0:20:28.119
<v Speaker 1>in running the firm. There was a sort of egalitarianism

0:20:28.320 --> 0:20:30.760
<v Speaker 1>among the partners where the CEO was like sort of

0:20:30.760 --> 0:20:34.159
<v Speaker 1>the managing partner, but he wasn't like the boss of

0:20:34.200 --> 0:20:36.960
<v Speaker 1>all the partners or anything like that. And I think

0:20:37.040 --> 0:20:39.680
<v Speaker 1>under Solomon that has really changed, and they've consolidated into

0:20:39.680 --> 0:20:42.920
<v Speaker 1>being much more of a normal public company and maybe

0:20:42.920 --> 0:20:45.280
<v Speaker 1>not the most important, but one symptom of that is

0:20:45.840 --> 0:20:47.680
<v Speaker 1>it used to be that Golden was like a partnership

0:20:47.720 --> 0:20:49.240
<v Speaker 1>run for the benefit of the partners, and so like

0:20:49.240 --> 0:20:51.160
<v Speaker 1>if they had a good year, the partners all got paid, right,

0:20:51.200 --> 0:20:54.040
<v Speaker 1>And now under the Solomon regime, it's a little bit

0:20:54.080 --> 0:20:56.920
<v Speaker 1>more like we're going to pay like a public company

0:20:57.000 --> 0:20:59.760
<v Speaker 1>and sort of maximize shareholder value and like not just

0:21:00.040 --> 0:21:02.119
<v Speaker 1>toretiously pay partners just because you know they're going to

0:21:02.359 --> 0:21:05.040
<v Speaker 1>them based on competitive pressures. And there's like sort of

0:21:05.119 --> 0:21:07.920
<v Speaker 1>a walk in the opposite direction with like Solomon and Waldron,

0:21:07.920 --> 0:21:10.480
<v Speaker 1>where like they're getting paid a lot of money as

0:21:10.480 --> 0:21:13.200
<v Speaker 1>the partners are no longer like the people divan at

0:21:13.240 --> 0:21:17.040
<v Speaker 1>the pod. So I think that like the partners, on

0:21:17.080 --> 0:21:21.320
<v Speaker 1>the one hand, some of them resent being like relegated

0:21:21.359 --> 0:21:23.280
<v Speaker 1>to a second tier status and no longer feeling that

0:21:23.320 --> 0:21:24.959
<v Speaker 1>they run the firm. And on the other hand, they're like,

0:21:25.040 --> 0:21:27.440
<v Speaker 1>these guys are getting paid so much money, right, Yeah.

0:21:27.280 --> 0:21:30.000
<v Speaker 2>Well maybe they should go all work as an alts manager.

0:21:30.160 --> 0:21:31.840
<v Speaker 1>Yeah. I mean, like one thing that that toddyts to

0:21:31.840 --> 0:21:33.760
<v Speaker 1>be right is that Goldman is trying to position its

0:21:33.760 --> 0:21:36.080
<v Speaker 1>off as an ALTS manager because that's better, you know,

0:21:36.080 --> 0:21:39.520
<v Speaker 1>you get a better multiple as everyone's trying to position,

0:21:39.720 --> 0:21:41.600
<v Speaker 1>like we've talked about black Rock on this ship, like

0:21:41.640 --> 0:21:44.879
<v Speaker 1>the position itself as an ALTS manager because you get

0:21:44.920 --> 0:21:46.760
<v Speaker 1>a higre multiple as an AULTS manager then as a

0:21:46.960 --> 0:21:48.320
<v Speaker 1>you know, Index one manager.

0:21:48.359 --> 0:21:52.320
<v Speaker 2>It's also it's like me trying to reruin myself as

0:21:52.359 --> 0:21:54.800
<v Speaker 2>a podcaster versus you know, a TV anchor.

0:21:54.880 --> 0:21:57.640
<v Speaker 1>It makes sense, are multiple podcasters?

0:21:57.720 --> 0:22:00.879
<v Speaker 2>Yeah, there you call Goldman sex Hasset managed. They have

0:22:00.960 --> 0:22:05.000
<v Speaker 2>about five hundred billion dollars of private assets under management.

0:22:05.440 --> 0:22:09.760
<v Speaker 2>Blackstone for contacts has more than one trillion dollars. So

0:22:09.800 --> 0:22:10.720
<v Speaker 2>I mean they are up there.

0:22:11.080 --> 0:22:12.840
<v Speaker 1>They're really you know, I remember being you know, I

0:22:12.880 --> 0:22:16.120
<v Speaker 1>was at Goldman. I Hurt did Goldman more than fifteen

0:22:16.200 --> 0:22:21.480
<v Speaker 1>years ago. I were fifteen years ago, and there was

0:22:21.520 --> 0:22:27.399
<v Speaker 1>a big focus on private equity as a you know,

0:22:27.680 --> 0:22:30.040
<v Speaker 1>important component of the firm. You know, I was a

0:22:30.119 --> 0:22:32.480
<v Speaker 1>fairly junior person, and I experienced it as like almost

0:22:32.480 --> 0:22:34.600
<v Speaker 1>the recruiting thing where like, you know, the cool place

0:22:34.680 --> 0:22:38.119
<v Speaker 1>to work in finance was private equity. So for Goldman

0:22:38.160 --> 0:22:39.879
<v Speaker 1>to be able to be like we run private equity

0:22:40.000 --> 0:22:43.040
<v Speaker 1>was good for you know, recruiting young people, but like similarly,

0:22:43.080 --> 0:22:46.679
<v Speaker 1>it's good for recruiting shareholders because you're like, you know,

0:22:46.760 --> 0:22:49.080
<v Speaker 1>the multiples that are given to alts managers are higher

0:22:49.080 --> 0:22:51.800
<v Speaker 1>than the multiples given to investment banks. Yeah, and like

0:22:51.840 --> 0:22:54.359
<v Speaker 1>the you know, the revenue is a little bit more stable,

0:22:54.359 --> 0:22:58.800
<v Speaker 1>and like it's a little bit certainly its executives get

0:22:58.800 --> 0:22:59.240
<v Speaker 1>paid more.

0:22:59.400 --> 0:23:02.359
<v Speaker 2>Yeah. So I mean to put some numbers to Blackstone

0:23:02.400 --> 0:23:05.800
<v Speaker 2>Trades at a p of like thirty seven. Goldman's closer

0:23:05.840 --> 0:23:10.359
<v Speaker 2>to twelve, which is less than thirty seven. But I

0:23:10.359 --> 0:23:15.280
<v Speaker 2>mean Blackstone KKR those are pure play alts managers.

0:23:15.480 --> 0:23:17.680
<v Speaker 1>What that means They're not pure playing.

0:23:18.800 --> 0:23:24.400
<v Speaker 2>Relatives relative to Goldman. Yeah, I mean when I think

0:23:24.440 --> 0:23:27.320
<v Speaker 2>of Goldman, my first thought isn't their alts business?

0:23:27.320 --> 0:23:30.320
<v Speaker 1>Obviously of course, right, no, they're not primarily business. But

0:23:30.680 --> 0:23:34.639
<v Speaker 1>I think of KKR like as a growing capital markets business.

0:23:35.240 --> 0:23:38.280
<v Speaker 1>Like the big alts managers want to get bigger. I'd

0:23:38.280 --> 0:23:39.760
<v Speaker 1>want me to get bigger, is to get into some

0:23:39.800 --> 0:23:41.720
<v Speaker 1>of the businesses that like the Goldman's of the world

0:23:41.720 --> 0:23:45.800
<v Speaker 1>are in, right, Like, there is a convergence, and obviously

0:23:45.840 --> 0:23:48.040
<v Speaker 1>you'd rather have the multiple of being a more or

0:23:48.119 --> 0:23:50.280
<v Speaker 1>less pure alts manager than being a more or less

0:23:50.280 --> 0:23:53.199
<v Speaker 1>pure investment bank. But like they're in a lot of

0:23:53.240 --> 0:23:54.440
<v Speaker 1>overlapping businesses.

0:23:54.640 --> 0:23:56.880
<v Speaker 2>Yeah, and the KRE people.

0:23:56.680 --> 0:23:58.280
<v Speaker 1>Get paid more. So. One thing I wrote this week

0:23:58.359 --> 0:24:00.199
<v Speaker 1>is like some of that is like the youth of

0:24:00.200 --> 0:24:04.040
<v Speaker 1>those firms, you know, like those rooms, you know, they

0:24:04.080 --> 0:24:06.520
<v Speaker 1>went public after Goldman did. They were founded way after

0:24:06.560 --> 0:24:09.480
<v Speaker 1>Goldman was. They were still like at like the sort

0:24:09.520 --> 0:24:13.800
<v Speaker 1>of closing stages of the like giant private equity like

0:24:14.080 --> 0:24:17.840
<v Speaker 1>gold rush of the you know eighties and nineties and

0:24:17.840 --> 0:24:21.199
<v Speaker 1>two thousands, whereas like you know, investment banks has been

0:24:21.200 --> 0:24:24.280
<v Speaker 1>a lot around longer. Like they're no founders. I mean

0:24:24.280 --> 0:24:26.440
<v Speaker 1>there are founders, right, they're founders of investment banks who've

0:24:26.440 --> 0:24:29.000
<v Speaker 1>made very good money. But like the founders of like

0:24:29.240 --> 0:24:32.040
<v Speaker 1>Bacon pulchbracket investment banks, right, like those guys, you know,

0:24:32.160 --> 0:24:33.480
<v Speaker 1>those those banks a one hundred.

0:24:33.320 --> 0:24:34.720
<v Speaker 2>Years old, they're resting peacefully.

0:24:34.880 --> 0:24:38.879
<v Speaker 1>Yeah. Some of what's happening is that the alts managers,

0:24:38.960 --> 0:24:43.200
<v Speaker 1>like the people who are senior executives there, took real

0:24:43.359 --> 0:24:47.400
<v Speaker 1>risks getting into new businesses, whereas like people who grew

0:24:47.480 --> 0:24:49.840
<v Speaker 1>up as partners at Colman were like in a you

0:24:49.880 --> 0:24:52.159
<v Speaker 1>know sort of well established business. So like, of course

0:24:52.640 --> 0:24:54.360
<v Speaker 1>the people who took those risks to start the alts

0:24:54.359 --> 0:24:55.560
<v Speaker 1>managers get paid a lot more.

0:24:55.640 --> 0:24:59.480
<v Speaker 2>Yeah, like took the risk to become a podcaster. It

0:24:59.480 --> 0:25:20.960
<v Speaker 2>should be for that. Yeah, reading your column actually listening

0:25:21.040 --> 0:25:25.959
<v Speaker 2>to it on my text to speech chiefly motivated me

0:25:26.000 --> 0:25:29.240
<v Speaker 2>to find where there are still inefficiencies in the market.

0:25:29.320 --> 0:25:31.480
<v Speaker 1>Do you think it's podcasting in terms of.

0:25:31.400 --> 0:25:37.080
<v Speaker 2>The media landscape? Perhaps certainly doesn't seem like it's linear television.

0:25:37.359 --> 0:25:43.399
<v Speaker 1>But you know what it is. Oh No, it's like

0:25:43.440 --> 0:25:45.280
<v Speaker 1>some it's a horrifying fourth thing.

0:25:45.400 --> 0:25:49.240
<v Speaker 2>God, it's like you it's YouTube's like twenty years old.

0:25:49.960 --> 0:25:54.000
<v Speaker 1>If I even said, it's like TikTok uh, you can

0:25:54.800 --> 0:25:59.520
<v Speaker 1>picture me shaking my fist at a cloud. It's it's

0:25:59.560 --> 0:26:02.480
<v Speaker 1>sure is where the kids are at some form video

0:26:02.440 --> 0:26:05.639
<v Speaker 1>so entirely other thing it's like it's like a brain implant.

0:26:05.800 --> 0:26:08.800
<v Speaker 2>Yeah, it's brutal out there. Maybe glasses that you put

0:26:08.840 --> 0:26:11.080
<v Speaker 2>on and it's just our faces. I was gonna say,

0:26:11.080 --> 0:26:13.600
<v Speaker 2>it seems like the inefficiency still left to till in

0:26:13.640 --> 0:26:15.520
<v Speaker 2>the market, to plow in the market. I don't know

0:26:15.520 --> 0:26:18.840
<v Speaker 2>what farming metaphorm trying to use. Perhaps we should all

0:26:18.880 --> 0:26:20.760
<v Speaker 2>just start bit coin treasury companies.

0:26:21.560 --> 0:26:25.240
<v Speaker 1>I do think that, like so much of the crypto

0:26:25.359 --> 0:26:27.840
<v Speaker 1>boom has been like people from traditional finance being like,

0:26:27.880 --> 0:26:29.840
<v Speaker 1>oh my god, look at the bits spretz here. Right,

0:26:29.840 --> 0:26:34.040
<v Speaker 1>It's like, yeah, crypto is so inefficient, and also you

0:26:34.040 --> 0:26:35.879
<v Speaker 1>could kind of get into it efficiently, so like all

0:26:35.960 --> 0:26:38.600
<v Speaker 1>these people from traditional finance like jumped in to capture

0:26:38.600 --> 0:26:40.800
<v Speaker 1>those spreads. But yeah, so this week the amazing thing

0:26:40.880 --> 0:26:41.640
<v Speaker 1>is twenty one.

0:26:42.040 --> 0:26:43.959
<v Speaker 2>Twenty one one great net for a company.

0:26:44.080 --> 0:26:48.560
<v Speaker 1>It is twenty one is a merger between a counter

0:26:48.600 --> 0:26:51.720
<v Speaker 1>Fitzgerald spack. Right, the cantor raised the spack a special

0:26:51.760 --> 0:26:54.960
<v Speaker 1>purpose acquisition coming they sold stock, so one hundred million

0:26:55.000 --> 0:26:57.200
<v Speaker 1>dollars with the stock to public investors a while back,

0:26:57.600 --> 0:26:59.760
<v Speaker 1>and like they had that pot and they were like

0:26:59.800 --> 0:27:04.080
<v Speaker 1>looking around for some sort of operating company to merge

0:27:04.119 --> 0:27:06.280
<v Speaker 1>with and take it public with this pack. And what

0:27:06.359 --> 0:27:09.720
<v Speaker 1>they found was not an operating company. It was a

0:27:09.800 --> 0:27:13.120
<v Speaker 1>pile of bitcoin managed by Tether, and also a pilo

0:27:13.119 --> 0:27:15.000
<v Speaker 1>of bitcoin managed by bidfin X, which is sort of

0:27:15.040 --> 0:27:18.040
<v Speaker 1>related to Tether, and also a pileo of bitcoin managed

0:27:18.040 --> 0:27:20.240
<v Speaker 1>by soft Bank, and also probably some other piles of bitcoin.

0:27:20.280 --> 0:27:23.040
<v Speaker 1>But Anyway, they mushed all these things together, counters one

0:27:23.119 --> 0:27:25.760
<v Speaker 1>hundred million dollars of cash and then all the other

0:27:25.760 --> 0:27:28.480
<v Speaker 1>people's bitcoin. You mush them all together. You have a

0:27:28.520 --> 0:27:31.520
<v Speaker 1>giant pot of bitcoin that is publicly listed because the

0:27:31.720 --> 0:27:34.639
<v Speaker 1>pack has a public listing. And so they announced the

0:27:34.640 --> 0:27:37.960
<v Speaker 1>merger this week, and it's always it's a very easy

0:27:37.960 --> 0:27:41.199
<v Speaker 1>merger because everyone is just a pot, and so you

0:27:41.240 --> 0:27:42.960
<v Speaker 1>can be like, okay, so your pot is one hundred

0:27:42.960 --> 0:27:44.680
<v Speaker 1>million dollars, so you get like one hundred million dollars

0:27:44.720 --> 0:27:47.879
<v Speaker 1>worth of stock. Your pot is three billion dollars of bitcoin,

0:27:47.960 --> 0:27:49.600
<v Speaker 1>so you get three billion dollars with it. So you like,

0:27:49.720 --> 0:27:52.920
<v Speaker 1>you know, allocated based on how much stuff the different

0:27:53.000 --> 0:27:57.320
<v Speaker 1>pots bring to the thing. And so you know, the

0:27:57.359 --> 0:28:00.480
<v Speaker 1>counter Fitzgerald Spack got roughly one hundred million dollars worth

0:28:00.560 --> 0:28:04.520
<v Speaker 1>of the pot and it probably like tripled in price. Yeah,

0:28:04.680 --> 0:28:09.879
<v Speaker 1>so that suggests roughly that the stock market values the

0:28:09.920 --> 0:28:14.119
<v Speaker 1>bitcoin in this pot at roughly three times the actual

0:28:14.240 --> 0:28:15.200
<v Speaker 1>lure of the bitcoin.

0:28:14.920 --> 0:28:16.240
<v Speaker 2>Of the Yeah, it's amazing.

0:28:16.720 --> 0:28:20.200
<v Speaker 1>It's not like they invented this. No, this investor presentation

0:28:20.200 --> 0:28:22.880
<v Speaker 1>which is amazing and which is like look at micro

0:28:22.920 --> 0:28:25.840
<v Speaker 1>strategy or now it's called Strategy. You know, the Strategy

0:28:25.880 --> 0:28:29.119
<v Speaker 1>company which has been buying bitcoin, putting them in a

0:28:29.119 --> 0:28:30.920
<v Speaker 1>pot and selling shares for twice.

0:28:30.720 --> 0:28:31.960
<v Speaker 2>The value for like five years.

0:28:31.960 --> 0:28:34.080
<v Speaker 1>Now, I don't think it's literally five years.

0:28:33.920 --> 0:28:35.399
<v Speaker 2>But it feels like no, I think it was like

0:28:35.480 --> 0:28:36.199
<v Speaker 2>twenty twenty.

0:28:36.359 --> 0:28:38.000
<v Speaker 1>Yeah, I think, yeah.

0:28:37.920 --> 0:28:38.480
<v Speaker 2>You're right time.

0:28:40.640 --> 0:28:42.880
<v Speaker 1>But you know they've been doing it forever, and there's

0:28:42.960 --> 0:28:43.640
<v Speaker 1>room for more.

0:28:44.320 --> 0:28:48.960
<v Speaker 2>Apparently my natural reaction when I saw this headline yesterday

0:28:49.120 --> 0:28:52.120
<v Speaker 2>was how many strategies do there need to be out there?

0:28:52.240 --> 0:28:53.400
<v Speaker 2>Apparently there's room.

0:28:53.840 --> 0:28:57.080
<v Speaker 1>Right. It's like they came to it from opposite directions, right,

0:28:57.120 --> 0:29:01.000
<v Speaker 1>So Strategy was like a company and it's CEO got

0:29:01.000 --> 0:29:05.160
<v Speaker 1>really into bitcoin. Then CEO now Chairmanry Taylor, and he

0:29:05.240 --> 0:29:06.840
<v Speaker 1>was like, what if we bought a lot of bitcoin

0:29:06.880 --> 0:29:09.520
<v Speaker 1>because like that would be a good investment for our company, right,

0:29:09.600 --> 0:29:11.320
<v Speaker 1>Like we should own bitcoin because it'll go up and

0:29:11.440 --> 0:29:15.240
<v Speaker 1>our company will be worth more. And that metamorphosed than

0:29:15.280 --> 0:29:17.120
<v Speaker 1>to like what if we were only a lot of

0:29:17.160 --> 0:29:20.000
<v Speaker 1>bitcoin because people keep wanting to pay more for our

0:29:20.040 --> 0:29:22.120
<v Speaker 1>stock than the bitcoin is worth. So they just did

0:29:22.120 --> 0:29:25.479
<v Speaker 1>more and more buying and bitcoin. But like they started

0:29:25.520 --> 0:29:27.040
<v Speaker 1>from a place of like we're a public company and

0:29:27.080 --> 0:29:29.800
<v Speaker 1>you'd like to buy bitcoin. Twenty one starts from the

0:29:29.800 --> 0:29:31.520
<v Speaker 1>place of I mean, I don't know how the merger

0:29:31.560 --> 0:29:33.920
<v Speaker 1>conversations came to you. Yeah, but essentially starts in a

0:29:33.920 --> 0:29:36.400
<v Speaker 1>place of like, we are Tether, Yeah, we own some bitcoin.

0:29:36.480 --> 0:29:38.560
<v Speaker 1>By the way, it's weird that Tether own so much bitcoin. Yeah,

0:29:38.600 --> 0:29:40.640
<v Speaker 1>because Tether is mostly in the business of like selling

0:29:41.000 --> 0:29:44.240
<v Speaker 1>stable coin tokens for dollars and parking the money in dollars.

0:29:44.360 --> 0:29:46.360
<v Speaker 1>But they have some like legacy businesses owning bitcoin. And

0:29:46.360 --> 0:29:48.760
<v Speaker 1>also they've made so many profits that they invest in bitcoin,

0:29:48.880 --> 0:29:52.360
<v Speaker 1>so they own a lot of bitcoin. And if you're

0:29:52.400 --> 0:29:55.160
<v Speaker 1>a pot of bitcoin, if you're a crypto native owner

0:29:55.200 --> 0:29:58.560
<v Speaker 1>of bitcoins, and you look at strategy, you're like, wow,

0:29:58.880 --> 0:30:02.600
<v Speaker 1>those guys can get incredibly cheap funding for their bitcoin

0:30:02.640 --> 0:30:04.920
<v Speaker 1>because they can sell stock at two x the value

0:30:04.920 --> 0:30:09.320
<v Speaker 1>of their bitcoin. So if you're just like a bitcoin manager,

0:30:09.920 --> 0:30:12.320
<v Speaker 1>how could you not be tempted to get into that business.

0:30:12.440 --> 0:30:13.720
<v Speaker 2>Yeah, And so they did, and.

0:30:13.680 --> 0:30:16.680
<v Speaker 1>They did it by like essentially buying a public company,

0:30:16.720 --> 0:30:18.600
<v Speaker 1>but like in this case, buying a spact to make

0:30:18.640 --> 0:30:21.160
<v Speaker 1>it really clean. And so now they have a public

0:30:21.240 --> 0:30:23.680
<v Speaker 1>listing for their pot of bitcoin, which is worth three

0:30:23.720 --> 0:30:24.960
<v Speaker 1>times with the bitcoin is worth.

0:30:25.080 --> 0:30:28.400
<v Speaker 2>I do just say I like the ticker XXI twenty one,

0:30:28.520 --> 0:30:32.520
<v Speaker 2>got it. So Jack Maller's is going to be the CEO.

0:30:32.760 --> 0:30:35.960
<v Speaker 2>He's thirty one, which is my age. But he made

0:30:36.000 --> 0:30:37.880
<v Speaker 2>that point as a selling point that we're not a

0:30:37.920 --> 0:30:41.840
<v Speaker 2>pivoting company, we're pure bitcoin. And also talking about Tether,

0:30:41.960 --> 0:30:44.200
<v Speaker 2>he said that how the deal came together was just

0:30:44.240 --> 0:30:46.200
<v Speaker 2>that he's known tether for a while, that you know,

0:30:46.280 --> 0:30:49.200
<v Speaker 2>a decade ago, there weren't many bitcoiners out there, and

0:30:49.240 --> 0:30:52.320
<v Speaker 2>I had the same reaction to Tether is a stable coin?

0:30:52.360 --> 0:30:52.720
<v Speaker 2>Is sure?

0:30:52.880 --> 0:30:55.240
<v Speaker 1>That usually ship with bitcoin. It's more interesting. They are

0:30:55.400 --> 0:30:58.480
<v Speaker 1>now basically in the business of taking dollars and parking

0:30:58.480 --> 0:31:02.120
<v Speaker 1>those dollars and treasury bills. But like the history of

0:31:02.160 --> 0:31:05.360
<v Speaker 1>the producing dollars out of bitcoin is an interesting one, right,

0:31:05.360 --> 0:31:08.760
<v Speaker 1>I mean, they have been making collateralized loans against bitcoin

0:31:08.800 --> 0:31:11.120
<v Speaker 1>to create more tether dollars, like they're an interesting business.

0:31:11.160 --> 0:31:14.880
<v Speaker 2>But yeah, interesting business is you know, pretty diplomatic.

0:31:15.600 --> 0:31:19.240
<v Speaker 1>But Jack Maller's I did seriously, but also yes.

0:31:19.440 --> 0:31:22.240
<v Speaker 2>I'm taking you you know at your word at face value,

0:31:22.400 --> 0:31:25.920
<v Speaker 2>tetherin is an interesting business. Jack Mallers went on Bloomberg

0:31:25.960 --> 0:31:28.280
<v Speaker 2>TV to talk about this deal on Wednesday. I didn't

0:31:28.320 --> 0:31:31.680
<v Speaker 2>interview him, my colleagues Caroline Hyde and At Ludlow did.

0:31:32.200 --> 0:31:35.480
<v Speaker 2>It was so fun. So he's going to be the

0:31:35.520 --> 0:31:37.480
<v Speaker 2>CEO of this company. He's also going to be the

0:31:37.520 --> 0:31:41.520
<v Speaker 2>CEO of Strike And they asked him about that and

0:31:41.560 --> 0:31:44.400
<v Speaker 2>he said, you can just do things and I'm going

0:31:44.480 --> 0:31:47.880
<v Speaker 2>to lead both businesses. I truly believe my purpose on

0:31:47.920 --> 0:31:50.520
<v Speaker 2>this planet is to try and help bitcoin have a

0:31:50.600 --> 0:31:51.640
<v Speaker 2>chance to change the world.

0:31:52.480 --> 0:31:54.800
<v Speaker 1>This is not a business, this is a part of bitcoin.

0:31:55.040 --> 0:31:58.680
<v Speaker 2>Well, they asked him, what is your day to day

0:31:58.880 --> 0:32:01.800
<v Speaker 2>going to be If you're just stroke the bitcoin, you're

0:32:01.880 --> 0:32:04.880
<v Speaker 2>just accumulating bitcoin, what do you do all day? And

0:32:05.400 --> 0:32:07.440
<v Speaker 2>I mean he basically said, is my job and what

0:32:07.480 --> 0:32:10.120
<v Speaker 2>I've dedicated to do for our shareholders is grower bitcoin

0:32:10.160 --> 0:32:11.960
<v Speaker 2>per share. That's what he's going to do, so, which

0:32:12.040 --> 0:32:13.320
<v Speaker 2>just means he's going to buy bitcoin.

0:32:13.640 --> 0:32:15.840
<v Speaker 1>Anyway, I did explode and you said that, but let

0:32:15.880 --> 0:32:17.800
<v Speaker 1>me say a couple of things. So one like growing

0:32:17.800 --> 0:32:20.720
<v Speaker 1>your bitcoin for shore just buying bitcoin bit fineey yeah. Two. No,

0:32:20.800 --> 0:32:22.800
<v Speaker 1>they say in their presentation that they're going to do

0:32:23.360 --> 0:32:27.440
<v Speaker 1>bitcoin education and branding, including branded video media, and acting

0:32:27.440 --> 0:32:30.080
<v Speaker 1>as the go to content partner for major conferences, web

0:32:30.080 --> 0:32:32.560
<v Speaker 1>three firms and fintech institutions. Which makes sense because like

0:32:33.240 --> 0:32:36.280
<v Speaker 1>my analysis of these things, by which I mean Strategy this,

0:32:36.440 --> 0:32:39.880
<v Speaker 1>and like there's like forty imitators. My analysis is like

0:32:40.080 --> 0:32:42.240
<v Speaker 1>you're sort of like Meme stocking bitcoin, right, Like you're

0:32:42.280 --> 0:32:45.560
<v Speaker 1>sort of like finding people who are so excited about

0:32:45.560 --> 0:32:48.000
<v Speaker 1>the story you're telling that they're willing to pay two

0:32:48.160 --> 0:32:50.560
<v Speaker 1>or three times the value of the bitcoin in your

0:32:50.560 --> 0:32:52.880
<v Speaker 1>pot for your stock, right, So how do you sustain that?

0:32:52.960 --> 0:32:54.280
<v Speaker 1>I mean, like one thing is you have to like

0:32:54.760 --> 0:32:57.840
<v Speaker 1>be very visible, right, And like Strategy and Michael Saylor

0:32:57.880 --> 0:33:00.320
<v Speaker 1>have done a really good job of being visible and

0:33:00.400 --> 0:33:04.520
<v Speaker 1>identified with bitcoin, and like these guys have a great

0:33:04.560 --> 0:33:07.240
<v Speaker 1>head start because they're like Tether, right, They're like they're

0:33:07.240 --> 0:33:11.200
<v Speaker 1>people who are visibly identified with bitcoin. But you can't

0:33:11.240 --> 0:33:13.400
<v Speaker 1>just rest on your laurels. You got to keep producing

0:33:13.400 --> 0:33:16.960
<v Speaker 1>branded video to make people think no bitcoin. And also

0:33:17.080 --> 0:33:19.240
<v Speaker 1>because I like bitcoin, I got to buy the stock

0:33:19.280 --> 0:33:19.960
<v Speaker 1>of twenty one.

0:33:20.320 --> 0:33:22.960
<v Speaker 2>Yeah, so I want to read you more of this interview.

0:33:23.240 --> 0:33:26.640
<v Speaker 2>I really enjoyed watching it. So he said, I want

0:33:26.640 --> 0:33:29.240
<v Speaker 2>to grow our bitcoin per share his BPS. When you

0:33:29.280 --> 0:33:31.960
<v Speaker 2>buy a share of twenty one, let's say our BPS

0:33:32.040 --> 0:33:34.200
<v Speaker 2>is zero point zero five, our intent is to be

0:33:34.240 --> 0:33:37.240
<v Speaker 2>able to grow that to zero point zero six, et cetera.

0:33:37.720 --> 0:33:40.480
<v Speaker 2>Whereas a vehicle like an ETF, your exposure is static.

0:33:40.720 --> 0:33:44.000
<v Speaker 2>He said, we will never have negative bitcoin per share,

0:33:44.360 --> 0:33:46.920
<v Speaker 2>at least that's our intent. How would they get there

0:33:47.480 --> 0:33:49.440
<v Speaker 2>negative bitcoin? Yeah? Does that?

0:33:49.680 --> 0:33:52.000
<v Speaker 1>I think he means negative bitcoin per share growth? Right?

0:33:53.280 --> 0:33:56.520
<v Speaker 2>He said we will never have BPS negative at least

0:33:56.520 --> 0:33:57.280
<v Speaker 2>that's our intent.

0:33:57.880 --> 0:33:59.479
<v Speaker 1>He must mean negative growth.

0:34:00.040 --> 0:34:02.600
<v Speaker 2>I was just there. I was at my desk, I

0:34:02.720 --> 0:34:06.840
<v Speaker 2>was watching the interview, was typing curiously, and I guess that's.

0:34:06.680 --> 0:34:09.600
<v Speaker 1>Like the inverse bitcoin exchange.

0:34:09.960 --> 0:34:13.040
<v Speaker 2>How would you just like sell? How would you have

0:34:13.160 --> 0:34:14.839
<v Speaker 2>negative bitcoin for sure? How do you get there?

0:34:15.680 --> 0:34:17.399
<v Speaker 1>Borrow a lot of money and then you sell every

0:34:17.560 --> 0:34:19.080
<v Speaker 1>I don't know. I don't have a great answer. I

0:34:19.160 --> 0:34:19.560
<v Speaker 1>don't think.

0:34:19.760 --> 0:34:22.719
<v Speaker 2>I think he must mean negative growth, Jack, friend of

0:34:22.760 --> 0:34:24.600
<v Speaker 2>the show, come on, tell us what you meant?

0:34:25.320 --> 0:34:29.239
<v Speaker 1>Yeah, negative bitcoin for sure? I should start that.

0:34:29.320 --> 0:34:32.200
<v Speaker 2>I wonder if that would you know? Why would you

0:34:32.280 --> 0:34:33.720
<v Speaker 2>ever issue?

0:34:33.880 --> 0:34:35.960
<v Speaker 1>What you do is you borrow in bitcoin then you

0:34:35.960 --> 0:34:37.160
<v Speaker 1>buy bonds?

0:34:37.800 --> 0:34:42.280
<v Speaker 2>Yeah, well I should do that.

0:34:41.840 --> 0:34:45.080
<v Speaker 1>Right, because like the basic theory of these bitcoin treasury

0:34:45.120 --> 0:34:47.600
<v Speaker 1>companies is you borrow in dollars and you buy bitcoin.

0:34:47.920 --> 0:34:50.000
<v Speaker 1>Like that theory isn't even true, Like they mostly issue

0:34:50.040 --> 0:34:52.440
<v Speaker 1>stock and buy bitcoin. Like these these things all say like,

0:34:52.480 --> 0:34:56.200
<v Speaker 1>oh we're super levered, they're not that lever. Yeah, but no,

0:34:56.320 --> 0:34:58.880
<v Speaker 1>the way you would do a negative bitcoin company is

0:34:58.920 --> 0:35:04.720
<v Speaker 1>you would go to like crypto firms, uh huh, borrow

0:35:04.760 --> 0:35:07.680
<v Speaker 1>bitcoin from them, and then you'll use those bitcoin to

0:35:07.680 --> 0:35:10.839
<v Speaker 1>buy treasury bonds. Okay, have negative bitcoin.

0:35:10.520 --> 0:35:14.799
<v Speaker 2>For share, yeah, because the vast majority of companies have

0:35:15.400 --> 0:35:19.880
<v Speaker 2>zero bitcoin. Yeah, zero.

0:35:21.360 --> 0:35:25.480
<v Speaker 1>Negative would be weird but doable, possibly worth doing. I

0:35:25.480 --> 0:35:26.480
<v Speaker 1>should start this company?

0:35:26.560 --> 0:35:27.520
<v Speaker 2>You should? Why not?

0:35:28.400 --> 0:35:29.160
<v Speaker 1>A lot of reasons.

0:35:29.239 --> 0:35:30.640
<v Speaker 2>We'll see what multiple you got.

0:35:31.560 --> 0:35:35.600
<v Speaker 1>Negative multiple, It would probably be terrible, just like you know,

0:35:36.120 --> 0:35:39.120
<v Speaker 1>because bitcoin is very volatile, and the bitcoin treasury companies

0:35:39.160 --> 0:35:41.359
<v Speaker 1>that we're gonna be levered bitcoin in vestments are one

0:35:41.440 --> 0:35:43.359
<v Speaker 1>not that leverage, and two they're smartly levered, like they

0:35:43.440 --> 0:35:48.040
<v Speaker 1>do you know, long term non margin callable convertible debt

0:35:48.040 --> 0:35:51.240
<v Speaker 1>to buy bitcoin, right, So like they're really not taking

0:35:51.239 --> 0:35:54.120
<v Speaker 1>on a lot of near term leverage risk. Right, If

0:35:54.160 --> 0:35:56.360
<v Speaker 1>you borrowed bitcoin and used to buy treasury bonds and

0:35:56.360 --> 0:35:58.680
<v Speaker 1>then bitcoin went up a lot. You could get margin

0:35:58.719 --> 0:36:02.520
<v Speaker 1>calls from your crypto. Not fun people to deal with.

0:36:02.560 --> 0:36:05.600
<v Speaker 2>Necessary that could be you getting.

0:36:05.360 --> 0:36:07.440
<v Speaker 1>The margin calls. Yeah, no, never mind, I'm not doing it,

0:36:07.520 --> 0:36:09.400
<v Speaker 1>but telling should do it. It'd be fun, be funny.

0:36:09.440 --> 0:36:09.719
<v Speaker 1>All right.

0:36:09.760 --> 0:36:12.400
<v Speaker 2>Well, I've got turtles to go sit out.

0:36:12.280 --> 0:36:15.400
<v Speaker 1>In the sun, go enjoy your mealworms.

0:36:16.680 --> 0:36:18.200
<v Speaker 2>They're kind of big, so I have to actually cut

0:36:18.200 --> 0:36:21.120
<v Speaker 2>them up for the turtles. So I've thought jump on

0:36:21.239 --> 0:36:26.880
<v Speaker 2>mealworms by accident. Okay, I want.

0:36:26.719 --> 0:36:28.160
<v Speaker 1>To hear much more about the cutting up of the

0:36:28.200 --> 0:36:28.680
<v Speaker 1>nail ORMs.

0:36:28.680 --> 0:36:31.040
<v Speaker 2>They're just like an inch long, and the turtles are

0:36:31.080 --> 0:36:34.480
<v Speaker 2>also an inch long, so it's too it's too big

0:36:34.520 --> 0:36:38.920
<v Speaker 2>the turtle. To be clear, they're dead the mealworms. Right,

0:36:40.239 --> 0:36:40.879
<v Speaker 2>let's go home.

0:36:43.160 --> 0:36:44.640
<v Speaker 1>And that was the Money Stuff Podcast.

0:36:44.800 --> 0:36:46.840
<v Speaker 2>I'm Matt Lvia and I'm Katie Greifeld.

0:36:47.239 --> 0:36:49.319
<v Speaker 1>You can find my work by subscribing to the Money

0:36:49.360 --> 0:36:51.560
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0:36:51.320 --> 0:36:53.799
<v Speaker 2>And you can find me on Bloomberg TV every day

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0:37:16.360 --> 0:37:19.040
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0:37:21.280 --> 0:37:23.600
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0:37:23.680 --> 0:37:24.960
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