1 00:00:02,720 --> 00:00:10,800 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. So you're on vacation 2 00:00:10,920 --> 00:00:11,400 Speaker 1: next week. 3 00:00:11,360 --> 00:00:17,880 Speaker 2: I am. I'll be in the mountains of Colorado. Yeah, 4 00:00:18,160 --> 00:00:19,800 Speaker 2: you know, the snow isn't great this time of year, 5 00:00:21,320 --> 00:00:23,040 Speaker 2: but you know, love of the game. 6 00:00:23,360 --> 00:00:24,759 Speaker 1: What are you going to do for money stuff? 7 00:00:24,920 --> 00:00:26,000 Speaker 2: We should do something? 8 00:00:26,120 --> 00:00:29,000 Speaker 1: Should we should have some mail bags. 9 00:00:29,160 --> 00:00:33,600 Speaker 2: We should have some mail bags. I will log onto 10 00:00:33,640 --> 00:00:37,879 Speaker 2: zoom for an hour and we'll take questions from the audience. Okay, 11 00:00:38,360 --> 00:00:41,200 Speaker 2: not live, not live, but that would be fun maybe 12 00:00:41,240 --> 00:00:41,640 Speaker 2: one day. 13 00:00:42,080 --> 00:00:45,360 Speaker 1: Right, So, if you want Katie to answer questions with 14 00:00:45,760 --> 00:00:48,720 Speaker 1: Colorado with me, send them to us now. 15 00:00:48,960 --> 00:00:51,639 Speaker 2: We need them. Should we tell them where to send questions? 16 00:00:52,040 --> 00:00:54,600 Speaker 1: I believe it's money pot at Bloomberg dot Net. 17 00:00:55,320 --> 00:00:59,200 Speaker 2: That sounds right it, Yeah, just yell them into the 18 00:00:59,240 --> 00:01:01,120 Speaker 2: sky and it'll get to us. 19 00:01:01,440 --> 00:01:03,160 Speaker 1: Definitely, don't have me on Twitter. 20 00:01:04,560 --> 00:01:05,520 Speaker 2: Do you still go on Twitter? 21 00:01:06,280 --> 00:01:08,960 Speaker 1: Not never, but I don't look at my notifications or 22 00:01:09,040 --> 00:01:11,240 Speaker 1: dms anymore. Yeah, I'm pretty much. 23 00:01:11,800 --> 00:01:12,720 Speaker 2: It's kind of sad. 24 00:01:12,920 --> 00:01:17,560 Speaker 1: It's really sad. This is like, you know, especially life. 25 00:01:17,680 --> 00:01:21,800 Speaker 2: That's the thing, Like the pandemic, it scratched so many 26 00:01:21,840 --> 00:01:24,039 Speaker 2: social issues. I don't know. I still go on all 27 00:01:24,080 --> 00:01:26,360 Speaker 2: the time. But I don't tweet as much anymore. 28 00:01:26,560 --> 00:01:29,520 Speaker 1: I don't. I'm not like performatively quitting. But I still 29 00:01:29,600 --> 00:01:31,840 Speaker 1: like tweet my columns when I remember too. 30 00:01:31,959 --> 00:01:36,120 Speaker 2: But yeah, I used to tweet a cat, like my 31 00:01:36,200 --> 00:01:36,800 Speaker 2: Friday cat. 32 00:01:36,880 --> 00:01:38,680 Speaker 1: I remember some of your Twitter sticks. I feel like 33 00:01:38,720 --> 00:01:39,360 Speaker 1: you had good Twitter. 34 00:01:39,520 --> 00:01:43,240 Speaker 2: I did have good sticks. No, And like yesterday on 35 00:01:43,280 --> 00:01:45,200 Speaker 2: FED Day, usually I tweet time for the best day 36 00:01:45,200 --> 00:01:48,120 Speaker 2: of our lives. I haven't done that in a while. 37 00:01:48,640 --> 00:01:50,960 Speaker 2: I feel like, you know, no longer the best day everlast. 38 00:01:51,520 --> 00:01:55,920 Speaker 3: No, Yesterday, Yeah, yesterday was the best day of your life. 39 00:01:56,120 --> 00:01:59,320 Speaker 2: No, it was fine. I mean they cut they cut 40 00:01:59,320 --> 00:02:01,720 Speaker 2: twenty five base points, which is pretty cool. Would have 41 00:02:01,760 --> 00:02:05,280 Speaker 2: been awesome for the chaos factor if they either held 42 00:02:05,360 --> 00:02:07,040 Speaker 2: rates or cut fifty basis points. 43 00:02:07,160 --> 00:02:10,520 Speaker 1: Yeah. Yeah, you want to just like, yeah, expectations. 44 00:02:09,960 --> 00:02:11,080 Speaker 2: Want to burn the world down. 45 00:02:11,240 --> 00:02:13,160 Speaker 1: Yeah yeah yeah. 46 00:02:13,200 --> 00:02:15,680 Speaker 2: But I really just want to talk about. 47 00:02:15,919 --> 00:02:18,880 Speaker 1: This is going to be that's the first thing, clanging, transition, 48 00:02:20,360 --> 00:02:23,360 Speaker 1: whatever is on paper in front of me. 49 00:02:23,919 --> 00:02:27,200 Speaker 2: I really want to talk about the arc innovation, ETF 50 00:02:27,280 --> 00:02:29,880 Speaker 2: and whatever the heck is going on with these IPO trades. 51 00:02:30,919 --> 00:02:32,720 Speaker 1: That was pretty good. 52 00:02:32,880 --> 00:02:35,040 Speaker 2: It has been every day I wake. 53 00:02:34,960 --> 00:02:38,440 Speaker 1: Up none of that. Hello, and welcome to The Money 54 00:02:38,480 --> 00:02:41,360 Speaker 1: Stuff Podcast, your weekly podcast where we talk about stuff 55 00:02:41,360 --> 00:02:45,960 Speaker 1: related to money. I'm Matt Levien and I wrte the 56 00:02:45,960 --> 00:02:47,760 Speaker 1: Money Stuff column for Bloomberg Opinion. 57 00:02:48,480 --> 00:02:51,120 Speaker 2: And I'm Katie Greifeld, a reporter for Bloomberg News and 58 00:02:51,160 --> 00:02:52,920 Speaker 2: an anchor for Bloomberg Television. 59 00:02:54,200 --> 00:02:57,679 Speaker 1: Katie, I gather that you're fascinated by r gtfs. 60 00:02:57,880 --> 00:03:01,320 Speaker 2: I opened my eyes in the morning horizontal in debt, 61 00:03:01,320 --> 00:03:05,120 Speaker 2: and I just think about heartbeat trades. Yeah, but this 62 00:03:05,200 --> 00:03:06,520 Speaker 2: isn't strictly a heartbeat. 63 00:03:10,880 --> 00:03:12,760 Speaker 1: I don't know exactly what the qualification. 64 00:03:12,800 --> 00:03:15,320 Speaker 2: If you take a look at the chart of inflows 65 00:03:15,360 --> 00:03:17,480 Speaker 2: and outflows, it looks like a heartbeat, but I don't 66 00:03:17,480 --> 00:03:18,960 Speaker 2: think that there are taxes involved. 67 00:03:19,200 --> 00:03:21,000 Speaker 1: It's not a tax heart beat, but is a different 68 00:03:21,040 --> 00:03:25,519 Speaker 1: kind of heartbeat. Yeah, right, So runs some ETFs. Kathy 69 00:03:25,520 --> 00:03:30,639 Speaker 1: would famous part of her ETF active manager and because 70 00:03:30,639 --> 00:03:33,160 Speaker 1: they're like active dfs, and because she's like a celebrity 71 00:03:33,200 --> 00:03:36,960 Speaker 1: tech investor, they get to invest in hot tech IPOs, 72 00:03:37,120 --> 00:03:38,800 Speaker 1: which hasn't been a thing for a long time, but 73 00:03:38,840 --> 00:03:41,080 Speaker 1: it's coming back, right, There's been some hot tech ips 74 00:03:41,480 --> 00:03:44,920 Speaker 1: so much have gone up a lot and so this 75 00:03:45,080 --> 00:03:50,680 Speaker 1: RTF gets to get small ish allocations in some hot 76 00:03:50,760 --> 00:03:54,960 Speaker 1: tech IPOs, and if you think those IPOs will go up, 77 00:03:54,960 --> 00:03:57,680 Speaker 1: you'll be like, oh, I'd like to invest in this 78 00:03:57,880 --> 00:04:00,920 Speaker 1: RKTF to get my tiny se life exposure to that. 79 00:04:01,680 --> 00:04:03,880 Speaker 1: But if you're really tidy minded about it, you're like, well, 80 00:04:04,200 --> 00:04:06,640 Speaker 1: I don't want all the other stuff in the CTF. 81 00:04:06,760 --> 00:04:10,280 Speaker 1: I just want this IPO exposure. I can't get the 82 00:04:10,280 --> 00:04:12,600 Speaker 1: IPO exposure myself because I am not on the list 83 00:04:12,640 --> 00:04:16,440 Speaker 1: of people who get allocated shares on these IPOs. But 84 00:04:16,680 --> 00:04:20,760 Speaker 1: I can get exposure to the ETF because anyone can 85 00:04:20,800 --> 00:04:23,360 Speaker 1: get exposure to the EDF. And then the further thought 86 00:04:23,440 --> 00:04:25,880 Speaker 1: you could have is I could hedge my exposure to 87 00:04:25,920 --> 00:04:28,960 Speaker 1: everything else on the ETF by, you know, for instance, 88 00:04:29,080 --> 00:04:31,479 Speaker 1: shorting all of the stocks that are currently in the ETF, 89 00:04:31,520 --> 00:04:33,919 Speaker 1: which it discloses, so that i'd be left with you know, 90 00:04:33,920 --> 00:04:35,680 Speaker 1: if you're long the ETF and short all of the 91 00:04:35,680 --> 00:04:38,440 Speaker 1: stocks in the ETF, you're left only with like the 92 00:04:38,520 --> 00:04:41,320 Speaker 1: possibility of it getting an IPO allocation and the IPO 93 00:04:41,400 --> 00:04:44,000 Speaker 1: going up. And so it seems like people are doing 94 00:04:44,040 --> 00:04:47,120 Speaker 1: some sort of trade like that, and the best way 95 00:04:47,160 --> 00:04:50,719 Speaker 1: to operationalize that trade is not to buy the ETF 96 00:04:50,839 --> 00:04:52,840 Speaker 1: and short the stocks. The best way to do it 97 00:04:52,880 --> 00:04:55,200 Speaker 1: is to borrow all of the stocks that are in 98 00:04:55,240 --> 00:04:59,359 Speaker 1: the ETF, deliver them to ARC, to the ETF to 99 00:04:59,520 --> 00:05:03,240 Speaker 1: create the ETF, get back shares of the ETF. Now 100 00:05:03,279 --> 00:05:05,839 Speaker 1: you have the ETF and you're effectively short the underlying 101 00:05:05,839 --> 00:05:08,080 Speaker 1: slides because you bar them and gave them to ARC. 102 00:05:08,839 --> 00:05:10,840 Speaker 1: And then when the IPEA happens, you reverse the trade. 103 00:05:10,839 --> 00:05:13,960 Speaker 1: You deliver back the shares, get back the underlying stuff, 104 00:05:14,320 --> 00:05:16,719 Speaker 1: You deliver the underlying stuff back to your share lender, 105 00:05:17,080 --> 00:05:19,279 Speaker 1: and you're left with only the popped IPO. 106 00:05:19,560 --> 00:05:23,200 Speaker 2: Yeah. I guess what I don't understand about this is 107 00:05:23,880 --> 00:05:25,680 Speaker 2: how big of a gamble is it to do this 108 00:05:25,960 --> 00:05:29,159 Speaker 2: in the ARC Innovation ETF. Like, I wonder if the 109 00:05:29,200 --> 00:05:32,200 Speaker 2: person or whoever was behind this trade knew for sure 110 00:05:32,680 --> 00:05:36,040 Speaker 2: that they're getting allocated some of Klarna or some of Bullish. 111 00:05:36,839 --> 00:05:39,040 Speaker 1: My impression is that in Bullish it was pretty telegraphed 112 00:05:39,040 --> 00:05:41,000 Speaker 1: that ARC was getting some of it. But I'm not sure. 113 00:05:41,279 --> 00:05:42,960 Speaker 1: These are trades that have been going on, and like 114 00:05:43,040 --> 00:05:45,600 Speaker 1: they went on with the ipea of Bullish a while back, 115 00:05:45,640 --> 00:05:49,359 Speaker 1: and then Klarina last week and Robin Wiggils at the 116 00:05:49,440 --> 00:05:53,440 Speaker 1: ft has been reporting about it. But like my impression 117 00:05:53,520 --> 00:05:56,760 Speaker 1: is that the main the flagship Arc Innovation ETF got 118 00:05:56,800 --> 00:06:00,719 Speaker 1: an allocation in Bullish and not in Klarina. R ETF 119 00:06:00,800 --> 00:06:04,400 Speaker 1: got an allegation in Klina like f. Yeah, so like 120 00:06:05,520 --> 00:06:08,800 Speaker 1: people did this. I mean, no one really knows, but 121 00:06:08,839 --> 00:06:10,479 Speaker 1: it looks like this trade, right, it looks like the 122 00:06:10,480 --> 00:06:14,159 Speaker 1: trade is you heart beat in you like borrow the 123 00:06:14,240 --> 00:06:16,360 Speaker 1: underlying shows you heart beat into the ETF, you take 124 00:06:16,400 --> 00:06:18,679 Speaker 1: your stuff out the next day to capture the IPO. 125 00:06:18,880 --> 00:06:21,880 Speaker 1: It looks like people did that with our innovation around 126 00:06:21,880 --> 00:06:24,240 Speaker 1: the Clarina IPO and there was no allegation, And so 127 00:06:24,279 --> 00:06:28,200 Speaker 1: I just like missed. It's not a huge risk yause 128 00:06:28,360 --> 00:06:30,080 Speaker 1: you know, you're long in short the same thing. 129 00:06:30,120 --> 00:06:33,320 Speaker 2: Basically, I'm just wondering, like I wonder if we'll start 130 00:06:33,360 --> 00:06:38,040 Speaker 2: to see this pop up in other sort of shiny 131 00:06:38,080 --> 00:06:39,400 Speaker 2: active ETFs. 132 00:06:39,800 --> 00:06:41,920 Speaker 1: Sure, I don't know how many shiny active ETFs there. 133 00:06:41,960 --> 00:06:44,159 Speaker 2: There's not a ton, but there's definitely some that you 134 00:06:44,240 --> 00:06:46,440 Speaker 2: might think would get allocated. 135 00:06:46,560 --> 00:06:48,920 Speaker 1: Yeah, Like in general, you know, index ones don't buy 136 00:06:48,960 --> 00:06:51,479 Speaker 1: IPOs because they're not in the index, and so you 137 00:06:51,520 --> 00:06:54,920 Speaker 1: don't see you know, the traditional ETFs, you don't see 138 00:06:54,920 --> 00:06:57,480 Speaker 1: this as a big thing. But like someone like Kathy 139 00:06:57,520 --> 00:07:00,960 Speaker 1: Wood who is an investor and yeah stive tech companies, 140 00:07:01,320 --> 00:07:03,520 Speaker 1: it does make sense that she would be interested in 141 00:07:03,520 --> 00:07:06,400 Speaker 1: buying an IPOs. And it does make sense that someone 142 00:07:06,480 --> 00:07:08,520 Speaker 1: would notice that and be like, I can create my 143 00:07:08,560 --> 00:07:13,560 Speaker 1: own IPR allocation by engineering the r ETFs. 144 00:07:13,760 --> 00:07:17,480 Speaker 2: Yeah, because, for example, there's an ETF dedicated just to 145 00:07:17,520 --> 00:07:21,080 Speaker 2: buying IPO stocks, like recent IPO stocks. 146 00:07:21,600 --> 00:07:25,360 Speaker 1: Which accomplishes nothing whatsoever. I know, the trade here is 147 00:07:26,000 --> 00:07:26,760 Speaker 1: the IPO pop. 148 00:07:26,920 --> 00:07:27,120 Speaker 2: Yeah. 149 00:07:27,160 --> 00:07:30,280 Speaker 1: Trade here is not Klarna, it's the IPO pop. 150 00:07:30,400 --> 00:07:32,800 Speaker 2: Yeah, it's the one day Yeah. I don't think they're 151 00:07:32,800 --> 00:07:34,240 Speaker 2: getting allocated IPOs. 152 00:07:34,320 --> 00:07:36,000 Speaker 1: Yeah. I mean, like maybe that's the next step. Right, 153 00:07:36,040 --> 00:07:38,720 Speaker 1: you're like, hey, guys, I buy all the IPOs, want 154 00:07:38,720 --> 00:07:41,960 Speaker 1: to allocate be an IPO. But then, you know, traditionally 155 00:07:42,000 --> 00:07:44,200 Speaker 1: the way you get allocated an IPI is like one, 156 00:07:44,400 --> 00:07:46,160 Speaker 1: you are a big investor who pays a lot of 157 00:07:46,200 --> 00:07:50,400 Speaker 1: commissions to a bank, and two you are a long 158 00:07:50,480 --> 00:07:53,520 Speaker 1: term investor who creates a good relationship with the management 159 00:07:53,520 --> 00:07:55,520 Speaker 1: of the company. So the company is like I want 160 00:07:55,560 --> 00:07:57,960 Speaker 1: those people to own seven percent of my stock, so 161 00:07:57,960 --> 00:08:00,240 Speaker 1: I'm going to allocate them in the IPO and then 162 00:08:00,240 --> 00:08:03,080 Speaker 1: like you have like a nice relationship where you are 163 00:08:03,120 --> 00:08:05,080 Speaker 1: a long term holder you on the stock. You have 164 00:08:05,120 --> 00:08:07,280 Speaker 1: a nice marked market gain because they sold you the 165 00:08:07,320 --> 00:08:09,400 Speaker 1: stock of the IPI price. Those are the people that 166 00:08:09,520 --> 00:08:13,160 Speaker 1: the banks and the companies want to allocate at the IPO. 167 00:08:13,600 --> 00:08:17,200 Speaker 1: Someone whose businesses I buy recent IPOs and then sell 168 00:08:17,240 --> 00:08:18,400 Speaker 1: them when they're no longer recent. 169 00:08:18,800 --> 00:08:22,480 Speaker 2: It's not that good, yeah, And it's also a smaller 170 00:08:22,600 --> 00:08:24,720 Speaker 2: funds of millions. 171 00:08:24,840 --> 00:08:28,160 Speaker 1: Right. Like when you're a bank and a company and 172 00:08:28,200 --> 00:08:31,239 Speaker 1: you're allocating the IPO, you're in many cases literally sitting 173 00:08:31,280 --> 00:08:33,360 Speaker 1: down with a list and going through it and being 174 00:08:33,400 --> 00:08:34,800 Speaker 1: like these guys are good to give it, you know, 175 00:08:35,280 --> 00:08:39,200 Speaker 1: and you don't want to have a thousand names on 176 00:08:39,240 --> 00:08:41,880 Speaker 1: that list and get to like, we're gonna give this 177 00:08:41,960 --> 00:08:45,240 Speaker 1: guy fifty shares, right, Yeah, you want to be efficient, right, 178 00:08:45,280 --> 00:08:46,720 Speaker 1: So if you have a big investor, you get them 179 00:08:46,720 --> 00:08:49,559 Speaker 1: a big, big slug of shares. So right, because Kathywood 180 00:08:49,559 --> 00:08:51,600 Speaker 1: is a celebrity because of the argannivation ATF is pretty 181 00:08:51,640 --> 00:08:56,240 Speaker 1: big because she is a long term supporter of like some. 182 00:08:56,240 --> 00:08:58,360 Speaker 2: Of the company take her five year time for him, 183 00:08:58,440 --> 00:08:59,160 Speaker 2: Like she's a. 184 00:08:59,080 --> 00:09:01,000 Speaker 1: Good institution and that to have in your stock, and 185 00:09:01,040 --> 00:09:03,040 Speaker 1: so it makes sense that she gets alecated ips. Yeah, 186 00:09:03,080 --> 00:09:06,960 Speaker 1: but it's not obvious that every IVTF but also would 187 00:09:07,000 --> 00:09:07,760 Speaker 1: have the same benefit. 188 00:09:07,840 --> 00:09:11,280 Speaker 2: This isn't something that I've sawt comment on, but I 189 00:09:11,320 --> 00:09:14,600 Speaker 2: do wonder how Kathy would and the ARC team feel 190 00:09:14,760 --> 00:09:15,640 Speaker 2: about this trade. 191 00:09:16,200 --> 00:09:18,600 Speaker 1: Oh yeah, like assuming this trade is what it seems like, 192 00:09:18,640 --> 00:09:24,280 Speaker 1: which is someone massively inflating the assets of. 193 00:09:24,160 --> 00:09:26,679 Speaker 2: These ETFs by billions of dollars. 194 00:09:26,400 --> 00:09:29,440 Speaker 1: Billions of dollars for like a week in order to 195 00:09:29,600 --> 00:09:35,120 Speaker 1: extract a large chunk of the IPO pop. Right, Like 196 00:09:35,840 --> 00:09:38,439 Speaker 1: the RCF trade was like on the order of like 197 00:09:38,960 --> 00:09:41,440 Speaker 1: you know, it's like a one ish billion dollar ETF 198 00:09:41,480 --> 00:09:43,360 Speaker 1: and someone pumped in on the order of like seven 199 00:09:43,400 --> 00:09:46,120 Speaker 1: hundred million dollars. I might be a little wrong about that, Billy. 200 00:09:46,200 --> 00:09:48,400 Speaker 1: It's like that kind of thing. It's like basically doubling 201 00:09:48,400 --> 00:09:52,080 Speaker 1: the size of the ETF. When you do that, you 202 00:09:52,200 --> 00:09:54,040 Speaker 1: now own half of the ETF and then you take 203 00:09:54,080 --> 00:09:56,120 Speaker 1: your money out, So you take out half of the ETF. 204 00:09:56,200 --> 00:09:58,320 Speaker 1: It also means you take out half of essentially the 205 00:09:58,320 --> 00:10:01,960 Speaker 1: IPO shows, right, So the person doing this or the 206 00:10:01,960 --> 00:10:04,840 Speaker 1: people doing this are extracting kind of half of that 207 00:10:04,880 --> 00:10:10,040 Speaker 1: IPO pop for themselves, meaning that the long term retail 208 00:10:10,080 --> 00:10:13,160 Speaker 1: investors who love Kathy Wood and are you know, invested 209 00:10:13,200 --> 00:10:15,920 Speaker 1: in the ETF don't get that half of the ip 210 00:10:16,120 --> 00:10:19,080 Speaker 1: but that just goes to someone who is just doing 211 00:10:19,120 --> 00:10:21,880 Speaker 1: this arbitrage. So they must feel bad about it. Yeah, 212 00:10:22,040 --> 00:10:24,560 Speaker 1: it's not good. It's not like what they want. Yeah, 213 00:10:25,080 --> 00:10:27,480 Speaker 1: they do extract like an extra two days of management vice. 214 00:10:27,600 --> 00:10:29,080 Speaker 2: But can they stop it? Though? 215 00:10:29,400 --> 00:10:30,640 Speaker 1: You know, when I read about it, I was like, 216 00:10:30,880 --> 00:10:33,079 Speaker 1: you call them up and you say, I'd like to 217 00:10:33,120 --> 00:10:35,640 Speaker 1: pump a billion dollars in and you say yes, because 218 00:10:35,640 --> 00:10:37,599 Speaker 1: that's life in the ETF business, like it is the 219 00:10:38,240 --> 00:10:40,720 Speaker 1: point of an ETF is like people can create and redeem. 220 00:10:41,400 --> 00:10:43,760 Speaker 1: There is like there are ways to I believe, you know, 221 00:10:43,800 --> 00:10:46,560 Speaker 1: most ttfs like have ways to limit, you know, creations 222 00:10:46,559 --> 00:10:47,400 Speaker 1: and redemptions. 223 00:10:47,600 --> 00:10:51,760 Speaker 2: I don't know. I mean, you can't stop money flowing 224 00:10:51,800 --> 00:10:54,040 Speaker 2: in or out, but not every inflow or outflow has 225 00:10:54,080 --> 00:10:55,800 Speaker 2: to result in the creation or redemption. 226 00:10:56,600 --> 00:10:58,280 Speaker 1: That's what an inflow is. 227 00:10:58,440 --> 00:11:00,920 Speaker 2: No, but people always say that it does isn't necessarily 228 00:11:00,920 --> 00:11:05,439 Speaker 2: always created creation or redemption. They give enough. People are 229 00:11:05,840 --> 00:11:06,840 Speaker 2: letting each other out. 230 00:11:07,520 --> 00:11:09,520 Speaker 1: Yeah, but like net inflows create creations. 231 00:11:10,360 --> 00:11:11,640 Speaker 2: Yeah, net inflows. 232 00:11:11,679 --> 00:11:14,760 Speaker 1: But I'm saying they can't sell people trading on the exchange. 233 00:11:14,760 --> 00:11:16,200 Speaker 1: But this is not a trade on the exchange. This 234 00:11:16,280 --> 00:11:18,960 Speaker 1: is a creation. Yeah, okay, it creates to make sense, 235 00:11:18,960 --> 00:11:21,040 Speaker 1: it's a creation. It does to make sense. Someone has 236 00:11:21,080 --> 00:11:23,120 Speaker 1: borrowed a big package of the underlying, delivered it to 237 00:11:23,160 --> 00:11:25,880 Speaker 1: the ETF and gotten out these shares, which is why 238 00:11:26,120 --> 00:11:29,560 Speaker 1: you see this heartbeat. Look where the assets of the 239 00:11:29,559 --> 00:11:30,920 Speaker 1: ETF increase. 240 00:11:30,960 --> 00:11:34,679 Speaker 2: All yeah, okay, fair, okay, Then how would they limit that? 241 00:11:35,600 --> 00:11:38,000 Speaker 1: One answer is like the person doing this is either 242 00:11:38,120 --> 00:11:40,679 Speaker 1: an authorized participant in the ETF, like someone who has 243 00:11:40,720 --> 00:11:43,440 Speaker 1: a relationship with ARC. Yeah, you can create and redeem shares, 244 00:11:43,800 --> 00:11:46,920 Speaker 1: or they're like some hedge fund working through an authorised participant, 245 00:11:46,960 --> 00:11:48,720 Speaker 1: because again you have to do a creation. So like 246 00:11:49,000 --> 00:11:52,120 Speaker 1: these assets are coming into the ETF from someone and 247 00:11:52,160 --> 00:11:56,440 Speaker 1: the ETF can say, hey, knock that off, yeah, or 248 00:11:56,600 --> 00:11:58,920 Speaker 1: you'll stop being an authorised participant. Right, Yeah, it's one 249 00:11:59,000 --> 00:12:02,480 Speaker 1: fairly STRAIGHTFORARDA. I assume most ttfs have some other way 250 00:12:02,520 --> 00:12:06,600 Speaker 1: to like limit creations to avoid getting too big or 251 00:12:06,720 --> 00:12:07,199 Speaker 1: you know. 252 00:12:07,400 --> 00:12:08,320 Speaker 2: I don't know if they do. 253 00:12:08,559 --> 00:12:09,200 Speaker 1: I don't know either. 254 00:12:09,320 --> 00:12:11,520 Speaker 2: There was a recent example of this. You had this 255 00:12:11,840 --> 00:12:16,200 Speaker 2: one very popular small cap funds ticker CALF, which ended 256 00:12:16,280 --> 00:12:20,360 Speaker 2: up switching indexes because I think at one point, like 257 00:12:20,440 --> 00:12:24,280 Speaker 2: for its holdings, it held like more than twenty percent 258 00:12:24,360 --> 00:12:25,880 Speaker 2: of the outstanding shares. 259 00:12:25,920 --> 00:12:27,240 Speaker 1: And you should be able to stop that. 260 00:12:27,800 --> 00:12:29,600 Speaker 2: Yeah, but you can't, like you have to like switch 261 00:12:29,640 --> 00:12:30,400 Speaker 2: your strategy. 262 00:12:31,480 --> 00:12:32,880 Speaker 1: Yeah, I don't know if they can stop it and 263 00:12:33,040 --> 00:12:33,520 Speaker 1: haven't yet. 264 00:12:33,679 --> 00:12:35,840 Speaker 2: I don't know either. But you do touch on the 265 00:12:35,840 --> 00:12:36,480 Speaker 2: fact that this. 266 00:12:36,400 --> 00:12:41,840 Speaker 1: Is the thing, like the rketfs are like a modern 267 00:12:41,960 --> 00:12:45,040 Speaker 1: rapper for like Cathy would running an investment fund. But like, 268 00:12:45,160 --> 00:12:48,360 Speaker 1: also ETFs are plumbing, right, And we've talked about like 269 00:12:48,640 --> 00:12:51,000 Speaker 1: portfolio trades in the bond market, Right, Like an ETF 270 00:12:51,080 --> 00:12:53,800 Speaker 1: is like a piece of plumbing that allows people to 271 00:12:53,840 --> 00:12:56,400 Speaker 1: do bond trades. Right. This is like a portfolio trade, right. 272 00:12:56,640 --> 00:12:58,880 Speaker 1: This is like it's a widget that you can take 273 00:12:58,920 --> 00:13:01,120 Speaker 1: down and be like, I'm going to distract the IPO 274 00:13:01,240 --> 00:13:03,560 Speaker 1: value out of this ETF, and so you can just 275 00:13:03,640 --> 00:13:07,320 Speaker 1: do it. And it just operates independently in the stock 276 00:13:07,360 --> 00:13:09,120 Speaker 1: market and has its own set of rules, and like 277 00:13:09,200 --> 00:13:12,280 Speaker 1: you know, Kathy would is actively managing it, but it's 278 00:13:12,320 --> 00:13:14,800 Speaker 1: like it's not purely her investment vehicle. It's also this 279 00:13:15,040 --> 00:13:18,360 Speaker 1: like you know, pre property. 280 00:13:17,800 --> 00:13:20,720 Speaker 2: Of the market. Yeah, that's an interesting way to look 281 00:13:20,720 --> 00:13:24,360 Speaker 2: at it, that it's basically just a portfolio trade, but inequities. 282 00:13:24,559 --> 00:13:26,600 Speaker 1: It's almost the reverse of a portfolio trade, right. A 283 00:13:26,600 --> 00:13:29,000 Speaker 1: portfolio trade is like you have a bunch of bonds 284 00:13:29,440 --> 00:13:31,280 Speaker 1: and you go to a market maker and you're like, 285 00:13:31,280 --> 00:13:32,720 Speaker 1: I want to sell this bunch of bonds and the 286 00:13:32,720 --> 00:13:35,520 Speaker 1: market maker is like, wow, you can probably squeeze most 287 00:13:35,520 --> 00:13:37,560 Speaker 1: of them into an ETF and I'll take the rest, 288 00:13:37,640 --> 00:13:39,720 Speaker 1: and you can sort of like squeeze your stuff into 289 00:13:39,720 --> 00:13:41,880 Speaker 1: these you have here. It's like, I'm going to extract 290 00:13:41,920 --> 00:13:46,160 Speaker 1: exactly one security from the ETF. And it's the reverse 291 00:13:46,200 --> 00:13:46,439 Speaker 1: of the. 292 00:13:46,360 --> 00:13:48,760 Speaker 2: Portfolio Ty, I want the needle, forget about all the 293 00:13:48,800 --> 00:13:51,600 Speaker 2: hay and you can just do it. Yeah, I was 294 00:13:51,640 --> 00:13:53,360 Speaker 2: gonna say, you do touch on the fact that this 295 00:13:53,440 --> 00:13:56,840 Speaker 2: is a fun who done it? Like, who is doing this? 296 00:13:57,120 --> 00:14:00,320 Speaker 2: And it has to be a fairly small universe of 297 00:14:00,480 --> 00:14:01,760 Speaker 2: potential suspects. 298 00:14:02,200 --> 00:14:04,280 Speaker 1: It seems to me that the most logical person to 299 00:14:04,280 --> 00:14:06,679 Speaker 1: do it would be one of the authorized participants who 300 00:14:06,720 --> 00:14:09,120 Speaker 1: can trade directly with the fund. Yeah, but maybe that's 301 00:14:09,120 --> 00:14:12,600 Speaker 1: like a little too confrontational and it's like someone trading 302 00:14:12,600 --> 00:14:13,720 Speaker 1: through an authorised participant. 303 00:14:13,920 --> 00:14:17,080 Speaker 2: Yeah, let's see. I don't want to name names necessarily, 304 00:14:17,559 --> 00:14:20,600 Speaker 2: but I mean, you look at some of ARC's filings, 305 00:14:20,680 --> 00:14:22,880 Speaker 2: it looks like they're aps, or at least the busiest 306 00:14:22,920 --> 00:14:28,080 Speaker 2: aps are Hudson River, Jane Street, Avian Amro, Bank of America, 307 00:14:28,280 --> 00:14:29,600 Speaker 2: Bnpever two, et cetera. 308 00:14:29,800 --> 00:14:32,520 Speaker 1: So right, the normal people. 309 00:14:32,640 --> 00:14:36,200 Speaker 2: Anyway, if you're the one behind the ARC trade right 310 00:14:36,400 --> 00:14:38,280 Speaker 2: some money pod at Bloomberg dot net. 311 00:14:38,480 --> 00:14:40,800 Speaker 1: I feel like at this point, like this has been 312 00:14:40,840 --> 00:14:44,440 Speaker 1: pretty widely rumbored and like praised, and if someone's going 313 00:14:44,440 --> 00:14:46,200 Speaker 1: to claim credit for that, they would have been like, yeah, 314 00:14:46,280 --> 00:14:48,400 Speaker 1: we did that. I feel like there's probably some reason 315 00:14:48,440 --> 00:14:51,560 Speaker 1: not to claim credit for it. Also, it's like imitatable, right, 316 00:14:51,640 --> 00:14:54,520 Speaker 1: like now anyone can do it, that's true. I don't 317 00:14:54,560 --> 00:14:56,800 Speaker 1: know how many opportunities there will be to do it. 318 00:14:56,720 --> 00:15:00,640 Speaker 2: It seems like a lot of squeezing for not like 319 00:15:00,960 --> 00:15:01,640 Speaker 2: enough juice. 320 00:15:01,680 --> 00:15:05,360 Speaker 3: But I don't know, you know, it's like a few 321 00:15:05,440 --> 00:15:11,600 Speaker 3: days of Stockboro cost Yeah, for potentially like low tens 322 00:15:11,600 --> 00:15:12,840 Speaker 3: of millions of dollars of games. 323 00:15:12,880 --> 00:15:16,520 Speaker 1: It's like it's it's real. I will say though that like, 324 00:15:16,520 --> 00:15:18,080 Speaker 1: like if I had the guess, I would say that, 325 00:15:18,120 --> 00:15:22,760 Speaker 1: like this trade became exciting when there was that rash 326 00:15:22,760 --> 00:15:25,160 Speaker 1: of IPOs that like went up one hundred percent. Yeah, 327 00:15:25,240 --> 00:15:28,120 Speaker 1: and then like they actually did it and like bullish 328 00:15:28,160 --> 00:15:31,480 Speaker 1: IPOs did well and Clarina which did fine, and then 329 00:15:33,000 --> 00:15:35,720 Speaker 1: I think we talked about this, like the IPOs earlier 330 00:15:35,800 --> 00:15:37,880 Speaker 1: this year had the huge pops because no one had 331 00:15:37,880 --> 00:15:40,880 Speaker 1: seen an ipo in years, and now it's like, yeah, 332 00:15:41,000 --> 00:15:42,760 Speaker 1: you know, like stuff had went public this week and 333 00:15:42,800 --> 00:15:45,760 Speaker 1: went down right, So it's not as exciting a trade now. 334 00:15:45,840 --> 00:15:47,720 Speaker 1: I like, you're not expecting one hundred percent pop in 335 00:15:47,760 --> 00:15:48,280 Speaker 1: every APA. 336 00:15:48,440 --> 00:15:51,440 Speaker 2: That's true. So maybe it was just a brief, sweet 337 00:15:52,000 --> 00:15:54,400 Speaker 2: moment in time. But it'll be fun to see if 338 00:15:54,400 --> 00:16:11,360 Speaker 2: this continues and if it's sprints. So you know how 339 00:16:11,400 --> 00:16:18,120 Speaker 2: I anchor a financial news TV show. Okay, well, surprise, 340 00:16:18,360 --> 00:16:21,080 Speaker 2: That's what I do when I leave this room. It's 341 00:16:21,120 --> 00:16:23,760 Speaker 2: called the Clothes. It's from three to five pm daily. 342 00:16:24,240 --> 00:16:26,640 Speaker 2: This isn't just a plug. I bring it up because 343 00:16:27,000 --> 00:16:31,080 Speaker 2: after the closing bell usually companies report their earnings and 344 00:16:31,120 --> 00:16:35,480 Speaker 2: because the US follows a quarterly earning schedule, that means 345 00:16:35,480 --> 00:16:39,640 Speaker 2: that there's almost always earnings to break on air, which 346 00:16:39,680 --> 00:16:44,120 Speaker 2: is exciting and I look forward to it. But maybe 347 00:16:44,160 --> 00:16:47,040 Speaker 2: now instead of doing that four times a year, I'll 348 00:16:47,040 --> 00:16:48,000 Speaker 2: only do it twice a year. 349 00:16:53,880 --> 00:16:55,120 Speaker 1: Yeah, I'm like, now. 350 00:16:56,560 --> 00:16:57,360 Speaker 2: I bring this up. 351 00:16:57,720 --> 00:17:01,000 Speaker 1: Yeah, you bring it up because present Trump is just 352 00:17:01,120 --> 00:17:04,399 Speaker 1: randomly out there being like, yeah, hey, if the SEC 353 00:17:04,520 --> 00:17:07,560 Speaker 1: wants to, we could move to six month reporting for 354 00:17:07,640 --> 00:17:10,080 Speaker 1: companies instead of reporting every three months. 355 00:17:10,080 --> 00:17:11,560 Speaker 2: I'm surprised he cares. 356 00:17:12,080 --> 00:17:16,239 Speaker 1: You know, someone mentioned it to him, so it just 357 00:17:16,240 --> 00:17:17,760 Speaker 1: as Sabody cares cares. 358 00:17:17,880 --> 00:17:21,480 Speaker 2: It seems like a off the beaten track issue for him. 359 00:17:21,560 --> 00:17:24,159 Speaker 1: He tried it last time, he did back before the 360 00:17:24,240 --> 00:17:27,160 Speaker 1: unitary executive It is an odd thing to care about 361 00:17:27,240 --> 00:17:31,359 Speaker 1: in the scheme of things. Yeah, but it marginally increases 362 00:17:32,119 --> 00:17:36,639 Speaker 1: the power and reduces the oversight over corporate executives, right, Like, 363 00:17:36,680 --> 00:17:38,600 Speaker 1: if you only have to report every six months, then 364 00:17:39,760 --> 00:17:42,560 Speaker 1: you have more time to do stuff without anyone paying 365 00:17:42,600 --> 00:17:45,680 Speaker 1: attention to it. That's probably good for like the lifestyle 366 00:17:45,720 --> 00:17:46,720 Speaker 1: of corporate executives. 367 00:17:46,760 --> 00:17:49,000 Speaker 2: Well, I was going to say I love this topic 368 00:17:49,080 --> 00:17:52,840 Speaker 2: because I can honestly see both sides of the argument, 369 00:17:53,359 --> 00:17:59,480 Speaker 2: one being Okay, the quarterly reporting schedule investors like transparency. 370 00:17:59,680 --> 00:18:02,760 Speaker 2: That's proven, we should have as much information as we 371 00:18:02,800 --> 00:18:06,199 Speaker 2: possibly can. But then on the other side, three months 372 00:18:06,400 --> 00:18:09,880 Speaker 2: is arbitrary, and I could be persuaded that it does 373 00:18:10,000 --> 00:18:13,000 Speaker 2: incentivize shorter term thinking on some level. 374 00:18:13,280 --> 00:18:15,600 Speaker 1: Yeah, I think a lot about this, Like there's no 375 00:18:15,760 --> 00:18:19,240 Speaker 1: like necessary reason that reporting every three months should encourage 376 00:18:19,280 --> 00:18:21,800 Speaker 1: shorter term thinking. Like it's just like a mistake to 377 00:18:21,840 --> 00:18:25,119 Speaker 1: think that investors only care about next quarter's earnings, right, 378 00:18:25,160 --> 00:18:28,399 Speaker 1: and like the shorter the reporting cycle than like the 379 00:18:28,520 --> 00:18:31,080 Speaker 1: less long term they'll care about. Like that can't be true, right, 380 00:18:31,119 --> 00:18:33,440 Speaker 1: Like companies report every three months and they report guidance 381 00:18:33,440 --> 00:18:35,680 Speaker 1: and they report like, you know, their investments for the 382 00:18:35,720 --> 00:18:37,520 Speaker 1: long term, and like people understand that. 383 00:18:38,119 --> 00:18:39,760 Speaker 2: I think you're being really generous. 384 00:18:40,160 --> 00:18:42,320 Speaker 1: Like everyone loves to say that the US stock market 385 00:18:42,359 --> 00:18:44,560 Speaker 1: only rewards short term thinking, and like, you know who 386 00:18:44,560 --> 00:18:46,639 Speaker 1: really loves to say that is Elon Musk. Yeah, who's 387 00:18:46,680 --> 00:18:49,680 Speaker 1: like got a you know, trillion dollar company and did 388 00:18:49,680 --> 00:18:51,360 Speaker 1: for a long time before it made money, right, and 389 00:18:51,400 --> 00:18:53,840 Speaker 1: like even now its valuation is entirely based on like ooh, 390 00:18:54,080 --> 00:18:56,399 Speaker 1: robots in the future. Yeah, it's just like false to 391 00:18:56,440 --> 00:18:58,880 Speaker 1: think that the US stock market only cares about next 392 00:18:58,960 --> 00:19:01,679 Speaker 1: quarters earnings, right, Yeah, there's just like no reason to 393 00:19:01,720 --> 00:19:04,000 Speaker 1: think that. Now. Yeah, it is the case that, like 394 00:19:04,560 --> 00:19:08,120 Speaker 1: there is volatility around quarterly earnings, right, Like people do 395 00:19:08,640 --> 00:19:12,080 Speaker 1: look at quarterly earnings and use them as a data 396 00:19:12,119 --> 00:19:15,080 Speaker 1: point to extrapolate future earnings. And if you have bad 397 00:19:15,119 --> 00:19:17,800 Speaker 1: earnings this quarter, people are like, oh, maybe they're not 398 00:19:17,840 --> 00:19:19,679 Speaker 1: gonna have good earnings in the long run, right, and 399 00:19:19,720 --> 00:19:22,159 Speaker 1: so like there are like high frequency data points, but 400 00:19:22,640 --> 00:19:25,000 Speaker 1: it's not logically entailed that, like if you report every 401 00:19:25,000 --> 00:19:27,919 Speaker 1: three months, then people only pay attention to three month earnings, right, 402 00:19:27,960 --> 00:19:30,840 Speaker 1: And that's clearly the case that, Yeah, it does long 403 00:19:30,920 --> 00:19:32,320 Speaker 1: term bets get made. 404 00:19:32,440 --> 00:19:35,600 Speaker 2: Yeah, it just does introduce volatility into the stock price. 405 00:19:35,680 --> 00:19:38,879 Speaker 2: And you could see a CEO who's you know, getting 406 00:19:38,880 --> 00:19:43,800 Speaker 2: beaten up on his earnings call maybe doing things to 407 00:19:43,840 --> 00:19:44,520 Speaker 2: minimize that. 408 00:19:45,160 --> 00:19:49,800 Speaker 1: Yes, but it's or her I think about Cliff is 409 00:19:49,840 --> 00:19:52,720 Speaker 1: this point about volatility laundering, where you know, if you 410 00:19:52,840 --> 00:19:57,160 Speaker 1: have a private investment that doesn't get marked to market 411 00:19:57,200 --> 00:20:02,000 Speaker 1: every day, it is and sometimes less volatile than most 412 00:20:02,040 --> 00:20:04,720 Speaker 1: public stocks, but only in the sense that you don't 413 00:20:04,720 --> 00:20:08,200 Speaker 1: look every day, right, Yeah, Like it's not economically less volatile. 414 00:20:08,240 --> 00:20:10,040 Speaker 1: It's just like you see the price of one thing 415 00:20:10,040 --> 00:20:11,480 Speaker 1: every day and you don't see the price of the 416 00:20:11,520 --> 00:20:14,320 Speaker 1: other thing every day. Yeah, it's a little like that, 417 00:20:14,440 --> 00:20:19,159 Speaker 1: where like if you just stop reporting earnings, then you 418 00:20:19,240 --> 00:20:22,560 Speaker 1: have less earnings volatility, you have less news driven volatility, 419 00:20:22,960 --> 00:20:26,000 Speaker 1: but you're just masking like what is actually happening. And 420 00:20:26,040 --> 00:20:27,359 Speaker 1: the other thing is like, I'm not sure you get 421 00:20:27,400 --> 00:20:30,640 Speaker 1: less stock price volatility, right, because you have you still 422 00:20:30,680 --> 00:20:34,400 Speaker 1: have trading. Right. It's just like if definitive financial statements 423 00:20:34,400 --> 00:20:37,000 Speaker 1: and like you know, guidance get reported every six months 424 00:20:37,000 --> 00:20:40,040 Speaker 1: instead of every three months, then you have a six 425 00:20:40,080 --> 00:20:42,720 Speaker 1: month window where people are trading based on. 426 00:20:43,600 --> 00:20:48,280 Speaker 2: Other stuff, right, body language, body language, TV appearance. 427 00:20:47,840 --> 00:20:51,840 Speaker 1: To the appearances rumor. People talk a ton about alternative data, right, 428 00:20:51,840 --> 00:20:56,720 Speaker 1: like you like sophisticated hedge funds are constantly using information 429 00:20:56,840 --> 00:21:01,080 Speaker 1: other than quarterly financial statements to build their models of 430 00:21:01,359 --> 00:21:03,560 Speaker 1: like how a company is doing. Right, They're you know, 431 00:21:03,640 --> 00:21:07,480 Speaker 1: looking at credit card data or famously satellite pictures of 432 00:21:07,520 --> 00:21:09,080 Speaker 1: parking lots to see how many people are coming to 433 00:21:09,080 --> 00:21:13,080 Speaker 1: the stores. And if you get rid of some of 434 00:21:13,119 --> 00:21:17,720 Speaker 1: the quarterly financial reporting, then those pieces of data will 435 00:21:17,760 --> 00:21:21,399 Speaker 1: be relatively more valuable. They will still exist hedgehunes will 436 00:21:21,400 --> 00:21:25,880 Speaker 1: still trade on them, but like you won't, right, It'll 437 00:21:25,920 --> 00:21:28,760 Speaker 1: be there'll be a lot more information asymmetry because some 438 00:21:28,800 --> 00:21:31,919 Speaker 1: people will have information about how companies are doing and 439 00:21:31,920 --> 00:21:34,119 Speaker 1: other people won't. Yeah, and then the other kind of 440 00:21:34,320 --> 00:21:37,000 Speaker 1: trading that could happen in six months is insider trading, right, 441 00:21:37,240 --> 00:21:40,240 Speaker 1: because like, the more time you have between announcing news, 442 00:21:40,280 --> 00:21:43,919 Speaker 1: the more opportunity there is to reach from knowing the 443 00:21:43,920 --> 00:21:44,479 Speaker 1: news yourself. 444 00:21:44,560 --> 00:21:48,639 Speaker 2: That'd be great for this podcast. Look, there would be 445 00:21:48,680 --> 00:21:52,320 Speaker 2: great for my TV show having fewer earnings reports but. 446 00:21:52,400 --> 00:21:54,879 Speaker 1: And more insider trading. Yeah, it'd be fun to have 447 00:21:54,920 --> 00:21:55,879 Speaker 1: the insider traders on. 448 00:21:56,160 --> 00:21:58,199 Speaker 2: I like to imagine that this goes through, that the 449 00:21:58,280 --> 00:22:02,240 Speaker 2: US moves to companies only needing to report every six months, 450 00:22:02,480 --> 00:22:05,479 Speaker 2: and think about what that would happen, because in Europe 451 00:22:06,440 --> 00:22:09,240 Speaker 2: they are mandated to only report every six months, but 452 00:22:09,400 --> 00:22:13,320 Speaker 2: many still file quarterly reports. Yeah, so I wonder if 453 00:22:13,359 --> 00:22:17,679 Speaker 2: the companies who report more frequently would get rewarded for 454 00:22:17,760 --> 00:22:22,520 Speaker 2: that from investors, Whether you would see companies like switch around, 455 00:22:22,680 --> 00:22:25,000 Speaker 2: and what the psychological effect would be from that. Like 456 00:22:25,040 --> 00:22:28,399 Speaker 2: if you were reporting on a quarterly basis and then 457 00:22:28,480 --> 00:22:31,359 Speaker 2: went to a six month basis, you know, would that 458 00:22:31,400 --> 00:22:34,280 Speaker 2: be taken as oh, shoot, there's bad news coming and 459 00:22:34,320 --> 00:22:35,680 Speaker 2: they're delaying it. 460 00:22:36,000 --> 00:22:39,760 Speaker 1: Yeah. Like I think if you're a normal company, it's 461 00:22:39,840 --> 00:22:42,919 Speaker 1: a little hard to reduce the freakanci reporting, right, I 462 00:22:42,920 --> 00:22:45,879 Speaker 1: mean you think about who would report six months? Like 463 00:22:46,000 --> 00:22:48,800 Speaker 1: some of it is like you know, Trump brothers back 464 00:22:48,800 --> 00:22:50,320 Speaker 1: to crypto treasury companies right. 465 00:22:50,280 --> 00:22:53,600 Speaker 2: Where it's like American bitcoin basically. 466 00:22:53,320 --> 00:22:54,639 Speaker 1: I do you think Another part of the answer is 467 00:22:54,680 --> 00:22:57,040 Speaker 1: like part of the reason people talk about this is 468 00:22:58,119 --> 00:23:01,720 Speaker 1: some form of like it is to burdensome to be 469 00:23:01,800 --> 00:23:04,200 Speaker 1: a US public company these days, and that is part 470 00:23:04,200 --> 00:23:08,280 Speaker 1: of why big cool tech startups are staying private longer, 471 00:23:08,320 --> 00:23:10,800 Speaker 1: and you know, ordinary people can't invest in them in 472 00:23:10,840 --> 00:23:13,040 Speaker 1: their pro own kids and all that stuff, And so 473 00:23:13,119 --> 00:23:15,679 Speaker 1: it is possible that like if you went to like 474 00:23:16,000 --> 00:23:19,040 Speaker 1: Sam Alton and you're like, hey, would you take open 475 00:23:19,080 --> 00:23:21,399 Speaker 1: a public and he was like, I have to report 476 00:23:21,400 --> 00:23:23,359 Speaker 1: every quarter and you're like, no, good news, you only 477 00:23:23,400 --> 00:23:25,160 Speaker 1: have to report every six months. You may think, okay, fine, 478 00:23:25,160 --> 00:23:26,879 Speaker 1: I'll do it, right, Like, I think it's a pretty 479 00:23:26,880 --> 00:23:30,960 Speaker 1: marginal benefit. But there's probably some quite cool tech startup 480 00:23:31,320 --> 00:23:34,840 Speaker 1: that would feel, like, you know, by saving money on 481 00:23:34,920 --> 00:23:38,040 Speaker 1: reporting costs and also by just having less frequent reporting 482 00:23:38,080 --> 00:23:41,480 Speaker 1: and less frequent like shareholder interference, it would like change 483 00:23:41,520 --> 00:23:43,480 Speaker 1: the bargain of whether or not it's a good idea 484 00:23:43,520 --> 00:23:46,320 Speaker 1: to go public. Right, Yeah, so like some new public 485 00:23:46,320 --> 00:23:48,280 Speaker 1: companies would report on a six month schedule. 486 00:23:48,520 --> 00:23:50,920 Speaker 2: Well to that point, Adina Friedman, who is the CEO 487 00:23:50,920 --> 00:23:55,800 Speaker 2: of NASAC, posted on LinkedIn basically that they supported the 488 00:23:55,840 --> 00:23:59,920 Speaker 2: reforms to reduce the burden on public companies because I'm 489 00:24:00,040 --> 00:24:02,480 Speaker 2: and you have heard that trotted out as a reason 490 00:24:02,880 --> 00:24:04,479 Speaker 2: for why companies are saying private. 491 00:24:04,560 --> 00:24:07,479 Speaker 1: So that is hard for me to imagine that, like 492 00:24:08,440 --> 00:24:12,720 Speaker 1: the costs of like having your accountants to your reports 493 00:24:12,720 --> 00:24:17,400 Speaker 1: every three months is what's giving you know, yeah, tripe private. 494 00:24:17,640 --> 00:24:19,640 Speaker 1: But like I did, there's probably it's a margin that's 495 00:24:19,640 --> 00:24:22,960 Speaker 1: probably true true ish and I say stripe right, But 496 00:24:23,040 --> 00:24:25,919 Speaker 1: like in fact, like the problem is that it is 497 00:24:26,000 --> 00:24:30,679 Speaker 1: hard for smallish companies to go public. Yeah, and this 498 00:24:30,880 --> 00:24:32,880 Speaker 1: is perhaps a material cost savings. 499 00:24:33,000 --> 00:24:34,920 Speaker 2: Yeah, we need more small caps. 500 00:24:34,840 --> 00:24:37,639 Speaker 1: And the sort of thing where it's one thing for 501 00:24:38,480 --> 00:24:40,640 Speaker 1: a big existing public company to say okay, we're going 502 00:24:40,640 --> 00:24:43,000 Speaker 1: to six month reporting, But it's another thing for a 503 00:24:43,160 --> 00:24:46,040 Speaker 1: smallish company to come public saying we're only going to 504 00:24:46,160 --> 00:24:48,240 Speaker 1: report every six months and everyone's like, okay, that's fine. 505 00:24:48,359 --> 00:24:50,879 Speaker 2: Yeah. I sort of stated it as a fact that 506 00:24:50,960 --> 00:24:54,119 Speaker 2: investors like information and want transparency. But I do think 507 00:24:54,200 --> 00:24:59,199 Speaker 2: there's this transparency barbelle that's developed for investors. Where you 508 00:24:59,240 --> 00:25:01,560 Speaker 2: think about et for example, and part of the reason 509 00:25:01,600 --> 00:25:04,680 Speaker 2: why ETFs have just killed mutual funds is because people 510 00:25:04,760 --> 00:25:06,959 Speaker 2: like to see the daily holdings. But then you think 511 00:25:06,960 --> 00:25:10,000 Speaker 2: about what's going on in private markets, and folks seem 512 00:25:10,040 --> 00:25:13,280 Speaker 2: perfectly happy to try and plow into that. So I 513 00:25:13,320 --> 00:25:15,679 Speaker 2: don't actually think that I can state it as a 514 00:25:15,720 --> 00:25:19,000 Speaker 2: fact that investors like as much information as possible. 515 00:25:20,280 --> 00:25:22,720 Speaker 1: Well, there's different kinds of investors, right, I mean, yeah, 516 00:25:23,040 --> 00:25:27,480 Speaker 1: active asset managers who are making investing decisions want to 517 00:25:27,520 --> 00:25:30,760 Speaker 1: make informed investing decisions, right, But no, right, I mean, 518 00:25:30,760 --> 00:25:32,399 Speaker 1: like if we talk all the time about like the 519 00:25:32,480 --> 00:25:35,919 Speaker 1: retail love for SpaceX and Stripe and open Ai, and 520 00:25:36,119 --> 00:25:40,600 Speaker 1: like those people aren't getting financial statements at any frequency, right, 521 00:25:40,640 --> 00:25:42,760 Speaker 1: that's just like sure, I trust you, right, So that 522 00:25:42,880 --> 00:25:43,359 Speaker 1: makes sense. 523 00:25:59,359 --> 00:26:03,320 Speaker 2: We have seven minutes to talk about structured products and 524 00:26:03,359 --> 00:26:04,200 Speaker 2: what a boom? 525 00:26:05,840 --> 00:26:08,640 Speaker 1: Yeah, I don't know. I love structured products. 526 00:26:08,680 --> 00:26:10,959 Speaker 2: I know you do. Why do people who aren't you 527 00:26:10,960 --> 00:26:14,520 Speaker 2: love structured products? Like? Why are we seeing this boom? 528 00:26:14,640 --> 00:26:17,040 Speaker 2: Are we just bored? Is the S and P five 529 00:26:17,119 --> 00:26:17,960 Speaker 2: hundred not enough? 530 00:26:18,800 --> 00:26:21,919 Speaker 1: The structure products are? Aren't import them, They're they're like storytelling. 531 00:26:22,000 --> 00:26:24,879 Speaker 1: Like the simplest structured product, the secure product that I 532 00:26:24,920 --> 00:26:26,879 Speaker 1: think it was, like the paradigm structured product. Is like, 533 00:26:27,240 --> 00:26:29,520 Speaker 1: if you give me one hundred dollars, I can take 534 00:26:29,640 --> 00:26:31,760 Speaker 1: ninety five dollars you ever take and buy a treasury 535 00:26:31,840 --> 00:26:34,919 Speaker 1: bill ninety six dollars, okay, and by a treasury bill right, 536 00:26:34,960 --> 00:26:37,240 Speaker 1: that will mature at one hundred dollars in a year. Right, 537 00:26:38,640 --> 00:26:41,720 Speaker 1: And then I have four dollars to do something weird with. Right. 538 00:26:41,800 --> 00:26:44,000 Speaker 1: And the simplest weird thing is I spend those four 539 00:26:44,040 --> 00:26:47,480 Speaker 1: dollars like that the money call option on the S 540 00:26:47,520 --> 00:26:49,879 Speaker 1: and P. Right. And so I say to you, if 541 00:26:49,920 --> 00:26:52,080 Speaker 1: you give me one hundred dollars, I'll give you back 542 00:26:52,960 --> 00:26:55,200 Speaker 1: some percentage of the return of the SMP or like 543 00:26:55,240 --> 00:26:56,560 Speaker 1: this is a return of the SMP up to some 544 00:26:56,600 --> 00:26:59,880 Speaker 1: cap or something in a year, but I'll always give 545 00:26:59,880 --> 00:27:03,200 Speaker 1: you one hundred dollars back. If the SMP crashes fifty percent, 546 00:27:03,280 --> 00:27:04,960 Speaker 1: you still get all your money back. Okay, So you 547 00:27:05,000 --> 00:27:07,480 Speaker 1: get SMP upside, right, And all I've done is I 548 00:27:07,480 --> 00:27:10,119 Speaker 1: bought a co option, I bought a Treasury bill, And 549 00:27:10,160 --> 00:27:13,920 Speaker 1: you're like, oh wow, stocks, they can never go down, right, 550 00:27:14,000 --> 00:27:16,080 Speaker 1: And so I write about this periodic that's the simplest 551 00:27:16,080 --> 00:27:20,159 Speaker 1: structure product that's not like the main structured product of 552 00:27:20,200 --> 00:27:23,440 Speaker 1: the current boom. But like that story of like you're 553 00:27:23,480 --> 00:27:25,200 Speaker 1: gonna give me money, I'm gonna park boasted in t 554 00:27:25,320 --> 00:27:27,000 Speaker 1: bills and I'm gonna use the rest to buy weird 555 00:27:27,040 --> 00:27:30,199 Speaker 1: options to give you like some weird payoff profile. You know, 556 00:27:30,240 --> 00:27:32,000 Speaker 1: there are people whose job is to sit in a 557 00:27:32,080 --> 00:27:34,439 Speaker 1: lab cooking up that sort of thing, and then there 558 00:27:34,440 --> 00:27:36,359 Speaker 1: are other people whose job is to like put a 559 00:27:36,400 --> 00:27:38,879 Speaker 1: nice story on that. So we're talking about this, like 560 00:27:39,040 --> 00:27:42,639 Speaker 1: Bloomberg big take about the boom instructured products, and they 561 00:27:42,720 --> 00:27:45,000 Speaker 1: talk you about like half of structured products in America 562 00:27:45,080 --> 00:27:49,520 Speaker 1: are auto callables. Yeah, an auto callable is an installment 563 00:27:49,560 --> 00:27:53,159 Speaker 1: put purchased by a bank from retail investors. Right, And 564 00:27:53,240 --> 00:27:56,080 Speaker 1: so you know, if you're a bank, Like you have 565 00:27:56,119 --> 00:27:58,560 Speaker 1: a lot of people who want to buy index puts 566 00:27:58,560 --> 00:28:01,119 Speaker 1: from you, and you're like, where will I get index puts? 567 00:28:01,600 --> 00:28:03,320 Speaker 1: And you go to the lab and you're like, I 568 00:28:03,320 --> 00:28:06,040 Speaker 1: would like to cook up an installment index put product 569 00:28:06,080 --> 00:28:08,320 Speaker 1: that I can buy from somebody. Maybe I could buy 570 00:28:08,359 --> 00:28:11,480 Speaker 1: it from like an insurance company or Berkshire Hathaway or something. 571 00:28:11,800 --> 00:28:13,760 Speaker 1: And then you're like, no, no, I can buy it 572 00:28:13,800 --> 00:28:15,840 Speaker 1: from retail investors. If instead of saying I'm going to 573 00:28:15,840 --> 00:28:18,400 Speaker 1: buy an installment index put from you, you say I'm 574 00:28:18,400 --> 00:28:20,960 Speaker 1: going to sell you a bond that pays you ten 575 00:28:21,000 --> 00:28:24,440 Speaker 1: percent interests amazing, And it pays you ten percent interest 576 00:28:24,480 --> 00:28:27,280 Speaker 1: every quarter unless the stock market goes up, in which 577 00:28:27,280 --> 00:28:29,800 Speaker 1: case I paid off early and then no problem. It's 578 00:28:29,800 --> 00:28:32,280 Speaker 1: auto called. Right. One of the catch is that if 579 00:28:32,280 --> 00:28:35,040 Speaker 1: the stock market goes down twenty percent, you lose all 580 00:28:35,040 --> 00:28:38,240 Speaker 1: the money. Right, that's just an installment put. Right. But 581 00:28:38,400 --> 00:28:41,120 Speaker 1: like instead of saying that, you say, this is a 582 00:28:41,160 --> 00:28:44,560 Speaker 1: note that pays a very high coupon gets called early 583 00:28:44,880 --> 00:28:50,600 Speaker 1: in certain circumstances, and it's the losses of the stock market. 584 00:28:51,120 --> 00:28:53,200 Speaker 1: Like that's like a great trade. It's like you're not 585 00:28:53,240 --> 00:28:57,240 Speaker 1: selling excitement you're selling. Look, you get ten percent a year. 586 00:28:57,400 --> 00:29:00,560 Speaker 1: You can't lose. The worst thing that happens probably is 587 00:29:00,600 --> 00:29:01,680 Speaker 1: you get paid off early. 588 00:29:01,800 --> 00:29:03,200 Speaker 2: No problem, no problem. 589 00:29:03,360 --> 00:29:05,160 Speaker 1: But then there are other products too that are like 590 00:29:05,920 --> 00:29:07,720 Speaker 1: the reverse, that are like we pay you if the 591 00:29:07,720 --> 00:29:09,880 Speaker 1: stock market goes down, right, because you put any set 592 00:29:09,920 --> 00:29:12,640 Speaker 1: of options into this thing, and so you have like 593 00:29:12,640 --> 00:29:15,640 Speaker 1: this unlimited range of like stories and payoff structures that 594 00:29:15,680 --> 00:29:19,640 Speaker 1: you can sell to retail investors. And this article quotes 595 00:29:19,680 --> 00:29:22,000 Speaker 1: a guy, like a financial advisor, saying that his client 596 00:29:22,040 --> 00:29:24,560 Speaker 1: said him, this sounds illegal, It sounds too good to 597 00:29:24,600 --> 00:29:28,640 Speaker 1: be true. Yeah, because you like you did, like, why 598 00:29:28,680 --> 00:29:30,360 Speaker 1: are we seeing a boom in it? There are two 599 00:29:30,440 --> 00:29:35,440 Speaker 1: kinds of structured products. They're selling options and buying options, right, 600 00:29:35,560 --> 00:29:37,720 Speaker 1: So like the autocoll is like the bank is buying 601 00:29:37,760 --> 00:29:40,840 Speaker 1: an option from the customer. The one that I started with, 602 00:29:41,320 --> 00:29:43,600 Speaker 1: the like you get the S and P, but you 603 00:29:43,640 --> 00:29:46,280 Speaker 1: can't go down. That's the bank is selling an option 604 00:29:46,320 --> 00:29:49,880 Speaker 1: to the customer. This thing I started with, that only 605 00:29:49,960 --> 00:29:52,720 Speaker 1: works if you can buy a treasury built for significantly 606 00:29:52,760 --> 00:29:54,640 Speaker 1: less than one hundred dollars, because then you have money 607 00:29:54,680 --> 00:29:57,120 Speaker 1: to buy options with. Yeah, So like in a very 608 00:29:57,120 --> 00:29:59,560 Speaker 1: low interest rate environment, it's hard to do really cool 609 00:29:59,600 --> 00:30:03,000 Speaker 1: structure products because you just don't have a lot. 610 00:30:02,840 --> 00:30:07,400 Speaker 2: Of Like I find that exciting because we've now entered 611 00:30:07,520 --> 00:30:09,320 Speaker 2: theoretically a ray cutting cycle. 612 00:30:09,640 --> 00:30:11,760 Speaker 1: Yeah, so there are search products the other way, right, 613 00:30:11,760 --> 00:30:16,640 Speaker 1: where like if rates are low, it's very exciting to 614 00:30:16,640 --> 00:30:18,800 Speaker 1: go to a customer and say I'll pay you eight 615 00:30:18,840 --> 00:30:21,200 Speaker 1: percent a year, And the way you get eight percent 616 00:30:21,240 --> 00:30:23,320 Speaker 1: of year is it's not interest, that's option premium, right, 617 00:30:23,480 --> 00:30:26,640 Speaker 1: So there are products for all environments. 618 00:30:26,720 --> 00:30:30,880 Speaker 2: Yeah, I do think it's interesting. They also quote someone 619 00:30:30,920 --> 00:30:35,200 Speaker 2: in here saying that you know, structured products aren't fought, 620 00:30:35,320 --> 00:30:37,440 Speaker 2: they're sold. That can apply to a myriad of things, 621 00:30:37,480 --> 00:30:38,480 Speaker 2: but it also applies here. 622 00:30:38,680 --> 00:30:41,440 Speaker 1: People say that about many, many, many things in finance, 623 00:30:41,440 --> 00:30:43,640 Speaker 1: but I think they most say it about searched notes, 624 00:30:43,680 --> 00:30:44,120 Speaker 1: and they. 625 00:30:44,080 --> 00:30:46,880 Speaker 2: Mean it here. But what's interesting is that now you 626 00:30:47,000 --> 00:30:48,240 Speaker 2: have because no one. 627 00:30:48,200 --> 00:30:50,200 Speaker 1: No retail investors like you know, what I would like 628 00:30:50,280 --> 00:30:52,400 Speaker 1: to do is sell installment puts to a bank. 629 00:30:52,720 --> 00:30:56,000 Speaker 2: Well, now you have an auto callbs ETF It launched 630 00:30:56,080 --> 00:31:00,240 Speaker 2: in June. So there are theoretically investors out there who 631 00:31:00,240 --> 00:31:03,600 Speaker 2: are just buying this on their own, who aren't necessarily. 632 00:31:03,080 --> 00:31:05,400 Speaker 1: Having it so advisor sold ETF. 633 00:31:05,480 --> 00:31:09,240 Speaker 2: Yeah, but it now exists where you don't need to 634 00:31:09,240 --> 00:31:11,800 Speaker 2: have an advisor sell this to you. 635 00:31:11,800 --> 00:31:13,680 Speaker 1: Look at the description of that and it's like, oh, 636 00:31:13,720 --> 00:31:14,800 Speaker 1: you got a ten percent yield. 637 00:31:15,520 --> 00:31:18,360 Speaker 2: Yeah, that's true. Maybe you plug it into Investipedia and 638 00:31:18,560 --> 00:31:23,080 Speaker 2: figure out what an auto callable is yield. Yeah, I'm 639 00:31:23,080 --> 00:31:27,280 Speaker 2: sure there are plenty of folks who just sort by yield, right, right, 640 00:31:27,440 --> 00:31:30,680 Speaker 2: it's yield, don't worry about the rest of it. 641 00:31:32,080 --> 00:31:34,000 Speaker 1: The other thing I think is in structure debts. It's 642 00:31:34,040 --> 00:31:37,200 Speaker 1: like I think of like the auto calables business as 643 00:31:37,720 --> 00:31:41,280 Speaker 1: banks buying crash insurance from retail so they can sell 644 00:31:41,320 --> 00:31:45,800 Speaker 1: crash insurance to other investors. But the overall structure debts 645 00:31:46,160 --> 00:31:50,160 Speaker 1: business is a is a bigger business. And the article 646 00:31:50,280 --> 00:31:53,160 Speaker 1: quotes the penn I heard saying everybody loves this business. 647 00:31:53,200 --> 00:31:55,120 Speaker 1: It prints money most of the time, and then usually 648 00:31:55,160 --> 00:31:56,840 Speaker 1: they find a way to lose money when the markets 649 00:31:56,840 --> 00:32:00,760 Speaker 1: are crashing. That's the banks. It is true that selling 650 00:32:00,840 --> 00:32:03,160 Speaker 1: structured notes is a way to make a lot of money, 651 00:32:03,200 --> 00:32:05,200 Speaker 1: like the edge on these trades is like one to 652 00:32:05,320 --> 00:32:09,720 Speaker 1: three percent, But somehow banks end up with positions in 653 00:32:09,760 --> 00:32:13,240 Speaker 1: these notes that sometimes blow up in crises, which is 654 00:32:13,240 --> 00:32:14,920 Speaker 1: not what's supposed to happen with the autocollable, which is 655 00:32:14,960 --> 00:32:18,160 Speaker 1: really supposed to be the bank's buying crisis insurance from 656 00:32:18,440 --> 00:32:21,560 Speaker 1: the retail customers. But again, there's lots of different profiles, 657 00:32:21,560 --> 00:32:24,719 Speaker 1: and some of them are more the bank selling crisis insurance. 658 00:32:24,880 --> 00:32:27,640 Speaker 2: We would you say your favorite structured product is? 659 00:32:28,200 --> 00:32:31,720 Speaker 1: I mean, they do like the autocollable just because. 660 00:32:31,520 --> 00:32:33,720 Speaker 2: It's like, so do a lot of people, it seems like. 661 00:32:34,200 --> 00:32:35,600 Speaker 1: But the other thing in the story is that, like 662 00:32:35,640 --> 00:32:39,160 Speaker 1: the banks are now off letting their structured note risk 663 00:32:39,200 --> 00:32:41,840 Speaker 1: to hedge funds because that's what banks do with everything. Now. 664 00:32:41,960 --> 00:32:43,880 Speaker 2: Yeah, another theme we've talked about. 665 00:32:44,000 --> 00:32:45,920 Speaker 1: Yeah, the bank has a relationship with the customer, but 666 00:32:46,000 --> 00:32:47,920 Speaker 1: like they're not going to take all this risk on 667 00:32:47,960 --> 00:32:49,800 Speaker 1: their own balance it, so they'll find some hedge fund 668 00:32:49,840 --> 00:32:51,360 Speaker 1: to take the structured note risk. 669 00:32:51,840 --> 00:32:57,040 Speaker 2: Cool, all right. Unfortunately that's all the time we have. 670 00:32:57,880 --> 00:32:59,040 Speaker 1: So we'll see you next week. 671 00:32:59,320 --> 00:33:03,640 Speaker 2: Send questions please, Yeah they're not good enough, maybe I 672 00:33:03,720 --> 00:33:06,800 Speaker 2: just won't open. Yeah, we'll see be skiing. 673 00:33:10,120 --> 00:33:11,720 Speaker 1: And that was the Money Stuff podcast. 674 00:33:12,040 --> 00:33:14,280 Speaker 2: I'm Matt Levine and I'm Katie Greifeld. 675 00:33:14,720 --> 00:33:16,880 Speaker 1: You can find my work by subscribing to The Money 676 00:33:16,920 --> 00:33:18,840 Speaker 1: Stuff newsletter on Bloomberg dot. 677 00:33:18,680 --> 00:33:21,480 Speaker 2: Com, and you can find me on Bloomberg TV every 678 00:33:21,560 --> 00:33:24,720 Speaker 2: day on the close between three and five pm Eastern. 679 00:33:25,280 --> 00:33:27,320 Speaker 1: We'd love to hear from you. You can send an 680 00:33:27,320 --> 00:33:30,560 Speaker 1: email Tough Money Pod at Bloomberg dot net, ask us 681 00:33:30,600 --> 00:33:32,560 Speaker 1: a question and we might answer it on the air. 682 00:33:33,080 --> 00:33:35,640 Speaker 2: You can also subscribe to our show wherever you're listening 683 00:33:35,720 --> 00:33:37,600 Speaker 2: right now and leave us a review. It helps more 684 00:33:37,600 --> 00:33:38,480 Speaker 2: people find the show. 685 00:33:39,200 --> 00:33:42,160 Speaker 1: The Money Stuff Podcast is produced by Ana ma Aserakis 686 00:33:42,160 --> 00:33:43,360 Speaker 1: and Moses on dom Our. 687 00:33:43,360 --> 00:33:45,440 Speaker 2: Theme music was composed by Blake Maples. 688 00:33:46,240 --> 00:33:48,560 Speaker 1: Amy Keen is our executive. 689 00:33:48,080 --> 00:33:51,280 Speaker 2: Producer, and Sage Bawman is Bloomberg's head of Podcasts. 690 00:33:51,760 --> 00:33:54,200 Speaker 1: Thanks for listening to The Money Stuff Podcast. We'll be 691 00:33:54,280 --> 00:33:55,960 Speaker 1: back next week with more stuff.