1 00:00:02,720 --> 00:00:10,000 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. I got a haircut. 2 00:00:11,600 --> 00:00:13,760 Speaker 2: That was actually that's the first thing I said to you, though, 3 00:00:13,880 --> 00:00:15,880 Speaker 2: after I told you that, I didn't want you to 4 00:00:15,920 --> 00:00:16,840 Speaker 2: watch me yogurt. 5 00:00:17,120 --> 00:00:19,880 Speaker 1: But in other news, you got a neck tattoo. 6 00:00:22,400 --> 00:00:24,960 Speaker 2: Yeah, I got a neck tattoo last Friday. 7 00:00:25,239 --> 00:00:26,360 Speaker 1: It's a Batman. 8 00:00:27,040 --> 00:00:29,960 Speaker 2: Yeah, it's the bat signal, the bat signal. Yeah, it's 9 00:00:29,960 --> 00:00:32,479 Speaker 2: a bat tat on my neck. It's my first tattoo. 10 00:00:32,840 --> 00:00:34,880 Speaker 2: A little intense to get it on the neck. 11 00:00:35,520 --> 00:00:38,040 Speaker 1: You can't realize this tattoo, like having only one tattoo 12 00:00:38,040 --> 00:00:39,720 Speaker 1: and having apian neck tattoo is pretty good. 13 00:00:39,800 --> 00:00:42,479 Speaker 2: The tattoo artist asked me that as well. The thing is, 14 00:00:42,560 --> 00:00:46,000 Speaker 2: I got the tattoo for my late pony Batman. I'd 15 00:00:46,000 --> 00:00:49,240 Speaker 2: had him since I was eleven. He passed away in May, 16 00:00:49,400 --> 00:00:52,879 Speaker 2: the day before my birthday. Also intense. I knew I 17 00:00:52,920 --> 00:00:55,440 Speaker 2: was going to get this tattoo when he did leave us. 18 00:00:55,800 --> 00:00:59,040 Speaker 2: So my answer to that question is when my cat 19 00:00:59,120 --> 00:01:04,160 Speaker 2: does get another tattoo. I wasn't expecting my TV producers 20 00:01:04,160 --> 00:01:06,960 Speaker 2: to be as into it as they were. We have 21 00:01:07,040 --> 00:01:07,760 Speaker 2: this thing called the. 22 00:01:09,600 --> 00:01:11,800 Speaker 3: Tattoo is news, I know, but I thought. 23 00:01:11,600 --> 00:01:14,400 Speaker 2: That, you know, we are a buttoned up financial news network. 24 00:01:14,440 --> 00:01:17,280 Speaker 2: I thought that they wouldn't be thrilled about it, but 25 00:01:17,880 --> 00:01:20,320 Speaker 2: they really wanted to do an on air reveal, so 26 00:01:20,360 --> 00:01:22,400 Speaker 2: we did. We had a man with a steady cam, 27 00:01:22,480 --> 00:01:25,600 Speaker 2: which is just a handheld camera essentially, come in and 28 00:01:25,720 --> 00:01:29,080 Speaker 2: zoom in on it at one point during one day show. Thankfully, 29 00:01:29,080 --> 00:01:31,800 Speaker 2: it wasn't scabbing yet, so it still looked kind of good. 30 00:01:31,880 --> 00:01:38,240 Speaker 2: It's in like a little yeah. Yeah, I think it's 31 00:01:38,560 --> 00:01:41,920 Speaker 2: healing nicely. It was really painful. Are you going to 32 00:01:42,000 --> 00:01:42,679 Speaker 2: get a tattoo? 33 00:01:42,720 --> 00:01:44,760 Speaker 3: No? No, no, I've missed. 34 00:01:45,440 --> 00:01:46,399 Speaker 2: I don't think you've had. 35 00:01:46,440 --> 00:01:48,080 Speaker 1: Had a tattoott man. 36 00:01:48,280 --> 00:01:50,240 Speaker 2: I was kind of thinking about that that my first 37 00:01:50,280 --> 00:01:53,920 Speaker 2: tattoo was at thirty two years old. It's still I 38 00:01:53,920 --> 00:01:54,160 Speaker 2: don't know. 39 00:01:54,200 --> 00:01:56,720 Speaker 3: I feel like age, I'm too old for tattoo. 40 00:01:56,840 --> 00:01:58,520 Speaker 2: But I feel like if you want a tattoo, you 41 00:01:58,600 --> 00:02:00,480 Speaker 2: probably get it in your teens twenties. 42 00:02:00,720 --> 00:02:02,960 Speaker 1: No, I feel like a lot of people enter a 43 00:02:02,960 --> 00:02:05,280 Speaker 1: new phase of life from their thirties and become tattoo people. 44 00:02:05,560 --> 00:02:05,920 Speaker 2: Yeah. 45 00:02:05,960 --> 00:02:07,200 Speaker 3: Maybe yes. 46 00:02:07,280 --> 00:02:09,440 Speaker 1: I saw it on Instagram on Friday and I said 47 00:02:09,480 --> 00:02:11,679 Speaker 1: to my wife, Oh, Katie got a neck tattoo, and 48 00:02:12,000 --> 00:02:14,680 Speaker 1: I was like, what, I'm like, Katy is not just 49 00:02:14,760 --> 00:02:18,720 Speaker 1: a financial news anchor, She's also an emo girl. Yeah. 50 00:02:18,880 --> 00:02:21,480 Speaker 2: At heart, I'm just trying to get back to my roots. 51 00:02:21,520 --> 00:02:21,680 Speaker 2: You know. 52 00:02:23,400 --> 00:02:26,400 Speaker 1: Hello, and welcome to the Money Stuff Podcast. You're a 53 00:02:26,400 --> 00:02:29,919 Speaker 1: weekly podcast where we talk about stuff related to money. 54 00:02:30,840 --> 00:02:32,799 Speaker 1: I'm Matt Levine and I write the Money Stuff column 55 00:02:32,800 --> 00:02:33,720 Speaker 1: for Bloomberg Opinion. 56 00:02:34,600 --> 00:02:37,480 Speaker 2: And I'm Katie Greifeld, a reporter for Bloomberg News and 57 00:02:37,520 --> 00:02:39,119 Speaker 2: an anchor for Bloomberg Television. 58 00:02:49,120 --> 00:02:50,240 Speaker 3: Do you know what a lu booo is? 59 00:02:50,560 --> 00:02:54,240 Speaker 2: I do? Are there impossible to escape? Did you know 60 00:02:54,280 --> 00:02:57,720 Speaker 2: what a little boo boo was? Prior to this week? 61 00:02:57,960 --> 00:03:02,000 Speaker 1: I'm definitely aware of the booboos as an important cultural force. 62 00:03:02,240 --> 00:03:03,560 Speaker 2: Yeah, do I. 63 00:03:03,600 --> 00:03:06,520 Speaker 1: Know what they are? Even now? I couldn't pick them 64 00:03:06,520 --> 00:03:07,240 Speaker 1: out of a lineup. 65 00:03:07,480 --> 00:03:11,640 Speaker 2: I really hate them. Sure, there's a print out of 66 00:03:11,639 --> 00:03:13,799 Speaker 2: a little Boo Boo between us on the table right now. 67 00:03:13,840 --> 00:03:16,720 Speaker 3: And I like free creatures that they're freaky. 68 00:03:16,800 --> 00:03:20,200 Speaker 2: They're freaky little things. Now you can trade derivatives of them. 69 00:03:20,120 --> 00:03:20,960 Speaker 3: Kind of them? 70 00:03:21,040 --> 00:03:24,280 Speaker 1: Yes, absolutely, yeah, you can trade binary options on the 71 00:03:24,320 --> 00:03:25,720 Speaker 1: boo boos. It's so good. 72 00:03:25,919 --> 00:03:28,639 Speaker 3: Yeah, through enthusiasm. 73 00:03:29,600 --> 00:03:31,959 Speaker 2: I really I don't get it. This is one of 74 00:03:32,040 --> 00:03:36,360 Speaker 2: the first cultural phenomenons where I just I feel like 75 00:03:36,400 --> 00:03:38,600 Speaker 2: I can't get into the headspace to pay sure. 76 00:03:38,880 --> 00:03:40,920 Speaker 1: Yeah, this is like the four hundredth for me. 77 00:03:41,320 --> 00:03:46,600 Speaker 2: Really, yeah, that's true. See I'm still getting neck tattoos. 78 00:03:47,120 --> 00:03:51,480 Speaker 2: This is my limit though, so Calshi and stock x 79 00:03:52,000 --> 00:03:56,520 Speaker 2: our partner, so that there's going to be event contracts 80 00:03:56,880 --> 00:03:59,800 Speaker 2: tied to many things. 81 00:03:58,040 --> 00:04:04,280 Speaker 1: Ye, here's the Boo Boo's a third category of h 82 00:04:05,280 --> 00:04:07,119 Speaker 1: and also some trading cards. Trading cards. 83 00:04:07,200 --> 00:04:12,040 Speaker 2: Yes, I don't understand this because I have my mind 84 00:04:12,120 --> 00:04:14,360 Speaker 2: dropped around what stock x does. And you know, there's 85 00:04:14,400 --> 00:04:17,680 Speaker 2: other alternative asset market places where you know, you can 86 00:04:17,680 --> 00:04:20,520 Speaker 2: buy shares of collectible items. I don't know how you 87 00:04:20,680 --> 00:04:23,440 Speaker 2: turn that into an events contract, right, this. 88 00:04:23,440 --> 00:04:26,360 Speaker 1: Is what I've been writing about. It's a weird mechanism. 89 00:04:26,640 --> 00:04:26,960 Speaker 2: Yeah. 90 00:04:27,000 --> 00:04:29,039 Speaker 1: What you can do is you can buy a yes 91 00:04:29,160 --> 00:04:33,320 Speaker 1: no contract that pays off a dollar if, like, you know, 92 00:04:33,440 --> 00:04:35,159 Speaker 1: the price of some box of the Boo Boos is 93 00:04:35,200 --> 00:04:37,520 Speaker 1: over one hundred and twenty dollars and it pays off 94 00:04:37,640 --> 00:04:39,200 Speaker 1: zero dollars if the price of that box of the 95 00:04:39,279 --> 00:04:41,719 Speaker 1: booos is less than one hundred you know, like you 96 00:04:41,760 --> 00:04:45,880 Speaker 1: can turn any continuous variable into a binary. Right. You 97 00:04:45,880 --> 00:04:48,160 Speaker 1: can say, if the price of Tesla is above four 98 00:04:48,240 --> 00:04:49,720 Speaker 1: hundred dollars, then you get a dollar, and if it's 99 00:04:49,760 --> 00:04:51,200 Speaker 1: below four hundred dollars, you don't get a dollar. 100 00:04:51,320 --> 00:04:51,480 Speaker 2: Right. 101 00:04:52,120 --> 00:04:55,120 Speaker 1: But it's not the most natural no product. 102 00:04:55,440 --> 00:04:58,120 Speaker 2: It seems not fun, but that's. 103 00:04:56,880 --> 00:04:59,200 Speaker 1: It's lot fun. But I don't know, it's like kind 104 00:04:59,200 --> 00:05:01,600 Speaker 1: of interesting, right. I don't know the reason for this, 105 00:05:02,000 --> 00:05:05,160 Speaker 1: but I speculated on some reasons, the simplest of which is, like, 106 00:05:05,480 --> 00:05:08,400 Speaker 1: CALSHI is an event contract marketplace, right. I think that's 107 00:05:08,400 --> 00:05:11,000 Speaker 1: what it does. It lets your bet on whether or 108 00:05:11,000 --> 00:05:14,800 Speaker 1: not some event will happen. And if that's your lens, 109 00:05:15,200 --> 00:05:16,880 Speaker 1: then like you could turn anything in the world into 110 00:05:16,880 --> 00:05:21,440 Speaker 1: a yes no event, Right, And if you get money 111 00:05:20,520 --> 00:05:24,360 Speaker 1: for trading, then you want to turn everything in the 112 00:05:24,360 --> 00:05:26,080 Speaker 1: world into a yes no event. And so you sort 113 00:05:26,080 --> 00:05:28,400 Speaker 1: of look around and say what products can we trade? 114 00:05:28,800 --> 00:05:31,960 Speaker 1: And it's like, well sneakers, I was like, well sneakers 115 00:05:31,960 --> 00:05:34,159 Speaker 1: are not really yes no events, but if you have to, 116 00:05:34,240 --> 00:05:36,000 Speaker 1: you can make them into yes no events and you 117 00:05:36,040 --> 00:05:36,560 Speaker 1: can trade them. 118 00:05:36,760 --> 00:05:39,640 Speaker 2: You know, convolute the question in such a way that it 119 00:05:39,720 --> 00:05:41,160 Speaker 2: becomes and it's not like. 120 00:05:41,120 --> 00:05:44,279 Speaker 1: A crazy convolution, but it's like a little crazy it is. Yeah, 121 00:05:44,279 --> 00:05:46,400 Speaker 1: it's a little crazy. Like I was looking at their charts, 122 00:05:46,400 --> 00:05:48,200 Speaker 1: you know, and like they have like prices some sneaker 123 00:05:48,240 --> 00:05:50,520 Speaker 1: and like there's a chart and the chart is like 124 00:05:50,880 --> 00:05:54,160 Speaker 1: four different lines for the probabilities of different like price levels, 125 00:05:54,320 --> 00:05:56,800 Speaker 1: because you want the chart to be just like the price. Right, 126 00:05:57,880 --> 00:06:00,400 Speaker 1: there's an intuitive chart of a sneaker price, and they 127 00:06:00,440 --> 00:06:03,440 Speaker 1: don't show that into ay, so it's a strange mechanism. 128 00:06:03,680 --> 00:06:05,960 Speaker 1: Maybe this is just like a publicity stunt, but I've 129 00:06:06,040 --> 00:06:09,120 Speaker 1: enjoyed writing about it because like one thing that is 130 00:06:09,160 --> 00:06:14,200 Speaker 1: going on here is that there is a belief, possibly 131 00:06:14,240 --> 00:06:17,200 Speaker 1: a money motivated belief among people like who are in 132 00:06:17,200 --> 00:06:19,760 Speaker 1: prediction markets and who work at like big exchanges and 133 00:06:19,800 --> 00:06:22,359 Speaker 1: who are partnering with prediction markets that this is like 134 00:06:22,400 --> 00:06:24,560 Speaker 1: the path to be in everything exchange, which is like 135 00:06:24,600 --> 00:06:26,919 Speaker 1: the term that coinbase has used, like this is the 136 00:06:26,960 --> 00:06:29,400 Speaker 1: way that you can sort of suck everything in the 137 00:06:29,440 --> 00:06:34,200 Speaker 1: world into financial markets. And one point I've been making 138 00:06:34,240 --> 00:06:36,120 Speaker 1: this wee because it's like kind of a rickety way. 139 00:06:36,640 --> 00:06:38,279 Speaker 1: Why does it have to be a prediction market like this? 140 00:06:38,680 --> 00:06:40,760 Speaker 1: But it is something that people are pretty enthusiastic about, 141 00:06:40,839 --> 00:06:42,240 Speaker 1: because at the end of the day, if you're running 142 00:06:42,279 --> 00:06:45,680 Speaker 1: a financial market, like one big category of what you're 143 00:06:45,680 --> 00:06:49,200 Speaker 1: doing is offering people more opportunities to bet, let's say, 144 00:06:49,240 --> 00:06:51,920 Speaker 1: on more things. And this is the most general purpose 145 00:06:51,920 --> 00:06:53,960 Speaker 1: way that people have found to let people bet on things. 146 00:06:54,120 --> 00:06:57,720 Speaker 2: Yeah. I get the betting argument. People like to bet, and. 147 00:06:57,960 --> 00:06:59,159 Speaker 1: I don't know why they would run a bet on 148 00:06:59,200 --> 00:06:59,880 Speaker 1: like the yesterday. 149 00:07:00,160 --> 00:07:02,479 Speaker 2: That's the thing. It has to be fun, right, and 150 00:07:02,560 --> 00:07:04,920 Speaker 2: it doesn't seem as fun versus like I'm going to 151 00:07:04,960 --> 00:07:07,839 Speaker 2: buy shares of a meme stock and hope it goes 152 00:07:07,920 --> 00:07:10,360 Speaker 2: to the moon versus I'm going to hope the price 153 00:07:10,360 --> 00:07:12,320 Speaker 2: of the box of the La Boo Boos goes above 154 00:07:12,400 --> 00:07:13,360 Speaker 2: this certain threshold. 155 00:07:13,720 --> 00:07:15,800 Speaker 1: Yeah. I do wonder if this is like a baby 156 00:07:15,800 --> 00:07:19,920 Speaker 1: step on the way to some more moonworthy financial market. 157 00:07:20,160 --> 00:07:20,440 Speaker 2: Yeah. 158 00:07:21,120 --> 00:07:23,120 Speaker 1: One thing I've written is that the essential thing here 159 00:07:23,160 --> 00:07:24,920 Speaker 1: is that these are contracts with someone on either side 160 00:07:24,960 --> 00:07:27,720 Speaker 1: of them, right, Like you're betting against someone else, and 161 00:07:27,960 --> 00:07:30,080 Speaker 1: if you have a contract that can go to a 162 00:07:30,120 --> 00:07:32,560 Speaker 1: million dollars, then the person on the either side of 163 00:07:32,600 --> 00:07:34,680 Speaker 1: that has to put up collateral and could have to 164 00:07:34,680 --> 00:07:36,880 Speaker 1: put up a million dollars of collateral. Right, so you 165 00:07:36,920 --> 00:07:41,600 Speaker 1: have like a really complicated and risky margining system if 166 00:07:41,640 --> 00:07:44,200 Speaker 1: you're having bets that can go continuously as far as 167 00:07:44,240 --> 00:07:48,280 Speaker 1: you want in either direction. Yeah, Whereas like traditional prediction markets, 168 00:07:48,280 --> 00:07:50,120 Speaker 1: the bets are like you get a dollar or you 169 00:07:50,160 --> 00:07:52,560 Speaker 1: don't get a dollar. So the collateral and the margining 170 00:07:52,600 --> 00:07:54,680 Speaker 1: is a lot easier and the risk is a lot lower. 171 00:07:54,880 --> 00:07:58,160 Speaker 1: So these are like not super risky exchanges. The exchange 172 00:07:58,160 --> 00:08:02,239 Speaker 1: itself not a particular riskue proposition as compared to oh, say, 173 00:08:02,520 --> 00:08:06,560 Speaker 1: certain crypto exchanges we've talked about. And so going from 174 00:08:06,560 --> 00:08:08,600 Speaker 1: that system to a system where the price can be 175 00:08:08,640 --> 00:08:10,600 Speaker 1: whatever the price is is like a you know, risky 176 00:08:10,600 --> 00:08:14,160 Speaker 1: and complicated set of decisions, but possibly something that is 177 00:08:14,200 --> 00:08:16,400 Speaker 1: in the future if you want to be at everything exchange. 178 00:08:16,520 --> 00:08:21,160 Speaker 2: Yeah, I do wonder how this can be manipulated this, right, 179 00:08:21,560 --> 00:08:23,200 Speaker 2: I mean events, contracts on. 180 00:08:24,160 --> 00:08:27,760 Speaker 1: You know. The answer I think is very clearly that 181 00:08:27,840 --> 00:08:31,960 Speaker 1: it can't be because go on, who is trading this. 182 00:08:32,240 --> 00:08:34,760 Speaker 1: The way to the way to manipulate this is like 183 00:08:34,960 --> 00:08:37,480 Speaker 1: there's a contract on like the average price of some sneaker, 184 00:08:37,760 --> 00:08:39,360 Speaker 1: and I go and buy a bunch of the sneaker 185 00:08:39,640 --> 00:08:41,720 Speaker 1: to push out the average price, right, and then I 186 00:08:41,760 --> 00:08:46,440 Speaker 1: win on my prediction market contract. But I assume that 187 00:08:46,840 --> 00:08:49,280 Speaker 1: however big the market for the sneaker is, it's probably 188 00:08:49,280 --> 00:08:52,600 Speaker 1: not that big like treasury bounds. However the market for 189 00:08:52,640 --> 00:08:56,880 Speaker 1: the sneaker is, presumably the prediction market is like orders 190 00:08:56,880 --> 00:09:00,960 Speaker 1: of magnitude smaller, because like, some people buy sneakers because 191 00:09:01,000 --> 00:09:03,840 Speaker 1: they want to wear the sneakers weird, But like, how 192 00:09:03,840 --> 00:09:05,840 Speaker 1: many people are going to want to buy the contract 193 00:09:05,880 --> 00:09:07,880 Speaker 1: that's like, oh, for the sneaker, price will be about 194 00:09:07,880 --> 00:09:10,560 Speaker 1: one hundred and twenty dollars. So I think that it's 195 00:09:10,559 --> 00:09:13,040 Speaker 1: going to be very hard to manipulate because it is, 196 00:09:14,080 --> 00:09:17,000 Speaker 1: at this point, two days in or whatever, a very 197 00:09:17,040 --> 00:09:20,320 Speaker 1: small derivative on top of a yeah, moderately larger market. 198 00:09:20,679 --> 00:09:22,280 Speaker 1: But in the long run, sure, Like you know, you 199 00:09:22,280 --> 00:09:24,559 Speaker 1: have an event contract that is a binary, right, it 200 00:09:24,600 --> 00:09:29,640 Speaker 1: pays zero or one, and it's on some underlying thing. 201 00:09:30,040 --> 00:09:32,680 Speaker 1: And the event contract gets big enough and it's like 202 00:09:32,800 --> 00:09:35,360 Speaker 1: trading a penny below the threshold, You'll buy some of 203 00:09:35,360 --> 00:09:37,240 Speaker 1: the underlying thing to push it up about the threshold, 204 00:09:37,240 --> 00:09:38,840 Speaker 1: and you make a lot of money on the contract. 205 00:09:39,160 --> 00:09:42,800 Speaker 1: It's like very easy to manipulate in concept. It's probably 206 00:09:43,040 --> 00:09:45,840 Speaker 1: very hard to manipulate right now in reality, but like, 207 00:09:45,920 --> 00:09:47,679 Speaker 1: you know, give it time, get more things. 208 00:09:47,920 --> 00:09:49,400 Speaker 2: I get it sea legs first. 209 00:09:49,640 --> 00:09:50,800 Speaker 1: And the other thing is, you know, I think about 210 00:09:50,800 --> 00:09:54,120 Speaker 1: this all the time. Like the CFTC, the US Commodity's 211 00:09:54,120 --> 00:09:58,280 Speaker 1: Futures Trading Commission, regulates commodities futures. It doesn't like really 212 00:09:58,360 --> 00:10:02,120 Speaker 1: regulate the market for wheat, you know, but it does regulate, like, 213 00:10:02,160 --> 00:10:04,280 Speaker 1: you can't manipulate the wheat market if it's going to 214 00:10:04,320 --> 00:10:06,640 Speaker 1: affect commodity futures. So the CFTC has some like anti 215 00:10:06,720 --> 00:10:12,040 Speaker 1: manipulation powers. And if you put everything onto prediction markets, 216 00:10:12,240 --> 00:10:16,120 Speaker 1: then everything becomes a commodity. And like the CFTC has 217 00:10:16,160 --> 00:10:18,480 Speaker 1: to think about like were you buying those sneakers to 218 00:10:18,520 --> 00:10:20,560 Speaker 1: push out the price of sneaker futures? 219 00:10:20,600 --> 00:10:23,840 Speaker 2: And then it's like, yeah, it's going to be interesting 220 00:10:23,880 --> 00:10:28,680 Speaker 2: to see how just the prediction market space matures, because 221 00:10:29,080 --> 00:10:31,760 Speaker 2: this I think is firmly silly season and I think 222 00:10:32,000 --> 00:10:33,200 Speaker 2: we can put it in that bucket. 223 00:10:33,280 --> 00:10:35,640 Speaker 1: Yeah. I think there are two paths for it maturing. 224 00:10:35,800 --> 00:10:36,000 Speaker 2: Yeah. 225 00:10:36,040 --> 00:10:38,080 Speaker 1: One is like what everyone says, which is like it's 226 00:10:38,120 --> 00:10:40,079 Speaker 1: somehow like becomes a market for everything, and it's like 227 00:10:40,160 --> 00:10:44,240 Speaker 1: becomes like the way that companies and like real people 228 00:10:44,240 --> 00:10:47,200 Speaker 1: think about having risk and like predicting the future and 229 00:10:47,240 --> 00:10:51,480 Speaker 1: like understanding probabilities and potentialities to the future. And then 230 00:10:51,480 --> 00:10:54,360 Speaker 1: the other way is it's like a giant legalized sports book, right, yeah, 231 00:10:54,400 --> 00:10:56,760 Speaker 1: and that's kind of where my money is. But who knows, 232 00:10:56,800 --> 00:10:57,200 Speaker 1: who knows? 233 00:10:57,280 --> 00:11:00,280 Speaker 2: Well, I was speaking to the CEO of CBO sure 234 00:11:00,360 --> 00:11:00,840 Speaker 2: last week. 235 00:11:00,960 --> 00:11:04,040 Speaker 1: Probably not in the legal live sports book. 236 00:11:04,440 --> 00:11:09,120 Speaker 2: No, no, So Cibo doesn't have their own prediction markets 237 00:11:09,120 --> 00:11:12,520 Speaker 2: outfit yet, but they're going to roll something twenty five minutes. Well, 238 00:11:12,520 --> 00:11:14,320 Speaker 2: they're going to roll it out in the next few months, 239 00:11:14,679 --> 00:11:16,640 Speaker 2: which is interesting because there's kind of a land grab 240 00:11:16,679 --> 00:11:18,400 Speaker 2: going on right now. I have to imagine that the 241 00:11:18,440 --> 00:11:22,480 Speaker 2: exchanges think about this all the time. They should've been. 242 00:11:22,440 --> 00:11:25,480 Speaker 1: During commodity futures for years, and now it's like it 243 00:11:25,520 --> 00:11:27,520 Speaker 1: turns out they were running a sports book and they 244 00:11:27,520 --> 00:11:27,960 Speaker 1: didn't know it. 245 00:11:28,040 --> 00:11:32,960 Speaker 2: Right. No sports, Cibo specifically is not going into sports 246 00:11:33,040 --> 00:11:37,679 Speaker 2: at least, that's that's what the CEO said mid November 247 00:11:37,760 --> 00:11:41,280 Speaker 2: twenty five. So we have the receipts and like that. 248 00:11:41,240 --> 00:11:44,840 Speaker 1: Makes sense because like if you're like Calshier polymarket and 249 00:11:44,880 --> 00:11:48,000 Speaker 1: you're like a little hobbyist prediction site. And then like 250 00:11:48,080 --> 00:11:50,360 Speaker 1: sports is it's like enormous gusher of money. And then you 251 00:11:50,480 --> 00:11:53,080 Speaker 1: go into sports right if you're seabow, like you know, 252 00:11:53,360 --> 00:11:57,520 Speaker 1: if you have like treasury, Yeah, like you know, there's 253 00:11:57,520 --> 00:12:00,200 Speaker 1: like more money in sports books than there is is 254 00:12:00,240 --> 00:12:02,920 Speaker 1: in like traditional prediction markets. There's more money in real 255 00:12:02,960 --> 00:12:04,760 Speaker 1: financial markets than there's in sports books. 256 00:12:04,840 --> 00:12:11,040 Speaker 2: Yeah, exactly. So they're focusing on economic and financial prediction 257 00:12:11,160 --> 00:12:13,720 Speaker 2: markets for the next forty five minutes. 258 00:12:14,400 --> 00:12:16,440 Speaker 1: Synergies there with interest rates and whatnot. 259 00:12:16,600 --> 00:12:37,560 Speaker 2: Yeah, for sure. Booze from La Boo boos to owls, 260 00:12:37,800 --> 00:12:40,760 Speaker 2: owls the blue cones. One interesting week. 261 00:12:41,280 --> 00:12:45,000 Speaker 1: We've said of this before, but like you yes, your 262 00:12:45,000 --> 00:12:48,400 Speaker 1: first love besides your horse is ETFs. You love an ETF. 263 00:12:48,880 --> 00:12:51,120 Speaker 1: So we've talked about private credit. We've talked a lot 264 00:12:51,160 --> 00:12:55,760 Speaker 1: about retel private credit and like ETFs for private credit, 265 00:12:55,800 --> 00:12:58,240 Speaker 1: which is like a category that kind of sort of. 266 00:12:58,160 --> 00:13:00,240 Speaker 3: Exists, trying to make it make trying to make it thing. 267 00:13:00,679 --> 00:13:02,920 Speaker 1: And whenever we talk about that, I always say, there 268 00:13:03,040 --> 00:13:07,600 Speaker 1: is a retail exchange traded fund category for private credit, 269 00:13:07,720 --> 00:13:11,240 Speaker 1: and it is called a BDC or business development company, 270 00:13:11,200 --> 00:13:13,440 Speaker 1: which is a terrible name because it makes it sound 271 00:13:13,520 --> 00:13:15,880 Speaker 1: like it's a business development company, and that is not 272 00:13:15,920 --> 00:13:17,840 Speaker 1: what it is. I don't know what a business development 273 00:13:17,880 --> 00:13:19,439 Speaker 1: company would be, but it sounds like a company that 274 00:13:19,480 --> 00:13:22,640 Speaker 1: develops businesses, right, But in fact, a BDC is just 275 00:13:22,720 --> 00:13:25,640 Speaker 1: a private credit fund. It's just a pot into which 276 00:13:26,200 --> 00:13:30,360 Speaker 1: a manager like Blue Owl puts private credit investments. 277 00:13:30,600 --> 00:13:31,720 Speaker 2: And it's publicly traded. 278 00:13:31,760 --> 00:13:34,560 Speaker 1: It's totally traded, and so investors can buy shares a 279 00:13:34,600 --> 00:13:38,920 Speaker 1: traded BDC. Not all some are like private like not traded, yes, 280 00:13:39,040 --> 00:13:41,760 Speaker 1: but like a listed BDC is just a stock on 281 00:13:41,800 --> 00:13:45,000 Speaker 1: the stock market. You can buy shares. Anyone can buy shares. 282 00:13:45,200 --> 00:13:47,240 Speaker 1: You can sell shares in the market. It's a little 283 00:13:47,240 --> 00:13:50,840 Speaker 1: bit like you need tof with one really important distinction. 284 00:13:51,120 --> 00:13:51,480 Speaker 2: Go on. 285 00:13:51,840 --> 00:13:55,040 Speaker 1: You can't redeem like you can sell your shares in 286 00:13:55,080 --> 00:13:57,240 Speaker 1: the market. And so what that means is that the 287 00:13:57,320 --> 00:13:59,040 Speaker 1: price of the shares is the price of the shares. 288 00:13:59,040 --> 00:14:01,079 Speaker 1: There's no mechanism to make sure that the price of 289 00:14:01,080 --> 00:14:03,880 Speaker 1: the shares is in line with NAV, whereas like an ETF, 290 00:14:03,960 --> 00:14:06,600 Speaker 1: like you know, if like the shares are trading below NAV, 291 00:14:06,760 --> 00:14:09,199 Speaker 1: then like you buy some shares and you pop them 292 00:14:09,200 --> 00:14:10,880 Speaker 1: out of you know, pop the assets out of the fund, 293 00:14:10,880 --> 00:14:12,280 Speaker 1: and you get stuff at a Navy. 294 00:14:12,200 --> 00:14:13,920 Speaker 2: In authorized participant. 295 00:14:15,200 --> 00:14:15,520 Speaker 3: Whatever. 296 00:14:15,920 --> 00:14:21,720 Speaker 1: With BDC's that's not necessarily the case, and it's therefore 297 00:14:21,800 --> 00:14:24,320 Speaker 1: not actually the case for whatever reason. 298 00:14:24,960 --> 00:14:28,480 Speaker 2: And I feel like we got another lesson in that 299 00:14:28,560 --> 00:14:31,280 Speaker 2: this week with Blue Owl having to call off the 300 00:14:31,320 --> 00:14:34,800 Speaker 2: merger between one of its publicly listed BDCs and then 301 00:14:35,040 --> 00:14:35,840 Speaker 2: a private fund. 302 00:14:36,040 --> 00:14:36,320 Speaker 3: Yeah. 303 00:14:36,360 --> 00:14:39,280 Speaker 1: So it has a thing called OBDC, which is like 304 00:14:39,320 --> 00:14:42,760 Speaker 1: the Blue Al Business Development Company, which is a publicly 305 00:14:42,800 --> 00:14:46,200 Speaker 1: traded PDC, and it has a thing called OBDC two, 306 00:14:46,400 --> 00:14:50,000 Speaker 1: which is a private BDC. So private BDC is like 307 00:14:50,400 --> 00:14:53,760 Speaker 1: they sell it to you know, investors. It doesn't trade 308 00:14:53,800 --> 00:14:56,520 Speaker 1: on the market. And so if you're an investor in 309 00:14:56,560 --> 00:14:59,640 Speaker 1: OBDC two, the private one, you can't get your money 310 00:14:59,640 --> 00:15:01,240 Speaker 1: back by just selling on the stock market. And so 311 00:15:01,280 --> 00:15:03,280 Speaker 1: the way it works is that they have a redemption 312 00:15:03,360 --> 00:15:06,040 Speaker 1: mechanism where like every quarter they'll buy up to a 313 00:15:06,040 --> 00:15:08,080 Speaker 1: certain amount of the shares back if you want to, right, 314 00:15:08,160 --> 00:15:10,440 Speaker 1: so they'll offer to buy shares back and you can 315 00:15:10,480 --> 00:15:16,400 Speaker 1: tender or not. And in recent months there's been a 316 00:15:16,440 --> 00:15:19,880 Speaker 1: little tension. Yes, they have bought back anyone's shares who's 317 00:15:19,960 --> 00:15:23,080 Speaker 1: wanted to sell. But there's like been a little bit 318 00:15:23,120 --> 00:15:25,400 Speaker 1: more redemptions than they'd like, and there's like, you know, 319 00:15:25,840 --> 00:15:28,440 Speaker 1: a widespread sense that if it continued at that pace, 320 00:15:28,480 --> 00:15:31,600 Speaker 1: they would eventually get redemptions speak, which they're allowed to do, right, Like, 321 00:15:32,120 --> 00:15:33,760 Speaker 1: they can sort of buy back as much as they want. 322 00:15:34,240 --> 00:15:38,000 Speaker 1: And so to get out ahead of that, they announced 323 00:15:38,040 --> 00:15:40,320 Speaker 1: that they were going to merge these two funds. So 324 00:15:40,720 --> 00:15:43,960 Speaker 1: if you had shares of ABC two, the private company, 325 00:15:44,400 --> 00:15:47,680 Speaker 1: you'd get shares of OBDC, the public company, and then 326 00:15:47,720 --> 00:15:49,960 Speaker 1: you could sell those whenever you wanted, no problem, you 327 00:15:50,000 --> 00:15:55,359 Speaker 1: don't have to redeem anymore. And that caused some unhappiness 328 00:15:55,600 --> 00:16:00,360 Speaker 1: because OBDC won the publicly traded one happens to traded 329 00:16:00,360 --> 00:16:02,880 Speaker 1: a about a twenty percent discount and net asset value, 330 00:16:03,080 --> 00:16:05,280 Speaker 1: and so instead of being able to get back one 331 00:16:05,320 --> 00:16:06,720 Speaker 1: hundred cents on the dollar, you can get back eighty 332 00:16:06,760 --> 00:16:08,640 Speaker 1: cents on the dollar if you sell your public shares. 333 00:16:08,760 --> 00:16:11,280 Speaker 1: No one wanted that, Yeah, so they ultimately called off 334 00:16:11,280 --> 00:16:11,680 Speaker 1: the merger. 335 00:16:11,920 --> 00:16:14,920 Speaker 2: Yeah. Specifically, when it comes to redemptions. In the third quarter, 336 00:16:15,400 --> 00:16:18,800 Speaker 2: they approved about sixty million dollars worth that was already 337 00:16:18,840 --> 00:16:23,160 Speaker 2: exceeding their pre set limit. Here the discount they've been 338 00:16:23,160 --> 00:16:25,680 Speaker 2: trying to address that, they've been doing, you know, a 339 00:16:25,720 --> 00:16:28,400 Speaker 2: bunch of share repurchases. They have a two hundred million 340 00:16:28,440 --> 00:16:31,280 Speaker 2: dollar program. But I could see how that would cause 341 00:16:31,360 --> 00:16:37,120 Speaker 2: some indigestion. Yeah, yeah, right, yeah, So now they're evaluating 342 00:16:37,160 --> 00:16:37,800 Speaker 2: how to go forward. 343 00:16:37,880 --> 00:16:41,400 Speaker 1: Yeah, it's hard because like the publicly traded product seems 344 00:16:41,520 --> 00:16:45,760 Speaker 1: kind of like a better product for the manager and 345 00:16:45,960 --> 00:16:49,840 Speaker 1: getting people out of the private product into the public product. 346 00:16:49,880 --> 00:16:54,040 Speaker 1: The public product, for the manager's perspective is permanent capital, right, 347 00:16:54,080 --> 00:16:56,080 Speaker 1: Like they never have to redeem any of it. Yeah, 348 00:16:56,080 --> 00:16:58,440 Speaker 1: they can if they want to, and they have been right, 349 00:16:58,520 --> 00:17:01,320 Speaker 1: they've been doing buybacks, which you can think of a 350 00:17:01,320 --> 00:17:04,720 Speaker 1: buyback as like a way to address the discount and 351 00:17:04,800 --> 00:17:06,840 Speaker 1: make shareholders happy, or you can think of it as 352 00:17:06,880 --> 00:17:09,920 Speaker 1: like just an opportunistic trade where like they can buy 353 00:17:10,520 --> 00:17:12,440 Speaker 1: one hundred cents worth of stuff at eighty cents on 354 00:17:12,480 --> 00:17:17,159 Speaker 1: the dollar. Right. But with the private company, it's like 355 00:17:17,680 --> 00:17:19,920 Speaker 1: people complaining when they don't get liquidity. You have asking 356 00:17:19,920 --> 00:17:21,479 Speaker 1: for liquidity, so you have to pay up money when 357 00:17:21,480 --> 00:17:23,880 Speaker 1: you don't necessarily want to. It's a less good product, 358 00:17:24,440 --> 00:17:26,879 Speaker 1: but it is hard. To get people out when the 359 00:17:26,880 --> 00:17:30,119 Speaker 1: public product trades at a discount. Yeah, The other question 360 00:17:30,200 --> 00:17:33,200 Speaker 1: that one might ask is why does the public product 361 00:17:33,240 --> 00:17:37,159 Speaker 1: trade at a discount? And some of the answer for 362 00:17:37,200 --> 00:17:40,240 Speaker 1: that is, like everything trades at a discount, like clothes 363 00:17:40,280 --> 00:17:42,360 Speaker 1: on funds trading at a discount, and like the traditional 364 00:17:42,400 --> 00:17:46,960 Speaker 1: reason for that is, like you capitalize future fees in 365 00:17:47,000 --> 00:17:49,200 Speaker 1: the discount, and so like you know, yeah, you'd rather 366 00:17:49,240 --> 00:17:51,240 Speaker 1: own one hundred cents worth of loans than one hundred 367 00:17:51,280 --> 00:17:53,040 Speaker 1: cents of worth of loans plus like the fees you 368 00:17:53,080 --> 00:17:55,119 Speaker 1: have to pay Blue Howel for the rest of time, 369 00:17:55,800 --> 00:17:59,080 Speaker 1: but in November of twenty twenty five. The other reason 370 00:17:59,080 --> 00:18:01,239 Speaker 1: that there might be a discount is that there are 371 00:18:01,280 --> 00:18:03,879 Speaker 1: some people who believe you may not believe this, for 372 00:18:04,040 --> 00:18:07,320 Speaker 1: some people who believe that some private credit loans aren't 373 00:18:07,359 --> 00:18:10,040 Speaker 1: worth as much as private credit managers think they're. 374 00:18:10,160 --> 00:18:12,880 Speaker 2: Yeah, that seems to be a more and more pervasive view. 375 00:18:13,160 --> 00:18:17,400 Speaker 1: It's a you you Jamie Diamond said some word about cockroaches, et. 376 00:18:17,359 --> 00:18:19,840 Speaker 3: Cetera, et cetera, and so Jeffrey Gunlock. 377 00:18:20,480 --> 00:18:25,040 Speaker 1: Everyone not everyone. I shouldn't say that. Mark Lipschels, Yeah, 378 00:18:25,040 --> 00:18:27,359 Speaker 1: this is not like necessarily correct, but it is a 379 00:18:27,440 --> 00:18:29,720 Speaker 1: you that people have. And so one reason that a 380 00:18:29,760 --> 00:18:33,000 Speaker 1: publicly traded pot of private credit loans might trade at 381 00:18:33,000 --> 00:18:34,879 Speaker 1: eighty cents on the dollar is that some of the 382 00:18:34,920 --> 00:18:37,199 Speaker 1: people trading it don't really believe that the pot of 383 00:18:37,520 --> 00:18:40,120 Speaker 1: loans is worth the dollar. Yeah, and so if that's 384 00:18:40,160 --> 00:18:42,959 Speaker 1: the case, then, like one, this merger is awkward. But too, 385 00:18:43,119 --> 00:18:46,960 Speaker 1: the awkwardness around this merger calls awkward attention to people's 386 00:18:46,960 --> 00:18:47,960 Speaker 1: worries about valuation. 387 00:18:48,160 --> 00:18:50,080 Speaker 2: Yeah, I mean you can also see this just in 388 00:18:50,160 --> 00:18:54,680 Speaker 2: shares of blue Owl Proper, which are down like forty 389 00:18:55,000 --> 00:18:57,520 Speaker 2: something percent this year. They're at their lowest since twenty 390 00:18:57,560 --> 00:19:00,600 Speaker 2: twenty three. A lot of that decline happened before we 391 00:19:00,680 --> 00:19:02,679 Speaker 2: got into any drama with the fund merger. 392 00:19:02,840 --> 00:19:05,520 Speaker 1: Yeah, it's like a little you know, blue Owl as 393 00:19:05,560 --> 00:19:08,440 Speaker 1: a management company, Right, you don't get a pure sense 394 00:19:08,440 --> 00:19:11,199 Speaker 1: of like the valuation of the portfolio, but. 395 00:19:11,280 --> 00:19:13,159 Speaker 2: People viewed as approximy I understand. 396 00:19:13,240 --> 00:19:16,199 Speaker 1: Right, the price of blue Owl shares tells you something 397 00:19:16,240 --> 00:19:21,399 Speaker 1: about what people think about the future cash flows of 398 00:19:21,440 --> 00:19:24,920 Speaker 1: the private credit business. The price of OBDC shares tells 399 00:19:24,960 --> 00:19:26,879 Speaker 1: you what people think about what the current loans are 400 00:19:26,880 --> 00:19:30,760 Speaker 1: currently worth. Right, And like there's slightly different. 401 00:19:30,560 --> 00:19:32,560 Speaker 2: Questions, slightly different. Right. 402 00:19:33,080 --> 00:19:35,480 Speaker 1: The price of the Blue Owl shares going down suggests 403 00:19:35,480 --> 00:19:38,560 Speaker 1: that people think that the private credit party is over 404 00:19:38,680 --> 00:19:40,439 Speaker 1: coming to an end, not as good as it used 405 00:19:40,440 --> 00:19:43,840 Speaker 1: to be. That right, Yeah, the price of the business 406 00:19:43,880 --> 00:19:47,600 Speaker 1: developed company is possibly suggests cockroaches. 407 00:19:47,760 --> 00:19:48,040 Speaker 2: Yeah. 408 00:19:48,160 --> 00:19:48,640 Speaker 1: Possibly. 409 00:19:49,000 --> 00:19:52,600 Speaker 2: Well, it's going to be interesting to see what happens here. 410 00:19:52,800 --> 00:19:55,440 Speaker 2: According to Bloomberg News, they have until April to find 411 00:19:55,440 --> 00:19:59,080 Speaker 2: a solution or will consider liquidating or dissolving the vehicle. 412 00:19:59,080 --> 00:20:02,200 Speaker 2: According to filings, typically there's you know, some wiggle room 413 00:20:02,200 --> 00:20:03,160 Speaker 2: around those deadlines. 414 00:20:03,240 --> 00:20:05,719 Speaker 1: I will say pudating is like not a terrible outcome 415 00:20:05,760 --> 00:20:07,520 Speaker 1: for the childers because it's like, then you get one 416 00:20:07,560 --> 00:20:08,440 Speaker 1: hundred cents on the dollar. 417 00:20:08,600 --> 00:20:10,600 Speaker 3: Yeah, assuming she's the loans one. 418 00:20:10,600 --> 00:20:12,840 Speaker 2: Hundred and something better than eighty for sure. 419 00:20:13,200 --> 00:20:13,640 Speaker 3: Yeah. 420 00:20:13,680 --> 00:20:35,600 Speaker 1: Probably there's an incredible brain controversy. Let's say about Charlie. 421 00:20:35,359 --> 00:20:36,760 Speaker 2: Javis another one. 422 00:20:37,160 --> 00:20:39,840 Speaker 1: So, she was the founder and c of a company 423 00:20:39,840 --> 00:20:44,400 Speaker 1: called Frank that like helped students fill out financial informs basically, 424 00:20:44,760 --> 00:20:46,640 Speaker 1: and she sold it to JP Morgan for one hundred 425 00:20:46,640 --> 00:20:51,919 Speaker 1: and seventy million dollars. And the allegations are that she 426 00:20:51,960 --> 00:20:53,879 Speaker 1: sold it to them on the basis of like having 427 00:20:54,040 --> 00:20:57,679 Speaker 1: millions of devoted customers. And then it turned out that 428 00:20:57,760 --> 00:21:00,640 Speaker 1: all of the customer email addresses and her database were fake, 429 00:21:01,040 --> 00:21:03,720 Speaker 1: and they sent out, you know, like JP Morgan is 430 00:21:03,720 --> 00:21:05,840 Speaker 1: not really in the business of providing financialate advice, Like 431 00:21:05,920 --> 00:21:09,639 Speaker 1: JP Morgan bought Frank to get like access to this 432 00:21:09,760 --> 00:21:12,360 Speaker 1: like devoted young customer base, and then they sent out 433 00:21:12,359 --> 00:21:14,959 Speaker 1: an email to all of Frank's customers being like, hey, 434 00:21:15,040 --> 00:21:17,280 Speaker 1: sign up for JP Morgan credit card or whatever, and 435 00:21:17,320 --> 00:21:20,320 Speaker 1: like all the emails bounced in there like wait a minute, 436 00:21:20,440 --> 00:21:24,080 Speaker 1: and so they sued her for fraud and then ultimately 437 00:21:24,240 --> 00:21:27,280 Speaker 1: got referred to prosecutors and she was arrested in charged 438 00:21:27,320 --> 00:21:30,800 Speaker 1: with fraud and tried and convicted and sentenced to seven 439 00:21:30,840 --> 00:21:31,399 Speaker 1: years in person. 440 00:21:31,480 --> 00:21:33,800 Speaker 2: And she's now I'm trying to find the title that 441 00:21:33,920 --> 00:21:36,639 Speaker 2: JP Morgan gave her because it was pretty good. But anyway, 442 00:21:36,640 --> 00:21:36,920 Speaker 2: go on. 443 00:21:36,960 --> 00:21:39,320 Speaker 1: She was like, yeah, they bought Frank and she was 444 00:21:39,359 --> 00:21:42,280 Speaker 1: like made a managing director and head of Frank or whatever, 445 00:21:42,320 --> 00:21:43,119 Speaker 1: and it was. 446 00:21:43,119 --> 00:21:44,240 Speaker 2: Like head of students something. 447 00:21:44,400 --> 00:21:46,679 Speaker 1: Yeah, and then like they'd send out this email and 448 00:21:46,680 --> 00:21:48,119 Speaker 1: it all bounced and they're like wait a minute, and 449 00:21:48,119 --> 00:21:49,720 Speaker 1: they put her on leave and fired her and so forth. 450 00:21:50,200 --> 00:21:53,159 Speaker 1: But because she was a Japy Morgan employee and because 451 00:21:53,200 --> 00:21:55,800 Speaker 1: she had a merger agreement where she's old Frank, they 452 00:21:55,800 --> 00:21:58,600 Speaker 1: had agreed to indemnify her for legal expenses and pay 453 00:21:58,600 --> 00:22:01,960 Speaker 1: her defense costs and and legal cases including it turns 454 00:22:01,960 --> 00:22:06,120 Speaker 1: out and they litigated this but they lost. They were 455 00:22:06,119 --> 00:22:08,440 Speaker 1: on the hook to pay for her criminal defense, which 456 00:22:08,480 --> 00:22:12,280 Speaker 1: is like, seems a little weird that, like, she defrauded 457 00:22:12,320 --> 00:22:15,360 Speaker 1: them allegedly and now convictedly and they had to pay 458 00:22:15,359 --> 00:22:17,000 Speaker 1: for her legal defense. But it's not that weird, Like 459 00:22:17,040 --> 00:22:19,560 Speaker 1: that's actually like a thing that happens somewhat regularly is 460 00:22:19,600 --> 00:22:22,240 Speaker 1: that you know, you agree to and then the fire 461 00:22:22,240 --> 00:22:24,560 Speaker 1: your employees, even against charges that they stole from you. 462 00:22:24,920 --> 00:22:28,040 Speaker 1: But what has also happened is that she has racked 463 00:22:28,119 --> 00:22:36,040 Speaker 1: up astonishing, amazing, incredible legal bills, to the point that 464 00:22:36,640 --> 00:22:39,600 Speaker 1: people keep saying the legal bills might approach the amount 465 00:22:40,200 --> 00:22:42,240 Speaker 1: the one hundred and seventy million dollars that she defrauded 466 00:22:42,320 --> 00:22:47,320 Speaker 1: from David Morgan. The legal bills are now nine digits, according. 467 00:22:47,080 --> 00:22:50,280 Speaker 2: To The Wall Street Journal, between her and her co 468 00:22:50,320 --> 00:22:53,400 Speaker 2: executive's legal defense to already cost more than one hundred 469 00:22:53,400 --> 00:22:58,439 Speaker 2: and forty two million dollars, So they're pretty dang close incredible, Yeah, clean, 470 00:22:58,640 --> 00:22:59,119 Speaker 2: just kidding. 471 00:22:59,200 --> 00:23:01,880 Speaker 1: If the government to send you to prison and someone 472 00:23:01,880 --> 00:23:03,359 Speaker 1: else will pay for your lawyers, you might as well 473 00:23:03,440 --> 00:23:06,040 Speaker 1: hire all of the best lawyers and leave no stone 474 00:23:06,119 --> 00:23:08,679 Speaker 1: unturned in your defense, which I think is what happened. 475 00:23:08,680 --> 00:23:11,200 Speaker 1: Like she hired really fancy lawyers, and they put in 476 00:23:11,280 --> 00:23:13,520 Speaker 1: a lot of hours and they reviewed a lot of documents, 477 00:23:13,920 --> 00:23:18,440 Speaker 1: and like from where I set, that doesn't seem all 478 00:23:18,440 --> 00:23:20,760 Speaker 1: that useful, Like, you know, they she had a lot 479 00:23:20,760 --> 00:23:23,840 Speaker 1: of emails being like, let's do fraud, right, That's not true. 480 00:23:24,600 --> 00:23:26,400 Speaker 1: There is there is more of a defense of her 481 00:23:26,440 --> 00:23:30,600 Speaker 1: actions that I'm whatever. I mean, like, it's pretty bad fraud, 482 00:23:30,800 --> 00:23:33,280 Speaker 1: but if it's not your money, you might as well 483 00:23:33,320 --> 00:23:35,320 Speaker 1: spend as much as you can to take any shot 484 00:23:35,359 --> 00:23:38,320 Speaker 1: of kind of prism. But the other thing is that 485 00:23:38,359 --> 00:23:41,000 Speaker 1: and this is like at the Times, Ron Lever wrote 486 00:23:41,000 --> 00:23:45,560 Speaker 1: about this last week, like JP Morgan is trying to 487 00:23:45,560 --> 00:23:47,400 Speaker 1: claw back some of this money and like stop paying 488 00:23:47,440 --> 00:23:50,399 Speaker 1: for it. And one thing they're accusing her is like 489 00:23:50,840 --> 00:23:54,119 Speaker 1: you know, enormous wasteful, unconscionable spending on legal bulls. But 490 00:23:54,160 --> 00:23:57,800 Speaker 1: The other thing is they're like, she spent money on 491 00:23:59,200 --> 00:23:59,960 Speaker 1: salulate butter. 492 00:24:00,200 --> 00:24:03,520 Speaker 2: Yeah, I'd never heard of it. Okay, I'm interested. 493 00:24:04,200 --> 00:24:10,960 Speaker 1: And I don't exactly know why JP Morgan, in paying 494 00:24:10,960 --> 00:24:13,359 Speaker 1: her legal bills, would have paid her salulated better bills. 495 00:24:13,400 --> 00:24:16,240 Speaker 1: But I have a guess which I read about, which 496 00:24:16,280 --> 00:24:23,560 Speaker 1: is that law firms will serve you lunch. Like you know, 497 00:24:23,760 --> 00:24:25,240 Speaker 1: I used to work at a law firm and like, 498 00:24:25,440 --> 00:24:27,679 Speaker 1: so I once worked on a deal where like we 499 00:24:27,720 --> 00:24:29,800 Speaker 1: had a client and like their negotiating meurger with some 500 00:24:29,840 --> 00:24:32,400 Speaker 1: other client, and the other client had another law firm 501 00:24:32,520 --> 00:24:34,480 Speaker 1: and we were meeting at that other law firm's offices, 502 00:24:34,960 --> 00:24:41,520 Speaker 1: and our client was like, let's go to Walktell's offices. 503 00:24:41,640 --> 00:24:43,960 Speaker 1: They have better food. And so we went to our offices, 504 00:24:43,960 --> 00:24:46,000 Speaker 1: and we had better food, and it's much nicer to 505 00:24:46,000 --> 00:24:47,600 Speaker 1: be at our offices, Like you have like a sort 506 00:24:47,640 --> 00:24:50,159 Speaker 1: of negotiating advantage when it's at your office, right, And 507 00:24:50,200 --> 00:24:52,240 Speaker 1: I was like, yeah, that's so nice. We got a 508 00:24:52,280 --> 00:24:56,160 Speaker 1: real advantage by having better food. And we didn't cook 509 00:24:56,160 --> 00:24:58,480 Speaker 1: the food, you know, we ordered in, but like we 510 00:24:58,600 --> 00:25:01,520 Speaker 1: ordered in nice food. Like, on the one hand, it's 511 00:25:01,600 --> 00:25:03,359 Speaker 1: nice that we're doing this nice thing for the client, 512 00:25:03,400 --> 00:25:05,200 Speaker 1: but we're billing it to the client, like the client 513 00:25:05,240 --> 00:25:07,440 Speaker 1: pays for all of this eventually, And so there's a 514 00:25:07,440 --> 00:25:09,159 Speaker 1: lot of stuff like that, where like, if you're a 515 00:25:09,200 --> 00:25:11,120 Speaker 1: client and you're at the law firm and you're paying 516 00:25:11,160 --> 00:25:13,280 Speaker 1: the law firm an enormous bill, and you ask the 517 00:25:13,359 --> 00:25:15,919 Speaker 1: law firm to do anything at all for you, like 518 00:25:16,520 --> 00:25:18,720 Speaker 1: buy you a change of clothes because you've been there overnight, 519 00:25:19,320 --> 00:25:21,760 Speaker 1: really anything, they'll just do it for you, but then 520 00:25:21,800 --> 00:25:23,920 Speaker 1: they'll put it on your bill, right, Yeah, And so 521 00:25:24,240 --> 00:25:26,160 Speaker 1: I think that one thing that might be happening here 522 00:25:26,400 --> 00:25:28,680 Speaker 1: is that Jamie Wagen is not only paying the law 523 00:25:28,680 --> 00:25:31,800 Speaker 1: firms bills. They're paying the law firms expenses, and the 524 00:25:31,880 --> 00:25:35,080 Speaker 1: law firm's expenses could pay some stuff for Charlie Jovis. 525 00:25:35,160 --> 00:25:39,040 Speaker 2: Yeah. Well, according to the Wall Street Journal, lawyers were 526 00:25:39,040 --> 00:25:42,200 Speaker 2: billing for twenty hours of work in a single day. Sure, 527 00:25:42,240 --> 00:25:44,520 Speaker 2: so maybe there were day shift and night shift lawyers 528 00:25:44,680 --> 00:25:45,520 Speaker 2: working around the clock. 529 00:25:45,600 --> 00:25:50,280 Speaker 3: No, that's that's no, that's individual. That's the same I've 530 00:25:50,280 --> 00:25:51,040 Speaker 3: worked at a law firm. 531 00:25:51,119 --> 00:25:55,240 Speaker 2: Yeah, that's awesome. Luxury hotel of grades, fine, the cellulite butter. Again, 532 00:25:55,320 --> 00:25:57,960 Speaker 2: I'm very interested in that. But we should probably say that. 533 00:25:58,000 --> 00:26:02,080 Speaker 2: A spokesperson for Charlie Avis says that Charlie says she 534 00:26:02,119 --> 00:26:04,320 Speaker 2: has nothing to do with that, and it's a ridiculous allegation. 535 00:26:04,640 --> 00:26:07,840 Speaker 1: No, it's not obvious that they could have bought the 536 00:26:07,880 --> 00:26:10,600 Speaker 1: cell that had better for themselves. That's like you're on 537 00:26:10,640 --> 00:26:11,240 Speaker 1: a work trip. 538 00:26:11,400 --> 00:26:14,159 Speaker 2: You're like, yeah, it's very it. 539 00:26:14,200 --> 00:26:15,880 Speaker 1: You got it, Like you build enough hours, you work 540 00:26:15,960 --> 00:26:18,000 Speaker 1: enough hours. You're like, I'm going to expense everything on 541 00:26:18,080 --> 00:26:18,640 Speaker 1: this work trip. 542 00:26:18,800 --> 00:26:21,200 Speaker 2: It is very heteronormative that we assumed it was for. 543 00:26:21,240 --> 00:26:24,240 Speaker 1: Charlie Well, right, because like JP Morgan is sort of 544 00:26:25,080 --> 00:26:26,800 Speaker 1: accusing her of wasting their money. 545 00:26:27,000 --> 00:26:29,760 Speaker 2: Yeah, but it could have been the law. 546 00:26:30,119 --> 00:26:33,720 Speaker 1: The law lawyers, right, the lawyers brack up whatever experences 547 00:26:33,720 --> 00:26:35,520 Speaker 1: they rack angels. 548 00:26:35,600 --> 00:26:38,600 Speaker 2: Yeah, this is amazing And I didn't fully appreciate that. 549 00:26:39,040 --> 00:26:41,199 Speaker 2: I would have just thought she's very expensive lawyers. But 550 00:26:41,720 --> 00:26:44,720 Speaker 2: I'm glad that so many different news outlets have tackled this. 551 00:26:46,200 --> 00:26:47,760 Speaker 2: Do you think that JP Morgan is going to be 552 00:26:47,800 --> 00:26:50,480 Speaker 2: able to stop paying for her legal defense? 553 00:26:51,240 --> 00:26:51,720 Speaker 1: Maybe? 554 00:26:52,280 --> 00:26:52,760 Speaker 3: I don't know. 555 00:26:53,200 --> 00:26:55,560 Speaker 2: When does it start to impact their earnings? Like when 556 00:26:55,560 --> 00:26:57,120 Speaker 2: do we see analysts ask. 557 00:26:57,119 --> 00:26:58,960 Speaker 3: Questions about this million dollar appeal? 558 00:26:59,520 --> 00:27:01,520 Speaker 2: Someone asked Jamie Diamond next earnings call. 559 00:27:01,600 --> 00:27:04,679 Speaker 1: Yeah, it's true, it's true, it's true. I think sometimes 560 00:27:04,680 --> 00:27:09,399 Speaker 1: about like the level of like mistake that you have 561 00:27:09,480 --> 00:27:11,160 Speaker 1: to make it a bank to be like asked about 562 00:27:11,200 --> 00:27:13,680 Speaker 1: on the earning call, and like to be fair, the 563 00:27:13,680 --> 00:27:16,280 Speaker 1: one hundred and seventy five million dollar acquisition of Frank 564 00:27:16,920 --> 00:27:20,000 Speaker 1: definitely got raised on some calls, right, Like Jamie Diamond 565 00:27:20,000 --> 00:27:22,000 Speaker 1: has addressed this, I think more than once. Yeah, with 566 00:27:22,080 --> 00:27:24,920 Speaker 1: like analysts and reporters, people be like, yeah, could you 567 00:27:24,960 --> 00:27:26,560 Speaker 1: do such bad due diligence and spent one hundred and 568 00:27:26,560 --> 00:27:28,159 Speaker 1: sef you have a million dollars in this company that 569 00:27:28,280 --> 00:27:30,360 Speaker 1: you know just have fay Gmail addresses. But now we're 570 00:27:30,400 --> 00:27:33,680 Speaker 1: getting to that level, getting to be a double dime. 571 00:27:34,080 --> 00:27:37,359 Speaker 2: Christ had Charlie Javis is exactly my age. She was 572 00:27:37,359 --> 00:27:40,600 Speaker 2: born in March of nineteen ninety three. She said, so much, 573 00:27:41,720 --> 00:27:43,200 Speaker 2: what have I done? 574 00:27:43,840 --> 00:27:44,080 Speaker 3: God? 575 00:27:44,160 --> 00:27:46,320 Speaker 2: What a whirlwind that must have been. Yeah, and by 576 00:27:46,320 --> 00:27:48,400 Speaker 2: the time she gets out of prison, when she eventually goes, 577 00:27:48,440 --> 00:27:51,560 Speaker 2: I mean she'll still be a relatively young woman. Yeah, 578 00:27:51,960 --> 00:27:56,360 Speaker 2: early forties, a lot to live for. She could still 579 00:27:56,400 --> 00:28:00,480 Speaker 2: get a tattoo. 580 00:28:02,040 --> 00:28:04,520 Speaker 1: And that was the Money Stuff podcast I'm Matt. 581 00:28:04,359 --> 00:28:06,040 Speaker 2: Levine and I'm Katie Greifeld. 582 00:28:06,240 --> 00:28:08,400 Speaker 1: You can find my work by subscribing to The Money 583 00:28:08,400 --> 00:28:10,440 Speaker 1: Stuffnoletter on Bloomberg. 584 00:28:09,960 --> 00:28:12,560 Speaker 2: Dot com, and you can find me on Bloomberg TV 585 00:28:12,760 --> 00:28:16,200 Speaker 2: every day on the close between three and five pm Eastern. 586 00:28:16,920 --> 00:28:18,919 Speaker 1: We'd love to hear from you. You can send an 587 00:28:18,920 --> 00:28:22,280 Speaker 1: email to Moneypod at Bloomberg dot net, ask us a 588 00:28:22,359 --> 00:28:24,200 Speaker 1: question and we might answer it on the air. 589 00:28:24,560 --> 00:28:27,159 Speaker 2: You can also subscribe to our show wherever you're listening 590 00:28:27,200 --> 00:28:29,080 Speaker 2: right now and leave us a review. It helps more 591 00:28:29,080 --> 00:28:29,920 Speaker 2: people find the show. 592 00:28:30,840 --> 00:28:34,320 Speaker 1: The Money Stuff Podcast is produced by Anamazerakis and Moses 593 00:28:34,440 --> 00:28:35,120 Speaker 1: ondem Our. 594 00:28:35,160 --> 00:28:37,240 Speaker 2: Theme music was composed by Blake Maples. 595 00:28:37,960 --> 00:28:40,680 Speaker 1: Amy Keen is our executive producer. 596 00:28:40,600 --> 00:28:43,120 Speaker 2: And Sage Bauman is Bloomberg's head of Podcasts. 597 00:28:44,280 --> 00:28:46,760 Speaker 1: Thanks for listening to The Money Stuff Podcast. 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