April 4, 2025 • 32 mins
Matt and Katie do not discuss tariffs but do discuss meme stock mini-IPOs, the stablecoin business, adult custodians of T-bills, booping some Circle coins, valuing X and xAI, X/xAI synergies, other possible Musk mergers, buying Tesla stock in order to complain about Elon Musk, and what we would do if someone gave us $7 million by mistake.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News. Hello and welcome to
The Money Stuff Podcast. You're a weekly podcast where we
talk about stuff related to money. I'm Matt Levian and
I write the Money Stuff column for Bloomberg Opinion.
Speaker 2 (00:19):
And I'm Katie Greifeld, a reporter for Bloomberg News and
an anchor for Bloomberg Television.
Speaker 1 (00:25):
That's Today. It was an all tariffs episode of The
Money suff.
Speaker 2 (00:30):
I actually would be the most prepared out in any
episode that we've ever done.
Speaker 1 (00:36):
We're talking about tariffs, non fought for forty eight hours.
Speaker 2 (00:39):
I was actually at my Grandmam's apartment last night, or
I guess in the afternoon.
Speaker 1 (00:43):
Talking about taffs.
Speaker 2 (00:44):
Well, I was with my dad, and my dad and
I both were like, can we turn on the TV?
My grandma was like sure, yeah, so we watched it
with her. No, yeah, the Rose Garden. Anyway, we're not
talking about tariffs. We are talking about a conservative leaning
(01:06):
news network.
Speaker 1 (01:07):
That in public conservative leading. Yeah.
Speaker 2 (01:09):
Yeah, I don't know what news Max does. I probably should.
Speaker 1 (01:12):
They're a television channel that I know.
Speaker 2 (01:14):
I've never watched them.
Speaker 1 (01:14):
They've take out the vast territory to the far right
of Fox News is.
Speaker 2 (01:19):
My understanding of it, them, you know, and their IPO.
At one point they had a market value of over
thirty billion dollars, which had them more valuable than Fox
for a brief moments of time. The stock has since
started to come back to earth.
Speaker 1 (01:33):
I don't pretend to understand this anymore. Yeah, the meme thing,
like the meme ipo thing. I think of this in
comparison to Trumpet Media and technology grew up the other
let's say, right wing media network. Maybe that also has
a very high valuation relative to its fairly low revenue
and net loss, and trump Media is owned by people
(01:55):
who are like, yeah, great, but like News is probably
owned by Thomas Pettif, who, in addition to being a
billionaire Republican downer, is also like a trader, you know,
Like he's the founder of Attractor Breakers, So like the ft.
You got him on the phone and he was like,
he said, he was stunned by the price. I think
newsbacks is a great company, and it's going to have
a very bread feature, but I think that it does
(02:16):
not warrant this high price. It was just like, you know,
in addition to being a real billionaire, he's like a
billion dollars worth of Newsmax stock.
Speaker 2 (02:23):
Yeah, he owns the second largest steak. It was at
one point worth at least five point four billion dollars.
I wonder if he's sold.
Speaker 1 (02:30):
I think he's locked up. Really, I think like to
ask him, like, are you going to sell? And you
know I can change before the long most big sharelders
are locked up in IPOs like that. And it's funny,
like for the same reason that the thigh prices, some
of the commentary that you'll read from enthusiasts is not
always well informed. And I read someone being like, what
will Newsmacks do with all of this capital while they
use it to become the next big media, Like they're
(02:51):
not getting any capital. It's just like the stock is
trading in the secondary market. You know, there's like a
real move among meme stocks that if your stock is meaning,
you should get off at the market stock offering so
you can raise money from the people who are buying
your stock in the secondary market and pushing out the price.
But you can't do that a week after your IPO
R three days after your ip Newsmax is not selling
any stock. I mean they sold stock at ten dollars
(03:12):
before the run in the stock. But they're not making
any money from this. This is just secondary training.
Speaker 2 (03:17):
They're not making money in general. They lost seventy two
million dollars.
Speaker 1 (03:21):
These are separate things. If you're a meme stock, you
don't make money in your business. Do you make money
selling stock? But they're not even doing that.
Speaker 2 (03:26):
I'm old fashioned, mad, I like to go back to
the That's true. I guess it's hard to predict what
will become a meme stock. I would not have guessed
that Newsmax was a candidate.
Speaker 1 (03:38):
No, not really really.
Speaker 2 (03:40):
Apparently, Chris Ruddy, though the CEO, was going on like
cable news and pitching the IPO, which I didn't know.
Had I known that, maybe I.
Speaker 1 (03:49):
Would to a TV channel.
Speaker 2 (03:50):
Yeah, that's true, but he was going on others, not
Bloomberg News. To the best of my knowledge. On the podcast,
I that's true, Chris Heiretti, if you're listening, I want
to talk a little bit about the mechanics of this IPO.
I was chatting with Bailey Lipschultz Bloomberg News about this.
He's my go to guy. Yeah, on funky things. He
(04:11):
also covers IPOs, which is a really poetic intersection. So
this was a regulation A plus it's a mini ipo.
Speaker 1 (04:20):
Okay, mini ipo?
Speaker 2 (04:21):
Yeah yeah, I didn't know that. And the reason I
found out is because I have another Matt in my
professional life. His name is Matt Miller, and he was like, wow,
the bank must have really mispriced this. And Billy made
the good point that because it's a reggae plus ipo,
they can only raise up to seventy five million, So
it's not like this was mispriced or anything.
Speaker 1 (04:41):
I mean, you can solve your shares. Who are the banks?
Speaker 2 (04:47):
Oh, I'm so excited. Do you ask Digital Offering LLC? Oh? Yeah, yeah,
Business Insider. I don't think you've seen this yet. Business Insider,
just as we're talking about this on a Thursday, published
a story titled Meet the tiny investment bank behind Newsmax's
rip roaring stock debut. Laguna Beach, California based Digital Offering
(05:08):
LLC was the bank behind this. Can I tell you
more facts about them?
Speaker 1 (05:12):
I want to hear all of the facts about them.
Speaker 2 (05:14):
I'll tell you at least three. They have ten full
time registered banker, three of whom act as principal investment bankers.
They typically advise companies valued at a billion dollars or less.
Those are actually all the facts I have. But I
have a quote from Mark Alenowitz. I hope I'm saying
his name correctly. He's a managing director there. He said,
(05:36):
the Newsmax, as you might predict, has been huge for them.
The small cap community knows who we are, but the
rest of Wall Street didn't. But now they're on the map.
Speaker 1 (05:47):
So I'm still highly open the idea that the bank's
miss priced today because like I used to be an
equity capital markets banker, I think of like, well you
do an IPO is you go out to institutional accounts
and you build a book of institutional accounts and you
put some stuff with retail. But you go to an
institution and you're like, well we lost seventy million dollars
one hundred seventy million over revenue. There's some cap to
the valuation you're going to get, right, And if you
(06:08):
trade on the secondary market to retail, there is not
that cap or any cap right, Like you can be
a thirty billion dollar company for briefly if you have
those kind of numbers. And so if you go to
institutional investors and say this is going to be a
memes talks that are prising it at two hundred dollars,
they will laugh at you. By the way, I don't
want to say black Ben tried that, but like.
Speaker 2 (06:29):
A little bit, a little bit friend of the show.
Speaker 1 (06:31):
Front of the show, Black they did it. But I
don't think that's the case here because the Reggae plus
offering done by a small bank might have been you know,
it was for the small cap community. It's not like
they're selling this to fidelity necessarily. Yeah, so maybe they
did misprice it as a meme matter. I don't know.
Speaker 2 (06:47):
I don't know. Well, it'll be interesting to see their
follow up to the newsmac's debut digital offering LLC.
Speaker 1 (06:53):
It does feel like a real golden age for like
a certain sort of like banker who is happy to
work with memestock companies. Right, stuff going on? Does it
going on that, like, you know, not necessarily everything wants
to be doing.
Speaker 2 (07:08):
I don't know, I feel like the golden age might
have been twenty twenty one, like these are like the
kind of thing or yeah, obviously you're still having some
memes stock IPOs, but there's just not a lot of
IPOs and I don't know.
Speaker 1 (07:21):
A lot of that's right, looking at a relative golden
age for the yeah memes stock bankers compared to the
you know, large cap it's true tech bankers.
Speaker 2 (07:31):
Everyone else could talk about circle you know what to
also in IPOs, this one hasn't happened yet, but it's
going to theoretically circle of stable coin fame has filed
for an IPO.
Speaker 1 (07:45):
Yeah, they filed like a long time ago, but their
filing became public this day. They filed like under yeah,
another special IPO rule, which is you can file confidentially,
but now they're unconfidential, so you can read their filings.
Speaker 2 (07:56):
Got some numbers. One hundred and fifty six million dollars,
that's their net in. That's on revenue of one point
six eight billion dollars in twenty twenty four. My only
simple question for you is how does the stable coin
make money? Is that just because they're backed.
Speaker 1 (08:11):
By how they're making Yeah, that's it. So oh yeah,
it's the best business in the world. And it's actually like,
it was surprising to me that their margins are so low,
and it's it's a little interesting why their margins aren't
one hundred percent. Yeah, but no they make money by
like they take tens of billions of dollars of deposits
from customers. You know, I read about this. They don't
directly put it in T bills because I think my
(08:34):
explanation would be like that is too much of like
a banking function or a financial services function, and they're
like a fintech. So what they do is they take
all the money and they put it in a black
Rock money market fund that puts it in T bills.
Speaker 2 (08:46):
That's amazing.
Speaker 1 (08:46):
Effectively, they put it in T bills and they pay
black Rock to be a sort of like adults custodian
in their T bills. Yeah, they put someone in bank accounts,
but it's like eighty five percent T bills. They say
they make a discount to sover, but they kind of
make T bill rits and then they pay as a
first cut zero percent interest to their customers. Now it's
like quite right, it's basically right. So they're making you know,
(09:10):
four percent or so on tens of billions of dollars,
and that might be a slight exaggeration, but it's like,
you know, they're making a lot of money, and then
where does it go? I mean some of it is
like they have expenses because they are a tech company.
They're building for sure, technological infrastructure to transfer stable coins
on the blockchain, et cetera, outside et cetera. Another big
part of it is like everyone knows this is a
(09:31):
good business model. It's not quite it's quite a business
a winner take all business model, but it's a little
bit like you want to be the most liquid stable coin,
and so they are paying platforms to be like a
preferred stable coin, so like they're the stable coin of coinbase,
and like there's a partnership with coinbase, and if their
coins are held on coin Base, like they're paying Coinbase
a lot of the interest. Right, They're paying fees to
(09:52):
buyance to be on binance, So there's some amount of like,
you know, this is a good business, and so the
customer acquisition cost is kind of they're paying something.
Speaker 2 (10:00):
But it feels like it's only a good business when
rates are high.
Speaker 1 (10:03):
So, right, it's such an interesting business because it's stumbled
into being a good business. It started. The stable coin
business started when rates were low, and everyone was like, well,
it's fine if we don't get paid interest, because it
was interested. You know, you don't get interest on our
savings accounts, on our money market account. So it's fine. Yeah,
And now the rates are high and you do get
interest on your money market account, and the stablegin issuers
(10:25):
are raking in money, and there are reasons that you
can't just easily natively get that interest on your stable coin. Yeah.
Think one reason is, like you know, that's like historically
not how it developed, and like you know, the biggest
stablekind issuers have ever liquidity advantage and they don't want
to pay interest. But another reason is, like there's securities,
(10:45):
a lot problems with doing it. If you were paying
interest on a stable clin it's not in like the
sort of crypto e gray area where it's probably fine.
It's a money market fund and it's security. And I
mean this is at least the sec theory as of
four months ago. And one thing that I have written
for a long time is that clearly people are going
to just start issuing interest sparing stable coins that are
(11:06):
you know, registered money market funds that trade on a blockchain.
And if you look at the Circle IPO documents, like
they talk about that, like they have an issuer that
does that that has like a small money market fund
and they are doing essentially an intersparing stable coin that
you can convert into like their regular coin. And they
kind of hint and I'm sure that there will be
more of that and like ultimately some of this, like
(11:28):
free money, will be returned to customers.
Speaker 2 (11:31):
Why am I thinking of black Rock and Securitized don't
they have something everyone has?
Speaker 1 (11:35):
Yeah, has a tokenized market fund circle I think owns
a company that does it in addition to like having
their stablegoin money out of black Rock fund. Yeah, everyone's
doing it. Franklin Templeton did it, like in twenty nineteen.
I watched their Recognize one remember that, Yeah, And I
was like, why is it not called the Benjamin And
no one had a good answer.
Speaker 2 (11:55):
I am excited to see how this is received when
it eventually does become public, because I know, you know,
you think about all the other like crypto equities. I
imagine this is going to trade similarly to the price
of bitcoin, even though maybe it shouldn't if it's I mean,
it's really just a money market fund with a lot
of I mean, like you know, as a first cut.
Speaker 1 (12:16):
Their business is kind of like what is the market
cap of like their coins outstanding and like the market
cap of stable coins outstanding does have a lot to
do with like demand for crypto.
Speaker 2 (12:24):
Yeah, that's true. It's not as direct though, as like
no micro strategy owns a ton of points, so it's
not exactly a proxy. It's obviously not.
Speaker 1 (12:34):
A pricy for bitcoin. I always think about like Golden
used to say that, like their business is at on
global GDP, and like the stable grend business is a
bet on like crypto GDP. Right, like if if crypto
is booming, like there will be more demand for stable
clins Now they're separately like a competitive dynamic and table
coins where like they might lose out to other stable coins.
And there's like the business model of like we get
(12:55):
interest and don't pay. Interest might be compressed and they
might have to pay more interest, like you know probably
speaking like the more crypto there is, the more people
will want their stable colin.
Speaker 2 (13:04):
I wonder like what the pitch to buy circle shares is,
especially if we have billions.
Speaker 1 (13:09):
Of dollars we get paid interest.
Speaker 2 (13:10):
That we don't pay, interest rates go down, Like what's
the point.
Speaker 1 (13:13):
The pitch is? Like we are building the future of
financial infrastructure, Like there's like the real upside case is
like five years, the way that you normally pay for
stuff will be with a regulated US stable clin instead
of venmo or credit cards or checks or whatever. You
will boop some circle coins to someone, right, Like, that's
(13:36):
the upside case.
Speaker 2 (13:37):
It's kind of coin to think we'll still be here
in five years. Yeah, right, man. You know we were
(13:57):
talking about right leaning like social media networks boy x X,
Twitter x X now part of x a I holdings. Yes, man,
so I obviously immediately thought of you on.
Speaker 1 (14:15):
The chronic layer of Elon Musk's mergers and this technically.
Speaker 2 (14:19):
Yeah, I thought about texting you, but I was it
was done.
Speaker 1 (14:24):
You spared me, right. I remember saying that it seems like.
Speaker 2 (14:30):
This though, isn't like that huge of a deal, Like
this didn't rock your world as much as some might
have expected it to.
Speaker 1 (14:36):
It's the biggest mn A deal this year. Yeah, and
the second biggest, actually maybe the first biggest is Elon
Musk's very biggest I mean like from like the Bloomberg table,
which counts announced deals including announced hostile deals. And the
biggest deal this year is Elon's deal to BioPen Ai,
which is not a deal. It's just a bid, and
(14:56):
it's not it's not really a bit, it's a piece
of warm. It's hard. But the second biggest is this deal,
which is a let's say forty five billion dollar acquisition
or like a you know, one hundred and twenty five
billion dollar total enterprise value of the all stock merger.
It's pretty big deal, except it's like, you know, it's
two companies he owns, or now one company that owns.
Speaker 2 (15:18):
I want to talk about valuations a little bit sure,
because it kind of feels like the Xai valuation. You
could poke a lot of holes in it.
Speaker 1 (15:25):
So a couple of things. So XAI, the Ai company,
bought x the Twitter company, in an all stock deal.
So xa I assumed let's say twelve million dollars of
Twitter debt, and it paid let's say thirty three billion
dollars of stock for x What is thirty three billion
(15:46):
dollars worth of stock?
Speaker 2 (15:47):
Mean?
Speaker 1 (15:47):
Well, it means if you value Xai at eighty billion dollars,
then you give Twitter, you know, thirty three eightieths of that,
and that's thirty three billion dollars worth of stock. You
don't have to believe eitheraluation. What actually happened was that, like,
they merged at a ratio, right, the people who owned
Xai got eighty one hundred and thirteen so of the company,
(16:09):
and the people who owned Twitter got thirty three hundred
and thirteens of the company. And that was the ratio
that happened. They could have been worth eighty dollars and
thirty three dollars right, or they could have been worth
eighty billion dollars and thirty three billion dollars or any
other number in that ratio. So you don't have to
believe the valuations. And it's interesting, like the last round
where Xai raised cash, it was like, I think at
(16:30):
a fifty one billion.
Speaker 2 (16:32):
It was fifty one billion in December. You did point
out that in mid February, Bloomberg reported that Xai was
canvassing potential investors for a ten billion dollar funding round
that would value it at seventy five billion dollars. But
I think that happened.
Speaker 1 (16:47):
X raised money recently at a you know, I've been
saying thirty three and forty five thirty three million dollar
equity evaluation, forty five billion dollars enterprise eye, Like that
was a weird round. And one thing about it is
like Elon Musk put in some money, and in hindsight,
you could sort of be like, well, they were doing
that to like print a trade at that price, so
(17:09):
they could justify doing the merger at that price, because
like you know, there was like talk of like X
being down fifty percent from where he bought it, and
I think it's nice for him to close it out
at the price that he paid for it. Yeah, but
like you know, you don't have to believe any of
those valuations because in a rough sense, like what happened
here was that Elon Musk owns two companies and he's
(17:30):
mushed them into one company. It doesn't matter what the
valuation was. Now that's not quite true because there are
minority shareolders in both companies, but like they're like along
for the ride. They don't they don't get us say
that they're not going to complain about the valuations of
any of these things.
Speaker 2 (17:44):
So I mean, are there any anti trust concerns here
at all?
Speaker 1 (17:47):
Like ABC anything I mentioned, Like you know, usually you
have some delay between signing and closing because you have
to like fill out anti trust forms. But someone pointed
out they're both owned by the same guy. Anyway, So
there's really no antigie concerns in many respects. The thing
to say I had this deal is those companies were
already the same company, So it doesn't really matter for antitrust,
(18:09):
or for fiduciary duties, or for valuation or for anything
else that they're emerging, Right, It's just like, yeah, sure,
it's like he's reshuffling the paperwork for his own companies. Yeah.
The one thing I'll say is, like why did he
merge them? One possible answer is that these are kind
of the same business and so like one reason that
I think Elon Musk has a bunch of separate companies
for all of the different ideas is like you want
(18:30):
to have like the companies have some focus and have
the employees of these companies have shares or options in
like their one companies. They're really motivated to do a
good job for that one company. And so like Tesla
and SpaceX are doing different things, so like move people
between them, but like you want to pay the Tesla
people in Tesla options and the SpaceX people and SpaceX options.
And I think that like there was a reason to
(18:52):
separate x and XAI because like AI was really hot
and he wanted to like raise money and like get
employees and pressed doing AI. But like increasingly I think
that they're the same business, which is that you collect
a lot of data like natural language of data and
information from the Twitter user corpus, right, and then you
(19:15):
feed that into models that are built by AI engineers
who work at XAI, and then you produce a large
language model you distribute through Twitter, right, Like their model
is distributed. It's like a.
Speaker 2 (19:28):
I know what GROC is is because of Twitter obviously,
but that's like that's not weird.
Speaker 1 (19:32):
Like every AA company is different, like trying to figure
out business models, but like a lot of stuff is
like there's a consumer distribution right where like open ai
among other products, sells access to you know, you could
like subscribe and have chat GPT, right and you pay
the fee every month to have like the consumer version
of Chat GPT and GROC is like that, and like
their distribution is through X and so it's increasing and
(19:54):
it's like this is the same business. It's like the
inputs and like the outputs are through X and like
the model in the middle has done through so like
everyone should be kind of working for the same goals.
And like motivated the same way. So we should merge
it so that like the employees are getting incentivized, yeah,
to help the whole system.
Speaker 2 (20:09):
Well, it's a nice reminder that like nothing truly matters.
And I guess that my experience on X as a
user won't change, So I'm not particularly fussed about this.
I do want to go to the second element in your.
Speaker 1 (20:21):
People were like, you know, like I wrote about this,
I got a lot of people have been like, but
now they're going to like steal all your data. They
are It's like they already were, like they all like
the commercial relationship like already existed X. I was already
paying X for like data and distribution, and like it
was already standing all your data sort of using all
of your data for sure. So there's no there's no
real change, I don't think.
Speaker 2 (20:42):
I do want to go to the second element in
the Musk Mars conglomerate that you penned. You're right, nothing
is permanent, and if one of the company succeeds while
another one has some temporary struggles, the winner can subsidize
or buy the loser. Talking about Musk's portfolio of different companies, this.
Speaker 1 (20:58):
Is like Tesla acquired Solar City years ago and a
deal that people suit over and they kind of kind
of looked like a ballout of some Yeah.
Speaker 2 (21:06):
Well you could see the reverse logic and like Tesla
buying Xai in a distant reality because Tesla is really
in the hurt locker. But I don't think Xai could
buy Tesla. It still has a market cap of something.
Speaker 1 (21:19):
They're saying buying it would be a merger. Merger, would
be a stock merger, and I think it would be
hard for a number of reasons, one of which is,
like I just made the case that x and xaire
the same business. Yes, this is a different business.
Speaker 2 (21:32):
Yes that's true.
Speaker 1 (21:33):
He's overlap or you're doing AI stuff to make the
self driving cars, but it's a pretty different business.
Speaker 2 (21:37):
Hasn't he said that he wants Tesla to be an
AI company.
Speaker 1 (21:40):
I might, Well, it is an AI self driving car
comp company, but it's very different, you know, but the
way there's some overlap, but it's not the same business
model or distribution. But then also like this deal is
so easy because they're private companies. M M. There are
shoulders other than him and both of these companies, but
like they're there because they him. They're not going to complain.
(22:01):
Dessa is a different situation, right, Like, every shareholder in
XAI or x is there because they like trust Elon
Musk and they want him to do stuff right, and
they will give him a lot of leeway to do
the stuff he thinks is good. Many vocal retail investors
vocal institutional investors too, and Tesla are like that, but
not all of them. No, Like, the one thing that
(22:23):
exists in Tesla is there are people who like really
don't like Elon Musk who will buy Tesla stock in
order to be able to complain about Elon Musk. Right,
Like I read this week about the controller of the
City of New York, Right, Like New York Pension funds
own a lot of Tesla stock. This is not because
they're huge Elon Musk fans, right, Some of it is
because they're like sort of indexy. Yeah, but also you
(22:46):
just do it to be like, I'll keep an eye
on that Elon Musk character. All own some of his stock,
and so like the controllers sent a letter to like
the legal department of the pension fund saying we should
sue Elon Musk because he is distracted by his role
in the government, and he is advocating policies that are
bad for Tesla, and like you know, they're like you say,
(23:08):
Tesla's in the hard locker. It's because like you know,
there's like boycotts and and stuff because people don't like.
Speaker 2 (23:14):
That's one part of it.
Speaker 1 (23:15):
But yeah, yeah, sure, right right.
Speaker 2 (23:16):
The ha'd some pretty ugly delivery numbers, which I think some.
Speaker 1 (23:20):
People, including the control of this city of New York,
would say is in part due to slackening demand because
people are mad at Elon Musk's politics.
Speaker 2 (23:28):
Right, I'm also anti EV, and I think that I
don't know they've reached their addressable market on the.
Speaker 1 (23:34):
Side, all right, But like if you think about the
people who are like in the addressable market or like
people are like I love an EV and the people
who are like I also love far right politics, like
you know, there's some disjunction there anyway, though, So like
the New York might sue for like securities fraud for doage,
which is you know, a real everything is security. But anyway,
my point is only that Tesla, if it were to
(23:58):
merge with XAI, would be all SARTs of lawsuits that
you don't have when it's all private companies.
Speaker 2 (24:03):
That's true. Well, I guess it would make more sense
with SpaceX since they both make things that go fast.
But that's a gross over simplification.
Speaker 1 (24:12):
There was that time I think all the time that
Elion must treated that the next Tess the model would
have rocket posters and be able to fly, And like
there were articles that were like, how feasible? Is this
just a public company saying this stuff? And you know
this is like seven years ago?
Speaker 2 (24:32):
Did he mean it back when it happened things mattered
back then?
Speaker 1 (24:36):
Well?
Speaker 2 (24:36):
No, no, a little bit seven years ago.
Speaker 1 (24:40):
I actually don't know, might be any number of years ago.
It's more than three in.
Speaker 2 (24:44):
Less than fifteen pre pandemic. That's why I think about things.
Speaker 1 (25:03):
Should we talk about substitute teachers?
Speaker 2 (25:05):
We absolutely should. Have you seen lately what substituted teachers
in Maryland are making?
Speaker 1 (25:11):
Seven million dollar.
Speaker 2 (25:14):
Louise? What are we doing?
Speaker 1 (25:16):
Yeah, So there's a story about like a Maryland state
audit of like the Prince George's County school system that
found various administrative errors, sloppiness, And the one that I
was drawn to is that a substitute teacher taught for
like three days, and they entered this teacher's information into
the system to some them like a you know, check
(25:38):
for their few days of work. And they put the
teacher's ID number into the hours worked field, and the
ID number had more digits than you want in the
hours work field. And so they sent the person a
check for seven million dollars. And they noticed that fifty
days later and asked for it back, and the teacher
gave it back. And I just like to do it.
(26:00):
Imagine what this person did. You've seen this person on
the gender of the teacher. I imagine what the teacher
did in those fifty days, and so do my readers.
There's a lot of emails about this. Most of them
were to the effect of, you take that money, you
put it in a money market fund. Fifty days later,
when they ask for the money back, you give it back,
(26:21):
and you keep the thirty to fifty thousand dollars spending
exactly how you count the tens of thousand dollars of
interest is yours to keep. You're briefly the owner of
seven million dollars. But you you know, you can collect
interest on seven million dollars, and it's a meaningful amount
of money.
Speaker 2 (26:36):
Absolutely, that's like.
Speaker 1 (26:37):
The most reasonable thing that you can do with it.
The other thing that someone sent me was like, you
should go to a trading firm. This is someone who
works like a trading firm. He's like, you should go
to like an insurance company or trading firm and buy
insurance on this. You should be like, I will give
you this person's had like three and a half million dollars,
three and a half million dollars, and if they come
to me for the money back, you give them seven
(26:57):
million dollars, and if they don't, you keep the three
and a half million dollars. So you're paying an insurance
rooom for. Are they going to ask you for the
money back? Now? I don't think any trading firm would
do that at fifty percent odds, But you could give
them like six point eight million dollars and someone might
take that trade and then you keep the two hundred thousand.
You know, the trade you can do.
Speaker 2 (27:16):
Maybe I would love to know what this person actually did,
though I don't think that we can get this person
on the podcast out.
Speaker 1 (27:22):
On their checking account for Are you sure? No, that's sure?
Speaker 2 (27:26):
I mean, this is the whole point of what we're reading.
But you are magic seven million dollars, You're just an
ordinary person. You just leave it in your checking account.
Speaker 1 (27:34):
You weren't magic, you were mistakenly paid it. Yeah, Now
there's a range of things you can do. You can
call the school system and be like, you mistakenly paid
me seven million dollars. Teachers seems not to have done that.
There's a number where I would do that. You know,
if I was accidentally paid, you know, an extra two
hundred dollars, I would probably call. Really I don't know,
(27:54):
I mean, but.
Speaker 2 (27:55):
Yeah, I don't think I would have noticed.
Speaker 1 (27:58):
If I were accidentally paid an amount that I noticed,
but that would not materially change my life, like really
materially change my life. I would probably call and be like, hey,
I'm a nice person, let's sort this error out. But
it's not really does like, let's see where.
Speaker 2 (28:11):
This goes, right, See, I'm the exact opposite of you.
If it was it's hard to do this without talking
about numbers. If it was seven million dollars, I would
probably call because that is so egregiously an error. There's
like no way I'm going to be able to keep this.
If it was far less than that, like not enough
to change my life, but enough that I could might.
(28:31):
If it was enough to buy worth a young Greenborough horse,
I would probably not call about it.
Speaker 1 (28:39):
But like that, when you spend it on the horse,
you would like the next day go out and buy
a horse.
Speaker 2 (28:45):
Well, I'd have to find the horse first, you know, Okay,
like while you're.
Speaker 1 (28:50):
Test riding, there's a good chance that the last for
the money bag.
Speaker 2 (28:53):
That's true. That's true. I wouldn't spend it immediately, but
I would start the process.
Speaker 1 (28:58):
The choice is not like you call and say, hey,
there's an error here, or you keep the money forever. Yeah,
Like there's the vast middle ground if you don't call
and you worry, right, which is what this person did, right,
that's not keeping that money.
Speaker 2 (29:09):
I probably would not spend it immediately, like in any situation,
but I'm not really an impulse sure.
Speaker 1 (29:15):
My favorite reader email about this, yeah, came from someone
who worked at a bank and got overpaid. He was
mistakenly paid like a bonus or something, and it was
like not seven million dollars, but it was. I think
he was like a young person. I don't know. It
was tens of thousands of dollars, and he says he
consulted an employment layer and learned about the time period
(29:36):
for letches, which is a legal concept of like basically,
how long do you have to wait before you don't
have to worry about anymore. It's like a statute of
limitations for stuff like this. And the lawyer told him
it was six years. Wow. He waited out the six years.
Speaker 2 (29:52):
Wow.
Speaker 1 (29:53):
And he's like at the end, I threw a claim
has lapsed party. That's awesome because they didn't ask.
Speaker 2 (29:58):
The money bag man. That is a great email. But
like I just.
Speaker 1 (30:02):
Imagine like the mindset of like this money has been
mistakenly deposited my account. Let me ask a lawyer, like
I reade one's about the city group error and one, yeah,
I know when they send the nine hundred million dollars
to Hedgehunds that were mad at them, and the Hedgehts
kept it. I wrote about the Hedgehunds consulting finders keepers
lawyers because like they did actually like bring a claim,
(30:24):
being like no, we're allowed to keep the money. But
like there are finders keepers layers out there in the world,
and you can consult one and be like you have
six years. If you get through six years, you can
keep the money. And he did.
Speaker 2 (30:34):
I would love to have gone to that party.
Speaker 1 (30:36):
That sounds like a party.
Speaker 2 (30:38):
Yeah, that's a good theme. I love a theme. That's
a good one. It's a good man.
Speaker 1 (30:42):
It's not I got a mistaken bonus. It's six years later.
They haven't asked for my mistaken bonus back. It's so good.
Speaker 2 (30:50):
I wonder if you told the bank, oh, it's not.
Speaker 1 (30:52):
That's a good point. Probably not, but now they know
I should say this is not legally pace.
Speaker 2 (30:56):
I have no idea what the city group.
Speaker 1 (31:01):
I know that would be too perfect. Hi. Yeah, yeah,
siting here. Check. And that was the Money Stuff Podcast.
Speaker 2 (31:10):
I'm Matt Levian and I'm Katie Greifeld.
Speaker 1 (31:12):
You can find my work by subscribing to the Money
Stuff newsletter.
Speaker 2 (31:15):
On Bloomberg dot com, and you can find me on
Bloomberg TV every day on Open Interest between nine to
eleven am Eastern.
Speaker 1 (31:23):
We'd love to hear from you. You can send an
email to money Pod at Bloomberg dot net, ask us
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Speaker 2 (31:29):
You can also subscribe to our show wherever you're listening
right now and leave us a review it helps more
people find the show.
Speaker 1 (31:35):
The Money Stuff Podcast is produced by Anna Maserakus and
Moses onam Ar.
Speaker 2 (31:39):
Thea music was composed by Blake Maples.
Speaker 1 (31:41):
Brandon, Francis Nudimens, our executive producer.
Speaker 2 (31:44):
And Stage Bauman is Bloomberg's head of podcasts.
Speaker 1 (31:46):
Thanks for listening to The Money Stuff Podcast. We'll be
back next week with more stuff
Bloomberg Audio Studios, Podcasts, Radio News. Hello and welcome to
The Money Stuff Podcast. You're a weekly podcast where we
talk about stuff related to money. I'm Matt Levian and
I write the Money Stuff column for Bloomberg Opinion.
Speaker 2 (00:19):
And I'm Katie Greifeld, a reporter for Bloomberg News and
an anchor for Bloomberg Television.
Speaker 1 (00:25):
That's Today. It was an all tariffs episode of The
Money suff.
Speaker 2 (00:30):
I actually would be the most prepared out in any
episode that we've ever done.
Speaker 1 (00:36):
We're talking about tariffs, non fought for forty eight hours.
Speaker 2 (00:39):
I was actually at my Grandmam's apartment last night, or
I guess in the afternoon.
Speaker 1 (00:43):
Talking about taffs.
Speaker 2 (00:44):
Well, I was with my dad, and my dad and
I both were like, can we turn on the TV?
My grandma was like sure, yeah, so we watched it
with her. No, yeah, the Rose Garden. Anyway, we're not
talking about tariffs. We are talking about a conservative leaning
(01:06):
news network.
Speaker 1 (01:07):
That in public conservative leading. Yeah.
Speaker 2 (01:09):
Yeah, I don't know what news Max does. I probably should.
Speaker 1 (01:12):
They're a television channel that I know.
Speaker 2 (01:14):
I've never watched them.
Speaker 1 (01:14):
They've take out the vast territory to the far right
of Fox News is.
Speaker 2 (01:19):
My understanding of it, them, you know, and their IPO.
At one point they had a market value of over
thirty billion dollars, which had them more valuable than Fox
for a brief moments of time. The stock has since
started to come back to earth.
Speaker 1 (01:33):
I don't pretend to understand this anymore. Yeah, the meme thing,
like the meme ipo thing. I think of this in
comparison to Trumpet Media and technology grew up the other
let's say, right wing media network. Maybe that also has
a very high valuation relative to its fairly low revenue
and net loss, and trump Media is owned by people
(01:55):
who are like, yeah, great, but like News is probably
owned by Thomas Pettif, who, in addition to being a
billionaire Republican downer, is also like a trader, you know,
Like he's the founder of Attractor Breakers, So like the ft.
You got him on the phone and he was like,
he said, he was stunned by the price. I think
newsbacks is a great company, and it's going to have
a very bread feature, but I think that it does
(02:16):
not warrant this high price. It was just like, you know,
in addition to being a real billionaire, he's like a
billion dollars worth of Newsmax stock.
Speaker 2 (02:23):
Yeah, he owns the second largest steak. It was at
one point worth at least five point four billion dollars.
I wonder if he's sold.
Speaker 1 (02:30):
I think he's locked up. Really, I think like to
ask him, like, are you going to sell? And you
know I can change before the long most big sharelders
are locked up in IPOs like that. And it's funny,
like for the same reason that the thigh prices, some
of the commentary that you'll read from enthusiasts is not
always well informed. And I read someone being like, what
will Newsmacks do with all of this capital while they
use it to become the next big media, Like they're
(02:51):
not getting any capital. It's just like the stock is
trading in the secondary market. You know, there's like a
real move among meme stocks that if your stock is meaning,
you should get off at the market stock offering so
you can raise money from the people who are buying
your stock in the secondary market and pushing out the price.
But you can't do that a week after your IPO
R three days after your ip Newsmax is not selling
any stock. I mean they sold stock at ten dollars
(03:12):
before the run in the stock. But they're not making
any money from this. This is just secondary training.
Speaker 2 (03:17):
They're not making money in general. They lost seventy two
million dollars.
Speaker 1 (03:21):
These are separate things. If you're a meme stock, you
don't make money in your business. Do you make money
selling stock? But they're not even doing that.
Speaker 2 (03:26):
I'm old fashioned, mad, I like to go back to
the That's true. I guess it's hard to predict what
will become a meme stock. I would not have guessed
that Newsmax was a candidate.
Speaker 1 (03:38):
No, not really really.
Speaker 2 (03:40):
Apparently, Chris Ruddy, though the CEO, was going on like
cable news and pitching the IPO, which I didn't know.
Had I known that, maybe I.
Speaker 1 (03:49):
Would to a TV channel.
Speaker 2 (03:50):
Yeah, that's true, but he was going on others, not
Bloomberg News. To the best of my knowledge. On the podcast,
I that's true, Chris Heiretti, if you're listening, I want
to talk a little bit about the mechanics of this IPO.
I was chatting with Bailey Lipschultz Bloomberg News about this.
He's my go to guy. Yeah, on funky things. He
(04:11):
also covers IPOs, which is a really poetic intersection. So
this was a regulation A plus it's a mini ipo.
Speaker 1 (04:20):
Okay, mini ipo?
Speaker 2 (04:21):
Yeah yeah, I didn't know that. And the reason I
found out is because I have another Matt in my
professional life. His name is Matt Miller, and he was like, wow,
the bank must have really mispriced this. And Billy made
the good point that because it's a reggae plus ipo,
they can only raise up to seventy five million, So
it's not like this was mispriced or anything.
Speaker 1 (04:41):
I mean, you can solve your shares. Who are the banks?
Speaker 2 (04:47):
Oh, I'm so excited. Do you ask Digital Offering LLC? Oh? Yeah, yeah,
Business Insider. I don't think you've seen this yet. Business Insider,
just as we're talking about this on a Thursday, published
a story titled Meet the tiny investment bank behind Newsmax's
rip roaring stock debut. Laguna Beach, California based Digital Offering
(05:08):
LLC was the bank behind this. Can I tell you
more facts about them?
Speaker 1 (05:12):
I want to hear all of the facts about them.
Speaker 2 (05:14):
I'll tell you at least three. They have ten full
time registered banker, three of whom act as principal investment bankers.
They typically advise companies valued at a billion dollars or less.
Those are actually all the facts I have. But I
have a quote from Mark Alenowitz. I hope I'm saying
his name correctly. He's a managing director there. He said,
(05:36):
the Newsmax, as you might predict, has been huge for them.
The small cap community knows who we are, but the
rest of Wall Street didn't. But now they're on the map.
Speaker 1 (05:47):
So I'm still highly open the idea that the bank's
miss priced today because like I used to be an
equity capital markets banker, I think of like, well you
do an IPO is you go out to institutional accounts
and you build a book of institutional accounts and you
put some stuff with retail. But you go to an
institution and you're like, well we lost seventy million dollars
one hundred seventy million over revenue. There's some cap to
the valuation you're going to get, right, And if you
(06:08):
trade on the secondary market to retail, there is not
that cap or any cap right, Like you can be
a thirty billion dollar company for briefly if you have
those kind of numbers. And so if you go to
institutional investors and say this is going to be a
memes talks that are prising it at two hundred dollars,
they will laugh at you. By the way, I don't
want to say black Ben tried that, but like.
Speaker 2 (06:29):
A little bit, a little bit friend of the show.
Speaker 1 (06:31):
Front of the show, Black they did it. But I
don't think that's the case here because the Reggae plus
offering done by a small bank might have been you know,
it was for the small cap community. It's not like
they're selling this to fidelity necessarily. Yeah, so maybe they
did misprice it as a meme matter. I don't know.
Speaker 2 (06:47):
I don't know. Well, it'll be interesting to see their
follow up to the newsmac's debut digital offering LLC.
Speaker 1 (06:53):
It does feel like a real golden age for like
a certain sort of like banker who is happy to
work with memestock companies. Right, stuff going on? Does it
going on that, like, you know, not necessarily everything wants
to be doing.
Speaker 2 (07:08):
I don't know, I feel like the golden age might
have been twenty twenty one, like these are like the
kind of thing or yeah, obviously you're still having some
memes stock IPOs, but there's just not a lot of
IPOs and I don't know.
Speaker 1 (07:21):
A lot of that's right, looking at a relative golden
age for the yeah memes stock bankers compared to the
you know, large cap it's true tech bankers.
Speaker 2 (07:31):
Everyone else could talk about circle you know what to
also in IPOs, this one hasn't happened yet, but it's
going to theoretically circle of stable coin fame has filed
for an IPO.
Speaker 1 (07:45):
Yeah, they filed like a long time ago, but their
filing became public this day. They filed like under yeah,
another special IPO rule, which is you can file confidentially,
but now they're unconfidential, so you can read their filings.
Speaker 2 (07:56):
Got some numbers. One hundred and fifty six million dollars,
that's their net in. That's on revenue of one point
six eight billion dollars in twenty twenty four. My only
simple question for you is how does the stable coin
make money? Is that just because they're backed.
Speaker 1 (08:11):
By how they're making Yeah, that's it. So oh yeah,
it's the best business in the world. And it's actually like,
it was surprising to me that their margins are so low,
and it's it's a little interesting why their margins aren't
one hundred percent. Yeah, but no they make money by
like they take tens of billions of dollars of deposits
from customers. You know, I read about this. They don't
directly put it in T bills because I think my
(08:34):
explanation would be like that is too much of like
a banking function or a financial services function, and they're
like a fintech. So what they do is they take
all the money and they put it in a black
Rock money market fund that puts it in T bills.
Speaker 2 (08:46):
That's amazing.
Speaker 1 (08:46):
Effectively, they put it in T bills and they pay
black Rock to be a sort of like adults custodian
in their T bills. Yeah, they put someone in bank accounts,
but it's like eighty five percent T bills. They say
they make a discount to sover, but they kind of
make T bill rits and then they pay as a
first cut zero percent interest to their customers. Now it's
like quite right, it's basically right. So they're making you know,
(09:10):
four percent or so on tens of billions of dollars,
and that might be a slight exaggeration, but it's like,
you know, they're making a lot of money, and then
where does it go? I mean some of it is
like they have expenses because they are a tech company.
They're building for sure, technological infrastructure to transfer stable coins
on the blockchain, et cetera, outside et cetera. Another big
part of it is like everyone knows this is a
(09:31):
good business model. It's not quite it's quite a business
a winner take all business model, but it's a little
bit like you want to be the most liquid stable coin,
and so they are paying platforms to be like a
preferred stable coin, so like they're the stable coin of coinbase,
and like there's a partnership with coinbase, and if their
coins are held on coin Base, like they're paying Coinbase
a lot of the interest. Right, They're paying fees to
(09:52):
buyance to be on binance, So there's some amount of like,
you know, this is a good business, and so the
customer acquisition cost is kind of they're paying something.
Speaker 2 (10:00):
But it feels like it's only a good business when
rates are high.
Speaker 1 (10:03):
So, right, it's such an interesting business because it's stumbled
into being a good business. It started. The stable coin
business started when rates were low, and everyone was like, well,
it's fine if we don't get paid interest, because it
was interested. You know, you don't get interest on our
savings accounts, on our money market account. So it's fine. Yeah,
And now the rates are high and you do get
interest on your money market account, and the stablegin issuers
(10:25):
are raking in money, and there are reasons that you
can't just easily natively get that interest on your stable coin. Yeah.
Think one reason is, like you know, that's like historically
not how it developed, and like you know, the biggest
stablekind issuers have ever liquidity advantage and they don't want
to pay interest. But another reason is, like there's securities,
(10:45):
a lot problems with doing it. If you were paying
interest on a stable clin it's not in like the
sort of crypto e gray area where it's probably fine.
It's a money market fund and it's security. And I
mean this is at least the sec theory as of
four months ago. And one thing that I have written
for a long time is that clearly people are going
to just start issuing interest sparing stable coins that are
(11:06):
you know, registered money market funds that trade on a blockchain.
And if you look at the Circle IPO documents, like
they talk about that, like they have an issuer that
does that that has like a small money market fund
and they are doing essentially an intersparing stable coin that
you can convert into like their regular coin. And they
kind of hint and I'm sure that there will be
more of that and like ultimately some of this, like
(11:28):
free money, will be returned to customers.
Speaker 2 (11:31):
Why am I thinking of black Rock and Securitized don't
they have something everyone has?
Speaker 1 (11:35):
Yeah, has a tokenized market fund circle I think owns
a company that does it in addition to like having
their stablegoin money out of black Rock fund. Yeah, everyone's
doing it. Franklin Templeton did it, like in twenty nineteen.
I watched their Recognize one remember that, Yeah, And I
was like, why is it not called the Benjamin And
no one had a good answer.
Speaker 2 (11:55):
I am excited to see how this is received when
it eventually does become public, because I know, you know,
you think about all the other like crypto equities. I
imagine this is going to trade similarly to the price
of bitcoin, even though maybe it shouldn't if it's I mean,
it's really just a money market fund with a lot
of I mean, like you know, as a first cut.
Speaker 1 (12:16):
Their business is kind of like what is the market
cap of like their coins outstanding and like the market
cap of stable coins outstanding does have a lot to
do with like demand for crypto.
Speaker 2 (12:24):
Yeah, that's true. It's not as direct though, as like
no micro strategy owns a ton of points, so it's
not exactly a proxy. It's obviously not.
Speaker 1 (12:34):
A pricy for bitcoin. I always think about like Golden
used to say that, like their business is at on
global GDP, and like the stable grend business is a
bet on like crypto GDP. Right, like if if crypto
is booming, like there will be more demand for stable
clins Now they're separately like a competitive dynamic and table
coins where like they might lose out to other stable coins.
And there's like the business model of like we get
(12:55):
interest and don't pay. Interest might be compressed and they
might have to pay more interest, like you know probably
speaking like the more crypto there is, the more people
will want their stable colin.
Speaker 2 (13:04):
I wonder like what the pitch to buy circle shares is,
especially if we have billions.
Speaker 1 (13:09):
Of dollars we get paid interest.
Speaker 2 (13:10):
That we don't pay, interest rates go down, Like what's
the point.
Speaker 1 (13:13):
The pitch is? Like we are building the future of
financial infrastructure, Like there's like the real upside case is
like five years, the way that you normally pay for
stuff will be with a regulated US stable clin instead
of venmo or credit cards or checks or whatever. You
will boop some circle coins to someone, right, Like, that's
(13:36):
the upside case.
Speaker 2 (13:37):
It's kind of coin to think we'll still be here
in five years. Yeah, right, man. You know we were
(13:57):
talking about right leaning like social media networks boy x X,
Twitter x X now part of x a I holdings. Yes, man,
so I obviously immediately thought of you on.
Speaker 1 (14:15):
The chronic layer of Elon Musk's mergers and this technically.
Speaker 2 (14:19):
Yeah, I thought about texting you, but I was it
was done.
Speaker 1 (14:24):
You spared me, right. I remember saying that it seems like.
Speaker 2 (14:30):
This though, isn't like that huge of a deal, Like
this didn't rock your world as much as some might
have expected it to.
Speaker 1 (14:36):
It's the biggest mn A deal this year. Yeah, and
the second biggest, actually maybe the first biggest is Elon
Musk's very biggest I mean like from like the Bloomberg table,
which counts announced deals including announced hostile deals. And the
biggest deal this year is Elon's deal to BioPen Ai,
which is not a deal. It's just a bid, and
(14:56):
it's not it's not really a bit, it's a piece
of warm. It's hard. But the second biggest is this deal,
which is a let's say forty five billion dollar acquisition
or like a you know, one hundred and twenty five
billion dollar total enterprise value of the all stock merger.
It's pretty big deal, except it's like, you know, it's
two companies he owns, or now one company that owns.
Speaker 2 (15:18):
I want to talk about valuations a little bit sure,
because it kind of feels like the Xai valuation. You
could poke a lot of holes in it.
Speaker 1 (15:25):
So a couple of things. So XAI, the Ai company,
bought x the Twitter company, in an all stock deal.
So xa I assumed let's say twelve million dollars of
Twitter debt, and it paid let's say thirty three billion
dollars of stock for x What is thirty three billion
(15:46):
dollars worth of stock?
Speaker 2 (15:47):
Mean?
Speaker 1 (15:47):
Well, it means if you value Xai at eighty billion dollars,
then you give Twitter, you know, thirty three eightieths of that,
and that's thirty three billion dollars worth of stock. You
don't have to believe eitheraluation. What actually happened was that, like,
they merged at a ratio, right, the people who owned
Xai got eighty one hundred and thirteen so of the company,
(16:09):
and the people who owned Twitter got thirty three hundred
and thirteens of the company. And that was the ratio
that happened. They could have been worth eighty dollars and
thirty three dollars right, or they could have been worth
eighty billion dollars and thirty three billion dollars or any
other number in that ratio. So you don't have to
believe the valuations. And it's interesting, like the last round
where Xai raised cash, it was like, I think at
(16:30):
a fifty one billion.
Speaker 2 (16:32):
It was fifty one billion in December. You did point
out that in mid February, Bloomberg reported that Xai was
canvassing potential investors for a ten billion dollar funding round
that would value it at seventy five billion dollars. But
I think that happened.
Speaker 1 (16:47):
X raised money recently at a you know, I've been
saying thirty three and forty five thirty three million dollar
equity evaluation, forty five billion dollars enterprise eye, Like that
was a weird round. And one thing about it is
like Elon Musk put in some money, and in hindsight,
you could sort of be like, well, they were doing
that to like print a trade at that price, so
(17:09):
they could justify doing the merger at that price, because
like you know, there was like talk of like X
being down fifty percent from where he bought it, and
I think it's nice for him to close it out
at the price that he paid for it. Yeah, but
like you know, you don't have to believe any of
those valuations because in a rough sense, like what happened
here was that Elon Musk owns two companies and he's
(17:30):
mushed them into one company. It doesn't matter what the
valuation was. Now that's not quite true because there are
minority shareolders in both companies, but like they're like along
for the ride. They don't they don't get us say
that they're not going to complain about the valuations of
any of these things.
Speaker 2 (17:44):
So I mean, are there any anti trust concerns here
at all?
Speaker 1 (17:47):
Like ABC anything I mentioned, Like you know, usually you
have some delay between signing and closing because you have
to like fill out anti trust forms. But someone pointed
out they're both owned by the same guy. Anyway, So
there's really no antigie concerns in many respects. The thing
to say I had this deal is those companies were
already the same company, So it doesn't really matter for antitrust,
(18:09):
or for fiduciary duties, or for valuation or for anything
else that they're emerging, Right, It's just like, yeah, sure,
it's like he's reshuffling the paperwork for his own companies. Yeah.
The one thing I'll say is, like why did he
merge them? One possible answer is that these are kind
of the same business and so like one reason that
I think Elon Musk has a bunch of separate companies
for all of the different ideas is like you want
(18:30):
to have like the companies have some focus and have
the employees of these companies have shares or options in
like their one companies. They're really motivated to do a
good job for that one company. And so like Tesla
and SpaceX are doing different things, so like move people
between them, but like you want to pay the Tesla
people in Tesla options and the SpaceX people and SpaceX options.
And I think that like there was a reason to
(18:52):
separate x and XAI because like AI was really hot
and he wanted to like raise money and like get
employees and pressed doing AI. But like increasingly I think
that they're the same business, which is that you collect
a lot of data like natural language of data and
information from the Twitter user corpus, right, and then you
(19:15):
feed that into models that are built by AI engineers
who work at XAI, and then you produce a large
language model you distribute through Twitter, right, Like their model
is distributed. It's like a.
Speaker 2 (19:28):
I know what GROC is is because of Twitter obviously,
but that's like that's not weird.
Speaker 1 (19:32):
Like every AA company is different, like trying to figure
out business models, but like a lot of stuff is
like there's a consumer distribution right where like open ai
among other products, sells access to you know, you could
like subscribe and have chat GPT, right and you pay
the fee every month to have like the consumer version
of Chat GPT and GROC is like that, and like
their distribution is through X and so it's increasing and
(19:54):
it's like this is the same business. It's like the
inputs and like the outputs are through X and like
the model in the middle has done through so like
everyone should be kind of working for the same goals.
And like motivated the same way. So we should merge
it so that like the employees are getting incentivized, yeah,
to help the whole system.
Speaker 2 (20:09):
Well, it's a nice reminder that like nothing truly matters.
And I guess that my experience on X as a
user won't change, So I'm not particularly fussed about this.
I do want to go to the second element in your.
Speaker 1 (20:21):
People were like, you know, like I wrote about this,
I got a lot of people have been like, but
now they're going to like steal all your data. They
are It's like they already were, like they all like
the commercial relationship like already existed X. I was already
paying X for like data and distribution, and like it
was already standing all your data sort of using all
of your data for sure. So there's no there's no
real change, I don't think.
Speaker 2 (20:42):
I do want to go to the second element in
the Musk Mars conglomerate that you penned. You're right, nothing
is permanent, and if one of the company succeeds while
another one has some temporary struggles, the winner can subsidize
or buy the loser. Talking about Musk's portfolio of different companies, this.
Speaker 1 (20:58):
Is like Tesla acquired Solar City years ago and a
deal that people suit over and they kind of kind
of looked like a ballout of some Yeah.
Speaker 2 (21:06):
Well you could see the reverse logic and like Tesla
buying Xai in a distant reality because Tesla is really
in the hurt locker. But I don't think Xai could
buy Tesla. It still has a market cap of something.
Speaker 1 (21:19):
They're saying buying it would be a merger. Merger, would
be a stock merger, and I think it would be
hard for a number of reasons, one of which is,
like I just made the case that x and xaire
the same business. Yes, this is a different business.
Speaker 2 (21:32):
Yes that's true.
Speaker 1 (21:33):
He's overlap or you're doing AI stuff to make the
self driving cars, but it's a pretty different business.
Speaker 2 (21:37):
Hasn't he said that he wants Tesla to be an
AI company.
Speaker 1 (21:40):
I might, Well, it is an AI self driving car
comp company, but it's very different, you know, but the
way there's some overlap, but it's not the same business
model or distribution. But then also like this deal is
so easy because they're private companies. M M. There are
shoulders other than him and both of these companies, but
like they're there because they him. They're not going to complain.
(22:01):
Dessa is a different situation, right, Like, every shareholder in
XAI or x is there because they like trust Elon
Musk and they want him to do stuff right, and
they will give him a lot of leeway to do
the stuff he thinks is good. Many vocal retail investors
vocal institutional investors too, and Tesla are like that, but
not all of them. No, Like, the one thing that
(22:23):
exists in Tesla is there are people who like really
don't like Elon Musk who will buy Tesla stock in
order to be able to complain about Elon Musk. Right,
Like I read this week about the controller of the
City of New York, Right, Like New York Pension funds
own a lot of Tesla stock. This is not because
they're huge Elon Musk fans, right, Some of it is
because they're like sort of indexy. Yeah, but also you
(22:46):
just do it to be like, I'll keep an eye
on that Elon Musk character. All own some of his stock,
and so like the controllers sent a letter to like
the legal department of the pension fund saying we should
sue Elon Musk because he is distracted by his role
in the government, and he is advocating policies that are
bad for Tesla, and like you know, they're like you say,
(23:08):
Tesla's in the hard locker. It's because like you know,
there's like boycotts and and stuff because people don't like.
Speaker 2 (23:14):
That's one part of it.
Speaker 1 (23:15):
But yeah, yeah, sure, right right.
Speaker 2 (23:16):
The ha'd some pretty ugly delivery numbers, which I think some.
Speaker 1 (23:20):
People, including the control of this city of New York,
would say is in part due to slackening demand because
people are mad at Elon Musk's politics.
Speaker 2 (23:28):
Right, I'm also anti EV, and I think that I
don't know they've reached their addressable market on the.
Speaker 1 (23:34):
Side, all right, But like if you think about the
people who are like in the addressable market or like
people are like I love an EV and the people
who are like I also love far right politics, like
you know, there's some disjunction there anyway, though, So like
the New York might sue for like securities fraud for doage,
which is you know, a real everything is security. But anyway,
my point is only that Tesla, if it were to
(23:58):
merge with XAI, would be all SARTs of lawsuits that
you don't have when it's all private companies.
Speaker 2 (24:03):
That's true. Well, I guess it would make more sense
with SpaceX since they both make things that go fast.
But that's a gross over simplification.
Speaker 1 (24:12):
There was that time I think all the time that
Elion must treated that the next Tess the model would
have rocket posters and be able to fly, And like
there were articles that were like, how feasible? Is this
just a public company saying this stuff? And you know
this is like seven years ago?
Speaker 2 (24:32):
Did he mean it back when it happened things mattered
back then?
Speaker 1 (24:36):
Well?
Speaker 2 (24:36):
No, no, a little bit seven years ago.
Speaker 1 (24:40):
I actually don't know, might be any number of years ago.
It's more than three in.
Speaker 2 (24:44):
Less than fifteen pre pandemic. That's why I think about things.
Speaker 1 (25:03):
Should we talk about substitute teachers?
Speaker 2 (25:05):
We absolutely should. Have you seen lately what substituted teachers
in Maryland are making?
Speaker 1 (25:11):
Seven million dollar.
Speaker 2 (25:14):
Louise? What are we doing?
Speaker 1 (25:16):
Yeah, So there's a story about like a Maryland state
audit of like the Prince George's County school system that
found various administrative errors, sloppiness, And the one that I
was drawn to is that a substitute teacher taught for
like three days, and they entered this teacher's information into
the system to some them like a you know, check
(25:38):
for their few days of work. And they put the
teacher's ID number into the hours worked field, and the
ID number had more digits than you want in the
hours work field. And so they sent the person a
check for seven million dollars. And they noticed that fifty
days later and asked for it back, and the teacher
gave it back. And I just like to do it.
(26:00):
Imagine what this person did. You've seen this person on
the gender of the teacher. I imagine what the teacher
did in those fifty days, and so do my readers.
There's a lot of emails about this. Most of them
were to the effect of, you take that money, you
put it in a money market fund. Fifty days later,
when they ask for the money back, you give it back,
(26:21):
and you keep the thirty to fifty thousand dollars spending
exactly how you count the tens of thousand dollars of
interest is yours to keep. You're briefly the owner of
seven million dollars. But you you know, you can collect
interest on seven million dollars, and it's a meaningful amount
of money.
Speaker 2 (26:36):
Absolutely, that's like.
Speaker 1 (26:37):
The most reasonable thing that you can do with it.
The other thing that someone sent me was like, you
should go to a trading firm. This is someone who
works like a trading firm. He's like, you should go
to like an insurance company or trading firm and buy
insurance on this. You should be like, I will give
you this person's had like three and a half million dollars,
three and a half million dollars, and if they come
to me for the money back, you give them seven
(26:57):
million dollars, and if they don't, you keep the three
and a half million dollars. So you're paying an insurance
rooom for. Are they going to ask you for the
money back? Now? I don't think any trading firm would
do that at fifty percent odds, But you could give
them like six point eight million dollars and someone might
take that trade and then you keep the two hundred thousand.
You know, the trade you can do.
Speaker 2 (27:16):
Maybe I would love to know what this person actually did,
though I don't think that we can get this person
on the podcast out.
Speaker 1 (27:22):
On their checking account for Are you sure? No, that's sure?
Speaker 2 (27:26):
I mean, this is the whole point of what we're reading.
But you are magic seven million dollars, You're just an
ordinary person. You just leave it in your checking account.
Speaker 1 (27:34):
You weren't magic, you were mistakenly paid it. Yeah, Now
there's a range of things you can do. You can
call the school system and be like, you mistakenly paid
me seven million dollars. Teachers seems not to have done that.
There's a number where I would do that. You know,
if I was accidentally paid, you know, an extra two
hundred dollars, I would probably call. Really I don't know,
(27:54):
I mean, but.
Speaker 2 (27:55):
Yeah, I don't think I would have noticed.
Speaker 1 (27:58):
If I were accidentally paid an amount that I noticed,
but that would not materially change my life, like really
materially change my life. I would probably call and be like, hey,
I'm a nice person, let's sort this error out. But
it's not really does like, let's see where.
Speaker 2 (28:11):
This goes, right, See, I'm the exact opposite of you.
If it was it's hard to do this without talking
about numbers. If it was seven million dollars, I would
probably call because that is so egregiously an error. There's
like no way I'm going to be able to keep this.
If it was far less than that, like not enough
to change my life, but enough that I could might.
(28:31):
If it was enough to buy worth a young Greenborough horse,
I would probably not call about it.
Speaker 1 (28:39):
But like that, when you spend it on the horse,
you would like the next day go out and buy
a horse.
Speaker 2 (28:45):
Well, I'd have to find the horse first, you know, Okay,
like while you're.
Speaker 1 (28:50):
Test riding, there's a good chance that the last for
the money bag.
Speaker 2 (28:53):
That's true. That's true. I wouldn't spend it immediately, but
I would start the process.
Speaker 1 (28:58):
The choice is not like you call and say, hey,
there's an error here, or you keep the money forever. Yeah,
Like there's the vast middle ground if you don't call
and you worry, right, which is what this person did, right,
that's not keeping that money.
Speaker 2 (29:09):
I probably would not spend it immediately, like in any situation,
but I'm not really an impulse sure.
Speaker 1 (29:15):
My favorite reader email about this, yeah, came from someone
who worked at a bank and got overpaid. He was
mistakenly paid like a bonus or something, and it was
like not seven million dollars, but it was. I think
he was like a young person. I don't know. It
was tens of thousands of dollars, and he says he
consulted an employment layer and learned about the time period
(29:36):
for letches, which is a legal concept of like basically,
how long do you have to wait before you don't
have to worry about anymore. It's like a statute of
limitations for stuff like this. And the lawyer told him
it was six years. Wow. He waited out the six years.
Speaker 2 (29:52):
Wow.
Speaker 1 (29:53):
And he's like at the end, I threw a claim
has lapsed party. That's awesome because they didn't ask.
Speaker 2 (29:58):
The money bag man. That is a great email. But
like I just.
Speaker 1 (30:02):
Imagine like the mindset of like this money has been
mistakenly deposited my account. Let me ask a lawyer, like
I reade one's about the city group error and one, yeah,
I know when they send the nine hundred million dollars
to Hedgehunds that were mad at them, and the Hedgehts
kept it. I wrote about the Hedgehunds consulting finders keepers
lawyers because like they did actually like bring a claim,
(30:24):
being like no, we're allowed to keep the money. But
like there are finders keepers layers out there in the world,
and you can consult one and be like you have
six years. If you get through six years, you can
keep the money. And he did.
Speaker 2 (30:34):
I would love to have gone to that party.
Speaker 1 (30:36):
That sounds like a party.
Speaker 2 (30:38):
Yeah, that's a good theme. I love a theme. That's
a good one. It's a good man.
Speaker 1 (30:42):
It's not I got a mistaken bonus. It's six years later.
They haven't asked for my mistaken bonus back. It's so good.
Speaker 2 (30:50):
I wonder if you told the bank, oh, it's not.
Speaker 1 (30:52):
That's a good point. Probably not, but now they know
I should say this is not legally pace.
Speaker 2 (30:56):
I have no idea what the city group.
Speaker 1 (31:01):
I know that would be too perfect. Hi. Yeah, yeah,
siting here. Check. And that was the Money Stuff Podcast.
Speaker 2 (31:10):
I'm Matt Levian and I'm Katie Greifeld.
Speaker 1 (31:12):
You can find my work by subscribing to the Money
Stuff newsletter.
Speaker 2 (31:15):
On Bloomberg dot com, and you can find me on
Bloomberg TV every day on Open Interest between nine to
eleven am Eastern.
Speaker 1 (31:23):
We'd love to hear from you. You can send an
email to money Pod at Bloomberg dot net, ask us
a question and we might answer it on air.
Speaker 2 (31:29):
You can also subscribe to our show wherever you're listening
right now and leave us a review it helps more
people find the show.
Speaker 1 (31:35):
The Money Stuff Podcast is produced by Anna Maserakus and
Moses onam Ar.
Speaker 2 (31:39):
Thea music was composed by Blake Maples.
Speaker 1 (31:41):
Brandon, Francis Nudimens, our executive producer.
Speaker 2 (31:44):
And Stage Bauman is Bloomberg's head of podcasts.
Speaker 1 (31:46):
Thanks for listening to The Money Stuff Podcast. We'll be
back next week with more stuff
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