October 17, 2025 • 31 mins
Katie and Matt discuss late-cycle credit accidents, dancing while the music plays, banks vs. private credit, the Nobel Peace Prize, institutional-grade prediction markets, 23-hour-a-day stock trading, picking off drunks at 3 a.m., digesting news outside of market hours, windows of liquidity and the rhythm of being a human.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
I'm just saying, like something could like happen, right, something
crazy could happen, right, Something crazy could happen while we're
recording this and I have to go talk about it
in like fifty two minutes.
Speaker 1 (00:21):
Is that exciting? Like you come in here an hour
before you go on television, and like you turn off
your phone. Obviously your phone is sitting right in front
of you, but like, let's pretend you turn off your
phone and focus entirely on the Money Stuff podcast, And
like what if something crazy happens and you get out
of if you're at like two fifty nine and you
go on air and they're like something crazy happening and
you're like yeah.
Speaker 2 (00:41):
They're like Katie, quick break this headline about the asteroid
that took out California, and I'm like, we're receiving reports
or something like that.
Speaker 1 (00:50):
I think you keep your life exciting.
Speaker 2 (00:52):
I do love adrenaline, like I crave adrenaline, but you know,
sometimes I get tired.
Speaker 1 (00:59):
Yeah, I'm pretty tired. I was out to a dinner
until like midnight last nightly six hours later than my
usual bedtime. So I'm in bad shape.
Speaker 2 (01:12):
Yeah, that's crazy pants. Matt came over at nine in
the morning with a smile on his face, and I
was like, how are you upright?
Speaker 1 (01:19):
I had a fun dinner last night, but it was
way past my bedtime. So now I'm going to do
this and then collapse.
Speaker 2 (01:27):
No, then you're going to go watch the clothes on
Bloomberg Television.
Speaker 1 (01:32):
Our body batteries are turning in different directions. You are
going to you're adrenaline filled asteroid reporting, and I'm going
to nap. I did go over to you yesterday and
asked if you knew where the nap rooms.
Speaker 2 (01:43):
At bloom I can't tell you.
Speaker 1 (01:45):
If there's bloom no naprooms at Bloomer.
Speaker 2 (01:46):
If there's Bloomberg people listening, they don't exist.
Speaker 1 (01:49):
No nap rooms. Hello, and welcome to the Money Stuff Podcast.
You're a weekly podcast where we talked about stuff really
to money. I'm Matt Levine. Am I right? The Money
Stuff column for Bloomber opens.
Speaker 2 (02:00):
And I'm Katie Greifeld, a reporter for Bloomberg News and
an anchor for Boomberg Television.
Speaker 1 (02:06):
Like we're in the like pest control season of the podcast.
Speaker 2 (02:11):
We're talking about book.
Speaker 1 (02:13):
There are like two hundred Bloomberg headlines on the last
three days about cockroaches.
Speaker 2 (02:17):
Yeah, I feel like the jokes over. We've squeezed as
much Series a J cockroach as we can, so let's
give it a rest. It's been like in the title,
so many newsletters that I've gotten over the past four hours.
Speaker 1 (02:27):
Yes, it will not be in the title of this podcast.
Un last week screw up. They're right. So Jamie Diamond
on the Jape Morion Earnings call used the very conventional metaphors. Yeah,
but when you see one cockroaches, there probably more. He's
talking about the First Brands and Tricolor bankruptcys failures. Yeah,
credit bad things, kabooms, kabooms actually the real word that
(02:48):
I love. And Mark Rowan said this, he said, it
does not surprise me that we were seeing late cycle accidents.
Accident is what you call this. Like the word for
what happened with First Brands and Tracklor was accident. Yeah,
you made some loans, you didn't get paid.
Speaker 2 (03:02):
Back, Oops, you spilled the milk.
Speaker 1 (03:04):
Just it's like accident is the term. But yeah, so
there have been some pretty big accidents in the credit space,
and one dumb thing that is happening is that there
is a dispute about whether they exist in the private
credit space or the public credit space. But I don't
think it's at all interesting, like at all. But basically
JP Diamond got on a call and it was like,
(03:26):
you see the problems with private credit because these you know,
companies on a bankround and then all the private credit
guys are like those are like publicly financed banks led
their deals, Like those are not and like they're not
like private credit private credit. They're not like direct loans
from like the classic. They're not like LBO, you know,
like the core of private credit. Like I don't know,
they were funded by funds, Like are they private credit
(03:49):
in some loose sense sure? Or some of them bank
led and like you know with their bonds Like yeah,
I don't know whatever. But the point is it's not
like JP Morgan making bank loans on its packs, and
it's not like core you know, direct credit.
Speaker 2 (04:01):
Yeah. A funny detail in all of this is that
Jamie Diamond didn't specifically call out private credit.
Speaker 1 (04:08):
Yeah, though he did talk about like BDC's.
Speaker 2 (04:10):
Being yeah yeah, yeah, I know, but like it's not
like he said, like, oh, these guys made bad loans,
blah blah blah. He did talk a little bit about
you know, BDC's trading at a discount to their NAV
but I think.
Speaker 1 (04:24):
It's just such as the efficient markets way.
Speaker 2 (04:26):
I'm saying they made right, right, right, But it did
so happen that Mark Lipschultz of Blue Out was asked
about his comments and appears that he took them personally,
and that's where he told, of course JP Morgan to
look inwards and the banks to look inwards at their loans.
So it is this fun blame game that has played
out this week. I feel like we wouldn't be talking
(04:47):
about it so much had Jamie Diamond not said cockroaches.
I feel like that game is defin a good like
tangible illustration for us to all seize upon.
Speaker 1 (04:56):
But it is like taking a step back, like it
is the case that like these accidents, as Mark running
call them, are like true like bubbly signs like you
don't make loans to like people who are double or
triple or one hundred times pledging their assets, which like
there are some allegation that no one really knows. There's
some allegations Tray Color and or First Brands were maybe
(05:16):
you know a little loose with collateral. You don't make
those loans unless you're really trying hard to make loans, right,
Like I wrote about, like one thing that I think
is interesting about first brands is like the people who
had a lot of exposure. You know, there's like this
Jefferis run fund. There's this like trade finance origination platform.
They have like enormous amounts of exposure specifically to first brands.
(05:38):
Like what does that mean? It means like you're running
a fund and you're like, you know, ideally you'd like
to have diversified you know, trade finance receivables or whatever,
but like you just need to find paper to put
into the fund. And if someone is like I'm going
to generate a lot of paper for you, then like
you'd love to deal with that person, right, Like you'd
love to deal with the first bend if they're like,
we can you know, sell you as much as you need,
(05:58):
And so it create some that is for people to
sell you as much paper as you need, which means
either becoming very overlevered to generate paper for you, or
just like writing fake paper or like you know, triple
pledging things so that they can like sell you more
stuff because they sell your stuff and you get the money,
and like that's you know, that's the trade they're in.
(06:18):
So it does feel very toppy. Yeah, like Mark Owen said,
accidents but also late cycle accidents, and like this is
a private credit thing, just the credit generally these days,
Like there's a lot of people going around being like, yeah,
it feels toffee. Yeah, we're going to keep doing it. Yeah,
(06:39):
you know. I think one of the most insightful things
ever said about finance was when Chuck Prince in two
thousand and seven said, as long as the music is playing,
you've got to get up and dance. Like that's what
it is, man.
Speaker 2 (06:49):
We all know we're coming to the end of the song.
Speaker 1 (06:52):
Like, if you're in the business of making loans, you
can't be like we're not making loans. Yeah, too many
loans are too frisky right now, We're not going to
do it.
Speaker 2 (07:00):
Yeah, you can't do that yet. A dance, Yeah, got
a dance, even if it's slate cycle and you know
everyone's tired. It is interesting. I mean this has been
held up as an example of we are in a
toppy environment. So too, I said, we weren't going to
talk about open Ai, but the open Ai Walmart deal.
That has been a lot of hay has been made
on social media about how truly we've reached the top or.
Speaker 1 (07:23):
Someone like the headline and something like, of course it's
a bubble.
Speaker 2 (07:25):
Of course are here, we are in a bubble. I
do want to talk a little bit more about this
other comment that Mark Lipschultz said, because it seems like
he did take this very personally. One of the things
he said, when it comes to market caps, there are
people who have meaningful interests in the industry not continuing
to grow and succeed. Blackstone's market cap exceeds the market
(07:47):
cap of most financial institutions in the world today. It's
not as if that's not coming from someone, and of
course there are people who don't like it. Which is
interesting that he use Blackstone specifically and not Blue asl
But Blue Aule has a market cap of about twenty
five billion dollars. Blackstone is somewhere closer to two hundred
billion JP Morgan is over eight hundred billion. But this
(08:08):
is the point we've spoken about before, is how the
stock market values some of these private credit players even
though their assets are much smaller than like a traditional
asset manager or even the asset management arms of these banks.
Speaker 1 (08:23):
Yeah. I think the point he's making is like when
he says that that market cup has to be coming
from somewhere, it's not like a comparison to the aum
of banks. It's a comparison to like their lending business. Right,
It's like, yeah, you know, I think he's making more broadly,
the point that like the business of making a lot
of categories of loans is shifting from being a thing
that banks, yeah, at least intermediate and under it, to
(08:44):
being a thing that is kind of being led and
originated and held in the balance sheets of private credit firms. Yeah, which,
again I don't know how interesting it is to like
debate about whether the problems you're seeing or like private
credit problems or bank problems. But like, on the one hand,
I think the private credit people make a good point, Like,
for I say this a lot, but like the funding
(09:06):
model of private credit is a lot more systemically stable
than the funding model of banks. Right, instead of having deposits,
you have long term equity capital. That seems good. The
private credit people will also argue that like they have
better underwriting incentives because they hold it on their books,
whereas banks obviously hold a lot of loans on their books,
but you think about a lot of what they do
is originate the distribute model, where they maybe have less
(09:29):
skin in the game on their underwriting. On the other hand,
thanks are regulated, and you do get the sense that
it is such a good fundraising environment for private credit firms,
such a frothy like if you want to sell your
private credit firm a lot of like traditional asset measures,
but it's like you do have some pressures to put
(09:53):
all this gusher of money to work, and that might
looseen your underwriting standards as well.
Speaker 2 (09:57):
Can I say one more thing about cockroaches? By all means,
this is so gross, Yeah, Jamie Diamond. So first of all,
exactly what he said on the call was my antenna
goes up when things like this happens. And my first
reaction was, like an antenna like that on a cockroach.
Speaker 1 (10:17):
You're saying he feels for the cockroaches, Well, it's just
he can put himself in the shoes of both the
lender and then he's gonna say the shoes of the cockroaches.
Speaker 2 (10:26):
But perhaps he tipped his hands there. I don't know,
but cockroaches do have antennas, and so does Jamie Diamond.
What's a second on your priority list? Yeah, all right,
(10:51):
I didn't win again. Well, someone won the Nobel Peace Prize,
but also the Insider Trading Prize, but it wasn't inside
did somebody?
Speaker 1 (11:01):
Somebody won the Nobel Peace Prize was Maria Corinam, a
shadow Venezuela and democracyativist. And also somebody won an amount
of money on polymarket some some Yeah, the sum appears
to be had fifty thousand dollars, which is like depends.
Speaker 2 (11:17):
On your like, I could find something to do it.
Speaker 1 (11:20):
It's not a bad payday for someone hanging out on polymarket.
It's not like institutional grade. You know, you can't like
run a hedge fund by like occasionally by once every
year making fifty thousand dollars on the Nobel Peace Prize winner.
But it's something, right, It's like, it's true, it's a
nice individual person's bet it. But anyway, there were some
suggestions that it was inside of treading because it was
(11:40):
done kind of right before the announcement, like in the
in the you know, hours later ampter then announcement and
in fact, a spokesman for the Norwegian No Balance Dude said,
we have noticed that some have made significant financial gains
by placing bets on this year's prize. We will investigate
whether this means that someone has unlawfully obtained information from us,
because presumably they knew before they announced it, right, And
so if like someone in the circle of trust that
(12:03):
the Norwegian Nobel Institute went and like placed an anonymous
crypto trade on polymarket, then would.
Speaker 2 (12:09):
It have been amazing for what it's worth. Oh yeah,
real sign of the times anyway.
Speaker 1 (12:15):
A real sign of the times. And then that's what
they seem to have thought happened, But it probably turns
out one never knows, because these things are all like
somewhat anonymous. But like, you know, there's an interview of
the guy who like allegedly did it, and he's like,
you know, you can look to the there's all this
public stuff basically like when they hit the button on
the announcement, Like there's a lot of assets on the website,
like there's a picture of my shadow for sure, and
(12:36):
they upload those assets before they hit the button, before
they like put out the actual press relief. And so
if you're like scraping the folder on the website that
has all the assets. You can see like you know,
something with her name in the web page, and then
you can make an informed pat and so that maybe
what happened.
Speaker 2 (12:54):
Here that is really funny. Also to your point that
fifty grand is an institutional money, I have to imagine
that next year this inefficiency in the market won't exist,
Like maybe they'll hit the button and then they'll upload
the photo.
Speaker 1 (13:07):
Yeah, there's some of this, like like this is a
trade that occasionally exists in US public company earnings. Yeah,
because you can, like, if you know, like the URL
of like last quarter's earnings, you can just like change
Q two to Q three in that URL and just
refresh that page until something pops up, which might be
(13:28):
before they officially announced earnings. Yeah, and so this is
like a well known enough trade that companies are a
little better about not doing that now. So right, you
think that like they will be a little bit more
information secure next year, or they won't. I don't know.
Speaker 2 (13:41):
I mean maybe they're not that bothered, but I just
feel like that that body who.
Speaker 1 (13:45):
Actually, like if you're the Nobel Institute and it turns
out that some junior staffer was using your information to
make fifty grand, you'll be annoyed with them. If it
turns out that someone on the committee that selects the
winner was betting on it, then you'll be really.
Speaker 2 (14:01):
Annoyed bad because that's like, don't like that.
Speaker 1 (14:03):
That's not insider trading. That's like you know market.
Speaker 2 (14:06):
Right, that's like rigging the game.
Speaker 1 (14:07):
That's rigging the game. It's like instead of betting on
who's going to win the Nobel Peace Prize, you're like
giving the Nobel Peace Prize to the person you bet on.
It seems really really bad. No allegation to that happened.
But if it's just like someone script your website, like
who cares? Give them the money?
Speaker 2 (14:19):
Who cares? That's a very Kathy would out of referencing,
of course, last week's podcast No right.
Speaker 1 (14:26):
No. I know people time out prediction markets. You know,
I've quoted chain Complain saying it's like their goal is
to help people understand and price the future, and people
really want prediction markets to create incentives to make the
world more informed, and it's like the ideal is like,
you know, you have a bet. I'm like, will Russia
invade Ukraine or whatever, right, and like you have people
(14:47):
who are really informed geopolitical analysts making bets, and then
you have like a Russian general making bets, and then
like you actually know right, and then like the market
implied odds are really informative, and so people can make
economic decisions based on this like probability that exists in
a prediction market. Like that's kind of an interesting ideal
and would be useful in a lot of purposes. And
(15:11):
you know, as we've talked about here, the problem with
that is like it's not clear. There is a lot
of dumb money on like yeah, the market of like, well,
Russia invade at Ukraine, and so it's hard to make
a lot of money. It's hard to be institutional grade,
and so like if you're a Russian general, you might
be like, well I can make ten thousand dollars and
possibly be shot, so I won't do it right. So
(15:31):
it's like it's like hard to incorporate information. And then
like you have examples like this where it's like whoever
this is like put a lot of work into figuring
out who was going to win the Nobel Prize twelve
hours early, and like one is that the sort of
fact that will inform anyone's economic decisions about like the
one's hedging who's going to win the Nobel Prize right.
(15:54):
Two is knowing it twelve hours early? That useful? And
then three like the reaction might be that they just
stop putting these assets on the web twelve hours early,
and then it's like.
Speaker 2 (16:03):
Well, okay, yeah, the trade is something like you haven't.
Speaker 1 (16:06):
Made anyone more informed about anything in any useful way.
It's just yeah, you get the money.
Speaker 2 (16:09):
Yeah, well to that point, I mean you write in
your newsletter that the point is that the Nobel Peace
Prize prediction market is working the way it is supposed to.
It incentivizes people to find out information and incorporate it
into prices, which I agree with, but it feels kind
of unsatisfying because you think about the example of you know,
(16:30):
equity markets and a hedge fund analyst scraping a website
for earnings. Makes that market a little bit more efficient,
and then it informs how companies invest capital and allocate capital,
whereas here it's just someone now knows this early and
like there's no follow through on that, which is satisfying.
Speaker 1 (16:49):
People care about who in the Nobel Prize, but it
doesn't have like economic consequences. They're not a lot of hedgers.
Yeah right, yeah, but you know this is like what
I've said about sports campling too. Right. It's like, if
you like create an ecosystem where people professional and like
semi professional and like just hardworking and smart people are
(17:10):
dabbling in prediction markets, then like there's possible spillover to
like economically meaningful prediction markets. Right, There's some possibility that
the people who spend eight hours building some scraping tools
to predict the novel PCE prize will then go on
to spend sixteen hours building scraping tools to predict the
next Russian invasion, right, because like the similarish skill sets. Maybe, yeah, maybe,
(17:36):
like maybe Russia's uploading its battle plans to a website.
Who knows. There's some notion that if prediction markets get
bigger and attract capital and skill, then ultimately the thing
you really want, which is that they inform people about
the probabilities of economically meaningful future events. Some possibly that
(17:57):
will come true. And like it's not in a straightforward
linear way where it's we start with the most important
markets and get really sos they get people to really
get predictions of the most important markets. It's we start
with places where you can make money, and then that
attracts money, and then that attracts more sophistication.
Speaker 2 (18:15):
It probably also informs your behavior in other markets. Like
if the prediction market for who is Russia going to
invade next gets really informative and liquid, and you could
imagine watching that and then going and buying a bunch
of calls on oil.
Speaker 1 (18:31):
Oh absolutely, although I mean right now, surely the oil
market is more predictive of geopolitical events. No, you know,
most prediction markets, but I don't know.
Speaker 2 (18:39):
The frustrating thing about oil, it's my least favorite commodity
to talk about. It never prices in a sustainable risk premium.
So maybe you wouldn't buy calls on oil, or maybe
you would, I don't know, buy treasuries.
Speaker 1 (18:53):
Right This is one of the arguments for prediction markets.
There's a lot of ways to implement predictions about future
geopolitical events. And what that means is that you can't
look at the price of oil or the price of
treasuries and read out a prediction about future events because
they kind of reflect a lot of different possible events. Yeah,
whereas if there's just like a contract, will Russia invade wherever,
(19:16):
then you can look at that contract and read off
the probability. Yeah.
Speaker 2 (19:19):
It's like very pure pleasure. Yeah right, congratulations to.
Speaker 1 (19:25):
Yeah, fifty grand probably less than the Nobel Peace Prize price.
Speaker 2 (19:29):
How much is it?
Speaker 1 (19:30):
I don't know. You get a gold medal.
Speaker 2 (19:32):
That's pretty good. Yeah, A look at the satisfaction.
Speaker 1 (19:36):
Yeah, it's pretty good.
Speaker 2 (19:37):
Yeah.
Speaker 1 (19:38):
I feel like winning the Nobel Piece prisence is in
some ways the worst. It's like, there's a decent chance
that you're like imprisoned or exiled.
Speaker 2 (19:45):
That's true. But in the event that you're not, imagine
all the speaking engagements and fees that you can command.
Speaker 1 (19:53):
That's okay, that's fair, that's fair, lucrative business winning a
piece press.
Speaker 2 (19:57):
Okay, Well, a bunch of people are going to write
in and tell you how much.
Speaker 1 (20:00):
Yeah, of course change. I think it's.
Speaker 2 (20:07):
It's fun because we could google it. We're not going
to do that, right, just yeah, staring at me.
Speaker 1 (20:25):
We're up to eighteen five stock trading.
Speaker 2 (20:28):
Eighteen five, baby, but you know in twenty twenty six,
eventually we'll get to twenty three five?
Speaker 1 (20:33):
Is a thing called the twenty four X Exchange, the
twenty four Exchange twenty four X National Exchange. The intuition
is that we want to trade stocks twenty four hours
a day, but like you can't do that because you
have to like restart the computers, so they're more modest.
Target is trading slacks twenty three hours a day, five
days a week, and their progress starts that as they
(20:54):
launched eighteen hour a day trading five days a week,
which is I feel like.
Speaker 2 (20:58):
Their name should be twenty.
Speaker 1 (20:59):
Three rec No, that's the thing, like if you're twenty
four twenty four, that's the number of hours in a day.
Speaker 2 (21:04):
If you say twenty three, I feel like what I know,
But it's disingenuous.
Speaker 1 (21:09):
Yes, that's why it's funny. Yeah, but like you know,
you're allowed to be funny anyway, though. But they're now
to eighteen hours, which is like, you know, kind of
like extended hours.
Speaker 2 (21:17):
Really all you need.
Speaker 1 (21:18):
I don't know, it's all I need. I as we've
established good about at six o'clock. But if you're, for instance,
in Japan and you want to trade American stocks, it
is convenient to be able to do it in the
middle of your day.
Speaker 2 (21:30):
Yeah, I guess like it's a global market, yeah.
Speaker 1 (21:33):
For American stocks and slacks generally, and so it does
kind of make sense that everyone should be able to
trade all the time.
Speaker 2 (21:39):
Also, you know, maybe you're in Japan, maybe you're just
up at three in the morning.
Speaker 1 (21:44):
Right, I try to be generous, like twenty four x
Exchange actually says, you know, this is for you know,
investors worldwide. And I don't really think that the paradigmatic
user of twenty four hour trading is someone drunk on
their computer at three am. But I kind of think
that I think about that person a lot. I think
that's a fun. Yeah, I'm not going to do it justice.
(22:05):
There's a famous great pit in like hedgehund market Wizards
the Jack Schueger book, where he interviews one hedgehund manager
who says, I want to hire people who wake up
early on Sunday morning and log in to poker sites
to pick off the drunks coming home in another time zone. Nice,
because what you're doing there is understanding where you have
(22:27):
the most edge and then just exploiting your edge, doing
it somewhat inconveniently for yourself in a just a cold
bloodedly rational way anyway, Right, there's some people in a
world of twenty four R trading who would come home
drunk from the bar at three am and be like,
all right, fire up Robin.
Speaker 2 (22:41):
Hood's options, my single triple leverage EUTF now.
Speaker 1 (22:47):
Yeah, and again, I don't think that's the main use
case for twenty four R trading, but it's the funniest
use case. Yeah.
Speaker 2 (22:53):
Well, hopefully, you know, as this gets online, we'll figure
out who exactly the players at three am Eastern are.
It might be Japanese retail players. It might be people
drunk coming home from the barn. It might almost said barn,
I say that a lot more often than bar.
Speaker 1 (23:10):
You come home from the barn more often than the bar.
Speaker 2 (23:15):
Or it might be you know, sophisticated US investors looking
to pick off Japanese retail investors. I don't know.
Speaker 1 (23:20):
Well, yeah, I mean. The other thing, like, the thing
that I think is interesting is we have this ecosystem
where a lot of news gets disclosed outside of regular
market hours because you don't want to be Traditionally, you
don't want to be in the situation of disclosing a
merger at ten am and everyone reacting to that sequentially
(23:42):
and like reading the press release and saying, oh, I
should buy the stock, and some people not having gotten
the press release yet and like selling it outdated prices.
It's just a mess. And so what everyone does is
they announce earnings at seven am or four or five pm,
so people have time to digest the earnings before the
stock opens for trading next And the purpose of after
(24:04):
hours trading really is to let people react to news
as it happens. So instead of, you know, if a
hurricane hits at midnight, instead of waiting until the next
day to dump your stocks, you can dump your stocks
at twelve oh one. And when you say that, I
think it's intuitively appealing to a lot of people. Oh
I can trade as soon as the thing happens. But
I think it's like kind of bad for retail investors. Yeah,
(24:28):
what it means is that instead of everyone reacting to
news at the same time, because you have a buffer
between when it's announced and when it can be traded,
you have people reacting to news as they get it,
as they analyze it, and so you're gonna have a
lot of people trading at wrong prices. And I do
think that's the point where that's the appeal of after
hours trading is like you'll just get more volatility, you'll
(24:50):
get more wrong prices. If you think you're skilled and
you enjoy a gamble or a game of skill, you'll
have more opportunities to log on at nine o'clock and
be like, I know what this news means, I'm going
to trade on it. I actually wrote this week about
the Meme ETF. Yeah, the Roundtole Meme Slack ETF that
was closed and then revived this week, and you know,
(25:11):
it was revived at the very small like the first
day of trading had it very small, Yeah, thousand dollars
a couple hundred thousand dollars on it, and it traded
kind of normally during the day, and then in the
after our session it shot up because like you know,
there's a few retail investors who are buying it, and
the marketmakers all went home because it was after I
was trading in this tiny little ETF, and so there's
(25:32):
no arbitrage mechanism, and so people are just buying it
at crazy premiums to nav which should not happen in
the ETF, but does if no professionals are awake. And
I think if you have like more twenty four hours trading,
there's gonna have more trading where no professionals are awake,
and things trading at wrong prices, and like people want
to trade it wrong.
Speaker 2 (25:48):
Prices, You're gonna have uglier charts. Basically, Yeah, if.
Speaker 1 (25:51):
You ugly tart means someone like made a very bad
trade and someone else made a very good trade. Yeah.
Speaker 2 (25:56):
Well you touched on something that I think we've talked
about before. It is like, Okay, a world where you
do have twenty four or twenty three hour trading five
days a week, is whether or not you'd still get
like these windows around the open and the clothes where
everyone is sort of trained to trade the most.
Speaker 1 (26:14):
I think you would, because professionals have a rhythm to
their day where they want to stop trading at the close.
Speaker 2 (26:20):
You know, yeah, not all but like you know in
tix ones it's clinton time.
Speaker 1 (26:23):
Yeah not even like to go home, but because like
you need a benchmark to mark against. And then also
just because of that like timing tradition, there is so
much concentrated liquidity there and so if you're a huge
investor who needs to move a lot of shares doing
that at the close is really useful. I do wonder,
you know, I never fully understood how crypto closes work
(26:46):
because crypto just sort of from day one as a
twenty four to seven market, and so.
Speaker 2 (26:52):
For traditional currencies as well.
Speaker 1 (26:54):
Yeah, that's right. Yeah, there's no like clothes, right, and
like in stocks, there's very clearly a close and a
lot of apparatus, you know, index funds and mutual fund
withdrawals and redemptions and benchmarks and everything are all kind
of organized around the clothes. And if you did move
to twenty four to seven training, if you just did
(27:15):
it in a natural, like nonpath dependent way, you'd be like, well,
when is the clothes? Yeah, I don't think that's ever
going to happen. I think it's always going to be
the main exchanges will have a close at four, And
even if the main exchanges offer you know, seventeen hours
of extended hours and everything is kind of technologically the
same during the regular session and the extended session, I
(27:35):
think there will still be a close that everyone can
point to and where a lot of liquidity will be concentrated.
Speaker 2 (27:40):
Yeah. I feel that way too, Like I do struggle
to imagine a world where this is the norm.
Speaker 1 (27:46):
It's just continuous, twenty four hour day, like nothing, no clothes. Yeah,
I don't.
Speaker 2 (27:49):
That doesn't seem feels like it goes against just the
rhythm of being a human.
Speaker 1 (27:55):
Yeah it does. It goes against like the stock markets rhythm.
I mean, you say the rhythm of being a human,
and I hear you. But like stock market, you can
buy an Amazon anytime you want, you know.
Speaker 2 (28:06):
Yeah, I was going to say, I mean humans did
make the stock market, right, yeah.
Speaker 1 (28:11):
Sure, yeah, no, right, right right. There is a human
rhythm and there is a computer rhythm, and like humans
have become adapted to the computer. And the stock market
is from a time of you show up there and
you leave to go have dinner, right, whereas like you know,
Amazon is from a time of computers and you log
in at midnight and buy something, right, And crypto is
(28:31):
from a time of computers, and so you log in
at midnight and buy a crypto. Yeah, And I think
that is creeping into the stock market, but I think
we're a long away from it entirely taking over the
stock market.
Speaker 2 (28:40):
I did want to point out one thing that you
wrote which actually made me grateful for the environment that
we live in right now. You talk about how a
decade ago it was possible to think that investing would
gradually become doller and more efficient and more automated, and
that people would just let robots and professionals manage their
retirements and basically we wouldn't have any of the silliness
(29:03):
that we do now.
Speaker 1 (29:04):
That was like when I said it was possible to
think that, Like I linked to something I wrote kind
of predicting that. So that was dumb.
Speaker 2 (29:10):
That's fine, you called yourself out, But I occasionally get tired.
As discussed, we all get tired of the silliness and
the headlines. But I think that the world that you
described sounds a lot more tiresome.
Speaker 1 (29:24):
So well, you say that as a person who goes
on TV to talk about financial news every day for
several hours.
Speaker 2 (29:31):
Yeah, but you write about it.
Speaker 1 (29:32):
Oh yeah, I agree. I agree, like all this dumb stuff.
You know, once every five times I write about memestocks
or crypti or whatever, I roll my asthm, like I
hate writing about this. Yeah, clearly, I was like, Wow,
at least that's something right about No, I agree. I
think it's a person as an investor, if you stopped
thinking about memestocks and like just you know, had like
(29:53):
robots perfectly investors, like reasonably perfectly investors stock and you
didn't worry about it. You could spend more time like
reading books.
Speaker 2 (30:00):
Yeah right maybe right, Like it's a better world.
Speaker 1 (30:04):
But it's works for you know, making jokes in a
financial new letter.
Speaker 2 (30:08):
That's true.
Speaker 1 (30:10):
That's what we're all here for.
Speaker 2 (30:11):
I have to go talk about all the silly things
on the television, how fun and the asteroid if it
hit yet?
Speaker 1 (30:19):
Luck with that? And that was the Money Stuff Podcast.
Speaker 2 (30:28):
I'm Matt Levine and I'm Katie Greifeld.
Speaker 1 (30:30):
You can find my work by subscribing to The Money
Stuffnewletter on Bloomberg.
Speaker 2 (30:34):
Dot com, and you can find me on Bloomberg TV
every day on the close between three and five pm Eastern.
Speaker 1 (30:41):
We'd love to hear from you. You can send an
email to money Pod at Bloomberg dot net ask us
a question. We might answer it on the air.
Speaker 2 (30:48):
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 (30:54):
The Money Stuff Podcast is produced by Anamazarakus and Mooses On.
Speaker 2 (30:59):
Our theme music was imposed by Blake.
Speaker 1 (31:00):
Maples, Amy Keane as our executive producer.
Speaker 2 (31:04):
And Sage Falman is Bloomberg's head of podcasts.
Speaker 1 (31:08):
Thanks for listening to the Money Stuff Podcast. We'll be
back next week. Welcome our Stuff
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
I'm just saying, like something could like happen, right, something
crazy could happen, right, Something crazy could happen while we're
recording this and I have to go talk about it
in like fifty two minutes.
Speaker 1 (00:21):
Is that exciting? Like you come in here an hour
before you go on television, and like you turn off
your phone. Obviously your phone is sitting right in front
of you, but like, let's pretend you turn off your
phone and focus entirely on the Money Stuff podcast, And
like what if something crazy happens and you get out
of if you're at like two fifty nine and you
go on air and they're like something crazy happening and
you're like yeah.
Speaker 2 (00:41):
They're like Katie, quick break this headline about the asteroid
that took out California, and I'm like, we're receiving reports
or something like that.
Speaker 1 (00:50):
I think you keep your life exciting.
Speaker 2 (00:52):
I do love adrenaline, like I crave adrenaline, but you know,
sometimes I get tired.
Speaker 1 (00:59):
Yeah, I'm pretty tired. I was out to a dinner
until like midnight last nightly six hours later than my
usual bedtime. So I'm in bad shape.
Speaker 2 (01:12):
Yeah, that's crazy pants. Matt came over at nine in
the morning with a smile on his face, and I
was like, how are you upright?
Speaker 1 (01:19):
I had a fun dinner last night, but it was
way past my bedtime. So now I'm going to do
this and then collapse.
Speaker 2 (01:27):
No, then you're going to go watch the clothes on
Bloomberg Television.
Speaker 1 (01:32):
Our body batteries are turning in different directions. You are
going to you're adrenaline filled asteroid reporting, and I'm going
to nap. I did go over to you yesterday and
asked if you knew where the nap rooms.
Speaker 2 (01:43):
At bloom I can't tell you.
Speaker 1 (01:45):
If there's bloom no naprooms at Bloomer.
Speaker 2 (01:46):
If there's Bloomberg people listening, they don't exist.
Speaker 1 (01:49):
No nap rooms. Hello, and welcome to the Money Stuff Podcast.
You're a weekly podcast where we talked about stuff really
to money. I'm Matt Levine. Am I right? The Money
Stuff column for Bloomber opens.
Speaker 2 (02:00):
And I'm Katie Greifeld, a reporter for Bloomberg News and
an anchor for Boomberg Television.
Speaker 1 (02:06):
Like we're in the like pest control season of the podcast.
Speaker 2 (02:11):
We're talking about book.
Speaker 1 (02:13):
There are like two hundred Bloomberg headlines on the last
three days about cockroaches.
Speaker 2 (02:17):
Yeah, I feel like the jokes over. We've squeezed as
much Series a J cockroach as we can, so let's
give it a rest. It's been like in the title,
so many newsletters that I've gotten over the past four hours.
Speaker 1 (02:27):
Yes, it will not be in the title of this podcast.
Un last week screw up. They're right. So Jamie Diamond
on the Jape Morion Earnings call used the very conventional metaphors. Yeah,
but when you see one cockroaches, there probably more. He's
talking about the First Brands and Tricolor bankruptcys failures. Yeah,
credit bad things, kabooms, kabooms actually the real word that
(02:48):
I love. And Mark Rowan said this, he said, it
does not surprise me that we were seeing late cycle accidents.
Accident is what you call this. Like the word for
what happened with First Brands and Tracklor was accident. Yeah,
you made some loans, you didn't get paid.
Speaker 2 (03:02):
Back, Oops, you spilled the milk.
Speaker 1 (03:04):
Just it's like accident is the term. But yeah, so
there have been some pretty big accidents in the credit space,
and one dumb thing that is happening is that there
is a dispute about whether they exist in the private
credit space or the public credit space. But I don't
think it's at all interesting, like at all. But basically
JP Diamond got on a call and it was like,
(03:26):
you see the problems with private credit because these you know,
companies on a bankround and then all the private credit
guys are like those are like publicly financed banks led
their deals, Like those are not and like they're not
like private credit private credit. They're not like direct loans
from like the classic. They're not like LBO, you know,
like the core of private credit. Like I don't know,
they were funded by funds, Like are they private credit
(03:49):
in some loose sense sure? Or some of them bank
led and like you know with their bonds Like yeah,
I don't know whatever. But the point is it's not
like JP Morgan making bank loans on its packs, and
it's not like core you know, direct credit.
Speaker 2 (04:01):
Yeah. A funny detail in all of this is that
Jamie Diamond didn't specifically call out private credit.
Speaker 1 (04:08):
Yeah, though he did talk about like BDC's.
Speaker 2 (04:10):
Being yeah yeah, yeah, I know, but like it's not
like he said, like, oh, these guys made bad loans,
blah blah blah. He did talk a little bit about
you know, BDC's trading at a discount to their NAV
but I think.
Speaker 1 (04:24):
It's just such as the efficient markets way.
Speaker 2 (04:26):
I'm saying they made right, right, right, But it did
so happen that Mark Lipschultz of Blue Out was asked
about his comments and appears that he took them personally,
and that's where he told, of course JP Morgan to
look inwards and the banks to look inwards at their loans.
So it is this fun blame game that has played
out this week. I feel like we wouldn't be talking
(04:47):
about it so much had Jamie Diamond not said cockroaches.
I feel like that game is defin a good like
tangible illustration for us to all seize upon.
Speaker 1 (04:56):
But it is like taking a step back, like it
is the case that like these accidents, as Mark running
call them, are like true like bubbly signs like you
don't make loans to like people who are double or
triple or one hundred times pledging their assets, which like
there are some allegation that no one really knows. There's
some allegations Tray Color and or First Brands were maybe
(05:16):
you know a little loose with collateral. You don't make
those loans unless you're really trying hard to make loans, right,
Like I wrote about, like one thing that I think
is interesting about first brands is like the people who
had a lot of exposure. You know, there's like this
Jefferis run fund. There's this like trade finance origination platform.
They have like enormous amounts of exposure specifically to first brands.
(05:38):
Like what does that mean? It means like you're running
a fund and you're like, you know, ideally you'd like
to have diversified you know, trade finance receivables or whatever,
but like you just need to find paper to put
into the fund. And if someone is like I'm going
to generate a lot of paper for you, then like
you'd love to deal with that person, right, Like you'd
love to deal with the first bend if they're like,
we can you know, sell you as much as you need,
(05:58):
And so it create some that is for people to
sell you as much paper as you need, which means
either becoming very overlevered to generate paper for you, or
just like writing fake paper or like you know, triple
pledging things so that they can like sell you more
stuff because they sell your stuff and you get the money,
and like that's you know, that's the trade they're in.
(06:18):
So it does feel very toppy. Yeah, like Mark Owen said,
accidents but also late cycle accidents, and like this is
a private credit thing, just the credit generally these days,
Like there's a lot of people going around being like, yeah,
it feels toffee. Yeah, we're going to keep doing it. Yeah,
(06:39):
you know. I think one of the most insightful things
ever said about finance was when Chuck Prince in two
thousand and seven said, as long as the music is playing,
you've got to get up and dance. Like that's what
it is, man.
Speaker 2 (06:49):
We all know we're coming to the end of the song.
Speaker 1 (06:52):
Like, if you're in the business of making loans, you
can't be like we're not making loans. Yeah, too many
loans are too frisky right now, We're not going to
do it.
Speaker 2 (07:00):
Yeah, you can't do that yet. A dance, Yeah, got
a dance, even if it's slate cycle and you know
everyone's tired. It is interesting. I mean this has been
held up as an example of we are in a
toppy environment. So too, I said, we weren't going to
talk about open Ai, but the open Ai Walmart deal.
That has been a lot of hay has been made
on social media about how truly we've reached the top or.
Speaker 1 (07:23):
Someone like the headline and something like, of course it's
a bubble.
Speaker 2 (07:25):
Of course are here, we are in a bubble. I
do want to talk a little bit more about this
other comment that Mark Lipschultz said, because it seems like
he did take this very personally. One of the things
he said, when it comes to market caps, there are
people who have meaningful interests in the industry not continuing
to grow and succeed. Blackstone's market cap exceeds the market
(07:47):
cap of most financial institutions in the world today. It's
not as if that's not coming from someone, and of
course there are people who don't like it. Which is
interesting that he use Blackstone specifically and not Blue asl
But Blue Aule has a market cap of about twenty
five billion dollars. Blackstone is somewhere closer to two hundred
billion JP Morgan is over eight hundred billion. But this
(08:08):
is the point we've spoken about before, is how the
stock market values some of these private credit players even
though their assets are much smaller than like a traditional
asset manager or even the asset management arms of these banks.
Speaker 1 (08:23):
Yeah. I think the point he's making is like when
he says that that market cup has to be coming
from somewhere, it's not like a comparison to the aum
of banks. It's a comparison to like their lending business. Right,
It's like, yeah, you know, I think he's making more broadly,
the point that like the business of making a lot
of categories of loans is shifting from being a thing
that banks, yeah, at least intermediate and under it, to
(08:44):
being a thing that is kind of being led and
originated and held in the balance sheets of private credit firms. Yeah, which,
again I don't know how interesting it is to like
debate about whether the problems you're seeing or like private
credit problems or bank problems. But like, on the one hand,
I think the private credit people make a good point, Like,
for I say this a lot, but like the funding
(09:06):
model of private credit is a lot more systemically stable
than the funding model of banks. Right, instead of having deposits,
you have long term equity capital. That seems good. The
private credit people will also argue that like they have
better underwriting incentives because they hold it on their books,
whereas banks obviously hold a lot of loans on their books,
but you think about a lot of what they do
is originate the distribute model, where they maybe have less
(09:29):
skin in the game on their underwriting. On the other hand,
thanks are regulated, and you do get the sense that
it is such a good fundraising environment for private credit firms,
such a frothy like if you want to sell your
private credit firm a lot of like traditional asset measures,
but it's like you do have some pressures to put
(09:53):
all this gusher of money to work, and that might
looseen your underwriting standards as well.
Speaker 2 (09:57):
Can I say one more thing about cockroaches? By all means,
this is so gross, Yeah, Jamie Diamond. So first of all,
exactly what he said on the call was my antenna
goes up when things like this happens. And my first
reaction was, like an antenna like that on a cockroach.
Speaker 1 (10:17):
You're saying he feels for the cockroaches, Well, it's just
he can put himself in the shoes of both the
lender and then he's gonna say the shoes of the cockroaches.
Speaker 2 (10:26):
But perhaps he tipped his hands there. I don't know,
but cockroaches do have antennas, and so does Jamie Diamond.
What's a second on your priority list? Yeah, all right,
(10:51):
I didn't win again. Well, someone won the Nobel Peace Prize,
but also the Insider Trading Prize, but it wasn't inside
did somebody?
Speaker 1 (11:01):
Somebody won the Nobel Peace Prize was Maria Corinam, a
shadow Venezuela and democracyativist. And also somebody won an amount
of money on polymarket some some Yeah, the sum appears
to be had fifty thousand dollars, which is like depends.
Speaker 2 (11:17):
On your like, I could find something to do it.
Speaker 1 (11:20):
It's not a bad payday for someone hanging out on polymarket.
It's not like institutional grade. You know, you can't like
run a hedge fund by like occasionally by once every
year making fifty thousand dollars on the Nobel Peace Prize winner.
But it's something, right, It's like, it's true, it's a
nice individual person's bet it. But anyway, there were some
suggestions that it was inside of treading because it was
(11:40):
done kind of right before the announcement, like in the
in the you know, hours later ampter then announcement and
in fact, a spokesman for the Norwegian No Balance Dude said,
we have noticed that some have made significant financial gains
by placing bets on this year's prize. We will investigate
whether this means that someone has unlawfully obtained information from us,
because presumably they knew before they announced it, right, And
so if like someone in the circle of trust that
(12:03):
the Norwegian Nobel Institute went and like placed an anonymous
crypto trade on polymarket, then would.
Speaker 2 (12:09):
It have been amazing for what it's worth. Oh yeah,
real sign of the times anyway.
Speaker 1 (12:15):
A real sign of the times. And then that's what
they seem to have thought happened, But it probably turns
out one never knows, because these things are all like
somewhat anonymous. But like, you know, there's an interview of
the guy who like allegedly did it, and he's like,
you know, you can look to the there's all this
public stuff basically like when they hit the button on
the announcement, Like there's a lot of assets on the website,
like there's a picture of my shadow for sure, and
(12:36):
they upload those assets before they hit the button, before
they like put out the actual press relief. And so
if you're like scraping the folder on the website that
has all the assets. You can see like you know,
something with her name in the web page, and then
you can make an informed pat and so that maybe
what happened.
Speaker 2 (12:54):
Here that is really funny. Also to your point that
fifty grand is an institutional money, I have to imagine
that next year this inefficiency in the market won't exist,
Like maybe they'll hit the button and then they'll upload
the photo.
Speaker 1 (13:07):
Yeah, there's some of this, like like this is a
trade that occasionally exists in US public company earnings. Yeah,
because you can, like, if you know, like the URL
of like last quarter's earnings, you can just like change
Q two to Q three in that URL and just
refresh that page until something pops up, which might be
(13:28):
before they officially announced earnings. Yeah, and so this is
like a well known enough trade that companies are a
little better about not doing that now. So right, you
think that like they will be a little bit more
information secure next year, or they won't. I don't know.
Speaker 2 (13:41):
I mean maybe they're not that bothered, but I just
feel like that that body who.
Speaker 1 (13:45):
Actually, like if you're the Nobel Institute and it turns
out that some junior staffer was using your information to
make fifty grand, you'll be annoyed with them. If it
turns out that someone on the committee that selects the
winner was betting on it, then you'll be really.
Speaker 2 (14:01):
Annoyed bad because that's like, don't like that.
Speaker 1 (14:03):
That's not insider trading. That's like you know market.
Speaker 2 (14:06):
Right, that's like rigging the game.
Speaker 1 (14:07):
That's rigging the game. It's like instead of betting on
who's going to win the Nobel Peace Prize, you're like
giving the Nobel Peace Prize to the person you bet on.
It seems really really bad. No allegation to that happened.
But if it's just like someone script your website, like
who cares? Give them the money?
Speaker 2 (14:19):
Who cares? That's a very Kathy would out of referencing,
of course, last week's podcast No right.
Speaker 1 (14:26):
No. I know people time out prediction markets. You know,
I've quoted chain Complain saying it's like their goal is
to help people understand and price the future, and people
really want prediction markets to create incentives to make the
world more informed, and it's like the ideal is like,
you know, you have a bet. I'm like, will Russia
invade Ukraine or whatever, right, and like you have people
(14:47):
who are really informed geopolitical analysts making bets, and then
you have like a Russian general making bets, and then
like you actually know right, and then like the market
implied odds are really informative, and so people can make
economic decisions based on this like probability that exists in
a prediction market. Like that's kind of an interesting ideal
and would be useful in a lot of purposes. And
(15:11):
you know, as we've talked about here, the problem with
that is like it's not clear. There is a lot
of dumb money on like yeah, the market of like, well,
Russia invade at Ukraine, and so it's hard to make
a lot of money. It's hard to be institutional grade,
and so like if you're a Russian general, you might
be like, well I can make ten thousand dollars and
possibly be shot, so I won't do it right. So
(15:31):
it's like it's like hard to incorporate information. And then
like you have examples like this where it's like whoever
this is like put a lot of work into figuring
out who was going to win the Nobel Prize twelve
hours early, and like one is that the sort of
fact that will inform anyone's economic decisions about like the
one's hedging who's going to win the Nobel Prize right.
(15:54):
Two is knowing it twelve hours early? That useful? And
then three like the reaction might be that they just
stop putting these assets on the web twelve hours early,
and then it's like.
Speaker 2 (16:03):
Well, okay, yeah, the trade is something like you haven't.
Speaker 1 (16:06):
Made anyone more informed about anything in any useful way.
It's just yeah, you get the money.
Speaker 2 (16:09):
Yeah, well to that point, I mean you write in
your newsletter that the point is that the Nobel Peace
Prize prediction market is working the way it is supposed to.
It incentivizes people to find out information and incorporate it
into prices, which I agree with, but it feels kind
of unsatisfying because you think about the example of you know,
(16:30):
equity markets and a hedge fund analyst scraping a website
for earnings. Makes that market a little bit more efficient,
and then it informs how companies invest capital and allocate capital,
whereas here it's just someone now knows this early and
like there's no follow through on that, which is satisfying.
Speaker 1 (16:49):
People care about who in the Nobel Prize, but it
doesn't have like economic consequences. They're not a lot of hedgers.
Yeah right, yeah, but you know this is like what
I've said about sports campling too. Right. It's like, if
you like create an ecosystem where people professional and like
semi professional and like just hardworking and smart people are
(17:10):
dabbling in prediction markets, then like there's possible spillover to
like economically meaningful prediction markets. Right, There's some possibility that
the people who spend eight hours building some scraping tools
to predict the novel PCE prize will then go on
to spend sixteen hours building scraping tools to predict the
next Russian invasion, right, because like the similarish skill sets. Maybe, yeah, maybe,
(17:36):
like maybe Russia's uploading its battle plans to a website.
Who knows. There's some notion that if prediction markets get
bigger and attract capital and skill, then ultimately the thing
you really want, which is that they inform people about
the probabilities of economically meaningful future events. Some possibly that
(17:57):
will come true. And like it's not in a straightforward
linear way where it's we start with the most important
markets and get really sos they get people to really
get predictions of the most important markets. It's we start
with places where you can make money, and then that
attracts money, and then that attracts more sophistication.
Speaker 2 (18:15):
It probably also informs your behavior in other markets. Like
if the prediction market for who is Russia going to
invade next gets really informative and liquid, and you could
imagine watching that and then going and buying a bunch
of calls on oil.
Speaker 1 (18:31):
Oh absolutely, although I mean right now, surely the oil
market is more predictive of geopolitical events. No, you know,
most prediction markets, but I don't know.
Speaker 2 (18:39):
The frustrating thing about oil, it's my least favorite commodity
to talk about. It never prices in a sustainable risk premium.
So maybe you wouldn't buy calls on oil, or maybe
you would, I don't know, buy treasuries.
Speaker 1 (18:53):
Right This is one of the arguments for prediction markets.
There's a lot of ways to implement predictions about future
geopolitical events. And what that means is that you can't
look at the price of oil or the price of
treasuries and read out a prediction about future events because
they kind of reflect a lot of different possible events. Yeah,
whereas if there's just like a contract, will Russia invade wherever,
(19:16):
then you can look at that contract and read off
the probability. Yeah.
Speaker 2 (19:19):
It's like very pure pleasure. Yeah right, congratulations to.
Speaker 1 (19:25):
Yeah, fifty grand probably less than the Nobel Peace Prize price.
Speaker 2 (19:29):
How much is it?
Speaker 1 (19:30):
I don't know. You get a gold medal.
Speaker 2 (19:32):
That's pretty good. Yeah, A look at the satisfaction.
Speaker 1 (19:36):
Yeah, it's pretty good.
Speaker 2 (19:37):
Yeah.
Speaker 1 (19:38):
I feel like winning the Nobel Piece prisence is in
some ways the worst. It's like, there's a decent chance
that you're like imprisoned or exiled.
Speaker 2 (19:45):
That's true. But in the event that you're not, imagine
all the speaking engagements and fees that you can command.
Speaker 1 (19:53):
That's okay, that's fair, that's fair, lucrative business winning a
piece press.
Speaker 2 (19:57):
Okay, Well, a bunch of people are going to write
in and tell you how much.
Speaker 1 (20:00):
Yeah, of course change. I think it's.
Speaker 2 (20:07):
It's fun because we could google it. We're not going
to do that, right, just yeah, staring at me.
Speaker 1 (20:25):
We're up to eighteen five stock trading.
Speaker 2 (20:28):
Eighteen five, baby, but you know in twenty twenty six,
eventually we'll get to twenty three five?
Speaker 1 (20:33):
Is a thing called the twenty four X Exchange, the
twenty four Exchange twenty four X National Exchange. The intuition
is that we want to trade stocks twenty four hours
a day, but like you can't do that because you
have to like restart the computers, so they're more modest.
Target is trading slacks twenty three hours a day, five
days a week, and their progress starts that as they
(20:54):
launched eighteen hour a day trading five days a week,
which is I feel like.
Speaker 2 (20:58):
Their name should be twenty.
Speaker 1 (20:59):
Three rec No, that's the thing, like if you're twenty
four twenty four, that's the number of hours in a day.
Speaker 2 (21:04):
If you say twenty three, I feel like what I know,
But it's disingenuous.
Speaker 1 (21:09):
Yes, that's why it's funny. Yeah, but like you know,
you're allowed to be funny anyway, though. But they're now
to eighteen hours, which is like, you know, kind of
like extended hours.
Speaker 2 (21:17):
Really all you need.
Speaker 1 (21:18):
I don't know, it's all I need. I as we've
established good about at six o'clock. But if you're, for instance,
in Japan and you want to trade American stocks, it
is convenient to be able to do it in the
middle of your day.
Speaker 2 (21:30):
Yeah, I guess like it's a global market, yeah.
Speaker 1 (21:33):
For American stocks and slacks generally, and so it does
kind of make sense that everyone should be able to
trade all the time.
Speaker 2 (21:39):
Also, you know, maybe you're in Japan, maybe you're just
up at three in the morning.
Speaker 1 (21:44):
Right, I try to be generous, like twenty four x
Exchange actually says, you know, this is for you know,
investors worldwide. And I don't really think that the paradigmatic
user of twenty four hour trading is someone drunk on
their computer at three am. But I kind of think
that I think about that person a lot. I think
that's a fun. Yeah, I'm not going to do it justice.
(22:05):
There's a famous great pit in like hedgehund market Wizards
the Jack Schueger book, where he interviews one hedgehund manager
who says, I want to hire people who wake up
early on Sunday morning and log in to poker sites
to pick off the drunks coming home in another time zone. Nice,
because what you're doing there is understanding where you have
(22:27):
the most edge and then just exploiting your edge, doing
it somewhat inconveniently for yourself in a just a cold
bloodedly rational way anyway, Right, there's some people in a
world of twenty four R trading who would come home
drunk from the bar at three am and be like,
all right, fire up Robin.
Speaker 2 (22:41):
Hood's options, my single triple leverage EUTF now.
Speaker 1 (22:47):
Yeah, and again, I don't think that's the main use
case for twenty four R trading, but it's the funniest
use case. Yeah.
Speaker 2 (22:53):
Well, hopefully, you know, as this gets online, we'll figure
out who exactly the players at three am Eastern are.
It might be Japanese retail players. It might be people
drunk coming home from the barn. It might almost said barn,
I say that a lot more often than bar.
Speaker 1 (23:10):
You come home from the barn more often than the bar.
Speaker 2 (23:15):
Or it might be you know, sophisticated US investors looking
to pick off Japanese retail investors. I don't know.
Speaker 1 (23:20):
Well, yeah, I mean. The other thing, like, the thing
that I think is interesting is we have this ecosystem
where a lot of news gets disclosed outside of regular
market hours because you don't want to be Traditionally, you
don't want to be in the situation of disclosing a
merger at ten am and everyone reacting to that sequentially
(23:42):
and like reading the press release and saying, oh, I
should buy the stock, and some people not having gotten
the press release yet and like selling it outdated prices.
It's just a mess. And so what everyone does is
they announce earnings at seven am or four or five pm,
so people have time to digest the earnings before the
stock opens for trading next And the purpose of after
(24:04):
hours trading really is to let people react to news
as it happens. So instead of, you know, if a
hurricane hits at midnight, instead of waiting until the next
day to dump your stocks, you can dump your stocks
at twelve oh one. And when you say that, I
think it's intuitively appealing to a lot of people. Oh
I can trade as soon as the thing happens. But
I think it's like kind of bad for retail investors. Yeah,
(24:28):
what it means is that instead of everyone reacting to
news at the same time, because you have a buffer
between when it's announced and when it can be traded,
you have people reacting to news as they get it,
as they analyze it, and so you're gonna have a
lot of people trading at wrong prices. And I do
think that's the point where that's the appeal of after
hours trading is like you'll just get more volatility, you'll
(24:50):
get more wrong prices. If you think you're skilled and
you enjoy a gamble or a game of skill, you'll
have more opportunities to log on at nine o'clock and
be like, I know what this news means, I'm going
to trade on it. I actually wrote this week about
the Meme ETF. Yeah, the Roundtole Meme Slack ETF that
was closed and then revived this week, and you know,
(25:11):
it was revived at the very small like the first
day of trading had it very small, Yeah, thousand dollars
a couple hundred thousand dollars on it, and it traded
kind of normally during the day, and then in the
after our session it shot up because like you know,
there's a few retail investors who are buying it, and
the marketmakers all went home because it was after I
was trading in this tiny little ETF, and so there's
(25:32):
no arbitrage mechanism, and so people are just buying it
at crazy premiums to nav which should not happen in
the ETF, but does if no professionals are awake. And
I think if you have like more twenty four hours trading,
there's gonna have more trading where no professionals are awake,
and things trading at wrong prices, and like people want
to trade it wrong.
Speaker 2 (25:48):
Prices, You're gonna have uglier charts. Basically, Yeah, if.
Speaker 1 (25:51):
You ugly tart means someone like made a very bad
trade and someone else made a very good trade. Yeah.
Speaker 2 (25:56):
Well you touched on something that I think we've talked
about before. It is like, Okay, a world where you
do have twenty four or twenty three hour trading five
days a week, is whether or not you'd still get
like these windows around the open and the clothes where
everyone is sort of trained to trade the most.
Speaker 1 (26:14):
I think you would, because professionals have a rhythm to
their day where they want to stop trading at the close.
Speaker 2 (26:20):
You know, yeah, not all but like you know in
tix ones it's clinton time.
Speaker 1 (26:23):
Yeah not even like to go home, but because like
you need a benchmark to mark against. And then also
just because of that like timing tradition, there is so
much concentrated liquidity there and so if you're a huge
investor who needs to move a lot of shares doing
that at the close is really useful. I do wonder,
you know, I never fully understood how crypto closes work
(26:46):
because crypto just sort of from day one as a
twenty four to seven market, and so.
Speaker 2 (26:52):
For traditional currencies as well.
Speaker 1 (26:54):
Yeah, that's right. Yeah, there's no like clothes, right, and
like in stocks, there's very clearly a close and a
lot of apparatus, you know, index funds and mutual fund
withdrawals and redemptions and benchmarks and everything are all kind
of organized around the clothes. And if you did move
to twenty four to seven training, if you just did
(27:15):
it in a natural, like nonpath dependent way, you'd be like, well,
when is the clothes? Yeah, I don't think that's ever
going to happen. I think it's always going to be
the main exchanges will have a close at four, And
even if the main exchanges offer you know, seventeen hours
of extended hours and everything is kind of technologically the
same during the regular session and the extended session, I
(27:35):
think there will still be a close that everyone can
point to and where a lot of liquidity will be concentrated.
Speaker 2 (27:40):
Yeah. I feel that way too, Like I do struggle
to imagine a world where this is the norm.
Speaker 1 (27:46):
It's just continuous, twenty four hour day, like nothing, no clothes. Yeah,
I don't.
Speaker 2 (27:49):
That doesn't seem feels like it goes against just the
rhythm of being a human.
Speaker 1 (27:55):
Yeah it does. It goes against like the stock markets rhythm.
I mean, you say the rhythm of being a human,
and I hear you. But like stock market, you can
buy an Amazon anytime you want, you know.
Speaker 2 (28:06):
Yeah, I was going to say, I mean humans did
make the stock market, right, yeah.
Speaker 1 (28:11):
Sure, yeah, no, right, right right. There is a human
rhythm and there is a computer rhythm, and like humans
have become adapted to the computer. And the stock market
is from a time of you show up there and
you leave to go have dinner, right, whereas like you know,
Amazon is from a time of computers and you log
in at midnight and buy something, right, And crypto is
(28:31):
from a time of computers, and so you log in
at midnight and buy a crypto. Yeah, And I think
that is creeping into the stock market, but I think
we're a long away from it entirely taking over the
stock market.
Speaker 2 (28:40):
I did want to point out one thing that you
wrote which actually made me grateful for the environment that
we live in right now. You talk about how a
decade ago it was possible to think that investing would
gradually become doller and more efficient and more automated, and
that people would just let robots and professionals manage their
retirements and basically we wouldn't have any of the silliness
(29:03):
that we do now.
Speaker 1 (29:04):
That was like when I said it was possible to
think that, Like I linked to something I wrote kind
of predicting that. So that was dumb.
Speaker 2 (29:10):
That's fine, you called yourself out, But I occasionally get tired.
As discussed, we all get tired of the silliness and
the headlines. But I think that the world that you
described sounds a lot more tiresome.
Speaker 1 (29:24):
So well, you say that as a person who goes
on TV to talk about financial news every day for
several hours.
Speaker 2 (29:31):
Yeah, but you write about it.
Speaker 1 (29:32):
Oh yeah, I agree. I agree, like all this dumb stuff.
You know, once every five times I write about memestocks
or crypti or whatever, I roll my asthm, like I
hate writing about this. Yeah, clearly, I was like, Wow,
at least that's something right about No, I agree. I
think it's a person as an investor, if you stopped
thinking about memestocks and like just you know, had like
(29:53):
robots perfectly investors, like reasonably perfectly investors stock and you
didn't worry about it. You could spend more time like
reading books.
Speaker 2 (30:00):
Yeah right maybe right, Like it's a better world.
Speaker 1 (30:04):
But it's works for you know, making jokes in a
financial new letter.
Speaker 2 (30:08):
That's true.
Speaker 1 (30:10):
That's what we're all here for.
Speaker 2 (30:11):
I have to go talk about all the silly things
on the television, how fun and the asteroid if it
hit yet?
Speaker 1 (30:19):
Luck with that? And that was the Money Stuff Podcast.
Speaker 2 (30:28):
I'm Matt Levine and I'm Katie Greifeld.
Speaker 1 (30:30):
You can find my work by subscribing to The Money
Stuffnewletter on Bloomberg.
Speaker 2 (30:34):
Dot com, and you can find me on Bloomberg TV
every day on the close between three and five pm Eastern.
Speaker 1 (30:41):
We'd love to hear from you. You can send an
email to money Pod at Bloomberg dot net ask us
a question. We might answer it on the air.
Speaker 2 (30:48):
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 (30:54):
The Money Stuff Podcast is produced by Anamazarakus and Mooses On.
Speaker 2 (30:59):
Our theme music was imposed by Blake.
Speaker 1 (31:00):
Maples, Amy Keane as our executive producer.
Speaker 2 (31:04):
And Sage Falman is Bloomberg's head of podcasts.
Speaker 1 (31:08):
Thanks for listening to the Money Stuff Podcast. We'll be
back next week. Welcome our Stuff
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