May 30, 2025 • 40 mins
Katie and Matt discuss Katie’s new bird, the legality of tariffs, the TACO trade, rooting for the nondelegation doctrine, implicit guarantees, the money to be made if Fannie Mae and Freddie Mac are re-privatized, stuffing Bitcoins into public companies and owning the global financial asset portfolio.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. That's your body battery.
Speaker 2 (00:09):
Oh my god, I slept terribly last night. I'm so
glad you asked. This is bad. I'm at seventeen. I
woke up in my body battery. It was at fifty one.
Usually I wake up in the eighties or the low nineties.
Speaker 1 (00:21):
So what was wearing on you?
Speaker 2 (00:24):
I'm moving tomorrow. I'm psyched. I'm going back to New Jersey.
It's where I belong.
Speaker 1 (00:30):
I thought you were going to say you're a stressed
about your bird.
Speaker 2 (00:32):
Oh god, I'm so glad you brought up the bird.
Speaker 1 (00:34):
So, Katy is a bird?
Speaker 2 (00:36):
Have a bird?
Speaker 1 (00:37):
So this is like the Katy's Exotic pet hower.
Speaker 2 (00:39):
Yeah. I have a lot to say about this bird.
So he's a European starling.
Speaker 1 (00:43):
Sure, by the way, one of my proudest moments. And like,
you didn't really notice this, but you showed me like
two pictures of this bird on your phone. Yeah, he's
like pretty small on this pictures. And I was on
your phone and I was like, oh, a starling. You're like, yes,
it's the starling. I was like, yes, yeah, you closed
the bird identifier.
Speaker 2 (00:57):
Yeah, Well they're super common around these parts because they're
an invasive species, which explains why now we're in possession
of the bird. My dad actually found him at my parents' house,
like as a creepy crawley little like no feathers, alien
baby thing. And I called the Raptor Trust and they said,
you know, because it's a non native species, we can't
(01:20):
help it. They said, try to return to the nest.
I tried that, I couldn't find the nest. And I said,
hypothetically speaking, how hard would it be to raise this bird?
And they said, actually, it's really easy to hand raise
European starlings. So that's what we've done.
Speaker 1 (01:34):
He's sitting here at the podcast right now.
Speaker 2 (01:36):
My parents are taking care of him at my direction.
It's kind of fun because it feels like they're my employees.
Speaker 1 (01:42):
How many like video calls? Are you doing a day
with your parents?
Speaker 2 (01:45):
Many? Actually have a new photo to show you now
he's about three to four weeks old. I'm really proud
of this photo, not that anyone listening can see it.
Hold on put in. My dad texted it to me
this morning.
Speaker 1 (01:57):
You know, we can put it in my email.
Speaker 2 (01:59):
Oh my god. Yeah, Well I won't put this photo.
Look at him.
Speaker 1 (02:02):
Oh he's a bird.
Speaker 2 (02:03):
Yeah, he's a real bird now, so we want to
release him? So no, not yet. There's three important milestones
that this bird needs to pass before we can think
about releasing him to the wild. He needs to be
able to perch. He's getting better. My mom has been
putting him on a stick and he will perch on
the stick. He needs to be able to fly. Obviously
(02:24):
he's flapping around. He's not flying yet.
Speaker 1 (02:27):
Is your mom like clapping our arms to demonstrate to him?
Speaker 2 (02:30):
That's what the conversation we keep having is we're not birds,
so it's not a bird. It's really hard. And the
third thing he needs to be able to do is
feed himself. The hand of God has been feeding him
mush mush for weeks now, so he needs to you know, Oh,
I'm so glad you asked. So high protein dry cat food.
You soak it for you know a while. I've been
(02:53):
doing a hard boiled egg and then you mash it up. Yeah,
it's kind of feels bad, hag to a bird, but
he doesn't know. And then I have this like egg
shell mix it's made for chickens to try to give
them more calcium so they lay better eggs. But basically,
what starling, baby, Starling, growing Starling's need is a lot
(03:16):
of protein and a lot of calcium. So this mix
seems to be working pretty well. I've adjusted it as
he's gotten a little bit older. As the photo shows,
he looks like a real bird, so we'll see if
his bones will support himself as he continues to learn
how to perch and fly.
Speaker 1 (03:32):
Well, I hope you will bring him into the podcast
before you.
Speaker 2 (03:34):
Yeah. Well, the thing is, and I promise we'll move
on soon, is that if he's not able to be released,
and we're not going to release him to a certain death,
if he isn't meeting these milestones, then we just have
a bird now, which isn't the worst thing.
Speaker 1 (03:50):
No, it's clearly the outcome you're rooting for. All right,
I think we're done. We'll see you next week.
Speaker 2 (03:55):
Yeah, no, I think that that was a good update.
Speaker 1 (03:57):
And yeah, hello, come to the Money Stuff Podcast. You're
a weekly podcast where we talk about stuff related to money.
I'm Matt Levigne and I write the Money Stuff column
for Bloomberg Opinion.
Speaker 2 (04:09):
And I'm Katie Greifeld, a reporter for Bloomberg news and
an anchor for Bloomberg Television.
Speaker 1 (04:13):
Hey, there's been some tariff news.
Speaker 2 (04:15):
Yeah. I feel like we have to timestamp this conversation
because everything is changing very rapidly.
Speaker 1 (04:21):
We're recording this at four o'clock on the Thursday, May
twenty ninth.
Speaker 2 (04:25):
Yeah, and about twenty four hours ago or less than that.
A court, which I learned existed.
Speaker 1 (04:31):
So U asked Court for International Trade.
Speaker 2 (04:33):
Yeah, based in Manhattan. Sure, yeah, so it blocked the
the tariffs that Trump put on on Liberation Day.
Speaker 1 (04:43):
Yeah, most of his tariffs are, yeah, the Liberation Day tariffs,
and actually like the pre Liberation Day like Canada and
China tariffs, the opioid tariffs, the personal tariffs, those were
all blocked by the court as of like Thursday afternoon.
The Appeals Court for the Federal Circuit, which is like
(05:05):
the appeals court the handles that you also just learned exist.
That the handles it feels from the court from the
International Trade. That court at a temporary stay, so it
could like consider whether to put a longer stay. So
everything's very much in flex. But yeah, the Court for
International Trade said these tariffs are illegal.
Speaker 2 (05:22):
Yeah, and it seems like we're heading to the Supreme Court.
Speaker 1 (05:25):
Well, I mean certainly, yeah, yeah, yes, yeah. Probably won't
be at the Supreme Court by the time this podcast
air is on Friday.
Speaker 2 (05:31):
Probably not. But you know, crazy things have happened. I mean,
coming into this morning, futures were up a ton on
the S and P five hundred because it was like, Okay,
the trade war's over. It's not. It seems like the
consensus that has emerged is that Trump has plenty of
other tools to put on tariffs somehow, And I don't
know what this does to the US negotiating stance. It
(05:53):
feels like it lessens it by quite a bit.
Speaker 1 (05:56):
I guess that's right. I don't know. It's just like
it feels like the US negotiating stance is so mercurial
and so unreliable that I'm not sure how much it
affects the negotiating stents or going. On the one hand,
as you said, he has a lot of tools to
put on tariffs, and if you are a trade partner
in negotiations with him, the threat has gone from I
(06:18):
will put on whatever tariffs I like, pursuing to my
unlimited authority to put on tariffs too. I will find
some stuff to do and it'll be super annoying and confusing.
It's like that's not that much better, right, That's still
a pretty bad threat. And in some ways, I feel
like a lot of what I read about people who
are in the posture of negotiating with Trump, like you
read about this, and like the situation with Harvard, right,
(06:41):
people worry about making deals because he is not a
reliable interlocutor and can always just change the deal and
there's not a lot you can do about it. In
some ways, like you having a little court supervision might
be kind of good for negotiating postures. I don't know
that's true, but like it's just like it's nice that
there's like just a soup song of like law here, right,
(07:05):
and like procedures, because you know, I wrote about this today.
There's in some ways this is a complicated case. There's
all these statutes, there's all these questions of like what
things should be left to the executive's discretion. But in
many ways it's a very very simple case, which is
that the Constitution of the United States just like a
real document. You can read it like it's a real
thing that exists, right, Like, not everyone involved in the
(07:26):
government has read it. But like, you know, there's like
a real document that people at least say they care about.
The Constitution just says the Congress has the power to
impose taffs and the president doesn't. So like all this
stuff of like executive orders imposing tariffs is really like
on a first order analysis, just not what the Constitution says.
And I think that's kind of the court starting point here. Yeah,
(07:47):
so it seems like kind of simple stuff and there's
more complicated stuff, but it is in some ways a
relief to see that the Constitution still has some controlling power.
Speaker 2 (08:00):
Yeah, that does seem like something a couple hours that
you would root for.
Speaker 1 (08:03):
I do. I'm weird like that.
Speaker 2 (08:05):
Yeah, when it comes into the negotiating stance, the standpoint
that I've seen bandied about is basically, if you're another
country negotiating with the US, like this kind of removes
the urgency or the incentive to make a deal with
the US because now it's in flux. You know how
much power Trump actually has to enact these tariffs.
Speaker 1 (08:24):
Yeah, that's right. But you wouldn't that against him having
a lot of power to do whatever he wants, if.
Speaker 2 (08:32):
You would, I don't know, yeah, yeah, I don't know.
Speaker 1 (08:35):
The one can say spring quick tomorrow.
Speaker 2 (08:38):
Yeah, at least on this Thursday. The consensus that has
seemed to emerge throughout the day. And you've seen this
in like the slow bleed of the S and P
five hundred from you know, our pre market euphoria was
this just turns up the volume so much on the
trade policy noise because who knows what's going to happen and.
Speaker 1 (08:55):
Not other noise, right, I mean, like one overhang to
finance is how much rule of law is there? And
every time the court says Trump can't do something, you
have wider variant in the outcome of how much rule
of fla is there because like maybe you'll be like,
oh yeah, the constitution does say that never mind, or
(09:17):
maybe like Peter Navara said, nothing has changed after a
court said the terriss around constitutional Like how did that's
like ating posture?
Speaker 2 (09:24):
It was kind of funny that this all happens within
hours of Trump being told about the taco trade. The
tacos trade, taco trade being Trump always chickens out. It
was coined by an.
Speaker 1 (09:36):
FT columnist Rob Armshuk at the FT.
Speaker 2 (09:38):
Yeah, yeah, basically that okay, Trump comes out with this
big announcement, you know, we're going to slap a gazillion
percent tariff on so and so, and then you know,
inevitably it's walked back, and that's the taco trade. You
bet on this is going to be walked back. And
Trump was told about that in the Oval Office, and
(09:58):
he was upset, as you would imagine, and said, no,
this is negotiating. This is how it's done, which you know,
maybe there's some truth to that, but you know, as
an investor, I can see how you could also turn
that into a trade, even though it feels like, you know,
in the last couple of weeks or so, it's become
less profitable because it feels like the shock value is fading, right, right, right.
Speaker 1 (10:18):
So a couple of things. One like Trump always chickens
out is the insulting to him phrasing of it. Yeah,
but the trade is when a drastic tariff announcement comes out,
the actual result will be less than that, either because
of the negotiation or because you checked, like you can
be agnostic about the cause, or you can just say, like,
this isn't as bad as it sounds. The second thing
(10:39):
I want to say is that Lewis Astroth at ft Alphaville,
like apparently got jealous of his colleagues ability to quinna
term that became so famous, so he wrote a bunch
of other potential acronyms, like Mexican food themed acronyms, and
the one I liked was takita, which is Trump always
quickly undoes initial trade offensive just like a little thing.
It's more a specific about the thing that's happening. The
(11:02):
other thing I want to say is that a reader
emailed me to be like, would it be a good
trade if you were a journalist to short the market
and then ask Trump about the taco trade, because like
the mechanism there is like you asked Trump about the
taco trade and he gets really mad, and then he
says I'll never chicken out again, and tarriffs get higher,
(11:23):
the market drops, Like I think, like you could have
imagined for a second that like Trump getting mad about
the phrase taco trade could have been bad for stock prices,
but of course it was quickly followed by the trade
cord ruling, which is good for stack prices. So it's
a little hard to isolate the impact of getting Trump
mad about the taco trade Yeah.
Speaker 2 (11:42):
That's pretty funny. It could work if he had explicitly
said I'm going to tear iff even harder. Right now,
I think.
Speaker 1 (11:49):
That it would have been reasonable to think that he
might have thought that. But then, you know, events moved on.
Speaker 2 (11:54):
Yeah, that's what happens a lot.
Speaker 1 (11:56):
That's kind of the real core of the taco trade,
which is events just keep moving on.
Speaker 2 (11:59):
Yeah. Well, it'll be interesting to see what happens to
the taco trade as we continue to muddle through whether
or not these tariffs are illegal and what other types
of terrifts were going to get. There's all these different
tariffs that this ruling doesn't cover. When you think about
steel and aluminum for example, Well.
Speaker 1 (12:18):
So the Liberation Day tariffs are ten percent to you know,
one hundred and fifty percent towers on everything, right, it's
ten percent baseline, But then every country had like quote
unquote reciprocal tariffs that were much higher. Amazing calculation of
the trade deficits. It's like the whole thing. It was
like truly universal, and it was basically you talk about
(12:39):
like steel taffs, there's like you have like a sort
of national security justification or whatever right you have some
theory behind steel tiers. But like this the Liberation Day tariffs,
where the US runs a trade deficit and we want
to stop that, and so we have tariffs that are
calculated through some formula designed to zero the trade deficit essentially, right,
And the court said you can't do that. The law
(13:02):
that he used AEPA International Emergency Economic Powers Act of
nineteen seventy seven. The AEPA allows you to respond to
an emergency, and if you have tariffs that are responsive
to an emergency, that's fine, but like, it can't be
the case that all international trade for the last thirty
years is an emergency. Like this is like too much,
it's like too much power to the executive. So you
(13:22):
can't do that. But can you find specific goods to
tariff and use other laws that say you have like
specific economic tariffing powers, like maybe probably often there are
more limits in those laws if you have to like
do fact finding and like put out a report and
they're time limited, right, So it's not as completely broad
as the powers that they claimed under AYEPA, which is
(13:44):
why they did the AEPA stuff. They're like, we're you
do everything all at once with no you know, review,
no fact finding. So AEPA was the law they thought
they could use for that. If they can't use that,
then they have to find other laws which will be
a little bit more narrow, but you can still do
a lot of terror.
Speaker 2 (14:00):
Yeah, I mean, there's section two thirty two, for example,
that's what's being used on steel, aluminum, vehicle and auto parts.
There's other laws as well, but usually there's some investigation
associated with him, so it takes months versus President Trump
is sitting in the Oval office and he signed something.
Speaker 1 (14:17):
Because again, like the Constitution says that Congress can make tariffs. Yeah,
and so Congress has in the past past laws saying
here are some tariffs that the president can impose, right,
but like, ultimately it's the Congress's tariff power, and the
Congress doesn't say in any of those laws the president
can make any tariffs he wants. It says, you know,
(14:37):
he does an investigation these particular things, for these particular reasons,
you can make tariffs. But it's not an open ended
grant of power. And one thing that the court so
yesterday is that if it were an open ended grant
of power, and one way to read AIPA is that's
an open ended grant to make whatever twists you want.
I don't think it's a good reading, but it's like
the Trump administration reading the court said, if you read
it that way, then it would be unconstitutional for the
(15:00):
Congress to give all of its tariff power to the
president with no limitations whatsoever. And I think that's right.
I have a personal interest in this. I don't know
if I've talked about this on the podcast a column,
but like that idea that Congress can't just give its
power to the executive with no constraints is called the
(15:20):
non delegation doctrine and it is had a controversial career
in the Supreme Court. But one of the important cases
in the recent Supreme Court about the non delegation doctrine
was argued by my wife. Wow, he's a criminal defense layer.
And so I was in the audience for that, and
so you know, I have like a little rooting interest
(15:41):
in the non delegation doctrine.
Speaker 2 (15:43):
I get it, even though to oversimplify and dumb it down.
It seems like that is what has happened here, and
it does just seem like Congress is too upset about it.
Speaker 1 (15:52):
So the podded history of the non delegation doctrine is
that it's never had any effect whatsoever. Like there is
lip service paid to the idea that Congress can't delegate
all of its legislative powers to the president, but that
lip service has always paid in cases saying but this
delegation is fine, right, including my West case. But there
is like this notion that interest in it has been relived,
(16:15):
and like one day they're going to find a delegation
that is too broad and maybe it's ayepa. I don't know.
Speaker 2 (16:19):
Yeah, I don't know. Again timestamp this is on Thursday.
It'll be fun to see how this shakes out. I
don't know. I would love to be a fly on
the wall and like some of these negotiations, because I
don't know, if you're Japan negotiating with the US right
now or India, do you just wait and see.
Speaker 1 (16:34):
I don't understand why this would really change it that much.
I just think that like the thing that you know
as like the Japan trade negotiator or whatever, is that
Trump really wants to make deals, he really wants to
have wins, he really doesn't trust free trade. He's really
willing to push the boundaries of the law as much
as possible. He's not really aware of what those boundaries are.
(16:56):
To think like I'm going to tell him to stuff
because a court struck him down. Seems crazy, Like now
more than ever, you make a deal, more than you're like, look,
this court was wrong. We understand. Here's our tariff concessions.
Like maybe you get a better deal now, and like
you're rushing to make a deal. I don't know. I
don't understand the idea that like now you're like, oh,
(17:18):
it's fine, like no more tariffs, Like I'll just walk
away from the negotiating table.
Speaker 2 (17:22):
So it's crazy. I don't know. Maybe you don't walk away,
but maybe you say, why don't we break for lunch
for a little bit. Why don't we.
Speaker 1 (17:28):
I think that was the opportunity to make a bigod deal.
I don't know. I don't listen to me, I don't
I don't know anything, but like to me like calling
him up and being like, I'm in your camp, buddy,
I want to make a deal. I know that you
have the constitual parademphosies tariffs. Let's make a deal. To me,
listen to the opportunity. You don't break for.
Speaker 2 (17:45):
Lunch that's true.
Speaker 1 (17:46):
You cut the deal now, Yeah, no exaggerating because like
if the deal involves like him imposing lower ABA tariffs
on you, like those are illegal maybe maybe. So I
don't know. It's harder to know what the deal is,
but I don't know how it changes the poster.
Speaker 2 (17:59):
That most of our topics today are vaguely and in
some cases explicitly. Donald Trump related Fanny and Freddy for example,
(18:23):
back in the.
Speaker 1 (18:23):
News another bit of you knowilateral.
Speaker 2 (18:26):
Pol an explicit implicit guarantee.
Speaker 1 (18:31):
Yeah, Donald Trump, the verb is so hard. I want
to say he tweeted, but in fact he posted on
truth social which you can say he truthed.
Speaker 2 (18:37):
Yeah, the truth.
Speaker 1 (18:38):
I am working on all caps taking these amazing companies public,
but I want to be clear the US government will
keep its implicit all caps guarantees, and I will stay
strong in my position on overseeing them as president. So
Fanny and Freddie, the government sponsored enterprises had a long
prehistory as being implicitly guaranteed by the US government. So
like they explicitly said, Morgus, they have trillion dollars Morgue,
(19:02):
and they issued mortgage backed securities that are guaranteed by them,
and those securities. Always said, these securities are not guaranteed
by the US government, And they said that because otherwise
you'd be confused, because everyone thought they were guaranteed by
the US government. That's what it's called an implicit guarantee.
They say it's not guaranteed, but everyone thinks it's guaranteed.
And then in two thousand and eight they went past
and they turned out to be guaranteed by the US
(19:24):
government effectively because the government like stepped in and took
them over, bailed them out, and made sure that creditors
were made whole. And that was roughly sixteen years ago.
And ever since, people have said this can't continue forever.
They have to return to private hands. And I always said, why,
it's fine, like no one. Yeah. But so now once again,
because Trump is in office, and because there's a lot
(19:47):
of money to me, there's a talk of returning Fanny
and Freddie to private hands. And the mechanics of that
are really complicated, and there's opportunity for people to get
hundreds of billions of dollars of value. Yeah, and so
that's of great interest to a lot of investors.
Speaker 2 (20:07):
Yeah, there's bags to be made, uh, bags to be made, yeah,
which could bring us to Bill Ackman, but we don't
have to talk about we don't have to.
Speaker 1 (20:14):
But Bill Ackman is one of the big investors in
that trade. And when Fanny and Freddie were put into
conservativeship by the government in the financial crisis, their stock
became like you know, in the ballpark of worthless, but
never stopped trading. And at some point in like twenty twelve,
I think the government changed the deal from the bailout
to say from now on, all of the profits of
(20:37):
Fanny and Freddy forever we'll go to the government and
shareholders will never get anything ever again, which you might
think would make the stock worthless and like made it
almost worthless, yeah, but some people thought that can't be true,
like that'll change, and so they bought the stock and
now they own stock. And it is unclear from first
(20:59):
principles how you would reprivatize Fanny and Freddy, but it
seems likely that whatever happens, the current shareholders of Fanny
and Freddy, who bought the stock at you know penny
is when it was declared to be worthless for all time,
it seems like that the current shareholders will get a
back yeah.
Speaker 2 (21:16):
Haven't they already though, like well like in market prices.
Speaker 1 (21:20):
Yes, yeah, yeah, because people are anticipating that Fanny and
Freddy will be returned to private hands, and specifically their
private hands, like specifically the existing shareholders of Fanny and
Freddy will not in fact be zeroed, but will end
up being shareholders of Fanny Freddy and look at a
lot of value.
Speaker 2 (21:37):
Yeah, it would be you know, kind of funny if
some of these big vocal investors who are calling for
the reprivatization, who you know, have bought the stock when
it was pretty much worthless sold now in this insane
run up that it's seens. Yeah, yeah, this is good. Yeah.
Stocks of both companies are trading at their highest level
since two thousand and eight. But you look at the
long term chart, like going back to the nineteen eighties,
(21:59):
and it's still nowhere close to where it was.
Speaker 1 (22:03):
Yes, because right now they're controlled by the federal government
and they're charters. Say that their shareholders can never get
any money ever. Yeah, so that's worse than the old
old business model.
Speaker 2 (22:13):
Yeah, for sure. I don't know this timeline. Even though
Trump is posting on truth social about it, it seems like
this has picked up an urgency, like this process would
take years and years.
Speaker 1 (22:23):
I want to just be clear, Like there's two things.
There's like you can return Fanny and predat to private hands,
and then there's the specific question of like how much
of it do you give to the existing shareholders? Yeah,
weird as zero? You can say, Okay, the deal is
the deal. And by the way, the deal is probably controversial.
People think it's really unfair. There's been a lot of lawsuits.
I want to respect their feelings that, like, in fact,
(22:44):
the twenty twelve deal to zero the shareholders, there's a
good case that it's pretty unfair. But whatever, given that
it exists, you could reprivatize them without giving existing shareholders anything.
You could just raise new money to cap them. You
can say, I mean, but like there's like some corporate
(23:04):
complexities to doing that, but like, you know, you could
raise a lot of new money and like essentially dilute
the existing charolders down to zero. And you could do
that by saying, you know, the government has I think
when I last read about this in January, in the
accounting of Fanny and Freddy, they owe the government three
hundred and forty billion dollars before the sholders can get
anything right, and so you could say, well, okay, we're
(23:25):
gonna go out and raise three hundred and forty billion
dollars of new capital to repay the government. And after
he raised that three hundred and forty billion dollars, then
like you know, the existing cherolders will have you know,
zero point zero zero zero one percent of the companies
or whatever, and so like their shold will be worthless,
not worthless, that's not worth very much. But the other
(23:47):
extreme is you can say, you know what that three
hundred and forty billion dollars that Fanny and Freddy o
the government, that was a mistake. They don't really owe that,
so we'll just cancel that that right, And then the
existing shaerolders are sitting on shaares worth one hundred billions
of dollars, more than one hundred billion dollars. And those
are kind of the two poles, right easting shareolders have
nothing or they have like more than one hundred billion
(24:07):
dollars of equity.
Speaker 2 (24:08):
Two scenarios.
Speaker 1 (24:09):
Two scenarios. I don't think it's like a prayer necessary
to choose the second one. I think there's reasons to
choose the second one. You might think it's fairer to
the shareholders. You might think the sharelder's got a raw
deal on twenty twelve. It's a reasonable thing to think.
And you might think that giving the charrelders a good
deal is a good way too. You know, you'll need
to raise money for Pannion and Freddy. You'll have better
capital markets access if you treat the shareolders nicely. But
(24:32):
it's also the case that like giving one hundred billion
dollars of value to these existing shareholders is like it's
like a little bit of an optically strange move.
Speaker 2 (24:40):
Yeah, yeah, I don't know. It feels like any scenario
is just going to be messy and optically strange. So
what I care about, circling back to ummoving is what
this could mean for mortgage rates.
Speaker 1 (24:53):
Yeah. Yeah.
Speaker 2 (24:55):
So Bill Polsey, he's the head of the FHFA, which
oversees Fanny and Freddy. He said back in February that
any effort to reprivatize the two must be carefully planned
to make sure that the housing markets to remain safe
without pressure on mortgage rates. So the explicit implicit guarantee,
even though you know, there's a lot of question marks
(25:16):
and details to be worked out there. At least that
seemed to remove some of the risk that mortgage rates
would spike here, right.
Speaker 1 (25:25):
Like who knows what every privatized Fanny and Freddy looks like,
but like here's some possibilities. One is, like there's an
explicit government guarantee that they pay for, so there's like
a fee, Yeah, that would be incorporated into your mortgage rates.
It might raise rates because right now Fanning's Fredady kind
of have an implicit somewhat more than implicit but less
than explicit guarantee because like they're in conservatorship and that
line of credit with the federal government and they don't
(25:47):
pay for that, or they they pay a lot for it,
but the accounting is somewhat complicated. But like in a
world where the government charged a fifty basis point fee
for a mortgage guarantee, then like that's fifty basis points
on your mortgage. Right, you could have a fully private
Fanny and Freddy where either they are fortress balance sheet
(26:07):
triple A super safe and raise a lot of capital
and that raises their costs and thus raises mortgage rates,
or they're like, yeah, double a pretty good and like
rais capital and then like possibly the mortgage backed security
is trade wider and that raises your mortgage rates. Right,
the implicit guarantee is essentially they're backed by the government,
(26:29):
but they don't pay for that backing. That's probably the
cheapest free of mortgage.
Speaker 2 (26:34):
Right, let's go with Allen then, seems to be what.
Speaker 1 (26:36):
They're going with.
Speaker 2 (26:36):
That's good.
Speaker 1 (26:37):
I know there's other stuff too, Like I was reading
a paper today, like a privatized Fanny and Freddy, Like,
right now there are arms of the government. They kind
of have always been arms of the government. You could
imagine them being like more kind of free market, ye, right,
Like one thing that Fanny and Freddy do is there's
like a thing called a conforming mortgage. And if you
meet the requirements of a conforming mortgage, which are not
(26:57):
that low but not that high, then you kind of
get the same rate. The rate for a conforming mortgage
is the rate for a conforming mortgage. But like you
can imagine a fully private Fan and Freddy having more
discrimination among borrowers where there's less cross subsidization, and like
very credit worthy borrowers get lower rates than like medium
credit worthy borrowers, So like you could have the effect
(27:18):
of not raising her lowering mortgage rates, but just like
increasing the dispersion of mortgage rates. That would probably be
fine for you.
Speaker 2 (27:24):
You don't know that. I guess maybe I have a
horrible credit score. You don't know.
Speaker 1 (27:29):
I don't know.
Speaker 2 (27:32):
So, yeah, well, seems like we're going to be talking
about this for years.
Speaker 1 (27:36):
I know, I know, I've a lot. You know. It's
it's like it's like heated up and cool down over
the years. And I used to write about it a lot,
and then I didn't for a long time because like
in the Biden administration, nobody every time about this. And
it's right about it again in January because like people
started tweeting about it, and now it's like it feels
like it's kind of coming back.
Speaker 2 (27:53):
I feel like the shares are just a good metric
of how much this is being tweeted about.
Speaker 1 (27:58):
Yeah, the show's just yeah, the market some real action.
Speaker 3 (28:02):
Yeah, there's a lot of social media activity.
Speaker 1 (28:20):
Bitcoin treasury companies.
Speaker 2 (28:22):
Yeah, when did that phrase become real? I guess Microsoft,
I think.
Speaker 1 (28:26):
Micro Strategy probably years ago, but like it's become like
everywhere in the last few.
Speaker 2 (28:31):
Yes, especially everywhere, like in just in the last few months,
because MicroStrategy started doing this in twenty twenty.
Speaker 1 (28:39):
I think that when micro Strategy started doing the first
of all, the micro Strategy is kind of a real company, yeah.
Speaker 2 (28:45):
And they are a software company, right, And like they.
Speaker 1 (28:48):
Sort of started slow. They bought some bitcoin. It got
kind of MEMI and so like early in the days
of micro Strategy buying bitcoin, you could say, and I
probably did say that it looks like every time they
spend one dollar buying bitcoin, it increased their market cap
by two dollars and that's a good trade. But it
wasn't like super super super obvious, right, I think they
would say things are or levered bitcoin. It was like
(29:10):
they had a business. Who knows how you value the business? Yeah,
that stuff. You could look at that and be like, well,
I can't just copy that. I can't just like put
bitcoins in a public company and have them be worth
twice what they're worth as bitcoins. And so I think
it was a little bit slow adoption if people copy them,
but like it was, you know, not everyone covered them.
And then the last few months, like people have realized
(29:31):
that you could take any random public company and just
stuff it full of bitcoins and like it'll double the
value of the bitcoins, and so that just feels like
a great trade. There are a lot of people who
own a lot of bitcoins, right, And if you own
two hundred million dollars worth a bitcoin, you sell them
for two hundred million dollars. But if you stuff them
into a public company, they'll be worth a billion dollars
and that's more. Yeah, So everyone's doing it.
Speaker 2 (29:52):
Everyone's doing it, and especially this week, it feels like
everyone is doing this. So you know, you kicked off
the week by talking about sharplink.
Speaker 1 (30:00):
I guess they did it. No, they did this, they
did the Monday, Yeah, or.
Speaker 2 (30:04):
Time they did this is a flat circle.
Speaker 1 (30:07):
So sharplink is great. Like sharplink is the purest form
of list because they were a sports betting marketing company
or some Yeah, they had a two million dollar market
cap as of like mid last week. Someone pumped them
full of four hundred and twenty five million dollars of
ethereum right or eth and so now they're trading it
like a two plus billion dollar pro form a market cup.
(30:28):
I want to be clear, like I wrote about this
and I said market cup, but it's not. They're done
have two point four billion dollar market They have a
two point four billion dollar pro form a market cup
right now. They have some share with outstanding, not very
many of them, and the shares traded a high price,
and they have like whatever like Bloomberg will tell you
eighty million dollar market caps something like that. But they've
also agreed to issue all these shares to these investors
(30:48):
who want to pump them full of ethereum. And if
you count those shares to the market caps like two
and a half billion dollars. And this is important because
like you know, we talked about QXO a few times. Yeah,
same deal, where you have a company with like very
few shares outstanding and a huge pot of money coming in,
and like the retail investors are like, oh, look, this
(31:10):
company has four hundred million dollars with ethereum and its
market cap is eighty million dollars. I should buy some
more stock. Right, That's wrong, right, because like the eighty
million doesn't count the four and twenty five million of ethereum.
But the stock is like the publicly traded stub is
small enough, and like the market cap is confusing enough
that people are buying it at a five or ten
(31:32):
times premium to the value of the ethereum and the pot,
and like there's nothing else, right, two million dollar company, Right,
But there's a ethereum in a pot and it trades
at a large multiple of the value of the ethereum.
Speaker 2 (31:41):
It is somewhat interesting that they went with ethereum versus bitcoin.
Speaker 1 (31:44):
Oh, I just think that people need to pick a lane.
And like Bitcoin is so saturated that like people are
doing Solana, they're doing ethereum, they're.
Speaker 2 (31:50):
Doing you mostly hear popcoin, they're.
Speaker 1 (31:52):
Doing doage coin, they're doing everything. But yeah, a lot
of them aren't bitcoin. But it's not only bitcoin.
Speaker 2 (31:56):
Yeah. Yeah.
Speaker 1 (31:57):
I wrote about two other big ones this week, household
name meme companies are you know, DJT Trump Media and
Technology Group and game Stop both announced bitcoin treasury buys
and their stocks both went down, which is like, that's the.
Speaker 2 (32:13):
End of it, Okay, the trade's over.
Speaker 1 (32:16):
I don't think the trades are literally over, because I
think those are special cases of companies that were kind
of already meme stocks. But it's definitely the case that
any random company for at least several weeks that announced
it bought a lot of bitcoin, like the stock would
go way up and people are like, oh, we should
do that. Yeah, and then these two big name ish
meme companies announced it and their stocks went down.
Speaker 2 (32:36):
It's like, yeah, trades over for game Stop. So they
announced in March that they plan to.
Speaker 1 (32:41):
Actually this is not new news for games. They actually
bought them coin this week and it went down.
Speaker 2 (32:45):
But like, in some ways, it's amazing that it took
this long for them to come up with the plan
that we're going to do this for game Stop. I
feel like, I don't know, I would have expected it
a couple of years ago, but here we are.
Speaker 1 (32:57):
Okay, First of all, I would expect it from AMC,
who does everything like AFC bought a gold mine because
that was funny, right, like AFC.
Speaker 2 (33:04):
Should somehow I had forgotten about.
Speaker 1 (33:06):
That they bought a gold mine.
Speaker 2 (33:09):
Maybe we should talk about that more. I would like
to get a status report on that.
Speaker 1 (33:14):
I know every stuff, And I'm like, they bought a
gold mine and I read about it, but I never did.
I'm not even sure they literally, but I think they
like did some sort of murder with a gold coin.
I don't know anyway, Games Stop has always been like
a little bit less like doing every meme, but they
do a lot of memes stuff. But yeah, I think
that if you want to do a viitcoin treasury strategy,
(33:35):
you kind of have to be all in on it.
And like gamesop, I still want to sell video games
at them all, And I think it was reasonable for
a long time to think that if you're just GameStop,
you don't really have an advantage in doing that strategy.
M h macro strategy was there to do at first.
It's not clear why a copycat would be particularly valuable,
(33:56):
so you might have tried to do something else before
getting into the viccoins state.
Speaker 2 (34:00):
So you wrote that, you know, you compare maybe Michael
Saylor will do something cooler with it's bitcoin than the
CEO of DJT. But it doesn't seem like there's anything
to do with it that's cool other than just buy
more of it.
Speaker 1 (34:15):
Okay, I hear you.
Speaker 2 (34:15):
I don't really disagree it. They're not going to say
I was being.
Speaker 1 (34:18):
Intentionally vague about doing cool stuff, Okay. One view of
these bitcoin treasury companies is that like they're sort of
like a like meta pump for pitcoin, right, The idea
is they will buy all the bitcoin and not sell it,
and that will cause the price of pitcoin to go
up and they'll be rich. It's just like a diamond
hands like theory of pitcoin like abstracted back one level
to these treasury companies, but another theory and a related theory,
(34:40):
I guess is like a lot of them, including micro strategy.
We'll talk about like investor education efforts right right, And
we talked about this with like twenty one. It's like
another big Jack Muller's Jack Millers, Yeah, like big bitcoin
treasury company with like Tether's bitcoins and you know they're
like we're going to do investor education or like knack
Amoto holdings like merch the opioid company, like a.
Speaker 2 (35:01):
Tiny drug company now on I haven't heard of.
Speaker 1 (35:03):
It's called kindly Empty. It's just like it's just random mania,
all these like random like tiny companies, like you can
pump them full of bitcoins, and like they all talk
about like we're gonna do marketing, media, investor education. It's
all like you know, we're gonna make the price of
bitcoin go up, right yeah, And so like your theory
is not only will they own bitcoin, but they'll do
stuff to make the price of bitcoin go up. I
(35:24):
don't know why that would make you buy them rather
than bitcoin, but whatever. But like I will say, like
micro Strategy, I have like a really interesting capital market
strategy where they're like, we're gonna use every part of
our cab structure to raise more money to buy a bitcoin.
And you can imagine being like, I'll buy the equity
because like they will get more attractive funding to buy
bitcoin by like selling converts at a high volatility. I
(35:45):
don't know, that's not a crazy position, but like most
of these companies are, so yeah, we're gonna buy bitcoin
and we're gonna talk about buying bitcoin. Why would you
have a premium for that?
Speaker 2 (35:53):
Yeah, I don't know. This is a tangent, but I
just want to talk to like the average employee at MicroStrategy,
which is now just strategy by the way, we've been
calling a micro strategy.
Speaker 1 (36:04):
It's still like a fish or whatever.
Speaker 2 (36:06):
Nothing matters because they employed thousands of people. I want
to talk to an average employee there who isn't involved
with the bitcoin strategy at all.
Speaker 1 (36:18):
It is a little perplexing, but you know, like if
they get data stock, they're.
Speaker 2 (36:23):
Pretty happy I don't know, but I agree obviously, But
you know, do they just think of it like I
work at a conglomerate, Like there's part of the business
that is just so totally disconnected to what I do.
Speaker 1 (36:36):
Right, It's funny, I've already said that, like the software
company really matters because like I don't know, like some
part I don't know what part, at least some small
part of the micro strategy thesis is like they could
get in the S and B one day, yeah, and
then like yeah, you're in the NAZAC one yeah, right,
because they're a real company, right yeah, And like if
you're just a bitcoin ETF, you can't get into these indexes.
It's like a little bit harder for like an active
(36:57):
equity manager to buy an ETF share than it is
to buy a share of an operating company. So I
think like there's something very important about what the software
employees do at micro Strategy that's a little bit undermined
by like kindly MD and you know, sharplink, where like
the operating business is so small, so small compared to
(37:18):
the pot of the Coiner Earth theorem.
Speaker 2 (37:20):
Just to your point that you know, perhaps you could
see micro strategy entered the S and P five hundred.
It is amusing how much crypto exposure there is in
the S and P five hundred right now, especially with
Coinbase being added. These are our I assume that your
four one k is in the S and P five hundred.
Speaker 1 (37:38):
I don't own any crypto because in part because like
there's a notion of journalists together because you're not supposed
to enryptos. You've heard about it, and like to me,
I'm like, like I don't know like shares of Tesla,
but I own mostly index funds, which on's.
Speaker 2 (37:50):
Tesla, right, Oh, yes, you do.
Speaker 1 (37:51):
Yeah, and like to me, like, the neutral portfolio is
not owning nothing. The neutral portfolio is owning all of
the financial assets in the world proportion to their like,
you know, value. And so if you own zero bitcoin,
you're like structurally biased against bitcoin because bitcoin is like
a trillion dollars of value. So you should own like
a little bit of bitcoin to like fully reflect the
(38:12):
global financial portfolio.
Speaker 2 (38:14):
And now I do through that, you do, yeah.
Speaker 1 (38:17):
And you know, like why am I so smart?
Speaker 2 (38:20):
Right? Like why are you so smart if.
Speaker 1 (38:21):
One percent of like the global financial portfolio is bitcoin?
Like why shouldn't I own that one percent of mys
in bitcoin.
Speaker 2 (38:28):
I think that's a pretty reasonable take.
Speaker 1 (38:31):
And then I have to like it. But they have
to like a lot of companies, right, Like I'm not right.
Speaker 2 (38:35):
Yeah, So you just want a market cap weighted total
asset portfolio.
Speaker 1 (38:41):
You're looking at me like that's a weird thing to want.
That's like the most normal possible thing to want. Everyone
wants that, just you can't get it, but you can
get closer to it by like having bitcoin treasury companies
in the ass and.
Speaker 2 (38:51):
P Maybe I sound skeptical, but I'm not. I think
that's great.
Speaker 1 (38:55):
I'm a simple man. I just want the global financial
asset portfolio.
Speaker 2 (38:59):
Simple man. I just want to go home and see
my bird.
Speaker 1 (39:05):
And that is the Money Stuff Podcast.
Speaker 2 (39:07):
I'm Matt Levian and I'm Katie Greifeld.
Speaker 1 (39:09):
You can find my work by subscribing to the Money
stuffnewsletter on Bloomberg dot.
Speaker 2 (39:13):
Com, and you can find me on Bloomberg TV every
day on Open Interest between nine to eleven am Eastern.
Speaker 1 (39:19):
We'd love to hear from you. You can send an
email to you Moneypod at Bloomberg dot net. Ask us
a question and we might answer it on air.
Speaker 2 (39:26):
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 (39:32):
The Money Stuff Podcast is produced by Anna Maserakus and
Moses ONEm Our.
Speaker 2 (39:36):
Theme music was composed by Blake.
Speaker 1 (39:37):
Maples, Brandon, Francis Nuinimnsara executive producer and Stage Bauman is
Bloomberg's head of Podcasts. Thanks for listening to The Money
Stuff Podcast. We'll be back next week with more stuff.
Bloomberg Audio Studios, podcasts, radio news. That's your body battery.
Speaker 2 (00:09):
Oh my god, I slept terribly last night. I'm so
glad you asked. This is bad. I'm at seventeen. I
woke up in my body battery. It was at fifty one.
Usually I wake up in the eighties or the low nineties.
Speaker 1 (00:21):
So what was wearing on you?
Speaker 2 (00:24):
I'm moving tomorrow. I'm psyched. I'm going back to New Jersey.
It's where I belong.
Speaker 1 (00:30):
I thought you were going to say you're a stressed
about your bird.
Speaker 2 (00:32):
Oh god, I'm so glad you brought up the bird.
Speaker 1 (00:34):
So, Katy is a bird?
Speaker 2 (00:36):
Have a bird?
Speaker 1 (00:37):
So this is like the Katy's Exotic pet hower.
Speaker 2 (00:39):
Yeah. I have a lot to say about this bird.
So he's a European starling.
Speaker 1 (00:43):
Sure, by the way, one of my proudest moments. And like,
you didn't really notice this, but you showed me like
two pictures of this bird on your phone. Yeah, he's
like pretty small on this pictures. And I was on
your phone and I was like, oh, a starling. You're like, yes,
it's the starling. I was like, yes, yeah, you closed
the bird identifier.
Speaker 2 (00:57):
Yeah, Well they're super common around these parts because they're
an invasive species, which explains why now we're in possession
of the bird. My dad actually found him at my parents' house,
like as a creepy crawley little like no feathers, alien
baby thing. And I called the Raptor Trust and they said,
you know, because it's a non native species, we can't
(01:20):
help it. They said, try to return to the nest.
I tried that, I couldn't find the nest. And I said,
hypothetically speaking, how hard would it be to raise this bird?
And they said, actually, it's really easy to hand raise
European starlings. So that's what we've done.
Speaker 1 (01:34):
He's sitting here at the podcast right now.
Speaker 2 (01:36):
My parents are taking care of him at my direction.
It's kind of fun because it feels like they're my employees.
Speaker 1 (01:42):
How many like video calls? Are you doing a day
with your parents?
Speaker 2 (01:45):
Many? Actually have a new photo to show you now
he's about three to four weeks old. I'm really proud
of this photo, not that anyone listening can see it.
Hold on put in. My dad texted it to me
this morning.
Speaker 1 (01:57):
You know, we can put it in my email.
Speaker 2 (01:59):
Oh my god. Yeah, Well I won't put this photo.
Look at him.
Speaker 1 (02:02):
Oh he's a bird.
Speaker 2 (02:03):
Yeah, he's a real bird now, so we want to
release him? So no, not yet. There's three important milestones
that this bird needs to pass before we can think
about releasing him to the wild. He needs to be
able to perch. He's getting better. My mom has been
putting him on a stick and he will perch on
the stick. He needs to be able to fly. Obviously
(02:24):
he's flapping around. He's not flying yet.
Speaker 1 (02:27):
Is your mom like clapping our arms to demonstrate to him?
Speaker 2 (02:30):
That's what the conversation we keep having is we're not birds,
so it's not a bird. It's really hard. And the
third thing he needs to be able to do is
feed himself. The hand of God has been feeding him
mush mush for weeks now, so he needs to you know, Oh,
I'm so glad you asked. So high protein dry cat food.
You soak it for you know a while. I've been
(02:53):
doing a hard boiled egg and then you mash it up. Yeah,
it's kind of feels bad, hag to a bird, but
he doesn't know. And then I have this like egg
shell mix it's made for chickens to try to give
them more calcium so they lay better eggs. But basically,
what starling, baby, Starling, growing Starling's need is a lot
(03:16):
of protein and a lot of calcium. So this mix
seems to be working pretty well. I've adjusted it as
he's gotten a little bit older. As the photo shows,
he looks like a real bird, so we'll see if
his bones will support himself as he continues to learn
how to perch and fly.
Speaker 1 (03:32):
Well, I hope you will bring him into the podcast
before you.
Speaker 2 (03:34):
Yeah. Well, the thing is, and I promise we'll move
on soon, is that if he's not able to be released,
and we're not going to release him to a certain death,
if he isn't meeting these milestones, then we just have
a bird now, which isn't the worst thing.
Speaker 1 (03:50):
No, it's clearly the outcome you're rooting for. All right,
I think we're done. We'll see you next week.
Speaker 2 (03:55):
Yeah, no, I think that that was a good update.
Speaker 1 (03:57):
And yeah, hello, come to the Money Stuff Podcast. You're
a weekly podcast where we talk about stuff related to money.
I'm Matt Levigne and I write the Money Stuff column
for Bloomberg Opinion.
Speaker 2 (04:09):
And I'm Katie Greifeld, a reporter for Bloomberg news and
an anchor for Bloomberg Television.
Speaker 1 (04:13):
Hey, there's been some tariff news.
Speaker 2 (04:15):
Yeah. I feel like we have to timestamp this conversation
because everything is changing very rapidly.
Speaker 1 (04:21):
We're recording this at four o'clock on the Thursday, May
twenty ninth.
Speaker 2 (04:25):
Yeah, and about twenty four hours ago or less than that.
A court, which I learned existed.
Speaker 1 (04:31):
So U asked Court for International Trade.
Speaker 2 (04:33):
Yeah, based in Manhattan. Sure, yeah, so it blocked the
the tariffs that Trump put on on Liberation Day.
Speaker 1 (04:43):
Yeah, most of his tariffs are, yeah, the Liberation Day tariffs,
and actually like the pre Liberation Day like Canada and
China tariffs, the opioid tariffs, the personal tariffs, those were
all blocked by the court as of like Thursday afternoon.
The Appeals Court for the Federal Circuit, which is like
(05:05):
the appeals court the handles that you also just learned exist.
That the handles it feels from the court from the
International Trade. That court at a temporary stay, so it
could like consider whether to put a longer stay. So
everything's very much in flex. But yeah, the Court for
International Trade said these tariffs are illegal.
Speaker 2 (05:22):
Yeah, and it seems like we're heading to the Supreme Court.
Speaker 1 (05:25):
Well, I mean certainly, yeah, yeah, yes, yeah. Probably won't
be at the Supreme Court by the time this podcast
air is on Friday.
Speaker 2 (05:31):
Probably not. But you know, crazy things have happened. I mean,
coming into this morning, futures were up a ton on
the S and P five hundred because it was like, Okay,
the trade war's over. It's not. It seems like the
consensus that has emerged is that Trump has plenty of
other tools to put on tariffs somehow, And I don't
know what this does to the US negotiating stance. It
(05:53):
feels like it lessens it by quite a bit.
Speaker 1 (05:56):
I guess that's right. I don't know. It's just like
it feels like the US negotiating stance is so mercurial
and so unreliable that I'm not sure how much it
affects the negotiating stents or going. On the one hand,
as you said, he has a lot of tools to
put on tariffs, and if you are a trade partner
in negotiations with him, the threat has gone from I
(06:18):
will put on whatever tariffs I like, pursuing to my
unlimited authority to put on tariffs too. I will find
some stuff to do and it'll be super annoying and confusing.
It's like that's not that much better, right, That's still
a pretty bad threat. And in some ways, I feel
like a lot of what I read about people who
are in the posture of negotiating with Trump, like you
read about this, and like the situation with Harvard, right,
(06:41):
people worry about making deals because he is not a
reliable interlocutor and can always just change the deal and
there's not a lot you can do about it. In
some ways, like you having a little court supervision might
be kind of good for negotiating postures. I don't know
that's true, but like it's just like it's nice that
there's like just a soup song of like law here, right,
(07:05):
and like procedures, because you know, I wrote about this today.
There's in some ways this is a complicated case. There's
all these statutes, there's all these questions of like what
things should be left to the executive's discretion. But in
many ways it's a very very simple case, which is
that the Constitution of the United States just like a
real document. You can read it like it's a real
thing that exists, right, Like, not everyone involved in the
(07:26):
government has read it. But like, you know, there's like
a real document that people at least say they care about.
The Constitution just says the Congress has the power to
impose taffs and the president doesn't. So like all this
stuff of like executive orders imposing tariffs is really like
on a first order analysis, just not what the Constitution says.
And I think that's kind of the court starting point here. Yeah,
(07:47):
so it seems like kind of simple stuff and there's
more complicated stuff, but it is in some ways a
relief to see that the Constitution still has some controlling power.
Speaker 2 (08:00):
Yeah, that does seem like something a couple hours that
you would root for.
Speaker 1 (08:03):
I do. I'm weird like that.
Speaker 2 (08:05):
Yeah, when it comes into the negotiating stance, the standpoint
that I've seen bandied about is basically, if you're another
country negotiating with the US, like this kind of removes
the urgency or the incentive to make a deal with
the US because now it's in flux. You know how
much power Trump actually has to enact these tariffs.
Speaker 1 (08:24):
Yeah, that's right. But you wouldn't that against him having
a lot of power to do whatever he wants, if.
Speaker 2 (08:32):
You would, I don't know, yeah, yeah, I don't know.
Speaker 1 (08:35):
The one can say spring quick tomorrow.
Speaker 2 (08:38):
Yeah, at least on this Thursday. The consensus that has
seemed to emerge throughout the day. And you've seen this
in like the slow bleed of the S and P
five hundred from you know, our pre market euphoria was
this just turns up the volume so much on the
trade policy noise because who knows what's going to happen and.
Speaker 1 (08:55):
Not other noise, right, I mean, like one overhang to
finance is how much rule of law is there? And
every time the court says Trump can't do something, you
have wider variant in the outcome of how much rule
of fla is there because like maybe you'll be like,
oh yeah, the constitution does say that never mind, or
(09:17):
maybe like Peter Navara said, nothing has changed after a
court said the terriss around constitutional Like how did that's
like ating posture?
Speaker 2 (09:24):
It was kind of funny that this all happens within
hours of Trump being told about the taco trade. The
tacos trade, taco trade being Trump always chickens out. It
was coined by an.
Speaker 1 (09:36):
FT columnist Rob Armshuk at the FT.
Speaker 2 (09:38):
Yeah, yeah, basically that okay, Trump comes out with this
big announcement, you know, we're going to slap a gazillion
percent tariff on so and so, and then you know,
inevitably it's walked back, and that's the taco trade. You
bet on this is going to be walked back. And
Trump was told about that in the Oval Office, and
(09:58):
he was upset, as you would imagine, and said, no,
this is negotiating. This is how it's done, which you know,
maybe there's some truth to that, but you know, as
an investor, I can see how you could also turn
that into a trade, even though it feels like, you know,
in the last couple of weeks or so, it's become
less profitable because it feels like the shock value is fading, right, right, right.
Speaker 1 (10:18):
So a couple of things. One like Trump always chickens
out is the insulting to him phrasing of it. Yeah,
but the trade is when a drastic tariff announcement comes out,
the actual result will be less than that, either because
of the negotiation or because you checked, like you can
be agnostic about the cause, or you can just say, like,
this isn't as bad as it sounds. The second thing
(10:39):
I want to say is that Lewis Astroth at ft Alphaville,
like apparently got jealous of his colleagues ability to quinna
term that became so famous, so he wrote a bunch
of other potential acronyms, like Mexican food themed acronyms, and
the one I liked was takita, which is Trump always
quickly undoes initial trade offensive just like a little thing.
It's more a specific about the thing that's happening. The
(11:02):
other thing I want to say is that a reader
emailed me to be like, would it be a good
trade if you were a journalist to short the market
and then ask Trump about the taco trade, because like
the mechanism there is like you asked Trump about the
taco trade and he gets really mad, and then he
says I'll never chicken out again, and tarriffs get higher,
(11:23):
the market drops, Like I think, like you could have
imagined for a second that like Trump getting mad about
the phrase taco trade could have been bad for stock prices,
but of course it was quickly followed by the trade
cord ruling, which is good for stack prices. So it's
a little hard to isolate the impact of getting Trump
mad about the taco trade Yeah.
Speaker 2 (11:42):
That's pretty funny. It could work if he had explicitly
said I'm going to tear iff even harder. Right now,
I think.
Speaker 1 (11:49):
That it would have been reasonable to think that he
might have thought that. But then, you know, events moved on.
Speaker 2 (11:54):
Yeah, that's what happens a lot.
Speaker 1 (11:56):
That's kind of the real core of the taco trade,
which is events just keep moving on.
Speaker 2 (11:59):
Yeah. Well, it'll be interesting to see what happens to
the taco trade as we continue to muddle through whether
or not these tariffs are illegal and what other types
of terrifts were going to get. There's all these different
tariffs that this ruling doesn't cover. When you think about
steel and aluminum for example, Well.
Speaker 1 (12:18):
So the Liberation Day tariffs are ten percent to you know,
one hundred and fifty percent towers on everything, right, it's
ten percent baseline, But then every country had like quote
unquote reciprocal tariffs that were much higher. Amazing calculation of
the trade deficits. It's like the whole thing. It was
like truly universal, and it was basically you talk about
(12:39):
like steel taffs, there's like you have like a sort
of national security justification or whatever right you have some
theory behind steel tiers. But like this the Liberation Day tariffs,
where the US runs a trade deficit and we want
to stop that, and so we have tariffs that are
calculated through some formula designed to zero the trade deficit essentially, right,
And the court said you can't do that. The law
(13:02):
that he used AEPA International Emergency Economic Powers Act of
nineteen seventy seven. The AEPA allows you to respond to
an emergency, and if you have tariffs that are responsive
to an emergency, that's fine, but like, it can't be
the case that all international trade for the last thirty
years is an emergency. Like this is like too much,
it's like too much power to the executive. So you
(13:22):
can't do that. But can you find specific goods to
tariff and use other laws that say you have like
specific economic tariffing powers, like maybe probably often there are
more limits in those laws if you have to like
do fact finding and like put out a report and
they're time limited, right, So it's not as completely broad
as the powers that they claimed under AYEPA, which is
(13:44):
why they did the AEPA stuff. They're like, we're you
do everything all at once with no you know, review,
no fact finding. So AEPA was the law they thought
they could use for that. If they can't use that,
then they have to find other laws which will be
a little bit more narrow, but you can still do
a lot of terror.
Speaker 2 (14:00):
Yeah, I mean, there's section two thirty two, for example,
that's what's being used on steel, aluminum, vehicle and auto parts.
There's other laws as well, but usually there's some investigation
associated with him, so it takes months versus President Trump
is sitting in the Oval office and he signed something.
Speaker 1 (14:17):
Because again, like the Constitution says that Congress can make tariffs. Yeah,
and so Congress has in the past past laws saying
here are some tariffs that the president can impose, right,
but like, ultimately it's the Congress's tariff power, and the
Congress doesn't say in any of those laws the president
can make any tariffs he wants. It says, you know,
(14:37):
he does an investigation these particular things, for these particular reasons,
you can make tariffs. But it's not an open ended
grant of power. And one thing that the court so
yesterday is that if it were an open ended grant
of power, and one way to read AIPA is that's
an open ended grant to make whatever twists you want.
I don't think it's a good reading, but it's like
the Trump administration reading the court said, if you read
it that way, then it would be unconstitutional for the
(15:00):
Congress to give all of its tariff power to the
president with no limitations whatsoever. And I think that's right.
I have a personal interest in this. I don't know
if I've talked about this on the podcast a column,
but like that idea that Congress can't just give its
power to the executive with no constraints is called the
(15:20):
non delegation doctrine and it is had a controversial career
in the Supreme Court. But one of the important cases
in the recent Supreme Court about the non delegation doctrine
was argued by my wife. Wow, he's a criminal defense layer.
And so I was in the audience for that, and
so you know, I have like a little rooting interest
(15:41):
in the non delegation doctrine.
Speaker 2 (15:43):
I get it, even though to oversimplify and dumb it down.
It seems like that is what has happened here, and
it does just seem like Congress is too upset about it.
Speaker 1 (15:52):
So the podded history of the non delegation doctrine is
that it's never had any effect whatsoever. Like there is
lip service paid to the idea that Congress can't delegate
all of its legislative powers to the president, but that
lip service has always paid in cases saying but this
delegation is fine, right, including my West case. But there
is like this notion that interest in it has been relived,
(16:15):
and like one day they're going to find a delegation
that is too broad and maybe it's ayepa. I don't know.
Speaker 2 (16:19):
Yeah, I don't know. Again timestamp this is on Thursday.
It'll be fun to see how this shakes out. I
don't know. I would love to be a fly on
the wall and like some of these negotiations, because I
don't know, if you're Japan negotiating with the US right
now or India, do you just wait and see.
Speaker 1 (16:34):
I don't understand why this would really change it that much.
I just think that like the thing that you know
as like the Japan trade negotiator or whatever, is that
Trump really wants to make deals, he really wants to
have wins, he really doesn't trust free trade. He's really
willing to push the boundaries of the law as much
as possible. He's not really aware of what those boundaries are.
(16:56):
To think like I'm going to tell him to stuff
because a court struck him down. Seems crazy, Like now
more than ever, you make a deal, more than you're like, look,
this court was wrong. We understand. Here's our tariff concessions.
Like maybe you get a better deal now, and like
you're rushing to make a deal. I don't know. I
don't understand the idea that like now you're like, oh,
(17:18):
it's fine, like no more tariffs, Like I'll just walk
away from the negotiating table.
Speaker 2 (17:22):
So it's crazy. I don't know. Maybe you don't walk away,
but maybe you say, why don't we break for lunch
for a little bit. Why don't we.
Speaker 1 (17:28):
I think that was the opportunity to make a bigod deal.
I don't know. I don't listen to me, I don't
I don't know anything, but like to me like calling
him up and being like, I'm in your camp, buddy,
I want to make a deal. I know that you
have the constitual parademphosies tariffs. Let's make a deal. To me,
listen to the opportunity. You don't break for.
Speaker 2 (17:45):
Lunch that's true.
Speaker 1 (17:46):
You cut the deal now, Yeah, no exaggerating because like
if the deal involves like him imposing lower ABA tariffs
on you, like those are illegal maybe maybe. So I
don't know. It's harder to know what the deal is,
but I don't know how it changes the poster.
Speaker 2 (17:59):
That most of our topics today are vaguely and in
some cases explicitly. Donald Trump related Fanny and Freddy for example,
(18:23):
back in the.
Speaker 1 (18:23):
News another bit of you knowilateral.
Speaker 2 (18:26):
Pol an explicit implicit guarantee.
Speaker 1 (18:31):
Yeah, Donald Trump, the verb is so hard. I want
to say he tweeted, but in fact he posted on
truth social which you can say he truthed.
Speaker 2 (18:37):
Yeah, the truth.
Speaker 1 (18:38):
I am working on all caps taking these amazing companies public,
but I want to be clear the US government will
keep its implicit all caps guarantees, and I will stay
strong in my position on overseeing them as president. So
Fanny and Freddie, the government sponsored enterprises had a long
prehistory as being implicitly guaranteed by the US government. So
like they explicitly said, Morgus, they have trillion dollars Morgue,
(19:02):
and they issued mortgage backed securities that are guaranteed by them,
and those securities. Always said, these securities are not guaranteed
by the US government, And they said that because otherwise
you'd be confused, because everyone thought they were guaranteed by
the US government. That's what it's called an implicit guarantee.
They say it's not guaranteed, but everyone thinks it's guaranteed.
And then in two thousand and eight they went past
and they turned out to be guaranteed by the US
(19:24):
government effectively because the government like stepped in and took
them over, bailed them out, and made sure that creditors
were made whole. And that was roughly sixteen years ago.
And ever since, people have said this can't continue forever.
They have to return to private hands. And I always said, why,
it's fine, like no one. Yeah. But so now once again,
because Trump is in office, and because there's a lot
(19:47):
of money to me, there's a talk of returning Fanny
and Freddie to private hands. And the mechanics of that
are really complicated, and there's opportunity for people to get
hundreds of billions of dollars of value. Yeah, and so
that's of great interest to a lot of investors.
Speaker 2 (20:07):
Yeah, there's bags to be made, uh, bags to be made, yeah,
which could bring us to Bill Ackman, but we don't
have to talk about we don't have to.
Speaker 1 (20:14):
But Bill Ackman is one of the big investors in
that trade. And when Fanny and Freddie were put into
conservativeship by the government in the financial crisis, their stock
became like you know, in the ballpark of worthless, but
never stopped trading. And at some point in like twenty twelve,
I think the government changed the deal from the bailout
to say from now on, all of the profits of
(20:37):
Fanny and Freddy forever we'll go to the government and
shareholders will never get anything ever again, which you might
think would make the stock worthless and like made it
almost worthless, yeah, but some people thought that can't be true,
like that'll change, and so they bought the stock and
now they own stock. And it is unclear from first
(20:59):
principles how you would reprivatize Fanny and Freddy, but it
seems likely that whatever happens, the current shareholders of Fanny
and Freddy, who bought the stock at you know penny
is when it was declared to be worthless for all time,
it seems like that the current shareholders will get a
back yeah.
Speaker 2 (21:16):
Haven't they already though, like well like in market prices.
Speaker 1 (21:20):
Yes, yeah, yeah, because people are anticipating that Fanny and
Freddy will be returned to private hands, and specifically their
private hands, like specifically the existing shareholders of Fanny and
Freddy will not in fact be zeroed, but will end
up being shareholders of Fanny Freddy and look at a
lot of value.
Speaker 2 (21:37):
Yeah, it would be you know, kind of funny if
some of these big vocal investors who are calling for
the reprivatization, who you know, have bought the stock when
it was pretty much worthless sold now in this insane
run up that it's seens. Yeah, yeah, this is good. Yeah.
Stocks of both companies are trading at their highest level
since two thousand and eight. But you look at the
long term chart, like going back to the nineteen eighties,
(21:59):
and it's still nowhere close to where it was.
Speaker 1 (22:03):
Yes, because right now they're controlled by the federal government
and they're charters. Say that their shareholders can never get
any money ever. Yeah, so that's worse than the old
old business model.
Speaker 2 (22:13):
Yeah, for sure. I don't know this timeline. Even though
Trump is posting on truth social about it, it seems like
this has picked up an urgency, like this process would
take years and years.
Speaker 1 (22:23):
I want to just be clear, Like there's two things.
There's like you can return Fanny and predat to private hands,
and then there's the specific question of like how much
of it do you give to the existing shareholders? Yeah,
weird as zero? You can say, Okay, the deal is
the deal. And by the way, the deal is probably controversial.
People think it's really unfair. There's been a lot of lawsuits.
I want to respect their feelings that, like, in fact,
(22:44):
the twenty twelve deal to zero the shareholders, there's a
good case that it's pretty unfair. But whatever, given that
it exists, you could reprivatize them without giving existing shareholders anything.
You could just raise new money to cap them. You
can say, I mean, but like there's like some corporate
(23:04):
complexities to doing that, but like, you know, you could
raise a lot of new money and like essentially dilute
the existing charolders down to zero. And you could do
that by saying, you know, the government has I think
when I last read about this in January, in the
accounting of Fanny and Freddy, they owe the government three
hundred and forty billion dollars before the sholders can get
anything right, and so you could say, well, okay, we're
(23:25):
gonna go out and raise three hundred and forty billion
dollars of new capital to repay the government. And after
he raised that three hundred and forty billion dollars, then
like you know, the existing cherolders will have you know,
zero point zero zero zero one percent of the companies
or whatever, and so like their shold will be worthless,
not worthless, that's not worth very much. But the other
(23:47):
extreme is you can say, you know what that three
hundred and forty billion dollars that Fanny and Freddy o
the government, that was a mistake. They don't really owe that,
so we'll just cancel that that right, And then the
existing shaerolders are sitting on shaares worth one hundred billions
of dollars, more than one hundred billion dollars. And those
are kind of the two poles, right easting shareolders have
nothing or they have like more than one hundred billion
(24:07):
dollars of equity.
Speaker 2 (24:08):
Two scenarios.
Speaker 1 (24:09):
Two scenarios. I don't think it's like a prayer necessary
to choose the second one. I think there's reasons to
choose the second one. You might think it's fairer to
the shareholders. You might think the sharelder's got a raw
deal on twenty twelve. It's a reasonable thing to think.
And you might think that giving the charrelders a good
deal is a good way too. You know, you'll need
to raise money for Pannion and Freddy. You'll have better
capital markets access if you treat the shareolders nicely. But
(24:32):
it's also the case that like giving one hundred billion
dollars of value to these existing shareholders is like it's
like a little bit of an optically strange move.
Speaker 2 (24:40):
Yeah, yeah, I don't know. It feels like any scenario
is just going to be messy and optically strange. So
what I care about, circling back to ummoving is what
this could mean for mortgage rates.
Speaker 1 (24:53):
Yeah. Yeah.
Speaker 2 (24:55):
So Bill Polsey, he's the head of the FHFA, which
oversees Fanny and Freddy. He said back in February that
any effort to reprivatize the two must be carefully planned
to make sure that the housing markets to remain safe
without pressure on mortgage rates. So the explicit implicit guarantee,
even though you know, there's a lot of question marks
(25:16):
and details to be worked out there. At least that
seemed to remove some of the risk that mortgage rates
would spike here, right.
Speaker 1 (25:25):
Like who knows what every privatized Fanny and Freddy looks like,
but like here's some possibilities. One is, like there's an
explicit government guarantee that they pay for, so there's like
a fee, Yeah, that would be incorporated into your mortgage rates.
It might raise rates because right now Fanning's Fredady kind
of have an implicit somewhat more than implicit but less
than explicit guarantee because like they're in conservatorship and that
line of credit with the federal government and they don't
(25:47):
pay for that, or they they pay a lot for it,
but the accounting is somewhat complicated. But like in a
world where the government charged a fifty basis point fee
for a mortgage guarantee, then like that's fifty basis points
on your mortgage. Right, you could have a fully private
Fanny and Freddy where either they are fortress balance sheet
(26:07):
triple A super safe and raise a lot of capital
and that raises their costs and thus raises mortgage rates,
or they're like, yeah, double a pretty good and like
rais capital and then like possibly the mortgage backed security
is trade wider and that raises your mortgage rates. Right,
the implicit guarantee is essentially they're backed by the government,
(26:29):
but they don't pay for that backing. That's probably the
cheapest free of mortgage.
Speaker 2 (26:34):
Right, let's go with Allen then, seems to be what.
Speaker 1 (26:36):
They're going with.
Speaker 2 (26:36):
That's good.
Speaker 1 (26:37):
I know there's other stuff too, Like I was reading
a paper today, like a privatized Fanny and Freddy, Like,
right now there are arms of the government. They kind
of have always been arms of the government. You could
imagine them being like more kind of free market, ye, right,
Like one thing that Fanny and Freddy do is there's
like a thing called a conforming mortgage. And if you
meet the requirements of a conforming mortgage, which are not
(26:57):
that low but not that high, then you kind of
get the same rate. The rate for a conforming mortgage
is the rate for a conforming mortgage. But like you
can imagine a fully private Fan and Freddy having more
discrimination among borrowers where there's less cross subsidization, and like
very credit worthy borrowers get lower rates than like medium
credit worthy borrowers, So like you could have the effect
(27:18):
of not raising her lowering mortgage rates, but just like
increasing the dispersion of mortgage rates. That would probably be
fine for you.
Speaker 2 (27:24):
You don't know that. I guess maybe I have a
horrible credit score. You don't know.
Speaker 1 (27:29):
I don't know.
Speaker 2 (27:32):
So, yeah, well, seems like we're going to be talking
about this for years.
Speaker 1 (27:36):
I know, I know, I've a lot. You know. It's
it's like it's like heated up and cool down over
the years. And I used to write about it a lot,
and then I didn't for a long time because like
in the Biden administration, nobody every time about this. And
it's right about it again in January because like people
started tweeting about it, and now it's like it feels
like it's kind of coming back.
Speaker 2 (27:53):
I feel like the shares are just a good metric
of how much this is being tweeted about.
Speaker 1 (27:58):
Yeah, the show's just yeah, the market some real action.
Speaker 3 (28:02):
Yeah, there's a lot of social media activity.
Speaker 1 (28:20):
Bitcoin treasury companies.
Speaker 2 (28:22):
Yeah, when did that phrase become real? I guess Microsoft,
I think.
Speaker 1 (28:26):
Micro Strategy probably years ago, but like it's become like
everywhere in the last few.
Speaker 2 (28:31):
Yes, especially everywhere, like in just in the last few months,
because MicroStrategy started doing this in twenty twenty.
Speaker 1 (28:39):
I think that when micro Strategy started doing the first
of all, the micro Strategy is kind of a real company, yeah.
Speaker 2 (28:45):
And they are a software company, right, And like they.
Speaker 1 (28:48):
Sort of started slow. They bought some bitcoin. It got
kind of MEMI and so like early in the days
of micro Strategy buying bitcoin, you could say, and I
probably did say that it looks like every time they
spend one dollar buying bitcoin, it increased their market cap
by two dollars and that's a good trade. But it
wasn't like super super super obvious, right, I think they
would say things are or levered bitcoin. It was like
(29:10):
they had a business. Who knows how you value the business? Yeah,
that stuff. You could look at that and be like, well,
I can't just copy that. I can't just like put
bitcoins in a public company and have them be worth
twice what they're worth as bitcoins. And so I think
it was a little bit slow adoption if people copy them,
but like it was, you know, not everyone covered them.
And then the last few months, like people have realized
(29:31):
that you could take any random public company and just
stuff it full of bitcoins and like it'll double the
value of the bitcoins, and so that just feels like
a great trade. There are a lot of people who
own a lot of bitcoins, right, And if you own
two hundred million dollars worth a bitcoin, you sell them
for two hundred million dollars. But if you stuff them
into a public company, they'll be worth a billion dollars
and that's more. Yeah, So everyone's doing it.
Speaker 2 (29:52):
Everyone's doing it, and especially this week, it feels like
everyone is doing this. So you know, you kicked off
the week by talking about sharplink.
Speaker 1 (30:00):
I guess they did it. No, they did this, they
did the Monday, Yeah, or.
Speaker 2 (30:04):
Time they did this is a flat circle.
Speaker 1 (30:07):
So sharplink is great. Like sharplink is the purest form
of list because they were a sports betting marketing company
or some Yeah, they had a two million dollar market
cap as of like mid last week. Someone pumped them
full of four hundred and twenty five million dollars of
ethereum right or eth and so now they're trading it
like a two plus billion dollar pro form a market cup.
(30:28):
I want to be clear, like I wrote about this
and I said market cup, but it's not. They're done
have two point four billion dollar market They have a
two point four billion dollar pro form a market cup
right now. They have some share with outstanding, not very
many of them, and the shares traded a high price,
and they have like whatever like Bloomberg will tell you
eighty million dollar market caps something like that. But they've
also agreed to issue all these shares to these investors
(30:48):
who want to pump them full of ethereum. And if
you count those shares to the market caps like two
and a half billion dollars. And this is important because
like you know, we talked about QXO a few times. Yeah,
same deal, where you have a company with like very
few shares outstanding and a huge pot of money coming in,
and like the retail investors are like, oh, look, this
(31:10):
company has four hundred million dollars with ethereum and its
market cap is eighty million dollars. I should buy some
more stock. Right, That's wrong, right, because like the eighty
million doesn't count the four and twenty five million of ethereum.
But the stock is like the publicly traded stub is
small enough, and like the market cap is confusing enough
that people are buying it at a five or ten
(31:32):
times premium to the value of the ethereum and the pot,
and like there's nothing else, right, two million dollar company, Right,
But there's a ethereum in a pot and it trades
at a large multiple of the value of the ethereum.
Speaker 2 (31:41):
It is somewhat interesting that they went with ethereum versus bitcoin.
Speaker 1 (31:44):
Oh, I just think that people need to pick a lane.
And like Bitcoin is so saturated that like people are
doing Solana, they're doing ethereum, they're.
Speaker 2 (31:50):
Doing you mostly hear popcoin, they're.
Speaker 1 (31:52):
Doing doage coin, they're doing everything. But yeah, a lot
of them aren't bitcoin. But it's not only bitcoin.
Speaker 2 (31:56):
Yeah. Yeah.
Speaker 1 (31:57):
I wrote about two other big ones this week, household
name meme companies are you know, DJT Trump Media and
Technology Group and game Stop both announced bitcoin treasury buys
and their stocks both went down, which is like, that's the.
Speaker 2 (32:13):
End of it, Okay, the trade's over.
Speaker 1 (32:16):
I don't think the trades are literally over, because I
think those are special cases of companies that were kind
of already meme stocks. But it's definitely the case that
any random company for at least several weeks that announced
it bought a lot of bitcoin, like the stock would
go way up and people are like, oh, we should
do that. Yeah, and then these two big name ish
meme companies announced it and their stocks went down.
Speaker 2 (32:36):
It's like, yeah, trades over for game Stop. So they
announced in March that they plan to.
Speaker 1 (32:41):
Actually this is not new news for games. They actually
bought them coin this week and it went down.
Speaker 2 (32:45):
But like, in some ways, it's amazing that it took
this long for them to come up with the plan
that we're going to do this for game Stop. I
feel like, I don't know, I would have expected it
a couple of years ago, but here we are.
Speaker 1 (32:57):
Okay, First of all, I would expect it from AMC,
who does everything like AFC bought a gold mine because
that was funny, right, like AFC.
Speaker 2 (33:04):
Should somehow I had forgotten about.
Speaker 1 (33:06):
That they bought a gold mine.
Speaker 2 (33:09):
Maybe we should talk about that more. I would like
to get a status report on that.
Speaker 1 (33:14):
I know every stuff, And I'm like, they bought a
gold mine and I read about it, but I never did.
I'm not even sure they literally, but I think they
like did some sort of murder with a gold coin.
I don't know anyway, Games Stop has always been like
a little bit less like doing every meme, but they
do a lot of memes stuff. But yeah, I think
that if you want to do a viitcoin treasury strategy,
(33:35):
you kind of have to be all in on it.
And like gamesop, I still want to sell video games
at them all, And I think it was reasonable for
a long time to think that if you're just GameStop,
you don't really have an advantage in doing that strategy.
M h macro strategy was there to do at first.
It's not clear why a copycat would be particularly valuable,
(33:56):
so you might have tried to do something else before
getting into the viccoins state.
Speaker 2 (34:00):
So you wrote that, you know, you compare maybe Michael
Saylor will do something cooler with it's bitcoin than the
CEO of DJT. But it doesn't seem like there's anything
to do with it that's cool other than just buy
more of it.
Speaker 1 (34:15):
Okay, I hear you.
Speaker 2 (34:15):
I don't really disagree it. They're not going to say
I was being.
Speaker 1 (34:18):
Intentionally vague about doing cool stuff, Okay. One view of
these bitcoin treasury companies is that like they're sort of
like a like meta pump for pitcoin, right, The idea
is they will buy all the bitcoin and not sell it,
and that will cause the price of pitcoin to go
up and they'll be rich. It's just like a diamond
hands like theory of pitcoin like abstracted back one level
to these treasury companies, but another theory and a related theory,
(34:40):
I guess is like a lot of them, including micro strategy.
We'll talk about like investor education efforts right right, And
we talked about this with like twenty one. It's like
another big Jack Muller's Jack Millers, Yeah, like big bitcoin
treasury company with like Tether's bitcoins and you know they're
like we're going to do investor education or like knack
Amoto holdings like merch the opioid company, like a.
Speaker 2 (35:01):
Tiny drug company now on I haven't heard of.
Speaker 1 (35:03):
It's called kindly Empty. It's just like it's just random mania,
all these like random like tiny companies, like you can
pump them full of bitcoins, and like they all talk
about like we're gonna do marketing, media, investor education. It's
all like you know, we're gonna make the price of
bitcoin go up, right yeah, And so like your theory
is not only will they own bitcoin, but they'll do
stuff to make the price of bitcoin go up. I
(35:24):
don't know why that would make you buy them rather
than bitcoin, but whatever. But like I will say, like
micro Strategy, I have like a really interesting capital market
strategy where they're like, we're gonna use every part of
our cab structure to raise more money to buy a bitcoin.
And you can imagine being like, I'll buy the equity
because like they will get more attractive funding to buy
bitcoin by like selling converts at a high volatility. I
(35:45):
don't know, that's not a crazy position, but like most
of these companies are, so yeah, we're gonna buy bitcoin
and we're gonna talk about buying bitcoin. Why would you
have a premium for that?
Speaker 2 (35:53):
Yeah, I don't know. This is a tangent, but I
just want to talk to like the average employee at MicroStrategy,
which is now just strategy by the way, we've been
calling a micro strategy.
Speaker 1 (36:04):
It's still like a fish or whatever.
Speaker 2 (36:06):
Nothing matters because they employed thousands of people. I want
to talk to an average employee there who isn't involved
with the bitcoin strategy at all.
Speaker 1 (36:18):
It is a little perplexing, but you know, like if
they get data stock, they're.
Speaker 2 (36:23):
Pretty happy I don't know, but I agree obviously, But
you know, do they just think of it like I
work at a conglomerate, Like there's part of the business
that is just so totally disconnected to what I do.
Speaker 1 (36:36):
Right, It's funny, I've already said that, like the software
company really matters because like I don't know, like some
part I don't know what part, at least some small
part of the micro strategy thesis is like they could
get in the S and B one day, yeah, and
then like yeah, you're in the NAZAC one yeah, right,
because they're a real company, right yeah, And like if
you're just a bitcoin ETF, you can't get into these indexes.
It's like a little bit harder for like an active
(36:57):
equity manager to buy an ETF share than it is
to buy a share of an operating company. So I
think like there's something very important about what the software
employees do at micro Strategy that's a little bit undermined
by like kindly MD and you know, sharplink, where like
the operating business is so small, so small compared to
(37:18):
the pot of the Coiner Earth theorem.
Speaker 2 (37:20):
Just to your point that you know, perhaps you could
see micro strategy entered the S and P five hundred.
It is amusing how much crypto exposure there is in
the S and P five hundred right now, especially with
Coinbase being added. These are our I assume that your
four one k is in the S and P five hundred.
Speaker 1 (37:38):
I don't own any crypto because in part because like
there's a notion of journalists together because you're not supposed
to enryptos. You've heard about it, and like to me,
I'm like, like I don't know like shares of Tesla,
but I own mostly index funds, which on's.
Speaker 2 (37:50):
Tesla, right, Oh, yes, you do.
Speaker 1 (37:51):
Yeah, and like to me, like, the neutral portfolio is
not owning nothing. The neutral portfolio is owning all of
the financial assets in the world proportion to their like,
you know, value. And so if you own zero bitcoin,
you're like structurally biased against bitcoin because bitcoin is like
a trillion dollars of value. So you should own like
a little bit of bitcoin to like fully reflect the
(38:12):
global financial portfolio.
Speaker 2 (38:14):
And now I do through that, you do, yeah.
Speaker 1 (38:17):
And you know, like why am I so smart?
Speaker 2 (38:20):
Right? Like why are you so smart if.
Speaker 1 (38:21):
One percent of like the global financial portfolio is bitcoin?
Like why shouldn't I own that one percent of mys
in bitcoin.
Speaker 2 (38:28):
I think that's a pretty reasonable take.
Speaker 1 (38:31):
And then I have to like it. But they have
to like a lot of companies, right, Like I'm not right.
Speaker 2 (38:35):
Yeah, So you just want a market cap weighted total
asset portfolio.
Speaker 1 (38:41):
You're looking at me like that's a weird thing to want.
That's like the most normal possible thing to want. Everyone
wants that, just you can't get it, but you can
get closer to it by like having bitcoin treasury companies
in the ass and.
Speaker 2 (38:51):
P Maybe I sound skeptical, but I'm not. I think
that's great.
Speaker 1 (38:55):
I'm a simple man. I just want the global financial
asset portfolio.
Speaker 2 (38:59):
Simple man. I just want to go home and see
my bird.
Speaker 1 (39:05):
And that is the Money Stuff Podcast.
Speaker 2 (39:07):
I'm Matt Levian and I'm Katie Greifeld.
Speaker 1 (39:09):
You can find my work by subscribing to the Money
stuffnewsletter on Bloomberg dot.
Speaker 2 (39:13):
Com, and you can find me on Bloomberg TV every
day on Open Interest between nine to eleven am Eastern.
Speaker 1 (39:19):
We'd love to hear from you. You can send an
email to you Moneypod at Bloomberg dot net. Ask us
a question and we might answer it on air.
Speaker 2 (39:26):
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 (39:32):
The Money Stuff Podcast is produced by Anna Maserakus and
Moses ONEm Our.
Speaker 2 (39:36):
Theme music was composed by Blake.
Speaker 1 (39:37):
Maples, Brandon, Francis Nuinimnsara executive producer and Stage Bauman is
Bloomberg's head of Podcasts. Thanks for listening to The Money
Stuff Podcast. We'll be back next week with more stuff.
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