← Money Stuff: The Podcast
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- [00:00]
Apollo Representative
The global industrial renaissance is transforming our world. Over the next decade, industries like energy, infrastructure and technology will need an estimated 75 to $100 trillion to modernize and meet demand. Long term projects need long duration capital. That's where Apollo steps in. With scale, flexibility and a focus on growth, we're partnering with companies to drive the future one innovation at a time. Learn more@thinkitnew.com Renaissance introducing the all new.
- [00:32]
Adobe Representative
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- [01:02]
Apollo Representative
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- [01:35]
Adobe Representative
Bloomberg Audio Studios podcasts Radio.
- [01:39]
Matt Levine
News hello and welcome to the Money Stuff podcast, your weekly podcast where we talk about stuff related to money. I'm Matt Levine and I write the Money Stuff column for Bloomberg Opinion.
- [01:53]
Katie Greifeld
And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.
- [01:58]
Matt Levine
Katie, you know what my main career aspiration is?
- [02:02]
Katie Greifeld
Tell me.
- [02:02]
Matt Levine
It's to lose a billion dollars and.
- [02:05]
Katie Greifeld
Come out better for it.
- [02:06]
Matt Levine
Well, you can't not.
- [02:08]
Katie Greifeld
Yeah. In this environment, well, it's not the.
- [02:11]
Matt Levine
Best possible career move. But up there, surprisingly high up there on the list of career moves that you can make is losing a billion dollars if you're a hedge fund trader or a bank trader. Because like, there's just gotta be something special about you if you lose a billion dollars.
- [02:24]
Katie Greifeld
Well, you know what I always say, A wounded lion is still a lion.
- [02:32]
Matt Levine
So Bloomberg's Nishant Kumar has a great story about how hedge fund traders who lose money are in high demand and hopping among multi strategy hedge funds and it does feature a quote from a hedge fund recruiter named Jason Kennedy, who says, even a wounded lion is still a lion. And the lion isn't mortally wounded. He will heal. And when he's fully back, that lion is worth a lot more money. I do love that. Like, by the end of the metaphor, he's like, also, there's money.
- [03:00]
Katie Greifeld
He's like, wait, let me tie this back into what we're talking about. That's an incredible quote. Sometimes you read an article and you come across a passage that just makes you pause. That was this for me. I would definitely rather be a wounded lion than a beaten mule. Which is a callback to our mailbag.
- [03:15]
Matt Levine
Episode and the title of our episode.
- [03:17]
Katie Greifeld
Jason Kennedy has a very optimistic take on this. That the lion will heal. Sometimes lions do get wounded and then they just die or they're never the same.
- [03:27]
Matt Levine
I grew up in sort of an efficient markets world, and I find it fascinating how quaint, how confident people are that they can identify investing skill. Clearly people believe it and they have good reason to believe it. Right. These are like large, successful firms that for many years produce good returns. But it's fascinating to me that you can be like, wow, this guy who lost a billion dollars, he's great. He's so skilled. We'll get him on the downswing.
- [03:53]
Katie Greifeld
Get him at a discount.
- [03:54]
Matt Levine
Yeah, we'll get him at a discount and he'll be great, right?
- [03:56]
Katie Greifeld
Yeah.
- [03:57]
Matt Levine
As opposed to the regime has changed or he was lucky before or something, and now he's not a wounded lion. He's just the guy who loses money.
- [04:05]
Katie Greifeld
He's a gazelle. So there's a lot of recent examples of this happening. Basically these battered former stars getting picked up, perhaps at a discount. I was struggling to find a success story. It felt like this article named a lot of bad examples or how this could go wrong. I wonder if this ever works out.
- [04:25]
Matt Levine
It's weird. You probably don't hear about the ones that work out because they're not going around bragging about how they lost a lot of money at their previous firms.
- [04:32]
Katie Greifeld
They're back to just being lions.
- [04:33]
Matt Levine
They're back to just being lions. Right. The other thing is that this has always been a thing that happens. Definitely there's been an uptick in it recently just because there's been such a talent war among the big multi strategy hedge funds. And so there are all these people on very large compensation packages that are moving around between these firms. And if you run these firms, the people you can pick off from your Competitors are often the people who have lost money. That's partly because they're out of favor or whatever. Some of them have potentially been fired because traditionally these firms, if you have a big drawdown, you get fired. Although the article mentions some of these people are stars who like, that doesn't happen to, they have a big drawdown and it's like, oh, it's okay, you can stay here. But they get picked off anyway. The other reason they're attractive is because they have to leave. If you lose money, even if you don't get fired, you're now below your high water mark. And so you have to earn back all the money you lost before you can get a big bonus again, more or less traditionally. And so if that's the case, it's very tempting to quit and start a new firm where your high water mark is reset back to zero.
- [05:41]
Katie Greifeld
Yeah, you're not in the penalty box.
- [05:43]
Matt Levine
Yeah. And you know, the article points out that it's not great for investors, like, particularly if you're in multiple firms, like, and people are just moving around to like reset their high water marks. Like, you're not getting the benefit of the high water mark.
- [05:55]
Katie Greifeld
That's true. To that point, there was a quote from a woman who now is a performance coach. She used to be the ex head of a Deutsche bank unit that linked investors with hedge funds, saying that after a bad year, the pitch is simple. Check, clean slate, chill. And let's be honest, some of these deals are the definition of an offer you can't refuse. So it makes sense psychologically.
- [06:17]
Matt Levine
Yeah, I wonder about chill, right? Like, what are your incentives at your new firm? On the one hand, you want to prove that you still got it, you're still lying. On the other hand, one thing the article points out is like, you get one of these, you can't continually lose a billion dollars. So if you lose a billion dollars, it's like, you did great, you took a lot of risk, you've learned from your mistakes, you move on, you go to a new firm, it's great, but you lose it again, then you're done. So you have incentives to be more conservative at your new firm.
- [06:48]
Katie Greifeld
Well, to that point, we already have an example. There is this man. His name is Rob Banham. He was at point 72, then he moved to Citadel. He's already been let go after making tens of millions of dollars of more losses. So I guess he found his second strike.
- [07:05]
Matt Levine
Right. Again, this is not what people assume, but it is possible that you've lost a lot of money because you're really talented at losing money. Yeah, but no, I love the hedge fund compensation structure of I think a lot of people would like to be able to find a system where if you lose money, that's your problem. Right? Not so much in multi strategy funds. But I've talked about this before with like single manager hedge funds where if they lose a lot of money for their investors and they're below the high water mark, they will shut down the fund and spend like six months doing penance on a beach and then they'll like start a new fund with a new name and the investors will be like what the hell? Yeah, you got to earn back your high water. And every so often people will be like I'm going to indenture myself for years to my old investors and just earn back every penny of my high water mark and not take away.
- [07:59]
Katie Greifeld
Congratulations.
- [08:00]
Matt Levine
Right. People do that, but not everyone does that. I think limited partners would love to have some incentive structure, some comp structure, some contract where they could make the losses fully the hedge fund manager's problem. But it's hard to do. It's hard to do. No one's quite cracked the code. The other thing I should point out is after I wrote about this I learned of a paper by Maury El Saifi at Duke called Hedge Fund Incentives, Risk Taking and Asset Prices. What I wrote about is like the hedge fund managers like including at multi shred firms have like incentives to optimize their bonus and their high water mark. So what that means is like if it's getting to be the end of the year and you're up a lot, you like chill because you don't want to lose all the gains you've made because those gains provide your bonus. Right. If you're down a little bit, you have a lot of incentive to take big risks because if you're down a little bit or flat, you don't get a big bonus. But if you're up a lot, you get a big bonus. And if you're down a lot, you don't do any worse than if you're down a little bit. So you might as well take big risks. And what else if he finds is that One, that's true and two, you can see it in asset prices where like basically more high beta, more volatile stocks go up when a lot of hedge funds are below their high water mark because they're gambling on redemption. And so like you actually see stock prices react to the year end bonus structures of hedge fund managers.
- [09:21]
Katie Greifeld
Man, I'm going to borrow this paper for when I'm on television at the end of the year and things are going bananas. I'm just going to say, well, I guess a lot of hedge funds, anything.
- [09:33]
Matt Levine
That happens at the end of the year is probably someone optimizing their bonus.
- [09:39]
Katie Greifeld
I use it all the time. Month, end, quarter end. Like well looks like things are just weird today. Can't explain this tick and this stock, but right.
- [09:47]
Matt Levine
I think that as we've said on this podcast, the market is a conversation among poor hedge funds and like, you know, if they need their bonus, that's what happens.
- [09:59]
Apollo Representative
The global industrial renaissance is transforming industries and reshaping our world. Over the next decade, sectors like energy, infrastructure and technology will require an estimated 75 to 100 trillion in capital CAPEX to modernize and meet the growing demand. This unprecedented level of investment is beyond the scope of public markets alone. Long term projects need long duration capital. That's where private capital comes in and that's where Apollo leads. With significant scale, the flexibility to adapt to evolving capex needs and a steadfast focus on enabling economic growth, we're partnering with companies to provide the financing solutions that fuel the future. Learn more@thinkitnew.com Renaissance.
- [10:48]
Adobe Representative
Introducing the all new Adobe Acrobat Studio now with AI powered PDF spaces. Do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn more@adobe.com do that with Acrobat.
- [11:19]
Siemens Representative
These days, AI can help you write emails, summarize long meetings, and even create presentations that impress your most demanding customer. But how about industrial AI that uses data and simulation to boost productivity on the shop floor? AI tools that help you understand machine language. AI that helps you grow your business. With Siemens Xcelerator, you can use AI services, software and consulting from a single trusted digital business platform. Plus you can find the right AI partner without having to search through hundreds of providers. That's AI for real from the global market leader in industrial AI, Siemens Xcelerator. Learn more at Siemens US Accelerator.
- [12:10]
Katie Greifeld
It is time to talk about Elon Musk.
- [12:13]
Matt Levine
It's been what, at least.
- [12:15]
Katie Greifeld
At least a week? At least a single week?
- [12:18]
Matt Levine
Has it only been one week? Anyway, yeah. Elon Musk is back in the news this week.
- [12:22]
Katie Greifeld
Yeah, well, actually last Friday. Last Friday, yeah. You famously don't publish on Fridays.
- [12:29]
Matt Levine
Oh, I'm busy crafting the email for this.
- [12:32]
Katie Greifeld
That's true, yeah. Takes hours. So, Elon Musk, $1 trillion.
- [12:37]
Matt Levine
I really don't like this framing. Everyone says this.
- [12:40]
Katie Greifeld
Everyone does.
- [12:41]
Matt Levine
Elon Musk is the CEO of Tesla and the techno king of Tesla. He's also controversially, let's say he's the founder of Tesla.
- [12:50]
Katie Greifeld
That is a controversial statement.
- [12:52]
Matt Levine
He didn't found Tesla. But he's the founder of Tesla.
- [12:54]
Katie Greifeld
Right? For sure.
- [12:56]
Matt Levine
For theoretical purposes, he's the founder of Tesla. And so like many founder CEOs, he's a big shareholder in Tesla and. Depends how you count because of like the weird option stuff. But he owns like 12 to 20% of Tesla.
- [13:08]
Katie Greifeld
It's not enough.
- [13:09]
Matt Levine
It's not enough. But it's a lot, right? And you look at a lot of like these big tech companies that are run by their more or less founders, they don't get huge compensation packages. And they don't get huge compensation packages because, like, it's just assumed that like they profit from the upside in the company by owning a lot of the company. So like, and Jeff Bezos ran Amazon, Mark Zuckerberg runs Meta. These people don't get paid hundreds of billions of dollars, they just own hundreds of billions of dollars of stock. And when they do good stuff, the stock goes up. And so anyway, Elon Musk is not like that for reasons. And he instead gets huge compensation packages. And the board or Tesla just asked shareholders to vote on a new comp package that targets growing Tesla. From today, about a trillion dollar company into a $8.5 trillion company, which is two Nvidias. Two Nvidias, yeah. Right. More or less two Nvidias now.
- [14:04]
Katie Greifeld
Yeah. Who knows what in 10 years what that'll be.
- [14:07]
Matt Levine
But if he succeeds in growing Tesla to an $8.5 trillion company, they will give him a trillion dollars worth of stock, which is great, but like also he will have a trillion dollars worth of stock anyway. Like, he already owns a lot of stock and if he 8.5 times the company, then the stock will be worth a trillion dollars. So it's not like they sat down and thought, if we give Elon Musk a trillion dollars, he'll turn this into an $8.5 trillion company. It's like if we give him another trillion dollars on top of the trillion dollars he'd already get for that, then he'll turn it into an $8.5 trillion company. It's not a trillion, it's whatever. If he does this, he would have a trillion dollars anyway because he's a big shelter. This is all in the shadow of, like, he had this comp package that a Delaware court strike down. And the judge at the time wrote, like, the board did not analyze whether it was necessary to give him all of this, given that he's a huge shareholder anyway and the comp set. The Zuckerbergs of the world don't get trillion dollar payback. They benefit from their share ownership. Once again, the board does not think that Elon Musk gets much incentive effect from the shares he already owns. They're just like, he needs more shares. And it's clearly not true that, that he is being incentivized by a trillion dollars. What's happening here is that Elon Musk wants to own 25% of the company. And so the board is like, how do we get him 25% of the company? And they just give him 25% of the company. They'd be like, well, if we don't give him 25% of the company, he'd quit. So here it is. Right. But that looks really bad. Even to a Texas court, that would look bad. So what they're doing is they're saying, oh, we have these super ambitious performance goals, and if he meets these goals, then we'll give him a trillion dollars. It's probably a reasonable solution. But it's so like, he's owned like 25% of Tesla, then he's sold down by Twitter and stuff. It's very strange that he thinks he deserves to perpetually own 25% of Tesla, and the board is like, well, you have to give it to him.
- [16:02]
Katie Greifeld
Well, people have tried to stop him.
- [16:05]
Matt Levine
From what?
- [16:05]
Katie Greifeld
From owning that much, or I don't know, you think about the 2018 experience.
- [16:09]
Matt Levine
Yeah, right. I think that, you know, Elon Musk says the funniest outcome is the most likely. Like, you could sue Texas to stop this. Everyone assumes you would lose, but no one really knows that's true.
- [16:23]
Katie Greifeld
I am really.
- [16:24]
Matt Levine
What if someone sued and won? Wouldn't that be funny?
- [16:26]
Katie Greifeld
That wouldn't be funny. Maybe not the funniest thing, though. So it probably won't happen.
- [16:31]
Matt Levine
He'd be so mad, though. I think it'd be pretty funny. But whatever. Yeah, okay.
- [16:34]
Katie Greifeld
I am curious to see what happens over the next decade, obviously, because $8.5 trillion, I mean, the first you think about the incentive structure that was put in place the first time around. That was very ambitious as well.
- [16:49]
Matt Levine
And he did it when he got his 2018 package. The idea of making Tesla a trillion dollar company, which is not exactly the target, but which he did, would have seemed kind of absurd. And then he did it in fairly short order.
- [16:59]
Katie Greifeld
Yeah.
- [17:00]
Matt Levine
I don't know. A decade's a long time.
- [17:01]
Katie Greifeld
One of the things that you mentioned in your column is that Elon Musk, the world's richest man, that briefly became not true this year.
- [17:09]
Matt Levine
That's right.
- [17:10]
Katie Greifeld
Larry Ellison briefly became the world's richest man. Now they're, I don't know, I think like a billion dollars separates them at this exact moment. But you think about the future. I think the fact, I think one.
- [17:21]
Matt Levine
Or both of them is like watching the chart as the lines cross.
- [17:23]
Katie Greifeld
I would like to think that both of them are. But in any case, obviously Oracle had insane earnings and had an insane outlook and.
- [17:32]
Matt Levine
Right. Like flattish earnings and insane outlook. But.
- [17:34]
Katie Greifeld
Yeah, well that's. It's mostly the outlook. Yeah. And you think about the billings growth and what. And where the future is going to go. It really just underscored why Elon wants to turn Tesla into an AI company. Because, okay, maybe EVs still are the future. They don't feel as immediately the future as AI is right now.
- [17:54]
Matt Levine
Oh, yeah, right. I mean, you can point to your billings, your like potential future sales as an AI company to your $300 billion.
- [18:03]
Katie Greifeld
Worth of contracts that you signed with.
- [18:04]
Matt Levine
OpenAI, and it's sort of worth that much in market cap. Right. That's why Elon Musk is turning his focus to AI. And it's also why Tesla needs to pay up to keep him. Right. Because there are more obvious AI plays, like his AI company. Also in the Tesla proxy, there's a shareholder proposal to invest in xai. And it's funny because there's some business rationale for Tesla to invest in X. AI companies put the chatbot on the.
- [18:35]
Katie Greifeld
Dashboard, which they've done, I think, talk to your car.
- [18:38]
Matt Levine
Yeah, but so like there's some business case. There's a, there's a very big like Elon Musk personal business case, which is that Tesla is not the most obvious AI company. Right. It's not going to capture the public imagination the way like Oracle is.
- [18:52]
Katie Greifeld
Yeah.
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Matt Levine
But then like xai, which is a more obvious AI, plays are very expensive and it needs money and Tesla has money. So like it does make sense for Elon Musk to like merge them or like take some Tesla money and give it to x. AI or whatever. But. But even in the current situation, even in Texas, it does seem a little hard for Tesla to just decide on the CEO's whim to invest billions of dollars in the CEO's other company. But if the shareholders ask for it.
- [19:20]
Katie Greifeld
Yeah, that's true.
- [19:22]
Matt Levine
And it's funny because someone tweeted about it and Elon Musk was like, it's not up to me. The shareholders have to ask for it. And so some shareholder duly went and proposed it.
- [19:32]
Katie Greifeld
Me, Elon, I'll do it. Exactly.
- [19:34]
Matt Levine
And then the shareholders were overwhelmingly vote in favor of it. And then the voter like to give shareholders what they want. We're going to give Elon his money and then someone will negotiate it. It's not how one normally runs a.
- [19:45]
Katie Greifeld
Company, but it's like it's happening.
- [19:47]
Matt Levine
It's how Elon Musk runs a company.
- [19:49]
Katie Greifeld
Hey.
- [19:54]
Adobe Representative
Introducing the all new Adobe Acrobat studio. Now with AI powered PDF spaces. Do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn more@adobe.com do that with Acrobat.
- [20:25]
Siemens Representative
These days, AI can help you write emails, summarize long meetings, and even create presentations that impress your most demanding customer. But how about industrial AI that uses data and simulation to boost productivity on the shop floor? AI tools that help you understand machine language. AI that helps you grow your business. With Siemens Xcelerator, you can use AI services, software and consulting from a single trusted digital business platform. Plus you can find the right AI partner without having to search through hundreds of providers. That's AI for real. From the global market leader in industrial AI to Siemens Accelerator. Learn more at Siemens US Accelerator at.
- [21:08]
Apollo Representative
Gsk, our focus is on doing the right thing for patients. We believe they should be free to focus on doing what they love, especially when they're living with a disease like cancer. That's why we focus where we can make the biggest difference. Matching the right treatment with the right patient. At gsk, we're pioneering advanced technologies like antibody drug conjugates that precisely target and attack cancer cells. By uniting science, technology and talent, we work tirelessly to stay ahead of cancer together. Visit gsk.com to discover more.
- [21:53]
Katie Greifeld
All right, Eric Adams, thank you to friend of the show, Bill Ackman, the actual Bill Ackman for teeing us up for this titillating conversation.
- [22:03]
Matt Levine
A friend of the show, Bill Ackman, went on Twitter to try to persuade Eric Adams to drop out of the New York City mayoral race, which is a, for our purposes, let's say three way race between Zoran Mamdani, who's, you know, fan favorite, odd lots, guest betting market favorite, polling favorite, Zoran Mandani. And then there's Andrew Cuomo, who's heard of him. Bill Ackman favorite.
- [22:28]
Katie Greifeld
Yep.
- [22:30]
Matt Levine
And then there's Eric Adams, who's the current mayor and seems to have no shot. But so like, prediction market, the poly market has Zoran at like 80% odds, Cuomo at like 18%. And then like, you know, Adam's like 1 or 2% or something like that. And so Bill Agman went on Twitter to be like Arian Adams dropout, because Hamdani seems to have a plurality. And so like, if everyone else drops out, then maybe Cuomo consolidates enough support to win. So if Ari Adams drops out, that really materially improves Cuomo's chances. And so Ackman went on Twitter to be like Eric Adams drop out. But he also said, and to fund your future, you could place a large bet on Andrew Cuomo and then announce your withdrawal from the race. There is no insider trading on polymarket.
- [23:16]
Katie Greifeld
What a crazy thing to say. I mean, God bless, he's not even wrong.
- [23:21]
Matt Levine
He's wrong in the sense that he says you could place a large bet on Andrew Cromwell. I don't think that's true. I don't think the liquidity in these markets is enough for one thing we know about Eric Adams is that he enjoys luxury plane trips to Turkey. I don't think he could make a ton of money betting on Andro Chroma, but some liquidity. But as a general proposition, is this a thing that will become popular in politics, which is betting against yourself and then dropping out of the race?
- [23:54]
Katie Greifeld
Yeah, I would like to see that world, that future actualized. I think it would be funny and it would provide a lot of fodder for this podcast.
- [24:02]
Matt Levine
Oh, yeah. Oh, yeah, right. I mean, because like, traditionally you're not, you're not supposed to pay people to drop out of political races.
- [24:09]
Katie Greifeld
Seems a little icky, seems a little bribey. Yeah.
- [24:12]
Matt Levine
But then like, the prediction markets are sort of like a distributed way to pay you for dropping out of your.
- [24:17]
Katie Greifeld
Race, and it's insider trading. And Bill Ackman didn't Say I will be on the other side of this trade. So that was good, right?
- [24:23]
Matt Levine
I mean, one thing I wrote about this is that there's not a ton of liquidity. Eric Adams couldn't make a ton of money by doing this unless someone were to step in and be on the other side of the trade, which, again, he didn't offer but like, would have been, you know, would be the logical next step. But then the other question is, is he right about there being no insider trading and nobody really knows.
- [24:44]
Katie Greifeld
It's like, don't know until you try.
- [24:47]
Matt Levine
Or for years afterwards. So, by the way, another independent reason that Eric Adams couldn't do that is because no one believes this. It's still illegal to trade on Polymarket if you're a US person. Polymarket is not available in the us.
- [25:00]
Katie Greifeld
No one ever talks about that.
- [25:02]
Matt Levine
No one ever talks about. They used to chuckle about it, be like, ah, you can't, you know, like Polymarket is like advertising all over New York. And everyone's like, oh, you can't trade on polymarket in the U.S. but everyone did. If you go to their website now, they're like, polymarket is coming home. The website actually has a little eagle. So good.
- [25:19]
Katie Greifeld
If you click it, it screams.
- [25:20]
Matt Levine
It's so good. No, it's just like, it looks like a Trump son designed it. But anyway, Polymarket is coming home. Polymarket will soon be available for US traders, says the website. But it's not now, right? So you can't do it. But. So right now, if you want to trade prediction markets in the us, you can trade on Kalshi, which you talk about all the time, because you can predict sporting events on Kalshi. And Kalshi has insider trading rules, quite strict insider trading rules. You can't trade if you have material non public information or if you can influence the outcome of the event. Polymarket's rules are less clear. And I imagine that when Polymarket is available in the us, it will look more like real commodities exchanges, which don't say you can't trade on material, non public information.
- [26:08]
Katie Greifeld
Mm.
- [26:09]
Matt Levine
Because that's not how commodities markets work. I quoted Carolyn Pham, who's the acting Commissioner at the cftc.
- [26:16]
Katie Greifeld
Right.
- [26:16]
Matt Levine
You talked about the special characteristics of the derivatives markets, where end users necessarily trade on the basis of their own proprietary information in order to hedge their risks. If you're an oil company trading oil futures, you know something about oil production that other people don't know. Theoretically you're totally allowed to trade it. So in US regulated commodities Markets, you're not allowed to trade with misappropriated information. So if you work at an oil company and you trade for your personal account based on the oil company's production plans, that's probably insider trading. That's probably not allowed because you're misappropriating that information. You have some duty to keep that confidential.
- [26:52]
Katie Greifeld
Right.
- [26:52]
Matt Levine
But the oil company itself can trade commodities. And if you read that through to election markets, which are not commodities, none of this makes any sense in election markets, but they are treated as commodities. If you read it through to election markets, then it's like, well, if Eric Adams's campaign manager placed an insider bet, that would be bad, be misappropriation for sure. Eric Adams does it himself. Maybe it's fine. So I really don't know. I really don't know what the sort of, like, future rules around insider trading prediction markets will be because, like, there are a lot of people, including like Kalshi and the people who got Kalshi to be a regulated U.S. derivatives exchange, a lot of people who are like, that's icky and unfair and we do not want to have the trouble that would come with allowing insider trading.
- [27:38]
Katie Greifeld
Right.
- [27:39]
Matt Levine
But there are a lot of people who are like, the whole point of prediction markets is insider trading. The whole point of prediction markets is to get accurate predictions by incentivizing insiders to bet on stuff they know. That's like when economists set up prediction markets. That's the whole point. And so Kelshi has spent years trying to become a regulated exchange and like, wanted to appeal to conservative regulators. We don't live at a time where people are that concerned about insider trading anymore. So I think I don't really know what's going to happen.
- [28:07]
Katie Greifeld
You could build a case that Eric Adams did listen to Bill Ackman, which I find tickling about this story.
- [28:15]
Matt Levine
He hasn't dropped out yet, right?
- [28:16]
Katie Greifeld
He hasn't dropped out yet.
- [28:17]
Matt Levine
But this is Thursday, September 11th.
- [28:20]
Katie Greifeld
Yes. On September 5th, Eric Adams had a press conference. I believe that was Friday. He said that he's staying in New York City's mayoral race. He also said that Andrew Cuomo is a snake and a liar. That's a direct quote. So on Friday of last week, he was very committed to staying. In September six is when we got the Bill Ackman tweet, which was awesome. And then Today on Thursday, 11 September, Bloomberg News reported that New York City Mayor Eric Adams did tell a group of civic and business leaders that he's conducting his own polling to decide the future of his reelection campaign. This is according to people who attended the meeting. So he's at least thinking about it. He's still.
- [29:02]
Matt Levine
He's not gonna make any money on it. Like, that's like.
- [29:05]
Katie Greifeld
I just love the title.
- [29:06]
Matt Levine
As a political matter, Bill Ackman would like him to drop out.
- [29:08]
Katie Greifeld
Yeah.
- [29:09]
Matt Levine
As a financial matter, Bill Eichmann's like, you can make a lot of money by dropping out. I don't think it's true, but it would be funnier if it was true.
- [29:14]
Katie Greifeld
Maybe he's thinking about it. Who knows? I'm not, you know?
- [29:17]
Matt Levine
Are you buying Andrew Cuomo contracts?
- [29:20]
Katie Greifeld
I'm certainly not.
- [29:21]
Matt Levine
Should I be?
- [29:22]
Katie Greifeld
I don't know if we can. Man, step away from the mic first.
- [29:27]
Matt Levine
No, as I said, I don't think there's a lot of money to be made at it, and there's a lot of unpleasantness. But maybe plus, like, the market is discounting this, right? Like the market is aware of Bill Akron's tweets.
- [29:37]
Katie Greifeld
That's true.
- [29:38]
Matt Levine
Adams is like 3%, right. I wonder if Cuomo's chances would go up that much if Adams dropped out.
- [29:42]
Katie Greifeld
But I don't know. We'll see. I was going to say we've still got a long way to go, but there's not that much longer. Time marches on. All right, well, we've collectively sighed, so I think that's the end.
- [29:58]
Matt Levine
That's the final sigh.
- [29:59]
Katie Greifeld
Yeah.
- [30:02]
Matt Levine
And that was the Money Stuff podcast. I'm Matt Levine.
- [30:05]
Katie Greifeld
And I'm Katie Greifeld.
- [30:06]
Matt Levine
You can find my work by subscribing to the Money stuff newsletter on bloomberg.com.
- [30:11]
Katie Greifeld
And you can find me on Bloomberg TV every day on the closed between 3 and 5pm Eastern.
- [30:17]
Matt Levine
We'd love to hear from you. You can send an email to moneypodlumberg.net Ask us a question and we might answer it on the air.
- [30:25]
Katie Greifeld
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.
- [30:30]
Matt Levine
The Money Stuff podcast is produced by Anna Mazarakis and Rosa Zondong.
- [30:35]
Katie Greifeld
Our theme music was composed by Blake Maples.
- [30:37]
Matt Levine
Amy Keen is our executive producer, and.
- [30:40]
Katie Greifeld
Sage Bauman is Bloomberg's head of podcasts.
- [30:43]
Matt Levine
Thanks for listening to the Money Stuff podcast. We'll be back next week with more stuff.
- [30:57]
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