Also Sticky

Summary

Money Stuff: The Podcast — "Also Sticky"

Date: March 27, 2026
Hosts: Matt Levine (Bloomberg Opinion columnist), Katie Greifeld (Bloomberg News reporter and TV host)

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Episode Overview

In "Also Sticky," Matt Levine and Katie Greifeld reconvene after travels to New Orleans and Las Vegas, kicking off with lighthearted updates before diving into key developments in private credit markets, the latest Larry Fink annual letter, and SpaceX IPO speculation. Expect the duo's trademark mix of finance elucidation, skepticism, and humor as they question liquidity myths, investment narratives, and index mechanics—while dropping memorable one-liners along the way.

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Personal Updates and Banter

[01:41–05:23]

• Trips Recap: Matt attended an M&A law conference in New Orleans ("Were the streets sticky?" "A little, yeah." - Katie/Matt, 01:43–01:45), while Katie covered an ETF conference in Las Vegas and visited the Titanic Museum.
• Listener Feedback: Podcast fans at the ETF conference specifically requested more ETF content.
• Life News from Katie:
  • Bought a house (almost official) and is expecting a baby girl named Julia.
    • "Should I tell the listeners that I'm pregnant?" — Katie (03:21)
    • "Congratulations on your house and your pregnancy." — Matt (03:36)
  • Discussed baby naming, sharing family connections and, humorously, deliberated naming her child after her horse ("August 'Gus' for short").

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Main Theme 1: Private Credit Redemption Drama

[05:23–14:42]

Key Discussion Points

• Private Credit Still Dominates Headlines:
  • "It's like every other red spike on the terminal is about private credit." — Katie (05:27)
• Recent Events:
  • Apollo and Ares received over 11% redemption requests in their private BDCs but stuck to a 5% allowed redemption, deferring the rest—standard playbook for semi-liquid structures.
  • Exceptions include Blackstone, which funded extra redemptions internally, and Blue Owl, which is winding down a fund.
  • "It's not like it's on page 92 of the prospectus, it's on page one, which is true." — Matt (07:45), quoting BlackRock’s Larry Fink.
• Fiduciary Dilemma:
  • Fund managers balance not triggering fire sales and protecting remaining investors from artificially inflated NAV (net asset value) redemptions.
  • "If the NAV is way too high, then you're cashing them out at way too high... and the people who stay in the fund are getting diluted." — Matt (07:59–08:17)
• Liquidity “Confusion”:
  • “Liquidity confusion” is cited as a new industry term, with some questions about how well risks were communicated to certain investor segments.
  • Jim Zelter (Apollo) notes: "Certain distribution channels in certain parts of the globe may have not fully communicated the risks inherent to the asset class." — read by Katie (10:10)
  • US retail investors (especially dentists) mentioned as an example of less sophisticated, liquidity-seeking clients.

Fundraising & Future Implications

• Private Credit Inflows Continue:
  • Despite redemptions, significant inflows remain. "There are clearly people who are looking around and saying, this is oversold, this is overblown...they are just like, yeah, we trust it. It's fine." — Matt (11:22–12:00)
  • Noted $5 billion in inflows for the quarter.
• Market Mechanics:
  • Observation that if not for BDCs, these assets would be in high yield funds, leading to price volatility rather than locked-up capital.
  • "Here...the market is still functioning on the loan side and then on the fund side everyone is complaining they can't get their money out." — Matt (14:36)
• New Products:
  • J.P. Morgan launching a private credit fund with a 7.5% redemption allowance is discussed as a possible marketing differentiator.
  • Raising questions about whether higher redemption limits will attract wary investors.

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Main Theme 2: Larry Fink’s Annual Letter & Index Fund Ownership in the Age of AI

[15:36–22:47]

Key Discussion Points

• Americans Should Buy More Stocks:
  • "He thinks that Americans should buy more stocks." — Katie (15:51)
  • Matt notes this aligns both with macroeconomic arguments and Fink’s interest as the head of BlackRock, a major index fund provider.
• AI Is Top of Mind:
  • Fink predicts that AI will create massive value, accruing mainly to corporations and their investors, while risking increased wealth inequality via job displacement.
  • "In the future there'll be no jobs, but instead of jobs, there’ll be corporate profits. ... you as a person should transition from having a job to owning the shares of the companies that will make all the profits." — Matt (16:57)
• Universal Basic Index Fund Ownership:
  • Matt riffs on the common UBI (universal basic income) argument but converts it into universal basic index fund ownership.
  • "Make sure everyone owns a share of the index fund and the index fund owns the companies that own the robots, and then it’s fine." — Matt (18:06)
• Emergency Savings Proposal:
  • Fink advocates for employer-linked, market-invested emergency savings accounts as a private-sector approach.
  • Hosts point out that this is a limited solution—"how will you pay for food for the rest of your life if no one has jobs?" — Matt (18:34)
• Nuanced Inequality Effects:
  • Some roles (plumbers, electricians) are less automatable, implying shifting, nuanced effects on job markets and inequality.
  • "And so it's unclear exactly how the inequality runs, but Mark Zuckerberg will do great." — Matt (19:53)
• Tension Between the AI Complex and Consumer Economy:
  • Katie paraphrases Elapshah: “Every investment today in an AI company or a beneficiary carries an implicit short on the consumer economy.” — (20:30)
  • Matt challenges the coherence, noting "if you displace everyone from their jobs...who’s left to consume?"

Notable Quotes & Moments

• "If you’re OpenAI, you need people to pay $20 a month to chat to your porn bot...They’ve pulled the porn bot." — Matt (21:54–22:08)
• Discussion of ESG: Acknowledging the shift from climate/ESG themes to AI but connecting both to the notion of a "guy who owns everything" considering systemic risks.

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Main Theme 3: SpaceX IPO Speculation & Index Fund Mechanics

[23:59–31:50]

Key Discussion Points

• Potential SpaceX IPO:
  • "The information reported that SpaceX might file to go public this week." — Matt (23:59)
  • Discusses escalating rumored valuations: $50 billion, then $75 billion. "Biggest IPO ever." — Katie (24:25)
  • Anticipates huge secondary supply post-IPO due to early investor and employee lockups rolling off.
• Index Inclusion Challenges:
  • Index providers (e.g., NASDAQ, S&P) may change rules to include SpaceX faster, so index funds can facilitate orderly exit for pre-IPO investors.
  • "All the index firms are thinking about how to restructure stock indexes to allow SpaceX to get into their indexes earlier." — Matt (25:48)
• Volatility and Index Entry Timing:
  • Explains the rationale behind excluding new IPOs from indexes until they “season”—mitigates jumpiness from insider sales and index buying.
  • "If you can mush those things together, you reduce some of that volatility...There’s a day where all the early investors can sell TO S&P 500 index funds and like, you know, less volatility." — Matt (27:17)
• Closed-End Funds as SpaceX Proxies:
  • EchoStar (spectrum license/SpaceX stock holder) surged on IPO news.
  • Fundrise Innovation Fund—closed-end vehicle trading at a wild premium (1,200% of NAV), leading to a Citron short report:
    • "That's a good short thesis." — Matt (30:08)
  • Observation: Many funds advertise SpaceX exposure, generating mania and pricing anomalies. ("One important move ... is putting up a big sign saying we own some SpaceX and then see if people start paying a premium for your stock." — Matt, 31:28)

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Bonus: Elon Musk Securities Fraud Jury Drama

[31:50–33:37]

• Matt tells a surreal story about Musk losing a securities fraud trial involving the Twitter acquisition—a case featuring a $4.20 figure written in blue ink by the jury, allegedly to taunt Musk.
  • "Elon Musk doesn’t think 420 is funny anymore..." — Matt (32:41)
  • Katie: "Does any of it matter to him?" Matt: "Rationally, no. But emotionally, I think very much so." (33:22–33:24)

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Notable Quotes

• "Functioning as sold." — Katie (09:38, on private credit lockups)
• "Liquidity confusion." — Matt (09:44)
• "In a world where robots do all of our work for us and we don't have to work... that's great in the aggregate. But then it's like, if you don't have any way to pay for the production that the robots produce, then that's bad for you." — Matt (17:46–17:57)
• "One important move you can make in today’s financial markets is putting up a big sign saying we own some SpaceX and see if people start paying a premium for your stock." — Matt (31:28)
• "Elon Musk doesn’t think 420 is funny anymore..." — Matt (32:41)

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Timestamps for Major Segments

• [01:41–05:23] — Personal catch-up, trips, house purchase, pregnancy reveal
• [05:23–14:42] — Private credit redemptions, liquidity, investor concerns
• [15:36–22:47] — Larry Fink’s letter, stock ownership, index funds, AI, inequality
• [23:59–31:50] — SpaceX IPO rumors, index mechanics, funds trading at wild premiums, market structure
• [31:50–33:37] — Elon Musk trial and jury antics

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Tone & Style

The episode features the hosts’ trademark blend of dry wit, technical insight, skepticism, and playful banter. They challenge finance industry narratives, poke fun at themselves and market mechanics, and retain a conversational, inviting style—even when unpacking serious topics like market liquidity, inequality, and the implications of technological change.

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For First-time Listeners

This episode provides a rich, entertaining primer on hot topics in private credit, index fund mechanics, and the evolving storylines of Wall Street’s largest players. Matt and Katie’s natural rapport and knack for highlighting both absurdities and hard truths in modern finance make this a must-listen for both seasoned pros and curious observers.

Transcript

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[Matt Levine]

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Bloomberg Audio Studios Podcasts Radio News Tell

[Katie Greifeld]

me about New Orleans.

[Matt Levine]

I went to New Orleans.

[Katie Greifeld]

Were the streets sticky?

[Matt Levine]

A little, yeah.

[Katie Greifeld]

You didn't like get on your knees and lick the floor?

[Matt Levine]

It was scientific sampling of the streets.

[Katie Greifeld]

How was the, the vibe, the conference?

[Matt Levine]

It was good, you know, like I guess that I had this image of my mind in my mind. If it's like a super fun conference and then at the end of the day it's an M and A law

[Katie Greifeld]

conference, you know, I don't know what you're saying.

[Matt Levine]

We'll leave it to the readers, the listener's imagination.

[Katie Greifeld]

Well, I was in Las Vegas.

[Matt Levine]

Also sticky.

[Katie Greifeld]

Yes. Las Vegas is also grim, but it was fun.

[Matt Levine]

New Orleans is nice. Like, I don't want to suggest anything.

[Katie Greifeld]

Yeah, New Orleans is beautiful.

[Matt Levine]

Bourbon street is a strange place. But like New Orleans is nice.

[Katie Greifeld]

And the architecture.

[Matt Levine]

Yeah, it was good.

[Katie Greifeld]

There's mules pulling carriages.

[Matt Levine]

I didn't see mules pulling carriages. I saw a little like streetcar, like little tram.

[Katie Greifeld]

That's awesome.

[Matt Levine]

That was cool.

[Katie Greifeld]

Yeah, there was none of that in Las Vegas, but we went to the Titanic Museum, which for some reason is In Las Vegas, famously landlocked. And it was a great conference. Got to talk shop with a lot of ETF folks, a lot of fans of the podcast.

[Matt Levine]

Oh, great. Yeah.

[Katie Greifeld]

Which is cute.

[Matt Levine]

They're like, katie, we like the podcast. All that we ask is more ETF content.

[Katie Greifeld]

Actually. Yes.

[Matt Levine]

Yes. Well, this is the ETF conference.

[Katie Greifeld]

Yeah. I did text that to you.

[Matt Levine]

Yes.

[Katie Greifeld]

Yeah, that was cute. Any other news?

[Matt Levine]

No, I got nothing.

[Katie Greifeld]

Yeah, I bought a house.

[Matt Levine]

Oh, yeah. You bought a house?

[Katie Greifeld]

Yeah. Well, nothing's been signed, but they selected our offer, so we're really thrilled.

[Matt Levine]

Congratulations.

[Katie Greifeld]

Thank you.

[Matt Levine]

What's your mortgage rate?

[Katie Greifeld]

That's fun to laugh with a good friend. Should I tell the listeners that I'm pregnant?

[Matt Levine]

I thought you were gonna say, should you tell the listeners your street address, but both the address of your house and the name and Social Security number of your unborn child.

[Katie Greifeld]

One, one, one, one, one, one, one.

[Matt Levine]

Doesn't have. It doesn't have a Social Security number.

[Katie Greifeld]

No, she's not across the finish line.

[Matt Levine]

Congratulations on your house and your pregnancy.

[Katie Greifeld]

Thank you. It was like, really?

[Matt Levine]

Tell the listeners where to send the baby gifts.

[Katie Greifeld]

Please don't send me anything. Please don't do that. But, yeah, I needed a place to live because our rent. Our lease is up at the end of May, and then I'm due in August. I love deadlines.

[Matt Levine]

Were you gonna say the baby's name on this podcast?

[Katie Greifeld]

Julia. Her name is Julia.

[Matt Levine]

Really?

[Katie Greifeld]

Yeah. Have I not told you that I don't know my mother's name is Julia?

[Matt Levine]

You're unusually chill about this. Yeah, I'd never do that.

[Katie Greifeld]

Yeah. I don't really get that. I've been cooking up this name for, like, the past decade, so I'm excited to finally have something to name. Julia.

[Matt Levine]

Yeah.

[Katie Greifeld]

My mother's name is Julia.

[Matt Levine]

You didn't waste it on a horse.

[Katie Greifeld]

I know. Actually, I love the name Aug. Gus for short. I have a horse named that, and my husband thinks that's weird, but does

[Matt Levine]

he think it's weird because you have a horse named Gus or because if you have a boy, you're going to give the boy the name of the horse?

[Katie Greifeld]

We're going to name a child after your horse. Yeah. And he's like, we can't do that.

[Matt Levine]

In some sense, this is the least surprising thing I've ever heard.

[Katie Greifeld]

Yeah. But, you know, it's just such a handsome name. August Gus.

[Matt Levine]

Yeah, yeah, yeah. Good for a horse.

[Katie Greifeld]

Good. Great for a horse. Yeah. Come on. It's multipurpose.

[Matt Levine]

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.

[Katie Greifeld]

And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.

[Matt Levine]

So we had a podcast last week about private credit. Huh?

[Katie Greifeld]

We sure did.

[Matt Levine]

Guess what?

[Katie Greifeld]

This week, private credit, well, you can't get away from it. It's like every other read Spike on the terminal is about private credit.

[Matt Levine]

Yeah. So by the Weinstein on our podcast last week was like, it's the most important or most interesting or biggest story in finance. And who was it who said that? It was a Goldman executive who said that the private markets clients love the Iran war because it distracts from their problems, which is the sort of thing you don't say out loud.

[Katie Greifeld]

But he did and we're thankful for it.

[Matt Levine]

But here on this podcast, we're sticking to private credit.

[Katie Greifeld]

Yeah, Apollo and Ares, those were the big ones this week.

[Matt Levine]

Yeah. I think Boaz said it's increasing. The more bad headlines there are about withdrawal requests and bad redemption requests, the more the next fund gets a bigger redemption request. So now Apollo and Ares both got like 11 plus percent redemption requests from their private business development companies. And they both stuck to their guns and said, we'll give you back 5% and the rest you can come back next time.

[Katie Greifeld]

Yeah.

[Matt Levine]

So that seems to be the playbook,

[Katie Greifeld]

which for everyone except that one Blackstone.

[Matt Levine]

Yeah, there are a couple of exceptions. There's the Blackstone one where they passed the hat and cashed out like 9% by raising money from Blackstone itself and some of its employees. There's also The Blue Owl OBDC 2 1, which is like they sort of limited it, but they also said they're winding it down and returning more capital. So it's like it's kind of a mixed bag. But yeah, most of them have said, look, these are long term semi liquid vehicles. Yeah, the deal is that you are locking up your money in illiquid assets in order to earn the higher returns that are maybe promised to illiquid assets. And you can get a little bit of your money out, but you can't get a lot of your money out. And that was the deal. Harry Fink said in an interview, it's not like it's on page 92 of the prospectus, it's on page one, which is true. And they're like, yeah, that's the deal. And if we cast more people out, that would be failing in our fiduciary duties to the people who stay in. Which is true for two reasons. One, it's like, oh, we have this illiquid stuff and we're not going to. We don't want to do fire sales. And so we're going to keep the stuff and cash out people a little bit, but not sell loans to cash more people out. But the other reason it's true is, like, this is what we talked about with Buzz. People have a lot of doubts about the marks in these funds. People have a lot of doubts that when a private credit fund says its NAV is whatever, that that NAV reflects the actual market value of the loans. And so one concern you'd have if you're running one of these funds is like, if people come to you to cash out and you cash them out, you cash them out at nav. And if the NAV is way too high, then you're cashing them out way too high. You're giving them too much value. And the people who stay in the fund are getting diluted by you. Cashing these people out when these fund managers say is part of our job as fiduciaries to the people staying in the fund, we can't cash out more than 5%. That's true. But it's also a little bit of a worrying thing to say because it suggests, like, you also might be a little bit worried about your.

[Katie Greifeld]

Yeah, well, also, if you had super large redemptions that you redeemed, what are you selling to meet them? There was a quote in a Bloomberg story out this week from the global head of credit strategy over at Citi who said that if you start meeting redemptions that are too large, what does the surviving portfolio start to look like?

[Matt Levine]

It's like the least liquid, weirdest cats and dogs in the portfolio. Probably. Right.

[Katie Greifeld]

Yeah. So that's fair.

[Matt Levine]

It is fair. I have a lot of sympathy with Larry Fink saying it's on page one of the perspective. That's right.

[Katie Greifeld]

Yeah.

[Matt Levine]

This is what this deal is. This is illiquid stuff. The role of this is. This is you are a wealthy person. A small portion of your money is in illiquid stuff that you won't need for years. And this is that. Right. And so you shouldn't need the money. The private credit fund is in the business of riding through periods of volatility by not giving you your money back. This is like, become a cliche. This is the product working as intended. It's just that, you know, people are mad about it.

[Katie Greifeld]

Yeah. Functioning as sold.

[Matt Levine]

There's a great Bloomberg Article. You know, there's like a phrase, liquidity illusion.

[Katie Greifeld]

Yeah.

[Matt Levine]

Which is an annoying phrase. A great Bloomberg article about people talking about liquidity confusion.

[Katie Greifeld]

Yes.

[Matt Levine]

Where they're like, they quote like Blue Owl and Apollo. People saying basically sort of saying, yeah, we don't know how these things were sold. Maybe the advisors didn't maybe highlight this enough. This is again what Boaz was talking about last week. Yeah. I don't know, man.

[Katie Greifeld]

We did have that conversation. Like, where was the potential point of miscommunication? I have one of the Apollo quotes in front of me, so I'm going to read it. This was coming from Jim Zelter, speaking at a conference that maybe the industry may have failed to clearly explain liquidity restrictions. Quote, certain distribution channels in certain parts of the globe may have not fully communicated the risks inherent to the asset class. He said in Melbourne. And so you have a mismatch right now in shorter term redemptions. Sheesh. I don't know. What do you do about that?

[Matt Levine]

Certain parts of the globe is interesting because my impression is like, that part of the globe is the usa, but I don't really know.

[Katie Greifeld]

I could be wrong.

[Matt Levine]

My impression is that he did say this financial advisor sold product, that there are a lot of dentists in the US who are trying to get out of these things. Those dentists people were literally sending me dentist forums discussing Cliffwater's private credit funds.

[Katie Greifeld]

We talked about this. I think when it comes to the Blackstone example, like, okay, yes, they are functioning as designs, but it still doesn't feel good necessarily. And when you think about future fundraising, it certainly might hurt.

[Matt Levine]

Future fundraising is really interesting. Right?

[Katie Greifeld]

Yeah.

[Matt Levine]

One fascinating thing, and I wrote about this this week, is that all these funds are getting like big redemption requests. They're also getting big ish inflows.

[Katie Greifeld]

Yeah.

[Matt Levine]

Not as big.

[Katie Greifeld]

For now.

[Matt Levine]

For now. Yeah. But like, but like really now, like, now you're like, I want in at Nav. It's just an interesting vibe because there are clearly people who are looking around and saying, this is oversold, this is overblown. Like, that's not as bad as it seems. We're going to buy at the lows. Right. It's like Boinstein is like, I'll pay 65 cents on the dollar. But the people who are sending their checks to these funds right now are paying nav. They're not buying at discounts. They're not buying at Lowe's. They are just like, yeah, we trust it. It's fine. What we want in. And it's Just sort of a strange non clearing market. Right. Like all these people want out at nav. They can't all get out. Other people want in at NAV. Why?

[Katie Greifeld]

I mean, there's been $5 billion of inflows so far this quarter.

[Matt Levine]

Yeah, I think both the Apollo fund and I think the Blackstone fund that we talked about, they both had inflows that were kind of around the amount that they actually cashed out. So like the Apollo fund got like around 5% inflows, paid out about 5% outflows. You know, got requests for like 11% outflows. And that's like, seems to be kind of normal. Like their inflows and outflows roughly match. When you cut out the outflows, they didn't actually pay out.

[Katie Greifeld]

Yeah, it's just like I will say, I mean this quarter we don't know what in the quarter.

[Matt Levine]

That's right.

[Katie Greifeld]

Yeah, that's right. Did any of them come in the last four weeks? I would like to know. Did you see this story? J.P. morgan planning a private credit fund that allows 7.5% redemption.

[Matt Levine]

Oh, cool. That's a big selling point. That's like the, the credit card that was. Yeah, I don't know. That's what you want to lead with.

[Katie Greifeld]

They're leading with it.

[Matt Levine]

I don't know if like that's that reassuring, but whatever.

[Katie Greifeld]

It's also public and private credit, so some of it will be in private.

[Matt Levine]

But the future fundraising stuff is really interesting. Right. Because you know, two months ago the whole story in private credit and in private markets generally was like, we're going to open up the 401ks, we're going to raise trillions of dollars.

[Katie Greifeld]

How do we put this in your retirement accounts?

[Matt Levine]

Like, and by the way, like, this does not undermine the case for putting it in your retirement account. It doesn't, but it does.

[Katie Greifeld]

Perception is everything.

[Matt Levine]

Yes.

[Katie Greifeld]

Everything in this business. And I don't know, when it comes to Future fundraising, maybe 7 and a half percent redemptions on a quarterly basis. Maybe that'll entice some of these, you know, worried skeptical investors.

[Matt Levine]

The other thing I was saying, like someone emailed me, like if this didn't exist, if there weren't these BDCs, if there hadn't been this rise in private credit, all this stuff, all these loans would more or less exist in high yield funds. All these companies that borrow from Apollo and Aries and HPS and whatever would be borrowing from the bank loan or the high yield market. And there'd be like clo funds and high yield funds would own the debt. And when people got nervous about software apocalypse and whatever, they would cash out of those funds and those funds would sell the debt and the price of the debt would go down and we would have a different, possibly also bad situation. Right. Spreads would widen, prices would go down, people would get nervous. People would go, the debt of these companies is collapsing. But they'd all get their money back at whatever the mark was here. It's like there hasn't been fire sales at point this the market is still functioning on the loan side and then on the fund side everyone is complaining they can't get their money out.

[Katie Greifeld]

Yeah.

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[Matt Levine]

Do you want to turn directly to Larry Fink?

[Katie Greifeld]

Yeah, actually you mentioned Larry Fink and he's had a lot to say in the past week. Some of it. He's a busy guy in the written word and you'll never believe this. No, he thinks that Americans should buy more stocks.

[Matt Levine]

It's so great. I wrote about this. He's right. In a very conceptual way. But also as an index fund manager, it is very much his book. But you know, he wrote the letter, his annual chairman's letter to investors where he talks about once upon a time where he talked about esg, now it's

[Katie Greifeld]

talked about the climate.

[Matt Levine]

He talks about. Yeah, like whatever's top of mind this year. It is neither Iran nor private credit. It is AI Another big popular top of mind thing. And he's like, yeah, what's going to happen with AI? It's going to put a lot of people out of work. And it's like very classic stuff, right? It's like people are worried that AI is going to take all the jobs. What does it mean for AI to take all the jobs? Well, it means you don't have a job. And it also means that like the money that you would have gotten paid goes somewhere and it probably goes to corporate profits. And so he writes in the letter, when we talk about the economic disruption of AI, most of the conversation is about jobs. But history suggests that transformative technologies create enormous value, and much of that value accrues to the companies that build and deploy them and to the investors who own them. So it's like, look, in the future, he doesn't say this. I say this. In the future, there'll be no jobs, but instead of jobs, there'll be corporate profits. And so you as a person should transition from having a job to owning the shares of the companies that will make all the profits. How can you do that? Well, BlackRock has index funds.

[Katie Greifeld]

Good news. Good news.

[Matt Levine]

So I'm parodying this, but I also kind of think it's true. Right. I mean, if you're really worried about AI significantly displacing human labor, that's a good problem. Right. In a world where robots do all of our work for us and we don't have to work and we sit around and just eat bonbons. Yeah. Consume the production that the robots produce, that's great in the aggregate. But then it's like, if you don't have any way to pay for the production that the robots produce, then that's bad for you. And so how do you do that? Well, you give everyone a share in the companies that own the robots, and then you're fine. And how you do that, A classic story is universal basic income, which is basically like the government takes some money from the robot companies and gives it to you so you can pay for food and stuff. But, like, you know, I call that universal basic index fund ownership in other ways, like make sure that everyone owns a share of the index fund and the index fund owns the companies that own the robots, and then it's fine.

[Katie Greifeld]

Yeah. Well, while there are still jobs, one of Fink's proposals was that employers should basically set up emergency savings accounts of up to $2,500 so that their staff can invest in the markets. Which was slightly interesting. It's like a private side answer to Trump accounts or something along those line lines. Yeah.

[Matt Levine]

Right. I mean, all this stuff is like, at some aggregate conceptual level, it's like, yeah, we'll all own the robots and then it'll be great. But then at some practical level, it's like, you'll have a $2,500 emergency fund that will own shares on the robots, and then like, okay, how will you pay for food for the rest of your life if no one has jobs?

[Katie Greifeld]

Don't worry about it. I Will say it's very easy to have this cynical. Take that. Yes, this is Larry Fink talking. His own book, but it's a good book.

[Matt Levine]

I mean, his book is like everyone should own a share of the economy. Which is a fine book.

[Katie Greifeld]

Yeah.

[Matt Levine]

But also, I mean, there are worse propositions.

[Katie Greifeld]

His starting point, that AI is going to exacerbate wealth inequality, that's not controversial.

[Matt Levine]

I'm saying the silly version of it, which is that no one will have any jobs anymore and we'll just eat what the robots produce. But the non silly version is like, yeah, there'll be winners and losers from AI.

[Katie Greifeld]

Yeah.

[Matt Levine]

By the way, exacerbated inequality. It's unclear exactly what the dynamics are. Right. And so one thing he writes about in the letter is that the skilled trades, there are jobs that will be displaced by AI, that'll be more and less displaced by AI. And plumbers and electricians will be less displaced by AI. And in fact, you'll need a lot of electricians to maintain the data centers and podcasters and index fund managers will be more displaced by AI.

[Katie Greifeld]

True.

[Matt Levine]

And so it's unclear exactly how the inequality runs, but Mark Zuckerberg will do great.

[Katie Greifeld]

Yeah, good. Just worried. But I was speaking to Elapshah this week. He co wrote the Citrini piece that tanked the markets. That one day in February I was on vacation.

[Matt Levine]

That's a good day.

[Katie Greifeld]

He wrote a part three this week and we talked to him on the television.

[Matt Levine]

Did the part three get as much attention as part one?

[Katie Greifeld]

No, I mean, we talked to him about it. So he had an interesting.

[Matt Levine]

Could you not book him for part one?

[Katie Greifeld]

I don't know. I feel like part two was the one that really.

[Matt Levine]

Was it part two?

[Katie Greifeld]

Whatever.

[Matt Levine]

Yeah, yeah, okay.

[Katie Greifeld]

I was on vacation, so, you know,

[Matt Levine]

part one was like the hipster preface that nobody read.

[Katie Greifeld]

Yeah, yeah, before it was cool. I was on vacation. So I was like, I'll just let this blow over. This will be fine. And then there was a war. Anyway, so he wrote that the AI complex and the consumer economy are increasingly on opposite sides of the same trade. Every investment today in an AI company or a beneficiary carries an implicit short on the consumer economy. And I thought that was kind of interesting.

[Matt Levine]

What does that mean? Why the consumer economy?

[Katie Greifeld]

Because basically, if you're replacing human workers, that's a dollar of household income that's lost. So people will have less money to spend.

[Matt Levine]

Right. I don't think that's an entirely coherent macro vision. I think like, you know, this is What Larry Fink would say, like, in a world where AI takes over all jobs and therefore no people have income to pay for consumption, that's not good for OpenAI, not good for Nvidia's business model. You need someone to pay for the consumption. And so the sort of rejiggering of the economy to allow people to pay for the consumption in this world where no one has any jobs is an interesting and a little bit stupid question, because it's all sort of fantasy at this point. But that's what Larry Fink is writing about. How do we restructure the economy so that when no one has a job, they can still pay for consumption?

[Katie Greifeld]

Yeah. I mean, to this man's credit, he does write that this is not sustainable and it's not something that the AI complex investors or society should want.

[Matt Levine]

Right, right. If you're OpenAI, you need people to pay 20 bucks a month to chat to your porn bot. Right. That was a joke. They've pulled the porn bot.

[Katie Greifeld]

Yeah. Thank you. Thank you for saying that.

[Matt Levine]

Thank you, OpenAI. But you need buyers, consumers. And if you displace everyone from their jobs, this is why, like, Sam Altman talks about Universal Basic Income. It's the same thing.

[Katie Greifeld]

And Andrew Yang. Yeah, well, sure, put some respect on his name.

[Matt Levine]

He doesn't run an AI company, but, yes, he might.

[Katie Greifeld]

He probably does. It's going to be interesting to get back to Larry Fink's annual letter for, like, two years straight. He was obviously hot on the climate. We don't talk about ESG anymore.

[Matt Levine]

I know.

[Katie Greifeld]

So maybe this is gonna solve the. All the doom and gloom.

[Matt Levine]

In some ways, it's related to the ESG stuff. Right. It's like Larry Fink is, in some deep sense, like an index fund manager. Right. That's not his background. And, like, whatever, he sits atop this giant complex that owns everything. And so he thinks about the world as a guy who owns everything. Right. And so this year, he's writing about, he's following momentum. Everyone should own everything. But in previous years, he was like, you know, if you're someone who owns everything, you can't be focused on the cash flows of one particular company. You have to think about, like, society, society as a whole. And so ESG was an early way to do that, where it's like, oceans rise, they'll wash away all of my companies. Let's not have that. And then AI is a different variant on a similar sort of way of thinking.

[Katie Greifeld]

Well, we'll reflect on this in two years. Maybe he top Ticked it.

[Matt Levine]

Maybe he'll go back to esg.

[Katie Greifeld]

Yeah. It would be so fun if he just continued.

[Matt Levine]

Right. A Democrat gets elected and it's like, you know, it's really important.

[Katie Greifeld]

Ms.

[Matt Levine]

Climate Change.

[Katie Greifeld]

We're back.

[Matt Levine]

The information reported that SpaceX might file to go public this week.

[Katie Greifeld]

Yeah.

[Matt Levine]

Hasn't happened yet. Well, actually they could. They might be able to file a confidential. Anyway, I don't think it's happened yet,

[Katie Greifeld]

but it's Thursday, so they have, you know, a little bit of time left in this week. Bloomberg News has reported this month.

[Matt Levine]

Yeah, so. Which was almost the same as this week.

[Katie Greifeld]

Yeah, that's true. Bloomberg News also reported that now they're looking to raise $75 billion.

[Matt Levine]

Biggest IPO ever.

[Katie Greifeld]

Yeah, I wonder how high this number can go, because the last figure that Bloomberg News reported was like $50 billion.

[Matt Levine]

Yeah. The interesting thing is, like, it's not even the 50 or 75 or whatever billion that is big. Like, what's big is that there are a lot of investors who have written pretty big tickets in SpaceX. Xai X this is the whole mishmash of Elon companies. And when this company goes public the first day, they'll sell whatever $75 billion worth of stock, but then soon after that, there will be a trillion dollars of stock to sell, there'll be a lot of stock to sell, a lot of early investors and employees and Elon musks who want to sell stock and raise money. And so the information about one thing that they're very focused on in these IPO talks is figuring out the lockup structure. Typically, you do an ipo, you sell stock in the ipo. All the big insiders and early investors can't sell any more stock for six months. And then after six months, their stock comes free. And there's often a stock drop when everyone is able to sell and they all sell stock at once. And I think SpaceX wants to be more thoughtful, more aggressive, more something about that. So it's not just like, sell nothing for six months and then sell a trillion dollars worth of stock in one day. And it's more like, how can we structure that so we can get out the stock that people are going to want to get out? And that's going to be interesting, right? There's going to be a lot of turnover in the stock. And reading between the lines a little bit, all the index firms are thinking about how to restructure stock indexes to allow SpaceX to get into their indexes earlier so that. So essentially, early investors can sell the index funds and make that trade clear. So it's going to be a lot of stock.

[Katie Greifeld]

Yeah. I'm particularly interested in the index side of things.

[Matt Levine]

Obviously people are mad about it. People are mad about the index funds.

[Katie Greifeld]

No, I don't know why the index

[Matt Levine]

managers, not the index funds, the index providers changing their rules. Like NASDAQ is talking about changing the rules of the NASDAQ 100 and even S& P is like. Well, I mean we could. That SpaceX.

[Katie Greifeld]

I guess I could see. I was actually having this conversation yesterday.

[Matt Levine]

Was this all the talk of the at the ETF country?

[Katie Greifeld]

No, but it should have been, honestly. But there's the idea out there that part of the reason you don't want freshly public companies in your index is because they need a period to season and like maybe get through some of the weirdness that you're talking about when it comes to lockups, etc.

[Matt Levine]

Yeah, I know but like, but part of like the weirdness is just like straightforward supply and demand stuff where you have like volatility because like the company goes public and then it's seasons or whatever for a little while and then there's a day when everyone can sell their stock and so the stock bounces around in anticipation of that day and then after that day and then it settles down and then there's another day when the index funds have to buy the stock and then it goes up and if you can mush those things together, you reduce some of that volatility. There's a day where all the early investors can sell TO S&P 500 index funds and like, you know, less volatility.

[Katie Greifeld]

Yeah, I don't know.

[Matt Levine]

This is somewhat exaggerated.

[Katie Greifeld]

Yeah. I guess we'll find out what these index overlords decide. But I feel like there were a few different SpaceX tentacles this week. You wrote about this one that when it was reported by the information that SpaceX could file as soon as this week you saw a bunch of space related and satellite stocks surge, including EchoStar.

[Matt Levine]

Yeah. So EchoStar is arguably a SpaceX treasury company. It's not really.

[Katie Greifeld]

I was thinking about Dats.

[Matt Levine]

Yeah.

[Katie Greifeld]

But it's a, it's a real business.

[Matt Levine]

It's a real business. It has like a, you know, DirecTV and stuff but it's like largely a collection of spectrum licenses that it's like in the process of selling off and it's sold some of them for cash.

[Katie Greifeld]

Yeah.

[Matt Levine]

And some of them to SpaceX for like $11 billion of SpaceX stock. And so if you zoom Way out. It's like, it's like kind of a pot of cash plus some SpaceX shares. And you know, you can. That's just the proxy for SpaceX and so people have been sort of treating it as a proxy for SpaceX. It's gone up a lot and it went up when SpaceX was reported to be planning an IPO soon. The other space companies I don't really get.

[Katie Greifeld]

I know, I know.

[Matt Levine]

Surely if you've got a space portfolio, you got to sell some space companies to make room for SpaceX.

[Katie Greifeld]

Yeah, yeah. So, I mean, it wasn't as clean of an explanation for those ones, but in the case of EchoStar, okay, they have a bunch of SpaceX stock. What happens when SpaceX goes public? Like, how would the shareholders of EchoStar sort of feel that.

[Matt Levine]

I don't know. I don't know what their plan is. I think to some extent people think of it as like a capital return play where like they're selling Spectrum for cash and stock and eventually you sort of end up with like a much smaller business and a big pile of cash and stock. And then you start thinking about how to return that cash and stock to shareholders. And the cash is fairly easy and the stock is not that hard. And so you end up Somehow extracting some SpaceX stock out of Ecostar or they just sell it and cash in.

[Katie Greifeld]

That's exciting.

[Matt Levine]

Yeah.

[Katie Greifeld]

I was also excited to talk about this because there's a closed end fund angle here as well.

[Matt Levine]

There's a closed end fund?

[Katie Greifeld]

Yeah.

[Matt Levine]

There's more than one. We talked ages ago about Destiny dxyz.

[Katie Greifeld]

Yeah.

[Matt Levine]

And this week, or at least last week, this week it's been surging. There's the Fundrise Innovation Fund, I think it's called, which is now trading at like 1,200% of NAV.

[Katie Greifeld]

Or it was.

[Matt Levine]

It was. Yeah, it's down a little bit.

[Katie Greifeld]

Citron came out with a short against

[Matt Levine]

it on Thursday is the short thesis. This is trading at 1,200% of NAV.

[Katie Greifeld]

Basically.

[Matt Levine]

Yeah. That's a good short thesis.

[Katie Greifeld]

Let's see. Oh yeah. Citron question. Simple math and asset value.

[Matt Levine]

Simple math and asset value.

[Katie Greifeld]

There you go.

[Matt Levine]

Right, right. So it's like it's a closed end fund, it's a small fund, it's like $600 million. It owns stock in like OpenAI anthropic SpaceX, like big name.

[Katie Greifeld]

All the big ones.

[Matt Levine]

All the big ones. And it was like a privately managed closed end fund that has like gone public. But most of its shares are locked up. So the actual, like, amount of stock that is available is like in the tens, millions of dollars. They said more than 10% of those shares are available. So it's not hundreds of millions of dollars. And a lot of people want to own SpaceX any way they can get it. And so there's a lot of demand for that relatively small stub of fundraise innovation fund stock and not a lot of supply. And so it's traded up to 1,200% of NAV. And at 1200% of NAV, you're not getting any SpaceX exposure, you're just getting exposure to the premium, right?

[Katie Greifeld]

That's right.

[Matt Levine]

As I've said before, I have a

[Katie Greifeld]

great idea for Bill Ackman. Oh, he should put SpaceX in his closed end fund and then he won't have to worry about the discount.

[Matt Levine]

It's true. Someone pointed out to me there's SpaceX and all sorts of closed end funds, including a Blue Owl technology private credit card, of course, owns a little bit of SpaceX stock. One important move that you can make in today's financial markets is putting up a big sign saying we own some SpaceX and then see if people start paying a premium for your stock.

[Katie Greifeld]

Well, we'll see. I'm also curious to see what happens obviously when SpaceX goes public, because a lot of these funds also are subject to a lockup period, or at least a lot of the SPVs.

[Matt Levine]

Wait, can I tell you an unrelated Elon Musk thing?

[Katie Greifeld]

I was hoping you would.

[Matt Levine]

That is amazing.

[Katie Greifeld]

Tell me.

[Matt Levine]

Okay, so he lost the securities fraud trial this week or last week. He agreed to buy Twitter in 2022. He like backed out of the deal. He like tweeted publicly like, oh, the deal is temporary, on hold. The stock dropped. Eventually he had to close the deal. People who sold stock when he tweeted that sued for securities fraud. That was a weird case. They sued in like a federal court in California and they won last week. He's lost the securities fraud case. Like, the damages haven't been determined yet, but they could be billions of dollars. Geez, it's a little nuts. But anyway, this week his lawyer, Alex Spira sent a letter to the court basically saying, like, we should have a mistrial. There is misconduct in the jury room. The jury had to fill out some form about like, you know, like the stock drops. One of the numbers on this forum was $4.20.

[Katie Greifeld]

Oh boy.

[Matt Levine]

And the letter, this insane letter, this long, passionate, yet legalistic letter that Alex Fiero sent to the court is like they filled out all these numbers in black ink except for the 420, which they wrote in larger font and in blue ink to drive home the fact that it was 420, a number previously associated with the online Good Lord. So someone said it to me saying Elon Musk doesn't think 420 is funny anymore, but it's like what a life he has. Has anyone ever been more put upon than Elon Musk? People are just making fun of him about 420. Can't imagine finding him liable for security threat. It's a weird thing.

[Katie Greifeld]

Does any of it matter to him?

[Matt Levine]

Rationally, no. But emotionally, I think very much so. And that was the Money Stuff Podcast. I'm Matt Levine.

[Katie Greifeld]

And I'm Katie Greifeld.

[Matt Levine]

You can find my work by subscribing to the Money stuff newsletter on bloomberg.com

[Katie Greifeld]

and you can find me on Bloomberg TV every day on the close between 3 and 5pm Eastern.

[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.

[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.

[Matt Levine]

The Money Stuff Podcast is produced by Moses Andam and Alexis Haut.

[Katie Greifeld]

Our theme music was composed by Blake Maples.

[Matt Levine]

Amy Keene is our executive producer. Thanks for listening to the Money Stuff podcast. We'll be back next week with more stuff.