Dinosaur Bone Treasury Company: A Mailbag Episode

Summary

Money Stuff: The Podcast – Episode Summary Title: Dinosaur Bone Treasury Company: A Mailbag Episode
Host/Author: Bloomberg (Matt Levine & Katie Greifeld)
Release Date: August 15, 2025

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Introduction

In this engaging mailbag episode of Money Stuff: The Podcast, hosts Matt Levine and Katie Greifeld delve into a series of listener-submitted questions, providing insightful analyses on topics ranging from securities law to IPO strategies and innovative treasury companies. Skipping advertisements and non-content segments, the episode focuses on dissecting complex financial concepts with wit and clarity.

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1. Are DoorDash Orders Futures Contracts?

Timestamp: [02:53 - 05:24]

Question from Josh:
“Are DoorDash orders a futures contract and therefore subject to securities law?”

Discussion:
Matt Levine clarifies the distinction between futures contracts and spot transactions, emphasizing that DoorDash orders, which involve paying a fixed price for immediate delivery, qualify as spot transactions rather than futures contracts. He explains that while futures contracts involve agreements to buy or sell assets at a future date, DoorDash transactions are settled swiftly, typically within hours.

Notable Quote:
"If you order an onion now and it arrives in an hour, that is not a futures contract. That's a spot delivery."
— Matt Levine [03:14]

Levine further explores the legal nuances, noting that the Commodity Futures Trading Commission (CFTC) defines spot contracts as those intended for physical settlement within a few days. He reassures listeners that it's unlikely DoorDash orders would be treated as futures contracts, highlighting the practical differences between subscription-based deliveries and traditional futures trading.

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2. Underwriters and Retail Mania in IPOs

Timestamp: [07:03 - 12:18]

Question from Daniel:
“Why don't the underwriters for IPOs seem to factor in retail mania? It seems like underwriters could inflate IPO prices knowing retail traders will drive demand.”

Discussion:
Katie Greifeld and Matt Levine discuss the recent IPO of Figma as a case study. Levine explains that underwriters and companies often prefer leaving money on the table to establish long-term relationships with quality investors rather than maximizing immediate gains through inflated IPO prices. This strategy fosters a stable shareholder base supportive of the company's vision, even if it means a significant first-day stock price surge.

Notable Quote:
"Figma, from their perspective, are shifting from venture capitalists to public investors who they hope will be long-term supporters."
— Matt Levine [08:18]

They also touch upon the evolving landscape where equity capital markets (ECM) bankers are adapting to the influence of retail investors and meme stocks, integrating this awareness into IPO strategies to balance institutional and retail interests.

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3. Bitcoin Treasury Companies vs. ETFs

Timestamp: [14:05 - 18:50]

Question from Tony:
“If Bitcoin treasury companies are priced irrationally as alternatives to ETFs, does that suggest a publicly traded company with a Treasury strategy is a good alternative for assets that don't fit into an ETF, like fine art or diamonds?”

Discussion:
The hosts explore the concept of treasury companies that specialize in holding specific assets, such as gold or cryptocurrencies, and how they trade at premiums to their net asset values (NAV). Matt Levine explains that companies like BioSig pivot from their original business to hold assets like gold, benefiting from trading above NAV due to investor hype. He highlights the potential for expansions into other asset classes, including fine art and diamonds, though he notes challenges like maintaining investor interest and managing premiums.

Notable Quote:
"A Treasury company is about selling stock at above the net asset value and buying more assets, creating a flywheel effect."
— Matt Levine [16:15]

Katie expresses enthusiasm for the idea of treasury companies managing non-traditional assets, while Levine cautions about the sustainability of such models outside of popular areas like crypto and gold.

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4. Formalized Hedging Markets for Sports Outcomes

Timestamp: [18:51 - 21:50]

Question from Duncan:
“Why aren't there formalized hedging markets for sports outcomes?”

Discussion:
Matt Levine addresses the emergence of sports futures markets, distinguishing them from traditional sports gambling. He explains that while futures exchanges aim to offer economic benefits through hedging—such as bars hedging against the outcomes of home games—these markets are often perceived as gambling platforms. Levine argues that the purported hedging benefits are marginal, serving primarily as a justification for legitimizing these markets.

Notable Quote:
"The tiny marginal hedging benefit is the wedge that people use to justify futures markets as sports gambling platforms."
— Matt Levine [20:30]

Katie acknowledges the complexity of differentiating between genuine hedging and gambling, reinforcing the nuanced nature of sports futures.

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5. No Penalty CDs and Bank Strategies

Timestamp: [21:52 - 25:30]

Question from Leo:
“I opened a no penalty CD at my bank with a higher yield than a savings account, but my money isn't truly locked up. How does this make sense for the bank?”

Discussion:
Levine explains that such financial products rely on the behavioral assumption that customers won't maximize their returns by withdrawing funds despite the absence of penalties. Banks profit by offering slightly higher rates on accounts where they anticipate lower-than-expected withdrawals, effectively monetizing depositor inattention.

Notable Quote:
"The bank is playing a statistical game. They figure most of their clients will not maximize, and so they will make money on it."
— Matt Levine [24:27]

He draws parallels to credit card rewards programs, where banks offer high rewards in specific categories, banking on customers' tendency not to optimize their spending across all categories.

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6. Rapid Fire Segment

Timestamp: [26:52 - 32:44]

In a lighter, rapid-fire segment, Matt and Katie address quick questions from listeners:

• Henry's Question: “What is your spirit security?”
  Matt whimsically responds with “Feline Prides,” a play on complex financial instruments, humorously illustrating the intricate nomenclature of securities.

• Another Listener's Question: “How does Katie feel about being described by Google as an Internet personality rather than a financial journalist?”
  Katie expresses satisfaction with the term, appreciating that it underscores her personable approach to financial journalism.

• Joel's Question to Katie: “Are business news network anchors specifically trained on vocal patterns designed to make everything sound tense and serious?”
  Katie discusses the natural adaptation of speaking styles between live TV and conversational podcasts, highlighting the lack of formal training and the influence of environmental factors on vocal delivery.

Notable Quote:
"There's different types of speaking that you do on air as an anchor."
— Katie Greifeld [29:56]

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Conclusion

Matt Levine and Katie Greifeld wrap up the episode by acknowledging the engaging discussions and teasing future topics. They invite listeners to subscribe, leave reviews, and submit more questions for upcoming episodes, maintaining an interactive and informative rapport with their audience.

Final Remarks:
"Thanks for listening to the Money Stuff podcast. We'll be back next week with more stuff."
— Matt Levine [33:07]

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Takeaways

• Securities Law Clarifications: Understanding the legal distinctions between futures and spot contracts is crucial in evaluating everyday transactions.
• IPO Strategies: Underwriters prioritize long-term investor relationships over immediate financial gains, influencing IPO pricing strategies.
• Innovative Treasury Companies: While treasury companies hold potential for managing diverse asset classes, their success hinges on maintaining investor hype and managing premiums.
• Sports Futures Markets: The delicate balance between hedging and gambling defines the legitimacy and functionality of sports outcomes markets.
• Banking Products and Consumer Behavior: Financial products often rely on typical consumer behavior patterns, allowing banks to optimize profitability through strategic offerings.

This episode provides a deep dive into complex financial mechanisms, demystifying them through approachable discussions and expert insights, making it a valuable listen for those keen on understanding the intricacies of money and markets.

Transcript

[CBOE Representative]

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[Lisa Mateo]

Hi, I'm Lisa Mateo, introducing you to the new Stock Movers report from Bloomberg. These are short audio reports, five minutes or less, delivered right to your podcast feed. Throughout the day, Stock Movers fills you in on the day's winners and losers on Wall street and tells you about the news and data that's driving those gains and losses. If you want to stay plugged into the stock market but don't want to spend all day watching tickers scroll across your screen, then Stock Movers is a place for you to get informed. Listen a couple times throughout the day to find out what's moving equities and why. Search for stock movers on Apple podcasts, Spotify, or anywhere else you listen. Get the latest stock news and data backed by reporting from Bloomberg's 3,000 journalists and analysts across the globe. Subscribe to Stock Movers wherever you get your podcasts.

[Katie Greifeld]

Bloomberg Audio Studios Podcasts Radio news. All right, Matt, Bye. Whoa, you're back.

[Matt Levine]

Hello. Hello, and welcome to the same recording session.

[Katie Greifeld]

I like it when we bend time.

[Matt Levine]

Yeah, yeah, it was impressive the first time. Now it's like, oh, yes, we're recording two money's thus for two separate reads.

[Katie Greifeld]

It's not that it was not even.

[Matt Levine]

Impressive the first time. No, right. Other people have also recorded more than one thing at a time.

[Katie Greifeld]

Yeah, I guess. You know, the fact that we're so charmed by this, or at least I am.

[Matt Levine]

You're like a professional recorder of media. I guess you only do live tv.

[Katie Greifeld]

I know. That's the thing I'm used to. The light is red and my heart is racing. But this is very chill, right?

[Matt Levine]

Me. Me. Still an amateur at all recorded media.

[Katie Greifeld]

Let's do this in 20 minutes.

[Matt Levine]

Oh, wow. Okay. I don't know about that. 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 wrote 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. And today is Mailbag. You didn't sing.

[Matt Levine]

No, I didn't sing. Come on, I cued you to sing. That's all we need.

[Katie Greifeld]

That's true. I took it. Okay, so let's get right into it.

[Matt Levine]

Yeah.

[Katie Greifeld]

Mailbag, Mailbag.

[Matt Levine]

From Josh. I saw this tweet about securities law as to doordash a blooming onion from Outback Steakhouse. You pay a fixed price now and receive it later. It is therefore a futures contract and thus illegal under the Onion Futures Act. Are doordash orders a futures contract and therefore subject to securities law?

[Katie Greifeld]

I like this question.

[Matt Levine]

I love this question. Okay, so first of all, onion futures are not securities. They're commodities. But famously, basically every commodity can be traded on a futures exchange, including things that are not commodities, like interest rates and sports bets. But the only things that cannot be traded on futures exchanges are motion picture receipts.

[Katie Greifeld]

Oh, yes, Tip of my tongue.

[Matt Levine]

Part of the Onion Futures Act. And onions. Onion futures cannot be traded because there's a famous story in the 50s of someone cornering the market for onions, and Congress got so mad that they banned trading of onion futures. So if you doordash a blooming onion, have you violated that law? Okay, this is a great question because the difference between future and spot is actually quite legally meaningful and. And quite vague. The answer is no. So if you order an onion now and it arrives in an hour, that is not a futures contract. That's a spot delivery. You have just ordered an onion on the spot market.

[Katie Greifeld]

Interesting.

[Matt Levine]

But there is no clear distinction between spot and futures. It seems like the CFTC says that a spot contract is one that is intended to be physically settled within a few days. So if you order an onion now to be delivered, you know, if you order it from a grocery store and, like, it's going to be delivered to you in three days, that's probably the instacart. Yeah, yeah, right. If you, like, set up an instacart order for, like, next week, it's probably fine. There's a retail provision in the CF in the Commodities act that uses 28 days as a dividing line, which is sometimes used as a rule of thumb.

[Katie Greifeld]

That's really interesting because I feel like from Amazon, you can subscribe to onions and you can.

[Matt Levine]

Oh, interesting.

[Katie Greifeld]

Yeah, you can get onions delivered to you on a schedule.

[Matt Levine]

Interesting.

[Katie Greifeld]

I think that you can do that with cat food. I haven't tried it with onions.

[Matt Levine]

This is definitely not legal advice. I think probably nobody's going to enforce that. I don't think anyone's going to treat that as a futures contract. That feels very spot. But you're right. One reason it feels very spot is because I believe that Amazon will, you know, if the prices change, they'll change the price. I think that they, they don't lock in. If you do a subscribe and save, you don't lock in the price until the end of time.

[Katie Greifeld]

Interesting.

[Matt Levine]

So like it's essentially a new series of spot contracts. Every.

[Katie Greifeld]

Like I've never actually done subscribe and save. I order never for an onion. Never for. Never for an onion.

[Matt Levine]

I'm going to now, though.

[Katie Greifeld]

Yeah, yeah, that'd be interesting. And then engineer the onion market so that prices change dramatically.

[Matt Levine]

So I think about this a lot because in stocks it's actually, it's the other way around. Like there is a very legally sensitive thing in stock trading which is naked short selling. If you promise me that you will deliver me Tesla shares, I promise tomorrow, and you don't have the Tesla shares or you don't have reasonable basis to believe that you can borrow those Tesla shares you have committed naked short selling. People get really, really mad about that. But if you promise to deliver me Tesla shares in a year, you do not have to borrow those shares. That's a futures or forward contract and that doesn't count. This is extremely not legal advice. But no one knows what the dividing line between a spot sale and a future sale of stock is. But again, it's in the. I think I used to use a rule of thumb of 10 days. It's something like that. It's like if you say you're going to deliver me Tesla stock tomorrow or in a week, that's probably a spot sale and you need to have a locate to borrow the stock or else you're committing naked short selling and you're in trouble. But if you say two weeks or a month or a year, then it's a forward contract and it's legal. So it's the opposite. Like in onions, a forward contract is illegal and stocks naked spot contract is illegal.

[Katie Greifeld]

We spent seven minutes on this question.

[Matt Levine]

Okay, you're really going to hold me to 20 minutes of this episode? All right.

[Katie Greifeld]

Mailbag, Mailbag from Daniel.

[Matt Levine]

Why don't the underwriters for IPOs seem to factor in retail mania? It seems like something you could do as an underwriter is have an analyst do the due diligence. Spend thousands of hours in Excel crunching the numbers. Get a fair evaluation for the stock, and then when you have the final number, the managing partner can just multiply it by two because a bunch of retail traders will buy it anyway. But they don't seem to do that, even though it seems like it would make sense. Also, who gets fired when a company trades on its first day at 200% above the IPO price and who gets to retire and buy a yacht. So this is about Figma, I think.

[Katie Greifeld]

Yes, this is about everything. I was about to bring up Figma because that's exactly what happened.

[Matt Levine]

Right. So Figma, by the time this airs, we'll have done an IPO about two weeks ago. But Figment did an IPO where it sold stock at $33 a share and it bounced to like 112 or something on the first day. And every time that happens, people, and by people I mean Bill Gurley specifically, go on Twitter to complain about IPO pops and how the company left money on the table. Right. And people who work in capital markets and people who work at Figma do not think that way. Right. Like Figma and its venture capitalists were very happy to leave money on the table.

[Katie Greifeld]

Yeah. Talk more because this is inevitably going to happen again.

[Matt Levine]

It's happened for decades and people have. Bill Curley has complained about it for decades. It's just like. So from Figma's perspective, they are a company with a shareholder base and they're shifting their shareholder base quite dramatically. Right? They're going from these venture capitalists who own them in the private markets to public investors who own them in the public markets. And if you're Figma CEO, you have a relationship with your investors. I'm getting a whole new set of investors. I want a relationship with them. I want good investors. I want investors who I think are in it for the long term and will be supportive of me and will be like good advisors and will be, you know, not flighty and not get mad at me if like the stock goes down one day and who believe in my long term vision. And so you go out and meet with a bunch of investors and there's something that you like and then they say, I'll buy the stock at this price. And you're like, okay, great. Here, have a lot of the stock. And then some other people at Citadel, we'll buy it at a higher price. And you're like, I don't want those guys. I want the long term guys. Bloomberg had reporting on this. There were specific long term investors they wanted in the stock and if they raised the price, they could easily get the deal done, but they would lose those people. And they're like, no, I'd rather have those people. And the stock they're selling in this deal just doesn't matter in the long term. What matters in the long term is their long term relationship with their investor base and with the capital Markets and giving everyone a pop on the first day makes investors love you. And so it's just better for the long term business. And similarly, Figma was the company sold some stock and then shareholders, venture capitalists and executives sold some stock. And those people did fine. They made money. And then the rest of their stock because they didn't sell all their stock, the rest of their stock is now worth a lot because the stock traded up. And having the stock trade up makes it easier for them to sell stock in the future. And they're happy with that. This is why everyone is happy with an IPO pop, because they didn't need that money that much. The amount of money they left on the table is not that important compared to setting up the long term relationship. That's the short answer to the who gets fired question. The answer, no one gets fired. Particularly what would be bad is if the bankers and this does happen, honestly, if the bankers went to Figma and were like, you cannot price as a penny above 33. The book is really weak right here and we don't think it'll trade well at 33. And figment was like, we really wanted 35, but if you insist and then it traded up to 112, the bankers would look really stupid. That's not what happened here. What happened here is they're like, we're 40 times covered. There's a ton of demand, but these investors will be out above 33. And figma's like, I'd rather have those investors. They were fully informed here, reasonably fully informed. But the other thing I want to talk about is Daniel's original question is why don't they factor in retail mania? They do, but it is an interesting question. My impression is that when I was an ECM banker a decade ago, retail was a pretty small part of the experience doing an ipo. And you thought of institutions as price setters and then you expected a little bump from retail because the day after the deal prices, all the retail people who couldn't get into the deal will want to buy. And so there'll be a nice lift there. But it's not, it's not a mania. And now I think ECM bankers, equity capital markets bankers are having to figure out how to think about meme stocks and retail mania. Yeah, it's not so much in the IPO business, it's in the going to companies that might be meme stocks and saying you should really have an at the market stock offering set up. Because if a meme hits, you want to be able to sell stock into it. I've talked to ECM backers and there are thinking about how to capitalize on retail insanity. It's not natural to them. They spend all day talking to big institutional managers and to then also lurk on Reddit boards is a bit of a shift.

[Katie Greifeld]

It's funny, but that's just a fact of life now.

[Matt Levine]

Yeah, it's not like they haven't noticed or they aren't thinking about it. It's just like it's a mentality shift.

[Katie Greifeld]

Yeah.

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[Lisa Mateo]

Hi, I'm Lisa Mateo introducing you to the new Stock Movers Report from Bloomberg. These are short audio reports, five minutes or less, delivered right to your podcast feed throughout the day, Stock Movers fills you in on the day's winners and losers on Wall street and tells you about the news and data that's driving those gains and losses. If you want to stay plugged into the stock market but don't want to spend all day watching tickers scroll across your screen, then Stock Movers is a place for you to get informed. Listen a couple times throughout the day to find out what's moving equities and why. Search for Stock Movers on Apple Podcasts, Spotify, or anywhere else you listen. Get the latest stock news and data backed by reporting from Bloomberg's 3,000 journalists and analysts across the globe. Subscribe to Stock Movers wherever you get your podcasts.

[Katie Greifeld]

Mailbag Mailbag I really like this question from Tony.

[Matt Levine]

Okay, yeah, me too.

[Katie Greifeld]

Okay, I'm going to try to read it. Do it if Bitcoin treasury companies are priced irrationally as alternatives to ETFs, does that suggest a publicly traded company with a Treasury strategy is a good alternative? For alternatives that don't easily fit into an ETF Fine art Treasury company Diamonds and gems treasury company not actually onion futures, treasury company Et cetera. This is a really interesting idea.

[Matt Levine]

So there is a gold treasury company. I wrote about it. It's called Biosig because it's like a biotech company. They got bored of being a biotech company and they're like we're going to buy a lot of gold.

[Katie Greifeld]

Yeah. Which is not the trade that a lot of people are making. I feel like biotech is more interesting than gold. But anyway, go on.

[Matt Levine]

They're not pivoting to being a gold miner. They're just buying a lot of gold. And they're a Treasury company. So yes, it's like an etf. And Right. The thought process that Tony had is the thought process that a lot of CEOs of small biotech companies have had, which is that if you're a bitcoin treasury company, your stock trades at two times, give or take your nav.

[Katie Greifeld]

Yeah.

[Matt Levine]

And that's much better than being an ETF where you trade pretty rigorously at one times your navy. And so every crypto person has started a crypto treasury company because you can double the value of your crypto. And then people look around, they're like, what else can we do that to? And gold seems to be part of the answer. This company, it's like their fundraise is weird. So it's hard to tell what their premium is, but they do seem to be trading at a premium to the value of the gold.

[Katie Greifeld]

Yeah. GameStop buy diamond like some sort of miners.

[Matt Levine]

Oh, no, no. AMC bought a gold mine, but that was long before the treasury company. That was just a comedy thing. But no, actually Some company bought GameStop stock as a Treasury play. But you can't really. Stock is one thing you can't really do because if you're 100% a stock treasury company, you're an investment company and this doesn't work. But Tony is right that BioSeg is owns gold, but it wants to be a commodity treasury company. But other the world is your oyster. Anything that you can think of that you want to be a Treasury company of, you can try it.

[Katie Greifeld]

This is so exciting.

[Matt Levine]

Right. So there's two problems with it. Maybe more than two problems. One problem is you have to sell it to retail. Right. Crypto, this is like a known playbook and it's gotten a little thin. Right. Everyone says the same things like we're going to do investor education and modernize the payment system and eventually people stop believing it. And so the premium in crypto is like slowly eroding.

[Katie Greifeld]

Yeah.

[Matt Levine]

But you have to tell a new story with a new thing. And gold is like a crypto adjacent story. Right.

[Katie Greifeld]

I'm not excited by gold.

[Matt Levine]

No, I understand. But you're not excited by bitcoin treasury companies necessarily either.

[Katie Greifeld]

Maybe you're not. No, but I'm more excited by the idea of you could have a Treasury company for fine art, for example.

[Matt Levine]

Right. So you need a story, and the story needs to appeal to a lot of people. And those people ideally are like retail weirdos on Reddit. But there's a lot of stories you can tell. Fine art's a great story.

[Katie Greifeld]

Dinosaur bones.

[Matt Levine]

Dinosaur bones. The other thing you need to do like a Treasury company is not really about the thing. Crypto or gold or fine art or whatever. What a Treasury company is, what MicroStrategy is, is a company that has stock that trades above its net asset value and it sells stock at above the net asset value and it buys more assets. And it's just a flywheel. I read some paper that called it accretive dilution. The more stock you sell, the more value you create for your shareholders. Because, like, you're selling stock for $200 and then buying $200 worth of stuff and your stock has gone up by $400. That's a great trade. It has nothing to do with the underlying thing. It has to do with the amount of hype you can get and then with investors buying into that repeated process. So if you can do that, that's the first step is can you get people to pay 100% premium to net asset value? If you can, then anything you buy, it's going to be a good strategy going to work. Right? Like, it's going to be a good trade for shareholders, but that relies on the original shareholders buying for two times nav.

[Katie Greifeld]

Yeah.

[Matt Levine]

And the question is, can you sell that story? And I do think that Tony is right that you can sell that story for things other than crypto. I think gold seems to kind of work. I think someone should definitely do a diamonds one. Fine art, whatever. But like onions. Probably not.

[Katie Greifeld]

But like, I don't know, probably not onions. I am excited because you can put gold in an etf, you can also put crypto.

[Matt Levine]

I know, but you can't sell it at 200% of NAV.

[Katie Greifeld]

I know.

[Matt Levine]

That's really important.

[Katie Greifeld]

No, I want to see them put an asset that you can't put into an ETF into a Treasury company, such as fine art.

[Matt Levine]

You can put anything into an etf, but yeah, private credit, treasury company.

[Katie Greifeld]

There you go.

[Matt Levine]

Mailbag.

[Katie Greifeld]

Mailbag.

[Matt Levine]

Duncan.

[Katie Greifeld]

Duncan has a multiple parter here.

[Matt Levine]

No, it's not.

[Katie Greifeld]

It's got two parts.

[Matt Levine]

Why aren't there formalized hedging markets for sports outcomes? I must imagine there are chains of bars and restaurants concentrated in areas associated with sports venues. Those locations position them to benefit from additional home games. Incremental spending associated with large victories. But only in positive outcomes would bars around Wrigley Field in Chicago be interested in hedging the risk associated with potentially 10 plus more home outings in a season if they make the playoffs. So this is a question, this comes up a lot. Weirdly. There are now, as I mentioned, futures exchanges where you can trade futures on things like will the Cubs win tonight? And in the ordinary course you would say, oh yes, that sports gambling. But it's very important to a lot of people, including at Robinhood and also Calshi and also other prediction markets. It's very important to a lot of people to say, no, no, no, that's not sports gambling, that's a futures market. And what makes a thing a futures market rather than a sports book? Part of the answer is like in theory, in a futures market you are trading or betting against other participants in the market rather than against the book. This is not actually important. Like actual sports books. Like you can have a sports book website where like the people taking the other side of the bet are market makers. And like on a futures exchange, the people taking the other side of the bet are probably market makers. So it's not as different as it as it seems, but technically, yeah, if you go to a sports book, you're betting against the sports book. If you're going to a futures exchange, you're betting against other participants on the futures exchange. But the other thing that makes it different is there's this sense that futures exchanges offer some sort of real economic benefit other than gambling. And when you think about sports futures, what is that benefit? Well, hedging is the best answer. And so you will regularly see people say, oh yeah, of course we should have a sports prediction market on a regulated futures exchange because bars near Wrigley Field need to hedge the risk of not making the playoffs and not having 10 more home games to sell beer at. This struck me as absurd, but it is true that there's some tiny marginal hedging benefit. And that tiny marginal hedging benefit, theoretical hedging benefit, is the wedge that people use to justify futures markets as sports gambling platforms. I once talked to a person who works in the sports futures business who said, well, you know, there's like big brands that sign multimillion dollar marketing deals with tennis stars and like their performance in tennis tournaments is economically material to like Nike or whatever, so they should be able to hedge that in the sports features market, right? So sure, why not? So that's why. That's why this is all happening. Right. Like, the reason that there are increasingly legal and popular sports futures exchanges is because they can be like, no, it's not gambling, it's for bars to hedge.

[Katie Greifeld]

Yeah, totally innocent. Great question, Duncan. Mailbag, mailbag. Leo also has a question and his question is that I just opened a no penalty CD at my bank and I'm trying to figure out how this product makes any sense for the bank. The terms are basically that it's about 25 basis points higher interest than their high yield savings with a fixed rate and your money is locked up for the first week and after that you can withdraw all your money, including to date earned interest at any time, but you have to take out all your money at once. How is this a higher yield product than a savings?

[Matt Levine]

Yeah. Okay. This is like all of retail finance.

[Katie Greifeld]

Yeah.

[Matt Levine]

This is credit card rewards is everything. Right. This is the business of a bank is like monetizing depositor inattention. We talked about, I think on the podcast, the CFPB Case against Capital One. So Capital One, they offered this high yield Savings account called 360Savings, and it had a high yield and people put their money into it and after a while they started lowering the yield. I guess they lowered the yield when like rates went to zero and they just didn't bring it back up. And instead what they did is they launched a new high yield savings account called 360Performance Savings that did have a high yield. And so they could advertise the high yield on the new account to new customers and bring in new customers with competitive rates. But the old customers who didn't notice that they were getting low rates, just continued to get low rates.

[Katie Greifeld]

Yes.

[Matt Levine]

You just do this forever. You'd get in trouble. Although not anymore. They were briefly in trouble, but then they weren't. But this is everything, right? The point of Leo's asking about a no penalty CD where he basically gets a higher rate than a savings account, but his money isn't actually locked up. Traditionally, a cd, your money is locked up for three months or six months or whatever.

[Katie Greifeld]

Right.

[Matt Levine]

And this is one where your money is not locked up. So it's really like a savings account, but it has a higher yield than your savings account. The reason they're offering that is because they are hoping that you will think of it as a CD and you will forget and you won't take your money out even if rates go up. And so they will get the advantage of paying you a lower rate and it will feel to them like a cd and they will get the sort of like, financial benefits of a cd. And if you are ruthlessly attentive and value maximizing, you will get some profit out of this at the expense of the bank. But the bank is playing a statistical game. They figure most of their clients will not do that, and so they will make money on it. Yeah, it's also probably a rates bet. Like, they're probably just betting that rates will go down and so it won't cost them anything. Right? Like, it's like a. Yeah, they're making a directional bet. But the main thing is just like they expect people not to maximize.

[Katie Greifeld]

They don't think you're paying attention. Leo.

[Matt Levine]

And this is like everything. Like, credit card rewards are like the classic case where every credit card product has really high rewards on some category of spending. And if you are a ruthless maximizer, and there are people, there are forums where people do this, right? If you're a ruthless maximizer, you'll use your gas credit card only to buy gas, and you'll use your dining credit card only to pay for meals, and you'll use your travel credit card only for travel, and you'll get a very high rate of cash back on all of your purchases, and you will cost each of your credit card issuers money. But almost no one is like that. Almost everyone picks one credit card and uses it for everything. And they get high cash back on one category of spending and nothing on or like low cash back on the other categories. And the issuers make money. And this is like, so clearly statistically true that the issuers have a great business, even though if you're the one person who does it right, you'll make money. And so there are forums and Money Stuff readers who are probably, like, more maximizing than, like, the average customer. But the bank makes money on the average customer.

[Katie Greifeld]

Mm.

[Lisa Mateo]

Hi, I'm Lisa Mateo, introducing you to the new Stock Movers report from Bloomberg. These are short audio reports, five minutes or less, delivered right to your podcast feed. Throughout the day, Stock Movers fills you in on the day's winners and losers on Wall street and tells you about the news and data that's driving those gains and losses. If you want to stay plugged into the stock market but don't want to spend all day watching tickers scroll across your screen, then Stock Movers is a place for you to get informed. Listen a couple times throughout the day to find out what's moving equities and why. Search for Stock Movers on Apple Podcasts, Spotify or anywhere else you listen. Get the latest stock news and data backed by reporting from Bloomberg's 3,000 journalists and analysts across the globe. Subscribe to Stock Movers wherever you get your podcasts.

[Matt Levine]

All right, we have a few more questions.

[Katie Greifeld]

We have some rapid fire questions.

[Matt Levine]

All right.

[Katie Greifeld]

Mailbag, Mailbag.

[Matt Levine]

Henry asks, what is your spirit security? Like a spirit animal, but a security.

[Katie Greifeld]

So now I'm worried. It's a commodity. I was going to say cattle futures.

[Matt Levine]

Commodities.

[Katie Greifeld]

Yeah. So what's this?

[Matt Levine]

Kind of grim.

[Katie Greifeld]

Yeah. But you know, don't you sometimes just feel like a beaten mule?

[Matt Levine]

That's still different from a slaughtered cow.

[Katie Greifeld]

What's your spirit security?

[Matt Levine]

My spirit security is Feline Prides, which is, I believe, trademarked by Merrill Lynch. I was an equity linked security structure at a bank and name the bank at Goldman.

[Katie Greifeld]

Yeah.

[Matt Levine]

And there's a form of equity linked security called a mandatory convertible unit, which is ferociously complicated. Basically, it's like a variable share forward contract stock collateralized by this bond that gets remarketed at the end of the forward term. It's so complicated, but also, in the glory days of derivative structuring, these things had to have names and they had to have acronyms. Now they're called mandatory convertible units, but there's some flavor. I don't remember the exact details, but some flavor of mandatory convertible units that were, I believe, trademarked by Merrill lynch, that were called Feline Prides, which stood for something like flexible equity linked.

[Katie Greifeld]

Come on.

[Matt Levine]

I don't even know. Prides is like preferred, remarketed.

[Katie Greifeld]

Just make it up.

[Matt Levine]

Equity instrument. I made it up. It's not what it stands for, but you can look it up maybe. It probably exists in a Money stuff column, but yeah, Feline Prides were a form of mandatory convertible unit that were complicated enough as a security, but incredible, like the pinnacle of acronyming work of all of finance. Those feline prides, man. Mailbag.

[Katie Greifeld]

Mailbag. I like this question. I have a short answer here. How does Katie feel about being described by Google as an Internet personality rather than, say, a financial journalist? I like that because it suggests I have a personality, so I'm fine with it.

[Matt Levine]

Yeah, I would probably be happier with. I don't know how I'm described by Google, but Internet personalities, it's pretty much the pinnacle of careers these days.

[Katie Greifeld]

I feel great. Mike.

[Matt Levine]

Mailbag.

[Katie Greifeld]

Mailbag.

[Matt Levine]

And from Joel, I have a question for Katie, our business. I should read this in anchor voice, but I can't. I'm not trained. Put on the mask I have a question for Katie. Are business news network anchors specifically trained on vocal patterns designed to make everything sound tense and serious? When I listen to you on the podcast, they don't notice this. However, I happen to catch you on Bloomberg TV while traveling, and you sounded different. It fits the pattern I hear on cnbc, Fox Business, et cetera. But I've never observed this on other live TV news formats in a sustained way. Maybe it's just me.

[Katie Greifeld]

I love this question, and I've never really thought about it, and I don't think I've ever been trained formally.

[Matt Levine]

I clearly haven't.

[Katie Greifeld]

Maybe I should have been. So there's different types of speaking that you do on air as an anchor.

[Matt Levine]

Wait, I want to hear more. This is a good one.

[Katie Greifeld]

There's reading from the prompter when you're just reading the intro to a guest or straight news. And then there's the voice that you use while asking questions. And by the way, I come up with my own questions. I get this question a lot, actually. Like, do they write questions for you? And it's like, no, they don't. Anyway, so that's not on the prompter.

[Matt Levine]

That's all you?

[Katie Greifeld]

Yeah. If you're reading from the prompter, prompter is written in such a way that you kind of naturally fall into, like, the anchor voice. Also. I don't know, I just feel like it's osmosis. Like, I'm sitting next to people who have also been anchoring for a lot longer than me, and they talk in that voice. So you kind of just talk in that voice. And then when you're asking someone a question, just the. I don't know, just the stage of television, you talk differently than you would on a podcast. But then, even if I'm on tv, the way that I'm answering a question is different than the way I'm asking a question. I think just the fact that I'm on this podcast and I'm talking versus asking a question or answering a question, this is more of a conversation. So I sound more like a normal human, but I haven't. No one told me to talk that way. It's just kind of what you do.

[Matt Levine]

You know, it's just like natural selection.

[Katie Greifeld]

Yeah.

[Matt Levine]

If you didn't talk that way, you wouldn't be on television.

[Katie Greifeld]

Yeah.

[Matt Levine]

Do you think that you make everything sound tense and serious?

[Katie Greifeld]

I try not to. I mean, if it's a tense and serious thing.

[Matt Levine]

I see what he means.

[Katie Greifeld]

Yeah. I mean, you do speak with some urgency on tv, I realize. Sort of a weird fact of being on television is that time feels different on television. Like 10 seconds. If someone says 10 seconds in my ear, there's so much you can say in 10 seconds if you're on TV. If you're in real life.

[Matt Levine]

I don't do a lot of TV, but I have noticed that where like a 3 minute TV hit feels like an hour.

[Katie Greifeld]

Yeah. Like even when they're counting down 5, 4, 3. Like I know I should probably be tagging saying this is Bloomberg at 3, but you really don't need to say it until 2, you know, so it really warps your sense of time. And I think that that urgency can sometimes show up in sounding serious.

[Matt Levine]

No, I know what you mean because you said we're going to do this segment in 20 minutes.

[Katie Greifeld]

Yeah. Here it is four hours later, pasted. I could have said so many words in this time. All right, that was fun. I think we'll air this.

[Matt Levine]

Yeah, sounds good. All right, so we'll see you in two weeks.

[Katie Greifeld]

Hope you're having fun on vacation, Matt.

[Matt Levine]

Yeah, yeah, right, right. It's now possibly August 15th and we'll be back on August, possibly 29th. I don't even know.

[Katie Greifeld]

See you then.

[Matt Levine]

We'll see you sometime. 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 Open Interest between 9 to 11am Eastern.

[Matt Levine]

We'd love to hear from you. You can send an email to moneypodloomburg.net Ask us a question and we might answer it on 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 Anna Mazarakis and Moses Andam.

[Katie Greifeld]

Our theme music was composed by Blake Maples and Sage Bauman is Bloomberg's head of podcasts.

[Matt Levine]

Thanks for listening to the Money Stuff podcast. We'll be back next week with more stuff.

[Katie Greifeld]

Foreign.

[Lisa Mateo]

Hi, I'm Lisa Mateo, introducing you to the new Stock Movers report from Bloomberg. These are short audio reports, five minutes or less, delivered right to your podcast feed. Throughout the day, Stock Movers fills you in on the day's winners and losers on Wall street and tells you about the news and data that's driving those gains and losses. If you want to stay plugged into the stock market but don't want to spend all day watching tickers scroll across your screen, then Stock Movers is a place for you to get informed. Listen a couple times throughout the day to find out what's moving equities and why. Search for Stock movers on Apple podcasts, Spotify, or anywhere else you listen. Get the latest stock news and data backed by reporting from Bloomberg's 3,000 journalists and analysts across the globe. Subscribe to Stock Movers wherever you get your podcasts.