Hour of Slurping

Summary

Money Stuff: The Podcast – "Hour of Slurping" (April 17, 2026)

Episode Overview

In this episode of "Money Stuff: The Podcast," Matt Levine (Bloomberg Opinion columnist) and Katie Greifeld (Bloomberg News reporter and TV anchor) deliver their signature witty, deadpan financial chatter. They tackle three standout stories:

• The bizarre pivot of Allbirds (now Newbird AI) from sneakers to supposed AI infrastructure provider, and what this reveals about meme stocks and market narratives.
• Exxon's creative maneuvers in retail shareholder voting and the ongoing ESG/governance wars.
• The wild, surprisingly exclusive world of coffee grading at the NYSE—which gives the episode its title: "Hour of Slurping."

Engaging and irreverent, Matt and Katie shed light on the absurdities and structures of Wall Street, from hot new memes to century-old commodity traditions.

---

Key Discussion Points

1. Allbirds' Wild AI Pivot: The New Meme Playbook (02:55–17:20)

Background:
Matt and Katie talk about Allbirds, the eco-friendly sneaker company, abruptly rebranding as Newbird AI and announcing a pivot into AI infrastructure. The episode opens with a comparison to past trends where companies rebranded themselves with blockchain, dot-com, and (most recently) crypto in an attempt to ride speculative waves.

Main Insights

• Echoes of Meme Stock Manias Past:
  Katie is "charmed" by the story's resonance with 2021 meme stock antics, and Matt points out the lineage—dot-coms, crypto, now AI.

  "Here we are in 2026 and that game is still alive." — Katie Greifeld [03:19]

• The Realities of AI Pivoting:
  Matt explains that unlike past fads, launching a serious AI infrastructure business is capital intensive and not easily faked:

  "That is a business where... a huge superstructure of financing has been built up to allow people to build gigantic data centers and source Nvidia chips years in advance... and Newbird... is selling the sneaker business... for something like $39 million." — Matt Levine [04:43–05:21]

• Questionable Funding Announcements:
  The much-touted "$50 million investment" is largely uncommitted, and analysts find the move unserious:

  "A $50 million investment is 'a drop in the bucket in the broader Neo cloud market.'" — Katie Greifeld, quoting analyst Dylan Cardin [06:03–06:18]

• Stock Price Hysteria:
  The stock jumped about 500% upon announcement (and fell back the next day, but stayed elevated), demonstrating meme-stock dynamics of "hot potato"—buying based on the belief someone else will buy at a higher price, not on business fundamentals.

  "I think it's almost all recursive self referential game of hot potato. Rather than no one's being fooled, just someone is the last person to buy." — Matt Levine [07:30]

• Meme ETF and Retail Speculation:
  The Meme ETF jumped on the trade, but Matt argues the real profits go to those who anticipate these pivots, not those who chase the news:

  "If you're just like a person looking to invest in meme stocks, you should buy them before they become memes. ... Don't do that. I obviously don't do that." — Matt Levine [17:02]

Memorable Moment:
Katie’s anecdote involving her father accidentally wearing her husband’s vintage Allbirds as a cosmic signal of their imminent meme status. [08:59]

Notable Quotes

• "Doing it for the plot. Like it's funny, right? Buying some bird stock right at this moment." – Katie Greifeld [07:39]
• "If you have just a public listing and nothing else... what you got to do is be like, we got a public listing, we're going to do a dad, we're going to do an AI pivot, we're going to do some nonsense, right? And so these guys did some nonsense." – Matt Levine [16:09]

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2. Exxon’s Shareholder Voting Gambit (18:30–25:05)

Background:
Matt and Katie discuss Exxon’s response to activist shareholder campaigns, particularly its new system allowing retail shareholders to default their proxy votes to the company’s board recommendations—a move widely seen as a way to counter institutional and ESG-focused investors.

Main Insights

• Why This Matters:
  Retail investors (40% of Exxon's base) largely abstain from voting. Exxon's new program secures their votes in favor of management, reducing risk from activist campaigns.

  "The retail shareholders probably do want to do what the board wants to do and probably don’t want to do what like BlackRock wants to do." — Matt Levine [20:18]

• Pushback and Parody:
  The New York City Comptroller's office responds, proposing that shareholders be able to automatically vote against management, or even “coin flip” on each vote.

  "If you have... the option for retail shareholders to always vote with the board, you should also give them the equivalent option to always vote against the board." — Katie Greifeld [22:02]

• SEC’s Role and Policy Shifts:
  The SEC’s current stance enables Exxon’s move, reflecting official skepticism toward ESG activism and proxy advisors.

Notable Quotes

• "You could never have done this in the past because I think it's easy to characterize it as being undemocratic. ... The current SEC does not like the influence of... BlackRock and ESG and proxy advisors." — Matt Levine [21:21]
• "I love a grudge." — Katie Greifeld [19:44]

---

3. Coffee Grading at the NYSE: The "Hour of Slurping" (26:14–36:40)

Background:
A Wall Street Journal piece about the elite group of coffee graders ("slurpers") who assess the quality of beans underpinning coffee futures at the NYSE. Amid humor and vivid detail, Matt and Katie explore why this arcane process persists and what it says about commodity markets.

Main Insights

• The Coffee Room and its Testers:
  The NYSE maintains an 8th-floor tasting room, where 38 specialists noisily slurp and spit coffee to grade each batch. The entry exam is notoriously hard—akin to a master sommelier’s, but for coffee, and only held every five years.

  "Only about 5 to 8% of test takers will typically pass each time the test is administered. But it's a four day exam. It's only given once every five years or so, which is nuts." — Katie Greifeld [29:42]

• Absurdities and Rituals:
  They play loud music (e.g. AC/DC) to mask the cacophony of slurping. Many testers do this as a side gig to trading.

  "They are required to noisily slurp the coffee because... that's how you get the full force of the flavor. And so they play loud music to drown out the horrifying sound of 38 men slurping coffee." — Matt Levine [27:26]

• Commodity Markets and Fraud:
  Matt contrasts coffee with metals and other commodities, referencing famous frauds like the “salad oil scandal”—where vast tanks were filled with salt water and a splash of oil, tricking banks and futures buyers.

  "Nickel futures where JP Morgan had some nickel in the warehouse that turned out to be rocks. It didn't matter. ... With this coffee, they lovingly grade the coffee." — Matt Levine [32:27]

• Exam Details:
  The test includes a regulatory written exam, bean sniffing, and a "cupping" practical (tasting and spitting, in front of proctors). Barista experience does not count as a qualification.

  "'Being a barista absolutely does not count.' ... That's much more relevant than trading commodities at a computer. But whatever." — Katie Greifeld and Matt Levine [33:44–33:54]

Memorable Moment:
Katie longs to visit both Morgan’s pub (at JPMorgan HQ) and the NYSE’s slurping room:

"I want to take the podcast there. I want to take this podcast to the coffee room, eighth floor. Just like a den of AC/DC and slurping." — Katie Greifeld [28:27–28:35]

---

4. Commodity Scandal Lore (35:26–36:40)

Background:
Matt and Katie swap more stories about legendary commodity market frauds, including the infamous 1960s salad oil scandal (saltwater masquerading as oil) and a story about a bank left with tons of frozen shrimp from defaulted loans, "so the bank was like, we're going to eat the shrimp."

Notable Quote:
"I love the idea that the bank made loans secured by frozen shrimp... the bank was like, we're going to eat the shrimp. And then they ate the shrimp." — Matt Levine [36:05–36:40]

---

Timestamps for Significant Segments

• Weather Trading & Opening Chatter: 01:43–02:30
• Allbirds/Newbird AI Pivot & Meme Mania: 02:55–17:20
• Exxon Shareholder Voting & Corporate Governance: 18:30–25:05
• Coffee Grading ("Hour of Slurping"): 26:14–36:40
• Commodity Market Scandal Stories: 35:26–36:40

---

Memorable Quotes

• "It's almost all recursive self referential game of hot potato." — Matt Levine [07:30]
• "Doing it for the plot. Like it's funny, right? Buying some bird stock right at this moment." — Katie Greifeld [07:39]
• "If you're just like a person looking to invest in meme stocks, you should buy them before they become memes. ... Don't do that. I obviously don't do that." — Matt Levine [17:02]
• "I want to take this podcast to the coffee room, eighth floor. Just like a den of AC/DC and slurping." — Katie Greifeld [28:35]
• "Only about 5 to 8% of test takers will typically pass each time the test is administered." — Katie Greifeld [29:42]
• "I love the idea that the bank made loans secured by frozen shrimp... the bank was like, we're going to eat the shrimp. And then they ate the shrimp." — Matt Levine [36:05]

---

Overall Tone and Takeaways

The episode radiates the hosts’ dry humor, skepticism about financial fads, and genuine fascination with both the old and the weird corners of markets. Whether critiquing market hype, untangling governance games, or marveling at the rituals of coffee grading, “Hour of Slurping” entertains and informs listeners on the ever-entwined themes of money, absurdity, and Wall Street culture.

Transcript

[Kelly Cavagnaro]

Hi, I'm Kelly Cavagnaro, Managing Director, Head of North America Institutional Distribution at Janice Henderson Investors we believe working together is the way to work better. Like combining your portfolio plans and our in depth strategy, your valued assets and our valuable insights. Your mission and our vision working in harmony to seek the right investment opportunities. Janice Henderson Investors Investing in a brighter

[Bloomberg Announcer]

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[Matt Levine]

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[Bloomberg Announcer]

Bloomberg Audio Studios Podcasts Radio News

[Matt Levine]

I do think weather trading is fabulous. I read this week about a guy who was thinking about buying weather futures to hedge golf bets on the sports platform that he ran because that makes

[Katie Greifeld]

a lot of sense.

[Matt Levine]

Sports bets are correlated with weather. And so if you're a sports betting platform, one of your correlated systemic risks is weather risk. So you might as well trade rain futures or whatever.

[Katie Greifeld]

I mean, the weather is absolutely a factor when it comes to horse racing, which is one of the most popular or one of the oldest forms of sports betting.

[Matt Levine]

Okay, that's fair because, you know, you

[Katie Greifeld]

have certain horses that are mudders.

[Matt Levine]

You're right.

[Katie Greifeld]

Who really loves racing in the wet and other horses just don't even want to touch it.

[Matt Levine]

Yeah, right.

[Katie Greifeld]

But they have to, right? Well, because of the abuse.

[Matt Levine]

Hello and welcome to the money's Love 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]

Katie, there's a new bird in town. Not Fatspah, your fallen friends, but no new bird. AI formerly known as All Birds.

[Katie Greifeld]

I, you know, love that they kept the bird. Maybe they only did it.

[Matt Levine]

It doesn't matter.

[Katie Greifeld]

It matters, Matt. It matters. And I Just, I'm charmed.

[Matt Levine]

They ke. They cut the bird.

[Katie Greifeld]

I love this story. I love, I love the price action around this story. It reminds me, reminds me of a simpler time in 2021 when meme stocks were raging and you could just pivot into crypto or blockchain with seemingly few credentials and your stock would soar. And here we are in 2026 and that game is still alive.

[Matt Levine]

Right. The classic was, I think it was earlier than 2021.

[Katie Greifeld]

It definitely was.

[Matt Levine]

It was like 2017, I want to say, was the real pinnacle of the blockchain stuff where Long Island Iced Tea company, by the way, made non alcoholic iced tea. Very funny name.

[Katie Greifeld]

Also confusing.

[Matt Levine]

Yeah, very confusing.

[Kelly Cavagnaro]

Yeah.

[Matt Levine]

But Long Island Iced Tea, it's so good. Long Island Iced Tea Company pivoted to being a blockchain company and they kept. They kept the long. Yeah, they became Long Blockchain.

[Katie Greifeld]

Amazing.

[Matt Levine]

Their blockchains were going to be extra long anyway. There's talk about it. The thing about, like pivoting to blockchain in 2017 is that like, it was all kind of like blank space.

[Katie Greifeld]

It did feel novel.

[Matt Levine]

Oh, I'm going to launch a crypto. People are like, okay, sure. Like dogecoin was worth billions of dollars. Like, okay, you as well as anyone else. Right. Newbird AI is pivoting into AI infrastructure. They're going to, you know, buy GPUs from Nvidia and put them in data centers and rent them out to run compute workloads for.

[Katie Greifeld]

Why not?

[Matt Levine]

I'll tell you why not.

[Katie Greifeld]

Oh, okay.

[Matt Levine]

Because, like, that takes a lot of money.

[Katie Greifeld]

Yeah.

[Matt Levine]

It's not like crypto. Like, that is a. For which OpenAI is talking about a trillion dollars of commitments. That is a business where people are like. A huge superstructure of financing has been built up to allow people to build gigantic data centers and source Nvidia chips years in advance and get all of these things to work together. And it is quite capital intensive and quite credit dependent. And Newbird, you know, it was formerly Allbirds. It is selling the sneaker business, the brand and the.

[Katie Greifeld]

I don't know, IP.

[Matt Levine]

Yeah, it's selling the sneaker business for something like $39 million to someone else. And it will have that cash, which it has already said it will dividend some or all of it to shareholders. And then it announced a financing which has a headline number of $50 million, although really only 5 million of it is committed. The rest is that the investors. So it's kind of like, you know, millions of dollars which will you know, get you 20 minutes of a data center but like it's not an obvious

[Katie Greifeld]

AI infrastructure to that point. Because there are sell side analysts who cover this company.

[Matt Levine]

One of them quit, right? Well one of them is like I'm done with this.

[Katie Greifeld]

William Blair. William Blair analyst Dylan Cardin says that a $50 million investment is quote a drop in the bucket in the broader Neo cloud market where most companies run capex budgets well into the billions of dol. And he also dropped his coverage.

[Matt Levine]

Trillions and 50 million is even an overstatement. Whatever.

[Katie Greifeld]

Yeah, he doesn't cover the company anymore.

[Matt Levine]

Right.

[Katie Greifeld]

He dropped his coverage.

[Matt Levine]

Right.

[Katie Greifeld]

Probably because he covers.

[Matt Levine]

He moved to a farm upstate. He is done.

[Katie Greifeld]

I've seen it all.

[Matt Levine]

I just like that's what I would do.

[Katie Greifeld]

Yeah.

[Matt Levine]

Take a baseball bat to my computer and be done with the stock analyst game.

[Katie Greifeld]

He also attributed most of this move to some combination of a very shallow float, automated momentum and unchecked hype.

[Matt Levine]

Probably also some short squeeze. Yeah, maybe also some short squeeze. Lesson is don't.

[Katie Greifeld]

I mean it was up a gazillion

[Matt Levine]

companies to zero, but yeah, no, I mean it's hype. It's.

[Katie Greifeld]

It does feel like.

[Matt Levine]

I don't think maybe I'm wrong. I don't think that there are a ton of retail investors or professional investors, but certainly not professional investors. I don't think there are a ton of retail investors who like wake up and read that press release and are like, oh boy, this is like the next big AI play. This is going to go to a trillion dollars. I need to get in on this early. I'm going to buy some new bird stock. Maybe there are some. But I think a lot of people are like, oh this is a great headline. Other people are going to read this. I think it's almost all recursive self referential game of hot potato. Rather than no one's being fooled, just someone is the last person to buy.

[Katie Greifeld]

Yeah. I've been kind of thinking of it as doing it for the plot. Like it's funny, right? Buying some bird stock right at this moment.

[Matt Levine]

It was definitely possible at any point yesterday that you would not be the last one out.

[Katie Greifeld]

Yeah.

[Matt Levine]

Or the last one in. Right.

[Katie Greifeld]

Yeah.

[Matt Levine]

It's only possible that it would keep going up. So you know, whatever.

[Katie Greifeld]

Yeah.

[Matt Levine]

Well you told yesterday, we're recording this on Thursday. Wednesday was the day that Allbirds announced that it was Newbirds and its stock went up like 500%.

[Katie Greifeld]

So good.

[Matt Levine]

Yeah, it's down a bit on Thursday

[Katie Greifeld]

we had a lot of it's still,

[Matt Levine]

like, way up from Tuesday.

[Katie Greifeld]

Had a lot of fun talking about it on television, obviously.

[Matt Levine]

Sure, sure. Almost every minute.

[Katie Greifeld]

Okay. So we're talking about retail investors, but they do have that unnamed institutional investor who is making that $50 million commitment.

[Matt Levine]

I had some guesses in my mind, but I didn't write them down. And then someone else sent me a different guess that was probably more important. It's not like BlackRock.

[Katie Greifeld]

Okay.

[Matt Levine]

It's not OpenAI.

[Katie Greifeld]

No.

[Matt Levine]

But Nvidia. I don't think.

[Katie Greifeld]

I don't know.

[Matt Levine]

Wouldn't it be funny? It was Nvidia.

[Katie Greifeld]

It would be Right.

[Matt Levine]

Talking about doing it for the plot.

[Katie Greifeld]

I feel like Johnson might just say we're doing this because it's funny.

[Matt Levine]

I did a little Googling to see if he was known for wearing Allbirds, because Allbirds were in their heyday with a lot of.

[Katie Greifeld]

Did you wear Allbirds?

[Matt Levine]

Definitely not.

[Katie Greifeld]

Okay. And my husband had a pair. They looked nice, actually. This is crazy. I don't know if he would want me to say this, but I am. So I visited my parents in Florida for Easter, and my husband keeps some shoes at their house. Like, we have just random shoes at their house. And my dad stepped out in a pair of vintage Allbirds. I was like, are you wearing Joe's shoes? And turns out he was. This must have been a signal.

[Matt Levine]

Is he the dad, the investor, and all of them?

[Katie Greifeld]

I do not think so. I don't think he qualifies as an institutional investor. I should have done something with this information because here we are, like, three weeks later.

[Matt Levine]

This is a valuable signal. Yeah, yeah. No, there's definitely, like. There are some funds that do these sorts of weird convertibles in micro cap stocks that are about to pivot to. I don't want to say meme status exactly. But not. Not meme status.

[Katie Greifeld]

Yeah.

[Matt Levine]

Like meme ish. And, you know, some of them do very well. I mean, the classic is, I wrote a lot about when Bed, Bath and Beyond did a big convertible structured kind of like this one with Hudson Bay Capital. Hudson Bay made like hundred millions, like tens, hundreds of millions of dollars, I take it, selling stock on behalf of Bed, Bath and Beyond as it trickled its way to bankruptcy. So there's definitely some money to be made doing weird floating strike convertible bonds for companies that are kind of just kicking around. But, like, when you pair it with the pivot to AI, it's really quite exciting.

[Katie Greifeld]

Yeah.

[Matt Levine]

I don't fully understand how the institutional investor monetizes this. Classically, the convertible becomes Convertible. And you convert some, you get some stock, you sell it. So it's very possible they have made no money yet and they're waiting to go through all of the process and actually fund the thing and get the stock. I think it's probably hard to short the stock right now, so it's hard for them to make any money, to have made any money so far. And there's a bit of a melting ice cube element here where if you announce this pivot, you want to be selling stock today. You don't want to be like in six to eight weeks when the deal closes, we'll be selling stock because you want to capitalize. Who knows what's going to happen.

[Katie Greifeld]

I do like your strategy that you put together of finding 10 near defunct public companies.

[Matt Levine]

Right. Because this is not like a winner take all market where Newbird AI is going to dominate the data center market. There's plenty of room for 10 other companies you haven't heard of.

[Katie Greifeld]

And you've got to diversify.

[Matt Levine]

You've got to diversify. The Wall Street Journal today had an article about how Barney's, the department store is coming back. But as a department store, it's like, oh, come on, they gotta do an AI pivot. And then I realized they're not a public company, so it doesn't make sense. But there was also a press release today, Mizeum. So two weeks ago they put it up. I've never done a Miseum, but they put out a press release two weeks ago. Mizeum brings free private social network to 10,000 weddings where every guest becomes the photograph. Oh, yeah. So there's their business model. As of two weeks ago, public company. Wednesday of this week, Myseum rebrands as Miseum AI to align with full suite of technology and social media platforms. I think they just added AI to their name. Like, I don't think they're making a substantive change to their photography social network. But by adding AI, their stock doubled on Thursday.

[Katie Greifeld]

This is the new dat.

[Matt Levine]

Well, it's the new pivot to crypto, which was the new pivot to dot com.

[Katie Greifeld]

Just in terms of like everything for this moment in time. This is working and you're still getting

[Matt Levine]

that was like 2024 thing.

[Katie Greifeld]

Yeah. Like say that you're. Now you're accumulating crypto token of your choice.

[Matt Levine]

Yeah, I can Nvidia chips, which harder to do.

[Katie Greifeld]

Yeah, I don't know. We'll see how long there's juice to squeeze here.

[Matt Levine]

Dats were like very intense for like, I don't know, three, six months. I feel like this is like three to six days, but maybe not hours. I mean, the thing is like the AI boom has legs, right? So like there's definitely like my ZM going a day after all birds feels like a flash in the pan. But like in six months, if someone's like, we're pivoting to AI infrastructure, will it work? Maybe. I don't know.

[Katie Greifeld]

It is weird that, you know, this is only happening now in terms of like the market reaction, the market embrace here because, you know, we've been talking about AI has been the conversation for at least two years now.

[Matt Levine]

Right. Again, it's different from crypto. You can't just wake up one day and be like, we're going to be a frontier AI model. There is a winner take all element here where people are giving a lot of money to fund people who have real AI chops and not random sneaker companies. The other thing I'll say is that the pivot to AI thing, when you look at the actual NEO clouds, the companies that are, you know, in this business, several of them did in fact pivot from crypto, right?

[Katie Greifeld]

Yeah.

[Matt Levine]

There's a very traditional like crypto mining to AI NEO cloud path where basically like you were like, we're going to get really into mining crypto and what that entailed in like 2021 was building data centers and acquiring a lot of like Nvidia GPUs. And then you happen to be really well set up to become an AI infrastructure provider when crypto crashed and AI took off. The stock market has rewarded pivots to AI of the past, but from people who had chips, servers and electricity.

[Katie Greifeld]

Well, there's new bird on the street.

[Matt Levine]

At least there's a new bird on the street.

[Katie Greifeld]

I feel like this whole story, I mean, we'd still be talking about it, but it's.

[Matt Levine]

If it didn't have a bird, we wouldn't be.

[Katie Greifeld]

It's made more fun by the fact that we're talking about new bird AI. Matt, fear not. I know you were wondering what the ETF angle is here and I have one for you.

[Matt Levine]

Is it the birds etf?

[Katie Greifeld]

No, it's the Meme etf. Apparently the Meme etf, it's from Round Tail. It was resurrected. It's already bought into Albert stock, which

[Matt Levine]

is already bought in like yes, Wednesday. Or like before Wednesday, I think on Wednesday.

[Katie Greifeld]

Well, get out of here.

[Matt Levine]

Here's the report out of here.

[Katie Greifeld]

Here's the reporting round Hill Investments, which has a meme Stock ETF that was rolled out to capture such moves was one buy at the start of the trading day. Do you want to hear from the CEO?

[Matt Levine]

No.

[Katie Greifeld]

Well, here's what he had to say. A shoe company rebranding as an AI compute infrastructure play is the kind of narrative shift that ignites retail enthusiasm. The spike in retail sentiment, coupled with a sharp increase in trading volume and elevated volatility around Bird following its AI pivot are exactly the signals the meme ETF is designed to capture in real time.

[Matt Levine]

Fine, whatever. Like he runs an etf, it's fine. He can capture those signals in real time.

[Katie Greifeld]

He sure did.

[Matt Levine]

What I will say is that if you were like a active meme investor, which look, he is, but whatever, if you're an active meme investor, the time to buy Allbird stock is before. And on the one hand, how would you know this was coming?

[Katie Greifeld]

How would you know?

[Matt Levine]

On the other hand, this is a small public company with a like retail facing brand name with like some nostalgic value that has already announced that selling its actual business and is just a public company listing. Just a public company listing right now has a lot of option value, right? Like just having a public company listing and not having anything particularly useful to do with it. If you have just a public listing and nothing else and you're like, welp, we've done what we need to do here, we're going to shut this down. You are wasting shareholder money. What you got to do is be like, we got a public listing, we're going to do a dad, we're going to do an AI pivot, we're going to do some nonsense, right? And so these guys did some nonsense. And if you had been like, well, this is a shell public company listing. We're going to see what nonsense they get up to. You would have made a lot of money. Whatever, it's fine.

[Katie Greifeld]

So anything about it in the future for all the meme day traders, if

[Matt Levine]

you're a meme etf, maybe you can only buy actual meme stocks. But if you're just like a person looking to invest in meme stocks, you should buy them before they become memes. This is like so investment advice. Boy, oh boy. Don't do that. I obviously don't do that.

[Kelly Cavagnaro]

Hi, I'm Kelly Cavagnaro, Managing director, head of North America Institutional Distribution at Janice Henderson Investors. We believe working together is the way to work better. Like combining your portfolio plans and our in depth strategy, your valued assets and our valuable insights, your mission and our vision working in harmony to seek the right investment opportunities. Janice Henderson. Investors investing in a brighter future together. Get the news you need in just 15 minutes.

[Matt Levine]

Start your day with Bloomberg Daybreak, the podcast with a global view on the stories that matter. I'm Nathan Hager.

[Kelly Cavagnaro]

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[Katie Greifeld]

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[Matt Levine]

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[Katie Greifeld]

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[Matt Levine]

Subscribe to Bloomberg Daybreak for a precise, thoughtful take on the stories that matter. Listen to Bloomberg Daybreak each morning on Apple, Spotify, or anywhere you listen.

[Katie Greifeld]

So Exxon shareholder voting. Yeah.

[Matt Levine]

There's like, a lot of retail shareholders, they traditionally never vote their shares because it's a waste of time for a retail investor to vote their shares. And so this sometimes annoys corporate managers because what you have is, like, the only people who vote are institutional investors. And sometimes the institutional investors are ornery or they care about governance, stuff that companies don't care about. Or traditionally they care about esg, stuff that companies don't care about. And so Exxon, in fact, a few years ago, a very small activist shareholder called Engine Number One ran a proxy fight basically over their, like, climate transition plans. And they won the proxy fight and they got a director elected to Exxon's board, which is very embarrassing for Exxon. And they won the proxy fight, not because they had a lot of shows, but because they, you know, they got some interest from like, the sort of blackrocks and state streets of the world

[Katie Greifeld]

who, you know, it was also very of the time.

[Matt Levine]

Yeah. Who at the time were like, ooh, esg.

[Kelly Cavagnaro]

We love that.

[Matt Levine]

Right. And so now this is all in the distant past, but Exxon never really got over it. And like, you know, a couple years ago, they got some sort of, like, activist proposal in their shareholder proposal, and they sued the proponents to stop them from doing it.

[Katie Greifeld]

I love a grudge.

[Matt Levine]

They really have a grudge. And so one thing they did, I think, like, last September, was they announced this new program where if you're a retail shareholder, you can just submit standing instructions to let the board vote your shares the way the board wants to. People got mad about this because it's obviously designed to thwart ESG and entrench board power, which I understand, but I also really respect it because the retail shareholders are not going to vote. It's a waste of time. So this is solving that problem. And the retail shareholders probably do want to do what the board wants to do and probably don't want to do what like BlackRock wants to do, probably have like less ESG commitment than like the big institutional managers. And so right now the institutions vote and the retail shareholders don't vote. And so the institutions have a lot of sway because they vote and they might have different preferences from the retail shareholders. And this is a way for Exxon to say, okay, retail shareholders, if your preference is just do whatever the board wants, you can just do that and then we'll vote your shares for you and we'll sort of recapture some voting power from the institutions. Which I think is like, annoying if you're an institutional investor or like a fan of governance or a fan of esg. But I think it's kind of a smart call by accent. And you could never have done this in the past because I think it's easy to characterize it as being undemocratic. And in the current SEC. Exxon went to the SEC and said, can we do this? And the current SEC was like, Absolutely, because the current SEC does not like the influence of. Yeah, BlackRock and ESG and proxy advisors and all that stuff. So Exxon was able to do this and they are. Now they have their. It's proxy season. Their proxy has come out, and so they're doing it as. You can submit your standing instructions to the board to vote. But meanwhile, they got a shareholder proposal from the New York City Comptroller, a classic opponent of everything that Exile's governance stands for. And they say, no, it's not fair for you to have only one set of standing instructions. That is, you know, vote however the board wants. You should have other standing instructions such as vote against whatever the board wants in all situations. Yeah, I love it. You should have like, if you have like the option for retail shareholders to always vote with the board, you should also give them the equivalent option to always vote against the board or an

[Katie Greifeld]

option like 50, 50, you know. Yeah.

[Matt Levine]

They do actually say they should include a range of possible voting options, such as independent voting options based on standing instructions, a general against management policy and or customized policies. They don't mention coin flipping, but that would be a good one.

[Katie Greifeld]

Yeah.

[Matt Levine]

Anyway, we'll see if this passes. It won't pass. Exxon has recommended against it, saying in part, like, it would not be consistent with our fiduciary duties to let. To give people an instruction to always vote the way we think they shouldn't vote because the board is like a fiduciary. They're trying to tell you to vote the right way. Right. In theory, if they give you the option to always vote the wrong way. That seems bad. But anyway, I loved it as a piece of trolling.

[Katie Greifeld]

Yeah. I mean, I also like it on the part of the New York City Comptroller's office. Yeah. Good game to both sides. I was reading a Morningstar reaction piece and very on brand for Morningstar. They're also not a big fan of Exxon's ideal here, but there were some interesting.

[Matt Levine]

Nobody's a big fan, but I kind of like it.

[Katie Greifeld]

Exxon likes it.

[Matt Levine]

And Matt Levine and the sec, a lot of big fans, but yeah. Not a lot of opinion.

[Katie Greifeld]

Well, Morningstar points out that the company reports that 40% of its shares are held by retail investors and 75% of those shareholders don't cast votes on the proxies. 40% is super high.

[Matt Levine]

Yeah, Right.

[Katie Greifeld]

Also, Morningstar went into a little bit how if you look on Exxon's, at Exxon's marketing materials for this, they talk about just like what a pain this is for retail shareholders. They say that the average retail investor would have to dedicate a full, full year of full time work to briefly study and vote on each of the 28,000 items in the proxy of the companies in the Russell 3000 in 2024. Assuming they only spent five minutes on each item. Which sounds like an exaggeration.

[Matt Levine]

Right? I mean, like, nobody owns every single individual stock in the Russell 3000.

[Katie Greifeld]

Yeah.

[Matt Levine]

That's not a reasonable thing to do.

[Katie Greifeld]

Yeah.

[Matt Levine]

You might own a Russell 3000 index fund.

[Katie Greifeld]

Yeah.

[Matt Levine]

And not vote. But it would be very weird to buy all 3,000 individual stocks and vote. But Exile's right. Like, it's irrational to spend any time

[Katie Greifeld]

more directionally, it's true.

[Matt Levine]

You wouldn't actually spend a year reading

[Katie Greifeld]

proxy materials, but someone might. Or not a full year. But I don't know.

[Matt Levine]

There are people whose job is to read and vote proxy materials. I know, but like giant asset managers. I picture hundreds of billions of dollars worth of stock.

[Katie Greifeld]

In my mind's eye, I see like, you know, kind of elderly man stooped over his kitchen table just reading proxy materials. I think about him sometimes.

[Matt Levine]

There are a few people like that. And like, often they're like the shareholder proposal proponents. Right. There are people who are like, what can I try to get Exxon to do? And they spend a lot of time rating proxies. Yeah, but Exxon does not care about them.

[Katie Greifeld]

No.

[Matt Levine]

Or it hates them. It's suing them.

[Katie Greifeld]

It actually cares a lot in a negative way.

[Matt Levine]

It stays up all night being angry at them.

[Kelly Cavagnaro]

Hi, I'M Kelly Cavagnaro, Managing Director, Head of North America Institutional Distribution at Janice Henderson Investors we believe working together is the way to work better. Like combining your portfolio plans and our in depth strategy, your valued assets and our valuable insights, your mission and our vision working in harmony to seek the right investment opportunities. Janice Henderson Investors Investing in a brighter

[Katie Greifeld]

Future Together on June 10, Bloomberg Invest

[Bloomberg Announcer]

is back in Hong Kong. We look at the role Hong Kong plays between China and the world as major powers compete and markets realign. As global investors rethink risk, we'll explore the forces driving Asian demand and the future of private capital capital. Catch exclusive interviews with top newsmakers, plus a live recording of Bloomberg's Odd Lots podcast. Visit BloombergLive.com/InvestHongKong to learn more. Supporting sponsor Deutsche Bank.

[Katie Greifeld]

YOU know what is important? Coffee Coffee. I was so charmed by this story in the Wall Street Journal by Crystal her talking about nyses coffee rooms. It has an elite coffee tasting force. I feel like we've also talked about this general idea. Basically they have to have people to set the ratings on U.S. futures markets prices for various types of coffee. So they have to verify.

[Matt Levine]

Right? The way many agricultural commodity futures market markets work is that you can take physical delivery of your futures and if you buy coffee futures, you might get physical delivery of coffee in a nice bonded warehouse, not a nice ice. Intercontinental Exchange owns NICE in an ice bonded warehouse. And that coffee has to meet certain quality standards in order for the whole thing to work, for the futures to actually reflect coffee prices and in order for that coffee to meet quality standards. There's a room on the 8th floor of the New York Stock Exchange where 38 mostly 50 something year old men, yeah.

[Katie Greifeld]

Sit and they sniff and they slurp.

[Matt Levine]

So okay, a real peeve of mine in journalism is that people often like discussing people like eating soup or drinking drinks will say slurping. And I'm like why does it have to be slurping? Why do you have to emphasize the sound like that's not how people eat. But in this case I cannot fault it because they are required to noisily slurp the coffee because like apparently that's how you get the the full force of the flavor. And so they play loud music to drown out the horrifying sound of 38 men slurping coffee sounds that I've tried

[Katie Greifeld]

to get into this podcast. When you eat soup before.

[Matt Levine]

Yes, that's true. We're not going to recreate sounds because you'll be immediately removed from the air. The Other thing that is amazing in this story is that there are photographs, somewhat alarming photographs of people mid spit spitting out the coffee that they've slurped. It's really, it's not all glamorous and high finance.

[Katie Greifeld]

I know we've talked about Morgan's, the pub in J.P. morgan's new building. Which I still want to go to.

[Matt Levine]

Yes.

[Katie Greifeld]

Well, I've been there many times, but I want to take the podcast there. I want to take this podcast to the coffee room, eighth floor.

[Matt Levine]

Just like a den of AC DC and slurping. Yes.

[Katie Greifeld]

That sounds insane. It sounds like the worst ASMR you've ever heard. But you might say this sounds like the best job ever.

[Matt Levine]

No, I wouldn't.

[Katie Greifeld]

Oh, I might.

[Matt Levine]

Like, honestly, like, I love my job so much.

[Katie Greifeld]

Yeah.

[Matt Levine]

And my only complaint is that sometimes, you know, we sit on an open plan office.

[Katie Greifeld]

We do.

[Matt Levine]

And sometimes someone near me is eating an apple.

[Katie Greifeld]

That must really tick you off.

[Matt Levine]

Imagine like I could not tolerate this coffee slurping job.

[Katie Greifeld]

I could absolutely do it.

[Matt Levine]

I could probably.

[Katie Greifeld]

But apparently not a lot of people are doing it.

[Matt Levine]

It's very hard. Well, because it's partly because, like, it's not a real job. It's like apparently most of them are either retired or after they finish their hour of slurping, they go to a real job.

[Katie Greifeld]

Right. For sure. It's their side hustle.

[Matt Levine]

Yeah. It's like it's an additive to their commodity trading job. But it's not how they make money.

[Katie Greifeld]

They must get paid.

[Matt Levine]

Yeah, they get paid, but it's not

[Katie Greifeld]

like maybe I could do that before the quick hour before the show.

[Matt Levine]

Exactly. The other reason there aren't that many of them is because it's a very hard exam. It's like the Master Sommelier exam, but for coffee.

[Katie Greifeld]

Yeah. So only about 5 to 8% of test takers will typically pass each time the test is administered. But it's a four day exam. It's only given once every five years or so, which is nuts. And if you. It's not like, I don't know, I don't know.

[Matt Levine]

It's one room. Yeah, I know, but I compared it to the Master Schumacher exam where like, there's a lot of like people who want that credential so they can do various jobs in the wine world. Like there's one job in the coffee world where you need this credential and it's kind of a part time job.

[Katie Greifeld]

Yeah. But even still, you'd think that it's just as difficult to hold it once a year as it is every five years.

[Matt Levine]

I'm not sure that's true. It's apparently a big move.

[Katie Greifeld]

This is why we need to go to the room and talk to the people in the room.

[Matt Levine]

The other thing I want to say about the exam is I read a lot about this linkage between financial futures and the underlying commodity in the warehouse. And I often point out that because almost no, not no, but almost no futures settle for physical delivery that is actually then taken out of the warehouse and used in industry, very few of them settle that way, I would have some expectation that the quality of the stuff in the warehouses would be lower than the quality used by industrial users. If you're a coffee roaster, you will try to get the best beans delivered directly to you from the farmer or whatever. And the beans that are like, yeah, they're fine, get delivered to the stock exchange warehouse, right? Because those are not likely to be used immediately in making coffee, for sure. Used to underlie financial futures contracts. And in fact, there was a great story that I wrote about a couple of years ago, 2023. The way the grading worked is, among other things, there's an age penalty where if the coffee has been in the warehouse for too long, it is not as valuable. You get a discount when you deliver it into a futures contract for somewhat obvious reasons, which is that it tastes bad, stale. Right? But the rules allowed you to take coffee out of the warehouse and then put it back in and get it regraded and you got rid of the age penalty because it was for futures, it wasn't for making coffee. Anyway, this is obviously not entirely true, right? Because some of the stuff in the futures warehouse does get taken out and used to make coffee and it is a source of supply for actual industrial users. But it's just like you wouldn't think that like the premium on freshness and quality at the stock exchange warehouse would be the highest. Which is why it's fascinating that they need 38 testers who go through this rigorous testing to grade this coffee. Because it's like these are like, you know, the elite coffee tasters of the world, but they're not like working for like three star restaurants. No, working for like, yeah, it's going to go in the warehouse and it's going to be for futures contracts.

[Katie Greifeld]

It's just love of the game really.

[Matt Levine]

It's very admirable that they care so much. You know, I've written about like nickel futures where JP Morgan had some nickel in the warehouse that turned out to be Rocks. It didn't matter. It didn't matter. With this coffee, they lovingly grade the coffee.

[Katie Greifeld]

I know. I want to talk about the test a little more.

[Matt Levine]

Oh, the test. Sure, sure, sure.

[Katie Greifeld]

Because it's three stages, right?

[Matt Levine]

Sniff the beans.

[Katie Greifeld]

Well, let me tell you.

[Matt Levine]

Well, actually, written test, sniff beans, drink cup.

[Katie Greifeld]

First part, you're correct. It's a written portion. You're tested on rules and regulations regarding coffee grading. Second portion, which is more than three hours long, you're tested on your ability to grade the coffee based on factors such as smell and color.

[Matt Levine]

And then this is, I think, not brewed coffee. I think the second part is like beans.

[Katie Greifeld]

Yes.

[Matt Levine]

And then the third is cups.

[Katie Greifeld]

If you pass those two portions, and if you fail, you have to go back to the beginning. You can't like retake the second portion. But if you pass those two portions, you have a cupping exam which is smelling, tasting and spitting coffee. In front of proctors.

[Matt Levine]

Right?

[Katie Greifeld]

Yeah. In front of you.

[Matt Levine]

Every part of the coffee process.

[Katie Greifeld]

Yeah.

[Matt Levine]

Well, not every part the article mentions. To even get to the exam, you have to have some relevant background, often as a commodity trader. And they're like, definitely not as a barista.

[Katie Greifeld]

Yeah. Because actually that is harsh.

[Matt Levine]

That's much more relevant than commodity trading.

[Katie Greifeld]

Actually it's a quote that being a barista absolutely does not count.

[Matt Levine]

It has to be more relevant than trading commodities at a computer. But whatever.

[Katie Greifeld]

Yeah, that was my intuition as well. But again, once we're in the room, we can ask them all these questions. Apparently there's a lot of pent up demands to take the test. The test is from you this month? Yeah, right, the test is this month. This once every five years test. And the Wall Street Journal reports that the last time that the test was administered there were only about 20 candidates. But apparently there's been a swell of interest. So rest easy. Your warehouse coffee that's backing your coffee futures.

[Matt Levine]

I assume there are other, like, are there like pork belly tasters, corn futures, you know, frozen orange juice tasters?

[Katie Greifeld]

You know, if they had this rigorous process applied to nickel.

[Matt Levine]

Nickel kickers. There are nickel kickers?

[Katie Greifeld]

Nickel kickers.

[Matt Levine]

After the JP Morgan thing, they did actually send out commodity analysts to kick all the nickel in. That's funny in the warehouses. But. But yeah, no, I mean, like, like there's a lot of delicious agricultural commodities. I wonder if there's like a similarly rigorous, you know, fraternity of tasters. Sugar tasters. Yeah, like kids would pass that test. They wouldn't. I've written recently about the salad oil scandal. You know, the salad oil scandal. No, this company in like the 60s was getting a lot of. Apparently soybean oil had just been invented. And so there's a craze for soybean oil.

[Katie Greifeld]

A craze?

[Matt Levine]

Yeah, craze for soybean oil. And this company got hundreds of millions or millions of dollars of financing against its stock of soybean oil. And the banks would be like, oh, yeah, we'll lend you millions of dollars into your soybean oil, but we got to go check on the soybean oil. And so they went and they looked at the tanks and the tanks were full and they're like, oh, yeah, it's a full tank of soybean oil. But in fact, it was salt water with a few inches of soybean oil on top. So it collapsed in scandal and people lost a lot of money.

[Katie Greifeld]

That would never happen on the eighth floor of the New York Stock Exchange.

[Matt Levine]

Let me tell you one more story.

[Katie Greifeld]

I have to anchor television.

[Matt Levine]

I mentioned, but it comes back to your interest.

[Katie Greifeld]

Oh, good.

[Matt Levine]

I mentioned the salad oil scandal and someone emailed me about how they worked at a bank in the 80s or something, and they were like, we were told two stories about commodity financing. One was the salad oil scandal, and the other was that our bank had loaned a lot of money against frozen shrimp and there was some scandal and default and that was why they served so much shrimp in the bank's cafeteria. I love the idea that the bank made loans secured by frozen shrimp and then the loans defaulted. And so the bank was like, we're going to eat the shrimp. And then they ate the shrimp.

[Katie Greifeld]

We're going to lift.

[Matt Levine]

So maybe that's what the coffee at Morgan's Pop is doing. 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 Anna Mazarakis, Moses Andam and Alexis Haut.

[Katie Greifeld]

Our theme music was composed by Blake Maples.

[Matt Levine]

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

[Bloomberg Announcer]

On June 10, Bloomberg Invest is back in Hong Kong. We look at the role Hong Kong plays between China and the world as major powers compete and markets realign. As global investors rethink risk, we'll explore the forces driving Asian demand and the future of private capital. Catch exclusive interviews with top newsmakers, plus a live recording of Bloomberg's Odd Lots podcast. Visit Bloomberglive.com investhongkong to learn more. Supporting sponsor Deutsche Bank.