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- [00:00]
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 when you own your own.
- [00:31]
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- [01:54]
Katie Greifeld
Something crazy could happen. Something crazy could happen while we're recording this and I'd have to go talk about it in 52 minutes.
- [02:04]
Matt Levine
Isn't that exciting? You come in here an hour before you go on television and you turn off your phone. Obviously your phone is sitting right in front of you, but let's pretend you turn off your phone and focus entirely on the money stuff. Podcast and what if something crazy happens and you get out of here at 2:59 and you go on air and they're like, something crazy, crazy happening?
- [02:23]
Katie Greifeld
They're like, yeah, they're like, katie, quick break. This headline about the asteroid that took out California. And I'm like, we're receiving reports or something like that.
- [02:33]
Matt Levine
I feel like you keep your life exciting.
- [02:35]
Katie Greifeld
I do love adrenaline. Like I crave adrenaline. But you know, sometimes I get tired.
- [02:43]
Matt Levine
Yeah, I'm pretty tired. I was out to a dinner until like midnight last night, approximately six hours later than my usual bedtime. So I'm in Bad shape.
- [02:55]
Katie Greifeld
Yeah, that's crazy pants. Matt came over at nine in the morning with a smile on his face and I was like, how are you upright?
- [03:02]
Matt Levine
I had a fun dinner last night, but it was way past my bedtime. So now I'm going to do this and then collapse.
- [03:10]
Katie Greifeld
No, then you're going to go watch the close on Bloomberg Television from 3.
- [03:14]
Matt Levine
To 5pm you and I, our body batteries are turning in different directions. You are going to your adrenaline filled asteroid reporting and I'm going to nap. I did come over to you yesterday and ask if you knew where the nap rooms at Bloomberg. Don't.
- [03:27]
Katie Greifeld
We can't tell people if there's Bloomberg.
- [03:28]
Matt Levine
There's no nap rooms at Bloomberg.
- [03:30]
Katie Greifeld
If there's Bloomberg people listening, they don't exist.
- [03:32]
Matt Levine
No nap rooms. Hello and welcome to the Money Stuff podcast, your weekly podcast where we talk about stuff related to money. I'm Matt Levine and I write the Money Stuff column for Bloomberg Opinion.
- [03:43]
Katie Greifeld
And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.
- [03:49]
Matt Levine
I think we're in the like pest control season of the podcast.
- [03:54]
Katie Greifeld
We're talking about bugs.
- [03:56]
Matt Levine
There are like 200 Bloomberg headlines in the last three days about cockroaches.
- [04:00]
Katie Greifeld
Yeah, I feel like the joke's over. We've squeezed as much juice, all the juice from the cockroach as we can. So let's give it a rest. It's been like in the title of so many newsletters that I've gotten over the past 24 hours.
- [04:11]
Matt Levine
Yes, it will not be in the title of this podcast unless we screw up.
- [04:14]
Katie Greifeld
But.
- [04:14]
Matt Levine
Right. So Jamie Dimon on the JP Morgan earnings call used a very conventional metaphor. When you see one cockroach, there are probably more. He's talking about the first brands and tricolor. Bankruptcies, failures, credit, bad things, kabooms. Kabooms actually the real word that I love. And Mark Rowan said this. He said, it does not surprise me that we were seeing late cycle accidents. Accident is what you call this, like the word for what happened with first friends and tricolor was accident.
- [04:42]
Katie Greifeld
Yeah.
- [04:43]
Matt Levine
Like you made some loans, you didn't.
- [04:45]
Katie Greifeld
Get paid back, Oops, you spilled the milk. Just not worth crying over.
- [04:49]
Matt Levine
It's like accident is the term. But yeah. So there have been some pretty big accidents in the credit space. And one dumb thing that is happening is that there is a dispute about whether they exist in the private credit space or the public credit space.
- [05:02]
Katie Greifeld
Yeah.
- [05:03]
Matt Levine
Which I don't think is at all interesting. No, like, at all. But basically JB Dimon got on a call and was like, ah, you should see the problems with private credit because these, you know, companies went bankrupt and then all the private credit guys were like, those are like publicly financed banks led their deals. Like, those are not. And like, they're not like private credit, private credit. They're not like direct loans from like the classic. They're not like lbo, you know, like the core of private credit. Like, I don't know, they were funded by funds. Like, are they private credit in some loose sense? Sure. Or some of them bank led and like, you know, are their bonds, like. Yeah, I don't know, Whatever. But the point is it's not like JP Morgan making bank loans on his books and it's not like core, you know, direct lending, private credit.
- [05:45]
Katie Greifeld
Yeah. A funny detail in all of this is that Jamie Dimon didn't specifically call out private credit.
- [05:51]
Matt Levine
Yeah. Although he did talk about like, BDCs being.
- [05:53]
Katie Greifeld
Yeah, yeah, BDCs are private credit. Yeah, I know. But like, it's not like he said, like, oh, these guys made bad loans, blah, blah, blah. He did talk a little bit about, you know, BDC's trading at a discount to their NAV. But I think it's just.
- [06:08]
Matt Levine
Which is the efficient markets way of saying they made bad lots. But anyway.
- [06:11]
Katie Greifeld
Right, right, right. But it did so happen that Mark Lipschultz of Blue Owl was asked about his comments and appears that he took them personally. And that's where he told, of course, JP Morgan to look inwards and the banks to look inwards at their loans. So it is this fun blame game that has played out this week. I feel like we wouldn't be talking about it so much had Jamie Dimon not said cockroaches. I feel like that gave a good tangible illustration for us to all seize upon.
- [06:39]
Matt Levine
But it is like taking a step back. It is the case that these accidents, as Mark Ryan called them, are true bubbly signs. You don't make loans to people who are double or triple or 100 times pledging their assets, which there are some allegations. No one really knows. There's some allegations Tricolor and. Or First Brands were maybe, you know, a little loose with collateral.
- [07:02]
Katie Greifeld
Yeah.
- [07:02]
Matt Levine
You don't make those loans unless you're really trying hard to make loans. Right. Like I wrote about, like, one thing that I think is interesting about First Brands is like the people who had a lot of exposure. You know, there's like this Jefferies run fund. There's this like, trade finance origination platform. They have like, enormous Amounts of exposure specifically to first brands. Like what does that mean? It means like you're running a fund and you're like, you know, ideally you'd like to have diversified, you know, trade, finance, receivables or whatever. But like you just need to find paper to put into the fun. And if someone is like, I'm going to generate a lot of paper for you, then like you'd love to deal with that person. Right. Like you'd love to do a first band if they're like, we can, you know, sell you as much as you need.
- [07:41]
Katie Greifeld
Yeah.
- [07:41]
Matt Levine
And so it creates incentives for people to sell you as much paper as you need. Which means either becoming very over levered to generate paper for you or just like writing fake paper, like you know, triple pledging things.
- [07:55]
Katie Greifeld
Yeah.
- [07:56]
Matt Levine
So that they can like sell you more stuff. Because they sell you stuff and you give them money and like that's, you know, that's the trade they're in. So it does feel very toppy.
- [08:04]
Katie Greifeld
Yeah.
- [08:05]
Matt Levine
Like, like Mark Arn said accidents, but also late cycle accidents. And like this is a private credit thing, but there's the credit generally these days, like there's a lot of people going around being like, yeah, it feels toppy. Yeah, we're going to keep doing it.
- [08:20]
Katie Greifeld
Yeah.
- [08:22]
Matt Levine
You know, I think one of the most insightful things ever said about finance was when chuck prince in 2007 said, as long as the music is playing, you've got to get up and dance. That's what it is, man.
- [08:32]
Katie Greifeld
We all know we're coming to the end of the song.
- [08:35]
Matt Levine
If you're in the business of making loans, you can't be like, we're not making loans. Too many loans are too frisky right now. We're not going to do it. You can't do that. You got to dance.
- [08:45]
Katie Greifeld
Yeah, got to dance. Even if it's late cycle and everyone's tired, it is interesting. I mean this has been held up as an example of we are in a toppy environment. So too I said we weren't going to talk about OpenAI, but the OpenAI Walmart deal that has been a lot of hay has been made on social media about how truly we've reached the top.
- [09:04]
Matt Levine
There's like an FT article or someone like the headline and something like, of course it's a bubble.
- [09:09]
Katie Greifeld
Of course, here we are.
- [09:11]
Matt Levine
Yeah, here we are in a bubble.
- [09:12]
Katie Greifeld
I do want to talk a little bit more about this other comment that Mark Lipschold said because it seems like he did take this very personally. One of the things he said, when it comes to market caps, there are people who have meaningful interests in the industry not continuing to grow and succeed. Blackstone's market cap exceeds the market cap of most financial institutions in the world today. It's not as if that's not coming from someone. And of course there are people who don't like it. Which is interesting that he used Blackstone specifically and not Blue Owl. But Blue Owl has a market cap of about 25 billion dollars. Blackstone is somewhere closer to 200 billion. JP Morgan is over 800 billion. But this is a point we've spoken about before is how the stock market values some of these private credit players, even though their assets are much smaller than like a traditional asset manager or even the asset management arms of these banks.
- [10:06]
Matt Levine
Yeah. I think the point he's making is like, when he says that market cap has to be coming from somewhere, it's not like a comparison to the AUM of banks, it's a comparison to like their lending business. Right.
- [10:15]
Katie Greifeld
It's like.
- [10:15]
Matt Levine
Yeah, you know, I think he's making more broadly the point that, like, the business of making a lot of categories of loans is shifting from being a thing that banks.
- [10:25]
Katie Greifeld
Yeah.
- [10:25]
Matt Levine
At least intermediate and underwrite to being a thing that is kind of being led and originated and held on the balance sheets of private credit firms.
- [10:35]
Katie Greifeld
Yeah.
- [10:35]
Matt Levine
Which again, I don't know how interesting it is to like, debate about whether the problems you're seeing are like private credit problems or bank problems. But like, on the one hand, I think the private credit people make a good point. Like, first of all, I say this a lot, but the funding model of private credit is a lot more systemically stable than the funding model of banks. Instead of having deposits, you have long term equity capital. That seems good. The private credit people will also argue that they have better underwriting incentives because they hold it on their books, whereas banks obviously hold a lot of loans on their books. But you think about a lot of what they do is originate the distribute model where they maybe have less skin in the game on their underwriting. On the other hand, banks are regulated and you do get the sense that it is such a good fundraising environment for private credit firms. Such a frothy. Like, if you want to sell your private credit firm, a lot of like, traditional asset managers will buy it. It's like you do have some pressures to put all this gusher of money to work and that might loosen your underwriting standards as well.
- [11:40]
Katie Greifeld
Can I say one more thing about cockroaches?
- [11:43]
Matt Levine
By all means.
- [11:46]
Katie Greifeld
This is so gross.
- [11:47]
Matt Levine
Literal or yeah.
- [11:48]
Katie Greifeld
Jamie Dimon so first of all, exactly what he said on the call was my antenna goes up when things like this happens. And my first reaction was like an antenna like that on a cockroach.
- [12:01]
Matt Levine
You're saying he feels for the cockroaches? Well, it's just he can put himself in the shoes of both the lender and the. He was going to say the shoes of the cockroaches.
- [12:09]
Katie Greifeld
Perhaps he tips his hands there, I don't know. But cockroaches do have antennas. And so does Jamie Dimon, apparently.
- [12:20]
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.
- [12:52]
Express Employment Professionals Advertisement Voice
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- [13:51]
Matt Levine
Join Bloomberg in Houston or via livestream on November 4th for the Future Investor Finding the Opportunity Opportunities this 2025 event series will examine how companies are investing in their businesses to create efficiencies, innovating their products and services and improving the customer experience. This series is Presented by Invesco. Q. Q. Q. Register@Bloomberglive.com FutureInvestorHouston that's Bloomberglive.com FutureInvestorHouston.
- [14:29]
Katie Greifeld
What'S second on your priority list?
- [14:32]
Matt Levine
A Nobel Peace Prize.
- [14:33]
Katie Greifeld
Yeah, all right.
- [14:34]
Matt Levine
I didn't win again.
- [14:36]
Katie Greifeld
Well, someone won the Nobel Peace Prize, but also the insider trading prize. But it wasn't insider.
- [14:44]
Matt Levine
Somebody won the Nobel Peace Prize. It was Maria Corinna Machado, a Venezuelan democracy activist. And also somebody won an amount of money on polymarket.
- [14:55]
Katie Greifeld
Some sum.
- [14:56]
Matt Levine
Yeah, the sum appears to be at $50,000, which is like, depends on your.
- [15:01]
Katie Greifeld
Like, I could find something to do with it.
- [15:04]
Matt Levine
It's not a bad payday for someone hanging out on polymarket. It's not like institutional grade, you know, you can't like run a hedge fund by like occasionally once every year making $50,000 on the Nobel Peace Prize winner. But it's something, right?
- [15:18]
Katie Greifeld
It's like, that's true.
- [15:19]
Matt Levine
It's a nice individual person's beta. But anyway, there were some suggestions that it was insider trading because it was done kind the announcement like in the, in the, you know, hours leading up to the announcement. And in fact, a spokesman for the Norwegian Nobel Institute said, we've noticed that some have made significant financial gains by placing bets on this year's prize. We will investigate whether this means that someone has unlawfully obtained information from us because presumably they knew before they announced that. Right?
- [15:43]
Katie Greifeld
Yeah.
- [15:43]
Matt Levine
And so if like someone in the circle of trust at the Norwegian Nobel Institute went and like placed an anonymous crypto trade on polymarket, which would have.
- [15:53]
Katie Greifeld
Been amazing, for what it's worth.
- [15:55]
Matt Levine
Oh, yeah.
- [15:56]
Katie Greifeld
A real sign of the times anyway.
- [15:58]
Matt Levine
A real sign of the times. And then that's what they seem to have thought happened. But it probably turns out one never knows because these things are all somewhat anonymous. But there's an interview with a guy who allegedly did it and he's like, you can look to. There's all this public stuff. Basically when they hit the button on the announcement, there's a lot of assets on the website. There's a picture of Machado for sure. And they upload those assets before they hit the button, before they like put out the actual press release. And so if you're like scraping the folder on the website that has all the assets, you can see like, you know, something with her name in the webpage and then you can make an informed bet. And so that may be what happened here.
- [16:38]
Katie Greifeld
That is really funny. Also, to your point that 50 grand isn't institutional money, I have to imagine that next year this inefficiency in the market won't exist. Like maybe they'll hit the button and then they'll upload the photo.
- [16:50]
Matt Levine
Yeah, there's some of this, like, like this is a trade that occasionally exists in US public company earnings.
- [16:57]
Katie Greifeld
Yeah.
- [16:58]
Matt Levine
Because you can, like, if you know, like the URL of like last quarter's earnings, you can just like change Q2 to Q3 in that URL and just refresh that page until something pops up, which might be before they officially announce earnings.
- [17:13]
Katie Greifeld
Yeah.
- [17:13]
Matt Levine
And so this is like a well known enough trade that companies are a little better about not doing that now. So. Right. You think that like they will be a little bit more information secure next year or they won't? I don't know.
- [17:24]
Katie Greifeld
I mean, maybe they're not that bothered, but it just feels like that, that.
- [17:28]
Matt Levine
Body who actually, if you're the Nobel Institute and it turns out that some junior staffer was using your information to make 50 grand, you'll be annoyed with them. If it turns out that someone on the committee that selects the winner but is betting on it, then you'll be really annoyed.
- [17:44]
Katie Greifeld
Super bad.
- [17:45]
Matt Levine
Because that's like, don't like that. That's not insider trading. That's like market manipulation, right?
- [17:49]
Katie Greifeld
Yeah, that's like rigging the game.
- [17:51]
Matt Levine
That's rigging the game. It's like instead of betting on who's going to win the Nobel Peace Prize, you're like giving the Nobel Peace Prize to the person you bet on. It seems really, really bad. No allegation that that happened. But if it's just like someone scraped your website, like, who cares? Give them the money.
- [18:03]
Katie Greifeld
Who cares? That's a very Cathie Wood attitude. Referencing, of course, last week's podcast and nothing else, Right?
- [18:09]
Matt Levine
No. I know people talk about prediction markets. You know, I've quoted Shane Copland saying it's like their goal is to help people understand and price the future. And people really want prediction markets to create incentives to make the world more informed. And so like the ideal is like, you know, you have a bet on like, will Russia invade Ukraine? Or whatever, right? And like you have people who are really informed geopolitical analysts making bets. And then you have like a Russian general making bets. And then like you actually know. Right. And then like the market implied odds are really informative. And so people can make economic decisions based on this, like probability that exists in a prediction market. And like, that's kind of an interesting ideal and would be useful in a lot of purposes. And you know, as we've talked about here, the problem with that is like, it's not clear there is a lot of dumb money on like, yeah, the market of like, will Russia invade Ukraine? And so it's hard to make a lot of money. It's hard to be institutional grade. And so like, if you're a Russian general, you might be like, well, I can make $10,000 and possibly be shot, so I won't do it. Right. So it's like it's like hard to incorporate information. And then like you have examples like this where it's like, whoever this is, like put a lot of work into figuring out who was going to win the Nobel Prize 12 hours early. And like one, is that the sort of fact that will inform anyone's economic decisions about like no one's hedging who's going to win the Nobel Prize.
- [19:37]
Katie Greifeld
Right.
- [19:37]
Matt Levine
Two, is knowing it 12 hours early that useful? And then three, like the reaction might be that they just stop putting these assets on the web 12 hours early. And then it's like, well, okay, yeah, the trade just like you haven't made anyone more informed about anything in any useful way. It's just. Yeah, you get some money.
- [19:53]
Katie Greifeld
Yeah, well, to that point, I mean, you write in your newsletter that the point is that the Nobel Peace Prize prediction market is working the way it.
- [20:00]
Matt Levine
Is supposed to in some broad sense.
- [20:01]
Katie Greifeld
It incentivizes people to find out information and incorporate it into prices, which I agree with. But it feels kind of unsatisfying because you think about the example of equity markets and a hedge fund analyst scraping a website for earnings makes that market a little bit more efficient. And then it informs how companies invest capital and allocate capital. Whereas here it's just someone now knows this early and there's no follow through on that.
- [20:31]
Matt Levine
Nobody can satisfy people care about who won the Nobel Prize, but it doesn't have like economic consequences. There are not a lot of hedgers.
- [20:39]
Katie Greifeld
Yeah, right. Yeah.
- [20:41]
Matt Levine
But you know, this is like what I've said about sports gambling too, right? It's like if you like create an ecosystem where people, professional and like semi professional and like just hard working and smart people are dabbling in prediction markets, then like there's possible spillover to like economically meaningful prediction markets. Right. There's some possibility that the people who spend eight hours building some scraping tools to predict the Nobel Peace Prize will then go on to spend 16 hours building scraping tools to predict the next Russian invasion. Right. Because like similar ish skill sets, maybe. Yeah, maybe, like maybe Russia is uploading its battle plans to a website. Who knows? There's some notion that if prediction markets get bigger and attract capital and skill, then ultimately the thing you really want, which is that they inform people about the probabilities of economically meaningful future events, there's some possibility that will come true. And it's not like it's not in a straightforward linear way where it's, we start with the most important markets and get really sophisticated people to do really good predictions of the Most important markets, it's, we start with places where you can make money and, and then that attracts money and then that attracts more sophistication.
- [21:59]
Katie Greifeld
It probably also informs your behavior in other markets. Like if the prediction market for who is Russia going to invade next? Gets really informative and liquid and you could imagine watching that and then going and buying a bunch of calls on oil.
- [22:15]
Matt Levine
Oh, absolutely. Although, I mean, right now, surely the oil market is more predictive of geopolitical events.
- [22:21]
Katie Greifeld
No.
- [22:21]
Matt Levine
You know, most prediction markets.
- [22:22]
Katie Greifeld
But I don't know the frustrating thing about oil, it's my least favorite commodity to talk about. It never prices in a sustainable risk premium. So maybe you wouldn't buy calls on oil or maybe you would, I don't know, buy Treasuries.
- [22:37]
Matt Levine
Right. This is one of the arguments for prediction markets. There's a lot of ways to implement predictions about future geopolitical events. And what that means is that you can't look at the price of oil or the price of Treasuries and read out a prediction about future events because they kind of reflect a lot of different possible events.
- [22:55]
Katie Greifeld
Yeah.
- [22:55]
Matt Levine
Whereas if there's just like a contract, will Russia invade wherever? Then you can look at that contract and read off the probability.
- [23:02]
Katie Greifeld
Yeah. It's like very pure play.
- [23:04]
Matt Levine
Yeah. Right.
- [23:05]
Katie Greifeld
Congratulations to whoever won. Female grader.
- [23:08]
Matt Levine
Yeah, 50 grand. Probably less than the Nobel Peace Prize prize.
- [23:12]
Katie Greifeld
I don't actually know. How much is it?
- [23:14]
Matt Levine
I don't know. You get a gold medal.
- [23:16]
Katie Greifeld
That's pretty good.
- [23:17]
Matt Levine
Yeah.
- [23:17]
Katie Greifeld
You also get the satisfaction.
- [23:19]
Matt Levine
Yeah, it's pretty good.
- [23:20]
Katie Greifeld
Yeah.
- [23:22]
Matt Levine
I feel like winning the Nobel Peace Prize is in some ways the worst prize because like there's a decent chance that you're like imprisoned or exiled.
- [23:28]
Katie Greifeld
That's true. But in the event that you're not, imagine all the speaking engagements and fees that you can command.
- [23:36]
Matt Levine
That's okay. That's fair. That's fair. Lucrative business, winning an OLP's prize.
- [23:41]
Katie Greifeld
Okay, well, a bunch of people are going to write in and tell you how much.
- [23:44]
Matt Levine
Yeah, of course it's a chunk of change. I think maybe it's not.
- [23:51]
Katie Greifeld
It's fun because we could Google it. But we're not going to do that, right? Just idly move it, Leave your phone.
- [23:55]
Matt Levine
Right in front of you.
- [23:55]
Katie Greifeld
Yeah, it's staring at me.
- [24:01]
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.
- [24:33]
Express Employment Professionals Advertisement Voice
From providing extra support during busy seasons to replacing vacant roles, you need Express employment professionals on your team. Express can handle everything from contract placements to finding the right full time team member. Solve your workforce challenges. When you let Express deal with the workers compensation, payroll, benefits and more so you can concentrate on what really matters growing your business. Go to expresspros.com if you've never used a staffing company, here's how Express has helped businesses like yours balance their workforce to meet production demands. Reduce stress and burnout, which reduces turnover. Access a local talent pool ready to work for all types of jobs and a variety of reasons. Choosing Express Employment professionals is the move to make this year with more than 870 locations. Find the one near you@expresspros.com that's expresspros.com hello and welcome.
- [25:33]
Matt Levine
This is the Michelle Hussain Show. I'm Michelle Hussain.
- [25:37]
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- [25:40]
Matt Levine
I think I've done enough. And Shonda Rhimes.
- [25:42]
Katie Greifeld
That's so cute.
- [25:43]
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- [25:44]
Matt Levine
Weekend you can count on one essential conversation to help make sense of the world. So please join me, listen and subscribe to the Mishaal Hussain show from Bloomberg Weekend. Wherever you get your podcasts, you certainly ask interesting questions. Up to 18. 5 stock trading.
- [26:12]
Katie Greifeld
18, 5, baby. But in 2026, eventually we'll get to 23. 5.
- [26:17]
Matt Levine
There's a thing called the 24X exchange. The 24 exchange, 24X national exchange. The intuition is that we want to trade stocks 24 hours a day, but you can't do that because you have to restart the computer. You do. So their more modest target is trading stocks 23 hours a day, five days a week. And their progress towards that is they launched 18 hour a day, trading five days a week, which is like, I.
- [26:42]
Katie Greifeld
Feel like their name should be 23x.
- [26:44]
Matt Levine
No, that's the thing. If you say 24, everyone's like, oh, 24. That's the number of hours in a day. If you say 23. Feel like what?
- [26:51]
Katie Greifeld
I know, but it's disingenuous.
- [26:53]
Matt Levine
Yes, that's why it's funny. But you're allowed to be funny anyway, though. But they're now up to 18 hours, which is kind of like extended hours.
- [27:01]
Katie Greifeld
That's really all you need.
- [27:02]
Matt Levine
I don't know. It's all I need. I, as we've established, go to bed at 6 o'. Clock. But if you're for instance in Japan and you want to trade American stocks, it is convenient to be able to do it in the middle of your day. Yeah, I guess, like it's a global market.
- [27:17]
Katie Greifeld
Yeah.
- [27:17]
Matt Levine
For American stocks and stocks generally. And so it does kind of make sense that everyone should be able to trade all the time.
- [27:24]
Katie Greifeld
Also, you know, maybe you're in Japan, maybe you're just up at three in the morning.
- [27:28]
Matt Levine
Right. I try to be generous. Like 24x exchange actually says, you know, this is for, you know, investors worldwide. And I don't really think that the Paradigmatic user of 24 Hour Trading Is someone drunk on their computer at 3am but I kind of think that I think about that person a lot. I think that's a fun. Yeah, I'm not going to do it justice. There's a famous great bit in like Hedge Fund Market Wizards, the Jack Schrager book where he interviews one hedge fund manager who says, I I want to hire people who wake up early on Sunday morning and log in to poker sites to pick off the drunks coming home in another time zone.
- [28:06]
Katie Greifeld
Nice.
- [28:07]
Matt Levine
Because what you're doing there is understanding where you have the most edge and then just exploiting your edge and doing it somewhat inconveniently for yourself in a just cold bloodedly rational way anyway. Right. There are some people in a world of 24 hour trading who would come home drunk from the bar at 3am and be like, all right, fire up Robinhood, let's trade some options.
- [28:27]
Katie Greifeld
My single triple leveraged ETF now.
- [28:31]
Matt Levine
Yeah. And again, I don't think that's the main use case for 24 hour trading, but it's the funniest use case.
- [28:37]
Katie Greifeld
Yeah, well, hopefully, you know, as this gets online we'll figure out who exactly the players at 3am Eastern are. It might be Japanese retail players. It might be people drunk coming home from the barn. It might almost said barn. I say that a lot more often than bar.
- [28:54]
Matt Levine
You come home from the barn more often than the bar.
- [28:59]
Katie Greifeld
Or it might be sophisticated US investors looking to pick off Japanese retail investors. I don't know.
- [29:05]
Matt Levine
Well, yeah, I mean the other thing, the thing that I think is interesting is we have this ecosystem where a lot of news gets disclosed outside of regular market hours because you don't want to be, or traditionally you don't want to be in the situation of disclosing a merger at 10am and everyone reacting to that sequentially and like reading the press release and saying oh, I should buy the stock. And some people not Having gotten the press release yet and like selling it, outdated prices, it's just a mess. And so what everyone does is they announce earnings at 7am or 4:05pm so people have time to digest the earnings before the stock opens for trading next. And the purpose of after hours trading really is to let people react to news as it happens. So instead of if a hurricane hits at midnight, instead of waiting until the next day to dump your stocks, you can dump your stocks at 1201. And when you say that, I think it's intuitively appealing to a lot of people, oh, I can trade as soon as the thing happens. But I think it's kind of bad for retail investors. What it means is that instead of everyone reacting to news at the same time, because you have a buffer between when it's announced and when it can be traded, you have people reacting to news as they get it, as they analyze it. And so you're going to have a lot of people trading at wrong prices. And I do think that's the point or that's the appeal of after hours trading is like you'll just get more volatility, you'll get more wrong prices. If you think you're skilled and you enjoy a gamble or a game of skill, you'll have more opportunities to log on at 9 o' clock and be like, I know what this news means, I'm going to trade on it. I actually wrote this week about the Meme etf. Yeah, the Round Hill Meme stock ETF that was closed and then revived this week. And you know, it was revived with a very small first day of trade. I had a very small thousand dollars, a couple hundred thousand dollars on it and it traded kind of normally during the day and then in the after hours session it shot up because there's a few retail investors who are buying it and the market makers all went home because it was after hours trading in this tiny little etf. And so there's no arbitrage mechanism. And so people are just buying it at crazy premiums to nav, which should not happen in etf, but does if no professionals are awake. And I think if you have more 24 hour trading, you're just going to have more trading where no professionals are awake and things trading at wrong prices and people want to trade at wrong prices.
- [31:33]
Katie Greifeld
You're going to have uglier charts, basically.
- [31:35]
Matt Levine
Yeah. Every ugly chart means someone like made a very bad trade and someone else made a very good trade.
- [31:40]
Katie Greifeld
Yeah, well, you touched on something that I think we've Talked about before is like, okay, let's imagine a world where you do have 24 or 23 hour trading five days a week is whether or not you'd still get like these windows around the open and the close where everyone is sort of trained to trade the most.
- [31:58]
Matt Levine
I think you would, because professionals have a rhythm to their day where they want to stop trading at the close, you know. Yeah, not all, but like, you know.
- [32:06]
Katie Greifeld
Index funds, it's quitting time.
- [32:07]
Matt Levine
Yeah. Not even like to go home, but just because like you need a benchmark to mark against. And then also just because of that like timing tradition, there is so much concentrated liquidity there. And so if you're a huge investor who needs to move a lot of shares, doing that at the close is really useful. I do wonder, you know, I've never fully understood how crypto closes work because crypto just sort of from day one is a 24,7 market.
- [32:34]
Katie Greifeld
And so for same with traditional currencies as well.
- [32:38]
Matt Levine
Yeah, that's right. Yeah. There's no like close. Right. And like in stocks, there's very clearly a close. And a lot of apparatus, you know, index funds and mutual fund withdrawals and redemptions and benchmarks and everything are all kind of organized around the close. And if you did move to 247 trading, if you just did it in a natural, like non path dependent way, you'd be like, well, when is the close? Yeah, but I don't think that's ever going to happen. I think it's always going to be the main exchanges will have a close at 4. And even if the main exchanges offer, you know, 17 hours of extended hours and everything is kind of technologically the same during the regular session and the extended session, I think there'll still be a close that everyone can point to and where a lot of liquidity will be concentrated.
- [33:24]
Katie Greifeld
Yeah, I feel that way too. Like I, I do struggle to imagine a world where this is the norm.
- [33:30]
Matt Levine
This is continuous 24 hour a day, like nothing. No clothes. Yeah, I don't. That doesn't seem.
- [33:35]
Katie Greifeld
It goes against just the rhythm of being a human.
- [33:39]
Matt Levine
Yeah, it does. Well, it goes against like the stock market's rhythm.
- [33:43]
Katie Greifeld
Yeah.
- [33:44]
Matt Levine
I mean you say the rhythm of being a human and I hear you, but like stock market, you can buy on Amazon anytime you want, you know.
- [33:50]
Katie Greifeld
Yeah, I was going to say, I mean, humans did make the stock market.
- [33:54]
Matt Levine
Right? Yeah, sure, yeah. No, right, right, right. There is a human rhythm and there is a computer rhythm. And like humans have become adapted to the computer and the Stock market is from a time of you show up there and you leave to go have dinner. Right.
- [34:09]
Katie Greifeld
So quaint.
- [34:10]
Matt Levine
Whereas, like, you know, Amazon is from a time of computers and you log in at midnight and buy something. Right. And crypto is from a time of computers, and so you log in at midnight and buy crypto.
- [34:18]
Katie Greifeld
Yeah.
- [34:18]
Matt Levine
And I think that is creeping into the stock market, but I think we're a long way from it entirely taking over the stock market.
- [34:24]
Katie Greifeld
I did want to point out one thing that you wrote which actually made me grateful for the environment that we live in right now. You talk about how a decade ago, it was possible to think that investing would gradually become duller and more efficient and more automated and that people would just let robots and professionals manage their retirement savings and basically we wouldn't have any of the silliness that we do now.
- [34:48]
Matt Levine
That was like, when I said it was possible to think that I linked to something I wrote kind of predicting that. So that was dumb.
- [34:54]
Katie Greifeld
That's fine. You called yourself out, But I occasionally get tired, as discussed, we all get tired of the silliness in the headlines, but I think that the world that you described sounds a lot more tiresome, so.
- [35:09]
Matt Levine
Well, you say that as a person who goes on TV to talk about financial news every day for several hours.
- [35:15]
Katie Greifeld
Yeah. But you write about it.
- [35:17]
Matt Levine
Oh, yeah. No, I agree, I agree. Like, all this dumb stuff, you know, once every five times I write about meme stocks or crypto or whatever, I roll my eyes. I'm like, I hate writing about this.
- [35:27]
Katie Greifeld
Yeah.
- [35:27]
Matt Levine
The other times, like, wow, at least I have something to write about. No, I agree. I think as a person, as an investor, if you stopped thinking about meme stocks and, like, just, you know, had, like, robots perfectly investors, like, reasonably perfectly invest your stock and you didn't worry about it, you could spend more time, like, reading books.
- [35:44]
Katie Greifeld
Yeah, right. Maybe.
- [35:46]
Matt Levine
Right. Like, it's a better world, but it's worse for, you know, making jokes in a financial newsletter.
- [35:52]
Katie Greifeld
That's true.
- [35:54]
Matt Levine
That's what we're all here for.
- [35:55]
Katie Greifeld
I have to go talk about all the silly things on the television and the asteroid if it hit yet.
- [36:03]
Matt Levine
Good luck with that. And that was the Money Stuff podcast. I'm Matt Levine.
- [36:13]
Katie Greifeld
And I'm Katie Greifeld.
- [36:14]
Matt Levine
You can find my work by subscribing to the Money stuff newsletter on bloomberg.com.
- [36:18]
Katie Greifeld
And you can find me on Bloomberg TV every day on the close between 3 and 5pm Eastern.
- [36:25]
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.
- [36:32]
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.
- [36:38]
Matt Levine
The Money Stuff podcast is produced by Anna Mazarakis and Moses Ondahm.
- [36:43]
Katie Greifeld
Our theme music was composed by Blake.
- [36:44]
Matt Levine
Maples, Amy Kean is our executive producer.
- [36:48]
Katie Greifeld
And Sage Bauman is Bloomberg's Head of Podcast.
- [36:52]
Matt Levine
Thanks for listening to the Money Stuff Podcast. We'll be back next week with more stuff.
- [37:06]
Katie Greifeld
There are two kinds of people in the world. People who think about climate change and people who are doing something about it. On the Zero podcast we talk to both kinds of people. People you've heard of, like Bill Gates.
- [37:17]
Matt Levine
I'm looking at what the world has to do to get to zero, not using climate as a moral crusade, and.
- [37:23]
Katie Greifeld
The creative minds you haven't heard of yet. It is serious stuff, but never doom and gloom. I am Akshat Ratty. Listen to Zero every Thursday from Bloomberg Podcasts on Apple, Spotify or anywhere else you get your podcasts.