Paid in Eggs

Summary

Money Stuff: The Podcast — "Paid in Eggs"

Host: Matt Levine (Bloomberg Opinion, Money Stuff column)
Co-host: Katie Greifeld (Bloomberg News & TV)
Date: July 10, 2026

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Episode Overview

This episode explores two headline-grabbing stories in the world of finance and markets:

1. The furor over SpaceX joining the NASDAQ 100, changes in index construction, and the rise of anti-Elon Musk ETFs.
2. Allegations of egg price manipulation by major U.S. producers—including their highly unusual legal settlement paid in eggs, not cash.

Matt and Katie blend their trademark mix of wit and technical insight, dissecting the culture and mechanics of both index investing and commodity markets. The episode’s tone is conversational and lightly irreverent, with memorable asides and quotable analysis.

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Main Topics & Key Insights

1. SpaceX, Index Rules & the Rise of No-Elon ETFs

[03:41–13:02, 13:43–25:45]

The Controversy Around SpaceX and Index Inclusion

• SpaceX’s addition to the NASDAQ 100 sparked uproar among investors—both due to sudden rule changes and Elon Musk's divisive persona.
• Matt Levine: "If the giant company doesn’t get into the index because of our rules, like, yeah, maybe we should tweak our rules... But nobody else thinks that. Everyone thinks it’s cheating for Elon Musk to get put into indexes." (04:39)
• Some investors are going to extreme lengths to avoid exposure to Musk-run companies—even swapping US indices for international ones.

'No Elon' ETFs: Product or Performance Art?

• New ETFs are being filed (QQNE, SPME) that essentially track major indexes minus Musk-led companies (Tesla, SpaceX).
• Katie Greifeld: “You have the moral hyperparameters.” (06:42)
• Matt notes that marketing, not factor analysis, is the main driver for niche ETFs: “It’s just like a market. People want the thing, so we’ll give it to them.” (06:55)

The Function (and Fads) of ETFs

• Many thematic ETFs exist more as vehicles of expression than serious investment strategies.
• Katie Greifeld: “You have all these strange little funds out there that have no assets, that just bump around, but they get a lot of coverage because they’re interesting.” (10:05)
• Discusses "performance art" ETFs like the Nancy Pelosi Copy Trading ETF.
  • Matt Levine: “Mainly it’s performance. Isn’t it kind of fun to have an ETF that copies Nancy Pelosi’s trades?” (11:12)

Will Investors Really Care About Missing Out?

• Even if Musk's companies outperform, Levine predicts “nobody in this fund will care. They’ll be like, I’m still glad I stayed out of SpaceX.” (09:19)
• Katie Greifeld: “I would also love to check in with that guy specifically…if SpaceX quadruples in value or something, I would imagine that maybe he’ll feel a little bit of FOMO.” (09:45)

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2. Index Rebalancing, Hedge Funds & the SpaceX Trade

[13:43–25:45]

Index Rebalancing: The Big Money Behind Passive Funds

• The episode describes the dynamics of index rebalancing, where hedge funds anticipate mass buying/selling by index funds after index changes.
• A trade involving two portfolio managers at Millennium made $3.7 billion in June, largely from these rebalance trades.
• Matt Levine: "Index funds need to buy so much stock all at once and that’s terrible... What the rebalancing traders are doing is they’re selling it to them. They're saying, okay, we know that at the close on Monday, the index funds are going to have to buy 60 million shares of SpaceX..." (16:33)
• Key to the trade: forecasting not only what will be added but how much demand there will be, and what competitors might do.

The Cycle of Boom and Bust

• These trades can be very profitable in some quarters, but highly cyclical and risky.
• Katie Greifeld: "So you have to have a strong stomach, it seems like to be in the index rebalancing game." (16:21)

Auction Mechanics & Performance

• Most of the action occurs in the market’s closing auction; index funds must buy at the closing price to match the index.
• Katie Greifeld: “How do they actually link up with the index funds? …It’s just an auction.” (20:44)

The Aftermath: SpaceX Price Drop Post-Inclusion

• Despite mass buying, SpaceX shares actually fell after joining the index as index fund buying stopped and supply started to grow.
• Lock-up expirations for SpaceX shares will bring new supply to the market; the eventual effect is uncertain.
• Matt Levine: “…if instead of 5% of the stock being available to buy, you know, 40% of the stock was available to buy, it would be lower…” (24:29)

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3. The Great Egg Price Manipulation — and a Settlement Paid in Eggs

[25:45–33:01]

Price Fixing Allegations ("Egg Libor")

• The DOJ and state attorneys general sued major egg producers for manipulating wholesale prices via the industry’s small clearinghouse, with the reference price (formerly "Urner Barry," now Xpana) set by a handful of trades.
• Producers allegedly bid up prices in the thin market, knowing most wholesale contracts referenced this price—even spoofing bid data.
• Matt Levine: "If the price on the egg clearinghouse is high, that'll make the price on all of our contracts high. So we can overpay in the clearinghouse market to raise the price on all of our wholesale contracts..." (27:30)
• Notable email: “Hurry. There are only 16 bids on ECI right now. That’s the egg clearinghouse, and 15 of them are ours, meaning Hickmans, which. That’s... a bad email to send.” (29:15–29:47)

Was Bird Flu the Real Driver?

• The manipulation is alleged to have happened during the avian/bird flu crisis, so investigators distinguish between “legit” price increases and artificial ones.
• Matt Levine: "One possibility is like, they used bird flu as cover for market manipulation… They tried to push up the price a little bit extra to make extra profits." (30:17)

Penalty: Eggs, Not Cash

• Settlement: The producers settled by agreeing to donate 50 million eggs (not dollars) to U.S. food banks.
  • “Truly my favorite part of the story is that the settlement was paid in eggs. …You never see that.” (28:41)
  • Katie Greifeld: “Those food banks are going to have to take physical delivery of so many eggs.” (28:48)
  • Levine jokes about the NY Attorney General keeping all the eggs, and both hosts marvel at the spectacle.

Securities Angle: The Egg Dynasty Sells Near the High

• Noted that Cal-Maine’s controlling family sold $300 million in stock at the highs—raising possible questions about disclosure and timing.
  • Matt Levine: “That feels like an everything securities fraud lawsuit waiting to happen…” (31:41)

Commodity Market Shadiness: Not Just Eggs

• Both speculate that similar manipulations may be happening in other food commodities (cattle, poultry, etc.).
  • Katie Greifeld: “I wonder how many markets this sort of behavior is happening in. I wonder if it’s happening in cattle right now.” (32:20)
  • Matt Levine: “Yeah, I think there’s a lot of it.” (32:28)

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Notable Quotes & Moments

• On No-Elon ETFs:

  • Matt: "An ETF is a form of expression. ... Other times they’re just funny ideas and so they’re fun to talk about." (10:23)
  • Katie: "You have the moral hyperparameters." (06:42)

• On index rebalancing:

  • Matt: “If we didn’t do this, like indexing wouldn’t work. Like the rise of indexing is made possible by multi strategy hedge funds doing this trade.” (17:10)

• On the egg price lawsuit:

  • Matt: “Truly my favorite part of the story is that the settlement was paid in eggs. ... You never see that.” (28:41)
  • Katie (laughing): “Those food banks are going to have to take physical delivery of so many eggs.” (28:48)

• On market manipulation:

  • Matt: "One possibility is like, they used bird flu as cover for market manipulation. That’s clearly kind of like the...vibe of the Justice Department complaint." (30:17)

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Timestamps of Key Segments

| Segment | Start | End | |-------------------------------------------|--------|--------| | Warm-up & banter | 01:34 | 03:41 | | SpaceX index inclusion/ETFs discussion | 03:41 | 13:02 | | (short ad break) | 13:02 | 13:43 | | Index rebalancing, hedge fund trades | 13:43 | 25:45 | | Egg price manipulation & settlement | 25:45 | 33:01 |

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Tone & Takeaways

• Matt and Katie’s discussion is punchy, lightly sarcastic, and enjoyably granular.
• Major financial mechanisms (ETF product design, index rebalancing trading, and benchmark price setting) are explained with humor and clarity.
• Both segments highlight investors’ willingness to express values or preferences (e.g., anti-Elon ETFs), and the sometimes absurd incentives and results in market construction (paying lawsuit settlement in eggs).
• The episode’s central insight: Markets are increasingly about narrative and performance—both in the literal, financial sense and in the sense of self-expression and comedy.

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For anyone seeking a primer on the quirks of modern index-based investing, financial product design, or commodity market shenanigans—with a side of “eggs-istential” comedy—this episode is a must-listen.

Transcript

[Katie Greifeld]

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[Bloomberg Announcer]

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Bloomberg Audio Studios Podcasts, Radio News

[Matt Levine]

Katie, I met your mom yesterday.

[Katie Greifeld]

Yeah, you did. That's so crazy.

[Matt Levine]

I went to your work baby shower.

[Katie Greifeld]

Yeah, it was supposed to be a

[Matt Levine]

surprise, but yes, you were unsurprised.

[Katie Greifeld]

I figured it out.

[Matt Levine]

You have methods of information.

[Katie Greifeld]

I do. I love knowing things, so I try to just accumulate knowledge. So I did unfortunately spoil the surprise for myself. But they brought it my mom, which was really nice. She met Matt, which was really exciting for her. You keep like circling around Greifeld members who aren't my dad. And my dad is dying to meet you.

[Matt Levine]

Okay, okay. Maybe I'll meet him at your other baby shower.

[Katie Greifeld]

Are you actually going?

[Matt Levine]

No, it's too far into New Jersey and I have too many children.

[Katie Greifeld]

God, that was. That was a cruel. A cruelty.

[Matt Levine]

Yeah, something step up.

[Katie Greifeld]

I know that my mom complimented your voice.

[Matt Levine]

Yes, she did. To me. And I said to her, the reason this podcast exists is because enough people are like, you have a great voice for a podcast.

[Katie Greifeld]

Yeah.

[Matt Levine]

And I was like, oh, I better do a podcast. And now here we are.

[Katie Greifeld]

Here we are, years later doing a podcast. I know. God, it's such a full circle moment. Anyway, I'm having a real supply chain day where if one.

[Matt Levine]

Welcome to Oddball.

[Katie Greifeld]

Like if one thing goes wrong, then everything. Oh, I see.

[Matt Levine]

I see.

[Katie Greifeld]

Everything else goes wr.

[Matt Levine]

Like, not like.

[Katie Greifeld]

No, I'm not like thinking deeply about

[Matt Levine]

transporting goods from through the straight of Hormuz.

[Katie Greifeld]

I mean, actually that I should think about a little bit.

[Matt Levine]

What's going on?

[Katie Greifeld]

Nothing so far. So maybe this is the thing. It's just a lot of events stacked on top of each other.

[Matt Levine]

Gonna go right.

[Katie Greifeld]

Let's start the thing that's gonna derail everything for me, and that's this podcast.

[Matt Levine]

Really set ourselves up for failure. Hello and welcome to the Money's Love Podcast, your weekly podcast where we talk about stuff related. 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]

Should we just get Elon out of the way?

[Katie Greifeld]

Yeah, let's.

[Matt Levine]

Let's just get Elon out of the

[Katie Greifeld]

way is potentially A pair of ETFs.

[Matt Levine]

A pair of ETFs. I've been banging this jump for a while that Everybody complains about SpaceX joining stock indexes a lot. This stuff comes up occasionally, but I've never really seen it to this degree of fervor. People are really, really mad about SpaceX joining the NASDAQ 100 index. They're really mad about the possibility that it might join the S and P.

[Katie Greifeld]

It's a little bit beautiful. This is the most the general public has ever cared about index methodology.

[Matt Levine]

Yeah, I know, right?

[Katie Greifeld]

It's nice.

[Matt Levine]

And it's so strange because it's like, like I'm really mad that they changed their rules to allow SpaceX in, which, you know, NASDAQ sort of did and S and P thought about doing, then didn't do.

[Katie Greifeld]

FTSE Russell also did.

[Matt Levine]

Yeah, FTSE Russell did. People got really emotional about, like, the sanctity of index Constitution rules.

[Katie Greifeld]

What a time.

[Matt Levine]

Like, to me, like, it seemed like, okay, like, this is a giant company and we're like a big index that represents the giant companies in the world. And if the giant company doesn't get into the index because of our rules, like, yeah, maybe we should tweak our rules. I think it's a reasonable thing for the index providers to think. But nobody else thinks that. Everyone thinks it's cheating for Elon Musk to get put into indexes. And so a lot of people are really mad about it. And there was a great Bloomberg article this week about retail investors being mad about it and saying things like I think he's on the side of evil. There are ways to not have Elon Musk in your stock portfolio, which people do in this article. One of these ways is to switch out of the US Stock indexes and into international stock indexes, which seems like a crazy overreaction.

[Katie Greifeld]

Yeah, you're making a lot of other choices that aren't related to Elon Musk.

[Matt Levine]

When I wrote about there should be an index fund with no Elon, people were like, oh, what about this small cap index? It's like, okay, yeah, but that's a different probability. But no, the obvious answer. And the Bloomberg article this week talked about direct indexing. There's a lot of obvious answers, but one of the main ones is buy the Nasdaq 99, 98. Buy the Nasdaq 100 without the companies you don't want. And now subversive ETFs is launching or filed for, yes, the QQ and SPME. And he stands for no Elon. The Nasdaq 100 and S and P 500X Elon.

[Katie Greifeld]

Yeah.

[Matt Levine]

So basically it's all of the companies in the NASDAQ 100 or the S&P 500 except for those that are run by Elon Musk, which right now is SpaceX and Tesla.

[Katie Greifeld]

That's the thing, like, for the S&P501 especially, like, you're just excluding Tesla, and Tesla has a 1.75% weighting in the S&P 500. So it feels like, what's the point?

[Matt Levine]

Well, the point is that you are getting mostly the same stocks. You're getting hopefully a comparable performance, but you are not having Elon, which clearly people want. Like, that's the thing that people want.

[Katie Greifeld]

You have the moral hyperparameters.

[Matt Levine]

Whatever you want, whatever. The thing is that makes you, like, go around calling your broker, being like, how can I find an index with no Elon? You have that. And now your broker can be like, oh, here it is.

[Katie Greifeld]

Yeah, I don't know.

[Matt Levine]

It's just like a market like this is not based on, like, deep analysis of factor exposures. This is based on, like, people want the thing, so we'll give it to them.

[Katie Greifeld]

Yeah, I feel like you were about to say marketing and that is what this is.

[Bloomberg Announcer]

Sure.

[Katie Greifeld]

Yeah.

[Matt Levine]

Everything like, man, how many ETFs have we talked about? Like, it's a. It's a consumer product. Yeah, you want to give people the consumer product they want.

[Katie Greifeld]

Isabel Lee at Bloomberg wrote this up. She quoted an ETF industry analyst who I chat with a Lot of his name is Dave Nadig and he was one of those people who had a lot of opinions about SpaceX being added into a bunch of these indexes. But he said that they may well attract some money that doesn't think too hard. But these kind of narrow cast micro ideas aren't really for anyone. Fun marketing, not a real investment thesis. So I mean this is one of those ETS have to be a real investment piece. Well I mean if you think about

[Matt Levine]

the law, it's not a real investment. Like it's not a like systematic based on broad study of the entire stock market. But some people are like look, I'm not a stock expert. I want to own the index funds. I'm not going to think about every company that I own. I want to own a passive index thing. But this Elon stuff freaks me out. And that's not an unreasonable. These companies trade at very high multiples of sales. SpaceX is trading on plans for space data centers. It's not crazy to think I don't know a lot about stocks, but I think these stocks are overvalued. Like not investment advice. It's just like that's a thing that people clearly think. Like some people think oh, I don't like the cut of Elon Musk's chip. But some people think oh, these stocks are overvalued and it's bad that they've been put into the indexes. So yeah, you're like you're selling a real investment thesis to those people.

[Katie Greifeld]

Yeah.

[Matt Levine]

Or you're selling them their investment.

[Katie Greifeld]

It's fair. I think the point that Dave is making, or maybe the point that I want him to be making is that you think about these like very narrow niche ETFs and they tend to exist for a while, they float along, they trade, they don't gather any money and then they shut down probably within the next year.

[Matt Levine]

Yeah, yeah, sure, sure, sure. I agree. And this might be a very narrow niche etf. But like I don't know, like we've been talking about this a lot. Like this thesis is not that narrow. Right. Like this thesis is something that a lot of people are worried about.

[Katie Greifeld]

Yeah, well the fun thing is that I mean if these launch we can talk about it in six months and see how it's actually done.

[Matt Levine]

I know but like people don't care.

[Katie Greifeld]

That's the problem. I mean you get all these like wild fil.

[Matt Levine]

The Bloomberg article about people trying to avoid Elon. They quote a guy saying I would not feel bad about never buying SpaceX, no matter how well it does. What I'm saying is the thing we'll know in six months, I guess we'll know how much money it took in, which is important, but there will also be performance. Either SpaceX will or won't outperform the NASDAQ index and nobody in this fund will care. They'll be like, I'm still glad I stayed out of SpaceX.

[Katie Greifeld]

Yeah. I would also love to check in with that guy specifically, though, if I mean SpaceX quadruples in value or something, I would imagine that maybe he'll feel a little bit of FOMO. I'm not a SpaceX.

[Matt Levine]

People really don't like.

[Katie Greifeld]

I know, but people really like money. It's like competing.

[Matt Levine]

It's 1% of your portfolio.

[Katie Greifeld]

Yeah. To your point on no one caring, again, as an ETF person, I take that as like, you have all these strange little funds out there that have no assets, that just bump around, but they get a lot of coverage because they're interesting.

[Matt Levine]

Yes. An ETF is a way, is a form of expression. It's a way to package an investment idea. And sometimes those investment ideas are appealing to a lot of investors, but other times they're just funny ideas and so they're fun to talk about.

[Katie Greifeld]

Right? Yeah.

[Matt Levine]

It's just like a little thesis. This is subversive, which launch these also runs the Nancy Pelosi Copy Trading etf.

[Katie Greifeld]

Exactly.

[Matt Levine]

Which again, you have an investment thesis like Nancy Pelosi and other Democratic lawmakers are regularly trading on inside information. They also have a Republican one. They have a Democrat and a Republican etf. You could have a thesis like, those guys are trading on inside information. So I want to copy them so I can make money. But I kind of think that mainly it's performance art. Right. It's mainly performance. Isn't it kind of fun to have a ETF that copies Nancy Pelosi's trades?

[Katie Greifeld]

Yeah. I guess the key to not being grumpy about it is to view it in that way. It is performance art.

[Matt Levine]

Right. Dave Nadig is an ETF purist who believes that ETFs are important part of the portfolio and should be constructed in a responsible way. But there's a lot of investment options out there, and this is a fun way to produce funny ones. But this one is not that fun. The Elon one. I really think the thesis is just pretty normal. And we've talked about it in a very straightforward like, this should be the product that people offer because people want it.

[Katie Greifeld]

Yeah. In terms of out there ideas. This isn't that out there.

[Matt Levine]

Totally fine.

[Katie Greifeld]

It's definitely in the zeitgeist.

[Matt Levine]

I thought like I had written, oh this should exist, but what I'd actually written is there should be a like no SpaceX anthropic OpenAI one which is like an overlapping idea but not the same idea because like people are mad about all those companies, like the rules being changed for all those companies. But Elon Musk is like more personally agitating to people.

[Katie Greifeld]

Yeah, Money Stuff is brought to you by OTC Markets Group. Thinking about joining the exploding overnight market space but unsure where to start. Designed to meet the needs of a growing international investor base, OTC Markets overnight platform for exchange listed securities Moon ATS provides access to global securities in US dollars from 8pm to 4am Eastern Sunday through Thursday. Extend your trading day and trade Global securities in US dollars through a FINRA licensed broker dealer. In the first half of 2026, over US$28.1 billion traded on Moon ATS. Learn more about Moon ATS visit otcmarkets.com Moon Moon ATS is operated by OTC Link, LLC, a FINRA registered broker dealer.

[Matt Levine]

Get the news you need in just 15 minutes. Start your day with Bloomberg Daybreak, the podcast with a global view on the stories that matter. I'm Nathan Hager.

[Bloomberg Announcer]

And I'm Karen Moscow. Join us each morning for curated stories on current events, politics, business and foreign

[Matt Levine]

relations, plus one conversation on the day's biggest developments, all in just 15 minutes. Subscribe to Bloomberg Daybreak for a precise,

[Bloomberg Announcer]

thoughtful take on the stories that matter.

[Matt Levine]

Listen to Bloomberg Daybreak each morning on Apple, Spotify or anywhere you listen. Elsewhere in SpaceX.

[Katie Greifeld]

Elsewhere in SpaceX joining indexes. Oh right, yeah. That's a smooth transition.

[Matt Levine]

Yeah. So SpaceX as of last week was not in the NASDAQ 100. So it's timely that this ETF launched this week, filed this week. It didn't actually launch. So the SpaceX joined the NASDAQ 100 basically Monday evening or Tuesday morning depending how you count, and it went down that day. It closed down on Monday despite tens of millions of shares trading had because all the index funds had to buy it. And this brought some attention to the index rebalancing trade. What also brought attention to the index rebalancing trade is that two portfolio managers at Millennium made $3.7 billion doing it last month.

[Katie Greifeld]

Yeah, at first I thought like year to date like that $3.7 billion, the singular month of June was fantastic for these guys having the time of their life. And there was a lot happening in June, obviously.

[Matt Levine]

I have talked to people who work at these multi strategy hedge funds and one question I've asked is like, if you're an index rebalance trader, like there's some big indexes that rebalance, you know, quarterly, twice a year, whatever. Do these people come to work every day? Yeah, everyone assures me yes, they work very hard all year round, but their job is kind of focused on a couple of big dates. And while apparently they work very hard all year round, they clearly sometimes are doing huge trades and sometimes they're not doing any trades because they're just thinking. They're thinking very hard. But in June there were a lot of rebalancings. One of the things that the Bloomberg article about this mentioned, there's five events, but one of them is the SpaceX joining the NASDAQ and I think the FTSE and a few other things.

[Katie Greifeld]

I mean Russell had its annual recal

[Matt Levine]

institution, so there's a lot of stuff going on and they were deploying a lot of capital and they made a boatload of money.

[Katie Greifeld]

Yeah, so there was a bunch. I mean this story was so well read and also made the rounds on social media. And as discussed, I booked March. A lot of tweets about this.

[Matt Levine]

A lot of people were calculating how much the individual people took home, which I would not work anymore if I had done one really good index rebalancing.

[Katie Greifeld]

I mean, God bless, you just got to get one home run. Friend of the pod, Gappy pointed out that this is very cyclical. A lot of boom and bust. Someone else tweeted out, yeah, these same

[Matt Levine]

pods lost hundreds of millions of dollars a while back.

[Katie Greifeld]

Yeah, specifically there was a story From March of 2025 talking about the uncharacteristic loss that this team lost in February, which was like $900 million or something.

[Matt Levine]

Now they've had a more characteristic game.

[Katie Greifeld]

So you have to have a strong stomach, it seems like to be in the index rebalancing game.

[Matt Levine]

Yeah, strong stomach. So like the index rebalancing trade is like essentially a liquidity provision trade.

[Katie Greifeld]

Yes.

[Matt Levine]

Index funds need to buy so much stock all at once and that's terrible. People sometimes get mad at the index rebalancers because they think that they're front running the index funds because they know the index funds have to buy and so they're buying ahead of the index funds, which is kind of true. But if they didn't do that, the index funds would have to do all of their buying at the close on like the one day. And they would have to pay up so much, like the stock would spike up at the close as there was like tens of millions of shares of new orders from index funds and nobody to sell it to them. What the rebalancing traders are doing is they're selling it to them. They're saying, okay, we know that at the close on Monday, the index funds are going to have to buy 60 million shares of SpaceX or whatever it is. So we're going to buy some stocks so we can sell them 60 million shares at the close so this stock doesn't spike up at the close on the low rebalance day. And so it's probably helpful to index funds. And there are studies showing that index funds have less slippage basically because of like the existence of this trade. They get a fee for it in expectation. Yeah, they get an at risk fee for it. I talk to hedge fund managers sometimes who are like, you know, if we didn't do this, like indexing wouldn't work. Like the rise of indexing is made possible by multi strategy hedge funds doing this trade. My assumption is that if the hedge fund just didn't do this trade anymore, like you could solve the problem with like averaging periods. Instead of the index provider saying, you know, as of Monday this is entirely in the S and P. You could be like, we're going to average it in over 30 days. So the index will slowly adjust over time. So that index funds could buy over time rather than buying in one day. But right now the index funds buy in one day and they buy from hedge funds. Yeah, and so the hedge funds make money by anticipating index fund demand and by. Also the main thing you have to figure out is. One thing you have to figure out is what companies will be added to the index, which I think is like.

[Katie Greifeld]

That sounds like the fun part.

[Matt Levine]

Yeah, I think some of it is kind of mechanical. Some of these indexes is not that mechanical. But another thing you have to figure out is how much stock the index funds will buy, which is fairly mechanical because you can guess how much index funds own and then they own that percentage. But another thing you have to figure out is how much your competitors will sell. You have to know who else is doing this trade. Because if twice as many people as you think are doing this trade, then you're going to drive down the stock in the closing auction. But so yeah, it's like a trade with some risk. The other risk is just like we own a couple of stocks. The stocks that you think will be added to the index. And like if you are just so you're just like long a lot of idiosyncratic risk on like huge positions in those stocks. And so that's how you can lose money is if those stocks go down, it's also you can make money. Like one theory that a reader sent me about the $3.7 billion they made in the rebalancing trade last month is that two stocks were added, I think to the S and P. One of them was Marvel.

[Katie Greifeld]

Yeah, that sounds right, Marvel.

[Matt Levine]

It was announced they're being added on June 5th. But you could probably have guessed. So probably some of these funds were long Marvel before June started.

[Katie Greifeld]

Yeah.

[Matt Levine]

And on June 2, Jensen Huang gave a talk where he said that Marvel is going to be a trillion dollar company and the stock went up like 33% that day, adding $70 billion of market cap. That could be the whole explanation for this. Right. You're just idiosyncratically long a lot of Marvel and then a Marvel go, then you've made $3 billion. So that could be the whole story.

[Katie Greifeld]

Yeah. Well, I was thinking it sounds fun to be an index rebalancer because outside of the Marvel Jensen Huang situation, even if it is somewhat mechanical determining which stocks are going to be added, you still see big pops in those names after it's announced that they're going to add the index.

[Matt Levine]

That's the trade is like he's buying it before it's announced so that you get that population.

[Katie Greifeld]

Yeah, sounds fun. Something that I wanted to ask you about and maybe this is a dumb question. So you talk about how when it comes to index funds needing to get these shares at the closing auction. They used to work with investment banks. Now it's these hedge funds that have sort of stepped into that role. You also point out that these hedge funds don't have customers or take orders. So how do they actually link up with the index funds?

[Matt Levine]

It's an auction.

[Katie Greifeld]

It's just an auction.

[Matt Levine]

This is just a NASDAQ closing auction.

[Katie Greifeld]

They don't know in advance the index funds that I don't know if there's

[Matt Levine]

any sort of like block trade desks doing stuff, but makes me nervous. 78 million shares of SpaceX cleared in the closing auction on Monday, which is like 10x what it usually does. So like index funds have to buy at the closing price, right?

[Bloomberg Announcer]

Yeah.

[Matt Levine]

And they don't have to like but you know, to track the index they have to own it at the closing price. And so they put in big orders to buy at the close. And someone has to be on the other side of those orders on a touch funds, knowing that there will be demand in the closing auction.

[Katie Greifeld]

So what do you think, just the market. What do you think happened this past week that you actually saw SpaceX shares finish the day lower? Did someone miscalculate what the closing price was going to be or how many shares would be needed?

[Matt Levine]

The way to make money on the index rebalancing trade is to buy low in the days leading up to the rebalancing event.

[Katie Greifeld]

Right.

[Matt Levine]

And then sell in the rebalancing and then keep buying low. Conceptually you should sort of buy like half of the shares before the rebalance event and half the shares after the rebalance event. And like, what should happen is that, like, you'll buy at kind of low prices and it'll kind of spike up into the close because, like, there'll be a lot of, you know, you'll be going on buying and then like, index funds will buy a ton and it'll spike up and then you'll keep buying, like you'll short some shares to the index funds in the closing auction on the one day and then you'll cover your short over the next few days. Right. And that's kind of what's happened. The index funds had to buy in the auction and then their buying demand was done. And then the hedge funds have the opportunity to keep buying, to close out their shorts. If they were short, I don't know. But that's what conceptually you should buy half before and half after because you're sort of averaging them in and you don't have to average them in over the period leading up to the rebalance date. You can average them in over the period around the rebalancing date.

[Katie Greifeld]

These are good notes for my next career as an index rebalancer because I love.

[Matt Levine]

I'm not an index rebalancer and I'm sure that I'm going to do this, do it, are horrified by my naivete,

[Katie Greifeld]

but hopefully they're listening and they're going to write in.

[Matt Levine]

But yeah, I mean, the answer is there was a big spike of demand in the auction and now the stock is lower because that big spike of demand went away. And hopefully if you're an index rebalancer, you're profiting from that by selling in the closing auction on Monday at like 160 or whatever and then buying today at like 150.

[Katie Greifeld]

It is going to be interesting also to, as you point out, we have the Start of the lockups expiring this month.

[Matt Levine]

This is like, I think I've said this on this podcast. What you want for neatness is the lockups all expire on the same day. It's added to the s and P500. You want to just. There's huge natural supply, there's huge natural demand. Sure, hedge funds can intermediate that, but why not just have an auction where the lockup sellers sell to the index buyers?

[Katie Greifeld]

In a perfect world, that would be the case.

[Matt Levine]

No one does that because it's like, I don't know, you can't like count on the. You can't count on S and P to include you at a particular time. But it's just like it just, it would be. It's so convenient.

[Katie Greifeld]

Yeah. I just feel like SpaceX is such like an interesting little petri dish of. Okay, you have this index demand. Okay, it was one time. Now you have like this waterfall.

[Matt Levine]

Right. Like, why not? Matt shows up.

[Katie Greifeld]

I know, but what's going to happen? Because we're not.

[Matt Levine]

Yeah, I don't know. I mean like, I don't know.

[Katie Greifeld]

Like you have some analysts saying it's going to a trillion, $10 trillion in market cap. It's just, I mean like in general,

[Matt Levine]

the people with the lockups are people who are not the anti elon Musk people. They're the opposite of that. Right. So like a lot of them won't sell. Some of them. A lot of them will sell. Right? Like a lot of them made a lot of money and you know, we'll take some profits. But yeah, some of them are like, no, I'm in this forever. 10 trillion.

[Katie Greifeld]

They're true believers, man.

[Matt Levine]

Yeah, I don't know. I mean, but I'm sure that the lockup will, you know, create a lot of supply. Let me definitely go in. Theory is that the stock price is high because there is just not a lot of supply. And there's a lot of forced demand from index funds and a lot of demand from retail. And if instead of 5% of the stock being available to buy, you know, 40% of the stock was available to buy, it would be lower, but depends on people are actually selling.

[Katie Greifeld]

You'll just have to watch this space.

[Matt Levine]

You'll be gone.

[Katie Greifeld]

I will be watching fondly from afar, very distantly.

[Bloomberg Announcer]

The Bloomberg Sustainable Business Summit returns to Singapore on July 22. Our 5th annual Asia Pacific Summit will explore how business and finance leaders are shaping the next phase of globalization by strengthening resilience and driving a multi speed energy transition across Asia's diverse markets. Join us for Solutions Driven discussions and networking opportunities. Thank you to our Summit Advisor, Bangkok Bank. Learn more at BloombergLive.com SBS Singapore.

[Matt Levine]

Should we talk about eggs?

[Katie Greifeld]

Yes, we should have started with eggs. It was a risky bet to start with ETFs because I feel like we lost a lot of the audience.

[Matt Levine]

I know. Should we switch them around and post?

[Katie Greifeld]

Yeah, I don't care.

[Matt Levine]

You don't care with Elon people. People love the amount of Elon.

[Katie Greifeld]

That's true. That's true to everyone. Yes, they're a great source of protein and choline, which is very important for brain health.

[Matt Levine]

Okay.

[Katie Greifeld]

Only if you eat the yolks. Eggs are super expensive. Yeah, I love eggs.

[Matt Levine]

They were super expensive because of bird

[Katie Greifeld]

flu and market has it has since been revealed.

[Matt Levine]

Maybe I'm not totally convinced that the market manipulation actually raised the price of eggs that much. But like you know, the Justice Department is and many states Attorney General. State Attorneys General.

[Katie Greifeld]

That's my least favorite plural attorneys general.

[Matt Levine]

Anyway, people get really into weird plurals. Anyway, the Justice Department and several states sued a bunch of egg producers for manipulating the price of eggs and they settled the house for eggs.

[Katie Greifeld]

I love how you basically ask why wouldn't you be rigging your version of Libor if you were in this game?

[Matt Levine]

I feel bad calling it Libor because Libor was essentially a number that was self reported. A standard setter would call banks and say hey what price are you borrowing at? And they just make up a number what I've been calling egg Libor which is actually the earner. Barry. Yeah, it's now called Xpana but there's a market data service called Expana, it used to be called Erner Barry that reports the price of eggs and it reports the price of eggs based on transactions on the egg. But the egg clearinghouse is not where most egg transactions take place. So you have the egg clearinghouse basically for egg producers to trade surplus eggs. So sometimes an egg producer owes its customers more eggs than it has. Sometimes an egg producer has extra eggs and so they match off in the egg clearinghouse and that produces a price. But there are not that many transactions on the egg clearinghouse compared to just wholesale egg transactions. And so the egg producers are like, well I mean allegedly in a settled lawsuit. But the egg producers are like, well if the price on the egg clearinghouse is high, that'll make the price on all of our contracts high. So we can overpay in the clearinghouse market to raise the price on all of our wholesale Contracts that price by reference to the earner, Barry Price. And so allegedly they did that. And they have emails and communications being like, hey, let's push up the price really high. And they did some spoofing. They would put high bids onto the clearinghouse so that the pricing service would use those high bids and then they'd take them away before they got hit. And the price of eggs allegedly went up again. The egg producers are like, nah, it didn't really affect the price of eggs, but the Justice Department thinks it did. And so they sued and they settled with a bunch of egg producers. And truly my favorite part of the story is that the settlement was paid in eggs. Yeah, you never see that. You never see that.

[Katie Greifeld]

No.

[Matt Levine]

But, like, egg companies are like, okay, we're going to pay 50 million eggs for this market manipulation.

[Katie Greifeld]

Those food banks are going to have to take physical delivery of so many eggs.

[Matt Levine]

Yeah, they're going to food banks, which is beautiful. The New York press release was like, a little ambiguous. It was like, the New York Attorney General has secured 50 million eggs, and 5 million of those eggs will go to New York food banks. Like, the actual explanation is that the other 45 million will go to food banks in other states because it's like. Like the total settlement is 50 million eggs or whatever. But I had a moment of thinking, like, will the New York attorney general eat 45 million eggs?

[Katie Greifeld]

I mean, don't threaten me with a good time. I love eggs. But I also loved some of the emails that were found. Hickman's, for example, was, you know, conspiring with executives from other egg producers and at one point emailed, hurry. There are only 16 bids on ECI right now. That's the egg clearinghouse, and 15 of them are ours, meaning Hickmans, which. That's like a. That's. I don't know. That's a bad email to send. Even if they didn't really meaningfully manipulate the price. That's a hard one.

[Matt Levine]

Yeah. More than one person said, we have to bid. Like, they vote in Texas early and often, which is like, once is fine. But, like, using that joke repeatedly.

[Katie Greifeld]

I'm glad you immediately brought up bird flu, because that was my knee jerk reaction reading this. Like, you think about the time period that we're talking about, like, 2022, bird flu, avian flu was devastating the nation's flocks. Chickens were dying left and right. They were having to be cold en masse. They didn't need to do all of this.

[Matt Levine]

Yeah. I mean, I think that obviously their costs went up. Right. So like, one possibility is like, they used bird flu as cover for market manipulation. That's clearly kind of like the. The vibe of the Justice Department complaint, which is like they saw prices going up anyway. They figured any price increase that they tried would be. Everyone would be like, yeah, it's bird flu, it's fine. And so they tried to push up the price a little bit extra to make extra profits. The other possibility is that their costs went up because of bird flu. And the market pricing service was slow to react to that. And so they manipulated the price on the clearinghouse to reflect the actual price of eggs. They say everything we did was legitimate and it didn't push out the price. You can imagine a sympathetic explanation for this. But in any case, yeah, the price went up mostly because of bird flu and then little bit maybe because of market manipulation around the edges.

[Katie Greifeld]

Yeah.

[Matt Levine]

The other thing that I like is that right around when this is happening, I think two weeks after the conspiracy allegedly ended in 2025, Cal, Maine, which is one of the big egg producers, they're like controlling families, sold $300 million worth of stock. The Adams family, actually, in an underwritten offering. And so they put out a prospectus disclosing all of their risk factors. And one of the risk factors is like, prices are temporarily high because of bird flu. And by the way, we got an investigative. The Justice Department trying to figure out why prices are high.

[Katie Greifeld]

Don't worry about that, though.

[Matt Levine]

Yeah. I wrote on Thursday that feels like an everything securities fraud lawsuit waiting to happen. Right. Like, you bought shares basically near the all time high. You bought shares from the controlling family without knowing that they were about to settle a market manipulation case. It's not ideal.

[Katie Greifeld]

No. Yeah. There's a lot of family drama involved in that. Maybe it's not drama, but the Addams Family does control it through super voting class A shares held by a vehicle called Daughters, which is four of the daughters of the late founder. Like, I don't know, I just love the idea of, like, there's this egg dynasty.

[Matt Levine]

Sure.

[Katie Greifeld]

Yeah.

[Matt Levine]

There's a number of egg dynasties.

[Katie Greifeld]

I would imagine so. I wonder how many markets this sort of behavior is happening in. I wonder if it's happening in cattle right now.

[Matt Levine]

I talked about there was like a chicken livewire conspiracy a while back. Yeah, Yeah. I think there's a lot of it.

[Katie Greifeld]

Well, in Cattle. I don't know if you've been following Screwworm.

[Matt Levine]

I'm moderately up to speed on Screwworm.

[Katie Greifeld]

Ravaging.

[Matt Levine]

Ravaging, yeah.

[Katie Greifeld]

The nation's herds. Yeah, so I don't know. Beef prices are going up.

[Matt Levine]

I wonder.

[Katie Greifeld]

All those worms. Bad news. Something else I'll be monitoring over the next six months. It's a situation I'll keep an eye

[Matt Levine]

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

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The Bloomberg this Weekend Podcast News, Politics and the Lighter side of Bloomberg Cosmetic Enhancement in Asia right now are elf ears.

[Matt Levine]

Elf ears?

[Katie Greifeld]

Yes.

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People are getting injections to enhance their ears.

[Katie Greifeld]

I really don't need anything else to

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learn to be self conscious about.

[Matt Levine]

This is not something I needed to have on my radar.

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