This Is Weird: A Mailbag Episode

Summary

Money Stuff: The Podcast

Episode: This Is Weird: A Mailbag Episode

Host: Bloomberg (Matt Levine, Katie Greifeld)
Date: September 26, 2025

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Episode Overview

This episode of Money Stuff is a special “mailbag” edition in which co-hosts Matt Levine (author of Bloomberg's Money Stuff column) and Bloomberg News reporter/anchor Katie Greifeld answer listener questions about quirky financial regulations, technical details of market structure, the evolution of public and private markets, and offer their personal (sometimes heterodox) takes on investing. As always, the conversation blends finance nerdery, wit, and current events in Wall Street.

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Key Discussion Points & Insights

1. The Mysterious Tungsten Cube (01:39–03:04)

• Matt recounts receiving a tungsten cube engraved with “this is weird” and speculates about the sender, appreciating the humor and the absurdity.
• Notable Quote:
  • “A tungsten cube with ‘this is weird’ engraved on it is very much my jam. And secondly, sending that with no note and thereby making it weird is kind of a good joke.” — Matt Levine (02:13)

2. Financial Reporting Frequency: Why Not Monthly? (03:50–07:55)

Listener Rod asks why public companies don’t report financials monthly, since management already has the data.

• Matt explains:
  • The theoretical purpose of reporting is for investors to have the same info as management.
  • The real barrier is the high legal liability public companies face (potential for shareholder lawsuits when something's wrong).
  • “The burden of public company reporting is an entirely different beast.” — Matt Levine (07:06)
  • More frequent reporting would multiply stress, not reduce it—even if companies do the work in-house.
• Katie notes:
  • Companies sometimes pre-announce earnings, but usually just for bad news.
  • What matters to investors is consistency in the reporting cadence, not necessarily frequency.

3. Leveraged ETFs and True Long-Term Leverage (07:56–12:22)

Listener Josh asks why there aren’t retail investment products that deliver true long-term leveraged equity performance, as opposed to daily leveraged ETFs that suffer from “volatility drag.”

• Matt:
  • Daily reset levered ETFs exist for gambling on short-term price moves, but not for long-term exposure.
  • “There’s no reason that if the thing you want is long-term levered exposure...it should be in a daily liquidity ETF.” — Matt Levine (09:35)
  • The private equity model (eventually accessible via 401(k)s) is likely where true leverage will come for retail.
• Katie:
  • Some monthly-reset levered ETFs have been tried, but have little demand and some have shut down.
  • The niche nature of these products is a barrier to their survival.

4. Fewer Public Companies & The Rise of Private Markets (12:22–15:14)

Listener Justin asks about the shrinking universe of U.S. public companies and the implications for individual investors, particularly in retirement plans.

• Matt:
  • The optimal world would have more companies going public and being investable via low-fee index funds.
  • Instead, access to high-growth companies increasingly comes via private funds with high fees.
  • This trend is “clearly happening,” with private capital providers lobbying for access to the trillions in 401(k)s.
  • “It’s not how anyone would design a financial system from first principles.” — Matt Levine (14:18)
• Katie:
  • Affirms that yes, 401(k) investors will likely have more exposure to costly private funds in the future.

5. The Onion Futures Act, Prediction Markets, and Legal Loopholes (17:56–22:26)

Listener Jordan asks: whether the infamous ban on onion futures can be dodged by using crypto prediction markets.

• Matt:
  • The Onion Futures Act of 1958 explicitly bans trading onion futures (as well as motion picture receipts).
  • While prediction markets have vastly expanded the universe of tradable events, onions remain a clear statutory exception—so, “The answer is no.”
• Segue to next question (Thomas):
  • The hosts move to discuss if insider trading in a company's own shares could be legal if done via prediction markets.
  • Matt: Securities-based swaps and equities involve distinct regulations. Bets on individual stocks remain off-limits on commodities exchanges, and even binary options on stocks are tricky.

6. Sharps and Sports Betting: Can Exchanges Ban You? (22:56–27:54)

Listener Josh #2 asks: if exchanges could ban sharp (winning) bettors in financial prediction markets as sports books do.

• Matt:
  • In traditional sports betting, sharps are limited to preserve bookmaker profits.
  • On regulated exchanges, which are more like marketplaces than bookies, open access is required by law—so banning is not allowed in the same way.
  • In U.S. equity markets, there are still quiet forms of exclusion where market makers prefer “noisy” (retail) traders over sharps, often via order flow segmentation.
  • “If you continue to pick off your brokers, your brokers will stop answering their calls.” — Matt Levine (28:09)

7. Who “Misses” Earnings: Companies or Analysts? (29:40–32:46)

Listener Mike: Should the burden of “missing” earnings be on the analysts who are wrong, not the company?

• Katie and Matt:
  • In reality, company management actively manages analyst expectations; missing estimates often signals a failure in communication, not just numbers.
  • The real-world impact is that stocks move on the news, so the causality is functionally from company to investor sentiment.
  • “Earnings expectations are not analysts putting their finger in the wind...earnings expectations are analysts talking to the companies.” — Matt Levine (30:18)
  • Regulatory lines are fuzzy, but some expectation management is considered fair play.

8. Heterodox Investing Opinions (32:47–34:58)

Listener Charlie asks: Do Matt or Katie hold any non-mainstream finance views?

• Matt:
  • Mostly sticks to orthodox ideas, but pushes back on Fintwit’s hatred of comparing stocks and flows, arguing that it’s just “valuation.”
• Katie:
  • Admits to a hot take: “Fixed income and bonds seem kind of stupid to me.”
  • “Money market funds, sure, that’s basically cash, but why on earth would anyone buy…even the belly of the treasury curve and especially out from there?” — Katie Greifeld (34:40)

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Notable Quotes & Moments

• “I wouldn’t mind hearing from whoever sent it to me.” — Matt Levine on the mystery tungsten cube (02:18)
• “Everything that happens in US Financial regulation...is in the shadow of litigation.” — Matt Levine (04:36)
• “You can’t really have monthly public reporting, because...the task of turning those numbers into something you could give to shareholders and not worry about getting sued is monumental.” — Matt Levine (05:13)
• “If you enjoy gambling, you'll enjoy a double gamble twice as much.” — Matt Levine, on the appeal of leveraged ETFs (11:09)
• “It's not how anyone would design a financial system from first principles.” — Matt Levine, on private funds for retail investors (14:18)
• “The answer is no...onions are actually covered by the statute...” — Matt Levine, responding to the possibility of betting on onions via crypto (18:37)
• “Commodities exchange has to have some sort of fair open access. And so...they can't limit you or cut you off.” — Matt Levine (24:23)
• “If you miss expectations, you have done a poor job of managing your analysts.” — Matt Levine (30:23)
• “I don't know, fixed income and bonds seem kind of stupid to me.” — Katie Greifeld (34:00)

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Timestamps of Key Segments

• Tungsten Cube Story: 01:39–03:04
• Why Not Monthly Reporting? 03:50–07:55
• Retail Leveraged Products: 07:56–12:22
• Public vs. Private Markets: 12:22–15:14
• Onion Futures & Prediction Markets: 17:56–22:26
• Sharps & Sports Betting in Finance: 22:56–27:54
• Earnings “Misses” – Fault?: 29:40–32:46
• Non-Mainstream Finance Opinions: 32:47–34:58

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Tone and Style

As always, the episode maintains a wry, thoughtful, and slightly irreverent tone: Matt Levine delivers technical explanations with deadpan clarity; Katie Greifeld brings relatable candor and energy. They tackle complex questions while sprinkling in finance in-jokes, personal opinions, and friendly banter.

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Conclusion

A signature “mailbag” episode full of sharp listener questions, honest (and sometimes unconventional) answers, and education on the behind-the-scenes reality of finance and investing. This installment covers everything from auditing practices and leveraged products to policy quirks like the Onion Futures Act—and reminds you that sometimes the weirdest mail you get might just be the best content.

Transcript

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[Matt Levine]

Yesterday arrived a tungsten cube. On the tungsten cube is engraved this is weird. It arrives in a box with no note. I was not expecting a tungsten cube.

[Katie Greifeld]

Was it checked for anthrax first? Was it? Was it dusted?

[Matt Levine]

I don't want to give any of the ideas, but I assume the Bloomberg mailroom is quite comprehensive in its anthrax dusting.

[Katie Greifeld]

I hope so.

[Matt Levine]

I didn't even think about it. I was just like, ah, it's come through the Bloomberg mailroom. It's fine. Anyway, I have this tungsten cube now. So if anyone sent me a tungsten cube that says this is weird, be in touch. That's fun. I have to say that first of all, a tungsten cube with this is weird engraved on it is very much my jam. And secondly, sending that with no note and thereby making it weird is kind of a good joke. So I have no complaints. But I wouldn't mind hearing from whoever sent it to me.

[Katie Greifeld]

I didn't realize that thisisweird was engraved on it when you posted it on Instagram. I thought that you added the text on the side.

[Matt Levine]

Oh no. Yeah, I posted it on my Instagram close friends stories. But I'M also holding it up to the camera in our zoom. Another way that you can't see it.

[Katie Greifeld]

That is a pretty good gag.

[Matt Levine]

Yeah, yeah, yeah. This is my life.

[Katie Greifeld]

It's pretty good. You have a little bit of a collection now.

[Matt Levine]

I do. I have my money stuff 10 year anniversary collection. I'm now holding both of them up to the camera. And again, no one can see it. Speaking of things that come in the mail.

[Katie Greifeld]

Oh, good one. Mailbag.

[Matt Levine]

I've ever done on this podcast. It's a mailbag episode.

[Katie Greifeld]

That was smooth. I wasn't even expecting it.

[Matt Levine]

I know, right? When you least expect a transition.

[Katie Greifeld]

We got some pretty good ones this week. Mailbag, Mailbag.

[Matt Levine]

Hello and welcome to the Money Stuff podcast, your weekly podcast where we talk about stuff related to money. I'm Matt Levine and I write the Money Stuff column for Bloomberg Opinion.

[Katie Greifeld]

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

[Matt Levine]

And today we're doing a mailbag side effect.

[Katie Greifeld]

Mailbag, Mailbag. Great questions. Thank you everyone for sending them in. Let's just dive right in. We got a great one out of the Gates from Rod. He asks why not more frequent reporting? As a CFO of a small but private equity owned business, I close our books monthly and report out our financial results each month. Every public company in the world is doing the same. It's no additional cost to release those results publicly in some form, even if not a full 10Q. This was interesting.

[Matt Levine]

The ostensible purpose of financial reporting is to give investors the same financial data that management is using to manage its business so that the investors can sort of sit in the shoes of management. Everyone knows that's not true, but that's sort of like the ostensible. That's why there's a, you know, in your 10k, you have to have management discussion and analysis where you sort of say what management is thinking about the financial results. Rod is surely right that every public company closes its books every month and has some sense of the financial results for that month. And if they had private equity investors, they would just send over the spreadsheet and the private equity investors would be like, thanks, this is helpful. But they have public investors, which means primarily that they have people who can sue them. Everything that happens in US Financial regulation and especially US Financial disclosure is in the shadow of litigation, right? So if you put out a 10Q and your numbers are wrong, you'll get sued and you will be like, yep, our numbers are wrong. Here is some money. Plaintiffs lawyers and I think that's a lot of what is going on here. Like when you put out a 10Q. Like a 10Q does not have audited financials, but you, like, spend three days with your auditor going through the 10Q and making sure that you have auditor comfort on every number in the financials because if they're wrong, you'll get very sued. And so that, I think, is why companies do not put out more frequent disclosure. Because, sure, you have those numbers, but the task of turning those numbers into something you could give to shareholders and not worry about getting sued over is monumental. People understand that this is not great. Right. This is why periodically the SEC tries to have some reform that tries to make it harder for shareholders to sue public companies. But. But, you know, I always say everything is securities fraud. I think the arc of the universe bends towards it, making it easier to sue public companies.

[Katie Greifeld]

This question did make me think a little bit about how occasionally you will see companies pre announce their earnings, even though they're wedded to quarterly updates. They will go early sometimes, but usually it's for bad news. Also, that's not monthly.

[Matt Levine]

Yeah, people prenounce for offerings or for bad news, but. Right. To have a monthly schedule of putting out financial information, no matter what, would be three times as stressful as doing it quarterly.

[Katie Greifeld]

Yeah, but in all these conversations, I feel like as we continue to bat around quarterly versus semiannual, I just feel like when it comes to shareholder reaction in terms of how the stock actually performs, it just needs to be consistent whether you announce monthly or every three months or every six months. I feel like switching around between the different time frames and is what really matters for investors trying to make decisions.

[Matt Levine]

Yeah, I mean, I think Rod points out that monthly reporting would smooth a lot of volatility and just make things more predictable and investors could have more information and not react as strongly to every three month announcements. But yeah, I think the disconnect here is between the burden of actually doing the financials and the burden of public company reporting, which is an entirely different beast. Kitty is wiping her screen.

[Katie Greifeld]

There's like a beam of light going.

[Matt Levine]

She's trying to wipe me. Me off her screen. Go away. As you might know if you've been listening closely or listened last week closely, Katie is recording this from Colorado.

[Katie Greifeld]

Colorado.

[Matt Levine]

And I'm recording this from my house. So it's the somewhat unusual but not unheard of remote money stuff. Podcast recording.

[Katie Greifeld]

Yeah, it's always a little bit worse. So thanks for listening. All right, great question, Rod.

[Matt Levine]

Mailbag.

[Katie Greifeld]

Mailbag. Let's see, we have another one from Josh and this one is about ETFs and Josh wants to know about them. He says you've done a great job covering the flaws of levered equity ETFs, especially how daily resets make them diverge from long term leveraged exposure. Do you see potential for retail products that actually deliver true long term levered equity performance? Suppose you think corporate America is too conservative with their use of leverage, but simply buying on margin is too costly for the ordinary retail investor. But an ETF sponsor could implement leverage far more efficiently. Is there a path for this to exist? Great question.

[Matt Levine]

So Josh I think has been ETF pulled by Katie. So we've talked about levered ETFs ordinarily rebalance every day to give you two times or three times the daily returns of a stock. And that creates this weird volatility drag. And if you wanted to have like two times the returns of a company for like a year, there's not really a product that will give you that other than buying the stock on margin and waiting a year. But there's no ETF product. Since we started talking about this trader did a like a weekly and monthly rebound ETF which gives you a month of two times the returns I think for like the S and P. But it is very hard to do an ETF that is like, we'll give you levered return on a stock for five years. Because the whole point of an ETF is it has daily liquidity. And so people can buy into the ETF each day and you're giving them a different proposition each day. If you're giving them, you know, five years return starting on September 25th, instead of saying we're giving you daily levered returns. But there is no reason that if the thing that you want is long term levered exposure to a company or an index or whatever, there's no reason that you should get that in the form of a daily liquidity ETF that you can get out of at any time. Right. Like there are other ways to build that product. Now the classic way to build that product is something like a private equity firm which buys companies, levers them up and takes investors. And as we talk about a lot around here, it is getting easier and easier to put private equity into your retail brokerage account. And so one day in the not too distant future, you'll just get a KKR fund in your brokerage account and that'll be that. But otherwise, yeah, I mean it is hard because the sort of Classic retail products are mutual funds, whether or not they're ETFs. And mutual funds have leverage limits. And so it is a little hard to invest in a retail product that gives you 2x the exposure to corporate America other than that retail product being your own margin account. But you know, watch this space. In like a year it's just going to be private equity funds in your 401k.

[Katie Greifeld]

I'm glad you brought up the Trader ETFs. I have some sad news. A bunch of them actually shut down.

[Matt Levine]

I'm not surprised. It's a super niche product, right? To be like, I want two times the monthly return on the S and P. Why? Yeah, like two times the daily returns is a fun gambling product, right? And two times the long term returns is maybe for like a month. Why a month?

[Katie Greifeld]

Yeah, I think at least one of them still exists. They did it on the QS SPY and also the Philadelphia Semiconductor Index. And the monthly Q's reset ETF still exists, but I mean it's small. It just seems like the demand isn't there. It's 61 million.

[Matt Levine]

But still there's two traits here, right? There's like what Josh asked about is if you think that corporate America is too conservative with their use of leverage, right? So you can think that the capital structure of the S and P is under levered and you want to back lever it yourself. And you can't do that through a margin account because you can't get good margin terms. But you wish some investment advisor would do it for you. That's a sort of set of corporate finance theses that are reasonable. The other one is if you enjoy gambling, you'll enjoy a double gamble twice as much. And that I think is a levered bet on a semiconductor index. I don't know. I don't know. But I think you're coming to that. Being from the perspective of like the semi industry is too underlevered, I need to synthetically lever up that industry. I think you're like, ooh, these stocks will go up a lot. Why not make them go up twice as much?

[Katie Greifeld]

Yeah, Josh, great question. Mailbag, mailbag. Another J named Justin asks. According to a recent op ed in the New York Times, the number of publicly traded companies has decreased by 50% over the last 30 years. Companies are choosing to remain private to avoid the additional regulatory requirements. But also because of the evolution in the funding models for promising tech startups, how will this impact the investment options available to individuals investors? Will 401k investors in the future have to allocate some portion of their investment portfolio to private capital funds with management fees that are much higher than standard equity index funds.

[Matt Levine]

Yeah, I just feel like the answer is yes. Right? It's not a first best state of affairs, right? Like the first best state of affairs, I think, I think in the abstract is like, somehow it gets easier to go public and companies feel some sense of patriotic obligation to go public. And they're like, you know, we're a good company. We want mom and pop investors to be able to participate in our growth. And so all the little companies go public and we make it really cheap and easy and we don't get sued when you go public. And so all the companies go public and the big fun, fast growing companies are available to mom and pop investors. They're available in index funds, they're available in standard low fee equity mutual funds, and life is great. The second best outcome is all the companies stay private and big institutional investors have access to their private shares. And those big institutional investors get bigger and bigger and bigger and they tap out all of the available institutional capital and they're like, hey, there's a lot of money in 401s. And then they lobby the president to let them take 401 money. And everyone's like, oh yeah, it'd be great to put individual retail investors into private investments because those are the ones that go up a lot. And then the alternative asset managers are like, great, so we'll just charge like 2 and 20 for that. And then that's the equilibrium you end up in. I think that's like clearly happening. And it's not how anyone would design a financial system from like first principles. Right? Because like, the point, you know, what you have is like, historically what you have is like a lot of companies that want a lot of money are public and they're available to everyone, including retail investors. And then like a smaller number of companies that don't need as much money are private and they don't have access to retail investors. But it's fine because it's like they're the smaller companies, the weirder companies, or the companies that don't need capital. And now we've moved to a model where the big companies that do need a lot of capital can get it in private markets, but the private market capital providers are like, hey, we could really use some retail money. And so you have this second layer of intermediation where you can just charge people a lot higher fees for investing in companies that would have been public 20 years ago.

[Katie Greifeld]

So the answer is yes. I just think it's yes. All right.

[Matt Levine]

I don't know. Prove me wrong. I'd love to be wrong.

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[Katie Greifeld]

This is really interesting to just me, but we have another question from another J name. This one comes from Jordan Jordan. It'd be funny. Okay, Jordan Jordan asks One of the recurring trends across both betting markets and crypto is that things that were previously illegal are now legal if you go through these venues, not legal advice. Does there exist a way to get around the Onion Futures act of 1958 by creating a betting market on poly market on the price of onions? Gosh. This question was written just for you.

[Matt Levine]

I feel like the answer is no. Okay, so we've talked about the Onion Futures act of 1958. In the past, basically in the United States, there are regulated commodity futures trading markets, except for onions, because onions are specifically. It's specifically illegal to trade onion futures. And the reason for that is like, someone cornered the onion market in the 50s and they were like so mad that that they said no more onion features. Also motion picture receipts. I don't actually know why that is, but like the Onion Futures act also says it's illegal to trade futures on motion picture receipts. But otherwise you can trade futures on any commodity which like people used to understand to mean like wheat and corn and metals and whatnot. And then in like the 70s, they started to understand it to mean like treasury rates and stock indexes and stuff like that. And from there we have very recently expanded into a brave new world for commodities include who will win the football game tonight and who will win the election. And so now we have this brave new world where like almost everything is by default, with many objections, with many complaints, with like many people believing this is wrong. But almost everything is currently legal to trade as a commodity futures contract on Kalshi. If you can think of a proposition, you can make it into a commodities future contract on Kalshi. But there are a few exceptions, and one of them is onions. Because onions are actually covered by the statute. They say you can trade commodities futures on everything but onions. So everything includes sports, includes elections. It doesn't include onions.

[Katie Greifeld]

Mailbag, mailbag.

[Matt Levine]

I'm gonna read the next question because it segues directly from that. It's from Jamis. I mean, Thomas Thomas writes a syllogism. One, gambling is legal if it is a commodities trade. True. Two, stock movement can be gambled on. Well, true. Three, company can insider trade on a commodity which it directly deals with. Except onions, of course. Nice callback. So is insider trading of a company's own stock legal if it happens on a prediction market, AKA a commodities exchange? So I think the other exception to like everything is a commodity that can be traded on commodity exchange. The other exception is stock, because stock is a security. And there are detailed, complicated. I do not pretend to fully understand, but there are rules about securities based swaps. So like there are commodities futures which are regulated by the commodities futures Trading Commission and are traded on the commodities exchanges. And then there are stock derivatives which are regulated by the SEC and have a more or less completely separate set of rules that apply to them. So if you were to try to list stocks on a prediction market, just like stocks, or I think like binary options on stocks, I think questions like will Tesla be up or down Today is I think a securities based swap. And I think you could not list that on a commodities exchange like Kalshi. Although this is not legal advice and people are pushing the boundaries of this every day. So I don't feel confident that this will always be true. But for right now I think it is the case that you can't just have straight up stock bets on prediction markets. Now I went and looked at Polymarket and Kalshi and there's some stuff, there's some like, what will be the biggest AI company at the end of the year. There's stuff where you're like, that's a little bit like a securities based swap, but it's far enough away that people don't think of it as betting on stocks. I don't know the answer to the question. I mean, I think if you think that pretty straightforward bets on stocks will end up existing on these prediction markets. I don't know the answer to the question. Would it be legal for the company to gamble on its own stock? I feel like the intuitively correct answer is no. But the tracing through the commodities rules might be yes. But in any case I wouldn't worry about it because these contracts are never going to be that liquid. And you know, Tesla's not going to go around being like, I can make $40 betting my stock will be up today.

[Katie Greifeld]

I feel like a company just has to do it so we can find out the answer once.

[Matt Levine]

Well, there's a series of things you have to do which include getting some sort of bet on your stock listed on a prediction market which is, you know, that's your first problem right there. By the way. I do think that more of that happens in Europe. Like you can have bets on stocks on prediction markets, but in sort of trading rules and commodities rules are different. There's.

[Katie Greifeld]

That was a good one two punch of questions.

[Matt Levine]

Onions and stocks, the two things that are not legal to trade on. Commodities futures. Mailbag.

[Katie Greifeld]

Mailbag. I'm really pleased to say that the next question comes from another Josh. So we're back to the J names, which is interesting. Anyway, this Josh asks. Sports betting apps regularly ban or limit so called sharp bettors, gamblers that have a history of winning a high percent of the time. This has always seemed weird or kind of unfair to me, but whatever. If these apps and other prediction type markets begin allowing bets on equities, can they legally do the same thing? If I'm consistently winning bets on if the S and P will go up or down on a specific day. Can they ban me from making that bet? I love this question. I have no idea, but boy is it fun to think about.

[Matt Levine]

So a couple points. One is, as we just said, I think it's going to be hard for these prediction markets to list stock trades because I think that's a securities based spot. Now there isn't. The exception is indexes for some reason trade on commodities exchanges like stock indexes. So you can probably, probably have a bet on the S and P, whereas you can't on like Tesla or Nvidia. So it is plausible that consistently winning bets on the S and P on your prediction market app is the thing that could happen. And then the question is, can they ban you? So in traditional sports betting, you have an account with a sportsbook that takes the other side of your bets and the sportsbook doesn't want to lose. And so it will think about are you going to be a winning better? And it has various data to evaluate that, including your track record and the time of day that you make bets and things like that. And if it concludes you're going to be a winning better, it will probably limit how much you can bet or even cut you off entirely because it doesn't want to lose big bets to you because it's taking the other side of your trades. A commodities exchange can't really do that. Commodities exchange has to have some sort of like fair open access. And so if you are betting on a commodities exchange, it can't limit you or cut you off. Now the other thing that's true about a commodities exchange is it isn't taking the other side of your bets. It's just an exchange like in a classic sports book. The person facing you is like both like the people providing the interface and the people taking the other side of the bets are the same or the bookmaker. In a commodities exchange, there's the exchange that provides the venue for the bets. And then the person taking the other side of your bet is just another bettor. It's probably a market maker in these prediction markets. It's probably a professional or semi professional market maker who is in the business of taking the other side of bets. If you look at actual US equity market structure, it's not quite the case that like if you're good at trading stocks, they will cut you off or limit you because you know, equities markets have a higher standard of fairness and openness than like sportsbooks. But it's not entirely not the case either. Like one Thing that happens is that like the stock exchanges have programs, separate venues to segregate retail and institutional orders. Because, you know, in this world the institutions are the Sharps and the retail orders are the noise gamblers. And so market makers, who are the equivalent of bookmakers, want to trade on the other side of retail and they don't want to trade on the other side of Sharps. And so you have ways to segregate the order flow. So the exchanges do some of it where they have retail execution facilities where you can trade with only retail on the exchange. But the main way this happens in the US Equity market is payment for order flow, where, you know, Robinhood will route stock orders to market makers because those market makers want to interact only with retail orders. So most retail is noise traders and it's fun for a market maker to interact with them. But some retail is Sharps. And I have heard anecdotally that market makers do limit those Sharps and that if you are really, really, really good at trading stocks in a particular way, like if you're picking off quotes or if you're like, if you have like really good, like short term alpha, possibly because you have some weird algorithm, possibly because you're spoofing, which some retail traders do, or possibly because you're incredibly smart and you're doing that on your Robinhood account and Robinhood is routing your orders to some market maker, that market maker might notice and it might call Robinhood up and say, hey, we don't want these orders anymore. There's some possibility of if you're too sharp, you'll get limited in some way in the equity market, although I think it's much more unclear and uncertain than it is in the sports betting world. I don't think that any of that is in the near future for Kalshi. But in the far future, when sports betting on commodities exchanges is a huge business, will bookmakers pay app providers to route orders directly to the bookmakers? And will the bookmakers say, I don't want these orders because they're too sharp? Maybe, Maybe. I don't know.

[Katie Greifeld]

So maybe we revisit this question in like 10 years.

[Matt Levine]

I would just say there's a continuum of how much a market maker can limit Sharps and like bookmakers do it like most clearly and explicitly. But like in the rest of the financial world, there's a little bit of it. Like in professional institutional bond trading, you see a certain amount of this where like, if you continue to like pick off your brokers, your brokers will stop answering their calls. Right? I mean, like there's a lot of if you're too sharp, people will notice and you'll get less ability to trade. So your AI agents, they make the team that uses them more productive, right? But if they aren't connected to other agents or your data or your existing workflows, how productive can they really make your teams? Any business can add AI agents. IBM connects your agents across your company to change how you do business. Let's create smile to business IBM join Bloomberg in Houston or via livestream on November 4th for the future finding the 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. [e-mail] FutureInvestorHouston that's Bloomberglive.com FutureInvestorHouston.

[Katie Greifeld]

Mike asks during earning season, a company misses, beats or hits expectations. But the reality is that earnings are what are it's the analysts who hit or miss or come close in their predictions when a Category 5 hurricane drops to a Category 4. Meteorologists don't say the hurricane underperformed. Instead they say it took a different path, etc. Shouldn't the hit or miss burden be on the analysts rather than the company? So I think this is interesting, but I also feel like it is on the company because they're in pretty regular communication with the sell side and specific are in the business of managing expectations.

[Matt Levine]

Yeah, no one wants to hear that, but that's the answer. Earnings expectations are not analysts putting their finger in the wind and saying, ah, I think those guys will go up. The earnings expectations are analysts talking to the companies and it's sort of seeping out through the analysts. So. Right. If you miss expectations, you have done a poor job of managing your analysts.

[Katie Greifeld]

Yeah.

[Matt Levine]

This is a common complaint. And it's like no, the analysts were wrong, not the company. And it's like that's fine, like you can say that, but like the point is that when you, Katie, go on television and you say a company missed expectations, what you're doing is explaining why the stock has gone down. Right?

[Katie Greifeld]

Yeah.

[Matt Levine]

And like the stock went down because people did have expectations. Right. And when the company underperformed those expectations or the expectations overperform the company in any case, like what happens next? The stock goes down. And so it is natural for the investors to feel disappointed. This company disappointed us. I don't know. It does feel like the company is the one that is the immediate cause of the disappointment. I think it's completely fair to say that they missed expectations.

[Katie Greifeld]

It's in some ways similar to the lead up to big Fed decisions. The Fed doesn't like to surprise the market. The Fed is almost certainly going to tell you without telling you what exactly it's going to do at their policy decision. They do have a blackout period. So you see like a real parade of Fed speakers get in what they're going to say before the blackout period. Like no big Fed decision should be that big of a surprise. You have like a range of possibilities. And I feel like it's the same at the micro level with all these companies as well.

[Matt Levine]

It is. And like, I think that like there are some, you know, regulatory concerns about like the mechanism that you and I have just posited of like companies manage their analysts pretty closely. No one would quite say that. It's a little awkward. You're not supposed to disclose material non public information to the analysts without disclosing it to everyone. But like, yeah, you know, but we're.

[Katie Greifeld]

On a podcast so we can say it.

[Matt Levine]

We can say it. It's like the truth is somewhere in between, but right. If you're a company and it's like two weeks before earnings and analysts expect you to make $2 a share and you're going to make $1 a share, like it's too late to make the extra dollar a share. Like what you're trying to do is figure out a way to communicate to the market that the market is going to be disappointed.

[Katie Greifeld]

Yeah.

[Matt Levine]

And if you fail to do that, then you missed expectations, man.

[Katie Greifeld]

Or you could pre announce it. Good question though Mike. We appreciate it.

[Matt Levine]

Mailbag.

[Katie Greifeld]

Mailbag. Charlie, I really like this question from Charlie. Charlie asks you both seem to hold primarily orthodox Fintwit views. Parentheses it is good to buy low cost index funds. Elon is wild but makes the number go up. M2 graphs are not a useful way to consider price, et cetera. Do either of you hold any heterodox opinions in this area? I'll let you go first.

[Matt Levine]

I hold no heterodox opinions. I probably hold some heterodox opinions. I have tried to start fights on Fintwit because I think that comparing stocks and flows is completely normal and happens every day. And the word for it is valuation. And for a long time on finance Twitter there was a stocks and flows police where people would see that Apple is worth more than the GDP of Kazakhstan and they'd be like, that's a stock and flow. You can never compare stocks and flows. And that's right. But this is a very minor hetero opinion. And for the most part I hold only orthodox opinions. And I think often that my job is just to explain recent financial events in terms of like Corporate Finance 101. And the most orthodox and normal corporate finance theories remain counterintuitive to a lot of people. And so it's fun to just explain them.

[Katie Greifeld]

Again, I would say the heterodox opinion that I hold about investing and this is not investing advice, et cetera. I don't know, fixed income and bonds seem kind of stupid to me. Like, just seems dumb.

[Matt Levine]

Okay. That's really heterose. I love that. You know, I like, come from an equities background. Right. I was a convertible bonds guy. And so, like, I do have a bit of, like, grievance that, like, everyone thinks that equities are dumb. But I appreciate that you're. That you think fixed income is dumb.

[Katie Greifeld]

Money market funds, sure, that's basically cash, but why on earth would anyone buy, like, even the belly of the treasury curve and especially out from there? They're unreliable as a hedge. And also I don't get that excited about the yield. But that's not investing advice. That is just a heterodox opinion that perhaps I hold.

[Matt Levine]

We're going to get canceled now. Can't believe you said that.

[Katie Greifeld]

I know. I'm sorry.

[Matt Levine]

All right. That was a mailbag.

[Katie Greifeld]

That was a mailbag. Thanks for the great questions.

[Matt Levine]

Thanks for joining us from your vacation.

[Katie Greifeld]

Yeah, I'm really eager to sign off, so I'm gonna dip.

[Matt Levine]

All right, goodbye. 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 and Moses Ondahm.

[Katie Greifeld]

Our theme music was composed by Blake Maples.

[Matt Levine]

Amy Keen is our executive producer, and.

[Katie Greifeld]

Sage Bauman is Bloomberg's head of podcast.

[Matt Levine]

Thanks for listening to the Money Stuff podcast. We'll be back next week with more stuff. Join Bloomberg in Los Angeles or via livestream on October 7th for the future. Finding the 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. [e-mail] FutureInvestorLA that's Bloomberglive.com FutureInvestorLA.