Money Stuff: The Podcast

Episode: Voluntary Nudge Nudge: IEEPA, TROW, FX
Date: September 5, 2025
Hosts: Matt Levine (Bloomberg Opinion, Money Stuff author) & Katie Greifeld (Bloomberg News/TV)

Episode Overview

This episode dives into three main topics shaping Wall Street and the wider financial landscape:

• The legal saga of Trump-era tariffs imposed under IEEPA (International Emergency Economic Powers Act)
• The unconventional partnership between Goldman Sachs and T. Rowe Price, emblematic of shifting strategies among asset managers
• The growing sophistication—and disruption—around deal-contingent hedging, with hedge funds edging into banking territory

As always, Matt and Katie mix deep technical knowledge with wry, deadpan humor—making “money stuff” accessible (and frequently cynical) for listeners.

1. The Trump Tariffs, IEEPA, and Constitutional Crisis

Segment start: 02:02

Key Points & Insights

• Illegality of Tariffs: The US Court of Appeals for the Federal Circuit affirmed that Trump-era broad tariffs, imposed via IEEPA, are illegal. However, these remain in effect pending Supreme Court review.
  • Matt: “We live in a weird world where… the government does a lot of stuff that's illegal and the courts are like, well, this is illegal, but we can't stop you.” [02:15]
• IEEPA (International Emergency Economic Powers Act): The government has argued this act allows the president to regulate imports (and thus impose tariffs) in the event of foreign threats. Courts have pushed back, stating “regulate” doesn’t mean “tax.”
  • Matt compares this to the SEC's inability to invent financial market taxes just because it regulates them. [03:13]
• Constitutional Power: The US Constitution places the authority to impose taxes and tariffs with Congress, not the president.
  • “It's a really core part of the Constitution… when the president announces sweeping new taxes without any legislation, it does seem very illegal.” —Matt Levine [02:56]
• What If the Supreme Court Invalidates the Tariffs?
  • Uncertainty whether importers will get refunds on tariffs already paid. The knock-on effects, such as consumer price changes, are nearly impossible to untangle.
    • “The downstream tariff effect is hard to unscramble even if you refund the actual tariffs.” —Matt Levine [08:13]
  • Supreme Court outcomes are uncertain: lower courts tend to follow precedent and rule against presidential overreach, but “the Supreme Court is a more flexible view of precedents.” —Matt Levine [04:28]
• Economic and Budget Repercussions:
  • Tariffs bring in huge sums; rolling them back would create a fiscal “hole.”
  • But most economists believe tariffs hurt economic growth, which ultimately worsens fiscal sustainability.
    • "Not Scott Bessant, not Donald Trump, but most economists think that tariffs are not really helping economic growth." —Matt Levine [09:51]

Notable Quotes

• On the legal limbo:
  “The government is collecting tens of billions of dollars a month from lots of boats coming in… if those tariffs are all illegal, do they have to pay the money back?” —Matt Levine [07:06]
• On the challenge of refunds:
  “If you're just a company that raised prices to consumers because of tariffs and then you got all the tariffs back, are consumers going to be mad? ...It's an interesting… effect that's hard to unscramble.” —Matt Levine [07:57]
• On constitutional questions:
  “For the Supreme Court to say it's too important for the president to be able to impose whatever taxes he wants is really a shocking change in the constitutional structure. But here we are.” —Matt Levine [11:26]

2. Goldman and T. Rowe Price: Strategic Partnerships in Asset Management

Segment start: 15:16

Key Points & Insights

• Goldman's Stake in T. Rowe Price: Goldman is buying up to 3.5% of T. Rowe Price stock (approx. $1 billion), making it a top-five shareholder, as part of a broader asset management partnership.
  • Katie: “Why do they have to go through all that? Why can't they just do a little JV, a partnership?” [15:59]
  • Matt: The purchase gives Goldman "skin in the game," aligning incentives for a real partnership rather than a superficial product placement. [19:04]
• Industry Context:
  • “Alts managers” (private credit, private equity) are in vogue. Large, traditional managers want better distribution (especially to retirement savers), while classic fund firms are trying to pivot to alts due to fee pressure and outflows.
  • T. Rowe has lost $200B in client assets and its stock is down ~50% since 2021—it's a tough market for traditional active managers. [18:10]
• Win-win Dynamics:
  • T. Rowe sits atop huge 401k/retirement fund distribution—ideal for channeling Goldman's alternatives products to retail and retirement savers.
  • This move is emblematic of the scramble among fund houses to join the alternatives/retail pipeline, given rising fee pressures in traditional funds.

Notable Quotes

• On why Goldman buys TROW, not just a partnership:
  “What does a real partnership mean? …It means giving Goldman some incentive to have some upside in T Rowe’s stock so that Goldman has some incentive to… actually not just use T Rowe as a dumping ground for its products, but try to be a real partnership.” —Matt Levine [19:04]
• On the struggle for traditional fund firms:
  “Everyone… is looking around and being like, how can we get into privates? Because the fees are better.” —Matt Levine [18:10]

3. Deal-Contingent Hedging: Hedge Funds Muscle into Wall Street’s Traditional Turf

Segment start: 21:49

Key Points & Insights

• What Is This?
  • In cross-border M&A, deal-contingent hedges allow acquirers to lock in FX (or rate) terms that only activate if the deal closes.
    • Katie: “Spiritually similar [to other hedges]. …It’s mostly currency and occasionally rates.” [21:53]
• Risks & Rewards:
  • For banks, these were classic offerings but tough to hedge—if a deal collapses, the balance sheet exposure is hard to lay off.
  • Hedge funds are now providing these services, sometimes via the banks, and increasingly directly to private equity firms.
    • Matt: “Hedge funds are taking the next logical step and just going directly to the clients and saying, hey, we’ll do the hedge for you.” [24:34]
• Why the Shift?
  • Banks have vast, diversified corporate relationships; hedge funds can establish direct, focused ties to the handful of dominant private equity firms doing these deals.
    • “If you’re a hedge fund... why don’t I just call those three private equity firms myself? Why do I need the bank at all?” —Matt Levine [25:22]
• Considerations for Clients:
  • Concerns about counterparty risk when hedging with a non-bank, and about confidential deal information leaking.
  • Potential benefit of client diversifying counterparties and perhaps negotiating better terms.

Notable Quotes

• On deal-contingent hedge innovation:
  “I always thought of this as a really niche, unusual business and now it’s a thing. That’s weird.” —Matt Levine [27:17]
• On the changing financial landscape:
  “Banks don’t have the risk appetite and balance sheet that they used to and the big hedge funds… are becoming the source of risk capital.” —Matt Levine [24:04]

4. Notable Quotes & Moments (with Timestamps)

• “If you can't refund the tariffs, it's kind of hard to unscramble that egg.” —Matt Levine [07:20]
• “If you replace the tariffs with voluntary tariffs, how much revenue would you collect? Not none. If it's voluntary, nudge nudge.” —Matt Levine [13:12]
• On Goldman's alts move:
  “They raise a lot of money to invest in alts… from institutions and from their private wealth clients… The story is trying to find true retail distribution, trying to sell through financial advisors, and… to 401k plans.” —Matt Levine [17:01]
• On the paradigm shift in deal hedges:
  “The nice thing of doing this trade with a big bank is you're facing the big bank and they probably won't default. Whereas if you're facing a hedge fund, you have… some diligence on how viable the hedge fund is.” —Matt Levine [26:39]

Conclusion

This episode frames major 2025 market stories as a clash between constitutional law, institutional legacy, and the relentless evolution of financial capitalism. Whether unpacking the “grim” state of US tariff policy, the asset management industry’s pivot to “alts,” or the rise of hedge funds as direct partners to giant PE shops, Matt and Katie thread sharp technical insight with their signature dry wit.
For financial professionals or curious lay people, this episode is a tour through the legal, economic, and competitive cross-currents in global markets—by two of the best in the business.