Credit Cockroaches

Summary

Slate Money – "Credit Cockroaches" (October 18, 2025)

Main Theme and Purpose

This episode centers on the much-anticipated "private credit bubble"—are we in one, is it bursting, and what recent high-profile frauds (like First Brands and Tricolor) say about the state of credit markets? The hosts also dive into the car market’s surging prices, auto delinquencies, and the evolving shape of the EV sector. A lively segment unpacks the meteoric success (and bizarre quirks) of the QQQ ETF, and the Numbers Round highlights weird pizza economics and the rise of MrBeast in fintech.

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1. Private Credit, First Brands, and the "Cockroach" Problem

[Starts ~01:57]

Key Topics:

• Is there a private credit bubble?

  • Felix Salmon: “There probably is a bubble and it probably isn’t bursting, at least not yet.” [01:57]
  • We’re in a “historically frothy moment” for credit — huge money is flowing into lending, with credit spreads extremely tight.
  • High-profile blowups (First Brands, Tricolor) have highlighted due diligence failures but haven’t tanked the broader market.

• Tricolor and First Brands: What Happened?

  • Both failures involved shady accounting—selling the same receivables to multiple lenders, a sign that “the credit market has failed to do its due diligence” [03:10].
  • Elizabeth Spiers: “There are some problems… that could extend to other companies.” [03:38]
  • Debate over whether banks or private credit firms are sloppier. Banks offload loans; private lenders are more opaque.

• The “Cockroach” Metaphor

  • Felix: “I don’t think Jamie Dimon was talking about private credit… But when the tide goes out, that's when you start learning who the frauds were.” [04:43]
  • Elizabeth: “If there’s a fraud here and a fraud there, there’s probably a bunch of other frauds somewhere else.” [05:10]

• Are These Isolated Incidents or Signs of Systemic Risk?

  • Most of the market is non-fraudulent; losses from fraud won’t create systemic risk barring a massive change in credit conditions.
  • Emily Peck: “Could there be a bigger risk now of some kind of bond repricing wave?” [07:14]
  • Felix: “If it’s a fraud, it’s a fraud and the bonds go to zero.” [08:00]
  • Elizabeth: “First Brands is much more straightforward… They had $2 billion of loans off-balance sheet.” [09:44]

• Wile E. Coyote moments:

  • When lenders look more closely, they may find problems that have been there from the start—sudden shocks, not gradual declines.

• Bank vs. Private Credit Risk

  • The post-2009 retreat of banks from lending led to a surge in private credit, but the ultimate risk still often trails back to banks.
  • Felix: “The banks have been, ‘yeah, we don’t want to take that much credit risk’... they lend to private credit, who lend to companies.” [12:51]

• Systemic Spillover?

  • The 2008-type scenario seems unlikely because private credit isn’t marketed as AAA-safety nor widely held as retirement savings (yet).
  • Some regulatory worries remain—private credit being allowed into 401(k)s could widen risk if the asset class stumbles. [15:52]

Notable Quotes:

• Felix Salmon: “A credit market, in general, is not going to get brought down by frauds.” [05:31]
• Elizabeth Spiers: “So basically, JP Morgan helped the private credit companies buy the cockroach-infested house and now is complaining about the cockroaches.” [14:05]

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2. The Soaring Cost of Cars and Auto Market Stress

[Segment starts ~18:06]

Key Topics:

• Even ‘Fraudulent’ Car Companies Have Strong Sales

  • First Brands, despite its troubles, still makes $5bn revenue/year.
  • New car prices topped $50,000 on average—an “insane” figure. [18:06]

• Why Are Car Prices So High?

  • Pandemic, ongoing supply chain issues, and producers shifting toward higher-margin models.
  • Felix: “Automakers have stopped making the entry-level, smaller, cheaper vehicles.” [21:42]

• Auto Loan Delinquencies

  • Emily: “Auto loan delinquencies jump to new heights… at all-time highs since 2009.” [19:27]
  • Stress might be more acute among lower-income buyers who are pushed into buying used cars—now also expensive.

• Luxury Truck Explosion and Branding

  • Elizabeth: “The best-selling vehicle in the US is the Ford F150 and they're starting at $65,000 new… it was sort of the affordable vehicle.” [22:18]

• Why Entry-Level Cars Have Vanished

  • Carmakers have maximized profits by discontinuing cheaper models, shrinking choice even for used car buyers.

Notable Moments:

• Emily: “Thousand dollars monthly payments have become, if not the norm, I think more typical, more frequent.” [19:27]
• Felix: “When I bought my car [pre-pandemic], I paid $10,000… you just can’t do that anymore.” [20:24]

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3. Cybertruck Mania, EVs, and Culture Wars

[Segment starts ~23:33]

Key Topics:

• Wired’s Cybertruck Safari

  • Outlandish stories from Cybertruck owners—including a participant in J6 and a divorcé opining, “Women do not like this vehicle.” [24:17]

• Design and Safety Issues

  • Elizabeth: “It is a fundamentally dickish design… very dangerous to people around it.” [25:19]
  • Emily: “A pretty basic requirement of [a] car—like, be able to see out of [it].” [25:34]

• Political and Social Symbolism

  • The Cybertruck as an overt culture-war statement: “It is kind of a political stance at this point to buy a Cybertruck.” [26:35]

• EV Trends and Subsidy Pullback

  • Buying rush before $7,000 tax credits phased out.
  • Debate over whether US policy has already moved the needle for long-term EV adoption.

• Where Now for EVs?

  • Elizabeth: “Automakers have already revised their projections down for EV adoption.” [31:27]
  • Felix: “Toyota… has done a more hybrid-first strategy.” [32:24]
  • Legacy carmakers struggle to profit from EVs, still dominated by Tesla.

Notable Quotes:

• Felix: “The Cybertruck is the one car that you can’t put that bumper sticker on saying ‘I bought this before Elon went crazy,’ because, like, that was the sign that Elon had gone crazy.” [24:24]

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4. The QQQ ETF Money Machine

[Segment starts ~36:53]

Key Topics:

• QQQ’s Bizarre Fee Structure

  • Because of its “Unit Investment Trust” structure, QQQ must spend its profits on marketing — explaining the blitz of QQQ ads. [37:14]
  • Emily: “This ETF is enormous… but [Invesco doesn’t] benefit from it. It’s pretty wild.” [37:33]
  • The ETF’s revenue dwarfs its parent company’s; much of it goes to marketing, plus huge licensing fees to NASDAQ ($205 million/year) [40:20].

• Comparison with S&P 500 ETF (SPY)

  • SPY has the same structure, but State Street makes the money as both manager and trustee. Invesco does not.

• Why QQQ Is Expensive—but So Popular

  • High fees (20 bps vs. 3–6 for S&P 500 ETFs).
  • Used as a cash-parking vehicle for tech-oriented traders—“not really a buy-and-hold ETF.”

• Can Invesco Fix It?

  • Invesco wants to ditch its current fee structure for a more normal (and profitable) setup but needs a hard-to-achieve shareholder vote.

Notable Quotes:

• Felix: “The revenue from Invesco’s QQQ ETF is actually substantially bigger than Invesco’s entire revenues. It’s like the subsidiary is bigger than the Holdco.” [37:39]
• Elizabeth: “Can they use their marketing funds to market to the shareholders?” [38:37]

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5. Numbers Round & Breezy Tangents

[Segment starts ~44:58]

Featured Numbers:

• Elizabeth: 445 million — MrBeast’s YouTube subscribers. He’s trademarking for a financial services company and launching a mobile phone company. “Expect MrBeast Healthcare next.” [45:03]
• Felix: 1.8 billion — S&P Global’s acquisition price for With Intelligence, a media company covering private markets (“$3 million per employee! Journalism can still be lucrative—if you’re in the right sector.”) [49:17]
• Emily: $5.44 — The price of what is allegedly the worst slice of pizza in NYC (at A Slice of New York! Pizza Cafe, Times Square). Backed up by a reader-led scrape of Google reviews. [49:30]

Fun Quotes & Moments:

• Felix, on pizza pricing: “The cost of a slice of pizza should always be the same as the cost of a subway fare.” [51:38]
• Emily, on pizza tourists: “Even the worst [slice in NYC] is probably better than most pizza you can get in most other places.” [52:00]
• Felix, on reading: “I read books on the subway, people!” [53:11]

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6. Memorable Quotes and Soundbites

• “A credit market, in general, is not going to get brought down by frauds.” — Felix [05:31]
• “If there’s a fraud here and a fraud there, there’s probably a bunch of other frauds somewhere else.” — Elizabeth [05:10]
• “Auto loan delinquencies jump to new heights… at all-time highs since 2009.” — Emily [19:27]
• “The best-selling vehicle in the US is the Ford F150 and they're starting at $65,000 new… it was sort of the affordable vehicle.” — Elizabeth [22:18]
• “The Cybertruck is the one car that you can’t put that bumper sticker on saying ‘I bought this before Elon went crazy…’” — Felix [24:24]
• “Can they use their marketing funds to market to the shareholders?” — Elizabeth [38:37]
• “Mr. Beast Healthcare will come next.” — Elizabeth [45:24]

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7. Timestamps for Major Segments

• Private credit/First Brands/Tricolor/Cockroaches: 01:57 – 17:37
• Auto market, car prices, EVs, Cybertruck: 18:06 – 33:23
• QQQ ETF segment: 36:53 – 44:58
• Numbers round/tangents: 44:58 – end

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Tone and Style

The episode is sharp, irreverent, and banter-rich, fearlessly calling out industry quirks and follies. The panel’s skeptical take on frothy markets, car culture, and ETF marketing is matched by empathy for regular consumers (whether pizza buyers or car buyers). If you’re a finance nerd or just want to keep up with the shifting boundaries of money, fraud, and market hype, this Slate Money covers a LOT of ground.

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Listen to Slate Money for…

• Nuanced takes on financial “bubbles”
• Smart ridicule of billionaire follies and product weirdness
• The why behind market headlines—minus hype.

Ad sections and intros/outros skipped; see full transcript for tangential sponsor content

Transcript

[A]

Foreign welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Bloomberg. I'm here with Emily Peck of Axios.

[B]

Hello. Hello.

[A]

With Elizabeth Spires of the New York Times. Hello. And we are going to finally give you the private credit bubble episode that you've been waiting for. You've been writing in and being like, talk about first brands. So now we are going to talk about first brands, the credit market and whether things are bursting. We are also going to talk about cockroaches. Yes, that's the same subject. We are going to talk about cars, which are very expensive. We're going to talk about why they're so expensive and what's going on in the auto market. We are going to talk about qqq, the NASDAQ ETF that is just insanely profitable. We have a Slate plus segment on Matcha. It's all coming up on Slate Money.

[B]

Slate Money is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day, but what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. [e-mail] WashingtonWise this message is brought to you by Apple card get 3% daily cash back when you buy an iPhone with your Apple card at Apple. Subject to credit approval. Apple Card issued by Goldman Sachs Bank USA Salt Lake City Branch terms and [e-mail].

[A]

Okay, so let's start this week with honestly the subject that most listeners have been requesting, which is when are you going to talk about first brands? When are you going to talk about private credit? Is there a bubble? Is it bursting? I'm just going to come out and say there probably is a bubble and it probably isn't bursting, at least not yet. This is where I'm at on this one. The big picture is that we are in a world historically frothy moment for credit for lending money to people. If you look at the bond market, which as Slate Money listeners know is the most important market in the world, the amount that companies need to pay to borrow money has never been lower. Whether it's investment grade or high yield junk bonds, all of those credit spreads are super, super tight. And what that means is a huge amount of money is going into lending money to companies. At the same time, we have had some pretty high profile failures of the credit market. Like the credit market has failed to do its due diligence on Trickolor, which was this used car dealer, mostly in Texas, on First Brands, which was also in the auto industry. They do like auto parts. They just borrowed a lot of money and both of looked like they were being a bit fraudulent. Their debt collapsed, but the collapse of their debt does not seem to have affected the broader credit market. People are treating these as like weirdly isolated fraudulent incidents. But I know that, Elizabeth, you're going to come out and tell me that the world is falling and everything is terrible.

[C]

Do I have a reputation for that? Yes, I. I guess I do. I don't think the world is terrible and everything is failing. But there are some problems with both of these situations that could extend to other companies. One is just that Jamie Dimon at JP Morgan and Mark Lipschitz at Blue Owl Capital are sort of pointing fingers at each other for the tricolor bankruptcy. And the private credit people are saying this is the fault of the banks because they originate loans and then they turn around and sell them. So they don't have as much incentive to do their due diligence as private credit companies do. But the bankers argue that this is in fact not true because the private credit markets are more opaque and therefore we don't have as much information about whether the deals that they're making are okay. So I think these are weaknesses for both kinds of institutions that could apply to other deals besides these two companies. And the question is now that people sort of know that these are potential weaknesses, are they going to do anything about it?

[A]

So to be clear, the potential weakness either way. And I think it is possible to get far too caught up in this, like, banks versus private credit thing. And to be very clear, I don't think that when Jamie Dimon started coming out and talking about cockroaches, what he meant. I don't think he was talking about private credit. What he was saying was, as, you know, basically, as Warren Buffett famously said, it's when the tide goes out that you learn who was swimming naked. That when the credit boom comes to an end and credit becomes less plentiful, that's when you're going to start learning who the frauds were. And what we learned with both Trickolor and First Credit is, oh, wait, you know, we were so busy, like, throwing money at anyone who wanted to borrow money that we didn't do enough diligence to realize that actually they were basically selling the same receivables to two or three different lenders. And I think that's what Jamie Dimon meant when he was talking about cockroaches, was like, it's never just one. If there's a fraud here and the fraud there, there's probably a bunch of other frauds somewhere else. But I think the bigger picture is just that a credit market in general is not going to get brought down by frauds. The overwhelming majority of borrowers in both the bank loan market and the private credit market are not fraudulent. And so long as they are able to continue to pay back their loans, and it looks like most of them are, we're basically going to be okay. There are going to be some credit losses on the frauds and they're probably going to be more frauds. But that's not a systemic problem.

[B]

But could the systemic problem be. And a lot of the coverage I was reading talked about something you already have raised on this podcast, Felix, in a previous week when we talked about how Microsoft's bonds were. What is it? The yields are low.

[A]

Treasuries.

[B]

Yeah, they're trading through Treasuries, which, in other words, people think Microsoft is more credit worthy than the US Government right now.

[A]

That's not necessarily what people think, but it's certainly. That's like what people think.

[B]

That's one way to look at it.

[A]

Yeah.

[B]

Anyway, a lot of the commentary I read about it's tri. How do you say it? Tricolor.

[A]

I have no idea. Tricolor. Okay.

[B]

I thought it was tricolor. Sounds so like when you buy that pasta that's three different colors, but. And you think it's really fancy, but it's just tricolored.

[A]

It's basically this used car company in Texas that would sell to relatively poor, relatively Hispanic customer base. Tricolor refers to the three colors of the Mexican flag. Everything was done in Spanish anyway.

[B]

Wonderful. Okay, total tangent there, but I just wanted to mention the three color pasta. But yes, my point is, in the coverage that I was reading, a lot of people were saying that credit was loose, that companies were able to borrow for pretty low rates that should have been higher rates. Like people were lending at lower rates than they should have been. These borrowers, like Tricolor. Tricolor were risky and yet they were getting loans at like relatively low rates as credit was just swooshing about. So could there be a bigger risk now of some kind of like bond repricing wave or something where everyone kind of realizes, oh, we lent out a lot of money to these companies that are not credit worthy. We need to like fix that up real quick and that could cause a problem.

[A]

So that's a really interesting Question, and I think you're absolutely right. Let's first stipulate that the coupon on the tricholor bonds, like the yield that Trickolor was borrowing at, didn't matter. Right. It's not that it was too low. They could have borrowed a 15% yield and they would still have gone bust. Right. Like if it's a fraud, it's a fraud and the bonds go to zero. And. And if you misprice the bond, it doesn't matter because you just want to avoid it going to zero and you want to avoid frauds. Right. That's a binary thing. Were they able to borrow money at a tightest red then? Probably they should have been able to borrow. I mean, probably they shouldn't have been able to borrow at all because they were a fraud. That's the point.

[C]

Well, I'm not sure Tricolor was a fraud. I think First Brands is much more straightforward. First Brand looks like it was definitely a fraud. We're not sure if Tricolor was.

[B]

The DOJ is investigating on Tricolor. So I feel like there is.

[A]

Yeah, the credit market has done really well. It's up like more than 9% year to date, which is crazy for fixed income and 100%. Yes. You know, if spreads start widening back out to something vaguely more historically normal and reasonable, then, you know, as we all know in the bond market, when yields go up, prices go down. So it is possible that total returns on bond funds and in the bond market will turn negative rather than positive. That is absolutely something that can happen. That always, when credit markets tighten, that's good for lenders. When credit markets widen, that's bad for lenders. We are inevitably going to have a credit market widening at some point. But again, that's just normal markets going up and down. I don't think that's anything to worry about, really.

[C]

Well, there was one private credit manager who referred to both of these situations as Wiley Coyote moments, where the coyote runs off the cliff and then is sort of suspended in midair until he looks down and then crashes to earth. And the analogy was just that when the lenders have an incentive to really do more diligence on the companies that they're lending to. What could happen is what happened with both of these companies, which is that they dig a little bit more and find these problems that were there from the beginning, really, but just the originators were not doing enough diligence on them to understand what was happening. Although I will say the First Brand situation strikes me as more straightforward potential fraud because they had $2 billion worth of loans off balance sheet. And the way that they were generating loans is Felix mentioned they were selling against their receivables. And this is a process called factoring. And there's nothing inherently wrong with it, except that in this case they were selling the same invoices to multiple lenders.

[A]

The reporting on tricker law is basically that they were doing the same thing, that they were taking the same cash flows and securitizing them like multiple times. Yes, you're right. The way that frauds work when they're uncovered in the credit market is that you thought it was a perfectly normal company, which you could price like a perfectly normal company. Then you realize that in fact there's missing money. There's an account that's supposed to have $2.3 billion in it and it has no money in it. And then the bonds just crash, basically very close to zero. That is the Wile E. Coyote moment. And that's what happens when a fraud is uncovered. I'm sure the same thing happened with Enron. And if Jamie Dimon is right and there are other cockroaches, that is other fraudulent borrowers, like that is going to happen to their bonds too. We just don't know which bonds those are.

[B]

Can we just pause and talk about JP Morgan and Mr. Dimon and his cockroaches? I think a lot of the cockroaches are they at JPMorgan and Chase, because this isn't the first time we've been talking about JPMorgan and Chase falling for a fraud. We just spoke last week about Charlie Javiz and her company, her student loan company. Frank. Which JP Morgan believe their fraud also, at least initially, she lied about how many customers she had. And J.P. morgan, you know, would they buy the company? Invested in the company.

[A]

They bought the company.

[B]

Yeah, yeah. I mean, I'm wondering like, if Mr. Dimon should be looking for the cockroaches in his house instead of talking about them.

[C]

Well, part of the reason why these standards are loosening is because these banks are desperate to deploy cash. And that creates an incentive maybe not to look as hard at where they're putting money as they should.

[B]

I feel like that's always happening. Just like Felix said, banks are always just giving out cash without looking hard enough based on whatever prejudices and things that they have going on themselves. And then everything's always fine until it's not fine that there's some fraud or that the system wobbles.

[A]

I'm going to take the other side of that, I think the reason why we have this big private debt, private credit.

[B]

Yeah, I know what you're going to.

[A]

Say is precisely that the banks are not really in the business of lending money anymore. That basically since 2009, since Basel III, since the regulators have really tightened up on bank lending, the banks have been, yeah, we don't want to take that much credit risk. So interestingly, what they're doing is they're lending to companies like Lual and Apollo and the other private lenders who are then turning around and lending to the companies. So, you know, theoretically, if I'm, you know, fraudulent, Felix, and I borrow from a private lender and the private lender has borrowed most of their money from JP Morgan, then in the first instance, the private lender that lent to me is going to get hurt. But so long as they have enough capital and enough loans and enough portfolio to be able to repay JP Morgan what they borrowed from JP Morgan, JP Morgan is fine. JP Morgan is a one step removed from all of the potentially fraudulent companies that the private lenders have lent to. It's not impossible that the banks will lose money on the money that they've lent to private lenders, but they do have like one extra layer of safety there.

[C]

So basically JP Morgan helped the private credit companies buy the cockroach infested house and now is complaining about the cockroaches.

[A]

And to your initial point, Elizabeth, we don't know what, whether the cockroaches are going to wind up being found more in the private credit world or more in the bank loan world or more in the bond world. Like there was a big collapse of Sachs bonds, which wasn't fraud and it was just like it was a bond. It was the most transparent thing in the world and yet it collapsed too. So I wouldn't say that Sachs was a cockroach necessarily. But yeah, there's a lot of credit paper out there that is being priced for perfection, as they say. And then the thing about bonds is that there's no, there's very little in the way of upside. You know, they have much more downside than upside. So if you find a problem, they can lose money and you're not really being paid for that by potential upside.

[B]

I guess my bigger question would be if there is something bad happening now with private credit and we can expect to see more first brands or tricolors, is there going to be spillover? Every time something like this happens, everyone's like, remember the financials, financial crisis, Remember what happened there? Those were bonds that exploded and really hurt the overall economy and real people lost real things. But this one doesn't seem like that.

[A]

It doesn't seem like that because what was happening in the financial crisis was that a bunch of risk averse institutions that couldn't afford to lose money were buying what they thought to be AAA rated completely safe paper and then it blew up in their face. No one believes that private credit is AAA rated or completely safe. Like the money that people are investing in is money that people can afford to lose. It's not life savings kind of stuff.

[B]

But on the horizon, the White House has proposed adding private credit to people's 401ks, so there's a private credit there.

[A]

Again, like we can talk about whether that's smart or not. But it's still credit, right? It's still probably safer than buying the S&P 500. That's mostly AI stocks these days.

[C]

Fair.

[A]

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[B]

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[A]

We should stay on the subject of DRA law and first rounds because like this, something interesting going on in the auto industry, which is that for all that these two different companies in the auto industry are struggling, like First Rand still has $5 billion of revenue every year. You know, it's still like never mind the financial ledger domain and shenanigans going on, you know, in the CFO's office. The main business of its business, which is making random auto parts to put in cars when they break down, is doing just fine. And we recently just had this rather startling headline that the average price paid for a new car has exceeded $50,000, which, I mean, what the actual fuck, that is a huge amount of money to spend on a new car or anything really. And we have had like a record high in the number and percentage of EVs being sold, partly because the incentives were being phased out. So people wanted to get in before the end of September. But the new car market seems to be quite hot. The used car market seems to be quite hot. The EV market seems to be quite hot. This is like, I don't know, I mean, is this science of life in the economy?

[B]

I don't know because Bloomberg had a headline this morning, Friday as we're speaking, Auto loan delinquencies jump to new heights. They're at all time highs apparently since the crisis of 2009. So I think these high prices are stressing people out. Most people in the United States have no choice but to buy a car. Then you have to finance it. And we know that thousand dollars monthly payments have become, if not the norm, I think more typical, more frequent. So I wonder if rising prices may be a sign of economic health like you're saying, Felix. But I'm worried about stress, stress in the market.

[C]

I think it's more producers taking into account tariffs and just passing the cost on to consumers because that's. That was one of the things that First Brands said when they were trying to explain their bankruptcy away was that they were affected by tariffs and two of their biggest creditors were GM and Ford. So I'm not sure that the prices are going up because consumer demand is up.

[A]

I mean volumes are up too. It's not just the prices are up. Like the amount that consumers are paying on new cars is, is going up. The amount that consumers are paying on used cars is going up, which is, to Emily's point, one of the reasons why delinquencies are going up as a percentage of overall borrowing. It's not massively out of whack compared to historical levels. But as cars get more expensive, I think a lot of people still are driving around in cars that they bought pre pandemic before, like the whole massive car price inflation happened. And eventually they're going to start wanting to say, well, I can't drive this 10 year old car anymore, I need to replace it with something else. And then they're going to go out into the market and they're like, shit. You know, pre pandemic, when I bought my car, I paid $10,000 for a car and it was perfectly good and you just can't do that anymore.

[B]

Yeah, cars have gotten really expensive. I think one thing is, as with the whole economy right now, it's high income people, wealthy people, driving, spending. So I think you see like for a certain segment of the market, it's like people who have money so spending, you know, making those $1,000 a month payments because they can basically afford them, driving prices up at the higher end and then pushing a lot of people down to get the used cars at the lower end, pushing those prices up. Do you know what I mean?

[A]

Exactly. And what we've seen very much in the car market since the pandemic is that the automakers have been pushing their higher priced, bigger, more expensive vehicles aggressively. And they've basically to a large degree, just stopped making the entry level smaller, cheaper vehicles. And so what that means is that there aren't that many entry level, smaller, cheaper vehicles to buy even on the secondhand market anymore because they're not being made anymore. And so if you are in the market for secondhand car that was made in the last five years, you basically have to wind up buying some expensive car because there aren't any cheap ones.

[C]

What's kind of mind boggling to me is that the best selling vehicle in the US is the Ford F150 and they're starting at $65,000 new. And when I was growing up, that was sort of the affordable vehicle. And you would buy a Ford F150 if you needed to use it for work or personal stuff. And now it's got like luxury car status almost.

[A]

One of the reasons why pickup trucks have always been relatively more expensive than cars, at least anything other than the very top end of cars is precisely that they have been sold as work tools. And you know that they're you know, you're investing in your business when you're buying an F150 in the way that you're not when you're buying a Nissan Altima. But, Yeah, I. The F150, price inflation has been something to behold, and people are just really loyal to that brand, and they'll pay whatever they need to to drive around in an F150, bless them.

[B]

And then everyone has the bigger car, so that. That makes everyone want bigger cars, because otherwise you feel very small on the road. I know, because I drive a smaller car, and I feel kind of, you know, I don't know. It's like walking around the city with the high rises.

[C]

Are you even an American, Emily, if your car's small?

[A]

No, I'm driving around on a bicycle. Imagine how that feels.

[B]

Should we talk about, though, another $65,000 truck that is popular out in the desert would be remiss if we did not mention this wonderful piece from Wired magazine that came out earlier this week in which the reporter. Her name escapes me, but she went out to the desert to a gathering of cybertruck owners and just interviewed them, and the result is pretty delightful. I don't know. I bet Elizabeth has thoughts.

[C]

I. It was amazing. My favorite one was they interviewed one guy who said, you know, I just don't understand why people think the truck is so political and divisive. And then there was an editor's note appended to it that noted that the guy they were interviewing had been part of the January six riots and had been pardoned by President Trump.

[B]

Yes.

[C]

There was another guy who said he used to be married, now he's divorced, and he's like, women do not like this vehicle. Yes.

[A]

The cybertruck is the one car that you can't put that bumper sticker on saying, I bought this before Elon went crazy. Because, like, that was the sign that Elon had gone crazy. And every time I see it, I'm just like, really? You decided? Really?

[B]

But people like it. In the piece, there were a few people that sounded quite rational. They said they use it to haul things around, and it's cool and it looks neat. And I. I think if you believe.

[A]

That it looks neat, then all power to you, man. If you think it makes you look like a complete dick, then, yeah.

[B]

All the other cars on the roads look the same.

[A]

It's true.

[B]

You can say for the cybertruck that it looks different, which is neat.

[C]

They look the same, though, for scientific reasons, like, you have a. Certain people have learned a lot about aerodynamics and things like that. Like if you have hard, rough edges at the front of a vehicle, that makes them more dangerous. That's why you don't see them on other vehicles.

[A]

It is a fundamentally dickish design in that it is quite dangerous to the people around it because it has that very long sloped windscreen and the driver really has no idea where the front of the car is or what's in front of their car.

[B]

One of the guys interviewed was like, I can't quite see very well out the windshield. And I was like, that seems bad. Like that's seems like, you know, pretty basic requirement of car, like be able to see out of car. I don't know. Maybe self driving is bigger now.

[A]

Yeah, exactly. Now you just let the robots do the driving for you.

[B]

But I did think it was kind of wild that these people are buying a product that's so polarizing, and then they're like, taking them out to the streets of America and people are like flipping them off and just saying mean things to them. There was one cybertruck owner who said he got a note on his car. What did the note say? It was like, you're an asshole or something. And then winds up talking to the woman who wrote the note.

[C]

Sounded a little apocryphal to me because he was very. He's very detailed about it. He's like. And then with tears in her eyes, she told me that she was sorry she judged me.

[B]

Yeah, yeah. I had hoped that was real, but probably not. But it seems like when being an American consumer, that's one way to go, you know, to buy things that, you know, are going to spark conversations or get people to, like, give you the finger.

[C]

I just refuse to believe that anybody who's bought a cybertruck recently would have not anticipated that reaction. Well, I mean, you know, because it is kind of a political stance at this point not to buy a Tesla categorically, I think, but a cybertruck specifically.

[A]

Yeah. Elizabeth, very few people have bought a cybertruck recently. The cybertruck sales, which were never very high to begin with, are down like 65% even by Tesla standards. Cybertruck sales are doing very badly. This was always a folly. It was always obvious from the day the design was revealed that it was not going to be this massive selling vehicle. And guess what? It hasn't been. Everyone who wanted one bought one when it came out, and now no one wants one and no one's buying it.

[B]

I think they should remake Back to the Future and Instead of a DeLorean, they should do a Cybertruck and that would be, that would make it all worthwhile because I don't remember many cars from the 80s, but I do remember the DeLorean and back to the Future if no one else does. It had the doors that open vertically, therefore was cool and made by a really rich guy.

[A]

The one thing I will say that I like about the Cybertruck is related to what you were saying about how all of the other cars look the same for sort of aerodynamic reasons. And the reason why all of the other cars look the same for aerodynamic reasons is number one, if you are a internal combustion engine car, then you want to get good gas mileage because it's expensive to fill up your car with gas, right? But number two, if you are in the EV, the EVs are even more aerodynamic because everyone had range anxiety for years when EVs started coming out. And they're like, I don't want to buy a car that I can't drive for 300 miles without recharging. And so in order to increase the range of the cars, we all of the EV manufacturers basically started making these teardrop shaped cars because that's the most aerodynamic shape. And they were all competing with each other on range. And so none of them could do an interesting design because that would hurt their range. And the range was the first thing everyone looked at in an ev. What I like about the cybertruck is that it's a sign that people are looking past range, which is much less important than people think it is. And you know, the Cybertruck is obviously sacrificing range for looks. And we also have the, you know, the new electric VW bus, the ID Buzz, which has like a big solid wall in the front of it. And that's a great looking vehicle and I love it and has terrible range. And I'm, I, I think, you know, more EVs with like less great range. The people don't care about range so much and they realize that EVs are like normal cars and you can just recharge them when you need to and you don't actually drive them that far very much on a day to day basis. Like that is a positive sign to me.

[B]

So here's my question to turn it back from cybertruck sort of. But you started a conversation talking about EV sales and they really have spiked recently because people raced to buy them to get their $7,000 tax credit before it went away. And we know that the White House is reversing a lot of the policy levers that it had pulled to get more people to adopt EVs. What I'm wondering now is perhaps the Biden administration, their actions were enough. Like, we have all these people that just raced to buy EVs, and the share of drivers who are driving EVs now is much higher. And at the same time, a lot of. There was a piece this week also about a lot of retailers now have put in EV charging stations because they realize it's like a draw for people. So there's more EV charging stations now than there have been. I'm wondering if we've reached a point where even though the government's pulling away aggressively from electronic vehicles, it's kind of like too late and like, the momentum is now, like, just pulling in EV favor. Because once you buy one, I'm imagining. Or you buy a hybrid, I'm imagining the next car you buy is the same. You're telling your friends about it, and it kind of builds on itself.

[A]

It's basically unheard of for people to move back, you know, to buy an EV and then buy a nice vehicle. Yeah, like, that just doesn't happen now. To be clear, the percentage of cars on the road, the EVs, at least outside California, is still low. You know, it's like single digits. So I'm not sure that we've reached that kind of. Well, everyone has an EV now, so we don't need subsidies anymore. Everyone does not have an EV most.

[B]

No, I'm not saying we don't need them. I'm just saying, like, maybe they did a lot of work already and like.

[A]

Maybe despite the pullback, EVs have become desirable, cool. Everyone who, like, more and more people have driven them. The people who've driven them, like them. The people who, you know, most people in an ideal world would prefer to have an EV than an ICE vehicle. So I think we've reached an important inflection point. Yeah. Certainly the lack of subsidies is not going to kill the entire industry, but it will probably slow the growth of the industry, I think.

[C]

Well, they've already. Automakers have already revised their projections down for EV adoption. A few years ago, they were projecting something like 48% of the market would be EVs by 2030. And now they're projected. Projections are 29%. And it's because the automakers still understandably are worried about the lack of charging stations, which haven't proliferated as fast as they thought they would.

[A]

Yeah, projecting future growth of the EV market is hard. Also, all of the big legacy automakers have struggled with the move to EVs. None of them has dealt with it very well, partly because they have just these enormous fixed plants for putting together old fashioned cars with a lot of moving parts. And those plants just don't lend themselves to putting together EVs. And if you do try and use those plants to put together EVs, the EVs aren't as good as the cars that are made on plants that were designed to make EVs like Teslas. Which is one of the reasons why Tesla, even with all of the bad press surrounding Elon Musk, remains by far the biggest selling EV brand in America because they're designed and built as EVs. So yeah, the big car makers, they need huge amounts of capital, which is quite expensive, to try and create EVs. None of them have had massive success. In a weird way, the biggest success has been Toyota, which has done a more hybrid first strategy. So yeah, the optimism that the big carmakers had that they could flick a switch and then just sell EVs, it's just not true. I mean, as Elizabeth was saying, the biggest selling car in America is the F150. It's not the F150 Lightning. The F150 Lightning is selling fine by EV standards, but not by F150 standards.

[B]

I'm not going to buy one.

[A]

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[B]

So because of a quirk in the structure of qqq, it's structured as a unit investment trust. But basically what that means is after the fund pays all its expenses, it can't just keep that rest of the money. It has to spend the money on marketing. So Invesco spends like hundreds of millions.

[A]

Tens of millions, over $200 million a year on marketing.

[B]

A year on marketing. Which is why they buy like super bowl commercials. And you've heard of QQQ because they spend all this money on advertising.

[A]

It reminds me of like the Barack Obama 2008 election campaign, which has so much money, it was like buying ads in video games.

[B]

But then the ads do work. And this, this ETF is enormous, but they don't benefit from it. It's pretty wild.

[A]

Yeah. Invesco, like the revenue from Invesco's QQQ ETF is actually substantially bigger than Invesco's entire revenues. It's like the subsidiary is bigger than the Holdco.

[C]

So basically, if you meet somebody who works at Invesco, they're probably in marketing.

[B]

Well, until now, because Invesco is trying to change the structure. And when it announced that it was going to try and change this structure, its stock price shot up because everyone was like, oh, finally, bro can make money from its own product.

[A]

They're going to need more than 50% of QQQ holders to vote for this change. And to be clear that it is $385 billion, this ETF. It is an absolutely enormous ETF, which means they're going to need holders of $200 billion worth of ETFs to vote in favor of this change. And as everyone knows, it's really hard to get shareholders to vote for anything because they're very.

[B]

They have the advertising budget to get their attention.

[C]

I was going to say, can they use their marketing funds to market to the shareholders?

[A]

I mean, they're going to have to. It's going to be very interesting to see whether they can find 50% of all this because a lot of people use the qqq. I'm going to say it's not dissimilar in some ways to stablecoins. You know how if you're in the crypto world, you bet on Bitcoin, or you bet on Dogecoin, or you bet on Solana, and then when you're not betting, you just go keep your money in stablecoins. It's a kind of like default. I feel like in the sort of tech day trading, Wall street bets world, you know, you can make your bet on Nvidia, you can make your bet on Broadcom, you can make your bet on Robinhood, and then when you're not making bets, you just keep it in qqq, which is the standard Nasdaq, just buy everything etf. But it's like a short term place where you keep cash for a while and then move it somewhere else. You don't think of that necessarily as a long term investment precisely because it is so expensive. It is by far the most expensive big ETF out there. While all the big S&P 500 ETFs are like 4 basis points, 3 basis points, maybe 6 or 7 if they're super expensive. This thing is 20 and no one wants to spend 20 basis points a year just for an index fund.

[B]

And I thought it was interesting that Spy, which is State Street's S&P 500 ETF has the same structure, but where Invesco is, like, they're licensing, they have a trustee that makes money, and it is BNY Mellon. So BNY Mellon makes money off of qqq, but Invesco doesn't. But with State street, their trustee is State Street. So they don't have the same problem as Invesco because they make money for themselves and it's all good.

[A]

The other entity that makes just obscene gobs of money from qqq is the NASDAQ, which is paid $205 million for just telling QQQ what to invest in saying, like, these are our stocks. Like, it's a public information. These are our stocks. But, like, because QQQ advertises itself as investing in the nasdaq, it needs to pay NASDAQ a licensing fee for that. And that licensing fee is now over $200 million a year, which is wild.

[B]

Yeah. Why is it called qqq? Because NASDAQ ends with a Q, probably. We're talking about this because FT wrote about it in a very good piece. And in the middle of the piece, they're like, here are the people from Invesco and NASDAQ talking about the creation of qqq. And this was compelling to me, I think. I don't know, my son.

[C]

Drugs or something.

[A]

Emily, you're becoming a nerd. You're becoming a finance nerd after all of these years in financial journalism.

[B]

No, that seems wrong. But they never talked about why it was called qqq. But I think that's a great ticker symbol, a great name. Just everything about that. Wonderful. Yeah. And did we already talk about how ETFs are? There's more ETFs than stocks or something now, we already talked about.

[A]

Yeah, there's been this massive explosion of ETFs. Most of them are not even within two orders of magnitude of the size of QQQ or Spy. When people are like, I just invest in ETFs, that's fine. But what you mean is I'm just investing in passive, low cost ETFs, like, you know, the Vanguard S&P 500 or whatever. They're not, you know, if you're buying tiny little ETFs that are meant to give you exposure to meme stocks or whatever, then God help you.

[B]

Oh, can I ask, this is why I'm not a finance nerd? Because I ask questions like this. What is the difference between when people say ETF like QQQ or voo, I think, is Vanguard's version of qqq. And an index fund, people say, like I invest in an index fund, isn't that the same thing as an etf?

[A]

Very good question. It is not a dumb question at all. It's an extremely good question. And Jack Bogle, the founder of Vanguard, would happily talk to you for hours about the difference between ETFs and index funds. Basically, they do the same thing, which is they invest your money in the index, but they do it in different ways and the ETF does it in a more tax efficient way. So most people have moved to ETFs, because if you buy an ETF and you don't sell your etf, then you don't need to pay taxes on the money in the etf. Whereas index funds have income from all of the dividends and you need to pay taxes on that dividend income. But like, index funds were designed to be more like buy and hold vehicles. And the reason why someone like Jack Bogle didn't like ETFs was that they make it very easy to trade in and out and people day trade ETFs and people hold ETFs for very short time periods. And that kind of violates the passive investing gospel of just buy and hold. If you buy and hold ETFs, that is a wonderful thing. But in fact, a huge number of hedge funds and day traders and all the rest of it are also in the ETF world because they're doing relative value trades or something like that.

[B]

So did the index fund come first? So this is very stable way to buy and hold. And then finance industry, Wall street was like, I know what we can do to these very stable instruments. We can trade them with these ETFs and like, you know, and so it goes. This message is brought to you by Apple Card. Each Apple product, like the iPhone, is thoughtfully designed by skilled designers. The Titanium Apple Card is no different. It's laser etched, has no numbers, and it earns you daily cash on everything you buy, including 3% back on everything at Apple. Apply for Apple Card on your iPhone in minutes. Subject to credit approval. Apple Card is issued by Goldman Sachs Bank USA, Salt Lake City branch terms and [e-mail].

[D]

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[A]

Should we have a numbers round? Elizabeth, you're looking excited about the numbers round. What's your number?

[C]

My number is 445 million and that's the number of subscribers that Mr. Beast has. And this is relevant because Mr. Beast just filed a trademark for a financial services company and he plans to offer online banking and investment banking services and also various crypto things.

[B]

Who's investment banking with Mr. Beast?

[C]

He's also trying to start a mobile phone company. So I expect that Mr. Beast Healthcare will come next.

[A]

I mean, mobile phone companies. I have recently written an article for a Bar of Soap about mobile phone companies and why everyone should switch from the big mobile phone companies to the small, little, you know, independent carriers because they're much cheaper and just as good. So if MrBeast wants to.

[B]

They're just as good.

[A]

Yeah, they really are just as good. It's the same network. So.

[B]

So Ryan, what's his.

[A]

What's his name? Ryan Reynolds. Well, Ryan Reynolds, his. His one was called Mint Mobile and that was actually bought by T Mobile. So if you have Mint Mobile, you get what? You get T Mobile service offered by T Mobile for just like a fraction of the cost of normal T Mobile service. There is no. If you have a T Mobile account, there's really no reason not to go with Mint instead of T Mobile because Mint is exactly the same, but cheaper.

[B]

Okay, I need to absorb some things here.

[C]

Who's your mobile provider, Felix?

[A]

I use a company called US Mobile, who have been lovely and they're tiny and no one's ever heard of them. But one of the interesting things about US Mobile is that you get to choose which of the three networks you want to be on and you can switch back and forth between them. What, for instance, Mint Mobile is only on T Mobile. Most of these companies are only on T Mobile. There's one called Visible, which is just, you know, Verizon. But US Mobile, you get to choose whether you want T Mobile AT and T or Verizon. And if you can have multiple lines, you can have two different phones on two different networks. And in fact, you can have one phone on two different networks if you're really playing on advanced mode. Most iPhones, most Android phones have dual E sims now, so you can actually have two different numbers on your phone on two different networks. So if one network isn't working, you can use the other network.

[B]

But these companies, they don't sell Internet access. Like we have like Verizon FiOS.

[A]

Well, no, they don't sell FiOS. But if you want wireless Internet access, if you want like a wireless, you know, 5G access point, which a lot of people have these days because it's perfectly good, you can stream video and all the rest of it. Yeah, they'll sell you that too.

[C]

I think Emily's talking about home services.

[A]

Yes, so that's exactly what I'm talking about. Homes are increasingly moving to wireless WI.

[B]

Fi and it's super cheap.

[A]

Yeah, it's much cheaper than hardwired.

[B]

I mean, breaking news, let's.

[A]

I mean, I have a home where I'm spending like more than $70 a month for like hardwired WI fi and I hate it. And I really want to move to wireless because it's just as good and much cheaper.

[B]

Oh, well, if that, if you do that, please update us and tell us how much money you've saved. I would like to know.

[A]

Okay, well, maybe when my article comes out on the bar of soap, we can talk about my bar of soap article.

[B]

I'm really confused about how a soap is related to this, but I look forward to finding out.

[C]

If you hold the soap like this, you can pretend it's a phone, you know.

[A]

You know how old cell phones are known as candy bar design? Nevermind candy bars. What about soap bars? People? My number is 1.8 billion, which is the number of dollars the S and P Global is spending to buy a company called With Intelligence. This is interesting to me because it's another sign that the boom in private markets is still booming. And not busting With Intelligence is basically a media company which provides information about private companies. And it's also interesting to me because I'm a journalist. And this media company which provides information about private companies is worth $1.8 billion billion dollars. So, like, you know, you can. If you are running a media company that hires journalists to report on private companies, then you can sell your company for 13 times revenues, which is wild.

[B]

Maybe I need to switch my beat.

[A]

Yeah, move to hedge funds and private credit. Then people will pay you millions until.

[B]

The private credit industry explodes.

[A]

It's like $3 million per employee for this company. That means. Emily, what's your number?

[B]

My number is 5.44, otherwise known as $5.44. That is the price of a slice of pizza.

[A]

What?

[B]

That has been deemed the worst pizza in New York City.

[A]

I mean, not least because it's $5.44. Come on, baby.

[B]

Mostly because it's $5.44. So to back up, there is this wonderful journalist called Ann Cadet. She has a substack. She used to be at the Wall Street Journal, and she sort of not like a personal finance person, but more like a guerrilla personal finance expert, New York City Chronicler, like. So she had another piece recently that was I spend 24 hours on the New York City subways, you know, and she wrote about it, and it's delightful and you should read it. Everything she writes is just absolutely delightful. She did a great piece, just incredible investigative journalism on the people who sell umbrellas. When it rains in New York City, it's not raining. There's no one on the street selling umbrellas. It is raining. It's like someone flipped a switch and there's all these umbrella salesmen out. She gave us the full story on that. Anyway, she wanted to eat the worst slice of pizza in New York City, but it was really hard to figure out what that was. She had a reader scrape all the Google reviews of pizza places in New York City and figure out how to do the rankings.

[A]

Emily, can I just. Before you do the big reveal. And I have not read this abstract, so I don't know what the big reveal is. Yeah, is it the Sparrows at Penn Station?

[B]

No, no. It is a restaurant called A Slice of New York, exclamation mark, Pizza Cafe. And it is in the Times Square area. And Ann goes with her friend who's like, more of like a pizza expert, and they eat the pizza and it sounds like just your regular, like, bad slice of pizza from New York City. Triangle shaped cheese and whatnot, has no flavor according to the description. And they even interview the manager slash owner of a Slice of New York Pizza Cafe. And it's just so delightful. And the guy's like, I know we could sometimes we could do better, but, you know, we're really trying. And they come to the conclusion that it's just bad New York City pizza. But what makes it extra bad is that it's $5.44, which is a lot more than you need to pay for New York City pizza.

[A]

For those of you who are not New Yorkers out there, the hard and fast rule in New York is that the cost of a slice of pizza should always be the same as the cost of a subway fare. The subway fare is going up from $2.90 to $3. Therefore, the cost of a slice should be $3, not five and a half dollars.

[B]

Right. But then they talked to some people that were there. It's mostly tourists because it's Times Square. And you know, she talked to a couple of customers and they're like, this is really good. It's way better than what we can find where we live. And that is the key point. The key point is that New York City pizza, even the worst in the city, as adjudged by a scraping of Google reviews, is still probably better than most pizza you can get in most other places.

[C]

Anecdotally, I think the sort of lowest price, baseline price for a slice of pizza was for a long time, 99 cents. And now I think it's gone up because there are three pizza spots in my neighborhood and they're all one block from each other and they all have a big sign outside that says buck 50 pizza.

[A]

I think there's still like two of the 99 cent pizzas places left. But yeah, they are dying. It's hard to make money selling 99 cent slices of pizza anymore. The subway fare is $3, people.

[C]

Is it?

[B]

It went up to $3.

[A]

It's about to go up to $3. Yeah.

[B]

Wow. Well, you should read Anne's piece where she spends 24 hours on the subway, which definitely is like making your $3 last for a long time.

[A]

Stretch that $3 and just stay on the subway for 24 hours.

[B]

Wait, one last thing.

[A]

Is that one last thing about the $5.44?

[B]

No, this is about the 24 hour subway experience, which I guess is cheating on my number. But she had a tally of the number of people she saw reading books in her 24 hours and the number was one.

[A]

That's so not true. I take the subway every day and I see people reading books every time I take the subway. She wasn't looking hard enough. I read books on the subway people. Anyway, I think that is it for us this week. Thank you for listening to Slate Money. Thank you for being a Slate plus subscriber. If you are, then you will know that there is a wonderful show about Matcha in your feed right now. Thank you to Jessamyn Molly and Shayna Roth for producing and we will be back next week with more sleep money. Slate Money is sponsored this week by Saks Fifth Avenue. Saks Fifth Avenue makes it easy to holiday your way. Whether it's finding the right gift or the right outfit, Saks is where you can find everything from the perfect Chloe bag for your hard to shop for sister to a Prada jacket for a fancy holiday dinner. If you visit saks.com, you'll be astonished at how easy it is to find new arrivals and gift inspiration from, I don't know, Dries Van Norton, wonderful Belgian designer. Lots of floral prints. Just the kind of thing you need to lighten up and brighten up what the darker days that are coming. If you don't want Dries Van Noten, I can tell you Sachs has holiday looks for everything. You can get Dolce Gabbana instead. I would recommend flowers. That's my top tip for this season as the nights get longer. But if you don't know where to start, Saks.com is customized to your personal style so you can save time shopping and spend more time just enjoying the holidays. Whether it's an office holiday party, a cozy night in or a vacation getaway, Saks has everything you need to holiday your way. So make shopping fun and easy this season and find gifts and inspiration to suit your holiday style at Saks Fifth Avenue. Limu Gay Moo and Doug Here we have the Limu Emu in its natural habitat, helping people customize their car insurance and save hundreds with Liberty Mutual. Fascinating. It's accompanied by his natural ally, Doug.

[B]

Limu is that guy with the binoculars watching us.

[A]

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