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The Fun Little Drink Economy
00:47:10
Capitalists figure out how to thrive under Trump, Gamestop makes a bid for Ebay, and McDonalds jumps on the fancy beverage trend.
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- [00:05]
A
Hello and welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Bloomberg with Emily Peck of Axios. Hello, hello With Elizabeth Spires as New York Times and we are going to pick Emily's brain because she is back from California where she was hanging out with a bunch of rich people who were drinking expensive coffee. And we're going to learn what that was like. We're going to learn whether the coffee was better over there. We're going to learn whether there's a whole bunch of optimism in the world. Spoiler alert. Yes there is. We are going to talk about one little example of that optimism, which is the fact that GameStop has put in a bid for ebay. We are going to talk about refreshers. The whole show, though, frankly, is a refreshing show. So stay tuned and all coming up, Sleep Money. This message is a paid partnership with Apple Card. Apple Card is a no fee cashback rewards credit card with a ton of great benefits. There's a lot to love, but instead of listing everything, I want to focus on my favorite benefit. Travel. You all know how much I love to travel, but even as a seasoned traveler, things can still get stressful, which is why I use Apple Card on my international trips. Apple Card has no foreign transaction fees, so I never have to worry about extra charges when I'm abroad. And with 2% daily cash back on every purchase. With Apple Pay, I'm actually earning daily cash as I travel. That's 2% wherever Apple Pay is accepted, which adds up when you're booking flights, hotels and car rentals. Instead of coming home feeling like I've drained my bank account, I come back with cash back I can put toward my next trip. So start using Apple Card for everyday purchases today. Don't have one yet? Apply in the Wallet app on iPhone subject to credit approval. Variable APRs for Apple Card range from 17.49% to 27.74% based on creditworthiness rates as of January 1, 2026. Existing customers can view their variable APR in the Wallet app, Apple Card issued by Goldman SachsBank USA, Salt Lake's silly branch terms and more at AppleCo. AppleCard benefits Slate Money is brought to
- [02:38]
B
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- [03:31]
A
Let's start with the business and finance news of the whole what year, pretty much would you say, Emily?
- [03:40]
B
Maybe even longer than that? Maybe. Maybe since 2025. January 20, 2025. Maybe that's where we start.
- [03:48]
A
That was when Donald Trump became the president for the second time and started implementing a very, let's call it to be polite, post neoliberal set of economic policies. He has a very America first kind of view of the world. He has a very zero sum view of the world. He's the way that we win is by other people losing. And he uses all of the power available to him as president of the United States to try and put his finger thumb on the scales and pick winners and do all of these things. And I grew up in a world where the received wisdom from the economics profession and everyone else was the best way to have broad prosperity would be if you have lots of competition and free markets and everyone is driving prices down and productivity up and consumers benefit. And Trump is like, fuck all that. I just want America to win. And the most visible sign of this was the Liberation day tariffs in April 2025, which he announced. And immediately the stock market falls off a cliff because they're like, we don't like that. We like laissez faire capitalism, free market capitalism. We don't like it when the government starts trying to get involved. Since then, as we all know, the stock market has bounced back not only from the Liberation Day tariffs, but also from the single biggest oil shock the world has seen since 1973. And we're hitting new record highs again. And the reason we're talking about this this week is that you just got back from Beverly Hills because you're very glamorous and you spent a few days hanging out with the California plutocrat crowd at the Milken Conference in Beverly Hills. And they were just peachy happy with this current state of affairs. If they ever preached the gospel of laissez faire capitalism, that is a dim and distant memory. And now they're like, wow, Trump is good, actually.
- [06:11]
C
Well, I don't know that, but I
- [06:15]
B
don't think I heard anyone say that. I just, everyone at this conference, right, which is like mostly CEOs, investors, bank people, a lot of people wearing navy suits and like chunky, expensive watches. A few women, maybe 25% of the crowd, women, immaculate suits, high heels, setting the scene of just like very rich people doing very rich people things, walking around looking extremely rich. And they were so happy. Okay, These were a happy group. The stock market, as you said, Felix, is hitting new all time highs seemingly every day. I think it did so a few times in the brief days I was there. And everyone is very excited about AI and all the money being poured into the AI hyperscalers and the opportunities of deal making around AI. And you heard. I heard more about AI and AI excitement and how AI is going to change the world than I heard anything about geopolitical shocks or the Strait of Hormuz. The Financial Times was there also. They quoted a banker saying something like, does anyone care that the Strait of Hormuz is closed? And you know, like the whole country of, say, India, they care, right? They're rationing cooking oil and not going to work because there's not enough gas. But you know, in Beverly Hills, where, by the way, gas prices were near to $7 a gallon, they did not care. $7 is like what you pay for a small coffee. It's fine, right?
- [07:56]
C
I mean, these are the people who don't know how much a banana costs. Definitely Arrested Development, whatever, it's fine.
- [08:01]
B
It's been, is it organic? I'll pay more. So everyone didn't care about any of that. And the few people I talked to who care about such matters were like, I don't understand why they don't care. You know, it was just like, no one cares why I care. And then one line of explanation came from a consultant I spoke to who said basically they learned to stop worrying and love geopolitical risk. Like CEOs basically have gotten used to managing around the volatility coming from the White House. They've just like deal with it, it's fine. It's like the way it is now. They can't be shocked by shocks anymore because there have been so many shocks.
- [08:40]
A
I really like this because again, back in the olden days, before Trump, when I was sipping at the trough of neoliberalism, the thing that everyone used to say was the thing that business values the most is certainty. The worst thing for business is uncertainty. Like risk. You can place in uncertainty, you can't. And what you don't want is especially policy uncertainty. Because when you're a business, what you're doing is you're making investment decisions with 10, 20, 30 year time horizons and you want some kind of certainty that you know what the world is going to look like in 10, 20, 30 years so that you'll be able to get a return on your investment. And when the world can get turned upside down on any given Tuesday because Trump tweets something that's not a conducive atmosphere for investment, turns out this is completely false. We are seeing all time highs in investment, not just in the stock market, especially, as you say, in anything AI related. And we're seeing that investment being made in the face of incredibly high political uncertainty, geopolitical uncertainty, and also even sectoral uncertainty, because no one has a clue what the AI industry is going to look like in 10 years. And given all of that uncertainty, you would imagine that risk premiums would be enormous, that valuations would be low right now because we just don't know where it's going to be. And people are taking a lot of risks that they need a higher return, so they need to buy in at a lower level. None of that is happening.
- [10:11]
C
Do you think, Emily, this is a matter of them having already priced in the risk, where they kind of think they know where AI is going to. They understand that Trump isn't an ideologue, but he sort of has a mobster way of operating where he will. For example, with Nvidia recently, he is allowing them to export chips to China, but he's taking a 25% cut. If you understand kind of Trump's zero sum mentality, then maybe he's more predictable than we think.
- [10:39]
A
I mean, he's clearly not predictable because he does things like bomb Iran, which no one really predicted. And the risk clearly isn't priced in because risk spreads are tiny, stock prices are at all time high that like, if risk was priced in, then all of the asset values would be much lower.
- [10:57]
B
Well, to build off what Elizabeth was saying, yeah, I think that CEOs just, they do think Trump is not as big of a risk as they used to. And I think investors say this all the time, and we already talked about it. There's a belief that Trump sort of like lives and dies by the market, the stock market. So I think when CEOs leaders see the stock market up, that's like a green light, like risk on kind of light, do deals, do whatever. Like the President's not going to mess with that as much. And then I think since the tariff lesson like the Liberation day shocked businesses and companies, they were sort of like afraid to act. But the way that's played out, which has been like a mix of like classic Trump always chickens out, taco vibes plus court pushback, plus everything seems fine, I guess, kind of vibes that CEOs are like, you know what, we can manage through this. Like, it, it's okay.
- [12:00]
A
And the proof of the pudding is in the eating. Here we are, we are now more than a year on from Liberation Day. We have the largest tariffs that the United States has seen since the era of smoot Hawley in 1931. And the more or less unanimous prediction of economists. If you had told them what the blended average tariff rate has been over the past year, what would that have done to corporate profits? They would have said, well, obviously corporate profits will fall in that kind of universe. And in fact, corporate profits are up, what, 11% over the past year. Something enormous like that. I mean, the stock market rising is mostly just a sort of arithmetic product of the fact that profits are going through the roof.
- [12:50]
B
Yes.
- [12:50]
C
We should mention too, that Thursday the Court of International Trade ruled that Trump's tariffs were illegal. And I think people were sort of anticipating that. So that might also be a reason for.
- [13:01]
A
They did that a year ago as well. But yeah, and then that'll take another year to trickle through. I don't think that this is pricing in optimism that the tariffs will go away so much as it's pricing in optimism that the tariffs don't turn out to matter that much for corporate profits.
- [13:17]
B
Plus AI.
- [13:18]
A
Plus AI. And what we have seen, and we talked about this last week with Google, is that profits are up and to the right across the market. Everyone is making money. We have this big sort of sloshing sound of capital sort of moving away from labor and towards capital. So if you have money in the market, that's good. Milken in particular is a conference of dealmakers. It was founded by Mike Milken, probably the greatest dealmaker of the 1980s. Everyone is looking for deals to make, for financing to structure. The amount of money that is being put into especially AI deals is just mind boggling for data centers and IPOs of anthropic and OpenAI and SpaceX. So there's this big theory that I have that I want to run by you guys, which is that for a while now, Silicon Valley has run on this idea that the way to become super successful is to be a monopoly. Peter Thiel wrote a whole book about it called Zero to One. And the idea is you don't make money by being competitive. You make money by owning an entire thing. And everyone just comes to you because you're the natural monopolist. That's how Google became so successful. That's how Facebook became so successful. That's how Windows became so successful. And that has, I think, here's my sort of like, big idea, which I want to run by you, that has kind of metastasized up to the level of the economy as a whole. And that what you have is Donald Trump kind of internalizing this idea and saying, I don't want to competition, I just want the US to be the monopolist and to call all the rules and to make all the money. And it kind of seems to be working.
- [15:02]
C
No, I don't think that that's some broad shift in the way that people think. I think this sort of boils down to how Trump operates. When we had Barry Ritholtz on a while back, he said something like, the market has to react now to this sort of one fucking guy doing something that shifts perception in big ways. And Trump's not an ideologue. I don't think that he has a particular theory about monopolies versus healthy competition. I think he just views everything as zero sum. And that's what we're seeing is the end product of that.
- [15:32]
A
But what we're also seeing is, even on a global basis, a positive sum effect of his policies. The stock markets in the rest of the world have gone up even more than stock markets in the US Winning in the US Is good for the US but somehow everyone else, even if they're losing. And Emily was just talking about how the industrial base of India is being completely hollowed out by the fact that no one can get fuel to run factories anymore. But that notwithstanding, I mean, look at what's happened to the Korean stock market. It's gone up five times.
- [16:06]
C
Those are people that are routing around Trump.
- [16:09]
A
This is my point. Everyone is somehow winning.
- [16:11]
B
I think you are right and wrong. So I think you're right that the zero sum situation has metastasized globally because of Donald Trump's America first policies have forced other regions of the world to be X first, Europe first, Asia first, whatever. Everyone is retreating into their, you know, corners of nationalism.
- [16:34]
A
Middle powers first. If you're Prime Minister Carney of Canada,
- [16:37]
B
Ridgewater's talking about the new mercantilism. Every country or region is trying to figure out how to have their, like, protected industries and moats and, you know, fighting each other. And that can be good, like, for, like, Germany and Europe. They're now afraid that the US won't come to their aid militarily. So they're building up defense industries and spending a lot of money. And like, growth is supposed to be a little bit higher there. But I mean, I wouldn't say that they're doing so great in the stock market. Like inflation fears, energy problems are causing equities to kind of fall in those regions. And in Asia, you pointed to the Korean market, but that's like an AI story, right? That's not about the new mercantilism or anything like that. That's because investors see Korea's Cosby as a way to invest in AI stocks. And it's done, like, insane. Then the second thing is you are right that monopolies can. And country monopolies like you're talking about can be good economically in the short term. I think in the long term in the US and around the world, this move to be protectionist and mercantilist and to see economic growth as zero sum instead of like, we all trade and everybody grows together, it makes everything really fragile. When you have a monopoly, when you're like, have a ruling capitalist class, like slang and like trotting around milking, feeling happy in the sun, you have a lot of losers building up, right? You have a lot of people not benefiting from stock market growth. You have a lot of countries that aren't building the moats, like you have your Indias, whatever. That leads to a lot of. And I did hear this talked about too, a lot of fragility, right? That leads to a lot of anger. That leads to a lot of populism. When the last time we had big global change in the economy, that's what we had the last time too. And that was during the time of Felix's heyday of neoliberalism. We had losers in the US that were like, hey, we got left out. Why don't we vote for this cool guy from TV who seems to get us? You know what I mean? Like, it's a very fragile situation when you are like, making these economic winners, sucking the capital up for companies and leaving a bunch of worker bees without very much of anything at all.
- [18:54]
C
I also wonder how much of this is just pure unadulterated AI optimism. There was a quote from Larry Fink, who's the CEO of BlackRock, where he said, we're not an AI bubble because there's a supply shortage, which to me is just looking at one tiny quarter of the whole AI issue. We do have potential risk on the horizons that he's sort of not acknowledging one is so much of the data center build out is built on debt. Some of the smaller, non hyperscaler companies may not be able to pay off and they're having trouble getting some of these big data centers online and hooked into the grid. And so anytime somebody's like, well, look at the stock market, we're not in a bubble. This is just the new reality where AI drives everything. If you're in a room full of other people who are all making tons of money off of AI, there's an incentive to be Wile E. Coyote running off the cliff and then just never look down collectively.
- [19:45]
A
So the fact that so much of the AI industry is built on debt is probably, I mean, it should be to some degree reassuring because debt investors by their nature are relatively conservative. Right. You can, you can't make massive profits from lending money because you're lending money at relatively low fixed rates and the upside is cap and the downside is everything.
- [20:09]
C
But using that logic, we'd have never had a credit crisis. I'm not sure that when there's a sector move where so much money is pouring into one sector and the entire index is very overweight that sector. I'm not sure. Generally though,
- [20:26]
A
can there be credit crises? Yes. Is there a lot of borrowing going on in the AI sector? Yes. Is there a huge amount of credit risk in the AI sector? I'm not sure about that. I think that's one of the reasons why Google and Amazon and the really deep pocketed, sort of ultra highly rated companies are seeing their market caps go up so much as a result of this AI bubble, if you want to call it a bubble. It's precisely that they are the ones who are able to borrow the money because they have the cash to do so and they have the cash flows to do so. No one's worried that they're going to end up defaulting.
- [21:05]
C
Yeah, well, that's what you said, not the hyperscalers. No. Right.
- [21:08]
A
That's where most of the debt is. Right. Are there little loans and bonds here and there which are riskier? Yes. But not enormously. Right. If you look at like the trillion dollars of AI related debt that has been issued so far, most of it is incredibly safe.
- [21:26]
B
Did you read my newsletter today?
- [21:28]
A
I did.
- [21:28]
B
What do you think of the guy who said that the reason government borrowing yields are up on government debt is in part because the hyperscalers are issuing so much debt and bonds that they're competing with Treasuries now?
- [21:42]
A
It's Absolutely true. It's not that Alphabet and Amazon are considered to be safer than the US treasury, but yeah, there is a, there is a finite amount of investment capital to go into the bond market.
- [21:58]
B
Yes.
- [21:59]
A
And when you have this much issuance, then that just drives yields up broadly across the board. Because if you can get, I don't know, 6% from Alphabet, then why would you lend to the government at less than 5%?
- [22:15]
B
Right. Because Alphabet is seen as just as,
- [22:18]
A
almost, as, almost as risk free, as safe.
- [22:21]
B
And so like, it's so interesting to me, like the cost of borrowing for the United States is going up because Google needs to borrow money too. I know, that's pretty wild. That's like these are new countries and almost entering the scene.
- [22:34]
A
Exactly. And this is ultimately, I think this ultimately does explain why everyone at Milken is so happy. Because Milken at Heart has always been and will always be a bond conference. It's all about fixed income issuance, fixed income investment. And right now, the fixed income desks have never been happier. They are just rolling in happiness. They are seeing flows, they are seeing deals, they are making money left, right and center. They are trading, they are issuing. And yeah, it would be unthinkable for this kind of volume to be in the bond markets and have anyone at the Milken conference be unhappy because they're just bond people. That's who they are.
- [23:17]
B
And like the US like, they can borrow so much money. Everyone's like, sure, we'll give you money. And now these big tech companies are like, hey, we can do it too. We can get lots of money too. And everyone helping them is like, wee wee, it's. Foreign.
- [23:43]
D
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- [24:45]
A
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- [28:29]
C
Yeah, so GameStop CEO Ryan Cohen wants to buy ebay somehow, even though they don't really have the cash to do that, and partly because he was once banned by ebay and is still carrying a grudge about it, but also because, and this strategically is the only thing about this deal that makes sense. GameStop has sort of pivoted to being a collector store. So it's, you know, Pokemon cards and collectibles and obviously that is ebay's bread and butter. And they've also developed more of a younger customer base. But nothing else about this deal makes sense.
- [29:05]
A
Let's start by stipulating for those of us who remember 2021, GameStop was this basically left 4 dead legacy video game retailer that was losing money hand over fist and was certainly going to fail. And a whole bunch of hedge funds were like, this video game retailer is certainly going to fail, therefore we can short the stock and make money. And then there was the mother of all short squeezes. The stock went through the roof. And while we all remember there was a movie about it in the whole thing.
- [29:36]
B
I saw the movie.
- [29:37]
A
I think we talked about it on Sleep Money.
- [29:38]
B
Oh yeah, we talked about it with Jonah Sarah.
- [29:41]
A
And the one thing that everyone said when GameStop was meme stalking was be careful people, because it's all going to end in tears and like GameStop will end up going to zero. Like whatever shenanigans happen with the stock. GameStop is now a $12 billion company.
- [30:00]
B
This was shocking for me to learn reading the prep. Apparently like Ryan Cohen did turn around GameStop.
- [30:06]
A
GameStop has $9 billion of cash on its balance sheet.
- [30:11]
B
How it's amazing. What a story. I had no idea. I lost track of it. It was just like a thing you flick at in another story about retail investors. You're GameStop. Move on. Never look, never check. Reading the prep for this and I was just like, hang on.
- [30:26]
A
And so when Ryan Cohen says like, I want to buy ebay and Elizabeth says like, well, he doesn't have the money. Well, he kind of does, right? He has $9 billion of cash, which is a lot of cash. And then he went to like, was it TD bank or someone like that in Canada and said, will you lend me $20 billion to buy eBay? And they're like, yeah, we can do that. I mean we're not going to 100% like nail promise, but we'll give you this thing called a highly confident letter, which to echo the previous segment was this thing that was invented by Mike Milken. And people have been using highly confident letters to buy companies since Mike Milken's day. So yeah, he has $20 billion that TD bank is highly confident they can lend him. He has $9 billion of cash. He's bidding $54 billion for eBay. He's halfway there just in debt and cash. And he's like, as he famously said on CNBC, it's half cash, half stock. Right? Half of 54 billion is 27 billion. What's the problem?
- [31:27]
C
I think there are two problems. One is that first of all, that letter that TD bank issued is pretty standard in early stage deal making and it's non binding. It doesn't really mean very much. It just gives TD bank some option where if they end up doing the deal, they'll probably have better rates than any other participating institutions. But the other thing is that Cohen does have a little bit of a mixed record in turnarounds. What he did with GameStop is they did move to younger audience focused on collectibles, but they also, their revenue is down significantly. But they're more profitable because they just cut out entire lines of business. So his entire MO is a cost cutter. But he also made big bets on Bed, Bath and Beyond, which ended up in bankruptcy. And he made noise about going after Nordstrom and making changes to the board. And then somebody pointed out to him that the board is entirely controlled by the family that owns Nordstrom and so he can't do that. So it seems like he's a little bit impulsive in terms of the way that he decides to do these things.
- [32:27]
A
Oh, he's certainly impulsive. He's a creature of Wall street bets. I will say that he made a lot of money on Bed, Bath and Beyond. That was successful for him. It wasn't successful for the long term shareholders. He bought the stock, it went up, he sold the stock, it went down, but he made money.
- [32:42]
B
This was intriguing. We again, I'll refer to the wonderful prep document that we are given. And I read an amazing story in forbes that said GameStop, they say they own some ebay stock. I think it's like 15% of.
- [32:57]
C
It's just under 5 because they had to report to the SEC.
- [33:01]
A
But they have an economic interest which is higher than that because they have a punch of options.
- [33:04]
B
Anyways, that's what I was getting at. They have a bunch of options and if ebay's stock price goes up, they can make a lot of money on the options. So he can go out and say, hey, I'm going to buy ebay and I'm going to value it at $125 a share. And the market's like, we don't really believe you, but the stock goes up anyway. A little bit more. That's already a win for this bro. He doesn't need to do anything. He doesn't need to have the deal go through.
- [33:30]
C
The opposite of that on this ebay
- [33:32]
A
stock went up, it went.
- [33:33]
B
Ebay stock went up and GameStop stock went down. So he could still make out perfectly. Wonderfully.
- [33:39]
A
He can make money on this trade as a short term trade. Like, do I believe he's going to end up buying ebay? No, because he's still a shitposter at heart. Right? And probably like 80% of this bid is shitposting. It's theoretically possible, but practically improbable. The amount of stock that he would have to issue in order to be able to pull this deal off, even if his stock doesn't go down any further than it already has, it's like four times the amount of stock that he has outstanding. This would be the most dilutive acquisition we've seen in years. And it's probably not going to happen.
- [34:15]
B
But the way Matt Levine explained it was sort of more like what he's actually talking about is eBay absorbing GameStop, but putting Ryan Cohen in charge of the whole thing. And like Ryan Cohen basically, basically borrowing money on the ebay side to make the whole thing happen. Kind of like a leveraged buyout.
- [34:32]
A
It's like an lbo. Exactly. And then ebay sees its debt load treble, go up four or five times and then suddenly ebay becomes this incredibly indebted company. And did we actually want that? Probably not. Is it good for shareholders who suddenly get a very risky company that is way over levered? Probably not. But you're just in Milken. It's like junk bonds are here.
- [34:52]
B
Again, that's not the point. Like making a healthy company isn't necessarily the point.
- [34:57]
A
The point of this, the whole thing is done right. So Ryan Cohen goes off on ebay and says, I'm going to sell my socks to help raise money for this. And then ebay bans him and the whole thing is just meme over meme. Matt had the great headline on his newsletter on Thursday, Half cash, half sock. On some level, it's really stupid. But one thing I do want to say, just because this is my little place where I get to rent here on Slate Money, is that a huge amount of the discourse surrounding this dumb bid that is not going to work was precipitated by an interview that Ryan Cohen did on CNBC with Andrew Rossorkin. And he was very sort of like, should we just say laconic to the extreme? He just basically didn't say anything. And Andrew was saying, dude, can you explain this math to me? And he said, I think the quote was the math doesn't math. And he's like, I just don't understand where you're going to get the money to buy ebay. And Ryan Cohen was like, it's half cash, half stock. I don't understand the question. And he didn't really explain it. And to people who think that he's God because they made all the money on GameStop and by the way, probably made lots of money on like Chewy and Petsmart. Like the guy has done a lot of good deals in his time. They were like, oh, he totally mogged Andrew Sorkin. And then the staid square financial journalist types, places like Semaphore or whatever would be like, Andrew Rossorkin was asking these incredibly sensible questions and he couldn't answer them and he looked like a moron. Andrew Ross Hawkin was not asking an obviously sensible question. I just want to come out and say this. He was like, you only have $16 billion of stock outstanding. You add that to the $27 billion of cash and it doesn't come to 54 billion that you need to buy the company. And it's like, Andrew, that's not how stock works. When you're paying with stock, you don't use the shares that are currently owned by your existing shareholders to buy the company. Your existing shareholders hold onto their shares. Like what you use is newly issued shares and you can issue as many newly issued shares as you like. There's no limit of 100%.
- [37:06]
C
I thought his question was more about the debt side of it. I think it's a reasonable question because, you know, Michael Burry of the Big Short fame dumped all of his game stock on the news of this because he think the debt side of it was going to work.
- [37:18]
A
No, Andrew's question was quite explicitly like, even if you get the 20 billion, where are you going to get the rest?
- [37:24]
B
He should have said, when you're talking about stock, are you saying you will issue 20, 20 billion worth more of stock or not?
- [37:31]
A
And when Cohen replied saying it's half cash, half stock, then yes, if you're paying $27 billion in cash, then yes, you're issuing $27 billion in stock, which is more stock than there is outstanding.
- [37:43]
B
But Cohen could have said like, my plan is to. He could have said to be specific. That stuff is.
- [37:48]
A
He could have answered the question, which he didn't.
- [37:50]
B
So I mean, and so that's what makes the whole thing pretty unusual. And that's why it got attention also, like, yeah, I mean, Andrew Ross Sorkin could have asked like that follow up question, but I feel like his job is to sort of like question these guys, like getting into the minds of the viewer who might think a similar thing. How does this tiny company buying this big company. That's just the question you ask, how are you going to do it?
- [38:15]
A
And the answer we all kind of know is he's not. But again, it's like it's symptomatic of the frothiness in the markets right now that he can come out and be like, I want to buy ebay, which is, you know, why the fuck not? Stranger things have happened.
- [38:30]
B
It doesn't not make sense. Like you were saying, like if GameStop's into collectibles and stuff and ebay is now like into the youth. Like they just bought Depop, which is like a secondhand Internet store. I'm like a thousand years old. But they bought Depop and are trying to like skew younger because, you know, original ebay fans are now like in their 60s. It doesn't not make sense.
- [38:51]
A
EBay? Yeah. EBay is just like old economy at this point and probably wants to get owned by someone new. Remember how it bought PayPal and then sold PayPal?
- [39:00]
C
Yeah.
- [39:00]
A
And now PayPal is a separate company that also owns, you know, Venmo and Braintree and like all of the payments bits. And there's constant speculation that PayPal is going to wind up getting bought by stripe because PayPal is old and clunky and Stripe is sexy and modern. And so like, let's just get the, you know, how old is Patrick and John Collison? They're like, I think they might have just turned 30. They're still pretty young.
- [39:25]
C
Really.
- [39:26]
A
Yeah. They're just going to come in and buy PayPal.
- [39:28]
B
I feel like I get 20 years older while some people only get like 5 years older. And I don't understand how that works works.
- [39:47]
A
Slate Money is sponsored this week by Vanguard. To all the financial advisors listening, let's talk about bonds for a minute. Capturing value in fixed income is not easy. Bond markets are massive, murky. And let's be real, lots of firms throw a couple flashy funds your way and call it a day. But not Vanguard. Vanguard bonds are institutional quality. That's not just a tagline, it's a commitment to your clients. It means top grade products across the board. Some managers out there promise big returns, which usually come with big risks. That can mean a rollercoaster ride for investors. Vanguard takes a steadier approach. They don't go all in on risky bets. Instead, they focus on reliability and consistency. It's not always flashy, but it sets the standard for what dependable investing should look like. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself@vanguard.com audio that's vanguard.com audio all investing is subject to risk. Vanguard Marketing Corporation distributor. Slate Money is sponsored this week by the Stopsky Foundation's podcast Break Fake Rules, Change Big Giving for good. If you're into learning more about money markets and the policies that shape them, then this is a show that we want to put on your radar. The show examines the fake rules holding the systems in place that shape the flow of charitable money and power in America and which rules we must break to secure a better future for all. You'll hear from the actual rule breakers, the folks in government and nonprofits who are tired of the status quo and the finding ways to fix how extreme wealth shaped society. For instance, there's an episode with Marlene Engelhorn which is called the Only Honest Philanthropy Abolishes Itself. I like that idea. And there's another one with Nikki Marin Baena saying, how do we break the fake rules of a broken immigration system? Basically, there's a bunch of conventions and actual laws governing charitable institutions, and some of them make no sense to listen to Break Fake Rules. Search for Break Fake Rules in your podcast app. That's Break Fake Rules. Anyway, talking about the kids, I love the perfect Segways. You guys introduced me this week to what are they called? Refreshers drinks. And so suddenly I'm reading all of these articles about perfectly normal places like McDonald's and Starbucks and Dunkin Donuts selling the incredibly weird sugary pink drinks with Boba in them and tea and the dumbest names in Christendom. And all of the teens are going oo, sweet pink thing. And spending fortunes on sweet pink drinks. And I'm like what is going on? And you're gonna tell me that it's not just 13 year old girls who's buying these things?
- [42:57]
B
No. Well, there's a. Okay, so what Felix is talking about is.
- [43:01]
A
Yeah, what am I talking about, Emily?
- [43:03]
B
Felix is talking about drinks. The rise of drinks at fast food outlets. People aren't as into soda anymore. People are into sorry drinks.
- [43:13]
A
Beverage innovation.
- [43:15]
B
Beverage innovation. Refreshers, Things that are pink, things that have matcha, things that have boba, things that have caffeine. These got big in the grocery stores with a drink called Celsius that Felix never heard of. Can you believe that? Slatemoneylate.com Anyway, Felix only drinks a 50
- [43:32]
C
year old wine so exclusively.
- [43:35]
A
That's not true.
- [43:35]
B
From Austria.
- [43:36]
A
I drink five year old wine. I drink.
- [43:41]
B
So the teens and the adults all got used to drinking things besides water besides soda. And fast food restaurants are pressured right now because the cost of actual food, such as the beef, is getting more expensive and the margins are getting tighter. But they realize they can charge like instead of charging like a $1.99 for a soda, you can charge like $5 or $6 for a strawberry watermelon refresher that has freeze dried strawberries in it or something like Sprite Berry Blast infused with sweet blue raspberry syrup. These are McDonald's drinks. You can make A lot more money if you're a fast food restaurant and pull people in outside of like lunchtime dinner hours. If you sell these drinks. And they're becoming very big.
- [44:23]
A
One of the things that jumped out at me was like, no one's drinking soda anymore. They're drinking Sprite this and Sprite that and Sprite the other. I'm like, wait, they're still drinking soda, Right?
- [44:32]
B
Dirty soda is still really big.
- [44:35]
C
I think this is like Gen Z's version of a slushy. This is what?
- [44:38]
B
Yeah.
- [44:39]
A
Like you have to tell me. And I'm going to really be the old. What is a Gaza guy here. But dirty soda, I'm going to assume it's not like Diet Coke with olive brine in it.
- [44:49]
B
Right.
- [44:51]
C
It's like, how do you make Diet Coke less healthy? You add like cream to it or something. They add like vanilla foam and things like that.
- [44:59]
A
Oh, foams. That was it.
- [45:00]
B
Oh, that's part of drink culture is cold foam. And I'm going to be honest, I write to us and tell us what the f cold foam is. I honestly don't quite get it. But there's all different kinds of cold foam. You can get it at Starbucks. Dunkin'. McDonald's now offers, I'm just reading from the press Release, a Dirty Dr. Pepper which layers classic Dr. Pepper trademark flavor with a vanilla flavor and a cloud of cold foam. I don't know what it is. I have never had cold foam. Have you, Elizabeth?
- [45:29]
C
I have not.
- [45:30]
B
But it's an add on. It costs like a dollar. If you go to Starbucks and you want to drink with protein. Cold foam, which is a thing.
- [45:35]
A
Of course it is.
- [45:36]
B
Cost like $2 to add it. It's foam. But I guess that's. There's that fancy Spanish chef that made foam a thing. And I feel like this is. Yeah. And I think this is the result.
- [45:47]
A
It's trickled down like Jose Andres comes up with like amazing ferra sized olives and beautiful things. And then the next thing you know, we have cold foam in McDonald's protein.
- [45:57]
B
Cold foam protein by the bubble.
- [45:59]
C
$2.
- [46:00]
B
Yeah, it is a bubble.
- [46:02]
A
I totally understand the business logic of this. Right. Which is exactly what you're saying, that you can have much higher margins on these refreshes than you did on old fashioned sodas or coffees or whatever. And higher margins than you have on food. So like it makes sense from a business perspective to sell as many of these as you can. The thing that I don't understand is the demand side of the Equation. That's where I kind of started. And I still want to ask you the same question again, which is who is buying these things beyond 13 year old girls?
- [46:34]
C
The 13 year old girls, 15 year old girls have a lot of. They spend a lot of money on stuff like this. You know, I feel like a Starbucks original gross market was high school kids coming in after school and getting originally, you know, just really sugary lattes and things.
- [46:48]
B
Yeah.
- [46:49]
C
And so now Starbucks has a collaboration with Mr. Beast that's called the Pink Cannonball. I mean it's. Of course it's called the Pink Cannonball. Pandering to the tweens.
- [46:57]
B
Did you read Katie Nitopoulos? She went and tried all the drinks
- [47:01]
A
and she's like my 9 year old loved them.
- [47:03]
B
Yeah, I don't know, you know, in all the reporting I didn't see much beyond like kids like them. I don't know how much adults like them, but adults, I mean they like the Celsius drinks that you haven't heard of. Felix. Everyone drinks to me it seems drink Celsius and they're not all shot sugary. A lot of these refreshers, they have the fake sugar in them like sucralose or the other kinds of fake sugar.
- [47:23]
A
But they're sweet.
- [47:24]
B
Yeah, they're sweet, but they're like quote unquote diet or whatever or they have caffeine or they have something people think of as healthy in some way or they say energy on them. So you're like, I want energy.
- [47:34]
C
You remember there was a lawsuit against Panera, I think last year because they had a caffeinated lemonade and somebody had heart problems because they just, just drank too much of it because you could just get it in like a 32
- [47:45]
B
ounce, but they drank like six. Like don't do that.
- [47:48]
A
Guys, I feel like we're up against the limits of our ignorance here. So please write in on slatemoneylate.com if you are over the age of 15 and explain to us what the fuck you're doing buying a pink berry strawberry blast with protein foam or whatever the fuck it is you have.
- [48:07]
C
Endorsed by Mr. Beast.
- [48:08]
A
Endorsed by me.
- [48:09]
B
Maybe it's good. Yeah, coffee sometimes tastes really bad. And if you want something kind of fancy.
- [48:15]
A
Oh my God, this is the Emily Coffee saga. She's on it, she's off it.
- [48:18]
B
I'm fully on it. And also I'm here to tell you I had an amazing coffee at Starbucks in California. And then I remember that California has better coffee than New York. And I was like, oh, right. Do you find that it has better coffee?
- [48:29]
A
I have literally no idea what you're talking about.
- [48:32]
B
What? The coffee in California, in my experience, tastes better than in New York.
- [48:37]
A
Okay, I will fight you over this, but not I'm right now. All right, slate money@slate.com Is Emily right? The California coffee. And specifically not just California coffee, but LA coffee.
- [48:48]
B
Starbucks in California tastes better.
- [48:51]
A
Starbucks in Beverly Hills and be better than the Starbucks in midtown Manhattan. As someone who never drinks Starbucks, I cannot answer this question.
- [48:58]
B
Can I also report this is not my number, but the tall Starbucks that I bought in Los Angeles, which is a 12 ounce drip coffee, cost me over $6. Is that normal?
- [49:08]
A
No, that is not normal.
- [49:10]
B
Wait, Elizabeth, I went to Erawan. I wanted to tell you, but I forgot. But I didn't see the expensive strawberries. Everything else was expensive, though.
- [49:18]
C
Did you buy anything?
- [49:19]
B
Yeah, I bought a bunch of snacks for the plane and stuff. And then I talked to the checkout guy and he was like, where have you been? And I was like, at this conference. And he was like, I've seen a lot of people from the conference. And I said, oh, there's so rich. You know, I'm not like that. And he was like, well, you're here.
- [49:37]
C
I mean, by a crazy smoothie, I should have.
- [49:39]
B
There was a really long line, though.
- [49:41]
A
If there's a long line for smoothies at Erewhon, then any economist will tell you that's a sign that they're underpriced.
- [49:47]
B
Oh, interesting. What a good take. But I think they're like $20.
- [49:51]
A
Clearly not enough. Jesus. Let's have a numbers round. Elizabeth, what's your number?
- [50:08]
C
Okay, my number is related to the drink segment. It's $58. And that's what you can pay for a strawberry watermelon drinks carrier made by a woman named Susan Alexandra. And this is another McDonald's collaboration. She makes these like, beaded bags and jewelry and stuff like that. And so she has a special limited edition beaded McDonald's carrier that comes in six colors to match each individual flavor. So if you're really super into this, I suppose you could buy six $58 drinks carrier and try them all.
- [50:42]
B
The economy is fine. Watermelon drink sounds good. To be honest.
- [50:46]
C
Yeah, I would probably do a watermelon drink. Light and fizzy.
- [50:50]
B
Yeah, refreshing.
- [50:51]
A
My number is 3400, which is the age of a gold bracelet that is being sold at the TFAF fair in New York next weekend. There's this gallery called David Aaron that is showing a TFAF. And they have a 3,400-year-old gold bracelet from the Bronze Age in the UK. And it's gorgeous. It looks like this really gorgeous hammered gold.
- [51:19]
C
What is tfaf?
- [51:21]
A
It's an art and antiques fair and armory, which happens every year. And I'm just like, look at this beautiful bracelet. And then you think, wow, like, if you bought it, you could have a bracelet that is over 3,000 years old and just have it sitting on your wrist. And it looks like it could have been made yesterday. And I love that about gold. And I think it is one of the reasons why gold sticks around so long.
- [51:40]
B
Gold never tarnishes. I only learned this recently. Did you guys know that? For a long time. I read it in a story like two weeks ago, and I was like,
- [51:48]
A
oh, it's basically an inert metal. Like, that's a whole point. Yeah, it doesn't tarnish.
- [51:53]
B
It doesn't silver tarnishes.
- [51:54]
A
It doesn't oxidize. It doesn't do any of that.
- [51:56]
B
Anywho, it just blew my mind.
- [51:58]
A
If you want to pop along to TF and buy this bracelet, it is not as expensive as you might think. You want to have a guess how much it costs?
- [52:05]
B
You said $3,400.
- [52:07]
A
3,400 years old.
- [52:09]
B
I was wondering why it was so cheap. I'm sorry. I really was listening. Ish. How much does it cost?
- [52:14]
A
It's 3,400 years old and it costs £85,000, which is about $115,000.
- [52:20]
B
That's more than $3,400.
- [52:23]
A
Emily, what's your number?
- [52:25]
B
My number is 55. That's the number of Harvard students last year that tied for the Sophia Freund Prize. That is an award given to the graduating senior with the highest GPA. But last year, 55 Harvard seniors got it. They all tied because they all had the highest gpa. And that is because all the Harvard kids get A's now. And some people think that's an issue, a problem. I don't know if I do. There's a big piece in the or. There was a regular sized piece in the Atlantic about this. Most Harvard kids now get A's. 66% of Harvard students get A's if you loop in the A minus 6.
- [53:00]
A
So 66% of all grades are A's. Is that.
- [53:03]
B
Yes. Thank you. 66% of all grades are A's. If you lose loop in the A minuses, it goes to 84%. So some people very upset. They're very upset about This, I think it doesn't matter.
- [53:12]
A
Is this bad? Why?
- [53:14]
B
Because kids will now to keep the streak going, they're more likely to select classes that give them easy as and less likely to challenge themselves in the interest of keeping the streak going.
- [53:25]
A
Whereas when I went to school 8,000 years ago, back in the 20th century, no one picks classes because they were easy or could get a, like, good grade relatively easily. That just never happened at all. No. No, sir, never.
- [53:37]
B
And then also the argument is, like, they're not used to failing. Like, they don't have the experience of doing poorly and challenging themselves, or, like, facing adversity.
- [53:47]
A
Kids who got into the most competitive university in America are somehow, they haven't done a lot of failing in their lives. You could knock me over with a feather.
- [53:55]
B
But the guy was like, in the old days, the good old days when there were Bs and Cs, you would be one of these absolute nerds or whoever, rich people that lucked in and face your first B or your first C or, like, for the first time realize, like, oh, you're not so special. You're at Harvard. Everyone got into Harvard along with you. And so there's some, like, lessons learned.
- [54:16]
A
But now the gentleman C, that's what George W. Bush got when he was at Harvard, was just the gentleman C. No one cares.
- [54:22]
B
But anyway, I guess people do care. And there's some, it feels like, get
- [54:25]
C
off my lawn, kids sort of thing. If you're the person complaining is graduated from Harvard in the 70s or the 80s, it's like, well, Harvard was not nearly as competitive then. So, yeah, you had C students running around.
- [54:38]
B
So you guys support this? You're like, A's for everybody.
- [54:41]
A
It's not that I support it. It's just I don't think it's anything to get, like, bellyachy about.
- [54:46]
B
Right.
- [54:46]
A
I would very much urge everyone listening to this to go delve back into the Slate Money archives and listen to the episode we did with Daniel Markovitz, who is the expert on all of this. And he is super great and friendly and smart. And if you don't want to listen to that whole episode, just Google his Yale Law School commencement speech, which is amazing. The kids these days, they work a lot harder than the kids 40 or 50 years ago at their studies. Not all kids, but the ones at Harvard, the ones who get into Harvard, yeah, they are. I'm not going to say they're smarter in some kind of IQ sense, but they are just incredibly optimized machines for doing incredibly well at academic studies. That's how they got in there in the first place.
- [55:30]
B
Can I just say, in college I took one class because I thought it would be an easy A. I took film studies. It was my lowest grade in college and the hardest class I ever, ever took.
- [55:40]
A
But it did set you up for a long and gloried, gloried, glorious, long and storied career as a host of Slate Money Goes to the Movies. So there is.
- [55:50]
B
Oh yeah. Whoops. Whoops. Shouldn't have revealed this information.
- [55:55]
A
Okay, I think that's it for us this week. Thanks so much for listening to Slate Money. Thank you to Jessamyn Molly for producing. Thank you to all you guys for emailing us your Starbucks drinks order. On slatemoney.com we have a slate plus segment on what athletes pay for better performance. Oh yeah, athletes. Thanks for athletic recovery and the amazing feats that happened in the London Marathon. Thank you for subscribing to Slate plus if you are a Slate plus subscriber. Otherwise, thank you for listening to this and we will be back next week with more Slate Money.
- [56:36]
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? Listen to Washington Wise, an original podcast for investors from Charles Schwab to hear the stories making news in Washington right now. Host Mike Townsend, Charles Schwab's managing director for legislative and regulatory affairs, takes a nonpartisan look at the stories that matter most to investors, including policy initiatives for retirement, savings, taxes and trade, inflation concerns, the Federal Reserve, and how regulatory developments can affect companies, sectors and even the entire market. Mike and his guests offer their perspective on how policy changes could affect what you do with your portfolio. Download the latest episode and follow schwab.com washingtonwise or wherever you listen.
- [57:33]
A
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