Bloomberg Audio Studios, Podcasts, radio news anyway. Hello, and welcome to the Money Stuff Podcast.
Your weekly podcast.
Okay, all right, we're gonna.
Get through this. Hello, and welcome to the Money Stuff Podcast, your weekly podcast where we talk about stuff related to money. I'm Matt Levine and I write the Money Stuff column for Bloomberg Opinion.
And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television. It's good on, Katie, great question. We're going to talk about Meme stocks and the week that has been. We're going to talk about biddle it's a tokenized money market fund, essentially stable coin, whatever you want to call it. And then we are going to talk about election contracts and how much the CFTC does not like them.
But I feel like I've said that on these signpostings before.
Yeah, certain amount is usually the answer. So Meme sucks. This started on Sunday one, right right, This episode ended in two, and we started and ended twenty twenty one. Redormant for a while, Roaring Kitty. He came back, question Mark, did he for real come back his account?
Did I just took it for granted? That he came back. I'm not so sure anymore.
I also took it for granted that, oh, the account posted it must be him. There is some speculation that it's not actually Raring Kitty. We haven't he said.
Who Ryan Kitty is? Did we say who Ryan Kiddy?
Okay? His name is Keith Gill. He's a real man. He had a starring role in the twenty twenty one episode of Memes sock Mania.
You did tell Congress I am not a cat, which is like.
A great it was. It was perfect. He also said what was he likes the suck.
He really liked GameStop. Yeah, and he made a lot of money really liking GameStop into the early twenty twenty one rally and GameStop where he made tens of millions of dollars.
I do think his origin story is really interesting though, because in addition to being Roaring Kitty, he's also known as d Yeah deep Value exactly. Yeah, like this truly started because he actually did like the stop.
Yeah, he's become this MEMI character. But he's like a guy who did fundamental research on GameStop and thought it was undervalued and did like multi hour YouTube tutorials and why GameStop was a good company. Like, he's pretty serious about it exactly.
So he started from, you know, a place of fundamental analysis. He tweeted again on Sunday after not tweeting since June twenty twenty one. The pace of his tweets have been breathless. He has been posting so much.
How many of them have been about game Stop?
Ah, that's the thing, Like it's zero surely, yeah, I mean he did or the account posted a clip of CNBC talking about game Stop, right, so that blurs the lines. But you're right that the thing that kicked it all off on Sunday was just a cartoon man leaning forward in a chair. He didn't mention game Stop, but GameStop Skyrocket.
Yeah, I mean it's the cartoon man was represented him and the leaning forward in the chair represented he was coming back to lead the masses to victory and GameStop to the moon. That's how people interpreted it. He is not commented.
We haven't seen his face, he hasn't posted any YouTube videos.
Hasn't posted on Reddit, I believe. Yeah, so it's really really magical that this Twitter account can move, you know. It added to like three or four billion dollars to the market cap of Game Stop on like Monday. Yeah, just like forgetting the band back together, like for the rolls. Nothing happened. Neither Game Stop nor allegedly Roaring Kitty said anything about Game Stop. There's no news. There's just like, Oh, that guy's back, that'll be fun.
So the question I have for you, and you pose this in one of your columns in the context of if you were designing an exam, could this count as market manipulation given that he didn't mention Game Stop? But what if he had bought a whole bunch of calls on Game Stop and then he posted what I.
Learned about market manipulation? Though these many years ago, people talked about materiality and like the reasonable investor information was material to the reasonable investor, you know, if it was useful and the reasonable investors investment decisions, and you know, if you lie about material stuff, that's fraud. The materiality is the sort of standard for all of the securities
last stuff. And one thing that has happened in recent years is you're like, what does the reasonable investor have to do with anything? Right? Because if he would gone back to me in law school and said, is it material to the price of game stop stock that a guy treated a picture of a guy leaning forward in a chair? I wouldy sapt that has nothing to do with the reasonable investor or anything else or game Stop.
Like he's never mentioned, you know, he didn't mention GameStop in the tweet, so he couldn't possibly have been like tricking anyone about anything material. So it seems hard to argue that there's any sort of market manipulation, even if, by the way, like even if he was like doing it as nefariously as possible, even if he like bought a bunch of call options and like tweeted the thing
and then sold the call option. If you butt coll options and tweeted like GameStop discovered the cure for cancer and then told his co options, like, that's obviously market manipulation. But like if you just replaced tweeting something about games Stop with tweeting a picture of him leaning forward in the chair, which has way more of an effect, right, I think it becomes not anything that the SEC can do anything about because he's not saying anything, he's not
lying misrepresenting anything. He's just you know, tweeting a picture of a guy in a chair. Now, I will say there's an amazing case about bed bath and beyond, where like Ryan Cohen, the actually Game Stop CEO now was also dabbling in that stock and he tweeted you can
reply to someone. He tweeted like a moon or a rocket munamagi, which doesn't it looks like a smiley face, but it's allegedly a munomagic and someone sued saying that was a fraud, and judge we wrote a long opinion being like, well, the moon emoji represents his views on the fundamentals and basically decided the fox switch could go hard, So like, there is some ambiguity here, but I do think that even if he was like trading on these tweets,
he's still clean. Now, the really interesting question is, you know, as you say, no one seems really sure that he's back. If you hacked his Twitter and still his account, or if you bought his Twitter from him and you were just tweeting these things which have nothing to do with Game Stop, but which have caused the price of game slop to go up by billions of dollars, is that market manipulation If you're trading on that, and again, you're not saying to make games stop, so it's really hard
to argue that it is. But it also feels like it is.
Yeah, yeah, I love it. And what if he just sold his account.
I mean, if he just sold his account, he's out of it. But who I was using the account is like, if he sold his account to anyone other than someone planning to manipulate the price of game stop, he got a bad deal, right, because it's a valuable account. Yeah, and Twitter or an ex Patrick McKenzie tweeted, you shouldn't be able to increase the market capitalization of a company by billions of dollars by pointedly not mentioning in a tweet, But at least two people can. One is nearly the
richest person on Earth and the other's labor is deeply mispriced. Right, so one is like Elon Musk when he tweets about something. You know, he famously tweeted you Signal about the encorected messaging app, and like the price of this unrelated company called Signal went up. So when he like doesn't tweet it out companies, he can still cause their price to go up. He's made some use of that skill and also happens to be extremely wealthy. But then Keith Gills
has done pretty well for himself. Keith Gill's labor is not that underpriced. He's made a lot of money. But even game still.
If you or I were only to become Keith Gill, how do you capitalize on this power in a legal way?
I don't want to give legal it. More to the point, if I just like acquired Keith Gill's Twitter account, right, I think I would have tweated exactly what was tweeated here. I don't know what people were trading. But what I would have done is I would have bought a lot of call options on game stop. I would have tweeted something like I'm back there you go, no reference the game stuff, and then I would have sold all the call options. Yeah, and then let you do you get diminishing returns, But.
I think we're there.
Yeah, yeah, well, I think you're probably right. But like, if you do this once, you got to do it for a lot of money, and you got to do it as levered as possible, like call options.
I'm just piecing together the price action with how often he has been tweeting on May fifteenth, he tweeted at least twenty times, sorry.
You diminishing returns, going away and coming back right since his first tweet from his Sunday comeback like heat. Nothing after that unless you start tweeting about game stuff, which seems riskier.
No one is really succinctly defined to me what him being back means, Well, he's just.
Going to see it, but coming from his account about movies, like movie clips are being tweeted from his account.
Yeah, but he hasn't posted anything substantial.
I don't know.
Why does it matter that he's back? Why does it matter that he's tweeting?
I'm asking almost like the deepest questions of financial markets.
Yeah, doesn't matter that is.
Tweeting movie clips. Maybe it doesn't. Maybe we're wasting our time here, but like, get know. I mean it caused the price of game stops to go up by three or four billion dollars, and like why because GameStop was like the quintessential meme stock. And what a memestock is like something whose trading action is entertaining and gives people
a sense of community. And it's like fun to be a part of this online message board community where you like trade jokes and share memes and then also by call options on game Stop.
Right.
That died down for a number of reasons, one of which is that the price of game Stop, after going
up a lot in twenty twenty one, came down. But other are other ones, like the pandemic ended, and so people who were like shut at home got to go out or you know, entertainment moves on, right, and people like found other things that were fun, and so the community fun meme sensibility that grew around game Stop ended and when he comes back by tweeting memes like there's nothing to do with the fundamentals of game Stop business,
but it's oh great, this fun thing is back. Like our online friends are back, Like we can go have fun together online. And when they go have fun together online, one thing that means is by call options on game Stop, and so the price goes up.
Yeah. I think I'm searching too hard here. Yeah, I just haven't.
None of it makes sense. Well, but it sort of does, right, I mean, like it is a fun thing to do online, and like part of the fund is like you do trade the stock, and so like the entertainment franchise is back, like we're in season two of Game Stop. And so that does make sense on its own terms, it just doesn't make sense on like financial terms.
The thing that I do find fun and that I do find interesting is that when what you're describing this sense of community, we're in it for the loles, when it actually does translate into the fundamentals of the business. And I'm talking about AMC and what AMC did this week.
Yeah, this has kind of always been how it's worked, going back to twenty twenty one. Game Stop has always been like, we don't understand what being a meme stop meme stock is, and you know, like they are a meme stock. They're run by a meme stock guy, and like they like the memes, but they don't do anything corporate financy with it. Whereas AMC, at every moment when their price has rallied irrationally, they've been like, we are
selling stock, we are raising money. We are going to get through like our tough financial times by selling stock to people at the best possible time. And so AMC actually didn't quite hit the best possible time.
They got really lucky, though.
So they were selling stock for the last six weeks. Yeah, and so they almost entirely missed this rally. They got some of it, but like they ended their stock sell plan basically on that first day when AMC rallied and sympathy with game Stop and everything else and all the other being stocks. But then they did turn around like the next day and sell a bunch of stock, not in the open market, but they like exchanged a bunch of their debt for stock. Yeah, So basically AMC's always
this is always been AMC's strategy. They're like a very indebted, somewhat struggling movie theater chain, and every time their stock rallies, they're like, we're gonna get rid of some of our debt by like exchanging it for this like incredibly over valued stock.
Yeah, in terms of why they always seek to capitalize and maybe game Stop doesn't. If you take a look at the debt profiles, a still has four and a half billion dollars in tent on.
Answers they need to. But you also think there's like a personality issue. Really Yeah, AMC, like their CEO at and Aaron, it's like I'm going to lean into being the leader of the Apes as they call themselves, and as he calls them, like the retail meme traders who love AMC, like, yeah, all in on King an online personality.
It is wild to me that in the Year of Our Lord twenty twenty four, like I get amc ape or some variation of that trending on x for me all the time. And I made the mistake of tweeting that I fell asleep during Doune two. I went to like midnight showing and I shouldn't have and I fell asleep, and I tweeted that, and I thought it was pretty innocent, and my mentions and my inbox were destroyed from people who just love AMC and are in the cult of AMC.
They're not like Dune two was a great note and we're offended by you not liking it. There like movie theaters are.
Great and we're yeah sleeping exactly, yeah, because it was like exclusive to AMC or or something that I didn't realize before I said it. They weren't upset that I didn't like the content of the movie.
It was really typically in the pay of AMC short sellers.
That's exactly what they thought. Let me clear the record right now, I am not but anyway gave stop. I thought this was interesting. It has long term debt of seventeen point seven million dollars and it remains limited to a low interest, unsecured term loan associated with the French government's response to COVID nineteen.
Yeah, yeah, that's good debt. AMC's that was like, I figure out exactly what it's called, but it's ten slast twelve percent pic toggle secondly and supported. It's all the words that you were like, oh, that's bad debt.
Yeah, my heart started racing. That's a lot of words. Yeah, did get a little bit into the fundamentals. I would also add that the movie business is really tough right now to be a movie theater.
Chain, even keep Kenny Raff all the.
Week, No no, and you think about the lagged effects of the writers and actors strike. There was some forecast out there that there won't be a single summer blockbuster to break a billion dollars, which is pretty terrible. And then you take a look at GameStop and it's trading at more than twelve hundred times it's expected twelve months forward earnings. So a lot of movement on the charts and a lot of silly valuations right now, right.
Right, If any of this were being discussed on Keeth gils Twitter accat.
Yeah, different, it would be different.
The summer Blockbuster, the summer Entertainment is Keith giels Twitter account.
I'm just searching. I'm searching too hard for meaning, but I need something to ground me in this life. Are you done talking about this?
No, I'm going to talk about this more on the Bloomberg Big Take podcast about memes thoughts.
Sounds like a riot. It's something you can listen to it on Apple podcasts, Spotify or wherever you get your podcasts.
Wait, are there lots of sirens in.
This podcast going on? Should I call my mom? Should we go to section two? I think I would feel a lot better grounded, more in touch with reality if we started talking about the blockchain and tokenized whatever this is.
Memeslas are so twenty twenty one. Another back. I feel like I tried to walk away from the blockchain a little bit in recent months, but now like really back.
You're really bad? You are you saying that officially? You are really back?
Like youth Gil, No, I would say that like I happened to write a lot about crypto this week.
Yeah, there's that there is.
Not like looking forward to doing it again next week.
But you did talk.
I was hoping not to.
You wrote about it in a very sedate, grown up way because you wrote about blackrock involved crypto.
Yes, is that true? I always wonder like if you walk into the black crypto floor like wearing shorts, and.
I somehow doubt that.
Yeah, it's still pretty blackrocks.
I don't think you're seeing any knees there, notions. I think they're all wearing pants. But let's talk about biddle, biddle, take it away.
That's spelled like build but wrong like b U, I D like hoddle, like hoddle, right, hoddle, which is crypto for hold and uh crypto for build, but actually it stands or something right, it's an acronym and it is the black.
Rock USD Institutional Digital Liquidity Funds.
Yeah, biddle, I have I love like crypto does a lot of fun stuff with names, but like traditional finance, you know, I grew up in a derivative structuring desk and that job is forty percent coming up with acronyms for things, and so like I respect that black Rock is like we're gonna just very casually slip this acronym name into it.
Yeah, I grew up in New Jersey, so a little bit different.
You can come at it from trad file, you can come at it from like crypto, the traditional answers, like this is a money market musual. It's a short term treasury bill liquidity fund. So it's just the money market fund. But you can trade it on the blockchain, right, It's on the Ethereum blockchain, and you can send your units of Biddle from your Ethereum wallet to someone else's and so you can use it on the blockchain for crypto trades.
If you're doing a cryptoderivative trade and you need collateral, you can post Biddle as collateral, or you can use it as money and pay people with Biddle. I guess if you come in fro another way from the crypto, it's a stable coin, right, Yeah, it's like a thing that is worth a dollar, that is, you know, stably worth a dollar, that is underpinned by like short term money good US dollar debt obligations, and that was on
the blockchain. So it's a stable coin that is in competition with the circle ustc coin or tether, but unlike those, it pays interest like natively.
In a world where fed funds is like five percent, that's pretty attractive.
Right. Crypto is in many ways a low interest rate phenomenon, right, because it's like, oh, all these projects that have no cash flows but like weird, grandiose promises, that's a better pitch in a world of low discount It's but like stable coins in particular are a low interest rate phenomenon because when teather is like, we'll take your money and do something weird with it, but we'll give you back the dollar whenever you ask for it, that's a better trade.
If like you can't get five percent interest on your dollar elsewhere, but now you get five percent on your dollar elsewhere. Tether is not a particularly attractive pure investment opportunity. Now there are ways to use teather in crypto to make money, but the proposition at tether is like you give them your dollar and they invest it and probably charger is or something.
And that's what they would say.
That's what they say, But and then they are in, you know, five percent interest and they keep it and they don't give it to you, whereas like biddle is like kind of the same thing, but we will give you the interest.
So thinking about it in the framing of who is this for and it's for people in crypto helped me understand this a lot more because when you're talking about it as a money market fund that's on the blockchain in tokenized my first reaction is that is a long walk for a short drink of water. But then you think about it from the perspective of this is for crypto people. It's not necessarily like a gateway to bring
institutional suppliers into cryptos. For people who are already in crypto, who actually want to earn interest on basically their cash management, it makes a lot more sense.
I think that the fact that Blackrock has a cryptodivision is a bet on some notions of crypto will become more accepted in broader institutional finance, right Yeah, And so one thing that means is that if traditional institutions are going to get more into crypto, stable coins are kind of like an important part of crypto trading, of collateralizing trades, of payment for trades, and you know, at some level institutions are going to say I'm not going to keep
my money in a stable coin that is one possibly issued by someone who's in more regulatory hot water than Blackrock, and two that doesn't pay interest, right, and so Blackroy's like, well, we have this alternative product where you can get paid interest and you can have your money with Blackrock, and like not just Blackrock, but a Blackrock money market fund, which is like a thing that people understand, right, Like it's easy to understand what a money market fund is
because it's like exists and it's like well known technology. And so if you're a sort of long term bets, like more traditional institutions are going to get into crypto than like having this traditionally appealing product helps with your offering and crypto. But yeah, I also think, right, it's like you're a crypto trader and like you need to hold stable coins and like we'll give you interest, right.
I mean, maybe that is BlackRock's long term vision. I'm thinking about the position of the securitized CEO. Blackrock of course partnered with Securitize for this thing. His name is Carlos Domingo, and his perspective on who this is for is that this particular product, so specifically this one, it's geared towards crypto institutions that want to have a cash management product for treasury management on the blockchain. So it's more for the cryptation.
Yeah. Right, If you're a traditional institution, you're just not need to be on a blockchain r exactly.
You would just buy a money market fund.
I will say, though, the Financial Times article about this mentions two plus one settlement.
Yeah, this is where it lost me.
It loses me as well. Yeah, but I'm going to put it out there. This is more of a twenty seventeen thing. But like people used to think that having a blockchain would somehow speed up trading and settlement in financial markets. That like, right now, things exist on computers and in databases that are too slow, and if you put them on the blockchain, and they'll be faster and you can settle trades instantly rather than having to wait
for P plus one or two post two settlement. And so the idea here, supposedly this is not decided to black rock or securitize. This is just an idea that is floating out there, is that tokenizing things like you know, money cash management will allow for like faster settlement of transactions, and ultimately the traditional finance system will move to a
blockchain based system and you'll need this for that to work. Now, in twenty seventeen, people really did go around saying the traditional finance system will move to a blockchain bysed system in twenty twenty four. That's like a little embarrassing to say.
Because the Erry Think is still into it.
Well, then that's there, you go, Larry I Think is the CEO of Blackrock.
Case you know, still in twenty twenty four expressing support.
For a long time, there's been a competitive tension between money market funds and checking accounts.
Yeah, bank accounts, right, yes.
Because money market funds have advertised themselves as like, we are a place that pays high interest rates and you can use it as cash, you can use it as for checking and you know, money market funds are interested in being a cash substitute for companies and individuals and institutions. And if you think the future of payments, for the future of security settlement is on the blockchain, who controls cash on the blockchain, Well, the answer is like tether, right,
the answer is like the big stable coin issures. But like arguably, if Blackrock can build a better product for offering cash on the blockchain, then not only does that mean that they're you know, they have a good crypto product, or like they're offering a good product to people who are currently in crypto. But it's like, if you think the future involves the blockchain, then this product can insert you into the heart of the payments infrastructure.
So and that's that's I.
Think that's all far fetched, but I think it's an interesting bet.
Well. I mean, I feel like that's the future that the SEC would certainly that it's Blackrock.
Oh yeah, absolutely. I don't think the SEC is going around hoping for a chain basedto future of payments, but like, if they're going to have a crypto based future of payments, I think they would prefer that it be Blackrock then tether right.
Four dimensional chess by Blackrock. Are you ready?
I'm ready.
Time to bring it home. It's our third act and we're going to talk about events contracts. Oh yeah yeah.
Elections.
Let the people trade, let them trade events contracts. You have places like Kelsey you have predicted the pretty popular.
They're very popular despite being like people want to know who's going to win the election, right, and like the sort of standard model of looking at polls feels unreliable and someone out dated, and the prediction market feels like it should tell you the answer. It should be like, oh, the smart money thinks that the odds of you know, Trump.
Winning, you can say it.
Or whatever, fifty five percent or whatever, and so therefore that's like the correct dodds. Right, there's like the Nate Silver model of translating polling results into probabilities. But there's like the simple model of like markets providing the probabilities and like people like that. But like those markets are thin in part because they're illegal. Right. The US Commodity Future Trading Commission has just never really been a fan
of election prediction markets. You know. The way it works is you to list the prediction event contract, you go to the CFTC and ask for permission, and if it's an election contract, they just say no. And so CALSHI has been told now and other exchanges like that have been told no. And last week the CFTZ proposed a rule I would just say it's always no, right, Like, instead of asking us, we'll just categorically exclude certain kinds
of event contracts. Yeah, and the kinds are for the most part, sports, the oscars and elections, those all count as gambling and so they're not allowed to be listed on US commodities exchanges.
Yeah. CFDC commissioners voted three to two to release the proposed regulation for public review agencies. Three Democratic commissioners voted in favor, you had two Republicans dissenting. I don't know so I, as a journalist like prediction markets just because it's nice to see what people are thinking.
As a consumer, I really want there to be a deep liquid prediction market that could tell me what election ods are.
Well, we were on the way there because did you see the news from April that Susquehanna is starting a trading desk focused on events contract in partnership with Calshi, plan to act as a market maker for transactions with CALSHI, which is obviously trying to expand. Obviously this would they weren't able to do elections in gaming. I think the reasons for why the CFTC doesn't want to do this are interesting. Tell me what, I forget his name, but the election cop guy.
The election cop guy. Yeah, that's Ross and Bedham is the chair of the CFTC. Gaylor really interesting statement when proposing these rules, saying basically he doesn't want the CFTC to be election cops. So like the way it works is that the CFTC mostly regulates the commodity's futures markets, and so if you like spoof and putting in orders for whak futures, then you get in trouble with the CFTC. But also they regulate the underlying commodities to make sure
that futures markets are fair. So if you go burn a cornfield, you'll get in trouble with the CFTC probably other people too, because you've manipulated the market for corn features. The theory here is that if they're election futures, the CFTC will regulate them, and if you then throw away a bunch of ballots or whatever, then the CFTC will have to come in and decide whether you've committed an
election fraud that affects a CFTC regulated contract. And the CFTC is like, we don't want that responsibility.
I mean, maybe I'm being naive, but it just seems unlikely that would ever be their responsibility. I get that they have to regulate the underlying market, but even still, I hear you.
But like, one thing that I've been writing about for a long time is that the sec the securities regulator has a surprising amount of responsibility for regulating all sorts of stuff that doesn't sound like securities law because of
how it affects the securities of public companies. And so the SEC is very interested in greenhouse gas emissions, regulating how companies account for and disclose and also do like their carbon emissions, because this SEC says, well, yeah, that's relevant to investors, and so like, all this environmental stuff gets wrapped up into stock prices and so we regulate it. The SEC has rules about conflict diamonds. They did an enforcement action against SeaWorld for its mistreatment of killer whales.
Like all this stuff where if it affects securities markets, the SEC is like, oh, well we'll ti put her hand in that. Well'll be interested in that. And I write about this a lot. I say everything is security is frud right, It's some combination of the SEC is interested in expanding its power as much as possible, and
so they're like, ooh, we'll be an environmental regulator. But it's also like us politics are not necessarily good at writing substance of regulations, and so like people are like, I want to fix this problem, and the way I'm going to fix it is by suing for securities fraud. It's a thing that courts and the sec are just more responsive to than to a lot of other complaints. You get a sympathetic hearing in court, and so like all of this stuff in the world gets smuggled into
securities law. And the CFTC is looking at that and saying, the election gets smuggled into commodities future's law. That's going to be really controversial. We're going to get in trouble for trying to regulate that. So I think they want to stay away from it. And I agree with you that it sounds far fetched to everyone except me because it's the thing I've been thinking about for a decade. So and I'm like, oh, yeah, I see where you're coming from, CFTC.
So I mean decade, I'll be there as well. By the same token this podcast for that one. Yeah, so we'll revisit this before the four yeah, five hundred maybe by the same token. You think about some of the proponents of course betting on or sorry, predicting, prediction.
Marketing, betting on.
You think about some of the proponents for these political events contracts. They argue that they could be a valuable source of data for forecasting election outcomes. This is from the Wall Street Journal. Kind of agree with that as a journalist, it's true, but then that they would also allow companies to hedge risk associated with either Democrats or Republicans coming to power. I don't super know what that.
Yeah, I don't really believe that. I think that people are pretty bad about predicting the directional impact of elections
on like financial quantities. So if you're like, oh, the price of oil will go up if a Democrat is elected, so I have to head that you just buy oil futures, Like you shouldn't like if you think, oh, it'll be bad for my business since some unspecified way if a Democrat is elected, that's probably wrong, and like you should probably think about how it will be bad for your business and hedging like those financial markets, rather than hedge by like betting on Democrats winning an election.
On Calshie on Calshie. Yeah, that's pretty funny.
To the extent you're hedging, you are undermining the predictive impact, right, Yeah, it's like you're not like betting, You're you're like, I don't know who's going to win, but if they win, that's bad for me someone.
That's something I think about a lot with these prediction markets. I don't know much about betting. I'm not a better But the way I understand it, if like they're super long odds on something and I wanted to bet on something outlandish but that has a high potential payout, I would take that bet. And that's not necessarily what I think is going to happen.
You're implicitly saying the probability that happening is higher than the probability reflected in the market. That's true, implicitly, like you're not really Probably a lot of people are taking one percent bets, not because I think the odds are two percent, but because you.
Know, I just think that. Yeah, I get I did like two party elections. Yeah. True, But it's not like a survey where I'm one hundred percent always going to say what I think is going to happen. I'm betting, and there's some strategy to that.
Yeah. But the counterpoint is, like surveys doesn't affect you, Right, there's real money online betting. You know, if you had a big liquid prediction market for elections, that would incentivize big, smart financial institutions to invest time and resources into figuring out who's going to win, so they could bet on the winning side, and then they would probably be.
Accurate and they could hedge themselves.
They could hedge themselves. Sure, I don't think it's something.
I'm curious to see how this actually turns out. So they're opening it to public review. I mean, there's a chance that nothing changes before the election itself.
Big chance, right, and then like after that, you know, like a'll butts are up. I will say that one of the Republicans City Center was like, this is a weird thing here where there's like two ways to bet on sports. There's like event contracts regulated by the CFTC, and then there's like regular sports coupling, which is regulated
by the states. And it used to be that the way it worked is that gambling was kind of illegal almost everywhere, and so like the CFTC was like, you can't have betting on sports on CFTC exchanges, and I was like, oh, of course. And all the states were like you kindt of betting on sports here, and I was like, okay, fine, we'll do it illegally. Most states now have like legalized sports campling, and so there's a lot of sports campling. O. It's very easy to gamble
on sports. It's very easy to gamble on sports on your computer. Right. And then also there are these people who are like, we're going to run a national futures exchange, We're have events contracts, and the CFTC is like, no, you can't do that. There's like a really kind of like fuzzy distinction between like what is a futures exchange that allows events contracts and is ready to by the CFTC and what is a sports book that is on
the internet and that allows sports betting. Right, one of the commissioners who dissented was like, we are stepping on state jurisdiction by saying, you know, you can't have sports gambling, and I actually don't know how it works, Like I'm very puzzled if any sports book is going to get in trouble with the CFTC saying actually, you're running a futures exchange with events contract and you're not allowed to do that.
We've talked about for us who've talked about the election, Are we going to talk about the oscars or oh yeah.
The oscars. The CFTC like doesn't want to promote gambling, and so they're like, you can't bet on the oscars. But Ray, why the heck not? It seems fun.
It does seem fun.
And I wrote this, but like, the CFTC doesn't want to be an election cop, and I think that is wise of them. But they aren't have fun to be like the oscars cop. Right, they have the CFTC auditor in the room.
So I'm sure it's rigged already, so they'd find that they'd get to get the CFTC in there to finally.
Get it right. Wouldn't if you were a CFTC enforcement layer, wouldn't you want to be the one cracking whether the oscar I would be salivating. There's a case this week about someone running a cattle ponzi scheme.
No, that's also good of it, But how on earth does that? Do the cattles not exist? I figured it out.
And that was the Money Stuff Podcast.
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