Bloomberg Audio Studios, podcasts, radio news. Okay, it's the last DAP school.
I know. I saw on your Instagram.
It was just of course, so that's the school for my children. And I've lived, you know, much of my adult life no longer and like the rhythms of the school year. But like then you have kids and you're like, why am I not on summer vacation. It just feels like it's summer vacation.
Now they're gonna wake up tomorrow and what are they going to do?
To the pool? Watch TV, watch the World Cup. Watching so much World Cup.
That sounds so fun, but you haven't watched any World Cup.
Oh my gosh, it's so good.
Apparently the ratings are pretty good.
It's great, Like it's it's been a good World Cup. And dang, I think I complained to you last week that like I think the USA placed tonight at.
Ten o'clock, Like that's that's what happening.
I prefer like a European World Cup where like I can watch all the games during the day. But it's been really good. It's been really fun to watch the kids, and I really feel like it is time for my summer vacation and I'll see you and I'll see you.
And yeah, I mean i'll see you next week.
Yeah, if I were taking a vacation a lot of time, because.
You're that's true, a sabbatical of sorts, of a child bearing sabbatical, to be clearly. Yeah, I plan to have a great time.
Everyone everyone plans that.
Yeah.
I know, as someone who's never had a baby before, I think I'm going to have a fanta time. It seems easy. I mean one seems easy, right as a parent of multiples. I don't know if I've talked about it on this podcast, but I really have just been approaching it like I'm getting a new puppy. I don't know how to take care of a human, but I can do a small animal.
I mean, look, obviously it's not like getting a new puppy, but there's some continuum.
Yeah, I mean, she can't talk, she can't really do much. She's like a little forest creature, right right.
I feel like it's very possible that your child would turn into a little forest creature.
I hope. So I'm really excited.
In a month or so, you'll know, like or be pregnant. But like, yeah, we won't be like that was a weird dream.
Then the party really start anyway, I guess we should do the podcast.
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 com for Bloomberg Opinion.
And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.
We almost had a vacation from SpaceX last week. I feel like we snuck in a little SpaceX.
Yeah, I mean you have to.
Write hardly a noticeable amount of SpaceX.
And now we're going to talk about SpaceX a.
Lot, well a medium that way too much a good amount. Yeah, like a segment of the show, did you know it's below two trillion dollars today? Or it was as of like one thirty or something.
Yeah, it's been interesting to see the back and forth in these shares. I mean, who knows. I mean as someone who watches lines all day, yeah, talks about them for a.
Living, right, I did sort of like you know, you have an ipo then like it's supposed to go up from there, and like this one has gotten up a little and now it's kind of done. It's not below the IPO price, but it's below like the first day, you know, closing price.
Yeah, big time. I mean the IPO price is like one hundred and thirty.
Five dollars fifty Thursday afternoon.
Yeah, who knows what it'll be when we published this podcast. But there was a good thought experiment in the New York Times this.
Week about SpaceX and Tesla merging big times. I don't think that's a New York Times thought exper No, I've seen that everywhere, and I don't want to say that like it was planted by SpaceX, but I do feel a little bit like they are dusting the waters for like that's the next thing that's going to happen the president.
She's not the CEO. She was on CNBC on IPO Day talking about it.
So there's no question that there's synergies between Tesla and SpaceX and our futures. Definitely, there's a convergence of kind of what we're all trying to accomplish in the future.
That's our next president, Yeah, pretty much. It is really crazy. What are they waiting for?
I think in general, if you work for Elon Musk, that need to like sleep and live a nice life as not you know, no one cares.
But yeah, they did just do it. That's true.
But just a minute ago.
It's just funny because we're going to talk about this until it happens, and it.
Feels like it's going to happen. Yeah, I feel like six months ago people were talking about this as a joke and now it's like, yep, that'll be next week.
Well I feel like six months ago. I mean, who knows how fuzzy my timeline is, but the idea of them ipoing was still a who knows.
I guess that's right. Yes, it was not fast. Yeah, they move on the merger thing. I mean, one answer to the question what are they waiting for is like, presumably a merger means an all stock merger because no one's gonna buy it. It's Tesla for cash. But like one answer that question might be that if SpaceX went public and its evaluation quickly rose to like, you know, four trillion dollars, then I think that would be more
convenient for Musk. Like I think from Elon Musk's perspective, the more SpaceX is worth relative to Tesla, the better this is because he owns more of SpaceX, you know, yeah, and SpaceX is kind of the new baby, and so the more that like SpaceX is represented in the combined company,
like probably that's more convenient for him. I don't know how much that matters, because he has super voting stock of SpaceX, and like he doesn't necessarily care that much about the charlder, so like it's probably fine to merge them.
You know. Right now, SpaceX weth like two trillion dollars and Tesla's worth like one point four trillion dollars, so like almost a merger of equals, Like that's fine for him, But it would have been probably a little bit nicer if it was like, you know, three to one or something.
So that's the Elon Musk perspective.
Oh, which is the only person.
Well.
The New York Times did include some quotes from Tasha Kini. She's at ARC Investment Management, which obviously really likes Elon Musk. She made the point that ARC would prefer the merger took place after Tesla had become the dominant company in self driving taxis. She said it would be good for shareholders to see that take off before the merger. Theoretically, because I and she didn't say this, but I'm assuming because Tesla shares would be worth more.
Yeah, I mean, like one thing that's going to happen is like SpaceX will do it's business, Tesla will do it's business. You know, ideally they would both go up, right, But one question you might have is like, in the next few months, a few years, whatever, will SpaceX go up more than Tesla? Will it become more valuable faster or slower than Tesla? Not the answer, But doesn't it feel like Elon Musk's attention and the world's attention is on SpaceX and data centers, AI and whatever, and not
so much on the cars. Now there's AI stuff at Tesla there, they're making the robots, they're making the cars, all sorts of stuff, right, and so in you know, in a year, like could this have reversed? Then could Tesla be the hot company because it's the human ide robots. Maybe? But doesn't it kind of feel like his attention on SpaceX now and like the longer you wait, the verse it is for Tesla. Yeah, this is just a cosma.
Yeah, No, it's a good point. He's always been the CEO of multiple companies, et cetera, et cetera. But it does feel like there's a clear favorite in his mind right now.
Yeah. The only thing is that like Grock, but Crock is.
That's also yes, how do I keep forgetting that that it's understandable X is XAI, which is, yeah, that's what it says.
The other other thing is like I've gotten used for a long time to this model of Elon Musk of like he has a bunch of different companies and a bunch of different independent bats and he's somehow multitasking between all of them. But like that is changing, right, I mean, like he had Twitter and an AI company and a
space company and now they're all one company. And then you know, you combine that with his car company, which is also like a separate solar company that he mushed into Tesla years ago, then like basically all of his scaled commercial stuff would be in one giant company, which is a real change from how he's been operating and also makes me wonder about like Neuralink and the boring company could be the only ones left probably missing one, but like I think those are the only big Elon
Musk companies that would not be rolled up into this and so how long beforeror Neuralink gets folded into the AI behemoth. It's all change from back in the day. I had like a whole shpiel about like how Elon Musk, by keeping all of his businesses in separate bets, was somehow doing this like seven dimensional chess mastermind fundraising thing where he could tap the same investors for every company and like shift resources around without the constraints of running
a public company. But like now it's just like, yeah, he's going to run a giant company, and that giant company will be a conglomerate, and he will allocate capital to whatever he thinks is the best business to have that capital, whether it's cars or humanoid robots, or space data centers or social media, yeah, ninos other things.
When you put it like that, it is a sea change.
Yeah, it's just like in many ways more.
Normal, right, Like maybe he got tired. I don't know, that.
Doesn't sound right given my general theory that sleep is not an impediment to doing anything in SpaceX. But yeah, it is more sensible, Yeah, to have one guy running one company or other than seven different companies.
And one guy seven company.
You know, every time he's like moving GPUs from Tesla to Xai or whatever dopes like me or writing columns being like you shouldn't be doing that, Like very good corporate governance, Like now it's fixed, right, if they're all one company, it's great corporate governance for him to move.
Yeah, I want to talk a little bit about what could stop this merger. It's not going to be a shareholder lawsuit.
Although I've written about like it's like a slim outside path to maybe a shareholder.
Maybe Vanguard, maybe Fidelity. No, probably not. But the New York Times did raise the question, which it then batted down. But couldn't there be some sort of antitrust concern here that could be raised? They're both AI companies.
I feel like in traditional anti trust you would say
not really. I don't think that SpaceX is exactly in a real market power position in the sort of broad like AI lab business, and like it has a very leading position in launching rockets into space for sure, and Tesla, you know, arguably it's something in electric cars in the US, it's not you know, it's not a monopolist and electric cars, but like those are not overlapping businesses, right, Like the question is like are you combining to overlapping businesses in
the same area. And I don't really think that's true. I think there's like beginning to be some rumblings of worry about like space access position and AI infrastructure, like especially they put the data centers in space, but like that doesn't really seem like an anti trust concern for combining the companies. But like, I think if this were a democratic administration, the combination of like two giant tech companies merging and like it being Elon Musk might raise
anti trust concerns. But guess what, Yeah, so I don't see it. But you know, if Donald Trump is mad at Elon Musk that week, will there be an antro trust problem? Like maybe, and then like European.
Anti trust you know, yeah, they're going to be all over it.
They'll be all over it. He's not winning any friends there. And again, like a traditional anti dress analysis, like it doesn't seem like they're really emerging competing businesses, but who knows.
I did want to also call out this nugget from the New York Times report because I didn't appreciate this. I knew about terrorfab so SpaceX and Tesla plan to jointly produce AI chips at a proposed factory called TERRAFAB also develop AI software through another project called macro Hard, which is obviously the opposite of Microsoft.
I think he's been making that joke for years.
Sounds stupid, I mean it's funny. It is funny. I didn't know about what I didn't know about macro Hard.
I hate to give him one, but yeah, macro Hard, nodding wistfully.
Oh, do you want to talk about Triller?
Triller? Yeah? I do kind of want to talk about Trailler.
So I went to your bio just before this podcast because I was like, all right, I have all my notes. Christmas guy again, matt Levine. No, I was like, I have all my notes. I just want to check one more thing. And then I saw you published about the SpaceX Treasury.
Company treasury company. Baby.
I audibly growned because I had completely forgotten about it. Yeah, but tell me about Triller.
There's a SpaceX Treasury company, of course, called Triller. Yeah, yesterday, it's a fifteen million dollar market cap. It's like it's like one of these things where they're like, we provide social media stuff for such celebrities as and then it names three people who I'm like, yes, these people are all actually famous, but I don't know anything about them, nor do I remember their names. No, they do like some something in social media. And also they sell insurance in Hong Kong.
Why who knows natural But so.
A teeny company, teeny public lesi company, and they announced that they are acquiring a four hundred million dollar slug of SpaceX through like three layers of SPVs, so like they're acquiring shares in an SPV that on shares in an SPV that owns some like pre appo locked up SpaceX stock excellent, yes, and they're like, this will be a fun new treasury asset for US. Okay, it's like the digital asset treasury trade, which you know, at its peak last year. I was like, we talked.
About this definitely.
I was like, sure, you can like sell some stock to buy bitcoin, but like, there's so many other things in the world besides bitcoin. Someone did a game stop treasure. We talked about an art market treasure all sorts of stuff. Dinosaur bone, dinosaur bone treasury company. That was the title of an episode. And right, so instead of a dinosaur bone treasury company, they're doing a SpaceX treasury company. I love it.
As you've already pointed out, they're at least a year late here, they're a year late.
To the Dinosaur Bone treasury company trade. And also they're late to ooh, would you like access to SpaceX stock because you can just buy SpaceX.
Stock seems easy.
It's like not a very good reason, but a reason to have a bitcoin treasury company is that, like it is somewhat more difficult for a normal person to buy bitcoin than it is for a normal person to buy stock of strategy, Like not really you can buy bitcoin. You're robbing it app. But like maybe you don't have robbing It. Maybe maybe you had an old timey record where you can only buy stock and you're like, oh yeah, strategy,
that's a good way to get bitcoin. But like anyone who can buy Triller can buy SpaceX because they're on the same stock exchange.
Yes, well, it will be a fun experiment. It's a line I'll watch when on All, right, do we get this SpaceX out of our system? Meta Meta? Another New York Times article, Mark Zuckerberg, Now he's looking at prediction markets, specifically an app. There wouldn't be real money.
Involved, right, I think it's called arena that has been reported from meta slash Facebook that allows you to do prediction markets, and I think the way it's supposed to work is like from NPR reporting, is that AI would come up with the markets and then also resolve the markets.
Some meta AI model would be like, you know what we need as a prediction market on you know, Vner Taylor Slip get married and then here are the options and then like it'll take bets and then like it'll notice when she gets married and resolved bets or something like that.
Fun.
Yeah, So when you think about like Calshier poly market, like they're like, we're you know, building truth machines. We're building a financial market that real world companies can use the hedge their risk of things like you know, the next winning.
A playoff game with a very straight But then like.
The alternative model is like you have built a gambling platform. What is gambling? Gambling is providing entertainment for money, right, It's like, yeah, it's like giving people like the rush of excitement from betting on a game, and like in expectation, they lose money. But I've gone to Vegas and gambled and felt and lost money and felt fine because I was like, I'm spending this money on entertainment, right, and
that's like that's the good case for gambling. And if that's your model, then it's like, well yeah, like if it's entertaining, maybe you can do it without the money. And Facebook are really good at harnessing human behavior to like give people dopamine heads in exchange for spending all of their time on Facebook's apps, and like that's what this is, right, That's why Calshei and polymarket have proved out a new form of human social behavior that keeps
them glued to their apps all the time. And like, we want them to be glued to ara apps, so we're gonna launch an app that they'll be glued to, you know, making predictions.
It is a smart move by Meta.
It's quite grim in some ways.
I mean for sure, I mean, like it better.
To have fake money gambling than real money gambling. But like I don't know.
The company is not ruled out eventual use of money according to the New Time, so that could be coming. I do like how how you wrote that Zuckerberg's point that this could be all thought of as addictive phone
apps rather than financial instruments is true. Like again, like Calci and Polymarket will tell you with a straight face that you know we're creating or we're helping to find true economic information here, but it does feel like a sort of emperor has no close moment of Facebook is creating a prediction markets app.
Yeah, a couple of things. One, everything's on a continuum, right, I mean, Robinhood. Their essential insight is stock trading is also like an addictive phone behavior, and so we can make it more addictive and more on your phone. True, everything is both right. The other thing I'll say is like the fact that Meta is in essentially the addictive phone apps business and looks at this and has big dollar signs in its thighs of like, ooh, this is
an addictive phone app. That doesn't mean that it's not also serving some truth seeking function.
Maybe maybe just thinking about Farmville, you know, which was another face book app that I.
Loved, right and Farmville.
I don't know if there was any truth seeking going on in the hours I spent on Farmville.
Well, I hear you, But like, also I'm reading the
Sebastian Malaby biography of Demi Sasabis. The Google Deep Mind Fighter and deep Mind spent a lot of time trying to solve games like early Atari, arcade games and StarCraft, all these like video games because and the reason they were doing that is partly because like they're gamers and they like video games, but partly it was like the way to develop and also prove the concept of like reinforcement learning machine artificial intelligence is to have it learned
to play games at better than human standard, and so there's like real lessons to be learned from those games. That's probably not true of Farmville, but I do think that one thing that is probably going on, and Berne Hobart has a good newsletter about it on Thursday of this week is Meta is one an addictive phone app company and two AI company, and prediction markets in AI are pretty interesting. Wen't have our rights. Prediction markets try
to quantify the magnitude of interesting uncertainty. That means they're implicitly taking the same form as the input to an AI model, given some information, make a prediction about what comes next. And so, like other people have talked to me about this, like using prediction markets to train AI is just sort of like an interesting corner of the world. It's like, we want to make computers that are good at understanding the world. We want to make computers that
can buy stocks that I'll go up. We want to make computers that can cure cancer whatever. Like if the computers get better at like predicting the future based on the current data, like that is good for artificial intelligence. And maybe one way to give them training data is to have a bunch of Facebook people on their phone saying, you know, this is where I think Taylor shots will get married, and like the computers will learn from that.
So like one possibility is that this is not so much a like engagement bait play from Meta and more a like AI training play. But it's really both. Yeah, Open AI, like four years ago, like their rhetoric was so utopian and ambitious, and then they're like, we're going to do ads and we're going to turn the dial on chat chpt to make it more engaging so that people spend more time with chat chpt. It's like everything
is a social media company. Everything is an addictive phone app company, and so like you know, yeah, you make your AI better so that you can keep people engaged with your app for longer, so you can serve the more ads.
Yeah, it's also grim, even more grim than Arena potentially. The New York Times reporting that Arena is just one of a handful of apps that Meta is currently trying out.
The other one is macro hard.
Macro Hard also Meta photos it photos. Yeah, it would create new types of media using AI. According to people familiar that, I don't think so.
Great. It's like Sora, No it's not. I don't care.
Yeah, no, I think SOA is a thing, but I don't.
Sorry, it was the open A version of it. Yeah, you look at AI videos that we had.
Made for you, similar to Macrohart. Something that I didn't appreciate until the New York Times told me about it was Meta has tried prediction markets. They were so early twenty twenty they released Forecast, which was a crowdsource prediction market app. It prompted people to make guesses about the world in the early days of covid. It eventually shut down in twenty twenty two. But man, this could have been Meta's market.
Yeah, that wasn't even that early. Like I mean, people have been playing around with many prediction markets for a long time, but nobody really.
Similar to AI. Like we've been talking about AI forever, but it feels like it only really exploded in the last couple of years.
I do think that, like kylsh and Poling Market, did corrareck the good of making it more exciting? And do you know how they cracked that good?
Tell me sports sports? There you go. I do just think it makes sense for meta. Good on you, Mark Zuckerberg. Maybe it'll work out better than Threads.
I still look at Threads a lot. Really, I was constantly trying to push you to it, and then like it's like clean accent and it just serves you a series of rage bait and it's just like it's Mark Zuckerberg. There's the gap between like what you want to want and like your base revealed. The preferences is like the world's greatest exploiter of that gap, where like do I want to be looking at stuff on threads that makes me angry but just because it's stupid?
Yeah?
No, do I want that? No? Do I do it? Yes? And yet and like you know, is he making billions off of that? Probably private credit is to the thing.
Yeah, there's been a ton of redemption requests. There is Morgan Stanley all, Yeah, they're all getting capped at five percent. Yea, it seems like that was working is design, Yeah, as the signs.
But yeah, it's like what we talked about with buzz, which is that when you gate these or when you can't redemption to five percent, you create a backlog in the next quarter. People are like, I want want me. You have all the redemptions from that quarter plus all the like leftover runs in the previous quarter, and it keeps snowballing from there. So that's kind of happening.
Yeah, so this will be a story that's with us for some time.
Yeah, unless like people start being more confident about private credit or I don't know, man, I don't know.
But JP Morgan says, Hey, so you don't like the whole quarterly redemption schedule, how about monthly liquidity?
I love it. First of all, love is a strong word, like this.
Is boring technical, you know, you love it.
I love it.
The sec also, I'm I mean, maybe they don't love it, but they're okay with it.
Of course they're okay with it. Like the point is, like, there's a rule that says you have to offer quarterly liquidity. Jerry Morgan is like, well, monthly liquidity is not quarterly liquidity, but it is strictly better than quarterly liquidity. And this is like, yes, that's true, it's strictly better. And so they like waived the rule to how you can have monthly liquidity.
Yeah.
What I love about it is like one reason to do this is to like give people more liquidity, but I think another reason to do it is to actually have people demand less liquidity, right, and so, like one thing I was thinking is like if you offer quarterly redemptions, like that's like a big decision, right, If you don't get your money out of this quarter, you have to wait a whole quarter for like us to get worse
before you can get your money out again. But if you offered like real time liquidity, then no one has any incentive to take money out now because in five seconds they can take money out. Right. Yeah, It's like monthly is somewhere in between.
Yeah, perhaps I'm comfortable waiting a month to get my money, but I'm not comfortable waiting three months.
It sounds less dire, you know. Yeah, there was all this worry for years, been worry about mutual funds which have daily liquidity, and about like the idea that you know, if stocks go down or bonds go down or whatever, then mutual fund investors will to add all their money back. And I was writing for years people are worried about
bomb market liquidity. That's the one point to me. Like John Brooks in the sixties was writing about like there was a stock market crash, and everyone's like, oh, no, mutual funds, which were like newly invented will sell out their stock if there's a crash, And then it was fine. Yeah, And I think that like some of that is like people who know they can get daily liquidity or not, you know, they're not rushing for the exits, whereas like you know, people in these private credit funds are rushing
for the exits. So maybe maybe monthly liquidity will solve that problem.
I mean, they're all tailored towards retail investors, but this specific one is tailored towards retail investors. There was this shift after what happened in the first quarter. You saw a lot of firms talking up institutional investors like that's where the focus is. But JP Morgan still seems interested in courting that retail investor, right.
I mean, you have to court the retail investor, right, like, the long game has to be we're going to sell privates to people with trillions of dollars in their prof one case. It just has to be the long game of everything correct. And so right now that retail capital seems to flighty and you're like, yeah, institutions still love us. It's great, but like you still have to be thinking
about that long game. Also, there's an article this week in bloomerket about the private credit arbitrage trade getting momentum from advisors. Did you see this? No, so the arbitrage chairs. I don't love that phrase, but whatever the trade is. Like, if you are in a private, non traded business development company credit fund, you can ask for your money back and if you get it, which you know, there's caps
on redumptions or whatever. But any money you do get back, you get back on one hundred cents on the dollar. You get it back at net asset value. That's the
rule how these things work. Meanwhile, they are publicly traded BBCs, which are essentially the same assets the same fund as the private BDCs, or like, they're at least run by the same managers that have overlapping assets, and those trade it like you know, eighty seventy five cents on the dollar, and so a lot of people think, well, I should take my money out from the public one a one hundred cents on the dollar and then put it back into the same assets that's seventy five cents on the dollar.
Because that's just saves me twenty five cents. That's a trade that, like was Winstein talked up on this podcast, that people have talked about and written about. But the Bloomer article this week is about financial advisors telling their clients to do that, which is fascinating to me because on the one hand, I don't want to give investment advice. I don't want to say that's good investing advice. There are pluses and minuses. The discount might get wider. You
can't know that this is not really an arbitrage. The liber Artical quotes a guy named John Scott at CF Advisers saying, when the same credit manager is running a non traded BBC at its net asset value and I listed sibling fund it a twenty four to twenty seven percent discount, that's not a philosophical debate. That's a math problem. That's kind of right, right, like it's kind of a good trade, and so as a financial advisor, it kind of be who's you to tell people who do this trade?
But also the whole non traded BDC product is kind of like financial advisors putting people into it, right, yeah, by financial advisor putting me into one, right, et cetera. And like, you know, you might ask why can non traded BDCs sell shares a one hundred cents on the dollar when traded ones sell shares it, you know, they traded eighty cents on the dollar. The answer is because your advisor is putting you into it. Why is your
advisor putting into it? You know? Whyto advisors do anything? Right? And so it is funny to see this like the advisors shifting their clients out of the advisor product and into the like publicly available product. It's just like, yeah, at some point in the cycle, you're like, wait a minute, I'm going to give people good advice.
Yeah right, Oh god, well that's cool.
It's not investing advice. I'm not thinking it's good advice. I'm just saying a lot.
Of it's on investing advices. Just the problem until a financial advisor tells you so not this podcast, right, that's right, that's right. Run it by your financial advisor.
See what she says. And that was the Money Stuff Podcast.
I'm Matt Levine and I'm Katie Greifeld.
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The Money Stuff Podcast is produced by annam Aserakas, Moses onm and Alexis Hot.
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Amy Keen is our executive producer. Thanks for listening to The Money Stuff Podcast. We'll be back next week with more stuff.