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How about them? Nixt Yeah, Michael R. Bloomberg photographed next to Timothy Shallamy and Kylie Jenner. That was a highlight for me. Taylor Switch was also there. Paul Tudor Jones was behind her. What an interesting cast of characters on Celebrity Row.
It's funny. I feel like I've seen a number of articles about who was there on Celebrity Around. None of them mentioned Paul Tudor Jones.
He was there.
That's the kind of insight you need to come to Bloomberg for.
I went to bed at halftime and the vibes were that of a funeral. Yeah, it was so bad.
Then they changed.
Oh my goodness did they change. I woke up at like one in the morning, and uh, I couldn't believe it.
Can I tell you something cute? My kids love sports, and my I guess then loves basketball. But like he is, he is particularly enamored of half court shots, and he is like got it in his head that like a half court shot is the best thing in basketball. And so when like, you know, they go to bed before the next games, but like they could come down sturds in the morning, We're like the nixt one one, O seven, one of the six was a huge comeback, and he's like, were there any half court shots?
Otherwise I'm not interested.
It's pretty like one day in like the previous Spurs series. I cou'd be like, yes, Wemby made a half court shot at the first half.
We don't speak his names.
Yeah, Hello, and welcome to the Money Stuff Podcast. I'm Matt Levin and I heard the Money Stuff calm with.
Then we're Companion, and I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.
I was thinking, like two weeks ago you were talking about how we were going to be recording this like a crucial time for the space x Ipo because we're recording this at like two in the afternoon on thirteen to thirteen on Thursday, and it'll come out, you know, in the morning ish on Friday, and between now and then, the SpaceX IPI will have priced and maybe even started trading all that kind of dobt that and what will we do? What will we do? I read about it
today a little bit. Yeah, time today was about why we're podcasting today. I kind of was like, there's no, there's not a pricing today, Like I understand that the IPI is pricing today, but actually priced a week ago because they went out at a fixed price and a fixed number of shares. They're like, the price is one thirty five per sure, take it or leave it? All accounts are that people took it?
Yeah, a lot of people.
It's like Blombers. Last reporting I think was that it was four times over subscribe, but that's like the institutional there's also like a hundred billion of retailer ITER's like it's significantly over subscribed, and so it would be interesting if it prices tonight at like one hundred and forty dollars or share, but I don't think they can even
do that. I think they're in a price at the price they've said they're going to price to that, and then so we know the space, like if your price which is one hundred and thirty five dollars per share, we're going to beat this if if if I'm wrong.
This makes my job on television today a lot easier because we're awaiting the pricing.
Waiting pricing, and then like it's one hundred thirty five. And then of course the question is where it all open tomorrow, whichill probably happen after we published this episode.
But theoretically, yeah.
No, not theoretically, I mean, like you know, the stock exchange opens at nine thirty in the morning.
Yeah, it's like, but I feel like you get first trades.
They're like two in the after Yeah, it's all right, So it could open because they're going out at a fixed price that is, like Elon Musk's arbitrary decision. It could open wildly up or wildly down. Yeah, But I mean the thing that I read about today is like there's there's like market prices, right, so there's like the secondary private company secondaries like the five and forge inequities on which like I don't know how real those prices are, I don't know how much trades. And then yeah, but
there's also like pretty robust gambling markets. Yes it's not just like polymarket, but also like finance and hyper liquid, like big crypto exchanges run essentially cash settled derivatives markets, right where you can just bet on the price of baseix luck, and then like you know, it eventually morphs into connecting to the actual public price of the stuck and those are training it like you know, up, you know, twenty percent from the IPO price, which is kind of
what you want in an IPO. Yeah, I don't know. The market is kind of saying like you've done it perfectly. Elon Muss, you got it right on the first try. Yeah.
I was actually having a conversation around like betting markets and this particular IPO, how they seem particularly relevant for this offering since there's just so much demand and it seems hard to get your little hands on it.
Right. I feel like I spent a lot of time complaining about the betting markets. Yeah, for two reasons. One like mostly their sports bets and that's annoying, and then secondly today extent their stock market bets, like that's just illegal, and like all of these things are offshore like polymarket and Binance and hyper liquid other spaceix stock price bets are not open to US customers because like it's just clearly forbidden by US securities law and kind of for
good reason. But also like the argument like they provide truth function and price seek and you know, and and price discovery is kind of real, right yeah, maybe right, Like if the stock opens at like four hundred tomorrow or like forty then whoops, never mind, But like for now, these things are like yeah, you got it perfectly right, you know.
Yeah, to the point like are you only talking about individual stocks? Can I bet on the future movement of the S and P five hundred in the next fifteen minutes?
Some more complicated question, but like I think the short answer is like yeah, you kind of can, because like for some reason index features the regulator regime is so weird. But basically, prediction markets are commodities exchanges, and for boring historical reasons, index futures are traded on commodities exchanges and so like cals, she can list them, and single stock futures are SEC regulated and so can't list them. And it's like.
Marked it than that, but feel like we're getting into dangerous territory. Well also with our we're going to talk a little bit about the regular regime, but I want to talk about SpaceX a little bit more. Oh SMP came out.
Yeah, we haven't talked about this.
I know, which is crazy because it feels like so long ago, because every day it feels like a year.
Right, everyone was like all the indexes are changing their rules to let SpaceX enter their index as fast as possible, and shocker SNP like put out a consultation being like, we're going to waive our profitability requirements and let them in in six months, and then they're like, Nope, we did the consultation and we decided we're not going to do that.
So now we're talking about potentially a year before well.
The minimum is a year. But then like they also have to be profitable, you know, I think I think the SMP rules you have to be probable for like four quarters basically, yeah, which is that's true twenty forty you know.
So you're maybe a little bit optimistic. This was a shakra though. I remember chatting about it with my ETF friends over at Bloomberg Intelligence and they were replacing like seventy five percent odds that the S and P five hundred or the S and P rather would do what all the other index providers did, And what an interesting world this is going to create, right, It's kind of ugly for the other index providers.
All of it is ugly for all index providers in the sense that if you think that you are a passive investor by buying, you know, an undifferent like whatever index you happen to buy, then it's a little annoying to be like, no, these are like active decisions made
by committees after consultations in round numbers. Is the S and P five hundred the same thing as the CRISP Total Stock Market index that underlies the big Vanguard fund like kind of right, but for the next year or two or five, they're going to have wildly divergent performance because one of them will have the three big as STACs basically and one of them won't, right, Yeah, and that's going to be a big difference in index performance.
And pere like, wow, some passive investment, you know. It's just like it's like such an active decision that has such an economic invit By the way, you're like, oh, it's it's bad for the other index providers, Like I don't know, it depends if they go up optically.
I'm just talking about the optics.
Someone everyone says, like I understand that, like the sort of like house view everywhere is that these index providers are evil for changing their rules to accommodate Elon Musk. I don't think that's true. I think it's like they're like look, you know, our job is to provide exposure to the stock the stock market.
I am sympathetic to that view. I mean, you think about the mission of a lot of these indexes, the Nasdaq one hundred. They want to have the one hundred largest companies that are listed on Nasdaq. It makes sense. But definitely have seen SMP presented as like their decision, they're the adult in the room here.
There's vocal support for what SMP did. I think there's vocal like, yeah, I got an email from one reader who's like, look, I don't buy the SMP to buy all like the five hundred biggest companies. I buy the SMP for its rules that you have to be profitable and liquid and you know, seasoned public company. And he might be the only one. I don't really believe that. That's how most like retirement savers are like, oh, you know what I really care about is SMP's rules. You know,
so clearly that guy exists. But also, like I think a lot of people like when this problem is presented to them, when they were like reminded of the fact that SMP has rules and it's thinking about waving them for SpaceX. A lot of people are like, no, those rules are good and we don't like this, but will they change their minds in two weeks if SpaceX.
Doubles and I don't know how would look terrible for them. I feel like for who S and P?
Yeah, the thing is like S and P. Actually, in some ways it's not that big a problem for S and P because S and P was never considering, like, we're going to put SpaceX in the index in two weeks, which would like a lot of the other index of it.
And one reason they didn't do that is you just could not physically fit the S and P demand at this space because like the SMP devat is like any I don't know, I'm going to say the run number, it's probably like ten plus percent of yeah companies stocks, and so faceax is going public with like four percent of its stock, Like you can't you can't fit the SMP. So like yeah, you know, they were like, should we do this in six months or should we do it
in three years? Right? Yeah, So whatever happens in the next six months wouldn't have mattered anyway what their decision was.
I have to say, I think this is the most interesting outcome, the fact that you had all the other index providers make this decision, S and P standing firm. And part of the reason I'm so interested is because I have to imagine there's a whole bunch of active managers out there who are absolutely psyched that SpaceX isn't going into the S and P Oh yeah, it's just been impossible to beat that benchmark, and now you potentially have a chance to.
Right. Also, you're not forced to make a decision. Yeah, in the same way, like if you're like a quote unk active manager whose job is to track the index and beat it a little bit, or it might be how some active managers see themselves, then putting SpaceX in the index made you like either have to own it or have to really confident that you that you're not like missing out on performance. Having SpaceX in the index means that if you do not own SpaceX for your career,
it's equivalent to being short SpaceX. And like you might not like an Elon Musk company, but you you don't like Tesla, you wouldn't necessarily short it because it's terrifying, right, yeah, And like you know, the same dynamic exists if you're like a long only manager benchmark to the index, and it's like, if I don't buy SpaceX and then it doubles, I'm gonna look like an idiot. So you get the thodds that pullet a little bit, and if you like SpaceX, you can buy it and not perform.
Something we were talking about last week was ESG considerations around SpaceX. The governance super hard here and UH.
Is the worst, like Mark Levine that relation the like Comptroller of New York put out his statement being like, we're going to try to stop them. They can't be allowed to disempowers.
They're going to try to stop SpaceX. They're going to try to stop Elon Musk. Who are they trying to stop?
He's gonna write a strongly worded letter. Wow, the governance of SpaceX is such that you cannot complain about the governance of SpaceX. You can't like buy shares and like sue or like run a proxy fight, like those are all closed off to you. So there's nothing you can do. Either buy the shares and just trust Elon, or you don't buy the shares, or the third option is you write strongly worded letters saying they should really have different governance.
But it doesn't matter. Yeah, the governance is bad. I don't know what they e.
I don't really know. I don't know how to make head or.
Sort of like it's like sort of orthogonal to all previous esg like environmental conversations. It's like, Wow, we're going to put a lot of data centers in space. Is that good for the environment?
Do the polluting in space versus.
A lot of solar energy his data centers?
Yeah?
Oh, I really like the Bloomberg story. He was yesterday maybe today? Whatever about like all the retail investors quoting them, saying it's like they tried to borrow money from a bank or for their sister to buy more SpaceX stock
or uh so. One woman says there's no such thing as too much when it comes to investing in one of the most ambitious companies that ever existed, and another guy says, I'm willing to overpay for it just to say I'm part of the thing, which is like an amazing I don't think about it, Like, what what is
a meme stock? Yeah, it's hard to get like like it's easy for like you to look at like game Stop and be like, oh, this is a company that trades above its fundamental value because retail investors like it. But like then you go on like you know, Reddit or whatever, and like people are making fundamental cases for
game Stop. You can't necessarily like tell a meme stock by what people say about it, right, You have to sort of like be like this enthusiasm is like it's my aesthetic judgment that some of these stocks are meme stocks. But then this guy is like, I know, I'm a were paying I don't think this company is worth that much, but I want to be part of this thing.
I want to participate in the culture. That's exactly think it's kind of beautiful. I like how candid he is and like true to his own intentions. He is right you know something I did think was interesting and we've probably have to move along. But I just think the
conversations that we're having around SpaceX anthropic open AI. I think back to the conversations we were having on this podcast probably a year ago talking about how Private Forever is the new mantra and like the dearth of IPOs, and it is pretty amazing to think about where we are at this moment where SpaceX is about to go public. We have s ones in some form from anthropic and open AI. It's just like a total total one to eighty.
It feels like in some ways to the conversations that kind of defines my twenty twenty five.
Yeah, it's interesting. I was thinking I think a lot about like Uber was part of a wave of like very similar conversations where it was like I think I
started writing private markets or the new public markets. Yeah, when Uber was private, and there's this like real sense of like companies could stay private forever, Like all the technology for like tender offers and like fundraising in private markets and all that stuff like was being developed, and there is this real sense that companies didn't want to go public anymore, and all the big companies that stay private and then like they all kind of went public.
And yeah, there's another wave of it this year basically, And you know, some of it is just like all of those stories are always overblown and eventually every company, every you know, big tech setup is going to go public. But some of it is just like the very specific AI story of like you need a gajillion dollars of CAPEX for data centers, and so you have to tap every possible financing source and being a public company helps you do them.
Yeah, it's hard to say how much you can extrapolated out. I did think to this point though, the language in Open AI, the company coming out and saying that they basically just want to give themselves the option to go public, that there is this pressure to go public and they aren't kind of an orace with anthropic But the company said that they haven't decided on timing for an IPO yet.
It may be a while because there are things we want to do that are likely easier as a private company, but it's a complicated set of trade offs, and this gives us the option to go public sooner if that ends up being the best. Which was pretty candid.
Yeah, people who complain about the governance of space acts like they're not wrong. It is a real see change from how public companies are run. And basically it's like Elon Musk can do whatever he wants. Is se we're verutting stock, he controls the board. You can't sue him. There's a real way to sue for pre chef duties. The company can do whatever they wants, and obviously that is informed by Elon Musk's own particular history with public
market lawsuits, but I don't know. Open Eye is like there are things we can do as a private company that are easier for a private Like some of those things will be easier if you copy the SpaceX governance structure and public right some of them were not, like some of like not having disclosure is useful or whatever, but like SpaceX will not be as constrained by public
company rule as any previous public company. And you know, I wonder if Open Aye and Anthropic, which are not run by Elon Musk but which have similar like idiosyncratic interests, like maybe they'll do the same thing and be like Cheryler's just gotta trust whatever.
We say, take it or leave it. We'll see. I will be firmly on attorney leave when those companies go public.
So yeah, and this podcast will have already come out when that SpaceX officially public. Sports. Yeah, one thing I have been saying for a while now is that like
now there is federal sports gambling. Yeah, And like one thing I said is like there's like now like federally regulated sports gambling where Calshi runs a sports betting operation that is regulated by the CFTC and it says, because it's regulated by the CFTC, it can't be regulated by state gaming regulators, and it has mostly won that argument in court. Mostly courts have said, yep, that's right. The CFTC regulation preemp state regulation. And so because you're a
CFTC regulated sports book, you don't have to follow state laws. So, for instance, you can offer bats in states that forbid sports gampling. You can offer sports gambling to eighteen year olds, whereas most states restricted to twenty one year olds. All these things, and one thing that I said is like, this is a weird situation for many reasons, but one reason is that the CFTC does not actually regulate sportscampling. There's no rules that the TC has ever published about
sports betting until this week. Yeah, I published a big set of proposed rules. They're not finally out, they have to go through notice in common, but like they propose rules for how to federal sports betting, which I just found just as a concept are very funny.
Yeah. I enjoyed your column on this, the CFTC confronting questions that no regulator has had to contemplate before.
Like plenty of state gaming regulators.
Yeah, for sure, not necessarily the markets regulators. No, and I do love you know when talking about pre collegiate sports, I went to high school, Like that's where my brain went. You just went straight to the little league.
Yeah, I mean for that have children high school. I have one of them. Is it's an accomplished little leaguer.
I thought you were going to say I have a side hustle, and it's no.
But like I will tell you, Katie, I am like the least athletic or sports knowligible person. But like I go to these little league games and I'm like, yeah, they need assistant coaches. That could be the third least coach. I feel like I'm going to be a little league coach within the next two years.
I thought you were contemplating basketball as well.
Uh, my daughter is like a competitive basketball and softball player, but I feel like I'm more suited to little league.
I was going to say either little league it seems like slower paced than basketball, but then I realize I'm thinking about the NBA Finals, which is super fast, and probably.
Basketball is just faster paced than Yes, it's fair yeah anyway, yes, so you can't bet on it. I wrote that the CFTC in it's like one hundred page role making about prediction. Markets did have to confront the question should there be
federally regulated betting on Little league? Right? Technically what they say is pre collegiate sports or sports below the collegiate level, so that include high school sports and also include little league, And they come out on the side of no, you can't have betting on little league because essentially these are market integrity questions, right, Like, like you do not want to allow really regulated betting slash swap contract trading on stuff where you can't be like pretty confident that the
result is one like determinable who won a little league game? There's no like official records, right yeah, and then two not manipulable, right, Like you don't want you want someone to throw a little league game to win a bat, That's true, whereas like, what are the chances of someone throwing an NBA game to win a bet? They're not zero, but like there's a lot of constraints on that, Yeah, fewer constraints on little league.
In some ways, it's a shame because I feel like you could have a real edge, you know, if.
You well that's the point. Yeah, Yeah, the point is that. Like the point is that, like prediction markets are meant to like be truth seeking functions, and like you want to incentivize people to to like find public information find difficult to get, but like you know, legally accessible information to build models to try to predict the future. This
is mostly economically relevant for like nonsports prediction markets. It's like, ooh, well, like you know there's a prediction market and what the FED will do and like people who predict that, well, you know, add information to the world, whereas like people who predict the next game, well, will win a sports bet. Yeah,
but the CFTC is agnostic. It's like sports are economically important, so we're going to have lots of betting on sports, but we want to encourage people to like do work that is informative rather than just like bribe or wrath.
They want to ban injury contracts because like those are like, you know, the person who knows whether a player is going to come back from an injury is kind of like the player and his doctor and like his team, his camp, and like those are going to be insider traded contracts.
And you don't want to encourage Tonya harding and have right right.
They also they also they also want to ban contracts on fights, not like boxing, but like you know, I'm like will fight, well, bral break out at a baseball game. One reason for that is to protect like so you don't like bet on a brawl and then start a
brawl and people get hurt. But then they also say, even if the probability that any athlete or market participant acts on such incentive is low, the effect of a market in physical altercation contract on the culture of athletic competition is inconsistent with the public interest, which is like true, yes, but imagine if I had told you five years ago that the Commodity Futures Trading Commission was like, well, you know, the integrity of the game requires us not to take
bets on fights and games. It's like, why is that a commodity?
It's amazing any of this happening.
It's so like weird and path dependent.
I do applaud them for, you know, putting out this report.
I read it skeptically and they did a good job. Yeah, good job.
Yeah. And it's you know, the way it's written, it's like very sober, it's with a straight face, it's.
Thoughtful about like a lot of these questions.
Yeah, it was pretty cool.
I will say there's one very weird one.
Yeah, it's not sports. Go on, did we.
Talk about the Supreme Leader of Iran out of office?
We must have.
We must There's this controversy where like cal had a market on like well al KAMENI be out out of office as Supreme Leader of Iran and then he was out of office because he was killed for sure, and Calsh she was like, we don't want this to be an assassination market, so we're not gonna pay it out. We're not gonna pay out. Yes, we're gonna like refund everyone in their money basically, And people got really mad
about that. Yeah, but that is like consistent with like the CFTC even before this rulemaking, like the CFTC has kind of had a rule against assassination markets. So like, obviously a market in like will a world leader be assassinated is obviously not okay, But what about like will a world leader leave office by the end of the year, If like the world leader resigns or loses an election, that's fine, You're allowed to have a market on that. And like election markets are a big part of it.
But if he's assassinated, then that's bad. And you might say, well, if it's just done, will he leave office? It's not
a bet on assassination, So that's fine. But in fact, what the CFTC says they talk about Nicholas Mudoro, which is like the example days, they say, an event contract that settles on whether Maduro is out of office by a certain date without further specification of the qualifying mechanisms involves assassination within the meaning of the rule, because assassination is among the pathways by which the settlement condition can be satisfied. That is, if you have like a world
leader out contract, that is illegal. And so there's a lot of stuff like that. They're like, you know, around shutdown oil facilities. Contact is illegal if like one way they could shut them down is getting them bombed, which is very strange. Yea, like any event could happen or not happen because of like a murder. You know they have war. Yeah, so they have bets on like what state will Taylor Swift get married in?
Oh, I thought you said date, Well, yeah they.
Have they have I think they have date, but they certainly have location contracts. And it's like she will not get married in New York if she's murdered. But like, that can't be it can't be illegal to list that contract because there's some way for it to resolve no due to a war assassination. So it's very that's like they haven't thought that one through.
How does that get resolved? Well, there's just a bunch of complaining about it.
Yeah, probably, or there's not, and like I'm the only one complaining and they just blunder along.
I don't know. It seems like a slippery soap.
It is, because like the the Kamani contract was like probably everyone thought it was fine until he got killed and they're like, yeah, wait, that was in hindsight an assassination contract. Right. There'll probably be other things like that, where like things that are not obviously assassination contracts will turn out to be in hindsight assassination contracts.
And I really like, what if you die of natural causes?
I actually think it's okay, but it's a little it's a little gray area. I don't think I think they probably would discourage bats on people dying. It's limited to dying of natural causes. Yeah, well, who knows, Maybe it'll turn into an insurance market. Let's talk real quickly about Friend of the Show. Former guest lost a big case the Supreme Court Tooay.
Yeah. The headline on the Bloomberg terminal is that the Supreme Court shields investment funds from shareholder suits. Specifically, the justices blocked activist investors from suing eleven closed end funds, and the suing investors were led by hedge fund manager Baulas Weinstein's SABA Capital Master Fund.
It's a weird case. So basically, the Investment Company Act, which is like the federal law that regulates closed end funds, investment funds, mutual funds, says that if you issue shares of a mutual fund or closed end fund, you have to have one vote per share. They'll have to be equal voting shares, no super voting whatever. A lot of
these funds are incorporated in Maryland. Maryland law that says you can have you can opt into a provision where if a shareholder gets more than ten percent of the stock, they can't vote their extra shares. They can only vote ten percent. They don't get to vote their entire holding. To prevent basically activists from influencing funds right, it's like an anti activist pro management provision. So all these funds
are in Maryland and have that provision. And so boas I don't think, owns more than ten percent of any of these funds. But he sued to be like, you can't have that provision because that's like a way to block activism. And he said you can't have it because the investment company says really clearly one vote per share, and this would be taking away votes from shares. And so he won in court because that's true. And then in the Supreme Court you got reversed because the Supreme
Court said didn't even address his argument. They're just like, you don't have a right to sue under this statute. Like this statute that says you have to have one vote per share, there's no right to sue if you violate it. The only way to enforce it is the SEC has to enforce it. If the SEC doesn't enforce it, tough luck. So Bo has lost on a technicality.
Yeah, and his firm did provide a statement basically saying that this decision puts the burden squarely on the SEC.
Good luck with them, et.
Cetera, et cetera. Closing with the SEC has no excuse not to act.
He does have which go on, which is everyone has turned off this podcast by now. Many people are not as interested in the injustices of closed end fund management as bo As. I'm saying is Katie is like gesturing like I'm interested. But you know who's not Paul Adkins in the SEC.
Yeah, he's probably a little busy.
Uh, he's busy.
He has to answer a letter from Elizabeth Warren asking him to basically delay the SpaceX.
IPO because it's because it's overpriced. Yeah, that's really good. He's also we're not gonna have time talking about this, but like today they put out a really major revision to equity market microstructure rules. Oh god, getting rid of the trade through rule, which is like ten of my readers like their heads exploited. But I'll just I'll just leave that here.
We have like minutes, We have minutes left. What does this mean for the entire industry of closed un fund arbitrage?
Though?
Does this essentially mecap it?
No, because as the funds that Boaz didn't earn ten percent of any of these funds. Okay, he's the dictorism. We just can't quote above ten percent of the funds.
Okay.
Also, like I can continue to write strongly worded letters to the SEC being like you guys got to do something about this. Yeah, maybe they'll read the letters.
Yeah, who knows. I might.
And that was the Money Stuff Podcast.
I'm Matt Levin and I'm Katie Greifeld.
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The Money Stuff Podcast is produced by Anam Azarakus Moses Onam and Alexis HoTT Our.
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Maples Amy Keen as our executive producer. Thanks for listening to The Money Stuff Podcast. We'll be back next week with more stuff.