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Oh my god, I slept terribly last night. I'm so glad you asked. This is bad. I'm at seventeen. I woke up in my body battery. It was at fifty one. Usually I wake up in the eighties or the low nineties.
So what was wearing on you?
I'm moving tomorrow. I'm psyched. I'm going back to New Jersey. It's where I belong.
I thought you were going to say you're a stressed about your bird.
Oh god, I'm so glad you brought up the bird.
So, Katy is a bird?
Have a bird?
So this is like the Katy's Exotic pet hower.
Yeah. I have a lot to say about this bird. So he's a European starling.
Sure, by the way, one of my proudest moments. And like, you didn't really notice this, but you showed me like two pictures of this bird on your phone. Yeah, he's like pretty small on this pictures. And I was on your phone and I was like, oh, a starling. You're like, yes, it's the starling. I was like, yes, yeah, you closed the bird identifier.
Yeah, Well they're super common around these parts because they're an invasive species, which explains why now we're in possession of the bird. My dad actually found him at my parents' house, like as a creepy crawley little like no feathers, alien baby thing. And I called the Raptor Trust and they said, you know, because it's a non native species, we can't help it. They said, try to return to the nest.
I tried that, I couldn't find the nest. And I said, hypothetically speaking, how hard would it be to raise this bird? And they said, actually, it's really easy to hand raise European starlings. So that's what we've done.
He's sitting here at the podcast right now.
My parents are taking care of him at my direction. It's kind of fun because it feels like they're my employees.
How many like video calls? Are you doing a day with your parents?
Many? Actually have a new photo to show you now he's about three to four weeks old. I'm really proud of this photo, not that anyone listening can see it. Hold on put in. My dad texted it to me this morning.
You know, we can put it in my email.
Oh my god. Yeah, Well I won't put this photo. Look at him.
Oh he's a bird.
Yeah, he's a real bird now, so we want to release him? So no, not yet. There's three important milestones that this bird needs to pass before we can think about releasing him to the wild. He needs to be able to perch. He's getting better. My mom has been putting him on a stick and he will perch on the stick. He needs to be able to fly. Obviously he's flapping around. He's not flying yet.
Is your mom like clapping our arms to demonstrate to him?
That's what the conversation we keep having is we're not birds, so it's not a bird. It's really hard. And the third thing he needs to be able to do is feed himself. The hand of God has been feeding him mush mush for weeks now, so he needs to you know, Oh, I'm so glad you asked. So high protein dry cat food. You soak it for you know a while. I've been doing a hard boiled egg and then you mash it up. Yeah, it's kind of feels bad, hag to a bird, but
he doesn't know. And then I have this like egg shell mix it's made for chickens to try to give them more calcium so they lay better eggs. But basically, what starling, baby, Starling, growing Starling's need is a lot of protein and a lot of calcium. So this mix seems to be working pretty well. I've adjusted it as he's gotten a little bit older. As the photo shows, he looks like a real bird, so we'll see if his bones will support himself as he continues to learn how to perch and fly.
Well, I hope you will bring him into the podcast before you.
Yeah. Well, the thing is, and I promise we'll move on soon, is that if he's not able to be released, and we're not going to release him to a certain death, if he isn't meeting these milestones, then we just have a bird now, which isn't the worst thing.
No, it's clearly the outcome you're rooting for. All right, I think we're done. We'll see you next week.
Yeah, no, I think that that was a good update.
And yeah, hello, come to the Money Stuff Podcast. You're a weekly podcast where we talk about stuff related to money. I'm Matt Levigne 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.
Hey, there's been some tariff news.
Yeah. I feel like we have to timestamp this conversation because everything is changing very rapidly.
We're recording this at four o'clock on the Thursday, May twenty ninth.
Yeah, and about twenty four hours ago or less than that. A court, which I learned existed.
So U asked Court for International Trade.
Yeah, based in Manhattan. Sure, yeah, so it blocked the the tariffs that Trump put on on Liberation Day.
Yeah, most of his tariffs are, yeah, the Liberation Day tariffs, and actually like the pre Liberation Day like Canada and China tariffs, the opioid tariffs, the personal tariffs, those were all blocked by the court as of like Thursday afternoon. The Appeals Court for the Federal Circuit, which is like the appeals court the handles that you also just learned exist. That the handles it feels from the court from the International Trade. That court at a temporary stay, so it
could like consider whether to put a longer stay. So everything's very much in flex. But yeah, the Court for International Trade said these tariffs are illegal.
Yeah, and it seems like we're heading to the Supreme Court.
Well, I mean certainly, yeah, yeah, yes, yeah. Probably won't be at the Supreme Court by the time this podcast air is on Friday.
Probably not. But you know, crazy things have happened. I mean, coming into this morning, futures were up a ton on the S and P five hundred because it was like, Okay, the trade war's over. It's not. It seems like the consensus that has emerged is that Trump has plenty of other tools to put on tariffs somehow, And I don't know what this does to the US negotiating stance. It feels like it lessens it by quite a bit.
I guess that's right. I don't know. It's just like it feels like the US negotiating stance is so mercurial and so unreliable that I'm not sure how much it affects the negotiating stents or going. On the one hand, as you said, he has a lot of tools to put on tariffs, and if you are a trade partner in negotiations with him, the threat has gone from I will put on whatever tariffs I like, pursuing to my
unlimited authority to put on tariffs too. I will find some stuff to do and it'll be super annoying and confusing. It's like that's not that much better, right, That's still a pretty bad threat. And in some ways, I feel like a lot of what I read about people who are in the posture of negotiating with Trump, like you read about this, and like the situation with Harvard, right, people worry about making deals because he is not a reliable interlocutor and can always just change the deal and
there's not a lot you can do about it. In some ways, like you having a little court supervision might be kind of good for negotiating postures. I don't know that's true, but like it's just like it's nice that there's like just a soup song of like law here, right, and like procedures, because you know, I wrote about this today. There's in some ways this is a complicated case. There's all these statutes, there's all these questions of like what
things should be left to the executive's discretion. But in many ways it's a very very simple case, which is that the Constitution of the United States just like a real document. You can read it like it's a real thing that exists, right, Like, not everyone involved in the government has read it. But like, you know, there's like a real document that people at least say they care about. The Constitution just says the Congress has the power to
impose taffs and the president doesn't. So like all this stuff of like executive orders imposing tariffs is really like on a first order analysis, just not what the Constitution says. And I think that's kind of the court starting point here. Yeah, so it seems like kind of simple stuff and there's more complicated stuff, but it is in some ways a relief to see that the Constitution still has some controlling power.
Yeah, that does seem like something a couple hours that you would root for.
I do. I'm weird like that.
Yeah, when it comes into the negotiating stance, the standpoint that I've seen bandied about is basically, if you're another country negotiating with the US, like this kind of removes the urgency or the incentive to make a deal with the US because now it's in flux. You know how much power Trump actually has to enact these tariffs.
Yeah, that's right. But you wouldn't that against him having a lot of power to do whatever he wants, if.
You would, I don't know, yeah, yeah, I don't know.
The one can say spring quick tomorrow.
Yeah, at least on this Thursday. The consensus that has seemed to emerge throughout the day. And you've seen this in like the slow bleed of the S and P five hundred from you know, our pre market euphoria was this just turns up the volume so much on the trade policy noise because who knows what's going to happen and.
Not other noise, right, I mean, like one overhang to finance is how much rule of law is there? And every time the court says Trump can't do something, you have wider variant in the outcome of how much rule of fla is there because like maybe you'll be like, oh yeah, the constitution does say that never mind, or maybe like Peter Navara said, nothing has changed after a court said the terriss around constitutional Like how did that's like ating posture?
It was kind of funny that this all happens within hours of Trump being told about the taco trade. The tacos trade, taco trade being Trump always chickens out. It was coined by an.
FT columnist Rob Armshuk at the FT.
Yeah, yeah, basically that okay, Trump comes out with this big announcement, you know, we're going to slap a gazillion percent tariff on so and so, and then you know, inevitably it's walked back, and that's the taco trade. You bet on this is going to be walked back. And Trump was told about that in the Oval Office, and he was upset, as you would imagine, and said, no,
this is negotiating. This is how it's done, which you know, maybe there's some truth to that, but you know, as an investor, I can see how you could also turn that into a trade, even though it feels like, you know, in the last couple of weeks or so, it's become less profitable because it feels like the shock value is fading, right, right, right.
So a couple of things. One like Trump always chickens out is the insulting to him phrasing of it. Yeah, but the trade is when a drastic tariff announcement comes out, the actual result will be less than that, either because of the negotiation or because you checked, like you can be agnostic about the cause, or you can just say, like,
this isn't as bad as it sounds. The second thing I want to say is that Lewis Astroth at ft Alphaville, like apparently got jealous of his colleagues ability to quinna term that became so famous, so he wrote a bunch of other potential acronyms, like Mexican food themed acronyms, and the one I liked was takita, which is Trump always quickly undoes initial trade offensive just like a little thing.
It's more a specific about the thing that's happening. The other thing I want to say is that a reader emailed me to be like, would it be a good trade if you were a journalist to short the market and then ask Trump about the taco trade, because like the mechanism there is like you asked Trump about the taco trade and he gets really mad, and then he says I'll never chicken out again, and tarriffs get higher, the market drops, Like I think, like you could have
imagined for a second that like Trump getting mad about the phrase taco trade could have been bad for stock prices, but of course it was quickly followed by the trade cord ruling, which is good for stack prices. So it's a little hard to isolate the impact of getting Trump mad about the taco trade Yeah.
That's pretty funny. It could work if he had explicitly said I'm going to tear iff even harder. Right now, I think.
That it would have been reasonable to think that he might have thought that. But then, you know, events moved on.
Yeah, that's what happens a lot.
That's kind of the real core of the taco trade, which is events just keep moving on.
Yeah. Well, it'll be interesting to see what happens to the taco trade as we continue to muddle through whether or not these tariffs are illegal and what other types of terrifts were going to get. There's all these different tariffs that this ruling doesn't cover. When you think about steel and aluminum for example, Well.
So the Liberation Day tariffs are ten percent to you know, one hundred and fifty percent towers on everything, right, it's ten percent baseline, But then every country had like quote unquote reciprocal tariffs that were much higher. Amazing calculation of the trade deficits. It's like the whole thing. It was like truly universal, and it was basically you talk about like steel taffs, there's like you have like a sort of national security justification or whatever right you have some
theory behind steel tiers. But like this the Liberation Day tariffs, where the US runs a trade deficit and we want to stop that, and so we have tariffs that are calculated through some formula designed to zero the trade deficit essentially, right, And the court said you can't do that. The law that he used AEPA International Emergency Economic Powers Act of
nineteen seventy seven. The AEPA allows you to respond to an emergency, and if you have tariffs that are responsive to an emergency, that's fine, but like, it can't be the case that all international trade for the last thirty years is an emergency. Like this is like too much, it's like too much power to the executive. So you
can't do that. But can you find specific goods to tariff and use other laws that say you have like specific economic tariffing powers, like maybe probably often there are more limits in those laws if you have to like do fact finding and like put out a report and they're time limited, right, So it's not as completely broad as the powers that they claimed under AYEPA, which is why they did the AEPA stuff. They're like, we're you do everything all at once with no you know, review,
no fact finding. So AEPA was the law they thought they could use for that. If they can't use that, then they have to find other laws which will be a little bit more narrow, but you can still do a lot of terror.
Yeah, I mean, there's section two thirty two, for example, that's what's being used on steel, aluminum, vehicle and auto parts. There's other laws as well, but usually there's some investigation associated with him, so it takes months versus President Trump is sitting in the Oval office and he signed something.
Because again, like the Constitution says that Congress can make tariffs. Yeah, and so Congress has in the past past laws saying here are some tariffs that the president can impose, right, but like, ultimately it's the Congress's tariff power, and the Congress doesn't say in any of those laws the president can make any tariffs he wants. It says, you know, he does an investigation these particular things, for these particular reasons, you can make tariffs. But it's not an open ended
grant of power. And one thing that the court so yesterday is that if it were an open ended grant of power, and one way to read AIPA is that's an open ended grant to make whatever twists you want. I don't think it's a good reading, but it's like the Trump administration reading the court said, if you read it that way, then it would be unconstitutional for the Congress to give all of its tariff power to the president with no limitations whatsoever. And I think that's right.
I have a personal interest in this. I don't know if I've talked about this on the podcast a column, but like that idea that Congress can't just give its power to the executive with no constraints is called the non delegation doctrine and it is had a controversial career in the Supreme Court. But one of the important cases in the recent Supreme Court about the non delegation doctrine was argued by my wife. Wow, he's a criminal defense layer.
And so I was in the audience for that, and so you know, I have like a little rooting interest in the non delegation doctrine.
I get it, even though to oversimplify and dumb it down. It seems like that is what has happened here, and it does just seem like Congress is too upset about it.
So the podded history of the non delegation doctrine is that it's never had any effect whatsoever. Like there is lip service paid to the idea that Congress can't delegate all of its legislative powers to the president, but that lip service has always paid in cases saying but this delegation is fine, right, including my West case. But there is like this notion that interest in it has been relived, and like one day they're going to find a delegation
that is too broad and maybe it's ayepa. I don't know.
Yeah, I don't know. Again timestamp this is on Thursday. It'll be fun to see how this shakes out. I don't know. I would love to be a fly on the wall and like some of these negotiations, because I don't know, if you're Japan negotiating with the US right now or India, do you just wait and see.
I don't understand why this would really change it that much. I just think that like the thing that you know as like the Japan trade negotiator or whatever, is that Trump really wants to make deals, he really wants to have wins, he really doesn't trust free trade. He's really willing to push the boundaries of the law as much as possible. He's not really aware of what those boundaries are. To think like I'm going to tell him to stuff
because a court struck him down. Seems crazy, Like now more than ever, you make a deal, more than you're like, look, this court was wrong. We understand. Here's our tariff concessions. Like maybe you get a better deal now, and like you're rushing to make a deal. I don't know. I don't understand the idea that like now you're like, oh, it's fine, like no more tariffs, Like I'll just walk away from the negotiating table.
So it's crazy. I don't know. Maybe you don't walk away, but maybe you say, why don't we break for lunch for a little bit. Why don't we.
I think that was the opportunity to make a bigod deal. I don't know. I don't listen to me, I don't I don't know anything, but like to me like calling him up and being like, I'm in your camp, buddy, I want to make a deal. I know that you have the constitual parademphosies tariffs. Let's make a deal. To me, listen to the opportunity. You don't break for.
Lunch that's true.
You cut the deal now, Yeah, no exaggerating because like if the deal involves like him imposing lower ABA tariffs on you, like those are illegal maybe maybe. So I don't know. It's harder to know what the deal is, but I don't know how it changes the poster.
That most of our topics today are vaguely and in some cases explicitly. Donald Trump related Fanny and Freddy for example, back in the.
News another bit of you knowilateral.
Pol an explicit implicit guarantee.
Yeah, Donald Trump, the verb is so hard. I want to say he tweeted, but in fact he posted on truth social which you can say he truthed.
Yeah, the truth.
I am working on all caps taking these amazing companies public, but I want to be clear the US government will keep its implicit all caps guarantees, and I will stay strong in my position on overseeing them as president. So Fanny and Freddie, the government sponsored enterprises had a long prehistory as being implicitly guaranteed by the US government. So like they explicitly said, Morgus, they have trillion dollars Morgue, and they issued mortgage backed securities that are guaranteed by them,
and those securities. Always said, these securities are not guaranteed by the US government, And they said that because otherwise you'd be confused, because everyone thought they were guaranteed by the US government. That's what it's called an implicit guarantee. They say it's not guaranteed, but everyone thinks it's guaranteed.
And then in two thousand and eight they went past and they turned out to be guaranteed by the US government effectively because the government like stepped in and took them over, bailed them out, and made sure that creditors were made whole. And that was roughly sixteen years ago. And ever since, people have said this can't continue forever. They have to return to private hands. And I always said, why,
it's fine, like no one. Yeah. But so now once again, because Trump is in office, and because there's a lot of money to me, there's a talk of returning Fanny and Freddie to private hands. And the mechanics of that are really complicated, and there's opportunity for people to get hundreds of billions of dollars of value. Yeah, and so that's of great interest to a lot of investors.
Yeah, there's bags to be made, uh, bags to be made, yeah, which could bring us to Bill Ackman, but we don't have to talk about we don't have to.
But Bill Ackman is one of the big investors in that trade. And when Fanny and Freddie were put into conservativeship by the government in the financial crisis, their stock became like you know, in the ballpark of worthless, but
never stopped trading. And at some point in like twenty twelve, I think the government changed the deal from the bailout to say from now on, all of the profits of Fanny and Freddy forever we'll go to the government and shareholders will never get anything ever again, which you might think would make the stock worthless and like made it almost worthless, yeah, but some people thought that can't be true, like that'll change, and so they bought the stock and
now they own stock. And it is unclear from first principles how you would reprivatize Fanny and Freddy, but it seems likely that whatever happens, the current shareholders of Fanny and Freddy, who bought the stock at you know penny is when it was declared to be worthless for all time, it seems like that the current shareholders will get a back yeah.
Haven't they already though, like well like in market prices.
Yes, yeah, yeah, because people are anticipating that Fanny and Freddy will be returned to private hands, and specifically their private hands, like specifically the existing shareholders of Fanny and Freddy will not in fact be zeroed, but will end up being shareholders of Fanny Freddy and look at a lot of value.
Yeah, it would be you know, kind of funny if some of these big vocal investors who are calling for the reprivatization, who you know, have bought the stock when it was pretty much worthless sold now in this insane run up that it's seens. Yeah, yeah, this is good. Yeah. Stocks of both companies are trading at their highest level since two thousand and eight. But you look at the long term chart, like going back to the nineteen eighties, and it's still nowhere close to where it was.
Yes, because right now they're controlled by the federal government and they're charters. Say that their shareholders can never get any money ever. Yeah, so that's worse than the old old business model.
Yeah, for sure. I don't know this timeline. Even though Trump is posting on truth social about it, it seems like this has picked up an urgency, like this process would take years and years.
I want to just be clear, Like there's two things. There's like you can return Fanny and predat to private hands, and then there's the specific question of like how much of it do you give to the existing shareholders? Yeah, weird as zero? You can say, Okay, the deal is the deal. And by the way, the deal is probably controversial. People think it's really unfair. There's been a lot of lawsuits.
I want to respect their feelings that, like, in fact, the twenty twelve deal to zero the shareholders, there's a good case that it's pretty unfair. But whatever, given that it exists, you could reprivatize them without giving existing shareholders anything. You could just raise new money to cap them. You can say, I mean, but like there's like some corporate complexities to doing that, but like, you know, you could raise a lot of new money and like essentially dilute
the existing charolders down to zero. And you could do that by saying, you know, the government has I think when I last read about this in January, in the accounting of Fanny and Freddy, they owe the government three hundred and forty billion dollars before the sholders can get anything right, and so you could say, well, okay, we're gonna go out and raise three hundred and forty billion
dollars of new capital to repay the government. And after he raised that three hundred and forty billion dollars, then like you know, the existing cherolders will have you know, zero point zero zero zero one percent of the companies or whatever, and so like their shold will be worthless, not worthless, that's not worth very much. But the other extreme is you can say, you know what that three hundred and forty billion dollars that Fanny and Freddy o
the government, that was a mistake. They don't really owe that, so we'll just cancel that that right, And then the existing shaerolders are sitting on shaares worth one hundred billions of dollars, more than one hundred billion dollars. And those are kind of the two poles, right easting shareolders have nothing or they have like more than one hundred billion dollars of equity.
Two scenarios.
Two scenarios. I don't think it's like a prayer necessary to choose the second one. I think there's reasons to choose the second one. You might think it's fairer to the shareholders. You might think the sharelder's got a raw deal on twenty twelve. It's a reasonable thing to think. And you might think that giving the charrelders a good deal is a good way too. You know, you'll need to raise money for Pannion and Freddy. You'll have better
capital markets access if you treat the shareolders nicely. But it's also the case that like giving one hundred billion dollars of value to these existing shareholders is like it's like a little bit of an optically strange move.
Yeah, yeah, I don't know. It feels like any scenario is just going to be messy and optically strange. So what I care about, circling back to ummoving is what this could mean for mortgage rates.
Yeah. Yeah.
So Bill Polsey, he's the head of the FHFA, which oversees Fanny and Freddy. He said back in February that any effort to reprivatize the two must be carefully planned to make sure that the housing markets to remain safe without pressure on mortgage rates. So the explicit implicit guarantee, even though you know, there's a lot of question marks and details to be worked out there. At least that seemed to remove some of the risk that mortgage rates would spike here, right.
Like who knows what every privatized Fanny and Freddy looks like, but like here's some possibilities. One is, like there's an explicit government guarantee that they pay for, so there's like a fee, Yeah, that would be incorporated into your mortgage rates.
It might raise rates because right now Fanning's Fredady kind of have an implicit somewhat more than implicit but less than explicit guarantee because like they're in conservatorship and that line of credit with the federal government and they don't pay for that, or they they pay a lot for it, but the accounting is somewhat complicated. But like in a world where the government charged a fifty basis point fee for a mortgage guarantee, then like that's fifty basis points
on your mortgage. Right, you could have a fully private Fanny and Freddy where either they are fortress balance sheet triple A super safe and raise a lot of capital and that raises their costs and thus raises mortgage rates, or they're like, yeah, double a pretty good and like rais capital and then like possibly the mortgage backed security is trade wider and that raises your mortgage rates. Right, the implicit guarantee is essentially they're backed by the government,
but they don't pay for that backing. That's probably the cheapest free of mortgage.
Right, let's go with Allen then, seems to be what.
They're going with.
That's good.
I know there's other stuff too, Like I was reading a paper today, like a privatized Fanny and Freddy, Like, right now there are arms of the government. They kind of have always been arms of the government. You could imagine them being like more kind of free market, ye, right, Like one thing that Fanny and Freddy do is there's like a thing called a conforming mortgage. And if you meet the requirements of a conforming mortgage, which are not that low but not that high, then you kind of
get the same rate. The rate for a conforming mortgage is the rate for a conforming mortgage. But like you can imagine a fully private Fan and Freddy having more discrimination among borrowers where there's less cross subsidization, and like very credit worthy borrowers get lower rates than like medium credit worthy borrowers, So like you could have the effect of not raising her lowering mortgage rates, but just like
increasing the dispersion of mortgage rates. That would probably be fine for you.
You don't know that. I guess maybe I have a horrible credit score. You don't know.
I don't know.
So, yeah, well, seems like we're going to be talking about this for years.
I know, I know, I've a lot. You know. It's it's like it's like heated up and cool down over the years. And I used to write about it a lot, and then I didn't for a long time because like in the Biden administration, nobody every time about this. And it's right about it again in January because like people started tweeting about it, and now it's like it feels like it's kind of coming back.
I feel like the shares are just a good metric of how much this is being tweeted about.
Yeah, the show's just yeah, the market some real action.
Yeah, there's a lot of social media activity.
Bitcoin treasury companies.
Yeah, when did that phrase become real? I guess Microsoft, I think.
Micro Strategy probably years ago, but like it's become like everywhere in the last few.
Yes, especially everywhere, like in just in the last few months, because MicroStrategy started doing this in twenty twenty.
I think that when micro Strategy started doing the first of all, the micro Strategy is kind of a real company, yeah.
And they are a software company, right, And like they.
Sort of started slow. They bought some bitcoin. It got kind of MEMI and so like early in the days of micro Strategy buying bitcoin, you could say, and I probably did say that it looks like every time they spend one dollar buying bitcoin, it increased their market cap by two dollars and that's a good trade. But it wasn't like super super super obvious, right, I think they would say things are or levered bitcoin. It was like they had a business. Who knows how you value the business? Yeah,
that stuff. You could look at that and be like, well, I can't just copy that. I can't just like put bitcoins in a public company and have them be worth twice what they're worth as bitcoins. And so I think it was a little bit slow adoption if people copy them, but like it was, you know, not everyone covered them.
And then the last few months, like people have realized that you could take any random public company and just stuff it full of bitcoins and like it'll double the value of the bitcoins, and so that just feels like a great trade. There are a lot of people who own a lot of bitcoins, right, And if you own two hundred million dollars worth a bitcoin, you sell them for two hundred million dollars. But if you stuff them into a public company, they'll be worth a billion dollars
and that's more. Yeah, So everyone's doing it.
Everyone's doing it, and especially this week, it feels like everyone is doing this. So you know, you kicked off the week by talking about sharplink.
I guess they did it. No, they did this, they did the Monday, Yeah, or.
Time they did this is a flat circle.
So sharplink is great. Like sharplink is the purest form of list because they were a sports betting marketing company or some Yeah, they had a two million dollar market cap as of like mid last week. Someone pumped them full of four hundred and twenty five million dollars of ethereum right or eth and so now they're trading it like a two plus billion dollar pro form a market cup. I want to be clear, like I wrote about this
and I said market cup, but it's not. They're done have two point four billion dollar market They have a two point four billion dollar pro form a market cup right now. They have some share with outstanding, not very many of them, and the shares traded a high price, and they have like whatever like Bloomberg will tell you eighty million dollar market caps something like that. But they've also agreed to issue all these shares to these investors
who want to pump them full of ethereum. And if you count those shares to the market caps like two and a half billion dollars. And this is important because like you know, we talked about QXO a few times. Yeah, same deal, where you have a company with like very few shares outstanding and a huge pot of money coming in, and like the retail investors are like, oh, look, this company has four hundred million dollars with ethereum and its market cap is eighty million dollars. I should buy some
more stock. Right, That's wrong, right, because like the eighty million doesn't count the four and twenty five million of ethereum.
But the stock is like the publicly traded stub is small enough, and like the market cap is confusing enough that people are buying it at a five or ten times premium to the value of the ethereum and the pot, and like there's nothing else, right, two million dollar company, Right, But there's a ethereum in a pot and it trades at a large multiple of the value of the ethereum.
It is somewhat interesting that they went with ethereum versus bitcoin.
Oh, I just think that people need to pick a lane. And like Bitcoin is so saturated that like people are doing Solana, they're doing ethereum, they're.
Doing you mostly hear popcoin, they're.
Doing doage coin, they're doing everything. But yeah, a lot of them aren't bitcoin. But it's not only bitcoin.
Yeah. Yeah.
I wrote about two other big ones this week, household name meme companies are you know, DJT Trump Media and Technology Group and game Stop both announced bitcoin treasury buys and their stocks both went down, which is like, that's the.
End of it, Okay, the trade's over.
I don't think the trades are literally over, because I think those are special cases of companies that were kind of already meme stocks. But it's definitely the case that any random company for at least several weeks that announced it bought a lot of bitcoin, like the stock would go way up and people are like, oh, we should do that. Yeah, and then these two big name ish meme companies announced it and their stocks went down.
It's like, yeah, trades over for game Stop. So they announced in March that they plan to.
Actually this is not new news for games. They actually bought them coin this week and it went down.
But like, in some ways, it's amazing that it took this long for them to come up with the plan that we're going to do this for game Stop. I feel like, I don't know, I would have expected it a couple of years ago, but here we are.
Okay, First of all, I would expect it from AMC, who does everything like AFC bought a gold mine because that was funny, right, like AFC.
Should somehow I had forgotten about.
That they bought a gold mine.
Maybe we should talk about that more. I would like to get a status report on that.
I know every stuff, And I'm like, they bought a gold mine and I read about it, but I never did. I'm not even sure they literally, but I think they like did some sort of murder with a gold coin. I don't know anyway, Games Stop has always been like a little bit less like doing every meme, but they do a lot of memes stuff. But yeah, I think that if you want to do a viitcoin treasury strategy, you kind of have to be all in on it.
And like gamesop, I still want to sell video games at them all, And I think it was reasonable for a long time to think that if you're just GameStop, you don't really have an advantage in doing that strategy. M h macro strategy was there to do at first. It's not clear why a copycat would be particularly valuable, so you might have tried to do something else before getting into the viccoins state.
So you wrote that, you know, you compare maybe Michael Saylor will do something cooler with it's bitcoin than the CEO of DJT. But it doesn't seem like there's anything to do with it that's cool other than just buy more of it.
Okay, I hear you.
I don't really disagree it. They're not going to say I was being.
Intentionally vague about doing cool stuff, Okay. One view of these bitcoin treasury companies is that like they're sort of like a like meta pump for pitcoin, right, The idea is they will buy all the bitcoin and not sell it, and that will cause the price of pitcoin to go
up and they'll be rich. It's just like a diamond hands like theory of pitcoin like abstracted back one level to these treasury companies, but another theory and a related theory, I guess is like a lot of them, including micro strategy. We'll talk about like investor education efforts right right, And
we talked about this with like twenty one. It's like another big Jack Muller's Jack Millers, Yeah, like big bitcoin treasury company with like Tether's bitcoins and you know they're like we're going to do investor education or like knack Amoto holdings like merch the opioid company, like a.
Tiny drug company now on I haven't heard of.
It's called kindly Empty. It's just like it's just random mania, all these like random like tiny companies, like you can pump them full of bitcoins, and like they all talk about like we're gonna do marketing, media, investor education. It's all like you know, we're gonna make the price of bitcoin go up, right yeah, And so like your theory is not only will they own bitcoin, but they'll do stuff to make the price of bitcoin go up. I don't know why that would make you buy them rather
than bitcoin, but whatever. But like I will say, like micro Strategy, I have like a really interesting capital market strategy where they're like, we're gonna use every part of our cab structure to raise more money to buy a bitcoin. And you can imagine being like, I'll buy the equity because like they will get more attractive funding to buy
bitcoin by like selling converts at a high volatility. I don't know, that's not a crazy position, but like most of these companies are, so yeah, we're gonna buy bitcoin and we're gonna talk about buying bitcoin. Why would you have a premium for that?
Yeah, I don't know. This is a tangent, but I just want to talk to like the average employee at MicroStrategy, which is now just strategy by the way, we've been calling a micro strategy.
It's still like a fish or whatever.
Nothing matters because they employed thousands of people. I want to talk to an average employee there who isn't involved with the bitcoin strategy at all.
It is a little perplexing, but you know, like if they get data stock, they're.
Pretty happy I don't know, but I agree obviously, But you know, do they just think of it like I work at a conglomerate, Like there's part of the business that is just so totally disconnected to what I do.
Right, It's funny, I've already said that, like the software company really matters because like I don't know, like some part I don't know what part, at least some small part of the micro strategy thesis is like they could get in the S and B one day, yeah, and then like yeah, you're in the NAZAC one yeah, right, because they're a real company, right yeah, And like if you're just a bitcoin ETF, you can't get into these indexes.
It's like a little bit harder for like an active equity manager to buy an ETF share than it is to buy a share of an operating company. So I think like there's something very important about what the software employees do at micro Strategy that's a little bit undermined by like kindly MD and you know, sharplink, where like the operating business is so small, so small compared to the pot of the Coiner Earth theorem.
Just to your point that you know, perhaps you could see micro strategy entered the S and P five hundred. It is amusing how much crypto exposure there is in the S and P five hundred right now, especially with Coinbase being added. These are our I assume that your four one k is in the S and P five hundred.
I don't own any crypto because in part because like there's a notion of journalists together because you're not supposed to enryptos. You've heard about it, and like to me, I'm like, like I don't know like shares of Tesla, but I own mostly index funds, which on's.
Tesla, right, Oh, yes, you do.
Yeah, and like to me, like, the neutral portfolio is not owning nothing. The neutral portfolio is owning all of the financial assets in the world proportion to their like, you know, value. And so if you own zero bitcoin, you're like structurally biased against bitcoin because bitcoin is like a trillion dollars of value. So you should own like a little bit of bitcoin to like fully reflect the global financial portfolio.
And now I do through that, you do, yeah.
And you know, like why am I so smart?
Right? Like why are you so smart if.
One percent of like the global financial portfolio is bitcoin? Like why shouldn't I own that one percent of mys in bitcoin.
I think that's a pretty reasonable take.
And then I have to like it. But they have to like a lot of companies, right, Like I'm not right.
Yeah, So you just want a market cap weighted total asset portfolio.
You're looking at me like that's a weird thing to want. That's like the most normal possible thing to want. Everyone wants that, just you can't get it, but you can get closer to it by like having bitcoin treasury companies in the ass and.
P Maybe I sound skeptical, but I'm not. I think that's great.
I'm a simple man. I just want the global financial asset portfolio.
Simple man. I just want to go home and see my bird.
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