Artisanal Human Money Stuff Podcast

0:02 Bloomberg Audio Studios.

0:04 Podcasts.

0:05 Radio. News. You want to talk about your whole thing?

0:10 Yeah, sure.

0:10 We can do 50% money stuff and 50% my wife.

0:12 What's the deal with Max Abelson?

0:15 Oh, I thought you were going to, you know, more specifically the fact that my wife is due to have our first child.

0:19 In like 20 minutes. Give birth during this podcast.

0:21 Matthew, she called me as I was on my way over here.

0:24 To be like... Get over here.

0:26 The first thing in my head was.

0:27 Are you supposed to be at the hospital right now?

0:29 I'm prioritizing money.

0:30 Money's up the podcast. This is like when people decide whether or not to play in the Super Bowl during the birth of their first child.

0:36 This is my Super Bowl.

0:37 This is your Super Bowl.

0:38 Money's up the podcast. No, she's fine. She was talking about something else. Thank you, Liza.

0:44 Yeah, you're in the period where anytime she calls you, she has to be like, not giving birth.

0:49 My heart leapt.

0:52 Welcome to the Money Stuff Podcast, your weekly podcast where we talk about stuff related to money. I'm Matt Levine, and I wrote the Money Stuff column for Bloomberg Opinion.

1:02 And I'm Max Abelson, and I'm a financial journalist at Bloomberg News.

1:05 Last time you were a senior financial journalist, have you been demoted?

1:08 I just don't want to go around flaunting such wonderful seniority. I'm the man of the people, Matt. We have so much stuff to talk about. What a week.

1:20 It's been a week.

1:21 It was the week that was.

1:22 Should we talk about anthropic?

1:23 We can't talk about anything else. We're two anthropods.

1:26 It's a big idea.

1:27 What does the word anthropod mean?

1:29 Anthropod? I don't think anthropod is a word. Anthropos is Greek for like a human.

1:33 Yeah.

1:34 And pod is normally the suffix for foot. So I suppose that if like you had goats hooves for feet, you'd be like, I'm not like those anthropods. I'm a. I'm going to blank on the word for goat. But anyway, yeah, anthropo-human footed. But anthropic, human, humane, human-ish, human-like.

1:53 Could be philanthropy, could be misanthropy.

1:56 No, it's like, I don't know if you know what they do, but they're in the business of creating non-human life forms, intelligences, deities. And so they are naming themselves anthropic. They're reminding themselves that they also have to care a little bit about lesser human life forms.

2:14 Pardon me, but I think I just made a quick but possibly good point, which is that they're called anthropic. They might be philanthropic. They might be misanthropic. The story hasn't been told yet.

2:25 They're just all of it. They're just anthropic.

2:27 Right.

2:28 Look, I mean, the IPO perspective is like we're ushering in an age of miracles, right? In 10 years, we will probably be looking back on this and either thinking, wow, anthropic, one of the more philanthropic entities in the history of the world, or alternatively, one of the more misanthropic.

2:43 And so how savvy to be called simply anthropic. Let's talk about anthropic.

2:48 Blank anthropic.

2:48 You had the good vision in anthropic, and you had the bad vision.

2:52 Yeah, it's Age of Miracles, Human Extinction. Those are the visions.

2:55 Yeah, go big or go home.

2:57 Those are the tensions in the anthropic. That's one.

2:59 And do they really spell out a good vision, and do they really do spell out a bad vision?

3:03 Well, I mean, so first of all, I mean, it's like a lawyer-written investment prospectus, which means that it has a lot of discussion of like, you know, their enterprise clients and the concentration of their, in their customer base and things like that, which are good. Like one thing that Anthropic is, is they have some people running a business, right.

3:19 That's not, I think like the core of like the culture of Anthropic there, you know, as they say, they're a research lab and like, you know, in some ways they're even weirder than a research lab, right. They're like the sort of like EA aligned safety conscious safety lab spinoff of open AI.

3:37 Right.

3:37 But like, roughly speaking they're an ai research lab and then they've bolted a business on top of it and the business is you know good and do they spell out the good case the age of miracles case not so much what's interesting is like anthropic has a long history of you know writing memos about the future of ai in particular dario amadei the ceo has written a number of public.

3:59 Memos they're very long i read one.

4:01 There's a famous one called machines of loving grace which is about you know, the age of miracles. And it's like, yeah, we're going to cure cancer. Like they talk about in the prospectus, there are some case studies, some of which are like, oh, we helped Jane Street make a lot more money, you know? And some of which are like very cute ones, like, oh, we helped like a local restaurant print better menus or whatever. I forget what they actually did for the restaurant, but like, you know, optimize their food costs. So like, we're a business business. Like we are in the business of like providing massive intelligence to other companies, which they pay us for, right? Which is like a good case to make to investors. But also, like,

4:33 I think that, like, the sort of cancer-curing stuff, the ushering in an age of abundance, the, like, making human labor obsolete in a nice way, not a bad way, those are all sort of things that have been, that are in machines of love and grace, that are in the sort of, like, anthropic sort of memo ecosystem, but are not in the prospectus so much than some. Because, like, you know, it's a warning document for investors, right? It's like, here's how much money we're making, here are all the risk factors, right? Now, on the flip side, the evil case, the bad case, is we will kill everyone on Earth.

5:02 And That is also not really emphasized in the prospectus for a couple of reasons. One, people are like, oh, you know, like I read somewhere like on Twitter, someone being like, oh, you know, like the stuff about human extinction really reads like it was put there by Lars. No, it doesn't. Like Dario Amadei has also written memos about like all the bad things that could happen. Right. And my impression from like Kevin Roos's book about the AGI race is that the publicly available Dario memos about human extinction are are the very tip of the iceberg of, like, the internal conversations at Anthropic about human extinction. My impression is that Anthropic is just people sitting around biting their

5:38 nails about killing everyone on Earth 23 hours a day, and then, like, one hour a day they, like, work at feverish pace to kill everyone on Earth. And so, their first practice is an incredibly toned-down version of that, which includes, like, they say, concerns have been raised within our organization and by other experts about human extinction.

5:55 The passive voice.

5:56 Like, by Dario, by people who have quit, by, you know, like, The impression that I get is that, like, if you polled people at Anthropic for their probability of doom, you'd get, like, a lot of alarming double-digit numbers, right? And so, like, compared to, I think, the, like, overall internal and cultural communication of, like, the risks of AI, this is a very sedate IPO perspective. This is a, yeah, I mean, concerns have been raised. There's also a really interesting one about job losses. There's kind of like three levels of AI worry. What are they? There's stuff that is currently existing and essentially just like a translated version of social media worries. There's like, it will be used for disinformation.

6:37 It will be used for deepfakes. It will be used for discrimination. It will incorporate discriminatory stuff. It will learn discriminatory biases from the data that it translates.

6:48 Known knowns in the Donald Rumsfeld language.

6:50 Yeah.

6:51 The things we know about. The things that are stink.

6:53 And then, like, there's versions of that that are, you know, a little violet copper, right? And so those are big dollar numbers for Anthropic, but, like, they don't care about it. Like, that's, like, for Mark Zuckerberg to care about. Like, the sort of frontier labs have moved beyond that into a vastly more abstract space, right? The second level is, like, it will disrupt society by being so good, right? It'll put all humans out of work, and then you'll need to have, like, universal basic income, you'll need to think about how to restructure society. And this is stuff that the AI labs worry about, you know, like Sam Aldman has called for, you know, seeding the government with shares of open AI

7:25 and Anthropic has their fund, their public benefit fund, where basically they're putting 5% of their shares into a philanthropy that they will control to, it doesn't say this, but it sort of implies pay people when they get laid off because of Anthropic, right? Like all those shares will like give the workers displaced by Anthropic some money. And then the third layer is like the machines will kill us all.

7:46 We're all going to die.

7:47 Yeah. And that stuff is harder to hedge financially.

7:50 Yeah, because there'll be no hedging because we'll all be dead. Well, there was that beautiful phrase, bring forth an age of miracles. These are the days of miracles.

7:59 I know. I can't not hear it to the tune of Boy in the Bubble.

8:04 Don't cry, baby. Don't cry. You know, it did get me thinking. It did get me thinking about the word offering.

8:11 Okay.

8:11 I really, I read money stuff and I thought about the word offering. I pulled up the prospectus and I read it because- You read. I read some of the prospectus. I mean, I did not read all of it. Did you read all of it?

8:20 No.

8:20 No, very long. Very long. But I was thinking, you know, they're offering up two offerings, as it were, Matt, because it is literally called an offering, right? It's an offering, an initial public offering. That's the canon name. Okay, but correct me if I'm wrong. Aren't they also basically saying that a new God is here And he might be very, very angry. He might want to kill you. So give us your money. Give us your money to appease the new God. And that's just a classic offering right there.

8:50 That is an old, old kind of offering and a new offering as well.

8:53 Someone emailed me to say, I think I'm quoting this correctly, is Roko's Basilisk securities fraud. Do you know what that means? That's a real intersecting world.

9:03 Roko's Basilisk?

9:05 Roko's Basilisk.

9:06 I don't know who Roko is, let alone the Basilisk.

9:09 This is a longstanding AI thing where it's from rationalist forums. Someone posed the thought experiment of Roko's Basilisk, which is some future all-powerful AI will leave humans alone, except that it will torture and kill humans who did not work their hardest to bring forth the future AI. This, as a philosophical thought experiment... kind of misses me but like i believe that like when elon musk and grimes started dating it was like bonding over their fascination with roco's basilisk it's a whole thing it's a whole thing but.

9:43 Anyway that's how my wife and i met too if.

9:46 If you're like in the like ea rationalist ai worrying community there's like a pascal's wager element to it where it's like you know you'd better work to bring forth the all-powerful ai if there's some possibility of it being Rocco's basilisk. Anyway, if you believe that, then you should buy the stock.

10:03 You gotta get the stock. You said EA, that's of course effective altruism. Does effective altruism predate artificial intelligence? Is Peter Singer talking about that? I think he like points.

10:14 It somewhere before. Who can say what predate artificial intelligence means? Because like, you know, There's versions of artificial intelligence forever. But I do think that modern EA is not originally about AI extinction risk. It just sort of becomes about AI extinction risk.

10:30 Well, how deliciously ironic that if we all die, I hope the last person has a nice chuckle about the idea that maximalizing altruism led to maximal death for all of mankind.

10:43 Well, I don't know if it led to it. I mean, No, there's this weird, ironic race in AI where different people are doing AI projects for different reasons. But certainly one motivator of a lot of people at Frontier Labs is we had better race as fast as we can to develop super intelligent AI. Because if we don't, some bad person will do it. And the bad person might be a Chinese lab, but it's famously all the people who run the US labs. hate each other with a burning passion.

11:14 And so like some bad person might be Sam Altman or Daria or Elon Musk. And, you know, if you're worried about that, then you have to race as fast as you can, possibly without an appropriate level of attention to risk, because you just think that if you get to super intelligence first, you will handle it better or your super intelligence will handle it better than like the other guy's super intelligence. And, you know, there's like this real sense that it'll be rapidly self-replicating. So whoever gets there first has a permanent enduring advantage. So- Everyone's racing quite hard.

11:42 Is that true for Musk and for Meta, for that matter? Do they also talk that talk?

11:47 I think the stereotype is that, like, Anthropic and OpenAI are founded by and follow people who have beliefs somewhere in that constellation. These are all big companies, and there's lots of divergent beliefs, and, like, it's hard to measure, but, like, there's a sense that those places are like that. There's a sense that Meta is more like, we're going to build a useful product for you to have on your phone.

12:09 And then SpaceX is a Total wild card, right? I mean, Elon Musk is a founder of OpenAI, definitely a guy who has expressed worries about super intelligent AI, definitely a guy who probably doesn't trust Sam Altman, but also not quite the same motivation as the people actually working in AI. So I don't know. Do you want to talk about their accounting?

12:30 I would love to talk about it.

12:31 Me?

12:31 I wrote about this a little bit on Wednesday. Anthropic, the IPO perspective, is the first public look at their financials. And the headline number initially was, was that they reported an $ 80 billion net loss in the first half of 2026, which sounds like a lot. But in fact, it sort of looks like their actual kind of economic net income is something around scratch, like I think positive $ 2. 7 billion.

12:59 It's around, it's near zero, like probably positive. I mean, $ 2. 7 billion is a lot, but not in the context of a company this giant.

13:07 Yeah, it's nothing.

13:08 But their loss is caused basically by they have like $ 80 billion of losses on the phrase is like derivative instruments or stock linked instruments. It's truly, it's just like agreements to purchase their common stock, like derivative, blah, blah, blah. But it's not, it's just like they sold forward forms of common stock to like Google and Amazon. And the stock went up a lot because like they've become a giant company. And so Google and Amazon are sitting on these big gains. And because of like weird choices that Anthropic has made in its structuring of those, contracts and in its accounting, Anthropic recognizes an accounting loss for those instruments.

13:47 It's just like people are like, you know, generally accepted accounting principles say that's a loss. So they have a loss and they're like, look, we have an $ 80 billion loss, but like really we're like, you know, positive. And I think a lot of analysts are like, yes, really they made money because having your stock go up is not a way to lose money. But some people are critical of this because they're like, oh, they're adjusting out all their losses. And I just think that that's wrong. I've written a lot over the years. I have a section header, people are worried about non-GAAP accounting. And what happens is that there are places where US generally accepted accounting principles produce results that do not really reflect the long-term economics

14:27 of a company. There are other reasons companies will adjust because companies do bad stuff. But one thing they'll do is they'll be like, look, Here are numbers that we've adjusted out, the stuff in GAP that doesn't make sense for our circumstances right now. And we'll tell you like our actual, like real recurring earnings power so that you can evaluate our company. And analysts sometimes are like, no, you're lying. But often they're like, yes, this is helpful.

14:48 And people get really mad about this because there's this belief that anytime a company is doing that, it's like lying to you. And it's like, and like GAP is correct and you should follow the rules and not try to like get around the rules. But I just think that's wrong. I think Gap sometimes does stuff that is not reflective of economic reality because it's a general set of rules and it's conservative and blah, blah, blah. But that's what's happening here. There are reasons that you might want to mark-to-market derivatives on your own stock that do not meet the very strict requirements for getting equity classification.

15:24 But it doesn't seem compelling here.

15:26 See, I don't know. I find this great and almost kind of moving because, you know, when you and I, a long time ago, when we started talking, one of the things that we bonded over was my favorite journalist ever, Janet Malcolm. And Janet Malcolm spends all of her time talking about how these different systems we have to try to get to the truth, you know, the legal system, journalism, she loves psychoanalysis. They're all like very, very flawed. And then it turns out like, so is accounting. In accounting, it's just another system that's a pretty good way to describe what's going on around you. But then like, lo and behold, It has these aspects that are just like a swing and a miss. Reality is very hard to capture.

15:59 Yeah. And I think that like, there's a reason that there are generally accepted accounting pencils, right? There's a reason that you want to have like a set of standardized rules that everyone has to follow because it allows for a certain amount of comparability and it makes it harder to do fraud because you have to follow the rules. Right.

16:16 But at the same time, I think that, you know, companies find that in specific situations, it is not reflective of reality. And like, they just say that it's not like a weird, like Oracle where you can only get one thing. They can be like, here are our gap financial statements. Here's where it's misleading because like gap is kind of dumb here in our circumstance. So like, here's the adjusted numbers and it's fine. Everyone can just look at that and decide what they want. Okay.

16:41 But there are times I believe I've reported on, on one or two, but I can't name them right now. I can't remember where companies have just gone to non gap numbers that are a little, well, have a little bit too much hair on them. Well, a little fuzzy.

16:52 What specific problems can you identify?

16:55 Wouldn't it be great if I could remember a company?

16:58 Oh, non-GAAP numbers. Oh, the non-GAAP numbers.

17:01 No, look, it's definitely true that like classically adjusted earnings numbers are adjusting at one-time events. And like, it is very well known that a lot of companies have a lot of negative one-time events that they adjust at, right? Every year they have the same one-time event. And it's like, that's not a one-time event, right? One main reason to adjust the numbers is like, To strip out one-time events and reflect your real recurring earnings power. And that is obviously susceptible to fudging, right?

17:29 You know what this makes you think of?

17:31 What?

17:32 How tragic it will be if, before all of humanity goes extinct, if, I believe, was it OpenAI said that general artificial intelligence, we're not totally sure what's going to happen to money?

17:43 Yeah. It's hard to know the role of money in a post-AGI world.

17:46 Hard to know the role of money.

17:48 This is what they said to investors in raising money, which is such a good line.

17:51 Absolutely wonderful. But let's say if that happens, how tragic that we'll no longer have you thinking about non-GAAP numbers and numbers in general. Do you have a plan? Do you have a backup plan in case money goes away? What kind of stuff are you going to write about? You're going to be out of work.

18:09 When I think about the progression of artificial superintelligence, My guess is that the job of online newsletter writer will become obsolete before money becomes obsolete. I'm not sure that's true.

18:22 You never know.

18:22 You never know. But I would guess that's true. So I'm more worried about AI taking my job in a strictly like, it has written all of your columns for you way than I am about AI taking my job because there's no longer any money to write money stuff about. That said, I tell people this. Every like three months, someone emails me like, I wanted to read a column by you about like blah, blah, blah. So I asked ChatGPT to write about it in the style of Matt Levine.

18:47 And it did a pretty good job. And then they sent it to me. I'm like, no, it didn't. It did a bad job. I'm safe for three more months.

18:53 Thank goodness.

18:53 But, you know, it's like one day it'll get there. One day. And it'll just be all at once. It'll just be like they release a new model and it's like perfectly replicates money stuff. And it's like, well, all right.

19:02 See you later. On a Wednesday, money stuff is obsolete. On a Thursday, money is obsolete.

19:07 Yeah. Yeah. I think it'll be like two weeks in between. I mean, like, let's be clear. One reason I'm doing this podcast is because there's some small chance that podcasts will survive an extra two weeks past newsletters in this AGI world.

19:21 Well, maybe the robots.

19:22 There's some chance that people will be like, I want to listen to an actual artisanal human talking to another artisanal human, but I can live without reading the writings of an artisanal human.

19:30 Artisanal humanity. What a bleak phrase. That's an awful thing to say.

19:35 Well, that's the world we're in.

19:38 Artisanal Human Money Stuff Podcast.

19:42 What else are we talking about?

19:56 How about SpaceX?

19:57 Okay.

19:58 SpaceX can emerge with Tesla. Maybe.

20:01 So a few years ago, a certain colleague of mine who writes a certain column called Money He taught me, I don't think it was out loud, I think it was by reading his work, that a basket of options is worth more than options on a basket. And obviously, I absorb that. I might have even told a few other people about that. I got to say, when you say it out loud, listeners, you'll agree with me, it makes one sound very smart.

20:28 That's why I read it periodically.

20:31 Yeah, that's why we do everything we do. Lo and behold, your coverage of Tesla... And you should talk about what's happening with Tesla and SpaceX, this potential merger. I feel like it's sort of saying the opposite. I'm really, I'm going to quiz you on this.

20:45 So here's like the way I think about it. This is the dispersion trade in the S & P 500. But anyway, like if you have 100 stocks, right, and you buy call options on each of those 100 stocks, those call options pay off zero if the stock goes down, let's say, and they pay off something if the stock goes up, right?

20:59 Okay, I'm with you.

21:00 So if half the stocks go down, you get zero on those. And if half the stocks go up, you get the payoff on those. You get the upside on those, right?

21:05 Okay.

21:06 So- In a sense, like ignoring premium, you can't lose money. You make money on the ones that go up and you don't lose money on the ones that go down.

21:13 Okay.

21:14 If instead you have an option, a call option on just all 100 stocks, like the combination, like the index, right? Then if the index goes up, if like the sort of aggregate value of the stocks goes up, then you make money. If the index goes down, you get zero, right? So you do worse in that scenario, right? In the first case, if half the stocks go up, you make money on those half the stocks.

21:33 Basket of options better than the option on the basket.

21:35 Yeah.

21:36 Yeah. In the second case, if half the stocks go up and half the stocks go down, you don't make any money, right? And this is like, one, it's like literally true, right? So like there's the dispersion trade where you trade index options against single stock options, right? The index options are worth less than the single stock. You have to like scale that trade appropriately because one set of options is more valuable than the other. But it's also a way to think about like, for example, conglomerates, right?

21:56 If you have 10 companies, if you own the equity in all 10 companies, you know, the equity is an option on the value of the company. Struck at the doubt, by the way.

22:05 What does that mean?

22:06 It means like the strike price of the option is the value of the debt. Like the equity gets the upside above the price of the debt, the face amount of the debt. And so if you, you know, have equity in 10 companies and five go bankrupt and five make a lot of money, you make money on the five and you don't lose any money on the bankruptcy.

22:22 I mean, you don't lose below your equity investment, right?

22:24 I'm with you.

22:25 Whereas if you combine all 10 of those companies and some of them go down and some of them go up, the ones that go down take away from the ones that go up, right? Because like they're essentially... It's not strict. You can have like a super good capital discipline where that doesn't happen. But for the most part, that happens, right?

22:39 That's why I had to retire from my career as a conglomerator.

22:42 Right. Conglomeratoring was a thing and it has become less of a thing because people sort of started internalizing this. I think in like the 70s, people would say, oh, the conglomerate is good because it diversifies the business, right? Like if one goes down, the other ones will go up. And then eventually people realized that's bad. For equity investors, that's bad. Equity investors who are diversified would rather have more option value. And I think that that's generally been sort of the rule. And like, so you can look at Elon Musk, like he has all sorts of crazy stuff and he does it in separate businesses or he used to do it in separate businesses. Neuralink, right? And you think about it, like Neuralink, planting wires in people's brains, right?

23:18 If it does a bad job of that, like there'll be a really big lawsuit, right? Like the value of Neuralink is very plausibly, very negative.

23:26 People would be very, very mad.

23:28 And like, this is not like a judgment on it. It's just like, that's the sort of thing that's very risky because And it could have a very negative value. And if you just did that as a business unit of Tesla and things went bad, you could conceivably bankrupt Tesla, right? Probably not.

23:42 No, but I know what you mean.

23:43 You'd take a lot of money out of Tesla, which has nothing to do with the cars, right? And so if you're running Tesla and you're like, I want to do brain implants, one reason to do it in a separate company, and Elon Musk has lots of reasons for everything, but one reason to do it in a separate company is you're separating out that risk from Tesla risk and giving people the pure play on Tesla and the pure play on Neuralink. And if they both go up, that's great.

24:03 But if one goes up and one goes down, that's still great. And I think that's generally a good rule of how to think about a lot of things. And so that's often how Elon Musk has run his companies and why he runs six companies at a time. But in recent years, he has merged Twitter into his AI company. He's merged his Twitter and AI company into his space company.

24:24 And now everyone has been sort of previewing this for a long time, but there's a real chance that SpaceX will merge with Tesla soon. Technically, he can't do that. The two special committees of the two boards are thinking about it.

24:35 Because he's conflicted?

24:37 Yeah, he'd get sued if he just did it himself. And so it is proper corporate governance to have special committees do it.

24:46 Proper corporate governance and worries about it haven't seemed to slow him down in the past.

24:51 He's often gestured a little bit in the direction of proper corporate governance. And I think here, like, They're interesting questions, right? Like, I think if he just, like, rammed through a merger of Tesla and SpaceX and they were both Delaware corporations, he would probably be stopped. They are not Delaware corporations.

25:04 They're Texas corporations. And I think that nobody in Texas wants, like, the very first test of the Texas business courts to be, like, this obviously conflicted merger rammed through by a controlling shareholder. Everyone's like, you know what, just do it the right way this one time. Anyway, but so what I'll say is that, like, the option value, like, reason not to do a conglomerate is still, like, compelling, but the circumstances in which like SpaceX and Tesla and in particular XAI exist have just changed, right? The whole world is so capital intensive, right? The AI world is so capital intensive that like one big advantage that Elon Musk has in his business is that he's very good at like doing

25:44 massive infrastructure projects, right? Very quickly, which is like a huge advantage. Like it's not obvious, like when like you know, like some quirky guys were starting Anthropi. It wasn't obvious that like doing enormous infrastructure projects was like the most important thing in the world. But like now it is, right?

25:59 Like doing enormous infrastructure projects is how you get to like artificial general intelligence, right?

26:02 You mean like building gigantic data centers?

26:03 Building gigantic data centers. And like, you know, Elon Musk can build a gigantic data center very quickly. He can like scrape and claw his way to getting more NVIDIA chips than everyone else. He can put data centers in space, you know.

26:13 The whole thing. Well, I mean, he's talked about that.

26:16 Yeah, I'm kidding about the data centers. He might be too.

26:19 But in any case, No, he's not kidding about that.

26:21 I know he's not.

26:22 I think some of his pay is tied to, you know, I don't know. That's a separate question. All right.

26:26 Yes. Some of his pay is nominally tied to that.

26:27 But go on, go on.

26:28 Anyway, in a world where like your comparative advantage is raising hundreds of billions of dollars of debt, that is not equity. And like creditors do not have an option on the value of the company. Creditors are the, you know, they've sold the option on the value of the company, right?

26:44 Yeah.

26:45 Creditors want less volatility. Equity holders want more volatility, which is why having a bunch of separate bets is better for equity holders. Having a diversified bet where if one thing loses money, another thing makes money, that's not a good pitch to an equity investor who is smart, but it is a good pitch to a debt investor. One thing that I think is happening is that, I don't know how conscious this is, but I think it fits the moment, is that Elon Musk is rolling up all of his weird little companies, not all of them, but eventually, many of his weird little companies into one giant company because one giant company is kind of the thing you need right now.

27:19 Right.

27:19 Like one giant balance sheet lets you get cheap financing to build giant data centers, which is the thing you need for SpaceX, for Tesla, for XAI, for Twitter, for everything.

27:29 Right.

27:29 So I think that's like kind of what's happening here where like the equity focused, like venture ish reasons to do a bunch of separate companies made sense four years ago. And now the like debt focused companies, Diversification reasons to have one giant company makes sense now.

27:44 It really does make sense. Or at least I follow. In other words, to make sure I get it, basket non-options, options on a basket, the conglomerator's rule that we discussed. The conglomerator, by the way, really is a word.

27:56 I think it is conglomerator.

27:57 Conglomerator. We don't want to rob it of a wonderful, precious syllable. Yeah, anthropod probably isn't a word either. That that really is true in a world of equity, in a world of stock. And if the name of the game is just raising untold trillions of dollars from debt markets, then according to you, good to go.

28:14 Anthropoid is a word.

28:16 That's what- Human-like. That's what I was looking for.

28:20 Anthropod, human-footed. Probably not in wide usage.

28:24 You know, listeners to the Money Sub podcast, what a delight to have that clarified.

28:29 Yeah.

28:45 I have something to ask you about Musk and your writing. Sometimes I've wanted to ask you without sounding insulting because I don't mean it insulting. The word glib is wrong because, you know. That's good. You can be glib. Yeah, but it's like a kind of glibness I like. Whereas Matt, normally glibness is, it's not my favorite mode of communication.

29:05 At least interpersonally. Maybe glib writing can be funny. But what I want to ask is sometimes you're sort of jokingly dismissive. You have a kind of fun, Matt shrug that I think your readers have become familiar with a kind of, eh, a kind of, do I really care? Not really. And so my question is, do you sometimes care more than you let on when you're giving that kind of half glib, joking shrug in your writing?

29:28 Yeah. I try to not care in my writing. Like I have, I'm a human, I'm an anthropoid. Um, like, I am producing a product that I hope is enjoyable. I understand that there are people who want a product that is essentially anger in some form. I understand that that does numbers.

29:49 Like outrage?

29:50 Yeah, that does numbers.

29:51 You're very rarely outraged.

29:53 I am not looking for that product in my life, and I do not aspire to provide that product. I aspire to provide, I'll say, a glib product.

30:03 Oh, but like good glib. Yeah, good glib. Informed glibness.

30:06 Yeah, just like a sort of like even-keeled, cheerful product. It's funny, like you asked me that, like I find some Elon Musk stuff bad. I find some other Elon Musk stuff good and entertaining, right? Like a lot of people are either like Elon Musk haters or Elon Musk fanboys. And like, I just like, I think he's interesting. Like, it's fine. Like, I don't need to be. I don't need to have like a all one thing or all the other thing view of Elon Musk. But the thing that like, that actually is difficult for me right now is prediction markets parts gambling. Because like, I find really interesting.

30:40 Like it's really interesting.

30:41 It's cool.

30:41 Like I like.

30:42 No, no, you don't think it's cool. But it's like evil. You were joking about it as a joke about how horrible it would be if this thing were to happen. Like a few months ago, maybe a year ago, maybe two years ago.

30:55 I know, but that joke was a joke. It wasn't like, oh, the world will end if there's sports gambling in your retirement accounts. And now there's sports gambling in your retirement accounts. I still feel like I can be glib and revert to the language of meditation. I can just watch the clouds float by and not have any feelings about it.

31:13 But I do have feelings.

31:14 It's crazy.

31:15 It's crazy, man. You shouldn't have sports gambling in your retirement account.

31:18 Two questions. The first one.

31:20 Anyway, it has nothing to do with anything.

31:21 It's just like. Do you meditate?

31:23 Not really. I have at times, but I don't keep it up.

31:26 A quick David Lynch-y question. Have you ever tried transcendental meditation?

31:30 Not in a... I've never worked with the people who train the people.

31:34 No.

31:34 But I've read descriptions of it and thought, oh, that sounds like meditation. But I don't have the.

31:40 I'm interested. When I'm back.

31:42 A lot of transcendental meditators in the financial world.

31:45 Oh, I think so. Do you want to dabble? Do you want to go to a TM class together?

31:47 Nope. Nope.

31:50 Well, I tried. Speaking of sports gambling, can we just talk for a second about the onions?

31:55 Oh, yeah. There's a very funny University of Chicago student protest movement against the Onion Futures Act, which is like, there's an Onion Futures Act. In 1955, some guys cornered the Onion Futures, and people got so mad that Congress passed a law saying there's no more Onion Futures trading. And I think at the time, the CFTC, or maybe even the predecessor to this, this is a long time ago, testified and were like, no, you should just let people trade Onion Futures. It's not really a big deal. And Kanye was like, no, never Onion Futures again. And then much, much later, there was a exchange for trading movie box office futures and the movie industry got so mad that they added box office futures to the Onion Futures. So

32:32 there's two things that are illegal to trade futures on in the United States. They're onions and movie box office receipts.

32:39 So wonderful.

32:39 And by the way, movie box office receipts are an interesting one because like, you know, who goes to the movies now, right? There's all sorts of like prediction market contracts on performance of movies, but it's like not box office receipts. And so there's like some gray area where it's like, oh, if it's streaming numbers, it's not a box office receipts.

32:56 Well, that's really pushing it. I don't know. I don't know.

32:59 There's like Rotten Tomatoes scores. There's all sorts of like movie reception contracts that are not box office receipts. But onions are onions, right? And so there's a law against trading onion features. And these University of Chicago students, as I think mostly a piece of performance art, possibly... Genuine libertarianism, but, like, probably largely performance art. They've been protesting on campus. They went to the Chicago Mercantile Exchange and stood out front with, like, someone wearing an onion costume and handed out onions for people to just, like, eat like an apple. And it's just very cute. It's a good gag. But I also learned that the recent protest at the CME was, like, Cowsheep paid for their bus and, like, did some SponCon

33:37 for them.

33:37 So it's just, like... Because it would be so funny if they were performing a certain kind of Chicago school.

33:44 Yeah.

33:44 Attitude.

33:45 I don't think I like gambling. I just, you know, like a neat person. I want like, I want the sports gambling to be in the sports gambling and the financial derivatives to be in the financial derivatives.

33:54 Has there ever been a bet on money stuff?

33:56 Oh yeah.

33:57 Is that right?

33:58 I don't, you know, I don't know. I mean like they're like the play market prediction markets where it's very easy for someone to set up a bet. And so people would do like, oh, money stuff mentioned display market prediction market. And then people email me because they've insider traded on it, right? Oh, you better mention it because I have like 10 fake units of fake currency riding on the sitcom. And then I'll be conflicted about whether to mention it.

34:19 Hey, Matt, why do you think I said the word anthropod today?

34:24 I'm not worried about that. I don't think there are mention markets on that.

34:28 Money stuff the podcast?

34:29 Money stuff the podcast.

34:30 Yeah, I guess the reason is.

34:31 We'll get there, we'll get there.

34:32 The reason is because I was mispronouncing another word.

34:35 Max Abelson, senior reporter at Bloomberg News. Thanks for coming on the podcast.

34:39 Genuinely, my senior pleasure.

34:42 And enjoy being a dad tomorrow, this afternoon.

34:45 Sometime soon. Thank you. I hope I will. We can bet on.

34:53 It. And that was the Money Stuff Podcast. I'm Matt Levine.

34:58 And I'm Max Abelson.

34:59 We'll have fill-in guest hosts for a few months while my usual co-host Katie Greifeld is on parental leave. You can find my work by subscribing to the Money Stuff newsletter on Bloomberg.com.

35:08 And you can find my work at Bloomberg.com, which you should generally subscribe to as well, because it's good.

35:14 We'd love to hear from you. You can send an email to moneypod at Bloomberg.net. Ask us a question and we might answer it on the air. You can also subscribe to our show wherever you're listening right now. And leave us a review. It helps more people find the show. The Money Stuff podcast is produced by Anna Mazarakis and Moses Andon. Our theme music was composed by Blake Maples.

35:33 Amy Keene is our executive producer and Cheryl Brumley is Bloomberg's head of podcasts. Thanks for listening to the Money Stuff podcast. We'll be back next week with more stuff.