transcript

Speaker 1:
[00:02] Bloomberg Audio Studios, Podcasts, Radio, News. Katie, is it some sort of Take Your Children to Bloomberg Television Day?

Speaker 2:
[00:11] Yeah. I feel like that's evidenced by all the children that are walking around.

Speaker 1:
[00:14] Yeah, there are a lot of children walking around.

Speaker 2:
[00:16] Where are your kids?

Speaker 1:
[00:16] I have never once been informed in advance, or frankly in real time, about a Take Your Child to Work Day. I just show up and all the kids are here and they're like, oh yeah, Take Your Child to Work Day. I'm like, why was I not informed?

Speaker 2:
[00:28] I hear there's a lottery. Not everyone's allowed to bring their children, is my understanding.

Speaker 1:
[00:32] I wasn't informed at the lottery. It's fine. My kids have school. It's fine.

Speaker 2:
[00:36] It's fine. I mean, you're not getting anything done that day.

Speaker 1:
[00:39] Right. Someone at Bloomberg Opinion had his kids here.

Speaker 2:
[00:43] You're like, scram kids.

Speaker 1:
[00:45] No, no, I was like a bad influence. I was like, my daughter first tried root beer here. But I saw two kids recording on the camera in the lobby.

Speaker 2:
[00:54] That's what I do.

Speaker 1:
[00:55] I was walking behind them and I could see the prompter and it was like, at Bloomberg News for Kids.

Speaker 2:
[00:59] Yeah.

Speaker 1:
[01:00] I was like, are they, is that going to be aired?

Speaker 2:
[01:02] It's cute that they do that. Certainly not on my show. No.

Speaker 1:
[01:07] Kids are killing it.

Speaker 2:
[01:09] Yeah.

Speaker 1:
[01:11] You're competitive.

Speaker 2:
[01:12] I don't know why. I want to go tackle those children, get away from my prompter.

Speaker 1:
[01:17] Going for your job in approximately 20 years.

Speaker 2:
[01:19] I thought I was having to worry about AI. Hello.

Speaker 1:
[01:23] Welcome to Money Stuff Podcast, your weekly podcast where we talk about stuff related to money. I'm Matt Levine and I write the Money Stuff column for Bloomberg Opinion.

Speaker 2:
[01:34] And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.

Speaker 1:
[01:48] Should we talk about the weather? I feel like we talked about the weather last week, and now we're talking about the weather again. There's a very economically important local climatic zone, which is that apparently somewhere within Charles de Gaulle Airport in Paris, there's a sensor that tells you the temperature for like Paris. And so Polymarket takes quite a lot of bets on the weather in Paris. And at Two Points this month, it's been reported the temperature in Paris, by which I mean the temperature at this one sensor in the airport, spiked by like four or five degrees Celsius in the space of a few minutes, causing very long shot bets on this temperature to pay off to the tune of tens of thousands of dollars. And so the French Meteorological Service is investigating. And there are tweets about someone took a hairdryer to Charles de Gaulle and made thousands of dollars trading these weather derivatives.

Speaker 2:
[02:43] So good.

Speaker 1:
[02:43] Yeah.

Speaker 2:
[02:44] I have to imagine there's going to be so many more cases like this.

Speaker 1:
[02:48] Right. I tried to write about it. I feel like...

Speaker 2:
[02:50] You did successfully.

Speaker 1:
[02:51] Well, yeah, I wrote words about it. There's market manipulation in the world, right? There's some stuff...

Speaker 2:
[02:58] It's happening right now...

Speaker 1:
[03:00] .underlying stuff, and there are derivatives on the underlying stuff, and people can manipulate the stuff to cause the derivatives to go up. And I've written about dozens of cases over the years. But what prediction markets have done is they've created a sort of infinite surface for market manipulation. Anything you can think of, there can be a prediction market on, and the outcome of anything you can think of might be manipulable. And so, if you are buying grain futures, the weather in the Midwestern United States is an input to the price of the grain futures. But a liter of air in the Midwestern United States is not a material input. But if you're buying the polymarket bed-on-the-weather-in-Paris contract, one tiny little spot causes the vets to pay off or not. There's always going to be market manipulation, but the prediction markets have just created this vast new possibility of things to manipulate.

Speaker 2:
[03:53] It's exciting, right?

Speaker 1:
[03:55] It kind of is.

Speaker 2:
[03:56] Yeah.

Speaker 1:
[03:56] I mean, I don't know, I feel stupid every time I write about it, but I keep writing about it.

Speaker 2:
[04:00] I mean, it's clever and some of them are clever and fun.

Speaker 1:
[04:04] I guess.

Speaker 2:
[04:05] I feel like I want to see photos or a diagram of where this temperature sensor is.

Speaker 1:
[04:10] Yeah, I do too.

Speaker 2:
[04:11] I feel like they could fix this by just placing it higher.

Speaker 1:
[04:14] Right. Hardly thinks it's near a drinking fountain at the gate, but it's probably not. It's probably on a runway.

Speaker 2:
[04:22] Yeah.

Speaker 1:
[04:22] Right? Because the weather in the actual airport is climate controlled.

Speaker 2:
[04:27] Yeah.

Speaker 1:
[04:28] I think. I don't actually know if it's...

Speaker 2:
[04:29] It's 68 degrees again, or it would be in Celsius.

Speaker 1:
[04:33] Europe is less committed to air conditioning than the United States, but still, I bet it's outside.

Speaker 2:
[04:37] Yeah.

Speaker 1:
[04:38] But still. I also wrote this week about bespoke parametric insurance.

Speaker 2:
[04:44] Yeah.

Speaker 1:
[04:44] So basically, there's a great Bloomberg article about Bad Bunny, I think.

Speaker 2:
[04:48] It's Bad Bunny.

Speaker 1:
[04:48] Yeah. He had a concert scheduled in Colombia, and he worried about it being canceled for torrential rain. And he went to insurance companies to get cancellation insurance. And they're like, well, we can sell you a policy that pays off if it rains, but the rain sensor is a mile away, and it's a very different microclimate where you are. And he was like, what if we built a weather station? And this is not him, this is his insurance adjuster.

Speaker 2:
[05:12] For sure.

Speaker 1:
[05:12] They built a weather station inside the venue so that they could get paid out if it rained in the venue. The story was great because one of the things was like, it was like they could have built just like a rain collector.

Speaker 2:
[05:24] Yeah.

Speaker 1:
[05:25] But then...

Speaker 2:
[05:26] You can manipulate that.

Speaker 1:
[05:28] You could just get a watering can and pour water on it. It's like they had to build out a whole weather station because that you have all the confirmatory readings and if they just pour water into the weather, into the rain sensor, then they'll know. Apparently the French Meteorological Service has this problem.

Speaker 2:
[05:44] Yeah, Bad Bunny should have just created a market on Polymarket or Cal-She.

Speaker 1:
[05:48] Well, that's the thing, right? I wrote about this and I was like, oh, bespoke parametric insurance and someone was like, is bespoke parametric insurance the same thing as a prediction market? And it's like, oh, kind of, yeah.

Speaker 2:
[05:57] In the future, for sure.

Speaker 1:
[06:01] I'm glad we talked about the weather. Weather sensor. It's gonna be all we talk about. Famously boring topic of conversation, but coming up more and more often.

Speaker 2:
[06:09] It'll come up again.

Speaker 1:
[06:10] Is she talking about Avis?

Speaker 2:
[06:12] Yeah.

Speaker 1:
[06:12] Do you know anything about Avis?

Speaker 2:
[06:14] No.

Speaker 1:
[06:14] Avis budget is what it's called. It's two or more different rental car parts.

Speaker 2:
[06:17] I think I more have often used Hertz, so I don't know much about Avis. I do know that the stock has been going insane.

Speaker 1:
[06:24] Yeah.

Speaker 2:
[06:24] Ripped. The consensus is that it's a short squeeze.

Speaker 1:
[06:27] Well, it's interesting. The stock was at $100 about a month ago, $100 a share, and it got to 713 on Tuesday.

Speaker 2:
[06:37] Wow. It must have been a great earnings report.

Speaker 1:
[06:39] Yeah. I was going to say, the consensus is that it's not earnings driven. It's not a fundamental.

Speaker 2:
[06:44] They report on the 29th of April.

Speaker 1:
[06:48] Maybe people have an inside view on this, but I don't think so. The phrase that is normally thrown out is short squeeze, and a couple of good reasons for it. One is that it's a heavily shorted stock. It's like short interest is like a somewhat mysterious thing to report, and you often get it on the delay, but something like 60 percent of the shares have been shorter, which is a lot. But the other reason that people talk about a short squeeze, and I wrote about this last week, is that two hedge funds own 108 percent of the stock, which if you do some simple math, if you own 108 percent of the stock and you call in all of your borrow, then there's no borrow to be found. Now, that's not exactly what happened here. One thing that has happened is I've gotten several emails from people being like, is there actually a short squeeze? Because there's no reports of hedge funds being carried out. In GameStop, a big hedge fund closed because of the GameStop short squeeze. There's not really any reports of that here. Bloomberg has been reporting that people were adding short positions as the stock was going up and have now made billions of dollars more than offsetting the billions of dollars they lost on the way up. It's interesting. These two hedge funds own 108 percent of the stock, but they don't really. They own 69 percent of the stock. Then they have big swap positions where traditionally, the way a swap works is like a bank writes the hedge fund, a contract saying, we'll give you the upside in the stock and you'll lose the downside, and the bank hedges it by buying stock. But it doesn't have to hedge it by buying stock. One thing I was thinking about is that if short sellers want to be short a lot of the stock, and if these two hedge funds are called SRS and Pentwater want to be long a lot of the stock, they can just do a bet with each other. The hedge fund says, if the stock goes up, I'll pay you, and if the stock goes down, you'll pay me. That's a swap. And what might be happening here is that that might be happening. What might be happening is that the short sellers are short the stock on swap, SRS and Pentwater are long the stock on swap, the bank is sitting between them and basically brokering a bet between the short hedge funds and the long hedge funds, and then there's no short squeeze. Everything's easy. I mean, there's a little bit of short squeeze. You have like collateral calls, but basically you can just sit there until the world returns to reality.

Speaker 2:
[09:08] I do also like the psychological maybe theory that if enough people think there's a short squeeze happening, more people are going to pile in, regardless of whether it's truly happening at scale.

Speaker 1:
[09:20] A short squeeze is almost like a magical incantation for a meme stock, right? You can have a stock go up 7x without a short squeeze because retail investors think there's a short squeeze, right? I mean, that's GameStop.

Speaker 2:
[09:33] Yeah.

Speaker 1:
[09:33] Although there was one probably. But right. The setup here with the huge amount shorted and the huge amount long, really encourages someone to think, oh, a short squeeze and then pile into it. So it occurs to me that my writing about it last week.

Speaker 2:
[09:50] Is this your fault?

Speaker 1:
[09:52] Not a lot of meme stops are born in Money Stuff, but who knows?

Speaker 2:
[09:57] There was an interesting JPMorgan note downgrading.

Speaker 1:
[10:00] The fundamentals don't justify this.

Speaker 2:
[10:02] Yeah, exactly. They downgraded them to underweight from neutral saying it has an unsustainable valuation not supported by fundamentals.

Speaker 1:
[10:09] Did they raise their price target?

Speaker 2:
[10:10] Yes.

Speaker 1:
[10:11] Because their price target is like a 100 bucks or whatever, and then it goes to 700 and they're like, okay, now it's a sell at 200.

Speaker 2:
[10:17] Well, they boosted the price target to account for capital markets opportunity. This is what I wanted to bring to your attention, that they wrote, we view the recent extraordinary quote, short squeeze driven rally in Avis budget shares as a potentially significant opportunity for management to create lasting value via opportunistic capital market transactions.

Speaker 1:
[10:37] I was thinking about that. When you're a meme stock and you say, okay, we're going to rip off an ATM, like that works, right? That's become like a standard piece of the playbook now. You do at the market stock offering to take advantage of your meme stock status. It's tougher when you are nominally, purely a short squeeze. The thing about a stock offering is it alleviates the short squeeze problem. You can solve the short squeeze problem. When people are really amped for short squeezes, they get mad if the company talks about issuing stock because that somehow deflates the short squeeze. But sure, if your stock is at 700, sell some stock. I was wondering if they would do some sort of at the market offering, and it's trickier in this situation.

Speaker 2:
[11:18] Has the moment passed?

Speaker 1:
[11:20] The stock was down, Tuesday was the peak, and we're recording this on Thursday, it's at $230 or something, which is, you know.

Speaker 2:
[11:27] Yeah.

Speaker 1:
[11:28] Has the moment passed? It's doubled in the last month for no reason. It's still a good deal, but it's not 700.

Speaker 2:
[11:33] Well, at least JP Morgan thinks that.

Speaker 1:
[11:35] What's their price target?

Speaker 2:
[11:37] Their price target is $165. It was $123. We'll see.

Speaker 1:
[11:43] I don't know.

Speaker 2:
[11:43] Earnings are next week.

Speaker 1:
[11:44] You can be a buy at $123 and the stock's at $100, and then you're a sell at $165 when the stock is at 700.

Speaker 2:
[11:50] There you go.

Speaker 1:
[12:06] Speaking of Memes Talks.

Speaker 2:
[12:08] Oh, yeah.

Speaker 1:
[12:09] Should we talk about SpaceX?

Speaker 2:
[12:10] Yeah, probably.

Speaker 1:
[12:10] It's going public.

Speaker 2:
[12:12] I can't wait.

Speaker 1:
[12:13] You'll have to wait. It's supposedly going public in June.

Speaker 2:
[12:15] I know.

Speaker 1:
[12:16] There's no real guarantee of that.

Speaker 2:
[12:18] That's true, especially if they want to do some interesting M&A.

Speaker 1:
[12:21] I love it so much. They decided to buy Cursor.

Speaker 2:
[12:24] Yeah.

Speaker 1:
[12:25] For like, reasons. Like, they're a-

Speaker 2:
[12:28] Then Thompson, it's true.

Speaker 1:
[12:29] It's true. It's true. Thompson at Stratechary has a nice piece about why this makes sense, right? I mean, like, SpaceX has... SpaceX is a rocket company, but it's also an AI company. And as an AI company, it's like quite good at getting chips and building data centers and just sort of like infrastructure.

Speaker 2:
[12:45] Yes.

Speaker 1:
[12:46] But, you know, it's a hot mess in terms of building a model. And so it seems a little bit like they're importing a AI lab into the, you know, use their AI infrastructure, which like makes sense, right? It turns out like the big use case for AI right now is coding tools and XAI fell behind in the coding tools race and Cursor had a lead in the coding tools race. And, you know, maybe even them lots of chips will help with that. So it makes sense, but the problem with it is that theoretically, SpaceX is going public in June and it's April and-

Speaker 2:
[13:21] Not for much longer either.

Speaker 1:
[13:22] No. And traditionally when you go public, you like, you know, disclose information about your business and like SpaceX's business is changing from week to week. As you can tell from the fact that it's called SpaceX and we're talking about its AI business.

Speaker 2:
[13:36] Yeah. Well, data centers in space-

Speaker 1:
[13:39] Sure, data centers in space. Absolutely.

Speaker 2:
[13:40] It's real, Matt.

Speaker 1:
[13:42] It's something. It's- It's really going to be a part of the pitch. But the point is, you can't like acquire Cursor, generate pro forma financials, put the pro forma financials into the prospectus, run it by the SEC, get the auditors to sign off, educate the research analysts about it, and go public in June if you're signing that deal in April. So they're not doing that. They're like, we're going to buy Cursor, but we got to do it after the IPO. So just put a pin in that, telling everyone we're planning it now, but no promises. No promises that are certain enough to require us to revise the IPO prospectus.

Speaker 2:
[14:21] I wonder if in the meantime, we'll see another bidder emerge.

Speaker 1:
[14:25] It's an interesting question. I was thinking the opposite, which is like, Elon Musk has some track record of changing his mind about M&A. Particularly here, it seems apparent that this is not like they're signing a deal and then meeting once a week in a conference room to negotiate integration. It's pretty clear that those guys are going to work at SpaceX tomorrow. So they have a lot of time to fall out of love with Elon Musk or for him to fall out of love with them. And if he changes his mind, he has to pay a $10 billion breakup fee. Breakup fees traditionally are on the order of 2% of deal value, and this one is 17% of deal value.

Speaker 2:
[15:02] I was going to say, even compared to the Warner Brothers discovery breakup.

Speaker 1:
[15:05] It's an enormous breakup fee.

Speaker 2:
[15:07] Yeah.

Speaker 1:
[15:07] And here's why. One, because it's not like a signed deal. It's a little bit weirder. So it's like buying an option rather than really signing a deal with a breakup fee. And two, he has a track record, you know.

Speaker 2:
[15:19] Twitter, which is part of XAI, which is part of SpaceX.

Speaker 1:
[15:22] When Musk was trying to get out of the Twitter deal, I had so many people emailing me and I kept thinking about it. Is this going to affect his ability to do M&A in the future? Will people be hesitant to sign M&A deals with Elon Musk in the future after he flaked on this one? And here's the answer. Yeah, you got to pay a lot of money because you might not have passed the deal.

Speaker 2:
[15:43] It is interesting that Musk's ambitions here are bumping up against real human timelines. If he did want to really buy Cursor, he can't do it before the IPO. It just physically can't happen.

Speaker 1:
[15:55] You say physically. Like the joke is always that Elon Musk is constrained only by the laws of physics and not by the laws of the SEC. And you could imagine him yelling at the lawyers who were like, please, don't close another deal between now and the IPO. You could imagine him being like, ah, it's not physically impossible.

Speaker 2:
[16:13] Come on.

Speaker 1:
[16:14] For whatever reason, they didn't do it. They decided to hold off.

Speaker 2:
[16:18] It pours cold water also on some of the speculation of SpaceX combining with Tesla. Because kind of.

Speaker 1:
[16:26] Oh, I don't think so.

Speaker 2:
[16:27] Before the IPO, it does.

Speaker 1:
[16:28] Oh, yeah, it's not going to come out before the IPO. So the other thing that I wrote about SpaceX this week is that SpaceX is going public with dual class stock. So I don't know, the perspective is not public and there are blanks anyway. But I don't know how much Elon Musk owns, but he will have 10 times voting stock, shares with 10 votes per share. So he will control SpaceX probably, which makes sense because one, if you're investing in SpaceX, you are clearly buying into the Elon Musk machine. And two, from his perspective, like he said about Tesla, I don't want to build a robot army at Tesla if I don't control it. And all the more so when he's building like an intergalactic robot army to colonize Mars and data center, you know, all this stuff, like he needs to control it. So I get it. He's going to control SpaceX. It's going to go public with dual class stock. Tesla did not go public with dual class stock. And you can't really add it afterwards. Like even if you get the shareholders to vote to approve it, like the stock exchange rules, like they don't like it. So he can't really add dual class stock in Tesla. So there's these weird things where every few years he gets a trillion dollar payback that Jimmy talked about, whether that's legal. It wouldn't be a trillion dollar payback if they were just like, oh, you get 10 times as many votes. Anyway, there is an obvious solution to all of these problems, which is you take SpaceX public with dual class stock, Elon Musk controls the votes.

Speaker 2:
[17:56] Done.

Speaker 1:
[17:56] And then two weeks later, maybe two weeks is optimistic, two months later, buys Tesla. And then the combined company has dual class stock and Elon Musk controls both of them forever. And like they both, you know, there's some overlap in like, they're both building robot armies.

Speaker 2:
[18:11] Yes. You only need one company building robot army.

Speaker 1:
[18:14] You only need one robot army. You wouldn't want the robot armies to fight.

Speaker 2:
[18:19] I mean, I would like to see that.

Speaker 1:
[18:21] Yes. Actually, that would be probably, like, a net good for humanity if Elon Musk's robot armies fight and annihilate each other, like, somewhere off the shoulders of Orion, you know, like, just.

Speaker 2:
[18:35] A theory I want to get your take on is, you know, Tesla reported earnings on Wednesday, broke those on live TV, but right now Tesla is the only public option to get into the Elon Musk machine, as you call it. I do wonder if SpaceX going public takes the shine off of Tesla and sort of collapses the Elon Musk premium there.

Speaker 1:
[18:58] I think it's very possible. I think it's so interesting to me that Tesla spends so much time talking about AI and robots. And it's like, you got to sprinkle a little of the AI dust on both of them. You know, you can't just do all the AI stuff in the AI company because then you don't have the AI stuff in the other company. It's possible that the only public Musk company premium goes away, but then the possible merger with SpaceX premium comes in. Comes right on in.

Speaker 2:
[19:23] Yeah, there's a passing of the baton there.

Speaker 1:
[19:25] Right. I don't know.

Speaker 2:
[19:26] Yeah. Tesla is trading at something like 183 times forward earnings.

Speaker 1:
[19:31] By the way, SpaceX is allegedly going public at 100 times forward revenue.

Speaker 2:
[19:36] It's going to be so fun. I keep thinking about what I need to do between now and the time I give birth, like the events I have to live through. I have to live through Milken and I have to live through the SpaceX IPO. I have to see them. And then I can have a child. So please go public and dream.

Speaker 1:
[19:55] Life highlights in the coming year. SpaceX IPO. Birth of your first child.

Speaker 2:
[20:00] I want to tell my child about this.

Speaker 1:
[20:04] Mommy, where were you when SpaceX went public?

Speaker 2:
[20:07] Let me tell you. I hate the word gazomping.

Speaker 1:
[20:24] Oh yeah, I was talking in my group chat about how much we all hate the word gazomping. Okay.

Speaker 2:
[20:28] This is America.

Speaker 1:
[20:30] Right. I did not realize it's like a British real estate term, and so I'm less offended by it now, cause it like, exactly-

Speaker 2:
[20:36] That makes me like it less.

Speaker 1:
[20:37] Sure, fair. But no, it's the term for like, when you have a deal to buy a house, and then someone else offers a higher price, and you lose your deal to buy a house. And so there's a Bloomberg story this week about that happened to hedge fund portfolio managers.

Speaker 2:
[20:51] Yes.

Speaker 1:
[20:51] Because the market for portfolio managers that multi-strategy hedge funds is so tight that people who have quit their jobs and accepted new offers to go to other hedge funds are while on gardening leave getting poached at still higher offers to go to still other hedge funds, or often to go back to their original hedge fund. And what I read about is like there's a time value of hedge fund portfolio managers, where like ordinarily if you hire a hedge fund manager, if you hire a portfolio manager, you should expect to have to wait about a year for them to serve out their gardening leave. And that's a long time to wait and you've got big plans. And so if you can find someone who's already served out 11 months of their gardening leave, they can start next month. And so the hedge fund managers who are currently sitting out on gardening leave are in some sense the most desirable candidates. And so of course people bid them up.

Speaker 2:
[21:43] Yeah. A different term which I like is interception trade, which is good American football term. That you just you have to get the timing just right. Which is cool.

Speaker 1:
[21:53] It's not that hard.

Speaker 2:
[21:54] Well, yeah. But it's made easier if you are a recruiter and you have a list of who you've placed in.

Speaker 1:
[22:02] You get someone a nice deal at a new hedge fund and you set a calendar reminder for like 11 and a half months to check in with them.

Speaker 2:
[22:08] So evil.

Speaker 1:
[22:08] So you can get them a higher offer. It is pretty evil. The thing that I most endorse is people getting that bag by negotiating up their offer. It's like, I'm all for it.

Speaker 2:
[22:16] Well, I love this quote. It's from Mark Greenberg, who is a former managing director at Point72, who now trains traders. You're talking about a group of people who are economic animals. They'll pay lip service to quality of life and where they live and the type of people that they're working for. But at the end of the day, one of the reasons the large firms have been so successful is because they can pay more.

Speaker 1:
[22:37] They can give them that back. It's just like you're good at profiting from optionality and spotting opportunities. It would be disappointing if you weren't doing this.

Speaker 2:
[22:47] It does seem like a vicious price spiral, though, you know?

Speaker 1:
[22:51] Yeah, sure.

Speaker 2:
[22:51] When does it end?

Speaker 1:
[22:54] It doesn't end. You know, it ends if the strategies start working. I don't know. I should mention there's a lawsuit.

Speaker 2:
[23:00] Yeah.

Speaker 1:
[23:01] Schoenfeld sued a guy who worked at Millennium. Schoenfeld did long, painful, rigorous negotiations to hire him. They signed an employment agreement with him. They signed a confidentiality agreement. And of course, once he has that, he goes to his bosses at Millennium and is like, so, and Millennium matched and he stayed. Which like, you know, more power to him. Schoenfeld sued him for $11 million.

Speaker 2:
[23:34] His name is Adam Grunfeld, which is sort of like Greifeld. But yeah, apparently he held himself out during negotiations as a long-term addition to Schoenfeld, capable not only of generating returns through his own trading strategies, but also of contributing to the firm's intellectual capital.

Speaker 1:
[23:50] Of course he did.

Speaker 2:
[23:50] Of course. What else would you do? It doesn't seem that different of a playbook than any other industry. You sort of interview and chop yourself around and then you bring it back.

Speaker 1:
[24:02] The unusual thing is getting sued.

Speaker 2:
[24:05] Yeah. Also, $11 million is quite enough. But to that point, apparently Schoenfeld said that it had contemplated the possibility that Grunfeld might renege on the deal.

Speaker 1:
[24:15] Of course they did.

Speaker 2:
[24:17] Yeah.

Speaker 1:
[24:17] This is every job in the world.

Speaker 2:
[24:18] Yeah. But I guess we're talking about a lot more dollar signs and, like you said, lawsuits, so.

Speaker 1:
[24:24] Yeah. It's very striking. One thing I was thinking about when I first wrote about the interception trade was, the reason the interception trade works is that someone who is 11 months into their 12-month gardening leave is more valuable than someone who's just at their current job and has 12 months of gardening leave to serve. One way to prevent that would be if your new job gave you a non-compete before starting at your new job. But I don't think you can do that. I don't think you can sign a new non-compete while you're still on the non-compete from your old job, right?

Speaker 2:
[24:50] Yeah.

Speaker 1:
[24:51] But that kind of happened here, right? Where he signed the employment agreement, and so they're like, no, no, no, you can't leave to your original job because you already signed our employment agreement. It's almost like he has a non-compete with his original job.

Speaker 2:
[25:05] Damn.

Speaker 1:
[25:05] Not really.

Speaker 2:
[25:06] Couldn't Millennium foot the $11 million?

Speaker 1:
[25:10] If you're leaving a job that has restricted stock, it's fairly traditional for your new employer to make you whole, right? Could Millennium foot the $11 million bill? Sure, but rather not if no one has to. I don't know. The argument is that he signed a binding employment agreement with an $11 million liquidated damages clause saying, if you don't show up for any reason, you have to pay us $11 million to compensate for our lost opportunity here. Which is like crazy. It's not how the world works in most employment situations, but apparently, maybe how it works in punch-ups. And that was the Money Stuff Podcast. I'm Matt Levine.

Speaker 2:
[25:56] And I'm Katie Greifeld.

Speaker 1:
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Speaker 1:
[26:22] The Money Stuff Podcast is produced by Anna Mazarakis, Moses Andam, and Alexis Haught.

Speaker 2:
[26:28] Our theme music was composed by Blake Maples.

Speaker 1:
[26:31] Amy Keene is our executive producer. Thanks for listening to the Money Stuff Podcast. We'll be back next week with more stuff.