Best and Final: WBD, IPO, BNPL

Speaker 1 When you give to a non-profit, how do you measure success? You'll hear a lot about things like low overhead costs and efficient fundraising. But what about the actual impact on people's lives?

Speaker 1 GiveWell, this episode's sponsor, focuses on that impact.

Speaker 1 They've spent more than 70,000 hours on research to help donors fund highly cost-effective programs that save or improve lives the most per dollar.

Speaker 1 GiveWell has spent 18 years researching global health and poverty alleviation and only directs funding to the highest impact opportunities they have found.

Speaker 1 Over 150,000 donors have already trusted GiveWell to direct more than $2.5 billion.

Speaker 1 Rigorous evidence suggests that these donations will save over 300,000 lives and improve the lives of millions more.

Speaker 1 If this is your first gift through GiveWell, you can have your donation matched up to $100 before the end of the year or as long as matching funds last.

Speaker 1 To claim your match, go to GiveWell.org, pick podcast, and enter this program at checkout. Make sure they know that you heard about GiveWell from this program to get your donation matched.

Speaker 4 Introducing the all-new Adobe Acrobat Studio now with AI-powered PDF spaces. Do more with PDFs than you ever thought possible.

Speaker 4 Need AI to turn a hundred pages of market research into five insights with a click? Do that with Acrobat. Need templates for a sales proposal that'll close that deal.
Do that with Acrobat.

Speaker 4 Need an AI specialist to tailor the tone of your market report to sound real smart in real time? Do that with the all-new Adobe Acrobat Studio. Learn more at adobe.com slash do that with Acrobat.

Speaker 4 Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own.

Speaker 4 Manage all your business finances from banking to payments to credit cards all in one place with their digital tools. Plus, access online resources designed to help your business thrive.

Speaker 4 Learn more at chase.com slash business. Chase for Business.
Make more of what's yours. The Chase Mobile app is available for select mobile devices.
Message and data rates may apply.

Speaker 4 JPMorgan Chase Bank NA, member FDIC, copyright 2025, JPMorgan Chase and Company.

Speaker 4 Bloomberg Audio Studios.

Speaker 1 Podcasts, radio, news.

Speaker 2 Hello, and welcome to the Money Stuff Podcast, your weekly podcast where we talk about stuff related to money.

Speaker 2 I'm Matt Levine, and I write themoneystuck com for Bloomberg Opinion.

Speaker 5 And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.

Speaker 2 I like a hostile merger fight, but like... Yeah.

Speaker 2 I don't like a media deal because everyone pays attention to the media deals. And the Warner Brothers merger fight has been wall-to-wall coverage everywhere, including in the Money Stuff newsletter.

Speaker 2 And it's like,

Speaker 2 I don't know, I can't keep up with it.

Speaker 5 Yeah, I was going to say when we were talking about topics and I suggested Warner Brothers, it seemed like

Speaker 5 you were not psyched. And it's like, I don't know, your column that you write would suggest differently.
I agree with you, though. I don't really get jazz talking about media.

Speaker 5 And obviously, we're covering it on Bloomberg television as well. This one, the fact that...

Speaker 5 It's become this bidding war does make it kind of fun and interesting. Oh, yeah, right.

Speaker 2 Like a virtual bidding war is interesting, although it's like a strange bidding war. Yeah.
We were recording this on like Thursday afternoon. Who knows?

Speaker 2 But basically, the deal is that on Friday, Warner announced they signed a merger agreement with Netflix for a price, let's call it like $29 or $30 in a mix of cash and two different flavors of stock.

Speaker 2 Mostly cash, but a fair amount of the value comes from two flavors of stock. And then on Monday, Paramount Skydance jumped in with a...
$30 cash tender offer.

Speaker 2 And one thing that's weird about the bidding war is that like those bids are pretty close and uh warner's board did determine that the netflix bid was higher because they valued some of the stock higher so they think that the bid is worth 31 or 32 a share but also like they did an auction they had advisors they took bids netflix bid whatever the number and paramount bid thirty dollars in cash

Speaker 2 And Warner looked at that and we're like, we're going to take the Netflix bid because we think it's higher. And Paramount went to shareholders with the same bid that got rejected.

Speaker 2 It's like kind of an unusual move. Like normally you raise your bid to like kind of be like, look at how great this bid is.
And here they're like

Speaker 2 going with the same bid and arguing the value of the stub stock and the Netflix bid. It's like a strange way to conduct a bidding war.

Speaker 2 They've also gone on TV and been like, this is not our best and final offer, which is a crazy way to conduct a bidding war. Like ordinarily, you don't negotiate against yourself.

Speaker 2 And if you do negotiate against yourself, you do it. You know, you're like, I've got to raise the bid.

Speaker 2 But instead, they're like, like, we're not going to raise the bid, but this is not our best and final offer. How could you tender it to that?

Speaker 2 How could you be like, okay, you can have it for not your best and final offer?

Speaker 5 Well, you point out, too, that it's also an interesting strategy since they need this to be a friendly situation with Warner Brothers as well.

Speaker 2 They don't strictly need it, but they kind of need it. And they've conditioned their offer on it becoming a friendly.
It's not that weird.

Speaker 2 People don't usually do hostile deals all the way through in 2025. You know, like you do a hostile deal to pressure the board into coming to the table with a friendly deal.

Speaker 2 Like, this is, you know, this is kind of how Twitter worked out, right? It's like a normal playbook. Yeah.
But they're not doing a pure hostile deal.

Speaker 2 They're not tendering to shareholders and saying, you know, give us your shares and we're closing and never mind what the board says. They need the board on side.

Speaker 2 And so it is a negotiation where they are like waging a public pressure campaign on the Warner board, but they're not just like doing a pure hostile offer.

Speaker 5 So what happens here? I mean, does Netflix now raise their bid?

Speaker 2 I don't know who has to move first. Yeah.
Like right now,

Speaker 2 Warner has said they're sticking with the Netflix deal. Paramount can't close the tender and it's all just sort of like in limbo.
And you can imagine Netflix is waiting it out.

Speaker 2 But I think given that Paramount has said things like this is not our best and final offer, probably the next move is for Paramount to raise. But I don't know.

Speaker 2 I think they're sort of seeing what the shareholders say.

Speaker 2 And if all of the shareholders are tendering into their offer and like calling up Warner's board and saying the Paramount deal is so much better, then

Speaker 2 maybe Paramount can get away with it. But it's just hard to imagine them paying $30 a share when they said they'd pay more.
Yeah. So I think they have to raise.
But then Netflix has to raise.

Speaker 2 It goes back and forth.

Speaker 5 There's also the detail that Paramount is for the entirety of Warner Brothers Discovery, including the cable networks, whereas the Netflix offer is not. It excludes the cable networks, including CNN.

Speaker 5 So, I mean, it also depends on how you value the cable networks.

Speaker 2 Yeah, this is why the Netflix deal is of uncertain value because

Speaker 2 in that deal, the cable networks stay with Warner shareholders, which Paramount says is worth about $1 per share. And

Speaker 2 the board thinks it's worth $3, $4, $5 a share.

Speaker 5 Aaron Powell, it seems like consensus would say that $1 a share is low on the lower end.

Speaker 2 Yeah.

Speaker 2 I think if you add it up, the Netflix bid is worth right around $30 is kind of market consensus. And then the board is a little high and Paramount's a little low.

Speaker 2 but like, it's not like vastly more, right? It's like around 30.

Speaker 5 There's also the Ellison of it all because Paramount is a pretty small company,

Speaker 2 it's like it's an LBO, right? It's like there happens to be a Paramount attached to it, but like basically, it's like we're going to borrow a lot of money against the Warner assets.

Speaker 2 Paramount does not on its own have the capacity to raise like, you know, $50 billion of debt, right?

Speaker 2 It would raise $50 billion of debt against Warner, and then it would have a big equity check from,

Speaker 2 you know, they have like commitments lined up from Jared Kushner and like some Middle Eastern investors, but it seems that Warner's board expressed uncertainty about the quality of those commitments, and so they also have a backstop from Larry Ellison's personal trust where he'll pay the equity check with his PA if he has to.

Speaker 5 Yeah, there's been a lot of good succession-flavored memes on social media about this situation.

Speaker 2 It is very weird to have your dad buy several companies for you. Whatever.

Speaker 2 I think it's cool. It's making an expression like, of course my dad would buy companies for me.

Speaker 5 That was an editorial comment by Matt.

Speaker 2 You didn't see the expression.

Speaker 2 Yeah, it's weird.

Speaker 2 It's weird to be the CEO of a public company and be like, my company is going to buy this prized asset with my dad's checkbook. I don't know.
It's fine.

Speaker 5 There's also, I mean, so Larry Ellison's checkbook is a factor here, but also Larry Ellison's relationship with the White

Speaker 2 I don't know. I try not to write about this too much, but it is like the very depressing backdrop to this is that like Donald Trump does not like CNN.

Speaker 2 He would like

Speaker 2 his friends to buy CNN and change it to be friendlier to him.

Speaker 2 And the way merger regulation in the United States in 2025 works is that to get a merger done, you have to commit to making television news friendlier to Donald Trump. Yeah.
It's really bad. Yeah.

Speaker 2 That's not

Speaker 2 That's not how it used to be.

Speaker 5 I'm trying to find exactly what Trump said on Wednesday as it relates to CNN. I mean, Trump is.

Speaker 2 He doesn't like CNN.

Speaker 5 Yeah. Well, he said, like, when it comes to a potential deal here, I believe he said that CNN needs to be included.

Speaker 2 I don't think he really has been paying attention to the mechanics of this merger. Yeah.

Speaker 5 You don't think he's following along, reading money stuff and like watching me on Bleemberg?

Speaker 2 He's watching you on Bleemberg.

Speaker 2 He's reading Mooney's Touf.

Speaker 2 I mean, he wants changes at CNN, right? And so if

Speaker 2 the Paramount deal closes, then Paramount will own CNN and will make it, you know, 24-hour praise Donald Trump network. Because like,

Speaker 2 that's a small price to pay to get the deal done, right? I mean, they're valuing.

Speaker 2 They're valuing not CNN. They're valuing the entire cable package, including CNN, at like $1 per share.
It's like, yeah, turn CNN into the propaganda channel. Who cares?

Speaker 2 It's not a major part of the business investment.

Speaker 2 If the Netflix still gets done, then CNN will be part of Discovery Global, which will be a much smaller, more levered public company run by existing Warner Discovery management.

Speaker 2 But is that going to be an acquisition target?

Speaker 2 Jared Kushner buy that? It's not obvious that CNN remains independent and with the same editorial posture that it has now, even in the Netflix deal. Yeah.
It doesn't go to Netflix. And by the way,

Speaker 2 a lot of the reporting on on this is that Larry Ellison is friendlier with Trump and therefore will win. Right.

Speaker 2 And by will win, I mean like Trump will tell the Justice Department, you have to find an antitrust pretext to prevent the Netflix deal from closing.

Speaker 2 And therefore, the only way to get the deal done is to sell the Paramount because the Netflix deal can't close.

Speaker 2 But there's also been reporting that Netflix's management have done a good job of cozying up to Trump. Like, is one possible outcome here that like Netflix

Speaker 2 says, fine, fine, we'll buy a CNN too and make it into the Trump propaganda channel?

Speaker 2 Maybe

Speaker 2 we can change the deal.

Speaker 2 I should say also, like, I said it feels like because this is so much about Trump's feelings about CNN that he could tell the Justice Department to find a pretext to find an antitrust reason to stop the deal.

Speaker 2 Separately, everyone thinks there are real antitrust problems.

Speaker 2 It's not.

Speaker 2 You don't need a pretext. It's a real concern when the biggest streamer buys HBO.

Speaker 2 And it's also a real, you know, people in the media industry have real concerns, you know, about both, but especially about the idea of Netflix taking over all these iconic films.

Speaker 5 Yeah, no, it's fascinating. I mean, relative to most media news, because we've been discussing the media angle on Bloomberg TV heading up into the Netflix deal getting announced.

Speaker 5 And for Netflix, I mean, Netflix is so dominant in streaming. You know, talking to analysts about this, they were like, this is really a nice to have for Netflix, you know, versus Paramount.

Speaker 5 This is more of a need-to-have.

Speaker 5 So, it's an interesting move by Netflix to even pursue this. But you think about the antitrust concerns, it's also built into the deal that they announced.

Speaker 5 Like, they accounted for a lot of time to work through all the different,

Speaker 2 sure, but like you know, whether or not it'll

Speaker 5 say no, and then well, that's part of the record breakup fee, right?

Speaker 5 $5.8 billion.

Speaker 2 It's a breakup fee.

Speaker 2 No, no, it's a break. It's like two bucks a share.

Speaker 2 You want a deal to get done, yeah.

Speaker 5 It's a nice consolation prize, though.

Speaker 2 It's not really. Okay.
No Warner shareholder is going to be like, let's take the Netflix deal because at least we'll get two bucks a share in 18 months when the deal falls apart.

Speaker 2 Like they want certainty, right? Like Netflix, part of their job here is to convince shareholders that their deal will close. And like that's not.

Speaker 2 That's like some amount of

Speaker 2 economic analysis and some amount of photo ops with Trump. Yeah.

Speaker 5 I do wonder, like, just to bring it back to the employees, like, in a situation where your company is in this deal limbo for 18 months, I have to imagine that the company is kind of in suspended animation.

Speaker 5 Like, things will get done, obviously, but that's a lot of uncertainty to hang over.

Speaker 2 Yeah, I don't know about suspended animation, but yeah, it's depressing. Being slightly dramatic, but I think if you work in media,

Speaker 2 if you work in media, like the time between now and 18 months from now is

Speaker 2 a perilous time, whether or not you're at Warner Brothers.

Speaker 5 The only sure thing is podcasts.

Speaker 2 That's true.

Speaker 1 When you give to a nonprofit, how do you measure success? You'll hear a lot about things like low overhead costs and efficient fundraising. But what about the actual impact on people's lives?

Speaker 1 GiveWell, this episode's sponsor, focuses on that impact.

Speaker 1 They've spent more than 70,000 hours on research to help donors fund highly cost-effective programs that save or improve lives the most per dollar.

Speaker 1 GiveWell has spent 18 years researching global health and poverty alleviation and only directs funding to the highest impact opportunities they have found.

Speaker 1 Over 150,000 donors have already trusted GiveWell to direct more than $2.5 billion.

Speaker 1 Rigorous evidence suggests that these donations will save over 300,000 lives and improve the lives of millions more.

Speaker 1 If this is your first gift through GiveWell, you can have your donation matched up to $100 before the end of the year or as long as matching funds last.

Speaker 1 To claim your match, go to GiveWell.org, pick Podcast, and enter this program at checkout. Make sure they know that you heard about GiveWell from this program to get your donation matched.

Speaker 7 Support for the show comes from Public.

Speaker 7 On Public, you can build a multi-asset portfolio of stocks, bonds, options, crypto, and now generated assets, which allow you to turn any idea into an investable index with AI.

Speaker 7 It all starts with your prompt.

Speaker 7 From renewable energy companies with high-free cash flow, to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work.

Speaker 7 It screens thousands of stocks, builds a one-of-a-kind index, and lets you backtest it against the S ⁇ P 500. Then you can invest in a few clicks.

Speaker 7 Generated assets are completely customizable and based on your thesis, not someone else's. Go to public.com slash market and earn an uncapped 1% bonus when you transfer your portfolio.

Speaker 7 That's public.com slash market.

Speaker 8 Paid for by Public Investing. Brokerage Services by Open to the Public Investing Inc., member FINRA and SIPC.
Advisory Services by Public Advisors LLC, SEC Registered Advisor.

Speaker 8 Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice.

Speaker 8 Complete disclosures available at public.com slash disclosures.

Speaker 6 These days, it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it.

Speaker 6 Fortunately, Okta helps you get identity right by securing your AI agents' identities, giving you a single layer of control, a single standard of trust.

Speaker 6 So whether an AI agent supports a single user or your entire enterprise, with Okta, you'll turn risk into opportunity. Secure every agent.
Secure any agent. Okta secures AI.

Speaker 5 Shall we talk about SpaceX?

Speaker 2 Yeah, another 18-month. Remember? I thought 18-month.
It's like... They went into an IPO? If it's in 2026,

Speaker 5 if it's in 2026, it will be

Speaker 5 fewer than 18 months.

Speaker 5 I just remember, you know, we spent so much time talking about how private markets are the new public markets, but now all these mega companies that were the poster child of staying private forever are potentially coming public.

Speaker 2 Yeah, first of all, it hasn't happened, right?

Speaker 5 Yeah, hasn't happened, but

Speaker 2 I don't like the private markets are the new public markets thesis.

Speaker 2 I mean, look, I have said in my column on this podcast, yeah, you could stay private forever, right? And, like,

Speaker 2 why not?

Speaker 2 But

Speaker 2 if it is the case that SpaceX,

Speaker 2 OpenAI, Anthropic, other names go public in 2026, then

Speaker 2 that might suggest that you can't stay private forever, but

Speaker 2 it will be like really different from previous

Speaker 2 IPOs. Yeah.

Speaker 2 Going public at a $1.5 trillion valuation, which is like the number that SpaceX is banding around.

Speaker 5 Depending on what second you're checking, it's bigger than Tesla.

Speaker 2 Yeah, but like, that's not how IPOs used to work. No.
Back when public markets were the public markets,

Speaker 2 you could go public when you were like,

Speaker 2 you know,

Speaker 2 there was growth still to come, but like going public at a $1.5 trillion valuation is like,

Speaker 2 okay, it's wild in two ways. One is that ordinarily you go from

Speaker 2 zero in a garage to $100 million or a billion or a $10 billion valuation, and then you go public. And then the next leg up to like becoming a trillion-dollar company, public investors capture, right?

Speaker 2 So public investors can invest not early, but like, you know, in like the growth trajectory of a company that will eventually become large, right? Like that's part of the promise of an IPO.

Speaker 2 This is a fairly immature company, and you can get in not on the ground floor, but on like the third floor. You go public at a $1.5 trillion valuation.

Speaker 2 So much of the upside has been captured already

Speaker 2 by private market investors.

Speaker 5 Aaron Ross Powell, maybe you're just thinking small, you know? No, I know, I hear you, right?

Speaker 2 Like, then this is like every Elon Musk comp package, right? Like, well, it's really $100 trillion company, so going public at $1.5 trillion.

Speaker 5 They're tackling the final frontier.

Speaker 2 But the other thing, and this is related in the SpaceX case, is like

Speaker 2 if SpaceX goes public next year at a $1.5 trillion valuation, in one sense, the private markets have captured most of the upside. In another sense, it is not a mature company.

Speaker 2 Bloomberg reported that they're expecting $22 to $24 billion in revenue in 2026, which is a lot of money.

Speaker 2 It's a big company to go public or whatever, but like it can be public at what, 70 times revenue? Yeah.

Speaker 2 Like, that's really big. That is big.

Speaker 2 What has happened here is not they've grown into an enormous company and then gone public at their enormous valuation.

Speaker 2 What happens is they've not grown into an enormous company and they're going public at a huge valuation that reflects their next 10 years of growth, which is a crazy thing to do. Yeah.

Speaker 5 Well, let's talk about why they potentially need to do it.

Speaker 2 Like why now?

Speaker 5 Do they need to do it? I mean, you think about some of the things that they're doing.

Speaker 2 They're going to build data centers in space, so they need $30 billion.

Speaker 5 They're going to build data centers on the moon, not actually on the moon, just suspended.

Speaker 2 They're building data centers. Yeah.
That's great.

Speaker 5 It's such a sign of the times.

Speaker 2 One theme of the financial markets this year is that everyone

Speaker 2 is building data centers and they've tapped every possible source of financing for data centers.

Speaker 2 And at some point, selling $30 billion of SpaceX stock is one more way to fill the hole of need for building data centers. And so like, SpaceX can raise a lot of money staying private.

Speaker 2 And by the way, it's like cash flow positive and doesn't need to raise a lot of money to shoot rockets into space.

Speaker 2 But the capital expenditures required to build data centers on every inch of the Earth and also in space is so enormous that even SpaceX has to go public. And even OpenAI, I suppose, maybe.

Speaker 5 Well, that's the thing. I feel like when we really do think big and

Speaker 5 really put our thinking caps on in terms of how ridiculous things could get, there is a limit to how long you can stay private.

Speaker 2 Yeah, right, right. Like one possibility is that I've been writing about private markets or the new public markets for, you know, a decade or whatever.
And that was in the context of the biggest,

Speaker 2 hottest, like, most sort of household name tech companies were

Speaker 2 kind of at bottom like capital light consumer tech, right? Like, it's a lot of...

Speaker 2 Like you wouldn't have said Facebook had a lot of CapEx needs because it was a website, right? Now Facebook has a lot of CapEx needs, but like for a long time it didn't.

Speaker 2 You know, Uber is like, yeah, we're going to match drivers and writers. We don't have to have anything.

Speaker 2 It was a real capital-led model. And now

Speaker 2 in that context, it was fairly, you know, you have capital-led and very scalable. It's very easy to stay private.
You need to spend a trillion dollars a year putting data centers on the moon. You

Speaker 2 have to

Speaker 2 like the private markets are really big, but they're not big enough for that.

Speaker 5 And even before we get there, like before we get to the moon, SpaceX has a lot of rockets to build.

Speaker 2 That's they're not capital-led. And yet

Speaker 2 they've managed in the private markets to become large and build a lot of rockets.

Speaker 5 A point that has been made is the fact that they have been able to raise large amounts of money in the private markets. We cover rocket launches on Bloomberg TV all the time.

Speaker 5 A lot of the rockets blow up. A lot of the tests fail.

Speaker 5 If SpaceX is a public company, it's going to be really interesting to have a split screen of the rocket, of a test launch potentially failing, and also the stock.

Speaker 2 That's so true, right?

Speaker 2 Like, you know, I read all the time that every bad thing that happens to a public company is a securities fraud, but like every time a rocket blows up, are they going to get sued, it's really

Speaker 2 important to think about.

Speaker 5 We didn't talk about the wrinkle of Elon Musk potentially being the CEO of two public companies.

Speaker 2 Yeah, but you can do that. I mean, whatever.
He's the CEO of five companies.

Speaker 5 They're big now. I know.

Speaker 2 I'm just like, I'm, I'm,

Speaker 2 I'm curious, like, what the dynamic is of pricing a $1.5 trillion IPO. Because on the one hand, it's like so big, right?

Speaker 2 On the other hand, it's like, you know, like, the talk is like they'd raise $30 billion.

Speaker 2 billion dollars Tesla trades like 30 billion dollars of stock a day right like at some level like you just suspend disbelief and you're like this is not an IPO this is just like an Elon Musk public company that happened to not be public and now it's public and then like you know you work it out in a couple of days like it's not I don't know there's something like when you get to this level of bigness and

Speaker 2 constantly doing tender offers and price transparency,

Speaker 2 it's like no one needs a deck to be introduced to SpaceX. Yeah.
It's just like, yeah, you're SpaceX. Yeah, the roadshow.
No one owns it in weird vehicles anyway. It's like, it's SpaceX, man.
Yeah.

Speaker 5 I hope it does go public because

Speaker 2 that would be fun. There was a thing where he tried to take Tesla private, right? And like he complains about the public markets.
And it'll be interesting to

Speaker 5 the earnings calls.

Speaker 2 Yeah, it'll be interesting to see what a public SpaceX looks like.

Speaker 2 It'd be interesting when he gets sued for the fourth time by the rocket blanket.

Speaker 5 I mean, to be fair, it happens.

Speaker 2 I'm not saying that it's actually a securities fraud to blow up a rocket or that he should be sued for blowing up a rocket. And like the investors in the current private SpaceX

Speaker 2 understand that that's part of the deal, and they don't sue him when he blows up a rocket.

Speaker 2 Once you hear public, all bets are off.

Speaker 7 Support for the show comes from Public.

Speaker 7 On Public, you can build a multi-asset portfolio of stocks, bonds, options, crypto, and now generated assets, which allow you to turn any idea into an investable index with AI.

Speaker 7 It all starts with your prompt.

Speaker 7 From renewable energy companies with high-free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work.

Speaker 7 It screens thousands of stocks. builds a one-of-a-kind index and lets you backtest it against the S ⁇ P 500.

Speaker 3 Then you can invest in a few clicks.

Speaker 7 Generated assets are completely customizable and based on your thesis, not someone else's. Go to public.com slash market and earn an uncapped 1% bonus when you transfer your portfolio.

Speaker 7 That's public.com slash market.

Speaker 8 Paid for by Public Investing. Brokerage Services by Open to the Public Investing Inc., member FINRA and SIPC.
Advisory services by Public Advisors LLC. SEC Registered Advisor.

Speaker 8 Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice.

Speaker 8 Complete disclosures available at public.com/slash disclosures.

Speaker 6 These days, it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it.

Speaker 6 Fortunately, Okta helps you get identity right by securing your AI agents' identities, giving you a single layer of control, a single standard of trust.

Speaker 6 So, whether an AI agent supports a single user or your entire enterprise, with Okta, you'll turn risk into opportunity. Secure every agent.
Secure any agent. Okta secures AI.

Speaker 4 When you own your own business, you own every decision. Now own the card that rewards you for it.

Speaker 4 The Chase Sapphire Reserve for Business card brings the best Sapphire Reserve benefits to business owners who expect hardworking rewards.

Speaker 4 Designed to meet the needs of business owners at scale, this pay in full card elevates your travel experience and offers premium benefits and value toward business services that can take your business to the next level.

Speaker 4 Sapphire Reserve for Business provides over $2,500 in annual value.

Speaker 4 Fuel your business and maximize rewards with 8x points on all purchases through Chase Travel, 3X points on social media and search engine advertising, annual partnership credits, and more.

Speaker 4 Make every journey more rewarding with a $300 annual travel credit and access to a network of airport lounges.

Speaker 4 Whether you're looking for pre-flight productivity or time to rest and recharge, Chase Sapphire Reserve for Business.

Speaker 4 With over $2,500 in annual value, it's it's the card that gives back all you put in. Learn more at chase.com forward slash reserve business.
Chase for business. Make more of what's yours.

Speaker 4 Accounts subject to credit approval. Restrictions and limitations apply.
Cards are issued by JPMorgan Chase Bank, NA, member FDIC.

Speaker 2 Should we talk about private credit as a new public credit?

Speaker 2 Yeah.

Speaker 2 Sure.

Speaker 2 There's this fascinating Wall Street Journal story this week about how it is harder to know how consumers are doing because the way you traditionally look at how consumers are doing is bank data, credit card data, like bank reports.

Speaker 2 Because banks say things like, people are charging a lot of money on their credit cards, or like we have a lot of delinquencies on our credit cards.

Speaker 2 And you get a sense of like what consumer credit looks like, consumer spending.

Speaker 2 And what is happening is that some consumer spending, it's like marginal, but it's real, has moved away from credit cards and into

Speaker 2 other stuff,

Speaker 2 alternative consumer lending, which I think I shorthand is like buy now pay later.

Speaker 2 So it's like a firm and things like this where it's like you charge something, but instead of charging it to a credit card, you charge it to a buy now, pay later lender.

Speaker 2 And the money for that doesn't usually come from banks. It comes from other people.
And there are a variety of lenders, but like a lot of it is what you'd call private credit.

Speaker 2 It's like insurance companies and private credit firms that are providing their balance sheet to fintechs that are the front end for these loans that make the buyout payload credit decisions.

Speaker 2 And so the thing that you're seeing is that instead of banks with credit cards providing credit for consumer spending, you have private credit providing credit for consumer spending, which is kind of a weird development.

Speaker 2 And also like a thing that I've been writing about for a long time now, which is that banking is getting narrower. Private credit is taking over from the banks.

Speaker 2 But a lot of that has been in LBO lending, business lending, data center lending, and now it's also in consumer lending. It's sort of an interesting shift.

Speaker 5 Yeah, absolutely. And you point out, as the Wall Street Journal did, that this makes data worse, you know, in terms of tracking.

Speaker 2 But I don't care that much about that. I care a little bit.
Yeah, like as a journey, you know, it's like, yeah, he writes about stuff.

Speaker 2 It's like, but I don't never write about like, oh, consumer credit is worse.

Speaker 2 So I don't care about this data. Other people care about this data.

Speaker 2 That's bad. But like, I mean, the broader point I would make is that the worsening of data is because bank regulators collect a lot of data from banks and make it public in some form.

Speaker 2 And so you can see stuff about what banks are doing.

Speaker 2 Also, a lot of, you know, the big banks are largely publicly traded, and so they'll talk about, you know, consumer credit weakness on their earnings calls. Yeah.

Speaker 2 Private credit is private, and so they don't do those earnings calls. I mean, this is publicly traded managers, so you get a little bit, but like, it's not the same level of interest in that.

Speaker 2 And like, they're not reporting to regulators in the same way that banks do.

Speaker 2 And the point I make is that the whole point of financial regulation in the last 20 years is that the banking funding model is systemically important and

Speaker 2 risky, right? Like banks have runs.

Speaker 2 When there's runs on banks, credit tightens and the economy gets worse.

Speaker 2 And if you can replace a runnable banking system with a long-term funded, equity-funded private credit system, then that is structurally better.

Speaker 2 And the trade-off for that is that that's less regulated, right? Like that's what happens. Like banks are highly regulated because their funding model is risky.

Speaker 2 If you just like have a pot of your own money and make loans out of it, you're less regulated.

Speaker 2 And people get nervous about that because it's less regulated, but it's like that's the trade-off that like

Speaker 2 the regulators meant to strike mostly without always thinking about it. And it's like a sensible trade-off, and it just makes people real nervous.

Speaker 5 Well, I mean, does it become more regulated? I have to imagine.

Speaker 2 I don't know, man. The people keep talking about it, but

Speaker 2 we're not in an environment that is really gung-ho on making anything more regulated. That's true.
And

Speaker 2 my point is that it doesn't make sense. I mean, whatever makes sense.

Speaker 2 There's a reason this stuff is less regulated, which is that it is less risky. Just as a baseline funding model, it is less risky.

Speaker 2 And so when a private credit firm wants to make bad loans, it's like, all right, that's your mistake, man. It's your money.

Speaker 2 When a bank wants to make bad loans, it's like, no, no, that's the depositor's money. That's like taxpayers' money.
Like, we need to make sure they don't make bad loans.

Speaker 2 So, you know, the regulatory pressure is less, but we'll see. But, like, for now, nothing's getting more regulated.
Banks are getting less regulated.

Speaker 5 This is a turn, but did you see that piece in the FT about Apollo? And it quoted an Apollo executive saying, we're becoming a bank. It truly sucks.
It was an unnamed person.

Speaker 5 Sounds like you didn't see this piece. No.
It was kind of funny. I'll send it to you.
Yeah, look, I mean, see, if you were still on Twitter, you would have seen it.

Speaker 2 There's like a long-running history of like like

Speaker 2 banks get regulated, things that are not banks move into the business, they become big,

Speaker 2 they

Speaker 2 move into riskier and riskier funding models, they blow up, they get bailed up by the Fed and they become banks, right? Like that's kind of the story of 2008.

Speaker 2 Like, could that be the story of private credit? Like, yeah, maybe.

Speaker 5 I'm excited to find out, truly, as a consumer of news.

Speaker 2 Yeah, I don't have in my mind a picture of what it looks like to have like

Speaker 2 the crypto crisis in 2022.

Speaker 2 It's like truly like like a replay of 2008 right I don't have a picture in my mind of what that looks like in the private credit version like I don't have a picture of like runs on private credit firms but like it would be cool yeah well to write about not like for the world or whatever but it would be like an interesting development but I again I can't quite visualize it yet but we'll get there

Speaker 2 and that was the Money Stuff podcast I'm Matt Levine and I'm Katie Greif You can find my work by subscribing to the Money Stuff newsletter on Bloomberg.com.

Speaker 5 And you can find me on Bloomberg TV every day on the close between 3 and 5 p.m. Eastern.

Speaker 2 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.

Speaker 5 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.

Speaker 2 The Money Stuff Podcast is produced by Anna Mazarakis and Moses Andam.

Speaker 5 Our theme music was composed by Blake Maples.

Speaker 2 Amy Keene is our executive producer.

Speaker 5 And Sage Vauman is Bloomberg's head of podcasts.

Speaker 2 Thanks for listening to the Money Stuff Podcast. We'll be back next week with more stuff.

Speaker 6 These days it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it.

Speaker 6 Fortunately, Okta helps you get identity right by securing your AI agents' identities, giving you a single layer of control, a single standard of trust.

Speaker 6 So whether an AI agent supports a single user or your entire enterprise, with Okta, you'll turn risk into opportunity. Secure every agent, secure any agent.
Okta secures AI.

Speaker 3 Here's a paradox. We buy insurance for peace of mind, yet the very policies we trust can deliver the biggest financial shocks.

Speaker 3 Across America, millions millions of claims are denied every year, not because people did anything wrong, but because policies quietly excluded the things that happened.

Speaker 3 The psychology of trust tells us we assume the contract is fair, but in insurance, the information gap is massive. The insurer knows every detail of what's covered.

Speaker 2 The policyholder rarely does.

Speaker 3 That's where my policy advocate comes in. For just 27 cents a day, their platform reads your policies and shows you in plain language where you're vulnerable.
They're not selling insurance.

Speaker 3 They don't do that. It's about transparency, giving ordinary people the same understanding insurance companies have had for decades.

Speaker 3 Because when you know what's really in your policy, you can plan, protect, and avoid surprises. Before you trust your policy to protect you, let MyPolicy Advocate tell you what it really says.

Speaker 3 Visit mypolicyadvocate.com today. Peace of mind starts with knowing the truth.
MypolicyAdvocate.com.

Speaker 9 So, have you heard the story about the prescription plan with savings automatically built in? It's where a family of any size can feel confident the cost of their medication won't hold them back.

Speaker 9 Go to cmk.co/slash stories to learn how CBS CareMark helps members save just by being members. That's cmk.co/slash storis.