The Fun Little Drink Economy

0:06Hello, and welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Bloomberg with Emily Peck of Axios.

0:16Felix Salmon: Hello, hello. With Elizabeth Spiers of the New York Times. Hello. And we are going to pick Emily's brain because she is back from California where she was hanging out with a bunch of rich people who were drinking expensive coffee. And we're going to learn what that was like. We're going to learn whether the coffee was better over there. We're going to learn whether there's a whole bunch of optimism in the world. Spoiler alert, yes there is. We are going to talk about one little example of that optimism, which is the fact that GameStop has put in a bid for eBay. We are going to talk about refreshes.

0:57The whole show, though, frankly, is a refreshing show. So stay tuned. And all coming up, sleep money.

1:10This message is a paid partnership with Apple Card. Apple Card is a no-fee, cash-back, rewards credit card with a ton of great benefits. There's a lot to love, but instead of listing everything, I want to focus on my favorite benefit, travel. You all know how much I love to travel, but even as a seasoned traveler, things can still get stressful, which is why I use Apple Card on my international trips. Apple Card has no foreign transaction fees, so I never have to worry about extra charges when I'm abroad. And with 2 % daily cash back on every purchase with Apple Pay, I'm actually earning daily cash as I travel.

1:51That's 2 % wherever Apple Pay is accepted, which adds up when you're booking flights, hotels, and car rentals. Instead of coming home feeling like I've drained my bank account, I come back with cash back I can put toward my next trip. So start using Apple Card for everyday purchases today. Don't have one yet? Apply in the Wallet app on iPhone. Subject to credit approval, variable APRs to AppleCard range from 17.49 % to 27.74 % based on credit worthiness. Rates as of January 1, 2026. Existing customers can view their variable APR in the Wallet app. AppleCard issued by Goldman Sachs Bank, USA, Salt Lake City Branch.

2:30Terms and more at apple.co slash applecardbenefits.

2:36Felix Salmon: Slate Money is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Listen to Washington Wise, an original podcast for investors from Charles Schwab, to hear the stories making news in Washington right now. Host Mike Townsend, Charles Schwab's Managing Director for Legislative and Regulatory Affairs, takes a nonpartisan look at the stories that matter most to investors, including policy initiatives for retirement savings, taxes and trade, inflation concerns, the Federal Reserve, and how regulatory developments can affect companies, sectors, and even the entire market.

3:18Felix Salmon: Mike and his guests offer their perspective on how policy changes could affect what you do with your portfolio. Download the latest episode and follow at schwab.com slash Washington Wise or wherever you listen. Let's start with the business and finance news of the whole, what, year, pretty much, would you say, Emily? Maybe even longer than that. Maybe since 2025, January 20th, 2025. Maybe that's where we start. That was when Donald Trump became the president for the second time and started implementing a very, let's call it to be polite, post neoliberal set of economic policies. He has a very America first kind of view of the world.

4:10He has a very zero sum view of the world. The way that we win is by other people losing. and he uses all of the power available to him as president of the united states to try and put his finger thumb on the scales and pick winners and do all of these things and i grew up in a world where they received wisdom from the economics profession and everyone else was the best way to have broad prosperity would be if you have lots of competition and free markets and everyone is driving prices down and productivity up and consumers benefit. And Trump is like, fuck all that. I just want, you know, America to win.

5:01And the most visible sign of this was the Liberation Day tariffs in April 2025, which he announced and immediately the stock market falls off a cliff because they're like, we don't like that. We like laissez-faire capitalism, free market capitalism. We don't like it when the government starts trying to get involved. Since then, as we all know, the stock market has bounced back not only from the Liberation Day tariffs, but also from the single biggest oil shock the world has seen since 1973. And we're hitting new record highs again and the reason we're talking about this this week is that you just got back from beverly hills because you're very glamorous and you spent a few days hanging out with the california plutocrat crowd at the milken conference in beverly hills and they were just peachy happy with this current state of affairs, if they ever preach the gospel of laissez-faire capitalism, that is a dim and distant memory.

6:07And now they're like, wow, Trump is good, actually. Well, I don't know that that,

6:13Felix Salmon: but I don't think I heard anyone say that. I just everyone at this conference, right, which is like Mostly CEOs, investors, bank people, a lot of people wearing navy suits and chunky, expensive watches. A few women, maybe 25 % of the crowd, women, immaculate suits, high heels, setting the scene of just very rich people doing very rich people things, walking around, looking extremely rich. And they were so happy. Okay, these were a happy group. The stock market, as you said, Felix, is hitting new all-time highs seemingly every day. I think it did so a few times in the brief days I was there. And everyone is very excited about AI and all the money being poured into the AI hyperscalers and the opportunities of deal-making around AI.

7:15Felix Salmon: And you heard, I heard more about AI and AI excitement and how AI is going to change the world than I heard anything about geopolitical shocks or the Strait of Hormuz. The Financial Times was there also. They quoted a banker saying something like, does anyone care that the Strait of Hormuz is closed? And, you know, like the whole country of, say, India, they care, right? They're rationing cooking oil and not going to work because there's not enough gas. But, you know, in Beverly Hills, where, by the way, gas prices were near to$7 a gallon, they did not care. $7 is like what you pay for a small coffee.

7:54Felix Salmon: It's fine, right?

7:55Elizabeth Spiers: I think these are the people who don't know how much a banana costs for Arrested Development.

8:00Felix Salmon: Whatever. It's fine. Is it organic? I'll pay more. So everyone didn't care about any of that. And the few people I talked to who care about such matters were like, I don't understand why they don't care. You know, it was just like, no one cares why I care. And then one line of explanation came from a consultant I spoke to who said, basically, they learned to stop worrying and love geopolitical risk. Like CEOs basically have gotten used to managing around the volatility coming from the White House. They've just like deal with it. It's fine. It's like the way it is now. They can't be shocked by shocks anymore because there have been so many shocks.

8:39I really like this because, again, back in the olden days before Trump, when I was sipping at the trough of neoliberalism, the thing that everyone used to say was the thing that business values the most is certainty. The worst thing for business is uncertainty. Like risk you can press in, uncertainty you can't. And what you don't want is especially policy uncertainty because when you're a business, what you're doing is you're making investment decisions with 10, 20, 30-year time horizons, and you want some kind of certainty that you know what the world is going to look like in 10, 20, 30 years so that you'll be able to get a return on your investment.

9:22And when the world can get turned upside down on any given Tuesday because Trump tweets something, that's not a conducive atmosphere for investment. Turns out this is completely false. We are seeing like all time highs in investment, not just in the stock market, especially, as you say, in anything AI related. and we're seeing that investment being made in the face of incredibly high political uncertainty geopolitical uncertainty and also even sectoral uncertainty because no one has a clue what the AI industry is going to look like in 10 years and given all of that uncertainty you would imagine that risk premiums would be enormous that valuations would be low right now because we just don't know where it's going to be and people are taking a lot of risk so they need a higher returns that they need to buy in at a lower level.

10:10None of that is happening.

10:11Elizabeth Spiers: Do you think, Emily, this is a matter of them having already priced in the risk where they kind of think they know where AI is going? They understand that Trump isn't an ideologue, but he sort of has a mobster way of operating where he will, for example, with NVIDIA recently, he is allowing them to export chips to China, but he's taking a 25 % cut. But if you understand kind of Trump's zero-sum mentality, then maybe he's more predictable than we think. I mean, he's clearly not predictable because he does things like bomb Iran, which like no one really predicted. And the risk clearly isn't priced in because risk spreads are tiny.

10:50Stock prices are at all-time high. Like if risk was priced in, then all of the asset values would be much lower.

10:56Felix Salmon: Well, to build off what Elizabeth was saying, yeah, I think that CEOs just, they do think Trump is not as big of a risk as they used to. And I think investors say this all the time, and we already talked about it. There's a belief that Trump sort of like lives and dies by the market, the stock market. So I think when CEOs, leaders see the stock market up, that's like a green light, like risk on kind of light. Do deals, do whatever. Like the president's not going to mess with that as much. And then I think since the tariff lesson, like the Liberation Day shocked businesses and companies. They were sort of like afraid to act.

11:39Felix Salmon: But the way that's played out, which has been like a mix of like classic Trump always chickens out taco vibes, plus court pushback, plus everything seems fine, I guess, kind of vibes that CEOs are like, you know what, we can manage through this. Like it's OK. And the proof of the pudding is in the eating. Here we are. We are now more than a year on from Liberation Day. We have the largest tariffs that the United States has seen since the era of Smoot-Hawley in 1931. And the more or less unanimous prediction of economists, if you had told them what the blended average tariff rate has been over the past year, what would that have done to corporate profits?

12:31They would have said, well, obviously corporate profits will fall in that kind of universe. and in fact corporate profits are up what 11 % over the past year something enormous like that I mean the stock market rising is mostly just a sort of arithmetic product of the fact that profits are

12:48Elizabeth Spiers: going through the roof yes we should mention to you that Thursday the court of international trade ruled that Trump's tariffs were illegal and I think people were sort of anticipating that so that might also be a reason for they did that a year ago as well but yeah that and then that'll take another year to trickle through. I don't think that this is pricing in optimism that the tariffs will go away so much as it's pricing in optimism that the tariffs don't turn out to matter that much for corporate profits.

13:17Felix Salmon: Plus AI. Plus AI. And what we have seen, and we talked about this last week with Google, is that profits are up and to the right across the market. Everyone is making money. We have this big sort of sloshing sound of capital sort of moving away from labor and towards capital. So if you have money in the market, that's good. Milken in particular is a conference of dealmakers. It was founded by Mike Milken, probably the greatest dealmaker of the 1980s. Everyone is looking for deals to make, for financing to structure. The amount of money that is being put into, especially AI deals, is just mind-boggling for data centers and IPOs of Anthropic and OpenAI and SpaceX.

14:03So there's this big theory that I have that I want to run by you guys, which is that for a while now, Silicon Valley has run on this idea that the way to become super successful is to be a monopoly. Peter Thiel wrote a whole book about it called Zero to One. And the idea is you don't make money by being competitive. You make money by owning an entire thing. And everyone just comes to you because you're the natural monopolist. That's how Google became so successful. That's how Facebook became so successful. That's how Windows became so successful. And that has, I think, here's my sort of like big idea, which I want to run by you.

14:40That has kind of metacitized up to the level of the economy as a whole. And what you have is Donald Trump kind of internalizing this idea and saying, I don't want competition. I just want the U.S. to be the monopolist and to call all the rules and to make all the money. and it kind of seems to be working.

15:01Elizabeth Spiers: No, I don't think that that's, you know, some broad shift in the way that people think. I think this sort of boils down to how Trump operates. When we had Barry Ritholtz on a while back, he said something like, the market has to react now to this sort of one fucking guy doing something that, you know, shifts perception in big ways. And Trump's not an idyllic. You know, I don't think that he has a particular theory about monopolies versus healthy competition. I think he just views everything as the US sum. And that's what we're seeing is the end product of that. But what we're also seeing is, even on a global basis, a positive sum effect of his policies.

15:40The stock markets in the rest of the world have gone up even more than stock markets in the US, right? Winning in the US is good for the US. But somehow, everyone else, even if they're losing, And Emily was just talking about how the industrial base of India is being completely hollowed out by the fact that no one can get fuel to run factories anymore. But that notwithstanding, I mean, look at what's happened to the Korean stock market. It's gone up five times. Well, there's people that are routing around Trump. This is my point. Everyone is somehow winning.

16:10Felix Salmon: I think you are right and wrong. So I think you're right that the zero-sum situation has metastasized globally because of Donald Trump's America first policies have forced other regions of the world to be X first, Europe first, Asia first, whatever. Everyone is retreating into their, you know, corners of nationalism. Middle powers first if you're Prime Minister Kani of Canada. Ridgewater is talking about the new mercantilism. Every country or region is trying to figure out how to have their like protected industries and moats and, you know, fighting each other. And that can be good. Like for like Germany and Europe, they're now afraid that the U.S.

16:54Felix Salmon: won't come to their aid militarily. So they're building up defense industries and spending a lot of money and like growth is supposed to be a little bit higher there. But I mean, I wouldn't say that they're doing so great in the stock market, like inflation fears, energy problems are causing equities to kind of fall in those regions. And in Asia, you pointed to the Korean market, but that's like an AI story, right? That's not about the new mercantilism or anything like that. That's because investors see that Korea's KOSPI as a way to invest in AI stocks, and it's done like insane. Then the second thing is you are right that monopolies can, and country monopolies like you're talking about, can be good economically in the short term.

17:36Felix Salmon: I think in the long term, in the U.S. and around the world, this move to be protectionist and mercantilist and to see economic growth as zero sum instead of like we all trade and everybody grows together, it makes everything really fragile. When you have a monopoly, when you have a ruling capitalist class slaying and trotting around Milken, feeling happy in the sun, you have a lot of losers building up. You have a lot of people not benefiting from stock market growth. You have a lot of countries that aren't building the moats, like you have your Indias, whatever. That leads to a lot of, and I did hear this talked about too, a lot of fragility.

18:17Felix Salmon: That leads to a lot of anger. That leads to a lot of populism. The last time we had big global change in the economy, that's what we had the last time, too. And that was during a time of Felix's heyday of neoliberalism. We had losers in the U.S. that were like, hey, we got left out. Why don't we vote for this cool guy from TV who seems to get us? You know what I mean? It's a very fragile situation when you are making these economic winners, sucking the capital up for companies, and leaving a bunch of worker bees without very much of anything at all.

18:53Elizabeth Spiers: I also wonder how much of this is just pure, unadulterated AI optimism. There was a quote from Larry Fink, he's the CEO of BlackRock, where he said, you know, we're not in the AI bubble because there's a supply shortage, which to me is just looking at one tiny quarter of the whole AI issue. We do have potential risk on the horizons that he's sort of not acknowledging. One is so much of the data center build out is built on debt. some of the smaller non-hyperscaler companies may not be able to pay off. And they're having trouble getting some of these big data centers online and hooked into the grid.

19:26Elizabeth Spiers: And so anytime somebody's like, well, look at the stock market, we're not in a bubble. This is just the new reality where AI drives everything. If you're in a room full of other people who are all making tons of money off of AI, there's an incentive to be Wile E. Coyote running off the cliff and then just never look down collectively. So the fact that so much of the AI industry is built on debt is probably, I mean, it should be to some degree reassuring because debt investors by their nature are relatively conservative, right? You can't make massive profits from lending money because you're lending money at relatively low fixed rates and the upside is cap and the downside is everything.

20:09Elizabeth Spiers: I mean, but using that logic, we'd have never had a credit crisis. I'm not sure that when there's a sector move where so much money is pouring into one sector and the entire index is very overweight, that sector. I'm not sure generally though. I just, I mean, can there be credit crises? Yes. Is there a lot of borrowing going on in the AI sector? Yes. Is there a huge amount of credit risk in the AI sector. I'm not sure about that. I think that's one of the reasons why Google and Amazon and like the really deep pocketed sort of ultra highly rated companies are seeing their market caps go up so much as a result of this AI bubble, if you want to call it a bubble, is precisely that they are the ones who are able to borrow the money because they have the cash to do so and they have the cash flows to do so.

21:02No one's worried that they're going to end up defaulting.

21:05Elizabeth Spiers: Yeah, well, that's what I said, not the hyperscalers. Right. No, right. That's where most of the debt is, right? Are there little loans and bonds here and there which are riskier? Yes, but not enormously, right? If you look at like the trillion dollars of AI related debt that has been issued so far, most of it is incredibly safe.

21:26Felix Salmon: Did you read my newsletter today? I did. What do you think of the guy who said that the reason government borrowing yields are up on government debt is in part because the hyperscalers are issuing so much debt and bonds that they're competing with treasuries now. It's absolutely true. It's not, you know, that Alphabet and Amazon are considered to be safer than the US Treasury. But yeah, there is a finite amount of investment capital to go into the bond market. Yes. And when you have this much issuance, then that just drives yields up broadly across the board because if you can get, I don't know, 6 % from Alphabet, then why would you lend to the government at less than 5 %?

22:14Felix Salmon: Right, because Alphabet is seen as just as, almost as safe. Almost as risk-free, as safe. That's so interesting to me. The cost of borrowing for the United States is going up because Google needs to borrow money too. I don't know, that's pretty wild. That's like these are new countries and almost entering the scene. Exactly. And this is ultimately, I think, this ultimately does explain why everyone at Milken is so happy. Because Milken at heart has always been and will always be a bond conference. It's all about fixed income issuance, fixed income investment. And right now, the fixed income desks have never been happier.

22:55They are just rolling in happiness. They are seeing flows. They are seeing deals. They are making money left, right and center. They are trading. They are issuing. And yeah, it would be unthinkable for this kind of volume to be in the bond markets and have anyone at the Milken Conference be unhappy because they're just bond people. That's who they are.

23:16Felix Salmon: And like the US, like they can borrow so much money. Everyone's like, sure, we'll give you money. And now these big tech companies are like, hey, we can do it, too. We can get lots of money, too. And everyone helping them is like, Wee! Wee! It's fun!

23:45Slate Money is sponsored this week by Cash App, which is a place you can go to start accumulating Bitcoin. I have been thinking about writing about Bitcoin for well over a decade at this point. There was a big piece I wrote on Medium about Bitcoin back in 2013 when it blew through a billion dollars in total market cap. It's now more like a trillion. It's one of those things that felt like it was always going to go away, but never really did. I have bought a work of art with Bitcoin. I have bought a coffee with Bitcoin. I have tried to use it as a payments mechanism, but honestly, the people who seem to have been most successful are the people who just bought it earlier, just did nothing with it and saw it accumulate in value.

24:32If you have been curious about Bitcoin but haven't made the jump yet, then you can do that in Cash App. It's just in the app on your phone. You can set up automatic purchases with zero fees, or you can buy larger amounts also with zero fees. You can start small, you can go bigger. It's designed to be simple either way. For a limited time, new customers can get$10 added to their balance. Just use code cashapp10 when you'd sign up. And don't forget this part, send at least$5 to a friend in the first two weeks. Terms apply. Cashapp is a financial services platform, not a bank. Banking services provided by Cashapp's bank partner.

25:08Bitcoin services provided by Block Inc. For additional information, see the Bitcoin disclosures at cash.app slash legal slash podcast.

25:20Felix Salmon: This episode is powered by AT &T Business. For every small business owner, there's a moment they remember when they realize they wanted to start their own business. It can be a life-changing moment, but those first steps are never easy. Figuring out the right building blocks, your goals, your schedule, your mindset, you have to think about an entire ecosystem. Not just the big stuff, but the little bits too. In this day and age, a major point for any successful business is strong connectivity. Spotty internet has led to some terrible work calls in my life, but when you're running a business, connectivity can make or break you.

25:48Felix Salmon: AT &T Business has the tools, team, and expertise you need for a reliable network you can depend on. They make connecting easy, and that's the main thing you want in a provider. Less time stressing, so you can focus on the million other things on your plate. AT &T Business is a reliable provider for small business owners. For Small Business Month, we celebrate small businesses by helping them run better. This means reliable uptime, easy switching, smart communications. AT &T Business built to work. Get AT &T Business at business.att.com.

26:19Slate Money is sponsored this week by Upwork. I have a friend who's starting a company that restores light-based artworks, artworks made out of neon and other things that emit light. It's a kind of niche-y thing, but she needs a website. And is she going to build that website herself? No. Does she want to hire someone to build that website? Yes. Does she want to bring someone on staff just to build a website? Hell no. What she wants is a freelancer. Scaling a business takes the right expertise at the right time. It takes people doing jobs for you, which need to be done, and then that's the end of that.

26:53And finding the people to do that. Hiring help should not be a headache, and it should not be a drain on your budget. Upwork makes it easy to hire specialized freelancers quickly, so you can get the expertise you need now without weeks of recruiting or a full-time hire. The fastest-growing businesses delegate smarter. Upwork helps you bring in expert freelance help fast, so you can delegate and keep moving. One of the biggest growth hacks is realizing you don't have to do it all yourself. Upwork is a one-stop platform to find, hire, and pay expert freelancers across web and software development, data and analytics, marketing, business operations, you name it.

27:29You can fill skill gaps, launch projects faster, and scale support up or down without committing to full-time headcount. With Business Plus, you can access the top 1 % of talent on Upwork, and with the AI-powered shortlisting, you'll get matched to the right freelancer in under six hours. Upwork also cuts down on operational hassle by handling things like contracts and payments in one place. Thousands of growing businesses already trust Upwork to hire flexible, high-quality freelance talent for everything from one-off projects to ongoing support. It is free to sign up and posting a job is easy.

28:01So visit Upwork.com right now and post your job for free. That is Upwork.com to connect with top talent ready to help your business grow. That's U-P-W-O-R-K dot com, Upwork dot com.

28:17Of course we need to talk about GameStop because... All right, Elizabeth, can you just give me the TLDR here? Just tell me what the GameStop story is because it's amazing.

28:28Elizabeth Spiers: Yeah, so GameStop CEO Ryan Cohen wants to buy eBay somehow, even though they don't really have the cash to do that. and partly because he was once banned by eBay and is still carrying a grudge about it, but also because, and this strategically is the only thing about this deal that makes sense, GameStop has sort of pivoted to being a collector's store. So it's, you know, Pokemon cards and collectibles. And obviously that is eBay's bread and butter. And they've also developed more of a younger customer base. But nothing else about this deal makes sense. Let's start by stipulating. For those of us who remember 2021, GameStop was this basically left for dead legacy video game retailer that was losing money hand over fist and was certainly going to fail.

29:21And a whole bunch of hedge funds were like, this video game retailer is certainly going to fail. Therefore, we can short the stock and make money. and then there was the mother of all short squeezes the stock went through the roof and well we all remember there was a movie about it and the whole thing i saw the movie i think we talked about it on sleep money oh yeah we talked about it with jonah sarah and the one thing that everyone said when gamestop was meme stocking was be careful people because it's all going to end in tears and like gamestop will end up going to zero like whatever shenanigans happen with the stock.

29:57GameStop is now a$12 billion company.

29:59Felix Salmon: This was shocking for me to learn reading the prep. Apparently, like Ryan Cohen did turn around GameStop. GameStop has$9 billion of cash on its balance sheet. How? It's amazing. What a story. I had no idea. I lost track of it. It was just like a thing you flick at in another story about retail investors. You're like, remember GameStop? Move on. Never look. Never check. Reading the prep for this. And I was just like, hang on. And so when And Ryan Cohen says, like, I want to buy eBay. And Elizabeth says, like, well, he doesn't have the money. Well, he kind of does, right? He has$9 billion of cash, which is a lot of cash.

30:36And then he went to, like, was it TD Bank or someone like that in Canada and said, well, you lend me$20 billion to buy eBay. And they're like, yeah, we can do that. I mean, we're not going to 100 % like nail promise, but we will give you this thing called a highly confident letter, which to echo the previous segment was this thing that was invented by Mike Milken. And people have been using highly confident letters to buy companies since Mike Milken's day. So, yeah, he has$20 billion that TD Bank is highly confident they can lend him. He has$9 billion of cash. He's bidding$54 billion for eBay.

31:15He's halfway there just in debt and cash. And he's like, as he famously said on CNBC, it's half cash, half stock, right? Half of$54 billion is$27 billion. What's the problem?

31:26Elizabeth Spiers: I think there are two problems. One is that, first of all, that letter that TD Bank issued is pretty standard in early stage deal making. And it's non-binding. It doesn't really mean very much. It just gives TD Bank some option where if they end up doing the deal, they'll probably have better rights than any other participating institutions. But the other thing is that Cohen does have a little bit of a mixed record in turnarounds. What he did with GameStop is they did move to a younger audience focused on collectibles, but they also their revenue is down significantly, but they're more profitable because they just cut out entire lines of business.

32:02so his entire mo is cost cutter but he also made big bets on bed bath and beyond which ended up in

32:09Elizabeth Spiers: bankruptcy and he made noise about going after nordstrom and making changes to the board and then somebody pointed out to him that the board is entirely controlled by the family that owns nordstrom and so he can't do that so it seems like he's a little bit impulsive in terms of the way that he decides to do these things oh he's he's he's certainly impulsive he's a creature of wall Street Bets. I will say that he made a lot of money on Bed Bath & Beyond. That was successful for him. It wasn't successful for the long-term shareholders. He bought the stock. It went up. He sold the stock. It went down.

32:41But he made money.

32:41Felix Salmon: This was intriguing. Again, I'll refer to the wonderful prep document that we are given. And I read an amazing story in Forbes that said GameStop, they say they own some eBay stock. I think it's like 15 % of...

32:56Elizabeth Spiers: It's just under five because at that point they have to report to the SEC. But they have an economic interest which is higher than that because they have a bunch of options.

33:04Felix Salmon: Anyways, that's what I was getting at. They have a bunch of options. And if eBay's stock price goes up, they can make a lot of money on the options. So he can go out and say, hey, I'm going to buy eBay and I'm going to value it at$125 a share. And the market's like, we don't really believe you, but the stock goes up anyway a little bit more. That's already a win for this bro. He doesn't need to do anything. He doesn't need to have the deal go through.

33:29Elizabeth Spiers: But the SEC did exactly the opposite of that on this news. No, eBay stock went up. It went up.

33:32Felix Salmon: eBay stock went up and GameStop stock went down. So he could still make out perfectly, wonderfully. He can make money on this trade as a short-term trade. Like, do I believe he's going to end up buying eBay? No, because he's still a shitposter at heart, right? And probably like 80 % of this bid is shitposting. it's theoretically possible but practically improbable the amount of stock that he would have to issue in order to be able to pull this deal off even if his stock doesn't go down any further than it already has it's like four times the amount of stock that he has outstanding like all this would be the most dilutive acquisition we've seen in years and it's probably not going to happen but the way matt levine explained it was sort of more like what he's actually talking about is eBay absorbing GameStop, but putting Ryan Cohen in charge of the whole thing.

34:25Felix Salmon: And like Ryan Cohen basically borrowing money on the eBay side to make the whole thing happen, kind of like a leveraged buyout. It's like an LBO, exactly. And then eBay sees its debt load, you know, treble or go up four or five times. And then suddenly eBay becomes this incredibly indebted company. And did we actually want that? Probably not. Is it good for shareholders who suddenly get a very risky company that is way over levered probably not but you're just a milking it's like junk bonds are here again that's not the point like making a healthy company isn't necessarily the point the whole thing is done right like so ryan cohen goes off on ebay and says i'm going to sell my socks to help raise money for this and then ebay bans him and the whole thing is just meme over meme uh matt had the great headline on his newsletter on thursday half cash, half sock.

35:15On some level, it's really stupid. But one thing I do want to say, just because this is my little place where I get to rent here on Slate Money, is that a huge amount of the discourse surrounding this dumb bid that is not going to work was precipitated by an interview that Ryan Cohen did on CNBC with Andrew Ross Sorkin. And he was very sort of like, should would just say laconic to the extreme he just basically didn't say anything and andrew was saying dude can you explain this math to me and he said i think the quote was the math doesn't math and he's like i just don't understand where you're going to get the money to buy ebay and ryan cohen was like it's half cash half stock i don't understand the question and he didn't really explain it and to people who think that he's god because they made all the money on gamestop and by the way probably made lots of money on like chewy and pet smart like the guy has done a lot of good deals in his time.

36:10They were like, oh, he totally mogged Andrew Ross-Aulcon. And then the stayed square financial journalist types, you know, places like Semaphore or whatever would be like, Andrew Ross-Aulcon was asking these incredibly sensible questions and he couldn't answer them. And like, he looked like a moron. Andrew Ross-Aulcon was not asking an obviously sensible question. I just want to come out and say this. He was like, you only have$16 billion of stock outstanding. You add that to the$27 billion of cash and it doesn't come to$54 billion that you need to buy the company. And it's like, Andrew, that's not how stock works.

36:47When you're paying with stock, you don't use the shares that are currently owned by your existing shareholders to buy the company. Your existing shareholders hold onto their shares. Like what you use is newly issued shares and you can issue as many newly issued shares as you like. There's no limit of 100%.

37:05Elizabeth Spiers: I thought his question was more about the debt side of it. I think it's a reasonable question because, you know, Michael Burry of the big short fame dumped all of his game stock on the news of this because he didn't think the debt side of it was going to work. No, Andrew's question was quite explicitly like, even if you get the 20 billion, where are you going to get the rest?

37:24Felix Salmon: He should have said, when you're talking about stock, are you saying you will issue$20 billion worth more of stock or not? And when Cohen replied saying it's half cash, half stock, then yes. If you're paying$27 billion in cash, then yes, you're issuing$27 billion in stock, which is more stock than there is outstanding. But Cohen could have said, like, my plan is, he could have said to be specific, that stock would be issued. Yeah, he could have answered the question, which he didn't. So, I mean, and so that's what makes the whole thing pretty unusual. And that's why it got attention. Also, like, yeah, I mean, Andrew Ross Sorkin could have asked like that follow up question, but I feel like his job is to sort of like question these guys, like getting into the minds of the viewer who might think a similar thing.

38:09Felix Salmon: How does this tiny company buying this big company? That's just the question you ask. How are you going to do it? And the answer we all kind of know is he's not. But again, it's symptomatic of the frothiness in the markets right now that he can come out and be like, I want to buy eBay, which is, you know, why the fuck not? Stranger things have happened. it doesn't not make sense like you were saying like if game steps into collectibles and stuff and ebay is now like into the youth like they just bought um depop which is like a second-hand uh intranet store i'm like a thousand years old but they bought depop and are trying to like skew younger because you know original ebay fans are now like in their 60s it doesn't not make sense ebay yeah ebay is just like old economy at this point and probably wants to get owned by someone you remember how it bought paypal and then sold paypal yeah and now paypal is a separate company that also owns you know venmo and reintree and like all of the payments bits and there's constant speculation that paypal is going to wind up getting bought by stripe because paypal is old and clunky and stripe is sexy and modern and so like let's just get the you know how old is patrick and john collison they're like i think they might have just turned 30 they're still pretty young Really?

39:25Yeah. They're just going to come in and buy PayPal.

39:27Felix Salmon: I feel like I get 20 years older while some people only get like five years older. And I don't understand how that works.

39:46This episode of Sleep Money is sponsored by Drive with Jim Farley, which is a podcast with the CEO of Ford. It has a brand new season, season four, which is coming out later this month. And for anyone who'd like to get behind the scenes with the CEO of Ford, Jim Farley, this is the best possible podcast for you. Every season, he talks to some of his favorite people about what they drive and what drives them. Like Sir Chris Hoy, who's not only a British racing driver, but he's also one of the most successful Olympic cyclists of all time. He talked to Jim about his career as an athlete, being knighted, and his cancer diagnosis.

40:31I checked out a couple of episodes of Drive with Jim Farley, including a very fun one with Matthew McConaughey from a couple of seasons ago. Holds up incredibly well. He's one of life's great raconteurs. You'll almost certainly find something you love across the seasons. He has a very broad range of guests, and you'll find a few that you recognize and probably some that you don't and you would want to hear from anyway. So to listen to Drive with Jim Farley, Just search for Drive with Jim Farley in your podcast app. That's Drive with Jim Farley.

41:10Slate Money is sponsored this week by Vanguard. To all the financial advisors listening, let's talk about bonds for a minute. Capturing value in fixed income is not easy. Bond markets are massive. murky and let's be real lots of firms throw a couple fleshy funds your way and call it a day but not Vanguard. Vanguard bonds are institutional quality that's not just a tagline it's a commitment to your clients it means top grade products across the board. Some managers out there promise big returns which usually come with big risks that can mean a roller coaster ride for investors. Vanguard takes a steadier approach they don't go all in on risky bets instead they focus on reliability and consistency.

42:00It's not always flashy, but it sets the standard for what dependable investing should look like. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com slash audio. That's vanguard.com slash audio. All investing is subject to risk. Vanguard Marketing Corporation Distributor.

42:27Anyway, talking about the kids, I love the perfect segues. You guys introduced me this week to, what are they called, refreshers? Drinks! And so suddenly I'm reading all of these articles about perfectly normal places like McDonald's and Starbucks and Dunkin' Donuts. Selling the incredibly weird sugary pink drinks with boba in them and tea. Refreshers. With the dumbest names in Christendom. and all of the teens are going, ooh, sweet pink thing and spending fortunes on sweet pink drinks. And I'm like, what is going on? And you're going to tell me that it's not just 13-year-old girls who's buying these things.

43:07Felix Salmon: Nope. Well, there's a... Okay, so what Felix is talking about is... Yeah, what am I talking about, Emily? Felix is talking about drinks! The rise of drinks at fast food outlets. People aren't as into soda anymore. people are into, sorry, drinks. Beverage innovation. Beverage innovation, refreshers, things that are pink, things that have matcha, things that have boba, things that have caffeine. These got big in the grocery stores with a drink called Celsius that Felix never heard of. Can you believe that? SlateMoney at slate.com. Anyway.

43:41Elizabeth Spiers: Felix only drinks a 50-year-old wine, so exclusively. That's not true. From Austria. I drink five-year-old wine. I drink.

43:51Felix Salmon: So the teens and the adults all got used to drinking things besides water, besides soda. And fast food restaurants are pressured right now because the cost of actual food, such as the beef, is getting more expensive and the margins are getting tighter. But they realize they can charge like, instead of charging like$1,$1.99 for a soda, you can charge like$5 or$6 for a strawberry watermelon. refresher that has freeze-dried strawberries in it or a Spriteberry blast infused with sweet blue raspberry syrup. These are McDonald's drinks. You can make a lot more money if you're a fast food restaurant and pull people in outside of like lunchtime dinner hours if you sell these drinks and they're becoming very big.

44:33One of the things that jumped out at me was like, no one's drinking soda anymore. They're drinking Sprite this and Sprite that and Sprite the other. They're still drinking soda.

44:43Felix Salmon: Right. Dirty soda is still really big.

44:45Elizabeth Spiers: I think this is like Gen Z's version of a slushie. This is like you have to tell me and I'm going to really be the old what is a Gaza guy here, but dirty soda. I'm going to assume it's not like Diet Coke with olive brine in it. It's like, how do you make Diet Coke less healthy? You add like cream to it or something. They add like vanilla foam and things like that. Oh, foams. That was it.

45:11Felix Salmon: Oh, that's part of drink culture is cold foam. And I'm going to be honest, write to us and tell us what the F cold foam is. I honestly don't quite get it, but there's all different kinds of cold foam. You can get it at Starbucks, Dunkin'. McDonald's now offers, I'm just reading from the press release, a dirty Dr. Pepper, which layers classic Dr. Pepper trademark flavor with a vanilla flavor and a cloud of cold foam. I don't know what it is. I have never had cold foam. Have you, Elizabeth?

45:39Elizabeth Spiers: I have not.

45:40Felix Salmon: But it's an add-on. It costs like a dollar. If you go to Starbucks and you want to drink with protein cold foam, which is a thing. Of course it is. It costs like$2 to add it. It's foam. But I guess there's that fancy Spanish chef that made foam a thing. And I feel like this is... Jose Andres. Yeah. And I think this is the result. It's trickled down. Jose Andres comes up with amazing spherisized olives and beautiful things. And then the next thing you know, we have cold foam in McDonald's. Protein cold foam. You pay by the bubble. $2. Yeah. it is a bubble. I totally understand the business logic of this, right?

46:16Which is exactly what you're saying that you can have much higher margins on these refreshes than you did on old fashioned sodas or coffees or whatever, and higher margins than you have on food. So like it makes sense from a business perspective to sell as many of these as you can. The thing that I don't understand is the demand side of the equation. That's where I kind of started. And I'm still I still want to I'll ask you the same question again, which is who is buying these things beyond 13 year old girls?

46:45Elizabeth Spiers: But the 13 year old girls have a lot of, they spend a lot of money on stuff like this. You know, I feel like a Starbucks original growth market was high school kids coming in after school and getting originally, you know, just really sugary lattes and things. And so now they, Starbucks has a collaboration with Mr. Beast that's called the Pink Cannonball. I mean, it's like pretty explicitly pandering to the tweens.

47:08Felix Salmon: Did you read Katie Notopoulos? She went and tried all the drinks. And she's like, my nine-year-old loved them. Yeah, I don't know. You know, in all the reporting, I didn't see much beyond like kids like them. I don't know how much adults like them, but adults, I mean, they like the Celsius drinks that you haven't heard of, Felix. Everyone drinks, to me, it seems, drinks Celsius. And they're not all sugary. A lot of these refreshers, they have the fake sugar and then like sucralose or the other kinds of fake sugar. But they're sweet. Yeah, they're sweet, but they're like, quote unquote, diet or whatever, or they have caffeine, or they have something people think of as healthy in some way, or they say energy on them.

47:43Felix Salmon: So you're like, I want energy.

47:44Elizabeth Spiers: You remember, there was a lawsuit against Panera, I think last year, because they had a caffeinated lemonade, and somebody had heart problems, because they just drank too much of it, because you could just get it in like a 32 ounce.

47:56Felix Salmon: But they drank like six, like, don't do that. Guys, I feel like we're up against the limits of our ignorance here. So please write in on SlateMoneyAtSlate.com if you are over the age of 15 and explain to us what the fuck you're doing buying a pink berry strawberry blast with protein foam or whatever the fuck it is. Endorsed by Mr. Beast. Endorsed by Mr. Beast. Maybe it's good. Yeah. Coffee sometimes tastes really bad. And if you want something kind of fancy. This is the Emily Coffee saga. She's on it. She's off it. I'm fully on it. And also, I'm here to tell you I had an amazing coffee at Starbucks in California.

48:34Felix Salmon: And then I remember that California has better coffee than New York. And I was like, oh, right. Do you find that has better coffee? literally no idea what you're talking about what the coffee in california in my experience tastes better than in new york okay i will fight you over this but not i'm right all right slate money at slate.com is is emily right the california coffee and specifically not just california coffee but la coffee starbucks in california tastes better starbucks in beverly hills it'll be better than the starbucks in midtown manhattan as someone who never drinks starbucks i cannot answer this question.

49:08Felix Salmon: Can I also report, this is not my number, but the tall Starbucks that I bought in Los Angeles, which is a 12 ounce drip coffee, cost me over$6. Is that normal? No, that is not normal. Wait, Elizabeth, I went to Erewhon. I wanted to tell you, but I forgot. But I didn't see the expensive strawberries. Everything else was expensive though.

49:28Elizabeth Spiers: Did you buy anything?

49:30Felix Salmon: Yeah. I bought a bunch of snacks for the plane and stuff. And then I talked to the checkout guy And he was like, where have you been? And I was like, at this conference. And he's like, I've seen a lot of people from the conference. And I said, oh, they're so rich. You know, I'm not like that. And he was like, well, you're here.

49:48Did you buy a crazy smoothie?

49:49Felix Salmon: I should have. There was a really long line, though. If there's a long line for smoothies at Erewhon, then any economist will tell you that's a sign that they're underpriced. Oh, interesting. What a good take. But I think they're like$20. Clearly not enough.

50:03Elizabeth Spiers: Jesus.

50:15Let's have a numbers round. Elizabeth, what's your number?

50:18Elizabeth Spiers: Okay, my number is related to the drink segment. It's$58, and that's what you can pay for a strawberry watermelon drinks carrier made by a woman named Susan Alexandra, and this is another McDonald's collab. She makes these like beaded bags and jewelry and stuff like that. And so she has a special limited edition beaded McDonald's carrier that comes in six colors to match each individual flavor. So if you're really super into this, I suppose you could buy six$58 drinks carrier and try them all.

50:52Felix Salmon: The economy is fine. Watermelon drink sounds good, to be honest. Yeah, I would probably do a watermelon drink.

50:59Elizabeth Spiers: Okay. Light and fizzy.

51:00Felix Salmon: Yeah. Refreshing. My number is 3 ,400, which is the age of a gold bracelet that is being sold at the TFAF fair in New York next weekend. There's this gallery called David Aaron that is showing a TFAF. And they have a 3 ,400-year-old gold bracelet from the Bronze Age in the UK. And it's gorgeous. It looks like this really gorgeous hammered gold.

51:30Elizabeth Spiers: What is TFAF? It's an art and antiques fair and armory, which happens every year. And I'm just like, look at this beautiful bracelet. And then you think, wow, like if you bought it, you could have a bracelet that is over 3 ,000 years old and just have it sitting on your wrist. It looks like it could have been made yesterday. And I love that about gold. And I think it is one of the reasons why gold sticks around so long.

51:51Felix Salmon: Gold never tarnishes. I only learned this recently. Did you guys know that for a long time? I read it in a story like two weeks ago and I was like, oh. It's basically an inert metal. I had no idea. That's the whole point. Yeah. It doesn't tarnish. It doesn't rust. Silver tarnishes. It doesn't oxidize. It doesn't do any of that. Anywho, if you want to pop along to T5F and buy this bracelet, it is not as expensive as you might think. You want to have a guess how much it costs? You said$3 ,400. $3 ,400 years old. I was wondering why it was so cheap. I'm sorry. I really was listening-ish. How much does it cost?

52:25It's 3 ,400 years old and it costs£85 ,000, which is about$115 ,000.

52:30Felix Salmon: That's more than$3 ,400. Emily, what's your number? My number is 55. That's the number of Harvard students last year that tied for the Sophia Freund Prize. That is an award given to the graduating senior with the highest GPA. But last year, 55 Harvard seniors got it. They all tied because they all had the highest GPA. And that is because all the Harvard kids get A's now. And some people think that's an issue, a problem. I don't know if I do. There's a big piece in the, or there was a regular size piece in the Atlantic about this. Most Harvard kids now get A's. 66 % of Harvard students get A's.

53:09Felix Salmon: If you loop in the A minuses. So 66 % of all grades are A's? Yes, thank you. 66 % of all grades are A's. If you loop in the A minuses, it goes to 84%. So some people are very upset. They're very upset about this. I think it doesn't matter. And this is bad. Why? Because kids will now, to keep the streak going, they're more likely to select classes that give them easy A's and less likely to challenge themselves in the interest of keeping the streak going. Whereas when I went to school 8 ,000 years ago back in the 20th century, no one picks classes because they were easy or could get a good grade relatively easily.

53:45That just never happened at all. No, no, sir, never.

53:48Felix Salmon: And then also the argument is like they're not used to failing. Like they don't have the experience of doing poorly and challenging themselves or like facing adversity. The kids who got into the most competitive university in America are somehow, they haven't done a lot of failing in their lives. You could knock me over with a feather. But the guy was like, in the old days, the good old days, when there were B's and C's, you would be one of these absolute nerds or whoever, rich people that lucked in and face your first B or your first C or like for the first time realize like, oh, you're not so special.

54:21Felix Salmon: You're at Harvard. Everyone got into Harvard along with you. and so there's some like lessons learned but now the gentleman c that's what george w bush got when he was at harvard it's just the gentleman c no one cares but anyway i guess people do care and

54:34Elizabeth Spiers: there's some it feels like i get off my lawn kids sort of thing if you're the person complaining is graduated from harvard in the 70s or the 80s it's like well harvard was not nearly as competitive then so yeah you had c students running around so you guys support this you're like a is for

54:50Felix Salmon: everybody. It's not that I support it. It's just I don't think it's anything to get like bellyache about. I would very much urge everyone listening to this to go delve back into the Slate Money archives and listen to the episode we did with Daniel Markovitz, who is the expert on all of this. And he is super great and friendly and smart. And if you don't want to listen to that whole episode, just Google his Yale Law School commencement speech, which is amazing. The kids these days, they work a lot harder than the kids 40 or 50 years ago at their studies. Not all kids, but the ones at Harvard, the ones who get into Harvard.

55:27Yeah, they are. I'm not going to say they're smarter in some kind of IQ sense, but they are just incredibly optimized machines for doing incredibly well at academic studies. That's how they got in there in the first place.

55:40Felix Salmon: Can I just say in college, I took one class because I thought it would be an easy A. I took film studies. it was my lowest grade in college and the hardest class I ever took but it did set you up for a long and gloried a long and storied career as a host of Slate Money Goes to the Movies so there is that whoops shouldn't have revealed this information I think that's it for us this week thanks so much for listening to Slate Money thank you to Jessamyn Molly for producing, thank you to all you guys for emailing us your Starbucks drinks order on slatemoneyatslate.com. We have a Slate Plus segment on what?

56:24Elizabeth Spiers: Athletes paying for a better performance. Oh, yeah. Athletes for athletic recovery and the amazing feats that happened in the London Marathon. Thank you for subscribing to Slate Plus if you are a Slate Plus subscriber. Otherwise, thank you for listening to this, and we will be back next week with more Slate Money.

56:46Felix Salmon: Slate Money is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Listen to Washington Wise, an original podcast for investors from Charles Schwab, to hear the stories making news in Washington right now. Host Mike Townsend, Charles Schwab's Managing Director for Legislative and Regulatory Affairs takes a nonpartisan look at the stories that matter most to investors, including policy initiatives for retirement savings, taxes, and trade, inflation concerns, the Federal Reserve, and how regulatory developments can affect companies, sectors, and even the entire market.

57:27Felix Salmon: Mike and his guests offer their perspective on how policy changes could affect what you do with your portfolio. Download the latest episode and follow at schwab.com slash WashingtonWise or wherever you listen. With almost half a million customers and over a trillion dollars of secure payments, Bill isn't new to intelligent finance. It's the proven way to simplify bill pay and maximize cash flow. Want to learn more? Visit bill.com slash proven for a special offer.