Jim Chanos on Who's Getting Caught Swimming Naked
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Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal. And I'm Tracy Alloway. Tracy, I guess one good thing about market crash, I don't know if it's even good because I like when lines go up no matter what. But, you know, people always say, oh, this can't go on forever. And they're talking about some specific trend or here's a scam or here's a bezel in the economy that will exist as long as the lines go up. Things get revealed in a downturn.

Things that were unsustainable are shown to definitively be unsustainable when the downturn hits. Right. What's that old Buffett quote when you don't see who's swimming naked until the tide starts to go out? And I think we are probably...

At that moment. And I got to say, in terms of who likes when lines go down, you know who likes when lines go down? Yeah. Short sellers. That's right. They definitely do. Especially when it's been like 15 years since a line has gone down and so many short sellers have had such a brutal time. Maybe we'll put swimming naked in the headline of this.

Instead of dead bodies floating to the top? Maybe it's a little. We'll have to figure out. Anyway, let's just jump right to it. We've had him on the show in the past, someone we always enjoy talking to. He is going to tell us about what bodies are going to float to the surface. And those bodies happen to be naked, too. He's going to tell us what naked bodies are floating to the surface. Jim Chanos, founder of Chanos & Company, longtime investor, short seller. Thank you.

Thank you for coming back on Odd Lots. No, thanks for having me. It's my pleasure. I only recently learned that Scott Besson, I say I only recently learned as if I looked this up. I heard it from you as you were walking into the studio. He worked for you. Yeah, he was my first analyst. Incredible. I taught him everything he knew up to a point, I guess. Up to a point. Okay.

All right. I'm just going to ask basic questions to start. But what has the past week or so? Let's see. We're recording this on April 9th at 1128 a.m. Yeah, we have to be that specific on the time now because things change so quickly. What is the past week been like for you?

Well, we're not in the business of running outside money anymore. So that ended a couple years ago. But we do advise clients and, of course, run our own money. So since 1996, we've always been hedged.

But we've seen, obviously, substantial alpha in the last couple of weeks, i.e. the stuff we're short has gone down much more than the market. We tend to be long the market passively. And that usually happens, right? When the market shifts gears, a lot of the more questionable story stocks, frauds, hypes begin to underperform. And that was not the case until really about

the tariff, the liberation day. And now it's really kicked in. If I'm a equity, if I'm an asset allocator, is that why I allocate to someone who specializes in short selling? Not because they are going to give me positive returns month after month after month,

but that it allows me to be more comfortably long risk assets in my other investments because I have this knowledge that I'll get outsized returns from you when they go down. Yeah, I mean, in our business model,

over 40 years, basically it morphed into the idea that fundamental shorts allow you to be more long. Yeah. And that's really at the end of the day, your shorts are financing your long portfolio. If your shorts don't go up or go down, it enables you to have a long portfolio that actually will outperform. Yeah. Yeah.

I mean, it is true that before this month, being a short seller did not seem that fun for like the past 10 years. And we've done episodes on the hard life of being a short seller. Are the gains now enough to offset like

a decade of lines going up? Well, again, the lines are going up, but it was all a matter of if you're selling insurance, as I was and advise people to do now. The idea was, is the insurance working? And the insurance was working well.

really, for even post-global financial crisis, for quite a while. And then starting about 2018, 2019, and right into the GameStop episode in the first quarter of 2021, it didn't work at all. But it has worked since GameStop. And even though the market's made new highs...

you know, as recently, I think it's January. The short side has not been too bad. I mean, Bloomberg has an index, the most shorted basket, which you can take a look at if you're a Bloomberg subscriber. Thank you for the plug. My pleasure. And it has done relatively well relative to the market since early 2021.

Let's talk about some areas of the market. Let's just jump right into it. I think actually the last time we had you on, I'm looking at this, was November. It was FTX. It was actually before FTX imploded officially, but after we did the infamous box episode. But you know what? What?

The last time we talked to you was November 23rd, 2022, right as FTX was uploading, but

There's another point in the history here that's important. November 30th, 2022 was when Chad GPT came out and then we got this incredible AI wave and people started piling everything into NVIDIA and all these data center plays, et cetera. And in a previous Odd Lots, and I don't remember what that was, you've talked about data centers before and some brutal data center economics. One of the things that we've seen in this downturn, see, I'm putting this all together.

This is not totally incoherent. One of the things that we've seen in this downturn is some really sharp reversals for the big AI plays that were big. Those were just so hot. And so I'm curious now, you've talked about data centers, et cetera. Tell us where you're seeing some of this stuff right now. So the AI bet is an uncertain bet. We don't know

what the returns on this massive investment is going to be yet. And even the Mag 7 will tell you it's uncertain. We think it's going to be worth the risk, but it's an uncertain payout.

And I'll leave that up to people who are much more well-versed in technology than I am. Our view was that the old legacy data centers that were built to basically handle the cloud, not AI, were in trouble and were a bad business to begin with and have gotten only worse.

And that was the bet. It's still the bet. I think it's a really, I've called it one of the worst business models I've ever seen because the CapEx is enormous. You got to keep replacing the air conditionings and the racks and the networking equipment to keep these centers running. And the returns on capital are just abysmally low.

So, we kind of said, "All right, AI is a thing. It's an uncertain thing." Market loved it. Now the market's questioning it. But we do know that the old data centers, the ones that have been around now for 10, 20 years. Is this like an Equinax? Yeah, Equinax, Digital Realty, Digital Bridge. Those have really challenged business models. So, one of the things that happened recently is CoreWeave did its IPO.

And it had initially targeted $2.7 billion, and it came in at $1.5 billion. And the interesting thing to me is part of that was a really big order from NVIDIA. And NVIDIA is very interwoven with CoreWeave's model. Since we're already talking about floating bodies and people swimming naked, I'm going to try to be as distasteful as I can. But

How incestuous is the relationship between CoreWeave and NVIDIA? So for those of us that are a little bit older than you two, I mean, we remember some of the round-tripping that was going on in telecom equipment back in 1999 and 2000 with Nortel and Lucent providing financing for its customers and then

selling things into those customers on cheap terms. And the whole thing unwound very quickly when the dot-com bubble and telecom bubble imploded.

I put a tweet out that got some notice where I saw NVIDIA not only was doing the CoreWeave kind of deals, but had just bought a distributor of theirs. And that was also a little worrisome. Now, it's only a small part of their business. It's not material. But when you start to see this stuff on the margin where companies are increasingly –

round tripping with their customers or financing their customers or buying in their inventory via distributors, you begin to wonder, you know, if it's just on the margin, that's fine. But as we all know, on the margin is everything, right? If you miss your earnings by a couple of pennies, you

your stock can be devastated. And if they're doing deals like this to basically make sure they make or beat numbers, then we have the old 1998, 99, 2000 dynamic at work where companies are stretching to make numbers. That has not been the case up until now, right? Through 2023, 2024. Demand's been amazing. Blowout numbers. But

It's something to keep an eye on at the shift. So in other words, like the insinuation here is not that there's something like per se bad, but history says that when you see stuff like this to keep the rally going. Aggressive moves with your customers and your distributors. Because that's what everyone's been wondering, right? And I guess like all of this stuff with the trade turmoil has like, we actually, it's kind of amazing because I think we've gone two weeks without talking about AI, right?

which maybe is something that we could be a little bit thankful for in some sense. But were the trade war to go away tomorrow and we were returned to what we were talking about in January. I saw your post earlier today about if tariffs run away like this and all the other stuff that is suddenly concerning. But this would be the concern. Yeah. Look, on the margin, again, on the margin, I think –

These numbers are not material. They deal with CoreWeave, the distributor they bought. But it's something to keep an eye on. Tracy, I just want to tell you, by the way, some of these names are just for listeners. Digital Realty is below where it was at its 2020 peak after having plunged from about 195 to 133. CoreWeave is actually just slightly above its IPO price of 40. That was a crazy day. It's at 41.35 right now. So anyway.

So one of the things that happened in the early 2000s with the telecoms and internet bubble is I think a lot of people expected some of these companies to fail. But I guess the bet was maybe a handful of them would be huge winners from the development of the internet. And it's true. We have Google come out of this. If you invested in Google, Amazon, you made a lot of money.

Is there any possibility of that happening when it comes to AI? Do you see a winner? Oh, I mean, I think there's going to be a lot of winners. If it's as revolutionary as the technology as it appears to be, we'll see all kinds of new business models and probably a company that we might know, like NVIDIA or whatever, succeeding, or maybe a couple of companies we don't know yet that will take advantage of it.

The flip side to be the glass half empty guy is that what everyone also forgets about the internet was that it destroyed as many businesses as it brought forward. Any business that was in the analog realm

business that went digital. So you actually had a physical product that went digital, was absolutely devastated, like Kodak or Blockbuster Video or the Yellow Pages, what have you. And I suspect that AI will be very similar. We'll see. You're not a hater.

No, no. I'm open-minded about it. I think it really is an amazing technology. And I think you're going to have to see both sides of the coin for capitalism with it. It'll probably devastate a number of business models as well. What's the path to monetization for these AI companies? Because you already pointed out the cost of capital is really high. Yeah.

I don't know. We still haven't seen the aha moment as we did with the internet, with online retailing and communities like America Online where suddenly your aunt was on it and then getting emails. And paying money for it. And paying money for it and getting emails. You have mail. Yeah.

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Let's pivot because you have been fond over the years to talk about this sort of myth that private equity is something more than just adding leverage to companies and that there's this perceived stability. Yeah, it's very nice. You don't have to look at your marks every day. It really is just leverage.

And, you know, I'm looking at a share price, the shares of like Apollo, for example, I guess maybe the private credit that was at 189.30 on December 9th. That's a 109. Blackstone shares look pretty similar. We're talking like 40 percent declines.

That was at 200. It's at 118 right now. That's below where it was in late 2021. Private assets are like the story that Tracy and I keep coming back to. What is your takeaway from this really intense selling of these names? Yeah, I mean, I'm a little surprised at how intense the selling has been so quickly. But look, I mean, I agree with Cliff Asness, who's done a great job talking about this. This is volatility laundering.

And the idea that these funds don't have the same risks as equity funds have is, to me, preposterous. You're buying businesses on leverage. And we're now seeing that as it's becoming increasingly hard for these deals to – for them to bring these deals public or get exits. And again, on the margin, you're seeing a little bit of odd behavior in some of the private equity funds in trying to entice their investors to stick around.

We'll have to see. I mean, up until now, for the last 15 years, getting back to the beginning of our conversation, sell-offs have been relatively short and sharp. So if you held off on marking your portfolio down, you generally were rewarded by not having to take the mark, right? The markets kept going.

And the nightmare scenario for private equity and arguably private credit will be a long period of lackluster or no equity returns scenario.

with higher interest rates. Can you actually just, when you said, oh, at the margins, we're starting to see some janky behavior with regards to their partner LPs. What's going on there? Yeah, there was a story, I think, on Bloomberg just yesterday or the day before where one of the funds was asking investors if they wanted to sell their LP investment in one of the funds

or transfer it, they had to get permission from the GP. In order to get permission, they had to agree to put money into the next fund. And that story caught my eye. And so when you start to see that, and now we're starting to see time series of fund performance that is starting to become more lackluster.

Right. Rolling 10 year returns and private equity are beginning to converge with that of the regular equity market. To your point about the length of the sell off. I mean, we've established that one of the competitive advantages of doing private credit versus public is you're not forced to take the marked market losses so soon. You can hold on for longer, theoretically. Yep.

We're seeing a lot of people right now talk about, you know, emergency moves from the Fed, maybe a cut sooner than the market had expected a week or two ago.

Do interest rates matter for private credit at the moment? How much of a buffer would lower rates actually provide here? Well, I think spreads matter more. And we've seen a widening out of credit spreads. So I think that one of the reasons people think the Fed is going to ease is because of that, right? Weakness, not because of low inflation. And so you're seeing a relatively very quick increase

increase in credit spreads over the past two weeks. I mean, it's really moved. So I don't think that that's the panacea that people are expecting, at least not yet, even with a Fed ease, because junk credit is, rates are going up.

Right. The Fed could do something just about the sheer mechanical breakdown if it's happening. The plumbing. The plumbing. People love to talk about the plumbing of the treasury market. The basis trade. I read something today about the basis trade. Thank you. Thank you for reading. Pause right there, listeners. Jim Chanos is a reader of the Odd Lots newsletter, which means you should be too. Okay.

What is a GP of a private fund do when the IPO window is slammed shut, when there really is not a lot of M&A? So basically very few opportunities for liquidity or distribution opportunities.

or anything like that, what kind of moves do they make? - You better practice your writing of a heartfelt apology letter to your LPs because the IRRs you've been telling them that the fund has been getting prior to its windup are gonna turn out to be way overstated to the actual returns. So look, it's problematic. I mean, investors are gonna get back stakes in private companies that they might not want. - Oh, so distributions in kind. - Yeah, exactly.

if you can't cash out. And so, yeah, I think it's going to be problematic for a number of funds. I mean, I'm sure there'll be plenty that'll do fine. But the days of saying, well, I'm going to earn 14%, 15% with very little volatility is

So this is a free lunch, I think, or over. The other narrative that pops up from time to time is this idea of dry powder, that there are a bunch of funds out there who have been holding cash for a long time, just waiting to snap up distressed assets once everything finally crashes. Is that real? I don't know. I mean, you have to get into the sort of weeds of every...

specific fund. But I mean, if they've been holding cash for years and years and years, they certainly weren't earning that 14 and 15% investors were hoping for. So I don't know how the accounting works on that. But I'm sure, look, there is some unused capacity in the private equity world. But on the other hand, that doesn't get you your returns. Buying companies and adding value to them is where the returns are. So

If there were funds and firms holding dry powder and asset prices get marked down a lot, that should be a good thing for them. I mean, the issue to me, and I've sort of talked about this in various ways, is that for the last 15 years, you're a dummy if you had dry powder. The market has told you over and over again –

Right? So this is why I'm always kind of skeptical that there could even possibly be much. And it's interesting. You know, look, we're like two weeks into – or no, it's been a week since Liberation Day. But you go a few weeks before that, obviously the weakness started picking up. And now we're seeing – we've seen this sort of dislocation in treasuries. It seems like if you have 15 years of people telling you you're a moron for holding –

for being under levered, then a downturn in just sort of normal investments can metastasize into financial problems very quickly. - Well it also depends, Tracy, how you define dry powder. A lot of firms define dry powder as the ability to capital call on their limit. It's not actually cash sitting in a bank account. - Yeah, that's a good point. - And I think that will become much more problematic in a downturn. - I'm not gonna pick up the phone if I had to. - Yeah, look, yeah.

- So you're primarily a markets guy, but you are no stranger to macro. Talk to us a little bit about, I guess the relationship between what we're seeing in markets and the real economy right now. - Yeah, I mean the transmission mechanism via tariffs will happen pretty quickly, I think. I mean, you saw Walmart warn today, Delta has pulled their guidance. Both of those were just today. I mean, it's kind of stunning

If you think about the nuts and bolts of these tariffs and how they work, despite what our president says, the importing entity pays the tariff. It's not a tax on China. And so you're a small and medium businessman. You just got $100,000 worth of product that landed at Long Beach Port from China. And your broker is saying, yeah, just come down with a cashier's check for $100,000 for the government and we'll release your product.

A lot of businesses don't have that. And so, I mean, there's real practical aspects

these tariffs that I don't think we kind of know all the implications and how it will ripple through the economy. And I suspect you'll start by May getting some pretty decent real-time feedback from businesses saying, you know, we're cutting our profit guidance. Because if they can't pass it on completely, and study after study shows they can't usually, then profit margins, which by the way, let us not forget, are at all-time highs.

are going to hit an air pocket. We have seen some companies pulling their forward guidance already, right, Jim? Yeah, Delta this morning. Walmart. When that chart came out, when Donald Trump pulled out the chart on Liberation Day and the market immediately tanked,

The view from a lot of people is like, if people actually understood the size of what these numbers are, the market would be down a lot more. Do you stand, and again, anything could happen by the 10th, but on April 9th, that there is still an element of disbelief that this could actually be where our term schedule ends up? Oh, I think there definitely is a level of disbelief. I mean, the stock market is still at 20 times latest 12-month earnings, and-

I mean, they're coming down, but people still think earnings are gonna be up 10% this year. And I don't know what planet they're on. And so I think that that's number one. And the size of the tariffs was stunning. I remember I was watching the press conference after the market closed,

I don't have the best eyesight in the world. I had to get close to the TV to make sure I was reading the numbers right. I was doing screenshots. Was that 50% or 5%? I mean, that says a lot. The idea that it could be 50% or 5% at all is pretty nuts. Yeah.

The point you were making about profit margins, I think is really important. And a lot of the macro impact of the tariffs depends on how corporations actually react to the tariffs. Do they choose to absorb the additional costs themselves or do they pass it on to customers?

What's your sense of flexibility there? And then more generally, where do you see inflation going from here? Because obviously there is tension between prices going up in the immediate term because of the tariffs and demand being destroyed and us getting deflation. I think Walmart's warning this morning was maybe instructional in that they went out of their way to say that they were pulling their profit guidance, I believe, but they

told people that their revenue growth guidance was still intact for this year, which seems to me to imply that they're not going to pass on these tariffs since they get so much of their stuff from China, right? They're going to eat it. They're going to eat it. And because otherwise they would say, well, we're going to hike prices 15%, 20%, and our revenue is going to be up 15% to 20%. They didn't say that. They said 3% to 4%, but margins, you know, we don't know on margins yet.

Yeah, I think this is really important because I think if you were to go back six months ago before the election, so much of the tariff conversation was this very simple minded. What does it mean for inflation in the Fed? And not this sort of deeper question of like, are you kneecapping corporate prices?

profitability in America? And what does that mean for all these different kinds of business models? I think that's the bigger risk, not inflation. If you remember, the past few years, the reason we had record corporate profits was because companies were able to pass on inflation to customers, the whole price over volume idea that we've been talking about. Yeah.

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where money means more let's talk about a guy uh elon musk who for many years you were famously short my bff your bff elon musk we did an episode recently with nick denton founder of gawker media and he said you know he said he said the fall of elon musk is a story that any journalist should come out of retirement for it may be the biggest story of our lives

He's been pronounced, you know, done, dead many times. And Tesla is always, is this different this time in your view? Look, I mean, he's tied himself to the administration in a way that is frankly kind of, to me, amazing and shocking at the same time. So he is tied now politically, you know, in a way that he never was. That's number one. But to me, Tesla is beyond Elon Musk politically.

Tesla is a real sort of benchmark stock for me because of the way in which Elon effortlessly sells the story of the future to investors. And I've always said that in bull markets, people put a premium on promises. And in bear markets, they put a discount on reality. And this is a stock that still, and there's a handful of others,

that still traded 40, 50 times revenues, where people still believe. They still believe in the promise of robotics and AI and robo-taxis. And he's captured the imagination of a whole set of investors, particularly retail investors, who just are rabid with the idea that this is the company of the future. And so that's number one. Number two, I mean...

Ultimately, he's going to have to deliver on these promises. And because, you know what? The car business he's got right now ain't all that. Margins are imploding. Profits are down now for three or four years in a row. He's going to have down, I think, down sales this year in terms of units. So I remember when the estimates were we're all going to be driving Teslas in 2030, right? That's not happening.

And so it'll be curious to see when the robo taxis are rolled out this summer in Austin. How exciting is that? And then of course, you know, the, the, the big one is, uh, we're all going to have, uh, you know, Rosie, Rosie, the robot, uh, from the Jetsons in our, in our house, you know, doing our, doing our tasks from Tesla. And again, I, I,

being the skeptic, I think I don't see the robotics, the humanoid robotics market being a whole lot different from the car market, right? It's utility. People will have one, it'll be 30 to $50,000. There'll be 15 companies making them. Uh, and, and margins will be, it'll be a manufacturing margin business. So, you know, cars have tons of software in them, tons of chips in them. They're amazing utility for the consumer. Uh,

But they're cars. They have a low margin. And a lot of people make them. And I think it's going to be the same with robotics. I always wonder how much rope the tech believers are giving companies to fulfill their promises. And I remember I asked Kathy Wood about this. Like, what is her time frame for actually making a profit? Because there's a premium on good stories. You can keep telling a good story for a pretty long time and a certain set of investors will believe it.

What's the catalyst for that actually starting to change? Well, again, I mean, I think that number one, interest rates have a big determinant on those kinds of stories because if we believe at least some of the rudiments of finance, you're willing to pay more for profits and cash flow 10 years in the future than when rates are higher. That's number one. And for all these companies like this,

95% of the value is in the terminal value. That's number one. Number two, it's look, it's castles in the sky. I mean, in bull markets, people believe these stories and that's as old as human nature. And when things get tight, I mean, we kind of forget Tesla was $100 a couple years ago down from 500 and it dropped 80% in 2022. So it varies.

2022 feels like a long time ago. All right. I want to talk about Elon, but from a different angle for a second. When Doge was announced. Yeah. People didn't really know what it was. And then once it started going, it looked like, oh, these cuts, these moves do not seem to have any rhyme or reason other than kneecapping.

the federal government. And a lot of guys are like, look, I'm all in favor of cutting waste, but I'm not so sure about this. Anyway, I was probably one of those guys, so I'll cop to it. But we did an episode a while back with this professor at Boston University on Medicare fraud.

fraud. And I thought to myself, okay, if there's one area that maybe some of these crack data scientists could go into and find some evidence and really like make some efficiencies and so forth, this would be Medicare. However, this week I saw a headline that says health insurers cheer increase of Medicare advantage payments. I don't know what Medicare advantage is yet. I know I'm supposed to look this up. Health insurers, insurers that offer Medicare advantage plans to seniors cheer to Trump administration decision announced Monday that

to increase federal reimbursement rates by $25 billion next year. What's Medicare? This is in the Albany Times-Union.

what is Medicare Advantage? Why are they cheering this? You're asking the old guy, right? No, I think it's because you know about these companies very well. And what does it say that the reimbursement rates came in so much higher than expected? Joe, if you watch cable news, you would know all about Medicare Advantage. Yes, you would. So I tweeted out when Doge started out, I said, if they don't go after Medicare Advantage right away, then you know they're not that serious. And so that kind of tells you where I'm coming out on this.

A Medicare advantage has been just a windfall for the insurers. It's basically for people that are eligible for Medicare, it's supplemental and it can be all-inclusive, meaning that you have a carrier treat you for not only that which Medicare covers but additional things. The problem becomes it's what we call upcoding and that's where the fraud has occurred.

because the government will give Medicare Advantage carriers a tiered set of payments depending on how sick their patient is coming into the program. So I could be relatively healthy

I don't know how they're going to code me when they go to the government for their reimbursement to say Mr. Chanos is very sick and blah, blah, blah, blah. So we get X thousand dollars from him per year as opposed to Y thousand dollars for him per year. And that's a big problem. There were some public companies that were purely in Medicare Advantage that we were short.

And a lot of them were bought up by companies like CVS and others. And we just couldn't believe it because if you did any kind of due diligence on these companies, you realize that they were upcoding. But I guess implicitly, if you're shorting them, that's a bet that someone takes this issue seriously in the public sector. And it looks like at least here's the guy who came in to cut spending and he now we're –

Yeah, I mean, they're going after the small stuff. They're going after the – I'm a bear on Doge. I mean, they're going after the political stuff. They're going after this ridiculous thing from two weeks ago about the number of Social Security numbers going to illegals and things like that. I mean, this is all political theater. And the real cuts are in areas that they haven't touched. Yeah.

And so we'll have to see. But it didn't get past me that Musk basically now is all but saying he's going to be gone from Doge in May.

You know, four months. And so, and Vivek never got going. And so I think that this is, they're finding out that what they thought was fraud in ways is turning out to be, you know, authorized programs that you might not agree with politically, but were authorized, right? And need legislative prescriptions. Yeah.

So I think they're not even going to come close to their target of a trillion dollars and $2 trillion. I think that's just pipe dreams. I completely forgot about Vivek, but you're right. He didn't even make it to the inauguration. Yeah, he didn't even get to day one.

Jim, hopefully you won't mind me asking this question, but I think it's fair to say you are a financial markets veteran. You've seen a lot of stuff happen over the years. Are there any historical parallels or analogies to our current moment in time? No. I mean, given what's driving markets as we sit here today,

I don't think we've ever seen anything like this where a global hegemon has willingly said, I'm going to basically shoot myself in the foot and get rid of the exorbitant privilege that we've had as being the global hegemon with the reserve currency. They're trying to dismantle that as we speak. And I think that just has...

all kinds of impacts that none of us have lived through. So we'll have to see unless it gets reversed. And so I don't know what the analog for this is. We're just going to have to, like everybody else, take it day by day. But the idea that markets are now going to react to tweets. And as someone I follow said, this is still a vibes market, not a math market.

And that as it relates to the equities. And I think that's well said. I think that this stuff just goes back and forth. And I think that's kind of no way to run an economy and no way to run markets.

That was a great place to leave, but I'm going to go end on like a more boring question. On the Medicare Advantage stuff. Yeah. And all these people can come in here and talk to us about upcoding and fraud. Where, in your view, when you've looked into this and why these companies end up getting bought out and the shorts don't work, where is the force coming from that prevents –

Whether it's the HHS or whatever from actually taking this stuff seriously. Yeah, there's actually arms of the government. None of this stuff is new. So why does, in your view, does it not get addressed? I don't know. I've called this the golden age of fraud. And it just seems that we have a willingness in the corporate sector and elsewhere and in the nexus of government and corporate of just not holding people to account for this stuff.

in the white collar crime area. And I think Medicare is just a wonderful example of that in our budget, the federal budget. And so the fact that they haven't even gone after this or addressed this yet from Doge is really telling to me because it's there. It's low hanging fruit. And if you look at the 10Ks of these companies that we were short, I mean, there's

criminal investigation after state level investigation listed in their legal proceedings. And yet most of them, when they get caught, they pay a fine and nobody goes to jail. The cost of doing business. It's so disgusting. Even if they reverse this trade strategy, there's so much rot.

I'm so angry right now. Jim Chanos, thank you so much. This was a very satisfying episode. I found this very fun. Thank you for coming in. Therapeutic. Therapeutic. Thank you. I'm so disgusted. My pleasure, guys. I'm so disgusted. Thank you for coming on Oplos. My pleasure. Tracy, I love talking to Jim.

Yes. Although that was bleak. And I have to say. I know it was bleak. You know what? Yeah, it was bleak. But Jim knows ball. And I enjoy talking to a ball-knower like Jim. I have to say for our listeners, I rarely see Joe in a bad mood. And he is actually in a bad mood this morning. Usually Joe has to put up with me being cranky. Yeah. Did we switch this week? Yeah, I think we switched. No, but I mean, it's bad.

It's bad. I feel bad, too. And it is just crazy to think that one man could end it all with just a simple announcement or even like some words of comfort and indication. Trump said, be cool. Be cool. And unfortunately, when I hear the word term, be cool, I just think of the opening scene in Pulp Fiction was like, everybody be cool. I'm not going to say the rest.

Yeah, he should be cool. It didn't work. Yeah. And if only he did something or said something at the very least, we could all go back to worrying, to your point, about AI and stuff like that. Yeah.

Shall we leave it there? Let's leave it there. This has been another episode of the Odd Lots podcast. I'm Traci Allaway. You can follow me at Traci Allaway. And I'm Jill Wiesenthal. You can follow me at The Stalwart. Follow our guest, Jim Chanos. He's at Real Jim Chanos. Follow our producers, Carmen Rodriguez at Carmen Arman, Dashiell Bennett at Dashbot, and Kale Brooks at Kale Brooks.

For more Odd Lots content, go to Bloomberg.com slash Odd Lots, where we have our daily newsletter and all of our episodes. And you can chat about these topics 24-7 in our Discord, discord.gg slash Odd Lots.

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