Liz’s view
Hello from the Milken conference in Beverly Hills, the birthplace and holy temple of confidence men.
It’s a fitting backdrop for Ryan Cohen’s incoherent bid for eBay, which would see GameStop, the $12 billion meme-stock survivor, cobbling together $55 billion to buy the e-commerce giant.
The Milken Institute Global Conference is the annual home of ambition untethered from arithmetic, where the world’s most elaborately credentialed optimists descend on Wilshire Boulevard to remind one another that the future belongs to those bold enough to ignore the math. Cohen’s unsolicited $55 billion offer for eBay landed here this week like a native species returning to its habitat.
The art of it all is Cohen’s letter from TD Bank saying it’s “highly confident” it can raise $20 billion for the bid. Even with that (more on which below) the offer is still missing $16 billion, as CNBC’s morning crew pointed out, comically and with a lot of dead air.
Milken is the spiritual birthplace of the “highly confident” bank letter. In 1983, corporate raider Carl Icahn wanted to buy oil giant Phillips 66 but didn’t have the money. He turned to Drexel Burnham, the scrappy investment bank powered by the patron of this week’s annual investment conference in Los Angeles, Michael Milken. Drexel didn’t have the money either, but armed Icahn with a letter saying that it was sure it could raise it by selling the newfangled financial product of the age, junk bonds.
Milken understood something essential: confidence is the product. The “highly confident” letter was the great hand-wave of modern finance, born of an era that formed the great hand-waver of modern politics, President Donald Trump, whose early years in real estate paralleled Milken’s rise and adopted the bravado of the age. Confidence, conjured from vibes, was a democratizer that allowed scrappy misfits to put any corporate, or national, balance sheet in play, no matter how big or blue-chip.
The broader economy hums along on the same frequency. The US is confident the Strait of Hormuz will reopen. CEOs are confident consumers — who are in the worst mood on record — will keep the global economy chugging. The conference rooms in LA are full and the decks this week are generally bullish. The confidence isn’t despite the chaos; it feeds on it.
Notable
- The war in Iran appeared to be the last of attendees’ worries: “There’s a lot of capital. There’s a lot of liquidity, and don’t worry about private credit. Don’t worry about AI. Don’t worry about geopolitics,” Axios reported from The Beverly Hills Hilton.