Animal Spirits Podcast - A Bubble is Coming (EP. 416)

Episode Date: June 11, 2025

On episode 416 of Animal Spirits, ⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠Ben Carlson⁠⁠⁠⁠⁠ discuss the stock market bet of the century, the most interesting market environment ever, positive trends in retirement saving, Europe is outperforming, downturns might be different now, the Fed should cut rates, how to invest in AI, crypto is Tradfi now, private market scrutiny, the most 1990s movie ever and much more! This episode is sponsored by T. Rowe Price. Learn more at: ⁠https://www.troweprice.com/exploreetfs⁠ Sign up for The Compound newsletter and never miss out: ⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠ Find complete show notes on our blogs: Ben Carlson’s ⁠⁠⁠⁠⁠A Wealth of Common Sense⁠⁠⁠⁠⁠ Michael Batnick’s ⁠⁠⁠⁠⁠The Irrelevant Investor⁠⁠⁠⁠⁠ Feel free to shoot us an email at ⁠⁠⁠⁠⁠[e-mail]⁠⁠⁠⁠⁠ with any feedback, questions, recommendations, or ideas for future topics of conversation.   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠⁠. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: ⁠⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

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Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions. expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ridholt's wealth management. This podcast is for informational purposes only and should not be

relied upon for any investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Ben, good morning. How are you? I'm doing good. Okay. It's good to see you. Uh, I want to mention, in case anybody missed it, on Saturday, Ben and I did a podcast with Dr. Daniel Crosby, title is The Joneses Aren't That Happy. We spoke about his book, The Soul of Wealth, and The Joneses Aren't That Happy, as a post that Daniel went on LinkedIn. That was a jumping life point for the conversation.

And it was great. I love talking about money, how it makes it feel. I really enjoyed it because we dug deep. And his book is great because it's almost like, I guess, short blog posts. the book, but he covers the whole gamut of how money impacts you, the psychology behind it. The just, and we dug deep. And I love those kind of conversations where you just think deep about money. And obviously, I think it's in a privileged place to think about that kind of stuff.

But there are so many different ways that money can screw with your head. And we get into a lot of them on the show. We got a lot of emails about a topic that we discussed. The reverse flex, people that are. super rich in the way that not just financially successful, but in the way that like everybody knows they're rich money that you can't hide, who drives like a beater, it's like a reverse flux. And what was the consensus saying it's a good thing or a bad thing?

It varies, varies. We had a few people who are like, listen, I think, though, if you're, if you're going to do the reverse flex, you have to flex in other areas, though. I'm fine with the reverse flex, but it's not on everything. Nah, it's a dick move. It is. It's like, I'm so rich. I drive a beater.

It's like, come on, dude. Don't flex on me. All right. So, wait, but when I drive in a court again someday, is that going to be reverse flex or not? It depends how rich you are. Okay. And you're never going to be that rich. Okay.

So no. And I'm not talking about the person with a nice income. I'm talking about the Uber rich person. Yeah. If you have a nice income and you drive in a cord and more power to you, like that's, you know, you want to be frugal and spend your money in different ways and give more to charity or whatever. That's one thing. I'm not talking about that.

Yes, I'm never a fan of the Warren Buffett has lived in the same house for, you read Snowball, right? Yeah. Buffett literally had a racquetball court in his house. He was not living in this tiny little shack. I've made this joke before, but what they don't tell you is he had a 90,000 square foot basement. There you go.

Underneath, right? All right. I want to make the case, Ben, that, and this just hit me this morning, just 30 minutes ago. I have to think hard about this, which I haven't yet, but this is a take that's baking in the oven, three quarters bake, because I believe it. This might be right here. here right now in the year 2025, the most interesting market environment that I've ever lived

through. Now, I haven't lived through all of them, but in my professional career, I think this is the most interesting one. And I'll make the case as follows. For the setup going forward, the current market? Today. Right now. These are some of the cross currents that investors are dealing with. Number one, first and foremost, we have Trump and the tax. Cross currents. Great, great word. funds, many cross currents. We have Trump and the tariffs, and we are still living through what the tariffs are going to be, where they're going to land, how they're going to impact the global economy, and not to mention the global world order, the fall of the dollar, the mooning of gold and Bitcoin,

all interconnected. All right, so you've got that one. That alone would be a big one. Arguably 1A. I would say this might even be bigger is AI, the industrial AI revolution. In fact, not might. Let me not caveat that.

This is bigger than Trump and the tariffs. The AI Industrial Revolution, I went through Mary Meeker's 340 slide presentation took me a couple of plane trips in several hours to get through. It was meaty, very dense. And I think the average person, in fact, let me stop caveating.

The average person and the average investor is wildly underestimating how impactful this is going to be. We're going to talk about it later in the show. I agree. I've been spending a lot more time thinking about this, too. And it hurts your brain a little bit to think about the ramifications of it. So a little teaser, a bubble is coming. I'm sure of it.

We've never seen a case in history where a life-altering technology didn't cause a bubble. Okay. Maybe the wheel? You think there was a wheel bubble back in then, you know, back in the day? Then you've got the rise of the retail investor. Big story, right? Yes. The retail investor makes up 25% of all trading volume, something like that.

In the compound and friends live show last week, I made the case. What if this is secular? This whole appetite for risk. And that, to your point, could mean more bubbles. You've got the post-COVID environment, a permanent shift in spending habits, which we'll talk about later in the show. you've got the Federal Reserve, will they or won't they, when they, will they? Cut interest rates, what are they going to do with potentially inflation on the back end

coming to the back end of this year? And then you've got percolating under the surface, the rise of Europe. And I saw these two headlines from Carl Continuo over at Blue Sky. I'm no longer on Twitter, not making an official announcement. But I deleted the I haven't been tweeting a long time But I deleted the app off my phone last night That's a big move

So now you just check it on your desktop more I'm just checking my desktop But I was in bed with Sorry, I was in bed with Logan And I mean I am ashamed to admit But I have my phone And with me in bed

While I'm putting them to bed And it's horrible Yeah But it's too much This was the story I broke the camera's back I'm in bed with little Logan My Angel

And I'm I'm, like, yeah, the Algo got me. I'm looking at murder videos. I'm like, oh, my God, this is sick. The thing is, when you watch one video, you're watching a sports highlight or something. The next video is like two dudes brawling in the street. Yeah, so.

But they know how to get you because you're going to turn away when two guys are just beating the daylights out of each other? Here's the thing. My Twitter thing is I finally opened up a burner account, and it's just news feeds. It's all the financial news. So, you know, maybe I'll do that. I did that a few years ago,

where I just, just follow just the, the people that keep our content going. And not to make this whole Twitter conversation, obviously a lot of great things happened there, and it's been instrumental. But that was a short of broke my back. All right. But no,

but I just followed all the news organizations, like financial news stuff. And there's probably 12 to 15 of them. And I was scrolling this morning and realizing, oh, this is an kept an obvious thing to say, the amount of news that is produced

is absolutely insane. No shit. It was almost overwhelming. This also coincides with me getting an alert for screen time. I got 10 hours last week, And I said, all right, this is ridiculous. 10 hours.

I was like, how many hours am I awake? Shame on me. Doing something about it. Okay. All right. So the rise of Europe. So Carl on Continia put this on blue sky. Here's a headline from this morning.

Netflix to invest over $1.1 billion in Spain until 2029. Blackstone plans to invest $500 billion. in Europe over the next decade. What if their executives just really want to go have meetings in Europe because it's so beautiful over there? So in conclusion, and I'm sure there's things that I've missed because this is just off the dome. I thought about it was 20 minutes ago.

This is right here right now, June 2025, the most interesting investing environment I've ever lived through. Okay. I appreciate the take. I don't think we're ever going to beat March 2020. But that was a moment in time. So you're saying this has like legs to it. Yeah, yeah, yeah, yeah.

All right, but I still think that the changes that were seen from early 2020 to now, like that situation led to this situation. Yeah, but 100%. And that was a bullet point, like the post-COVID world. But I do think, and I said this to you earlier, you could make the case of the 2020s. We're going to look back on this decade. Because it really does.

The 2020 started immediately. like there's this whole thing that the 1990s didn't end until 9-11 right and that's like the last real decade I think the 2020s actually has the the potential to be the first decade since 1990s like we didn't have a decade the first 20 years of this of this century the 2000s the 2010s totally blend together 2020s has the like this is going to be a decade we look back on I go oh my gosh can you believe everything that happened then yeah all right that's a good take I like it Thank you. All right.

Here's some awesome news from the Wall Street Journal. And this gets down to Josh's theory of the Relant's bid. Workers are putting away a record share of their retirement. The average savings rate in 401K plans. You saw this story already or not? I did not read the article. Okay. What percentage is the average 401k savings right now?

14.3%. Holy moly. The first three months of this year. Isn't that crazy? It's according to Fidelity analysis of their millions of accounts that they manage. and that includes a 4.8% contribution from employers. So call it 10% from the individual, another 4 or 5 from the employer. 17.5% of people increase their savings, right only just 5% decreased.

Less than 1% stopped saving altogether. This, I have to say, I've always said like your goal when you're starting out should be double-digit saving percentage. This number kind of boggled my mind. I did not realize it was this high. You know, I have an analogy for this. Robin and I, Robin is frequently late. She's great at a lot of things, but being on time is not one of them.

She's always scrambling out the door. Four bags, overpacking, rushing. Like, calm down. Can you ever get out of the house on time with kids, though? I can. It's almost impossible. Not, not I can. I was on my own for Logan's baseball games twice this week, 15 minutes early.

The coach said, whoa, panic, what are you doing here? Hey, just me easy, easy, no drama. But my point is this, we were taking two separate cars to go somewhere and we're on the phone and I'm like, why are you driving so fast? She's like, so we can get there fast. And now, mind you, driving fast, the difference between I'm driving 62 and my crappy Jeep. She's driving, I don't know, 74, however fast she's going to go. Do you have a death rattle on that thing or got rid of that one?

Not yet, not right now. But she's like, I don't know, half a mile ahead of me. I see her. You know what I mean? She's not making up that much ground. Right. In a short, in a short distance, you can't make it that much time regardless of how fast you drive. Yeah. So we're going 23 minutes away. And she got there perhaps 40 seconds before I did. And you can't make up time by driving fast. You got to leave early. Same thing with investing.

There you go. He brought it around. Good analogy. Thank you. Yes. Take your time. But this is unequivocally great news. Here's some more good news from Gallup. Stock market ownership. It hit roughly 60% in the late 1990s from the dot-com boom. And that decade, that decade, I think it was 19% in the early 1980s of households owned any stock in some form, individual securities, mutual funds, whatever. It went all the way to 60% by the 90s. And then it flatlined because we had the lost decade. And then it fell and it dropped to 52% in 2016. Now it's back up to 62%, which is close to an all-time high. This is the great news about the pandemic and getting people to accept more risk. So we've seen an increase in and the number of people who own stocks.

You know, one of the takes that I'm proud of is in 2020 and one, it was really popular to just destroy Robin Hood and what it's doing to our culture. And I'm sure I threw some of those takes in there. Like, if I went back to the tape, I'm sure that I said that a few times. The confetti stuff for sure annoyed me. But yeah, you're right.

It's been a net positive. But I think that I was fairly balanced. Now, you know, maybe this is just me misremembering and giving me myself too much credit. But I'm, I'd like to think that I wasn't over, that the introduction of people to the markets, I thought, at least I think I thought, was not a bad thing,

that whatever gambling habits they might have developed early, and sure, some of it sticks with people, but ultimately people grow up and grow out of it and reintroducing or introducing people to the market and saving and whatever gambling, eventually investing, is on balance a good thing, even if it's not all good. So credit robin,

Yeah. They have 26 million accounts, and 13 million of them, half of them, are the first brokerage account ever for that person. Remember we had the whole thing where I invested in the Robin Hood IPO? And we had the argument about being better than Coinbase. And I sold like a week later, I think. And Robin Hood is now barely, or no, a lot, I guess, above... It's bigger than Coinbase now. No, but it's 110% above its IPO price. Remember, it had a huge run-up right afterwards, and then it crashed, I don't know, 95% or something. I spoke about this chart with Josh a couple of months ago. Schwab used to be like 14 times bigger than Robin Hood, and now it's less than four times.

Wow. Yeah, so Robin Hood had a 90% drawdown and then came all the way back from it. Don't see that too often. Crazy. All right. Larry Fink was in the FTA. He wants more tax breaks for investors. Now, a lot of people read this and go, go, oh, of course, the guy who owns an investment

company wants more tax breaks. because he's rich too, but he's talking about tax-deferred retirement account breaks, right? He wants to help more people invest in the economy. So he says, take Japan until recently he had a no tax-incentivized way to invest for retirement, which is kind of crazy, no 401k, no IRA. Now its NISA program is booming. Enrollment surpassed $25 million last year. Meanwhile, U.S. lawmakers are weighing a market-based twist on baby bond,

an investment account for every American at birth, which is the new Trump account. So I don't know if you looked at this at all. You know finance had us during this yesterday. So this is... Brad Gersoner's been pushing this. Yes. Credit to me, I've been pushing this. Yeah, but you haven't been doing anything about it.

He's actually... I've been writing about this for a while. So under the proposal, so from 2025 through the end of 2028, any newborn child will get $1,000 put into their account. Love it. And it's going to be automatically opened. And it's going to be invested from what it says in a total stock market index fund. I hope they use some...

one that is dirt cheap, right? Vanguard or Black Rock. By the way, Vlad was at the White House yesterday with Garsner. Is this going to be done to Robin? Is that the idea? Possibly. I'm not sure exactly. Okay. So then you could make contributions up to $5,000. Now, I saw a few stories that interviewed financial advisors and they're like, listen, this, the tax breaks aren't very great. You probably better off investing in a 529 plan. I don't care. The whole automatic piece of it to me, I think that's great. Yeah, love this. Like the fact that they get people investing, it in the stock market. And I don't know all the rules and regulations yet about when they can take it out and stuff. But this is a case I've been making forever. So I think this is great news.

I love it. You know, there's a lot of cynicism in our society, understandably so, especially when it comes from people like Larry Fink. We love to complain. It's something that everyone loves to do. But it's not all bad all the time. This is a good thing. Yes. I totally agree. All right. So we talked last week about the cash holdings. and how it's kind of this dichotomy of everyone's taking risk, but there's also these $7 trillion in money markets and there's all this money. So I got an email from someone who said, listen, I'm retiring at 65.

And he said, so retirement has completely changed our cash profile. We're holding much more cash in short-term bonds now than everyone's before in our life. That would decline over the next decade as these funds get spent and Social Security comes online for us. But he ran on his whole thing about how they were holding more T-bills and more short-term bonds. And I think that's going to be the case for a lot of people. So I think the trying to use like the cash holdings and some of this stuff as like a bullish bearish sentiment indicator, I think it's going to be really hard for the next five, 10, 15 years because of baby boomers.

They're going to need, they're going to be raising cash for spending purposes, right? Yeah, but also, why not bonds? I mean, if overnight rates come down to 2.5 percent, that's going to look a lot different. Yeah, but I mean, I think the whole, I'm going to keep two years worth of spending in cash or something. I think a lot of people are going to do that. Yeah. So I think you've always made the case pounding the table, that money market assets, those are sticky if they're not going to come out.

I'm coming around to that idea, and I think you're probably right. Double pounding the table with fists, fissing the table. Absolutely. Something like that. So we mentioned the 2020s has been just mind-boggling. Crazy. I looked at this the other day. I looked at all the annual returns.

We've had, you know, one bad year in 2022, some drawdowns otherwise. but the decade now, we're up over 100% for the decade that's annualized at 13.7% per year, roughly 14%. All things considered. Now, the retort is, yeah, we threw trillions of dollars at these problems and blah, blah, blah. Still, if you would have laid out everything we've gone through, the pandemic, 14% unemployment, negative oil prices, 9% inflation, all that. What are you going to have for annual returns?

No one would have said 14% per year. The stock market has been outperforming, I don't know, Happiness, contentment, well-being, for the last X number of years. Yes, it's a good thing the stock market is not powered by sentiment, exactly. Yeah. I mean, it is in some ways, but then again, it isn't. This makes go back to a point you made a couple months ago. Like, what would the mood be like if there was like a four-year bear market?

Right. Right. Not just like a, you know, run of the mill. Yeah, I agree. All right. This is a bit of a faceblower. Jeffrey Kleintop tweeted. It's not just this year, as we have been saying for years,

Europe has been outperforming the U.S. over the past two and a half years since the current bull market began in mid-October 2022. That outperformance is now 30 percentage points. Wild. He said it's still not too late to diversify if you're overly concentrated in U.S. stocks. Look at this. So MSCI Europe Index versus the S&P 500.

Who did it thunk? So this is from the bottom in 2022. I never would have believed this. It's a huge spread. And, yeah, I've always had this thing where, like, bare markets are resets in many ways, which is funny because the pandemic bear market was a reset at first. It was, like, small caps and value stocks took off. But then you had the reversal and the growth stocks came back.

But maybe this is one of those things. I never would have guessed this. Not me. All right. From Uri and Timmer at Fidelity, he looked at what happens after a 20% drawdown and then, like, showing the rally. And this goes back to like the 1900s, I guess. And showing that this is one of the quickest V-shaped snapbacks. Now, to be fair, it didn't go down as far as the other ones, obviously.

This was like barely, barely hit 20, right? We had to round up or do intraday like you. Is it possible? By the way, it didn't hit 20%. Even intraday? No, no, on a closing basis. Yeah, no, it didn't. Are you finally coming around to the intraday?

No, but that was a bear market for sure. Okay, thank you. Even though it was brief. But are we almost ready to say, you can never say anything with complete certainty. Are downturns different now? Are they just going to be faster and more frequent than they were in the past? They have been for the past couple of years. So let's say you had two bear markets per decade on average, going back to history.

And they lasted 36 months. Are we just going to have three or four now when they last six to 12 months instead? I'm not ready to say that. I'm starting to come around to this idea that everything moves faster and the market just prices stuff in so quickly and then moves on.

Eventually, but even if it's 10 years from that, I mean, eventually there will be a bare market that doesn't be shape or cover. Yeah, there'll be a financial crisis and that will be less longer. I agree. But I think the run of the mill correction bare market. I'm going to reject that theory.

I know things move quicker, but, and we can say that recoveries over the last five years, 10 years really, have been quicker. But to say that this is just what it's going to be on a go forward basis for the rest of our lives, can't do it. How about this? 75% of corrections of their markets are just going to go quicker and they did the pass. I think a lot of them, that's the world we live in now because we process information so much faster. I also, not to go too far down this rabbit, but I also think.

the way that companies respond to adverse economic conditions, the ability to lift a few levers, dial a few knobs. And the government. Now, you could say, well, eventually there's going to be a policy mistake or the government's going to say, no, we're not. And that could be it. All right, I was perusing the latest J.P. Morgan guide to the markets. And this caught my eye.

The yield to worst and subsequent five-year annualized returns for the Bloomberg U.S. aggregate total return index. it's the forward five-year, the yield currently is like 4.7%. That implies a return of around 4.7% going forward from here because take the starting yield, go out five years or so. So my case is the 60-40 is in pretty good shape, even if the stock market doesn't do quite as well as it has for the last five years. Fair?

Yeah. The 40 piece is finally going to pick up the slack a little bit. Yeah. That's good news. It's great news. All right. Not a ton of tariff news, thank God, moving the markets lately. But liberty to Sri economics...

What if they just did the Larry David and pretended like we never did it in the first place? Would anyone really care besides the taco memes? So the New York Fed did a survey and they asked manufacturers and service firms what percentage of the price increase so you're going to pass through to your customers. And the things that stand out are 100%, like all of the cost increase, was almost half of service firms and about 30% of manufacturing firms.

And then on the other end, you had 20% of both-ish, a little bit more, said they're going to eat it. They're not going to pass on the costs. And then, you know, the middle is a little bit flatter. But yeah, that's how it works. Cost increase, pass them out. I wonder if the ones that said they're going to eat it are kind of lying, too,

if this is like a sentiment survey. Because they're really going to eat the whole thing. I don't know. Okay. Let's just hope it doesn't come to pass. All right. I'm going to make it. You made a case earlier.

I'm going to make a case. I think I've done this before, but I think the Fed should cut rates. Let's hear it. Let's do it. Rip the Band-aid off. So the EU has already cut eight times, I believe. They're back down to 2%. And people can say, well, they're getting ahead of the tariff stuff.

Well, why don't we get ahead of the tariff stuff? Trump actually said, if inflation should come back, then he can raise the rates to counter, saying, like, if the Fed cuts rates and inflation comes back, you can always raise them back again. Torsal slack. MNA activity is about the lowest it's been. I don't know how they actually, this is by deal count. Global MNA activity, very weak. IPO market, pretty darn low. This is from Renaissance Capital, which tracks the LEPO stuff.

The IPO market is just, it's heating up a little bit. There's a few more IPOs, but compared to the past, it's still. pretty darn small. But so what? The Fed should cut because there's low M&A and IPO. This is the big,

this is the big one, though. U.S. existing home sales are now at the lows of the great financial crisis. David Kelly says the National Association of Home Builders Market Index

fell to its lowest level in 18 months, while single family building permits fell to two-year low. High mortgage rates, high prices, weakening demographics are unimpeding home building.

So I think the, we need to we need to have more activity. I think the housing market is the big one here. I agree. Fully. Fully on board. And a lot of people say, well, if a Fed lowers rates, that doesn't mean that longer term rates are going to come down. But the Fed could say, hey, we want lower mortgage rates. I think they could say that. Yeah, it does. I mean, maybe it doesn't, but you would think. Okay, I agree with you. To me, the big one is... And then AI is deflationary. Put it all together. I think a Fed should cut.

Neil Duda agrees. Neil Duda said, slowdowns don't always stop on their own. And in this case, it feels like a policy response will eventually be needed. Between now and then, the pressure on the economy will continue to build, even if tariff nois subsides. The longer the Fed waits, the more they will end up having to cut later. I agree with you. I agree with Neil. Matthew Klein, did you do with his piece? He had a piece saying the Fed should not be cutting rates. Right. I think the Fed is always late, though. And I think that they like it being late. I don't, for some reason, they like it. So, but just to push back on the IPO market a little bit, the IPO market, even though we're not getting a tidal wave, we are getting more activity and the deals are scorching

hot. Corweave, IPO at 40, it's at 160. Circle, did it double the first day. Mike McCarty tweeted that chime financial IPO, demand blows past share supply ahead of pricing, exceeding the number of available shares by more than 10 times. So there is a speculative frenzy going on in some corners of the market. But is it speculative because there aren't enough IPOs, right? There's appetite for it, but there's not enough companies that are going public. Either way, that argument to me falls on deaf ears that the Fed should cover. because there's not a lot of M&A and IPO activity. I just think that, yeah, that's down the list.

But I think housing activity is a really big one, and it's really important for the economy, and it's essentially just slowed to a crawl. Totally. Totally. Yeah. Cut. And it does seem like the business... I was talking to a friend this week saying that, listen, our company has essentially completely stopped hiring new grads. Like, that's a thing people have been talking about lately,

and that's like, that's an AI worry. And I don't know for sure if that AI worry is going to come to fruition. but there's a lot of people who are just, it's the tariff stuff, and I think the labor market is slowly starting to, you know, stop a little bit. We haven't spoken about it yet on the show, but both Neil Dutta and Callie are definitely putting a lot of notice on the cooling labor market. Market seems to be unperturbed for now, but something to keep an eye on. It is crazy because the unemployment rate basically hasn't budged in 18 months or so.

It's been like 3.9% to 4.2%. Yeah. Both Neil and Cali say, but like, if you look past a headline number under the surface, there are some concerns. Nothing red, but maybe a little bit of a yellow. Yes. I just think for whatever reason, the Fed never wants to try to get ahead of these things. They've never done it.

Yeah. And so if we have to get a 50 basis point cut again at some point, that's probably what's going to happen. All right. Let's talk about artificial intelligence. So Mark Rubenstein has a substack called net interest. It is one of my absolute favorites. He writes about financial services companies.

And it just turned five years old. That went fast. Been there since the beginning, I think. He said one major development, so he did a reflection on the last five years. One major development has been the integration of AI tools into my research process. While the core analysis remains human driven, AI has enhanced my ability to process vast amounts of financial information and surface relevant insights. For a solo operation like mine, the impact has been profound.

I once considered recruiting London Business School students for research support, but AI has largely filled that gap. Sorry, MBAs. I now use AI to analyze earnings transcripts, source relevant publicly available research, and edit my writing, all in a fraction of the time it wants to allow me to focus more on the interpretive work that adds value. I was a pretty slow adopter of it, and now I'm using it. It's now a daily thing, maybe like an hourly thing where I'm constantly using it and asking questions and did I miss anything? So I have a scenario for you. So let's say like this, it really does ramp up productivity. And millions of jobs are at least disrupted or they, they're not filled or

they're not put out there. So that's disinflationary or deflationary. So I'm picturing an economic environment of rising unemployment. And I said this at the live show. Like, what if we get rising unemployment, but not a recession? I could see that. Deflation. But then, but then you have rising profit margins, profits and margins. There's going to be a ton of people who are really angry at the stock market. That does not sound farfetched at all. Right? that's when people are going, these corporations are doing better than ever, their profit margins are rising, and I'm out of work, right? This is when people get really, really mad at corporations in the stock market. I don't know, maybe. I could easily envision to cover the economist, right,

along those slides. So we got an email that expresses the sentiment. I'm confident AI is still early and going to take up many white college jobs in the next few years. Could you speak about what a bold but responsible AI investment would look like? 40 years old, 40 years old, W2, job, standard investments. So he said this is the kind of tweet getting my attention. And Bucco Capital. Wait, so this guy wants to know, like, how do I invest in this? Yeah, so Josh wrote a blog post years ago, just buy the damn robots.

Yeah. That was an early prophetic post from Josh. So Bucco Capital, one of the best on Twitter, said, I asked Gemini and ChatsyBT to construct a portfolio based solely on the new 300 plus slide, Mary Meeker, AI, report. So my take is this, as I mentioned earlier, a bubble is coming and allow me to present some charts from Mary Meeker. I understand a lot of people are listening. Wait, hang on. Before you get into this, my simple Ben answer is just you own the S&P 500 or the NASDAQ 100. Yeah, I mean, 35% of the S&P is now direct beneficiary of AI. Yeah, I think that's, if you don't want to get too

cute about it. That's the simplest route. All right. So, she has a chart. I believe we mentioned this because she pulled this from Stripe, from Stripe's annual letter. But she's showing the top 100 AI companies versus the top 100 SaaS companies, the median time to annualize revenue of $100 million. I'm sorry. Fast to ramp to $5 million. Okay, to $5 million. It took SaaS companies 37 months. It's taking the median top 100 AI company 24 months. SAS was revolutionary. Or evolutionary, this is revolutionary.

Everything is faster. So she has a few slides in there, and I only grabbed a few, but she has many highlighting different companies and how fast they're growing. So Corrieve, for example, Corrieve revenue is up 730% from 2022 to 2024. Q1 revenues were $982 million. That's up 420% year over year. Like I said earlier, the Corrieve IPO at IPO at 40, two months ago. And that first week or so, remember, it kind of just went nowhere and fell, I think because

of the tariff stuff still. Now it's at 160, 40 to 160. Palantir, certainly in the AI category. Palantir, so she has a chart showing the global public market cap leaders, 85% of them, 25% of 30 are based in the U.S. by the way. Palantir now has a market cap of $302 billion. What? It's just behind Coca-Cola.

I have a chart in here showing Coca-Cola's market cap from 1990 to today versus Palantir, which IPOed a couple of years ago. And basically, the bridge is closed. Palantir is trading at 105 times price to sales. Hang on. What does Palantir do? AI defense. I don't know.

It's one of those companies that, eh. It stock goes up. That's what it says. does. Zoom, the poster child for the bubble in 2021 traded at 125 times sales. Palantir not so far behind 105. Now, I know there's a Palantir Army. Don't come at me, please. I understand that there's things going on other than price of sales ratio. I understand the explosive economic growth and margins and moats and blah, blah, blah. Plus their CEO has that little thing here. Yes. Nevertheless, wow, 300 billion dollar market cap. Palantir, just behind Coca-Cola. Unbelievable.

All right, there's a company called Scale AI. It did $335 million in revenue in 2023. It did $870 million in 2024. There's a company called Vast Data. It's data infrastructure engineered for Insight, okay? Basically went from zero in 2019 to $2 billion in sales in 2025. And this one caught me a touch. I actually went to the website.

I'm like, wait, what is this now? It says specialized AI, legal, workflows. So Harvey, it's a company called Harvey. It went from 10 million to 70 million AOR in 15 months. In 2024, we saw four times annual recurrent revenue growth and expanded from 40 customers to 235 customers in 42 countries, included the majority of the top 10 U.S.A law firms. So they're doing something in law with AI to enhance productivity. I, you know, not my world. But my point is this. If you are not in inside of this and you are not aware of what's going on.

You will be very soon. All of us will be. And it's coming like a freight train. And there will be a bubble if we're not in one already. Do you also think most people just, it's going to be integrated into their lives in a way that they don't even realize they're using it? Yeah, sure. One of the companies that she highlighted was customer service agents.

You know, when you're like, no, no, I said customer support. Like that whole stuff is going to be upended. All of it. Here's my thing. I agree with you about a bubble. I would be more surprised if we didn't get a bubble than if we did. Like I've been saying since the early days of Chad GPT, like history tells us that any time there's an innovation like this, you get a bubble because people pull forward

expectations. And there is the thought that without hyperbole, this will be the biggest revolution, technological revolution we've ever seen. And I wouldn't fade that. Ben Thompson wrote a piece a couple weeks ago about just the amount of money that the big companies, the hyperscalers, as he call them, are. spending on, and he's like, how long is the market going to let them, like, how far would their free cash flow margins have to fall before the market finally slaps them on the wrist

and says, like, okay, if you're not seeing the returns yet, that's like the only case against it is, is there this immaculate handoff of the baton from all the, all the investing right into returns that, and the market says, you know what, we're not going to let you or buy these companies 50% lower. So that is the question. That is the question. And, and, and, and, her slide deck, she has a lot, and I'm going to talk with Josh about this, about the hyperscalers and the capax as a percentage of revenue. And it's crazy how much they're spending. And yes, to your point, they're free cash flow margins of meta, Microsoft, like Amazon, Google. It has gone down pretty substantially as they just dump money into these things. And the market doesn't

seem to care right now. Given the on the benefit of doubt, like at what, at what point does the market start? That's the thing where I always say that we got everything we wanted and more from the dot-com bubble. I think the stuff people were asking for the 90s, they would probably be shocked at how much stuff we have. Just YouTube and Spotify and all these things. And we still had to go through the dot com blow up to get there. Like, can we get the AI handoff without that? That is the question.

Now, I would be remiss if I didn't say it because I understand this might sound like, oh, Michael, so bullish, LOL top. The stock market, this really is neither here nor there, but I do just want to throw this out, that the stock market has gone straight up for the last month. basically uninterrupted and, you know, I'm not calling for a 5% pullback tomorrow, but it feels like things that got in too easy in the stock market in the very short term.

Yeah. And you had the chart last week that we shared on Exhibit A of the Mag 7 drawdowns that they've seen already this in 2022. Yeah, I have that here. So just just pinning this for one second because we're right there. So there's a great chart shared from Daily Chartbrook via Vandatrack and they show the retail purchases of the Mag 7. So, it's the 10-day moving average percentage of total retail inflows. And interestingly, people bought the shit out of the Liberation Day dip and credit to them they've been selling ever since. If you look at the retail purchases, they've been going straight down.

Wait, just because the purchases are going down, it doesn't mean they're selling, though, right? Just means they're not buying as much. Yeah, yeah. Yeah. That is interesting. So they only buy when, like, they see. They only buy the dip.

I mean, okay. Here's another one. You can't really call it a fat pitch, but you can call it like a meatball kind of. It was a fat pitch. It was a fat pitch. J. P. Morgan has a great chart. Retail portfolio weights in Mag 7 have been declining.

Look at this. In the summer of 2024, it hit 10% in Mag 7. Now it's under 2%. Huh. Right? Big time, huh? So, Ben, to your point, last week you mentioned this. But look at this.

The drawdowns for Apple in 2022 with 37%. And again, 31%, is that 31 to 37? I can't even tell in 2025. Invidia fell 63% in 2022. It fell 37% to 2025. Tesla fell 49% in 2025. Meta fell 34% of 2025. I am sick and tired, and this is the last time I will say this, I think, for now.

I'm sick and tired of people just like mocking the retail investor. All they have to do is buying all the max 7. There's been two monster drawdowns in the last. Amazon, Facebook, and Vida, and Tesla all fell more than 50%. And some of them fell even more than that. So instead of like a, because the dot-com bubble, but the NASDAQ crashed more than 80%. That was a complete wipeout. Amazon fell 95%.

We're not going to get that. No. Right? That's not going to happen. Because when that happened, Amazon was still hemorrhaging. I mean, Amazon was obviously a fundamentally different business. But their free cash flow is wildly negative. Yeah.

None of those companies were making money. That was the problem. But thinking through what, if there is an AI bubble, what could that look like? Could we just see us, back to my point about faster markets? Could we see a series of like 20 to 30% drawdowns in these as they work through? Oh, yeah. Oh, yeah.

Now, somebody might say, Michael, what are you talking about? Did you hear what you just said five minutes ago? Palantiers trading on 105 times sales. What do you mean there can be a bubble? Now, if somebody wants to say we're in one right now, okay, I'm not going to fight you. The market cap for Corweave is currently, and again, I don't really know much about the fundamentals of this company, but the market cap of Corweave is $75 billion. Knowing human nature, things can always, always, always get stupider. That would be if this AI stuff and people really start, oh my gosh, paying attention to it, to your point, I don't think what percentage of the population really is paying attention to this right now?

Nobody. How many of your friends are asking about the AI trade? it's it's minimal i've had a few ai conversations with friends more about like how you use it at work and stuff but it's it's tiny in the grand scheme of things tiny um all right we've we've shared these charts before but it's kind of wild um if you index the mag seven versus the remaining 493 stocks damn it i i didn't put the tweet in here so my apologies whoever i'm lifting this from looks like a goldman chart but i can't remember the mag seven you know up into the right and the remaining 493 stocks, not great performance. But, okay, this is kept waiting.

This is how it works. It's like saying, well, take KD and Steph off the 2016 Warriors. No, you can't. This is part of the deal. There's another chart. And that's why I think that's the, if you really want to make an AI bet, the easiest play is just that. And you wait, you'll let the stock market pick the winners for you.

So here's another great one. And we've mentioned this before, but bears repeating. They have a chart showing the MSCI acquisition. We XUS, now we look at earnings. That's just the rest of the world. The rest of the world. We're looking at earnings per share versus the S&P 493. Kind of remarkable.

They track each other almost identically, right? Yeah. And then again, there's the Mac 7, which is on its own chart. And this is, this is it. I know we keep repeating ourselves, but this has been the dominant story. Nobody could have imagined, certainly myself included in 2015 and 2018 and 2019 in 2022, that all of these sort of things were going to happen, that the margins and the moat, which is going to keep getting wider and wider.

Maybe we're at an inflection point. Maybe AI is the big disruptor that comes for everybody, or some people. Yeah, and if the people are getting out of the Mag 7 trade, they're going down to the next tier, the Palantiers and whatever, they're looking for the next NVIDIA that's going to be in the top 10. Michael Sembless was on AdLots recently. He said AI is the stock market bet of the century. And the bet part is just not that it's going to change the world, and it probably is, but it's also just the amount of money that's flowing in there.

That is the bet. That's it. Yeah, I tend to agree. That's it. So, not to say nothing else matters, because it's stupid hard to tune out the drawdowns to the bare markets because they're coming along the way. There's no doubt about it. We just had one.

But you got to keep your eye on the ball. Now, the story will crack eventually. I don't know when. But you're right. Crypto. We haven't spoke about crypto in a while. No. Last week, you and I were talking.

We were in Chicago. We were looking at all the Bitcoin ETFs and how much money they have. We looked at iBit, which is the I-Share's one, that's the biggest one, has over 70 billion in assets. I think the Fidelity one had 30 billion. It's a huge thing. I saw some, I can't remember who did it. And I'm not throwing shade of this person, but someone tweeted that they came to our event last week. And they're a crypto person.

They said, hey, so I went to a trad-fi event. Talking about our event? Yeah, word trad-fi guide. But people in crypto use the word trad-fi, and it's, I think it's a derogatory term. Don't you? It's not a night. It depends. Not always.

Okay. For me, it feels like a derogatory term. And I have a secret to share for the crypto people. Crypto is tradfye now. Bitcoin is tradfai. You have $100 billion plus in crypto ETFs, and that's been the big story of the past year for crypto. Crypto's tradfite. When stable coins come up, stable coins is the big thing for crypto, like that's the, that's the

rails to get people on or whatever. That's the entrance ramp. I mean, you're 100% right. Where's crypto? Where's crypto without the ETF? If it's tradfai doesn't come into crypto, crypto is, what are we talking about these days? Bitcoin's what, $40,000?

So sorry, crypto now is tradfi. Yeah. So BlackRock. And there's nothing wrong with that. If you're a crypto person, that's what you want. Well, it depends which crypto person. But you can't pretend like it's separate now. It's the same thing.

Black Rock's, Ibit, took in a record amount of monthly flows in May. Boutchunis has his chart showing how long it took to get to $70 billion. Now, obviously, GLD, VO, it's not an Apple's appellous comparison because ETFs were much different in 03.1, but nevertheless, 341 days versus 1,700 days for VOO, pretty remarkable. And this is what we've been looking for. Baltunis also tweeted a nice look at the breakdown of holders of the spot Bitcoin ETFs via 13F filings. Advisor has surged up the list now to number one by a mile. These 13F filers make up 20% of total assets, but in my opinion, that it's likely to rise to 35, 40% as more adoption comes.

And James Seifert is the origin for this data. But look at this investment advisor. See, it's funny, RIAs have so much more power now because the idea at the beginning of crypto was, just wait until the institutions come. You can see endowments around their insurance companies, but they're much smaller than, I mean, they're dropping the bottom.

bucket compared to advisors, right? Who's that? The endowments. Endowments and insurance companies, like the institutional, like, they're tiny. Tiny, wow. Pensions. Look at how family offices are very small compared to investment advisors. And so here we are.

Bitcoin is at an all-time high end. I'm not getting any questions from friends and family. Are you? Not really. I guess there's just so much going on now. It's hit 110. That was your top of your range. You're ready to sell some.

Oh, by the way. In terms of interesting moments in markets, I mean, I mentioned Bitcoin briefly, but like, holy shit Bitcoin, a new asset class at all-time highs. Yeah. Yeah. It's now just being, no one has the conversation anymore. Remember at the beginning it was, listen, you put 2% of your portfolio in it, and if it goes to zero, who cares?

No one never says anymore. Well, if it goes to zero. Yeah, that risk has been taken off the table. Wait, so, I was looking at this as we were talking. Do you know how much money is in VOO now, which is the Vanguard, S&P, 500 index fund. This is going to be a trillion dollar ETF. It's $660 billion. Well, Jeffrey, I have this tablo, but I haven't had a time to ready yet. Sorry, Jeffrey, but I will. The Vanguard total stock market index fund has $1.7 trillion in assets.

Oh, it does? Oh, if you include all the ETFs and, oh, see that, this is just the ETF as well, right. Holy smokes. That's unbelievable. 7 trill. All right, this is a headline. J.P. Morgan plans to offer clients financing against crypto ETFs. And why would it they? They're in the money-making business, too. But obviously, Jamie Diamond has been, I would say, fairly vocally harsh. Let's take out the fairly. He's been very anti-crypto. So this is just margin loans against Bitcoin ETFs? Yeah. Okay. Yeah, why not? All right, what those rates are. All right, real estate, dental crypto? All right. Older millennials just got super lucky. So this is the share of first-time homebuyers, again, from Tors and Slack.

And in 2010, it was 50%, the share of first-time homebuyers buying a house. That's crazy. It went from 50% to 24%. So still, it's just, it's been falling a lot. And you could say that wasn't normal either. Half of all homebuyers shouldn't be first-time homebuyers. And the thing is, there wasn't a lot of activity back then either. But that's pretty, if you were an older millennial, you timed things perfectly.

Like, there's going to be a divide. I feel like everyone puts baby boomers in the same cohort. even though it's like an 18 or 20 year window. Like my dad was born in 1947. I hope I'm not getting that wrong. He was a big part of the baby boom. I think people in like the early 60s are still called boomers. But that's a completely different part of the demographic, right?

Oh, for sure. Older and younger millennials is huge. There's going to be a massive difference there. You could say we also got effed graduating to the teeth of a financial crisis. Oh yeah. The labor market was awful. You're, yeah. Every generation has its shit.

I mean, without fail. I heard a lot of, in 2008, 9, 10, I heard a lot of people just say, like, you should be happy you even have a job, right? I didn't have a job. Wow. I was paying 400 bucks a month for my job. Hey, you were a waiter there for a while, right? Speaking of real estate, this caught my eye.

Now, I know this is apples and, I don't know, pencils, not a direct comparison, but. But, holy mackerel, from Mary Meeker's presentation. She compares data center build time. Now, we're talking a fully operational data center, 750,000 square feet, which is the equivalent of 418 homes. That took 122 days to build. I don't know where this was. It took 122 days to build this thing versus the average home.

That's 1,192 square feet, on average, takes 234 days to build. Much more money on the first one than the second one, obviously. A little bit of a bigger investment. A little bit more incentives. It is, we've built three homes in the course of our home owning lifetimes. It is such a onerous process with all the permits are holding us up here or the this is holding us up. And we can't do this until we do this. And it is one of those things where, I don't know,

until they just 3D print a house for you or something, it seems like it's always going to take while. It's never going to be easier or more efficient. It's all like rules and regulations and stuff, I think. All right. Private markets are getting a decent amount of negative press these days. A lot, yes. You're right.

The negative press is, I think it's warranted in some ways. but in other ways, it's like, this whole industry is not garbage. Like, there wouldn't be this much money in it if it didn't do something for investors. I think we all understand the downsides and they will continue to be reporting about it because because it's valid. There is a lot of shitty behavior that is happening, that is coming that we need to be vigilant against. But there's a chart that is going around, that's been going around.

We've seen it before. This is from Bloomberg, sources pitch book. private equity distributions have plunged. Investors haven't yet got in all their cash back since 2016 vintage. Okay. Okay. Okay. But it's a cliff, right?

It basically goes to zero from like 2021 to today. And you might see this like, oh my God, investors aren't getting their money back. Yeah, obviously, if you invested two years ago, you're barely getting your money back. Duh. These funds laid out. They're not trading stocks. Most of these funds have a seven to 10 year window in which they can invest. the capital. And a lot of them have an extension that they'll let investors vote on saying,

we're going to go an extra two years because we need more time to invest. It's a long period just to get the money invested. I mean, this chart is hot garbage. This is the way it should look. Yeah, exactly. But getting back to the point that like remaining vigilant because my God, is it coming, the tidal wave, we've spoken a lot about this and we will continue to, Ben Johnson has a chart showing the number of launches of interval funds. And this is just going to go. Yeah, this is how advisors invest in this. Yeah, but this is going to hockey stick higher. Ben Johnson was at our live event.

Yeah, he was. Shout to Ben. I saw this headline this morning. I have not had a chance to dig in. Maybe we'll talk about this next week. Withdrawal requests at Starwood Property Fund are at $850 million. The fund sold $1.6 billion worth of property from December to May to meet redemption requests. Not great.

But this is why those interval funds have like a 5%? cap on how much they can and will sell. They don't want everyone rushing for the exits I want. So Bill Gurley was talking about... But wait, hold on. One thing. One thing. We'll last thing on this.

And but also, the fund sold $1.6 billion with a property from December to meet redemptive requests. They sold it. There was so much money out there. Yeah. So it's not like they got, they had to lock it up and gate it because they couldn't sell it. Who knows what type of return they got.

But, like, my point is, there's so much money. My God, there's so much money. distressed funds, L.O.L. So Jason Zouag wrote a piece about secondary funds and how they work. And it's kind of a weird thing

where you buy the fund at a discount, then you immediately mark it up and it looks like you have the... So it's hard to, like, people are trying to wrap their brains around that. So Bill Gurley quote tweeted this and he said,

in all private, all the time world will be much messier, or much mustier world with even more opportunists and charlatans. Transparency is an investor's friend. Darkness, I can't say that word.

Obfuscation is not. That is a tough word. Yeah, it is. But it looks better when you write it and say it. Bill Gurley is a venture capitalist. He's in this world. So he's not, he's talking his book. He's not saying like he's not a guy from the outside.

He's a person in this world. And I'm sure he gets, he gets a lot more transparency because he's such a big, well-known investor. But. So for people that are not familiar with. His point is true. The meat of the story was, and I want to talk to some people and find out how common this is and is this shady or are there like, yeah,

no, this is how it works, and also there's something else. So Jason reported on a fund company, was it Hamilton Lane? Yeah. Who bought distressed assets or whatever, bought assets in the second day market a discount from their nav, immediately marked it up to the nav, and then it's taking performance phase on that. Now, I saw some other people tweeting about this, and I want to talk to somebody to get more information that, yeah, this is how it works, but there's also clawbacks and high

watermarks, and they have to do all of that. Otherwise, this goes backwards. Now, I don't know. This is like a little bit outside my lane, but certainly sounds, it doesn't sound great. When I worked in the institutional investment world and we invested in some secondaries, we thought it was great because we would invest in it. They'd buy it at a 40% discount. And our IRA immediately will look great because they market back up to 100 cents of the dollar.

Right. So for us, and I don't remember how the performance fees worked for all of those. But as an investor, you were going, this is awesome. Look at, look at all great I am. I mean, here's maybe a stretch. But imagine a hedge fund manager. bought a stock that was traded at 50, down from 100. And they just marked it at 100 and just started taking carry on that.

Right. Like, oh, I bought it at a discount. But the private equity manager would tell you that, no, the marks on this are true. The reason there was a discount is because it's hard to get out of these things. There's no market for it. So I can actually see both sides in this one. Well, if there's no market for it, then how do they sell? Well, true.

All right. So your point is, can you trust the marks? And you don't know until they have a liquidity event, which we don't have those anymore. The fees are real. The marks are questionable. True. All right. So we reference the transcript all the time.

And I want to make the case that transcripts are more valuable than macro data, or at least, at least as valuable. So following the company earnings reports and then the quarterly earnings calls. Yeah. So I pulled a couple of quotes that, bear with me. I want to read some of this. Well, they've been really helpful for us for understanding the consumer for the past few years. for sure. So a tractor supply. President said, I'd say what we're seeing on the consumer is really not much difference in this last two or three years. I think consumers continue in

their rhetoric and in the qualitative comments, talk about being cautious and even some modest kind of confidence kind of variations we've seen over the last few months. But if they can practice in terms of their spending, consumers are holding up very well. As the weather has come out and has come out and the spring has finally arrived, our seasonal products are selling very well. So when the sun's out, the business has been very good. Here's the CEO of Marriott. If you and I had been sitting here a year ago, and you had said to me, imagine a circumstance where your biggest market gets to a 52-year low in consumer confidence. How do you think about average?

I mean, how do you think about rev par? Was that revenue per average room, I guess? That sounds about right. I don't know what my answer would have been. I'm fairly certain it wouldn't have been north of 4% growth. Okay, so this is what I mentioned earlier, that the post-COVID spending environment is a permanent shift. I lifted that from, again, the CEO of Marriott. He said, one of the takeaways from our perspective, we talk often about the shift in consumer spending patterns. Pre-pandemic,

you had younger demographics already prioritizing travel and experiences and highly deploy their disposable income. When we look at the credit card spending data today, that phenomenon has spread across demographics and feels pretty permanent. And I think that the shift is offsetting some of the indicators that would have historically led to much softer ref parts. I think a lot of people look at travel as a necessity these days. It's not a discretionary purchase anymore. It's like, no, we are going to travel. I think a lot of people just have that feeling.

Here's SOFI. And they serve probably, not probably. They serve the median financial person in terms of income, maybe lower just because it's younger people. Probably younger, I would say. We underwrite on the personal loan side to a 7% to 8% average life of loan loss. Losses are trending well below that. Okay. All right, here's some of the downside because it's not all roses.

From TransUnion, there's unemployment, which we mentioned earlier. The only, I think, concern that we see at this point is with the unemployment rate. If you unbundle the number, the percentage of consumers that are working part-time but wish they could work more hours has increased in a material way. And that could be an early indicator of a slowdown in the jobs market. And then lastly, from Dollar General, during our recent customer survey work, 25% of Dollar General customers reported having less income than they did a year ago. And nearly 60% of our core customers noted that they felt the need to sacrifice

some necessities in the coming year. So shout to the transcript for this. I am subscribed to their substack. If you're interested in this, I suggest to check it out. But also, Ben, this goes back to the point. So, like, you could read this and be like, See, there's cracks. There's cracks forming on the lower income side.

But what we said earlier last week, that data point from Seveda, that the lower income consumer is responsible for two percentage points of earnings per share in the S&P, they don't matter to the stock market. Not talking about the human side. To the stock market, it's the hypers. That's why if AI really is this big booming productivity tool, then the stock market, what if it doesn't care about a rise in unemployment? in. That sounds really...

That's dark. That sounds really stupid to think in your head. Like, of course it's going to care. But what if it leads more productivity and it doesn't care? That's a world I'm like preparing myself for. All right. Two things on the personal finance front. A bunch of people sent me this because I'm a big truck fan, as you know.

Wall Street Apes. I don't know what this is. How is this legal? American finances a truck that costs $11,000. He makes 84 payments of $1,900. And the amount he will pay in total for the truck is $100. 160-ish. So that's because he's paying 10% interest on this.

10% interest, the finance charge is almost 50 grand, so the total is 160. They want to know. This person says, I don't care what anyone says, this is usury and the bankers doing this should be locked up. No, no, no, no. The person making this purchase should be locked up. Take away their checkbook, take away the credit card.

This is insane behavior. 10.6% borrowing cost. Sorry. All right. Hold on. Hold on, hold on, hold on, hold on. I'm doing some math. Bear with me. So, this person... See, when people say, Ben, why do you hate trucks so much? My bad, my bad, my bad. I completely misunderstood.

I thought that after the car... No, no, no, no, yeah. That's almost what it looks like. Okay. So that's the total... Whoa, whoa, yeah, this... The wordy of this really threw me off. Yeah. All right, so yeah. So that's... Yeah, that's called interest. I'm sorry. Yes. Yeah, you're making a decision to do this.

Right. And that's the going rate of interest. That's the Jamie Irons. People are willing buyers, that blah, blah, blah. Okay, so this is crazy. I never look at this stuff, but I booked a hotel room in Chicago yesterday because we're going there for the Morningstar Conference in a couple weeks. And they're worse than, hotels are worse than ticket master. Destination fee, $25.

City tax, $16. This is for a one-night stay. State tax, $35. Destination fee tax, $4.35. The city and the state, that is what it is. But the destination fee and the destination fee tax is hot garbage. Right? That's just like a, we know you're going to pay it.

And people say, well, we don't mind taxing tourists. We'd rather tax tourists than people who live in our city and state. And I know people will pay these because, but it's just, it just seems, I don't know. Gross. Not. Yes. Yeah. Unnecessary.

Can I ask you a question about laundry? Okay. So I have a bench in front of my bed. Okay. Is that where you put the clean, clothes or the dirty clothes? Well, here's the rub. They're not dirty.

Or are they? If you put on a hoodie to go out to a little league game and you come back an hour and a half later and you drop it on the bench, should that be washed? No, no, no. Hoodies and jeans, those are fine for multiple wares. T-shirts, wash a T-shirt every time. You can't re-wear a T-shirt. So I've been having this thing with Robin lately.

stop. I wore that for an hour. That's not laundry. Because the more times you wash something, the more the quality degrades. Yeah. The kids, if the kids wear it, then you wash it because they're animals. T-shirts, automatic wash. I'm smelly.

T-shirts get washed. I agree. Sweat shirts, sweater, jeans. Those are, of course, you don't wash those every time. Okay. We're on the same picture. All right. Just an idea for, because we did our live show last week in Chicago.

do you think that live shows and events have a different feel since the pandemic? Like, do people appreciate them more now? And obviously, our events, we're always trying to have a little fun because we had people at a bar for an hour before our show and at Future Proof it's outside

and the beach. But I've been to a bunch of other things where I've spoken at conferences. I feel like people now appreciate the live because there's so much more Zoom. I feel like they appreciate it more, being in person. Yeah, I think, I think it's,

well, we didn't really do it. I don't, we don't have a big frame of reference. We weren't really on the road that much pre-hademic doing live shows. Yeah, I just think every sort of conference I've been at, like, I think people appreciate them more than they did before. I think that's one of the outcomes we've seen to the pandemic. So at the live show, I got a little bit roasted, and you know what? It was fair for my attire.

Normally, I am the least dressed person on the stage. And I dress pretty nice in our Chicago event, and it was embarrassing. I don't know what I was thinking. That's not me. I totally signed off on it. I thought you looked good. You had some nice leather loafers on it. I thought you looked good.

I think people are just not used to you dressing like that. Neither are my. You had like a, you looked like a total, I said you looked like you could work for Steve Cohen. You had a vest on with a nice shirt. You and I went shopping. It felt like I was wearing a costume. That's why people were roasting you because they're not used to seeing it. But I thought you looked nice.

Okay, thank you. All right, story time. So we were, we took an Uber in Chicago and we got in and the guy is blasting Creed. Right? And he said, do you guys want something else? Oh, yeah. That was hilarious. And you said, no, I'll keep your creed on, man. It's okay. No, I said, turn it up.

Yeah. And then we had a discussion about, like, you were like, do people really like creed or do they like it ironically? Because sometimes you can't tell. And I feel like the internet has allowed people to ironically, but also really like stuff more because other people like it with them. Right. It's, you can find your groups about this stuff more easily than you could pre-internet days. It's hard to unpack that. That's a good point because my friends were asking me this. If I want to go to a Creed concert the summer, I was like, like to laugh? I don't understand. Like, do we like Creed? The lines have been blurred between like, do I actually like them ironic?

I've said this about the guy Fieri theory. Like at first, everyone hated him. Like, you know, highbrow people. Then it's like, actually, I like him ironically. And now people just like him. That's how things work. And the funny thing is, is that we got out of that Uber, I went back to the hotel. And I go for a run on the, what's that high line thing called, 606?

And, you know what I listen to my run? Freed? Creed. Okay, this is a good question. Hey, guys, can you elaborate on your movie show rating? On a 0 to 10 scale, I would consider 5 average, but it seems that your system is different. In the most recent show, you guys talked about a show that was bad, but Ben gave it a 5.4. Is 6.4 an average for you guys?

So I said 5.4, and this was the Mountain Head one. Here's the thing. It was a high-quality movie, but it was a bad movie. Like, good acting, but not good. So that's, you're right. I've heard some people, Zag and say, they actually like it. Oh, that's just contrarian behavior.

Trust me. I rarely go below a five. Five for me is bad. It'd have to be really, really bad to get in the fours or threes for me. You know, I have a whole list of my movie ratings. Like the Tree of Life, I remember that one with Brad Pitt. I never saw, never heard of it. Is that what it's called?

It's like a 2.5. Duncan probably likes it. Okay. I'm a harsh critic, even though I like band movies. Like, how about this? I don't know why this is probably my head. Deep Blue C. I love that movie.

I love that movie. I started on the theater. You know what I would give it? 6-8. Okay, yeah. That, yeah, those ones have to be in the 6es. Right. I mean, just, if you give Deep Blue C over 7.5, you're a clown.

That's true. Like, acknowledge that I love that movie, but you can't rate it high. Let's be real. All right. So we've been watching The Better Sister lately on Amazon. I think we're halfway through. It's a mini-series. I think it's eight episodes.

Jessica Beal and Elizabeth Banks. Are you watching it? So that looks, sounds like I show you and Robic watch together. Right. So I mean, we're in bed the other, the other morning. And she pops it on. I think she was on the second episode. And I'm like, this looks good.

I'm like, what's going on here? I watched 20 minutes. I said, why aren't you watching this one? But she was, I, so I'm watching it. I'm like, yeah, but obviously this is like, this is good. Like, obviously I would like it. And she's like, okay, well, I just started. And so I'm like, well, what the heck?

So then we went to Chicago, and now she finished it. See, it's rich people, husband is murdered, Hamptons, New York City apartment. Corey, what's the guy's name? Stoll? Stoller? Yeah. And, yeah, it's great. It's worth watching. I think I have the most... Wait, hang on, hang on. By myself? I don't...

Yeah, I think, yeah. I mean, the ending could totally fall apart, but I think, yeah, I think it's pretty good. I think the chemistry between Jessica Biel and Elizabeth Banks as sisters is really good. I think I found the most 1990s movie of all time. Ooh. So the algorithm got me. I rewatched days and confused for some reason the other day. And then it gave me mall rats. And I have not seen...

And mall rats is one of those nostalgic movies that... It's on Netflix. I almost pressed play last night. It's on Netflix. So I put it on. And this is one of those movies that, for some reason, the timing and the place of when you watch the movie totally messes with, like, how much you remember it. And this is one of those movies in high school and college.

My friends and I have watched all the time. And I haven't watched it. Yeah, I haven't watched it since. But I rewatched it. And I did, I think I memory hold. There's some really, really dumb parts in it. But if you can overlook those, this is the most 1990s movie of all time. Because it's only an hour and 25 minutes, which wouldn't happen today.

That takes place in a mall, obviously. The mall was the center of the universe for people in the 90s. That's where me and all my friends would meet. Every Friday night, we meet at the mall and we go to a movie. Wait, wait, wait, wait. I have to pile on here because you said, like, there was like a moment of time you remember things. I remember seeing that for the first time in Josh Cohen's basement. And it was definitely inappropriate.

What year did that come out? Was that 93? No, wait a way to that. Maybe I don't know. I don't actually don't. Yeah, maybe it is 93. And holy gazoli is that. Oh, 95.

Okay. All right. So I was 10. Appropriate. What a movie. Yeah. I mean, there are some inappropriate parts, but so here's the other 90s parts besides them all. It's got Shannon Dordy in it from 902 and O.

It's got some peace and peace. Ben Affleck, pre-teeth getting fixed. He got pre-Hollywood teeth. Claire Forlani, who was like had a thing and then meet Joe Blackhappett and she fell off. It's got one of the London brothers. I think it's, I think one of them was in days confused and one was in this. This was the party of 5-1, which I also watched obviously. The hidden pictures thing where you, I could never do those.

Oh, that was the thing. I never saw him. I could never do them. I could never, oh, just cross your eyes and I could never do them. Jason Lee as a sarcastic. Like, sarcasm was a personality trait in the 90s. Like, being sarcastic was the thing. All the pop culture references, that was more because of Kevin Smith, but it's all Star Wars and Batman. Jay and Simon and Bob had the one movie.

And do you remember the khaki coat with the corduroy collar? Everyone had one of those in the 90s. This is the most 1990s movie ever. Yeah. And I'd give it, for the nostalgia premium, I'd give it a 7-2. Ooh, hi, okay. But me and my friends used to quote this movie all the time. Again, it's really, really dumb, but...

I mean, the scene where Kevin Smith goes through the dressing room with his head? Yeah, it's great. All right. Then two kids movies we watched recently. My daughter is working through the sports movies. We watched Rookie of the Year where the guy breaks his arm. I forgot John Candy was the announcer. I hadn't probably seen this since I was 10.

And then the Electric State is a Chris Pratt movie with the girl from Stranger Things on Netflix. Straight to Netflix movie. Never heard of it. Awful. Terrible. Like a robot war. And my son loved it. Okay.

I worry about his movie taste sometimes. George's going right down my highway. I love it. I feel like he wants, he keeps asking us to watch horror movies and I won't let him. But he's going to get there someday. Okay. That's all I got. All right.

I have one recommendation and it is a double table pounder. I finished. Start and finished. Thank you to all who recommended. Mobland. Ah, the Tom Hardy one. I watched one episode. I need to get back into it because I love Tom Hardy.

So I did the same thing. I watched one and I was just like a little bit like, yeah, it didn't. Holy shit. Keep going? Okay. Double table pounder. It's Tom Hardy, Pierce Brosnan, Helen Mirren, and it's two families in London going to war. It's kind of like the gentleman, except a little bit less silly, like a little more serious, but not too serious. It is dark and violent.

Okay. I'm going to get back into that one. It's good. It's good. And I'm looking forward to season two. How about that? Tom Hardy as the enforcer. He's perfect for that role. You know how normally I'm like a one season type of guy? Yeah.

I'm signed up for season two. Okay. Opening day. Good to know. Yeah. Yeah. It was weird though because the first episode, same thing. I was like, yeah.

And then it gets going in a serious way. Okay. All right. We went deep today. We went long. Yeah. We mentioned it a few times. Thanks to everyone who came out in Chicago.

Our production team did an amazing job putting that event together. It was spectacular. And especially Daniel, but everyone, but especially him. He was up super late. And we were hoping to do more of those, so in Chicago and elsewhere. But thanks everyone who came. Animal Spirits at Compond News.com. See you next time.