Animal Spirits Podcast - A Housing Recession (EP.281)

Episode Date: November 2, 2022

On today's show we discuss why most people don't care about the bear market, the relationship between wages and inflation, why we won't see a repeat of the 1970s, why Apple is the best company in the world, the revenge of the Dow, tech stock valuations, the best decade ever for movies and much more.   Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by Masterworks. Michael, Masterworks just had another exit from one of their paintings. They sold a George Condo. I did not. I own a George Condo. I don't a George Condo. I own a George Condo called Listening to Voices, but they sold George Condo's Gargantuan. It's a second condo that was sold.

I feel like there's a real estate joke in here, but I'm not going to go there. It's too easy. So, your initial offering was like $1.65 million. They sold this for $2.55 million. that's a 21.5% net IRR for people, annualized return. That's seven exits now for MasterWorks, six of which are over a 20% net return. It's pretty good. So they got their whole track record.

When's my Gunther Forg going to sell? This untitled piece, it's a beauty. I feel like it's just sitting there for anyone who wants it. So they've sold two condos, a Monet, a Banksy, Sam Gillian, Cessly Brown. So they've done a lot of sales so far, so it's not just buying. So MassWorks tells us they have now over 560,000 users. and $500 million in art in their collection. Pretty impressive.

There is a wait list, but you can go to masterworks.com and skip it at masterworks.com slash animal. That's masterworks.com slash animal. See important disclaimers at masterworks.com slash disclaimer. 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. Michael Batnik and Ben Carlson work for Ritt Holt's Wealth Management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions

and do not reflect the opinion of Rit Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Michael, friend of the show Meb Faber, who we were on his show, what, two months ago maybe, his podcast. He's been doing this for even longer than us. He put a tweet out. If you were to tell me at the beginning of the year that we'd have one of the, if not the worst year ever for most asset allocation strategies, I'd expect a lot of resentment, but it seems rather chill. What's your best

guess as to why? Now, you and I... Let me jump in. Let me jump in. This is important. Okay. Before you do. Duncan, Duncan, get in here. So on Thursday, after T-Cath, we were having this exact conversation. Duncan, can you corroborate this? Are you trying to say that your ears to the ground on this one? No, I just want to, Duncan, affirm, because Thursday morning, I was laying in bed and I don't know if I had an epiphany, but I was thinking about this exact topic. Like, we're in it. We've been talking about us. We're in it. We're in the bare market. The year is basically over. The year is basically over. And if this is as bad as it gets, it probably will get worse, can you get worse? But it doesn't feel so bad. And yes,

I'm in a position of privilege and I haven't been affected. I've got a mortgage. I've got a job. But it's not just me. It's not just me because we talk to a lot of people and generally it seems like people are pretty okay. So I just want to, Duncan, to come in here to say that, yes, Meb tweeted it, but it was great minds because we had this conversation 24 hours prior. Thank you, Duncan. So I think if you're in this position we're in, Mab probably is in a similar position. He's talking to a lot of investors. We talk to a lot of advisors. We talk to people in our audience. we get a ton of feedback. We have clients.

So I think we've a pretty good, our finger on the pulse. I don't think you can say that Twitter is a market sentiment thing, but I think Twitter is like market sentiment in HGH. And there's a lot of people who want people to be freaking out right now, but I don't think a lot of people are. And so you actually wrote a post about this. What's your best guess reason? So I think your best reason here,

you gave three reasons for why people aren't really freaking out. One of them was remote work. I feel like that's a very good take that I never would have come up with. I think that would be a small percentage. But your point is basically... I agree. It's a two-parter, though. It's a two-parter. Go ahead. Lay it out. So I think it's a really good take. So your point is like you're not around other people all the time talking about this and people can't sit there and talk about the market all the time.

Like, oh, my 401k is down and the stock market is down. When you have interactions with people at work, there's not as much small talk. Is that the idea here? That is the idea. The other part that I didn't write about was that there are layoffs, but they're happening at tech companies primarily. And I would imagine that they're remote layoffs. It's not like everybody is in person. And so remote layoffs probably just don't sting as bad. I didn't even think about that, but we talked about up in the air being my favorite Clooney movie a few weeks ago. And on the movie, Anna Kendrick comes in as a young person, and they're a firm that goes and fires

people. The outsource firing other people and laying people off. And her idea was firing people over Zoom. And the whole point of the movie was, you can't do that because it's got to be more personal. But you're right. That's probably how a lot of people get fired these days from white collar professions. And it could have a impact on morale. Obviously, we hear about layoffs at certain tech firms and stuff, but your bigger point here is that the unemployment rate is still so low that everyone still has a job.

So you can complain about inflation. You can complain about your stock portfolio being down. But if you still have a job, you're still making money, and you're probably making a little more money, even if on an inflation-adjusted basis, it's less. You're probably doing fine. Your job is obviously more important than your portfolio. And the fact of the matter is, I'm not trying to be insensitive.

Obviously, there are people that are deeply. impacted by the current economic environment. But overall, employment's... I'm stealing that one for the title of this. Your job is more important than your portfolio. Yeah, I mean, the unemployment's at 4%. And so, yeah, listen, if we're here a year from now, and the S&P's only down 8% from its high, but the unemployment rate is 7%, people will feel a lot worse because your job,

your life is more important than your portfolio. How far did you take the scatter plot back? Because you did a drawdown of the S&P 500 versus unemployment rate as a scatter plot. And you can see that... I think this goes back to the 60s. Okay. And usually when you're in a big drawdown, the unemployment rate is much higher than this 5, 6, 7, 8, 10%, maybe.

Now we're still well below 4%. I think you have this huge disconnect between the economy and the stock market right now. Even if people think there's a recession coming, it's one thing to think about it and talk about it, but in actual recession where people do start losing their jobs, and I think we're just learning that the strength of the labor market, it ends up superseding the stock market.

It doesn't matter as much that your stocks are on if you have a job. That's the thing that's happened in the last few downturns is that the stock market goes down and unemployment is going up and there's a pretty good relationship there. That's not the case this time. In previous recessions, if you don't lose your job, you know probably multiple people. If it's one in ten people lose their jobs, you start to hear these things and you start to get anxiety subconsciously, maybe not subconsciously like am I next? That's off the table.

That's not happening right now. I also think, so we've talked, we'll get into this episode again, the housing market rolling over. I think there's so much of a margin of safety built in to stuff like that where people go, oh, if the housing market falls 10%, that's going to be awful. People have such big gains. The housing market could fall honestly 15 or 20%. I'm not sure. I think 20% probably be a little much. They'd have to keep rates at like 10% for a while. But even if that happened, people have so much of a margin of safety built in from the gains they've had, I don't think even that would have a huge impact on people.

As long as you're still in your house and paying your mortgage. I think this idea of the wealth effect is negated if you have strong employment. Yes. Unfortunately, that's what the Fed wants to screw up right now. They want people out of their job. I go back and forth on this. So the last reason you gave was excess savings. So Lance Lambert tweeted this chart.

I think it's from Jason Furman. And he put the stimmies on here. So the three stimulus checks. And it just shows the excess savings rate. It's like the personal savings rate along. with excess savings, and people have asked us for a few weeks now, like, what is this excess saving stuff? And so I think we'll try to put some meat in the bones here. So the Wall Street Journal had a good one on this. This is from Finance Woge, who actually had his own profile,

like the New York Magazine. Wait, Finance Woge. Yeah. Oh, Tamarios. Yeah. You didn't see this? I'm sorry. Yeah, I'm sorry. My brain broke for a second. I thought you were talking about the Twitter handle. Wasn't that your nickname, Finance Loge? He says, U.S. household still around $1.7 trillion in savings they accumulated through mid-2021 and above and beyond what they would have saved if income and spending had grown in line with pre-pendemic economy, according to estimates by Fed economists. I'm sure you could poke some holes in this kind of stuff. There's probably a lot of assumptions being, but that's a huge number. They say around... They're just looking at the personal savings rate with the trend line going back pre-pandemic and we're way above. That's all.

They also say, and it's not just the top quartile people, even though if you look at, they broke it up by quartile here, the top quartile has the most savings, which makes sense because they make the most money. But he says around 350 billion in excess savings as of June were held by the lower half of the income distribution or around $5,500 per household. It's kind of across the board. Everyone has seen this. And obviously, the personal savings rate is now going down as people are spending this down. But I think if you saw an overshoot to the upside of personal savings rate, I think we could see an overshoot to the downside where this thing just keeps going lower as people are just used to saving and used to spending now. And I think, unfortunately,

that could mean just people just spend it all down or just going to debt to keep spending money. The excess savings are being worked through. So there was an analysis from the Board of Governors of the Federal Reserve System, and they said from 2020 through the summer of 2021, U.S. households accumulated $2.3 trillion in savings above and beyond what they would have had, pre-COVIDs continued since the end of 2021, about one-fourth of those excess savings have been spent. There's still more to come. This was interesting, too. It's not just individuals. He's saying businesses were able to lock in lower rates. You've mentioned a few times. times. But he says just 3% of junk bonds mature over the next year. Only 8% come due before

2025. So all these companies that were able to just gorge on rates, junk bonds were trading at 4%. These really crappy companies could take out debt. They're sitting on it. And it's not it's coming due. There's not like this wall of debt maturity where they're going to have to roll it over and get new debt in the coming years. Obviously, if they do issue new debt, it's going to be higher rates. But the stuff that they have now, it's not that bad. The other one is we've talked about this household debt service payments as a percentage of disposable income, it's still way, way lower than anything we saw in the 80s, the 90s, even the early 2000s. It's coming up, but it's coming up from record low levels in the past 40 years or so. What else we got?

Okay, here's another one. I think we talk about this a little bit. They break out, this is another Wall Street Journal one. They break out, which they're the best place for these kind of charts. Are they not? The Wall Street Journal? Yes, yes. They're good at this stuff. they have the increase in total wealth from the end of 2019 through the second quarter of 2022. So it's obviously gotten a little worse since then, but they do the bottom 50%, 50th to 90, 90 to 99, and then the top one. And the biggest relative increase in total wealth, which we've talked about is the bottom 50%. But then they show the checkable deposits and the top 1% has seen like a 700% increase in checkable deposits. Look at this next chart here. It's cash to assets. Cash has a percentage of,

of their assets, which for everyone, but the bottom 50% is the highest on record. And it just shot up. So it's much higher than it's been. Now it's coming from a low base. It was like half a percent to three and a half percent. But still, people are still pretty flush with cash. So I guess there's still cash on the sidelines. Another interesting chart from that Fed paper was where did the excess savings come from?

And the top quartile, it was all reduction in spending, which makes sense. You're locked away for a year and a half. Nothing to do, no traveling. No travel, no luxury. And then from the bottom and second and third quartile, it was all fiscal stimulus. The strength of the labor market and the amount of savings people have is making me question previous takes I had about, well, the Fed is going to raise rates and they're just going to lower them. I think it is possible that they could just leave rates high for a while because of this strength.

That's going to be dependent on whether we do get a recession and the unemployment rate does rise and that sort of thing and you have to maybe go in and fix something. but I think there's a much more likely scenario that they might have to just leave rates high for a while at like 4 to 5%. And I don't know if I would have believed that six months ago. They're not going to lower rates if the economy isn't breaking. What if we just slowly adjust to higher rates? Now, the mortgage market is a whole separate story, which we'll get to. It is 935 on Tuesday morning. S&P 500 is up 1% and at its highest level. I didn't hear your bell go off today. I think it's from closed bandwidth. S&P 500.

at the highest level since the middle of September. So we'll take it. Not bad. We'll take it. This is like the 12th most hated bear market rally of this bare market. We're getting there. So I've been looking at a lot of tech. I think you and I've both been looking at a lot of the technology stocks lately.

I pulled up just a drawdown chart from white charts of Apple, Amazon, Microsoft, Google, Facebook, and I'm not going to call them alphabet or meta, ever. I'm sorry. Invidia and Tesla. And you look at the drawdowns for all of these. Apple really is in a league of its own. I think Apple has these last few years especially separated itself from it was the Fang stocks or the fan mag or whatever.

I think Apple is completely in a league of its own. It was down 29% off the highs at one point and it came back. It's outperforming the S&P in the drawdown. So it's down 15 or 16%. All these other stocks are down well over 30%. Amazon's down 40 plus percent. Google's down almost 40%. Even Microsoft's down like 33%.

Tesla's down 45%. Obviously, Facebook is down 75%. We'll talk about that a little more later. Nvidia's down 60%. I think Apple is, not to say it can't in the future get crushed, but I think it's separated itself. It's like it's the best stock in the world. Yeah, it has been for a while.

Not like best returns, but... Well, also best company in the world. I think it is. It has to be. When they reported earnings for the third quarter, it was record numbers. I don't know if it was across the board. I think services might have been hit a little bit, but they're still chugging. What are they in terms of the overall stock market?

now. What were they at the highs? I think it was 7% of the S&P. Hang it. Let's see. It's getting higher. Okay, so right now for the S&P, Apple is 7.2% of total. That's a pretty pretty big. So Microsoft is over five. Those two companies make up nearly 13%. That's massive. Well, what's the second one, Microsoft? I'm looking at Apple divided by the S&P, and I'm guessing that it's at another all-time high. Let's say. Not quite. It hit an all-time high a couple of weeks ago. Anyway, still hanging hot. Yeah, best stock in the world. Okay. So we were talking about, yeah, go ahead. No. You, me, me, you. All right. Thank you. I sent you and Josh this last week. This is year-to-date returns for the Dow, the S&P, and the NASDAQ 100. Nasdaq is still down 30%

year-to-date. S&P's down 18 and change. The Dow is down less than 10% this year. I think the peak-to-troth drawdown for the Dow was maybe 17. And a lot of people will say, well, it's because it's a price-weighted index, blah, blah, blah. I don't think that's the case. That has nothing to do with it. It's the makeup of the index, right? Yeah, if this is market cap way, it would be the same thing, I'm guessing. If you look over the long term, the Dow and the S&P are pretty darn close to each other

to the long term. So all these big blue chip names that were kind of left in the dust for a while, they're doing much, much better. And it's energy and health care names probably that are lifting up the, and it's not like those aren't stocks getting killed, like Nike and some of these big sections are getting killed at Dow, but the People's Index is doing pretty good this year. We were asking Sean to send us the best performers, and I said, what about Exxon? I forgot that Exxon was removed from the Dow.

Look at this chart. It was removed in August 2020, 2020, 2021, I believe. Not great. That looks like it's right when oil went negative, or right after that, basically? I think it was after. So the Dow would be doing even better if Exxon was still in there. Tough scene there. What did you think about my post is the stock market gas lighting us?

The basic premise there was, if we, we never saw prices for stocks, would we be so sure that we're going to a recession? And I think the answer is unequivocally no. I'm not going to lie. The gaslighting thing always kind of confuses me. What is gaslighting? That phrase is relatively new to me. I had to Google it to make sure I was using it right.

How do you do, fellow kids? Yeah, it says, manipulate someone by psychological means that's the question of their own sanity. I feel like that's appropriate. The stock market is manipulating us because if the stock market bounces, you know, we're going to say, oh, maybe things actually aren't so bad. And when the stock market rolls over, we say, oh, my God, we are so f***ed. Yes. My point was if all you saw was earnings and economic indicators, you probably would feel

a lot less anxious about the current environment. Yes. The Fed is obviously a big piece of this, too, and interest rates, but you're right. It doesn't feel like the world is falling apart yet if you listen to corporations and you look at the unemployment rate and things like that. There's a piece baking in my mental oven. Our tech stock's cheap. and we were talking about Facebook going from $1.1 trillion in market cap down to under $300.

Josh and I were like, that's got to be the largest destruction of market cap of all time. It has to be. The numbers are bigger. I thought so, too. Turns out, not true because Amazon and Microsoft, because they were both, I think they were both in the $2 trillion club, lost more. Amazon fell 860, Microsoft fell 830. So I think last week I said, I said Facebook's $800 billion decline has to be. be the biggest in history, and there's not a close second, but it's in third because Amazon

and Microsoft got so big. Duncan was asking me after, because we were recording TCAF when Amazon came out, and I was like, besides myself, oh, my God, Amazon's not 20%. This is madness. And after the show, Duncan was like, I don't understand why people are selling Amazon. Like, is it not a good company anymore? I just don't understand how all this works. And I said, it's not like individual investors are saying, I think Amazon's going to be smaller in five years and so I'm selling the stock today. That's not what drives stock prices. It's mostly people at the margin and the ones making big trades in the institutional investors. So to that point, Carl Cintinia tweeted this from Goldman, our prime book data from October 21st

through October 27th confirms hedge funds were firmly in super cap tech de-risk mode. Infotech saw risk offloads with long sales outpacing short covers nearly 1.5 to 1. We observe the largest notion of long selling in tech in seven months. And so again, these are not individual investors saying, like, I don't believe in Amazon anymore. It's people that have a different time horizon who aren't thinking about Amazon for the next five years. They're thinking about Amazon for the next 30, 60 days, rightly wrong. I'm not casting judgments. That's just what it is.

The motivations are different. It is kind of crazy that you can have, and I think this year and last week was a perfect encapsulation of diversification. So Facebook was on 22% in one day. The next day, Amazon was down. I think it only finished down 10%. I guess my conspiracy theory is how much money is actually changing hands in the after hours market? It feels like it's got to be a little amount of money. compared to the amount of money that trades hands during the day.

And it can absolutely blast a stock. It's like a 1987 for a stock. Amazon's initial print was down, I think 12, 13, but it fell down to 20. And then I think it fell the next day, it was only down 8%. So I'd love to talk to somebody who knows what they're talking about about how after hours trainings works because I have no idea how that works, honestly. But you saw these two of the biggest stocks in the market got absolutely creamed and the S&P 500 basically didn't care.

That was a good point in the column for diversification. For sure. One of my favorite quotes in markets is from Benoit Mandelbrot. I don't know if I'm saying his name right. We've had this conversation before, but he wrote a book called The Misbehavior of Markets. And one of the lines I'd always stop with me was the trend has vanished, killed by its discovery. And where I'm going with this is there was a lot of talk over the last, I don't know, five years, maybe it's been 10 years at this point, about the overnight phenomenon. I think there's some conspiracy, weird conspiracy theories about this, how if you buy the close and sell the open, like all the gains happen overnight. It's not a conspiracy. Guess

what? All the economic activity, not all the economic activity, that's not true, but all of the earnings, which drive the stock market, happen after hours. And economic data usually comes out pre-market. Not all of it. But yeah, a lot of the market moving stuff happens after hours. So anyway, there's an ETF that launched called night. I don't know if it's night shares. I don't know what the ticker is. It doesn't matter. But the premise is by the close, sell the open. Well, that strategy is actually outperforming buy and hold year-to-date, bespoke tweet of this. But more interesting was if you only own the S&P 500 intraday this year by the open-seller close, avoiding overnight, you'd be down 1.9%. Isn't that interesting?

So coming into this year, it was the opposite. Now the other way is working. Yeah. Okay. So you know, you see a lot of like ETF back tests go like this, and then you see like the dashed line and then it's flat, oftentimes. I can't see the thought press. Like, I understand if you're a Renaissance technology in your Jim Simons, you don't need to have a reason

for the strategies that you employ. You're just looking to clip these little arbitrage opportunities. I need a better reason behind. I'm just going to, what does it, sell the clothes and buy the open or buy the clothes and sell the, whatever the strategy is? By the close, sell the open.

Get all the overnight gains. Listen, if it works, it works, but it seems to not be working anymore. Let's move on to Arc. Speaking of not working. I asked this a couple weeks ago, is this the biggest money incinerator of all time? And Jeffrey Patak from Morningstar said, I put up my bat signal and he answered it. So he looked at, is this the biggest money lost by retail in a while?

And it's not because there's all these huge funds. But if you look at the list, he's basically saying the amount of money that Arc made relative to the amount of money that it's lost is definitely the biggest. So some of the bigger, like the Vanguard bond market. was more money lost. That's just because it was like a trillion dollar fund. This is the point. He said, so ARC did gain $7 billion in market appreciation up to... Pretty good. Yeah, it's pretty good. In 2021, so they made $7 billion for investors. But he says that was swamped by the subsequent $17 billion loss after all the money came in. So meaning on a net basis,

they've been a bigger money loser than money gainer because they made a bunch of money after returns were good, money piled in. That was my whole point. So he's saying it's not the biggest one in dollar terms, but like as a relative basis to the starting assets compared to the gains it it had, it's the biggest one. So I think I was on this of the year. So thanks, Jeff, for taking a look at that for us. That was interesting. Lance Lambert tweeted through 33 months, the U.S. has already registered 15% inflation this

decade. We're on pace for 50 plus percent of this decade. I forget the on pace for, but if you just look at this line. That's like the baseball season. If he's on pace for 800 home runs because he hit two in the first day. But even still, through 33 months, the 1980s are not on this chart because I'm sure that it's worse. But this is not a pretty chart. This is not what you want to say. I'm doing some work right now on why this is not the 1970s. I'm going to give a bunch of reason. I'm going to

you back up with data and some stories maybe. But there are some similarities. So I compared average hourly earnings to total inflation by decade, starting in the 70s. And so the 1970s had massive wage growth, almost 100%, but inflation was up almost 100% too. Then you go to the 90s, it's like 37% wage growth and 34% inflation. But 2010s is even lower. Wage growth is like 27% but inflation was only 20. But this, in the first less than three years, so this is through September, inflation to his point is like 15% in change and wage growth is 16%. I guess this is the Fed's conundrum. Unfortunately, it's very bizarre, but they don't want huge wage growth. And we've already had enormous, not only inflation, but wage growth as well, because obviously

someone's higher prices are someone else's income and someone else is spending and all that stuff, it flows through. So I guess that's the point where I can see why the Fed is thinking this way. They don't want a repeat of the 70s. I get that. I don't think that it is that, but that's the biggest risk to them, I guess, right now. And I actually think, here's my conclusion in two sentences. The biggest reason we won't have another 1970s is because the Fed has studied the 70s and won't let it happen again. Like the biggest reason there wasn't a great depression in 2008 is because Bernacki had studied the Great Depression and wouldn't let it happen again. It's kind of almost circular logic in a way, but I think that's the biggest reason we won't

have another repeat of the 70s because there's still people around who have scars from that period and know what happened and have studied it. And that's why they're so serious about killing inflation. Ben, I forgot to mention earlier when we were talking about our Dow discussion that the Dow outperformed the NASDAQ in the month of October, the largest outperformance since October or since the fall of 2002. Isn't that pretty wild? 20 years. Didn't you also say this is the best performing month for the Dow ever?

Is that possible? No, no, no, best performing October. Oh, okay. It was the best October ever. See, you gaslighted me. Did I use that phrase right? I didn't say that. I didn't say that.

I didn't say that. Josh said, Where does this month rank for the best October? Because I was blown away if that was the best month ever. But it was up 14 or 15% in October? You gaslight of yourself, son. I was up 14%. Okay.

What's between catfishing and gaslighting? See, those are not even. I know. Those are not the same. All right, let's talk about real estate. So there was an article in the Washington Post that this is a housing recession. Yes, true, for sure. And one of the stats that jumped out of me was refinances are down 86% from where they were a year

going. I have an obvious question. How are they not down 100 percent? Who is still refinancing? I have an answer for you. Were you living under a rock? I have an answer for you. It's got to be all cash out refis. So people who are taking money out of their people need money or why. That's got to be it. I'm guessing, you're squeezing the bottom of the toothpaste for this. Okay. Credit to you. So the question is why wouldn't you have done a cash out refi a year ago? But I guess these are people that need the money for whatever reason. Yeah, it's a good question, but it's the kind of thing where I'm sure in a few months, this is going to go to 99. It's got to be if rates stay this high.

So we've been asking when does stuff start breaking? I do think the housing market is one of the first ones. And maybe this is against my earlier point about the Fed, keeping rates higher. If they really do somehow break the housing market, then that's going to potentially really have an impact on the economy and they can't keep rates higher for longer, maybe. But they had this thing on the box. But the housing market is broken. It's broken.

But I think it's going to take a while for the economic activity to seep through to the numbers. Would you say the housing market is in a cast like Kobe? Yes, but it can come to a standstill. You sent me a picture of Kobe in his Halloween costume. How do you get the costume over his cast? Okay, this is incredible. This really is incredible. I think one of our superpowers, meaning of human beings,

is our ability to adapt up and down, whether it's life situations, whatever the case may be. But the first three or four days in the cast were really challenging. And now I don't think he's going to want to take it off Because he's getting all the attention I think he loves it But he scoches around on his butt He gets around in his wheelchair

He has adapted so quickly This is his new normal He's making his way around the house He comes into our bed Like literally just scooching on his butt Has he caught you in the shin with his cast yet Because that hurts Or stepped on your toe or something with it

He's no worse for the wear This is his new normal Kids are very adaptable At a certain point Kids for sure But I think grownups too I think we adapt not as easily, but we adapt.

Yes, well, we'll see if that happens with the housing market. But my point of the housing market is, it's basically come to a standstill and people aren't buying and people aren't selling. And inventory levels arising, people think, oh, that's a good thing. But I just think if nothing's working and there's no gears moving in motion here, then all the activity that stops and construction that stops and loan officers are not processing paperwork anymore, people are going to get laid off. Eventually, that seeps into the real economy.

There's going to be a lag for that to have an impact, I think. It's not like you see it right away. Like the stock market crashes 20% one day and you see it and you feel it. The housing market, I think the impact is going to be on a lag. Well, the housing market is in the eye storm. We open the show with talking about why this doesn't feel so bad. For those people, this is as bad as it gets. So, Oddlots had a podcast about the mortgage market being broken.

And I looked at this a couple weeks ago for portfolio rescue. And someone asked, why is there such a big spread between the 10-year treasury and mortgage rates? And I looked at the average since like the 1960s has been like one and a half percent. Mortgage rates are like one and a half percent over the 10-year treasury. Is this the highest it's ever been? It got a little higher in the 80s, but it was briefly. It's pretty much the highest besides the 80s because there was such a big movement in rates then. Okay.

And so now it's like 3%. And the question is why. And part of the reason you have to think, well, the Fed's not buying mortgage bonds, but this person made the claim that it's actually different because no one wants to buy these bonds anymore. So I think the Fed's going to have to eventually if they want to fix this market. it. But because you assume if someone buys a 30-year mortgage bond from someone, you're not going to hold it for 30 years because that person is probably going to refinance. That's what's happened for the last 40 years. People buy a mortgage bond and then it gets refinanced. So the

duration of that bond is not actually 30 years. It's probably more like seven or eight years because they either sell the house and move or they refinance. If you have people who are buying mortgage or buying assets to match liabilities and they thought they were buying a seven or eight-year duration bond. And now it's 15 or 20 years because people aren't moving or they aren't going to refinance forever. Then no one wants to buy those bonds anymore because why wouldn't they just buy a bond with different duration? What are the implications of nobody wanting to buy those bonds? That the spread between mortgages and tenure is going to be higher and that means higher mortgage rates. So the Fed is going to have to step in if they want to bring that spread

in and probably buy again. They're going to have to be the buyers. The fact that they started to buy it in the first place and then let rates get so high, they basically broke this market. So is that their first pivot? They're going to start buying mortgage bonds? I think if the housing market broke big time, that would probably make sense to me. Is there a reason why they can't buy mortgage bonds while simultaneously raising overnight rates? That's a good question. Is that like pushing and pulling on a string at the same time? I don't know. Maybe. I mean, I guess if you think about it, the Fed, their job is the lender at last resort.

But the way that the economy has been sloshing back and forth the last few years, you would almost think that the Fed would be doing better if they try to, to just smooth the economic cycles instead of hitting the brakes or hitting the gas when things are really good or really bad. The CEO of Lowe's on the earnings call said, home mortgage rates have moved up from 3% at the beginning of the year to over 7% now. This increase in mortgage rates means that the monthly cost of buying a new home has more than doubled in the past 10 months. Ben Eisen had something similar for the Wall Street Journal.

So you know who's in the best position right now? I don't want to get into generational warfare again, but the boomers are in the best position for this housing market of anyone. Because let's say you're a boomer with your mortgage paid off and you're going to downsize. I feel like I'm in a pretty good position. I got a 3% mortgage that's a break. Yeah, but you're stuck in a house. Yes.

But so let's say you're a boomer, though. You know that you need some money for retirement and you're going to downs. So your mortgage is paid off. If you're able to sell your home, you can sell it at a pretty big, a huge gain from where you bought it. You can downsize your house, take the difference, put it into four or five percent bonds and then buy a house with cash. That's a pretty good position to be in right now. Like, you're in a much better position than a millennial whose rent is getting jacked up if they haven't bought a house yet, and they're trying to buy a house at 80 or 90% higher

monthly 10th than a year ago. Yeah, but you know what millennials have that boomers don't? What's that? Well, the boomers do it, but just more time. And more time is always the best. Younger is always better. You always want more time. We've heard from a few people who said, you know what?

Screw it. I'm still buying a house. I know the timing is off, but I can afford it and I'm going to do it. And honestly, if you're going to stay in a house for a long time, you're probably going to be okay after a while. If you can afford this, you can afford anything, I guess, in the housing market. So second home purchases are down 69% year for a year, not nice. This is going to keep falling, these numbers. You did a round down on that. You should have rounded up. It's 69.9. It should been 70. You said 69 in purpose. It literally says it right there on the screen.

69.9% it says. I'm rounding up there. Len Kiefer did a chart house price trends by Metro Area. And they're still so far above. So can some regions fall like 30% and still be higher than 2019 than pre-pendemic levels. Yes, because the game is so big. Yeah. Yes. Again, that's my point. There's such a margin of safety built in here.

And I hope most homeowners like us realize that you were given a gift when your housing prices went up so much and that you shouldn't just expect that to happen and think that like that was OD or whatever. It's also rent, too. That's slowing. This is from the Wall Street Journal again. Apartment demand in the latest quarter measured on a one-year change was the lowest since 2009 when the U.S. was feeling the effects of the subprime crisis.

Measureed a quarter of the drop in demand was the worst of any quarter in more than 30 years of data. So rents, again, yes, this is a good thing. Also, it could be worse. People keep sending us this because we asked about how things are going in the really hot real estate markets in Canada. Ben Rabidow has been tweeting about this in the greater Toronto area, a metro region of nearly six million people. There were 45 new single family homes sold by developers last month. In case you're wondering about the state of the industry, 45, he also said Toronto's new single-family home sales fall 96% year-over-year in September. New condo sales are down 89%.

So what's the Canadian Fed doing? I don't know. They're going to have to let people lock their rates and roll them over or something, aren't they? I have no idea. That sounds like, to me, that sounds like a situation where housing prices could crash 30% or 40% correct? If it's that big of a slowdown? Well, yeah. All right. Let's move on to great quarter guys. We talk about quarter all the time. We're investors in the company and power uses the product. It keeps getting better. They're rolling out financial soon. I mean, I was walking home from the train station the other night listening to Amazon. And prior to quarter, I was not an earnings call guy. You? No, I never did. It just makes it easier. And I'm guessing there's probably a lot of people who listened to a lot of these calls and don't know this is out there yet. We keep seeing the product features that are coming and it's going to just get better too. All right. Let's start with Google. So Google, I think, missed on ESMS. My apologies, I'm a little bit light on the dock for this one. But the point that I want to make is Google fell 8% after earnings. And the company had, I know it's all relative. And Google had more net income in the quarter than the following companies had in the last 12 months. Goldman, Walmart, Qualcomm, AIG, Morgan, Cisco, Ford, Amazon. Tesla, UPS, Broadcom, Oxy.

This was in the last quarter. Google made more money. Now, the flip side of that is, look at this quarterly revenue. Just up to the right. Which one? About the fact that its quarterly revenue is higher than the yearly revenue for these other companies. That's pretty good.

But the problem is, of course, that it's slowing. They grew their revenue 6% quarter over quarter. And for a growth company, that's not great. Only up 6% quarter over quarter. Do you still think tech stocks are cheap if their growth are slowing? I'm going to get into that. I'm still flushing it out. Here's the thing.

I guess the hardest part about that question is what valuation level are you comparing it to? The last three years or the four years before that, or I feel like how much of the valuation, if you're doing a relative comparison, I feel like it's going to be hard to figure out when to compare current valuations to. Well, the other thing is you have to compare it to the alternatives. One of the alternatives is risk-free bonds that are yielding over 4%. That obviously changes the calculus. So I've done this multiple times.

I've got like a brain defect where I'll send out a Google invite. I'll put it on my Google calendar, like an invite. So I'll write like Michael and Eric, except I'll forget to invite the person. Oh, right. Just on your calendar. So it'll just be my calendar. But when you go to add a person, just based on what you type in the title, it knows to auto fill. I put the mouse on the invite and I clicked it and it auto filled with Eric.

That would be nice if they said... How smart is Google? If they said, are you sure you don't... Yeah. Do you use the pre-fill on your emails a lot, too? Where they just know what words you're going to type next? Oh, yeah, yeah. Yeah.

I feel like that at first it was like, that was just this really cool invention, and now it's just part of my daily routine. All right, Facebook. Here's the only they never get, though. Holy bazole. If you want to say, have a good weekend to someone, because I'll never say to someone, have a good week. But on a Friday, I'm going to say, have a good weekend.

I always give a have a good weekend on a Friday, but I never say have a good week, and they always say have a good week. They never get the weekend for me. So, Corder is now doing like these threads of the most interesting things from Ernie's calls. And I thought this was interesting. So Facebook is spending a ton of money. But most of their cap-backs, which Brad Gersoner and others have said is out of control, most of it is actually going to their AI discovery engine, which is powering reels and trying to catch up with TikTok, not into reality labs, which is the metaverse. However, the CFO said, we do anticipate that Reality Labs operating losses in 2023 will grow significantly year over year.

The market was not a fan of that. Market was probably not a fan of Mark Zuckerberg saying, quote, obviously the Metaverse work is a longer term set of efforts that we're working on, but I don't know. I think that it is going to end up working too, end quote. Where do you fall on the lines of some people are like, it's a crazy move, but I respect the hell out of what Zuckerberg is doing. he's trying to get ahead of changing trends and creative destruction and trying to do something new versus people who say he's nuts. I can't believe they're spending so much money. This is going to be the downfall of Facebook. Where do you fall on that continuum? I'll get said in one second. So Mark said, I think that our work here is going to be of historic

importance. So that's what he said there on the Metaverse. Alex Cantris, who has a great substack, wrote Zuckerberg pivoting hard from a business so profitable, it allows him to pivot, may seem puzzling. But he clearly sees the writing on the wall. Young people no longer enjoy broadcasting on social media. They prefer messaging privately often in groups, and they enjoy short-term video, often from people they don't know. I asked a group of students this week, if any had posted on Facebook within the past six months. None had. Antonio Garcia Martinez, who wrote a really good book about his time at Facebook called Chaos Monkeys, said, the quote is, Zuck is making an existential bet the company move at enormous scale. Most companies would just

dilute themselves and slowly die. So whether or not this is going to work obviously remains to be seen. We probably won't know for a very long time. But yes, I do respect what he's doing because this is obviously not an easy decision. I'm sure there is massive, massive pressure to slow it down. But he's doing what he obviously thinks is right for the company. And I don't know that I agree with it. I think that I don't know enough to agree or disagree, but I do respect the boldness. Yes, I do. I kind of do. I think the one risk here would be this guy's been a billionaire since age 20, what, 20, basically?

And how old is he now? He's my age. He's 40. Late 30, 7.38? He's been a billionaire for almost half of his life. He's owned the controlling stake in Facebook. He probably never has anyone tell him no. I would worry, does this guy really know what these trends are anymore?

He's had a security detail. he lives in probably these huge mansions, is this guy so out of touch that he completely ruins Facebook? I think that's a real risk. You saw this too. I shared this with you since the IPO now. So Facebook, we've been doing this for a while now. Facebook was underperforming since 2016 and 2015. Facebook IPOed in May of 2012. It is now underperforming the S&P 500 since that date by 120% in total. At the peak in September 2021, it was outperforming, this is 13 months ago, 14 months ago. It was upperforming by 600%. It's now underperforming. And if you went from the period, so remember Facebook came public and then it fell 50%. Yes. I'm cherry picking. But if you went like

the 10 years from that down 50% through September 2021 when it hit its peak, the most recent peak, which is not that long ago, it was up 2,000% or 40% per year over a 10 year period. Just an amazing run. And it's all gone now. It's fallen 75% and all of that outperformance is just, Poof, gone. Unreal. It is. All right, Amazon revenue growth forecast is just 4.8%, the lowest in history. You know what that means?

Black Friday deals are coming. Amazon is going to be getting rid of crap left and right. I'm still holding out on spending money on stuff. Amazon's quarterly revenue growth has averaged around 28% for the last decade plus. And with the numbers this large, it just becomes difficult to sustain that. So the most recent quarter was 15%. Not bad, but their free cash flow is deeply, deeply negative, and the market is punishing money losing companies.

Which is kind of ironic because Amazon was given the benefit that out for so, so long for being in a money losing company. Yes. There's a tweet showing Amazon XAWS. They're operating income and they're operating income without Amazon Web Services, and it is fugly. All right. Just because I like to put on a spot with this stuff.

So we have, obviously, Facebook is down the most out of all these, but Amazon, I said it's down 45%. Tesla is down 45%. Facebook down 75%, Microsoft down 30% in change. You had to bet your life on one of these stocks. Amazon is the pick, right? So I think Amazon is a safe pick. Amazon is the highest probability bet. But Facebook is the most upside. If what Zuck is building works and it's so hard to imagine.

imagine it working, honestly. I don't think anybody wants the Metaverse, at least today, as is. Now, again, super early. Don't even know what it's going to look like. But if the MetaVus works, I feel like Zuck probably thinks this is like a multi-trillion dollar opportunity. So I would say Facebook, most risk, most reward Amazon the safest. As someone who still never had a Facebook account, I can safely say, if they do a Metaverse thing and you have to wear a headset, I'm out on it completely and I'm never going to join. Everyone can be living in the Metaverse and I'll be in the physical world still. Well, I don't want to put myself in that box because Maybe it's cool.

Maybe it'll be fun. We'll see. Come on. It's not going to be fun. It's probably not. Well, we'll see. Let's talk about Spotify. I wonder Spotify is like Facebook before Facebook was able to monetize mobile.

Remember that was the thing that was hanging over the stock in 2013 or so. And Spotify has major issues with the bet that they're making on podcasting. So I want to talk about this for a second. So they beat on monthly average users and premium subscribers. there's now 195 million people that pay for Spotify, which is, sounds pretty damn good to me, 195 million people that pay. They miss on gross margin and operating income. They're still losing a lot of money.

The stock got killed. We're looking at, if you want to look at these charts with us where on YouTube, the premium revenue is going in the right direction. The premium ARPOO, meaning like what they charge these people is not because I guess they're just not raising costs that much, although they said that they raised costs in 46 countries. so I'm not trying to square that circle, but anyway, the ad-supported revenue is still relatively small. It's 13% of their overall revenue. And so this is the podcast advertising stuff, or just the advertising stuff. So it is very much dominated by the subscription model. And gross margins,

I feel like these margins aren't great for this type of company. It's 24% total. It's 28% for the premium, just for people that pay. The ad-supported gross margins is 1.8%. What a horrible business. That's for podcasting alone? 1.8%. Yeah, it says ad-supported. So I don't know if that could be a music as well, but their operating expenses are out of control growing. What is this research and development been? I can't say. Is that 86% year over year? I can be your second set eyes here. That's a lot. That's just a lot of spending. They're spending so much money and the market is not into that. They actually talked about it on the call listening to like the cost of capital going up

and being more disciplined with their spending. But they've got 10 consecutive quarters of free cash flow. So I feel like financially the company is in a good position, but the market is not liking the fact that the expenses are soaring and the podcasting thing is not seeming to work. Yeah, on the call, Daniel Ack said, in the last two years, we've actually done more than 46 price increases in markets around the world. So they take that to believe that we believe we have significant pricing power on this, and we're offering an amazing consumer value proposition. There's just so many companies that are just great products, really bad stocks.

Obviously, Twitter is probably, well, I don't even know if Twitter's a great product, but I bought this stock a number of years ago just because of Daniel Ack, and I sold it probably 50% decline ago just because I figured this is one of the stocks that gets crushed. But if I'm making a bet, it's solely based on him, I think, at this point. I want to take a stamp here because I do think that they're going to figure it out. All right, Rich Greenfield asked, Daniel, you appear increasingly frustrated with Apple. What would you like to see them do that they are not allowing today? Can you also give us a couple? Okay. So he said, so really at the core of this, is Daniel, like, the CEO of Spotify, really at the core of this is the same argument I've been saying that for about

four years, which is our view is that this is the next great battle from net neutrality into what I call the platform neutrality wars. And the key part that we want to do at Spotify is we want to have the ability to communicate with our customers, the way we choose to do, and the way our customers are accepting to have that line of communication. We do not want a gatekeeper or a monopoly in the way to dictate how we communicate with our customers. I just think it's absurd, frankly, that they're allowed to keep doing this. It's insane that it's been taking four years to get the resolution for something that's just absurd and holding everyone back. It holds developers back. It holds creators back. And it's bad for consumers.

So in this latest TIF, I think Spotify was trying to go around to Apple with the audiobooks. And the 30% rate that Apple, so I'm not an expert in this, but it seems anti-competitive and punitive and monopolistic. And it seems crazy, no? Honestly, to me, though, they created the app store. They created the iPhone. They set the terms. They created this brand new medium for all these companies to exist. Spotify does not exist in its current form without the iPhone. Neither does Uber, needed all these companies. True.

Apple created the battlefield for these companies. Patterns run off eventually now. Sure, I can see why you want them to, but I'm just saying Apple is the one who created this. A lot of these companies would not exist without Apple, like at all. The bottom line for Spotify is that they spent a lot of money on content and podcasting is still a tiny business. But here's like my just not overthinking this.

I am very bullish on advertising on podcasts. I think that business is going to be a lot bigger in 500 today, and they're going to be the key beneficiary of this. So I think this is like a maybe don't overthink it and buy type of stock, but it's tough because how could you not question the stock or the strategy when it's down 78%. Obviously, the market is not buying what they're selling. No, I agree. And again, I'd be betting on him more than anything else.

All right, Uber reported this morning, and I've been like, I don't want to say Baron Uber, but I've been like skeptical, especially on like the delivery stuff. But gross bookings grews 26% year over a year to $29 billion, free cash flow, positive again. Stock's up 14%. Revenue is up 72%, 81% on a constant currency basis. And the stock is, I mean, it's still down 50%. But yeah, the stock is spotting today. My wife and I got five guys on Uber Eats watching some football on Saturday.

It didn't feel like driving all the way across town to get it. And on the way back, they said, hey, we could stop at these three stores on the way back for you. No extra delivery fee if you want anything. That's not bad. It's not a bad service. Like, oh, shoot, we forgot to get this too. Pick up some chips and salsa for us. So I guess you could say with Uber too, like maybe don't overthink it.

They're going to be the leader in mobile, whatever, whatever. Maybe. The SP 500 is now down 15 basis points on the day. Pretty nasty reversal. It is 1015, so a lot of day left. A lot of day left. By the time you're listening to this, these numbers will be stale. That's Crypto Winter.

That was like an interlude for a radio show. It's the top of the hour. The headlines today are... But also, did you notice my radio voice? I softened it up a little bit. Where's the weather? Colchitania tweeted. Bitcoin trading is in a deep freeze, says Morgan Stanley.

A record number of Bitcoin units haven't moved or traded in six months. Makes sense. Do you think that's how the price is being propped up? There's not as much trading going on. It's easier for people in crypto to keep the price propped up. You call this propped up? I honestly am surprised Bitcoin's not at $10,000. I thought for sure we would see some, with all the leverage coming out of the system, I'm really

surprised it's not lower. Me too. We spoke with Matt Levine on TCAF about his gigantic piece. We released our episode with Fidelity Digital Assets on Monday, if you want to listen to that, and I went there to talk. I still am, my good opinion on the future of crypto and being the financial rails on the future has not changed. I am still, I want to say wildly bullish, that sounds irresponsible, but I am still bullish on this as the future where the price goes, who knows, but my opinion has not changed. I agree, though, with the people from Fidelity said, if it's 10 years from now and we have no great consumer application...

My opinion will change. Yes. Then by that point, then all the money flowing in, it can't just be speculating on tokens. My opinion is definitely... I want to die on this hill. If there's nothing there in a few years, I'm ready to say that I was very wrong. We'll say. All right.

So it sounds like the whispers are Elon Musk is going to charge $20 a month to be verified on Twitter. And I got to say I'm out I guess the brands would pay for it Maybe some of the journalists It's not even in my I just don't want to do it I don't want to do it

If I'm comparing this to like streaming Like Netflix or HBO Max Or Hulu or something like this And I'm paying more for Twitter What does the checkmark do? I don't care I don't either So someone we know some people

Who work at Twitter They reached out to us and said Hey do you want the checkmark And I thought Yeah sure I didn't really care But I'm never going to pay for that Stephen King tweeted $20 a month to keep my blue check

That they should pay me If that gets instituted, I'm gone like Enron. So Elon tweeted to him, we need to pay the bill somehow. Twitter cannot rely entirely on advertisers. How about $8? So here's the thing. He has to start making money on his investment. So Chris Blumstrand had a threat on this, basically going through the first part was

how ransacked Twitter was by its executives who were just printing stock for themselves, basically, which was not great since the stock price did do much. But he's saying that his new $20 billion in. debt with a company that makes $5 billion in revenue and has $6 billion in cash on hand, they need to start making money. If he's going to pay back investors or IPO this someday, he's got a huge debt load. So he's going to have to make money. So my take is, I think you can probably make Twitter a better business.

I don't think there's much he can do to make it a better product. Well, you know, what's not helping is him tweeting that conspiracy theory about Paul Pelosi being attacked by a male prostitute. That probably wasn't a great start. Twitter as somebody who's Jewish who was seeing all this shit going on is kind of frightening and not fun but scary. I don't really know

what else to say. Like when you see that like Kanye was right about the Jews on that building and not good. Yeah, listen, there's three options. He could make Twitter better or worse or make it stay the same. It's probably easier to make it a worse place. I think Twitter is what it is at a certain point. Social media brings out the worst of

everybody. Yes. I think it has done like irreparable damage and I don't know how you put the genie back in the Where does the genie come out of, the bottle? Yes. But we're walking around Halloween yesterday and being around people. What a great holiday. Yes.

Halloween is great. I'm sure people have all sort of different backgrounds and political persuasions and just giving out candy. Yes. I'm sure that someday they're going to look back when social media started as like the downfall of civilization should have happened. The funny thing is my contrarian take is I personally like Twitter. I like the service. I get a lot out of it.

I get all my news there. I get research. But my experience on Twitter is probably. way different than someone else's. And so take that with a grain of, what do you call it? Salt. Sand? Grain of sand. That was your, yes. Take it with a grain of sand. But I don't think that there's anything he can do that's going to make Twitter a better product. He could make it be a better business and make more money. I don't think he's going to be able to improve the product

at all. I think Twitter is always going to be what it is. He can make it worse, but not better. Last year, Snap paid 12,000 creators $250 million. Is social media over? I mean, I feel like this was like, over is ridiculous, but... No, it's not over. No, no, no. I don't mean that. I don't mean that. But like, it seems as if we're in a new era.

We're in the mature era. Facebook is pivoting. Snap is flailing. Twitter is fucked. TikTok is killing everyone. It seems like we are in a different era of social media. Obviously, I'm on Twitter as much as I ever have been, unfortunately. That's fair.

Yes. Things are changing. Definitely. I agree. This was something on Google. I should have mentioned earlier. Google missed every consensus P&L estimate. R.Cs are plummeting.

This is from need. And we believe that Google is worth more in pieces and together. So we welcome regulators' attempts to break up Google. We calculate that YouTube would be valued at $300 to $500 billion to separately traded. I think we mentioned this earlier. Yeah, we were wondering about that. What would YouTube worth? We're like, oh, well, Netflix is worth whatever, $200 billion.

And they're saying YouTube would be worth $3 to $500 billion. It would be kind of interesting. If YouTube is a public company, AWS is a private company, I wouldn't mind seeing that. Last week we mentioned like a Zoom cheat about being on calls where you really don't feel like staring to the screen because it's either there's 10 people on the call or it's boring, whatever. A few people sent to this is a product for that. I don't know if it's like a gimmick or what, but there really is.

Oh, the name of the product is Beuler. That's pretty good. This grinded my gears band. I bought tickets to see Jerry Seinfeld on Ticketmaster. Have you seen Seinfeld before? I have not. I'm very excited. He came to Grand Rapids.

Like, after I was in, just got out of college, and a friend had tickets to the place downtown. He came and he just killed. But the one that always sticks with me is he goes, what is so grand about these rapids? Just, I mean. Did people laugh? Of course. Yes. So $42 per ticket for a service fee, I guess, just a service fee.

And then they kept hocking you. Oh, this is interesting. Here's why I put this in the dock. Ticket insurance. I did not buy ticket insurance. I did not want to spend another $36 on ticket insurance, but they said to try and like social proof you, which I don't fall for that shit,

76,303 people protected their tickets in the last three days. Okay, let's do the math on that. Let's say it's $10. That's $763,000 in ticket insurance. Is that something people were spending money on COVID reasons for though? Also, remember COVID? When's the last time we talked about that? I think it's floating around here a little bit.

Okay. A lot of people came into this. Revolving doors. I said, I'm anti, not a fan. Someone said revolving doors are to prevent the chimney effect in tall buildings. In winter, when the air inside the building is a lot hotter than outside, the dense outside air pushes the hot air up through the building violently. But I buy it. I buy that for tall buildings. We were in a two-story building. Two-story buildings, fine. You don't need a revolving door. Yeah, that was aesthetics. They were just conforming. Yes. All right. Someone sent me this tweet, WTF facts. On this day, 1994, Pulp Fiction, Forrest Gump, the Shawshank Redemption and Jurassic Park were all showing at movie theaters at the same time. The 90s to us is the 1960s to like our parents'

generation in terms of rock and roll. You're never going to have a better decade for movies the 90s. So in 1994, I was nine years old. Which of these four did you see in the theater? I saw Forrest Gump twice and I saw Jurassic Park. I was probably really young for Shawshank and Pulp and I watched those when they came out on video. Me too. I saw Forrest Gump and Jurassic Park in the theater. I saw Jurassic Park the day it opened. I wish I could see. myself watching Jurassic Park at nine years old probably just in absolute awe

it was amazing yes that really was a spectacle speaking of like younger and being a child what is this thing I know there's like a meme of it but what is this thing where your kids can laugh

but then when you tell him to smile like Kobe does like an underbite when he smiles yes he doesn't have an underbite like he just kids don't know how to do fake smiles yeah fake smiles are top I'm not great at them but for some reason children in particular

I have a very difficult time faking a smile. I think the ages that they're at, my son George is the same thing. You get some very awkward pictures. Like, he goes like this. Like, they think showing your teeth is smiling. They don't know how to fake smile. We get, yes, we get some bad ones too. And we're trying to crowd three kids.

I'll start. Somebody emailed us asking my thoughts about Event Horizon. Here's the truth. Here's how I feel about Event Horizon. I saw it once when I was, I don't know what that movie came out. I'm going to guess 11 or 12 and I haven't seen it again. I remember that was a big deal when it came out. That movie was like a huge deal.

Like, it'll scare the crap out of you to see this in the theater. No, it did. Inventorized and knocked my socks off. I was scared for a year. This was 97. Okay, I was 12 years old. I was way too young to see this movie. Is it worth the rewatch?

I don't know if I could do it. It's Lawrence Fishburn, right? Lawrence Fishburn and Sam Neal, speaking of Jurassic Park. So, speaking of scared, I did a spooky walk with Kobe. We did like a Halloween thing, and by accident, I went in backwards. I went through the exit with him on the wheelchair. and I'm pushing him and there's like really bright lights

and so as you're approaching the light you can't see what's behind the light and I'm like kind of scared because there's like people in mass walking around scaring you and I was scared I was actually scared Kobe wasn't scared

I said Kobe was this spooky he said not for me why Kobe hasn't seen Halloween he doesn't know what lurks out there I was really scared I was genuinely scared and they weren't even really like It was just guys walking around to mass They weren't, like, trying to, like, bounce out of you.

I was scared. This is why you like horror movies. So you told me to watch Barbarian. You said, watch it. It's good for content. A few people give me good feedback. It was a very well-done movie. Some initial thoughts.

Airbnb really has the brand thing down. I've been seeing Airbnb come up in a more. Like, how many horror movies in our something's wrong in Airbnb? What's the premise? This is not a spoiler. Someone goes to rent an Airbnb and there's something lurking in the basement. It's the ultimate. Oh, no, no, no, no, no, no, no, no, no, stop.

You just ruined it. I said, no spoilers. The premise is that... How can you give the premise without spoiling it? Very simply. Here, this is how you do it. A woman drives up to a house. It's raining. She gets out of the car. She goes up to the lockbox. The lockbox is empty. She goes back into her car. A light turns on. She goes up to the house. Somebody else is in the house and says, what are you doing here? Who are you? I went to this Airbnb. No, I went to the Airbnb. Boom. Hygings ensue. That's how you set it up.

That doesn't tell the premise at all, though. This is the ultimate... That's the premise. I know horror movies are supposed to be like that. It's the ultimate like, don't go, wait, why are you going back there? Wait, why are you going down there? What are you going in there for? I was watching last night. Why did he go back down there?

But anyway, for the movie. They did a great job making Justin Long be very unlikable. He's always a likable character in his movies, but they did a very good job making him be unlikable. The first scene where Justin Long comes on screen, there was like a half second. There was a half second in my brain where it was like, wait, did the real break? Like, what just happened? Yeah, the movie changes pace like three or four times.

It's a really well done movie. I also think you keep saying well done. Did you enjoy it? Horror movies just don't do it for it. Whatever like gets your blood flowing in a horror movie, it doesn't, I thought it was well done, but it doesn't like get my juice flowing. So I thought this movie was a ton of fun. It was good.

It's just, it's not my kind of, it's not my genre, which is I understand why people like them. But here's the thing. So the inbred person in the basement, I don't know why Matt Millen did sign. No spoilers. I'm sorry. It's a horror movie. Obviously, there's going to be some scary person.

I don't know why Matt Millen didn't sign her to be strong. strong safety in tight end for the lion. Is he still the GM? No. No, I'm saying back in the day. She's been around. She was in Detroit for a long. This movie was in Detroit.

They didn't do Detroit a lot of favor, but he should assign her to the lions. She could have been an amazing free safety. Two more. Hocus Pocus 2 on Disney Plus, which the first one came out when I was young, 30 years later made another one. My kids watch this three times. I don't know why the streamers don't make more holiday movies. My kids watch this just because it's the Halloween movie.

There should be more. So planes, trains, and automobiles is the only. only Thanksgiving movie. Make more Thanksgiving. There's plenty of Christmas movies, obviously. The streamers should just make movies for every single holiday. Because people will watch them around the holidays. You watch Barbarian for me. I'm going to rewatch playing trains and automobiles for you. Wait till Thanksgiving. Watch on Thanksgiving. I will. I watch it every year on Thanksgiving. I love that movie. Okay. I need to watch it. If it's been a while, it'll hit different John. Okay, finally, I got a book recommendation because I think everything is pretty pessimistic

these days. This one came out in 2020. So I kind of lost it. I can remember who recommend this on Twitter, 10 global trends every smart person should know. And it's basically one of those books that tells you how much better life has gotten over the years. I'm just pulling out a few stats here. Since 1820, the size of a world's economy has grown more than 100 fold. Over the past 200 years, the world's population has grew somewhat less than eightfold. If we grow 2.8% average GDP growth for the global economy, that's what we've done since 2000. By 2100, by the end of the century, the world economy would be $1.1 quadrillion. Wow. Well, here's the deal, Ben.

People will not be any happier. It's true. They'll probably be much less happy. So I'm reading a book. Somebody recommends me called The Comfort Crisis. And it very much explains, I mentioned earlier about our ability to adapt, up and down. As life becomes easier, we have less things to complain about or less real things to complain about. And the things that we complain about are just hollow nonsense.

And that's what life is. It's true. When you were working on the farm seven days a week, you didn't have time to complain that your Airbnb cleaning fee was $30. Right. We went long. This might be a record for us. A lot to talk about. Animal Spiritspod at gmail.com, and we will talk to you next week.