Animal Spirits Podcast - A Tough Break (EP.278)

Episode Date: October 12, 2022

On today's show we discuss a late-night trip to the ER for a broken leg, good news is bad news in the labor market, the last time the Fed sent us into a recession, earnings vs. stock market performance, the inflation burp, what happens to housing prices from here 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 our friends at Y charts. Michael, yesterday, we actually had an update with some of the research team at Y charts. I was asking us for some feedback, showing us some new features. My favorite part of the conversation with them was they asked us, what is it that you're looking for out of Y charts? And you wanted like intraday five-minute candle charts or something. Not exactly. Not exactly true.

You were looking for intraday stuff. And I asked for like a long-term scenario analysis of like dollar cost averaging and withdrawal strategies from a portfolio. And I thought that was just a good yin and yang for us. So I put a chart in here today. U.S. job openings, total non-farm. We've been looking at this for a while. It peaked at almost 12 million, which is like double the amount of unemployed people that are in this country. It's rolling over big time. It's gone from almost 12 million to 10 million. I think this is probably if you want to look on the bright side of things, probably a decent thing, at least in terms of like the Fed, that job openings are

coming down. You hope that doesn't lead to people getting fired. But I think this would be the hope for it's not going to be as bad as everyone thinks. We just have job openings cut in half or something. And that's like the soft landing scenario. That's probably way too optimistic of a take, but I'm grasping here. Anyway, I got a whole economic dashboard on white charts. If you want to check it out, you can see all the intraday stuff Michael's trying to get pushed in there and all the long-term stuff I'm trying to get shoved in there. Michael had a good target date joke. That was a good zinger. I love my dashboard. I've got asset classes. I've got fan mag. I've got sectors. I've got the arc names. And they were asking Ben, what does his dashboard

look like? And I said 2030, 20, 35, 2040 target date funds. That's about it. So go to Y charts. Tell them that Animal Spirit sent you and they'll give you 20% off when you first sign up. 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 Rit Holt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. We're starting for the timestamp. Tuesday, October 11th, 9.40 a.m. My eyes are glassy. I had a late night. I had a night. So we played football yesterday. Flag football. Kobe is five years old. And during practice, they were playing a game called sharks and minnows. You familiar with this game?

Ah, yes. We play that in soccer a lot. The kids do. I've seen this one before. So Kobe was, I don't know if he was a shark or a minnow. I'm not familiar with the rules, but he was being chased. So I guess that would make him a minnow. So he was being chased. And he's looking over his shoulder for the Great White that's about to get him. And as he, like, turns, there was another boy running in the same direction, and they collided. As soon as he turned around. And so I saw it. And I'm not like a hysterical parent.

I usually am the dusted off type. But I immediately ran over. It was a rough hit. So Kobe's screaming. And I picked him up. And he's not like a screamer. He doesn't cry like that. and he said, I broke my leg.

Wow. Pretty immediately. He said, I broke my leg. And I took his cleat off and he's like freaking out. And I didn't know what to do. I didn't know how to calm him down because he was just in a lot of pain. And so we left. And I called Robin and I told her that Kobe had a pretty good collision and we're going on.

And she's like, he didn't even try to get him to stay. Why are you coming home? Like, are we those parents? were just a couple of parents, and I was like, you're probably right. I was like, I don't know. I panicked. I wasn't sure what to do. He was like, he was really upset.

In her defense or your defense, it is hard to tell sometimes if a kid's really hurt or they're just like milking it and you don't know. Yeah, I was like, it looked like a rough hit. And he's usually not like dramatic like that. So we got home and on the car ride home, he's telling me to slow down on the bumps and it hurts. And he had the full ice pack on his leg. Usually we do like, there's like the gel.

like the fuzzy animals with like the gel sort of ice things. This is like full ice, just a straight up ice pack on his leg for 30 minutes. I took it off. I put another one. So he's an hour, just straight ice pack. And I'm like,

I think this is serious. And so we tried to get him up. And we said, all right, Kobe, let's see if you can walk in it. And he just lost his shit. And so I said to Rob, I was like,

pretty sure we should take him to the doctor, right? Like let's go to CitiamD or one of those clinics. And Robin took him. And she called me and she said, he broke his tibia. And the tibia is your shin bone. And so I like started crying. I felt so bad. I don't know.

First of all, like he's going to be in pain and that we didn't take it seriously enough. And not good. All right. So we got home at what time was this like maybe 6.30. And we ended up going to the children's emergency room. That's what they suggested we do. We got there at 8 o'clock. And it was a long night.

It was just a long night. X-rays. So at the WebMD, they put him in like a softcast. And they did x-rays there, and we didn't get home until six of the morning. And he's got a full cast pretty much all the way up his thigh. Is that like a two or three-month thing? I have no idea what we're going to do because he's totally immobile. They said he's too small for crutches, but that doesn't make sense.

We're going to have to get him crutches. We thought about the scooter with the handlebars and you put your leg up, but he can't bend his knee because the... Oh, because all the way up. Oh, man. Because the cast is, like, all the way up. You're going to need a wheelchair. So we're going to need a wheelchair. I think he's not going to be able to go on the bus.

I'm going to have to take him to school every day. I just feel terrible for him. He's obviously out for the 20, 23 season. And I think he was breaking out. He was having a good season coming on strong. Adam Schaefter just reported he's out for the whole season. Anyway. That's tough, man.

I honestly don't know how little boys, little boys, anytime they're doing anything, are constantly running into each other, running into stuff, falling off of stuff, jumping off of stuff. But, yeah, we're surprised that hasn't happened yet. We had it with our daughter Libby and soccer last year where she went to the ER and she hurt her ankle pretty bad. And they told her she broke her ankle.

So they sent her home on crutches and we're thinking the same thing like, oh, God, this sucks. Four hours later, they called us back and said the doctor read the x-ray wrong. It really wasn't broken. We had four hours where you're going to have three months. I sent you the x-ray. And as soon as Robin sent me the picture, that's where I started crying. I was like, oh, no. And obviously, I'm not a doctor, but.

I don't know to read x-rays, but there's like a huge. You can see the line. It's pretty visible. Yeah. And there's like two of them. There's like two. So anyway, this morning, I told Kobe, I said, how are we going to bathe them, by the way? Is there like a giant balloon that you put around their leg?

Man, that's a good clip. Bathroom? You put a trash bag and give them a shower, probably. He's totally immobile. So anyway, so I sent him this morning. I said, hey, so Kobe, you broke your leg. And he looked at me. He goes, I told you I broke my leg at football.

I knew it. That is pretty incredible that he said that immediately. Like, I didn't even know he knew what a broken bone was. How do you know what a broken bone is? That's tough, man. I feel for you. I remember in college, we had a friend who broke his ankle playing like pick up basketball. And for two months, he had to have a cast on.

And he couldn't get the class on crutches. So there was like eight of us that were his friends had to drive him everywhere and like drop them off at class and pick him up and bring him to lunch and get his lunch for him. We were being good Samaritans about it for a while. But after two months, we were all sick of it and ready to like shove him down the stairs because we were sick of doing stuff for him. But I guess it's a little easy. year for your son. So I wrote, I'm preparing an open letter to the league.

You want compensation. So that's a case of bad news is bad news. There's no silver lining here for you for a while. I don't know. I don't think so. I mean, no. I mean, if you were to cast before? Segway time. No, no, no, no. I don't even know how that's possible. I grew up playing sports. I never broke a bone as far as I know. It's like the worst smell in your life after he has it on for like six weeks. Just preparing you for that. His leg is going to smell like Jeffrey Dahmer's basement. I'm just preparing you for this. So, just so you know. All right.

So that's bad news is bad news. Now, for a while, at least, it seems like good news is bad news in the economy, at least when it comes to jobs. So it sounds like, I mean, most days in the stock market, you don't really know why it's up or down from one day the next. A lot of times it's random. But there are certain days when a piece of data comes out, a news headline, and you can see something happened immediately. And Friday was that day, job numbers came in better than expected. and the stock market got walloped again. The great thing about bear market rallies is they happen and then they just don't last.

It's so much fun. Oh, yeah, it's a great time. Yeah. Can I just say, we're in a bare market, Ben? Yes. I know that's obvious, but does life feel different to you yet? Is your wife treating you any differently? I wonder how many people actually know we're in a bare market.

Like people I've been talking about recessions. How many normal people talk about the fact that the stock market is down? It feels like, I mean, when you have conversations with civilians, if you're at the football, ball game. Does anyone ever talk about the stock market? I have heard nothing from regular people about it. Not only that, Ben, but last week, one of the guys, one of the dad said to me, so what do you do for living? And I said, I'm in wealth management. And he goes, huh? There's like two other dads there. And nobody was like, so this market, huh? Yeah, didn't take the bait. I think people are still focused on inflation. So John authors from Bloomberg had this piece that looked at something.

I think it's from, well, I'm saying, not to believe with the point, but it is kind of interesting to just take a pause and zoom out and know that you are living through a period that future generations will be reading about much like we have read all of John Brooks's books in the 60s and we're like in it. We are in the throes of wherever this goes. It's just, it's interesting. Can I call shotgun on like the great inflation of 2022 for a book title Sunday that I'm going to write? I mean, I'm not actually going to write. You have another book in you? No way. I had a publisher emailed me this week saying, what's the next book? And I said, I'm done. There's no way I'm writing another book. it's way too much work

I can't imagine what would compel me to write a book another book So this is from Deutsche Bank and they look back going back to

1980 and eight of the nine tightening cycles for the Fed the unemployment rate was lower a year after the tightening cycle began so I have this graph

here and then the only time it happened hold on said that one more time so when the tightening cycle begins a year later

the unemployment rate was lower a year after it began meaning there is a huge lag between the Fed tightening and the unemployment rate. And the only time it happened was Paul Volcker in 1980 because I think they did it so aggressive. So I'm saying if you think about, I'm sorry, I'm sorry.

When you say the unemployment rate is lower, just so I'm very clear. Does I mean you're talking about like going from 6% to 5%? Yeah, look at the table here. It says one year after the start. It's still falling as they're tightening and basically saying the Fed policy does not work immediately for employment, which is what they're trying to see is they want employment to get worse. labor market to get worse. It looks like even two years after. Yes. It's still falling. So wait, does tightening not lead to unemployment going up? Surely it must. Doesn't tightening slow the economy? Isn't that what we're told? Doesn't that just make sense? It's just on a lag. And maybe it doesn't really work until they throw us into recession. It takes a while for them to throw us into a recession.

So the point would be, does this mean that there's just way more pain ahead for a lot of stuff? If the fed's just going to go, okay, the labor market is not, it's not softening. It's not softening. It's not softening. That doesn't seem like a good thing to me. You raise an interesting point because I've been wondering, as have a lot of other people, why isn't the data turning? And to that end, because financial conditions are obviously tightening between stock market and credit spreads and mortgage growth and all of that sort of stuff, bespoke tweeted, we're now in the longest streak of better than expected non-farm payroll reports since at least 1998.

That's not good. That's not good. we keep seeing unemployment come down. Jobless growth is robust, as they say. When is the day to get I tweeted this out last week. I think this happened so close to the 2020. I think part of this is too. How many employers right now are willing to say, I'm going to fire 20% of my staff beyond the tech companies that are obviously they overstaffed. If you just had three years at a restaurant where you couldn't hire anyone and people were staying at their job for a month and then hopping to another job, are you really going to fire a bunch of your staff right now and then try to do that

that all over again. I'm sure there's a lot of employers who are going, there's no way I want to go through this again. I worked at an upscale Italian restaurant during the great financial crisis full time because I was home like a loser, only one of my friends home going to school here. So I had work because I had nothing else to do. And I had to pay rent, which is a whole other story. But the restaurant was empty. You saw that it was a recession. It was moderately busy on the weekends. But during the weekday, there was like four tables. You don't feel that now. where places are everywhere you go. Not even a little.

People are still spending like gangbusters, at least anecdotally, it looks like that. I looked at this yesterday. So the S&P from the highs is down like 24, 25%. From the COVID bottom, we're still up 65 to 70%. Since the end of 2019, we're up 18% still. If we're going pre-pendemic, we're still up almost 20%. So I looked, 3,200 is about the number where we were at the end of 2019. So that's like another 12 to 13% downside from here to take out all the games since 2020.

Just get rid of all the COVID games. Which, by the way, the Dow already did. I think the Russell already did. The NASDAQ. So the S&P went down another, we had another correction from here, 10 to 12%. That would take away all again. So that'd be probably almost like a 30% correction in total. That would put us at a nice average bare market, I think.

Rob just sent this to me. He's going to have to get a little bell for you guys. At least he's got a pretty cool cast on. All right. So here's my thing about the Fed. So we've talked about this before. So this is from the Atlanta Fed, what is it called, the wage growth tracker? You look at it from Job Switcher to,

job stayer and then overall. So the job switcher, their wage growth is like 7%. So it's like if you change jobs, you've been able to negotiate a much higher salary. And everyone has gotten wage increases, but jobs switchers especially. I feel like we've had 40 to 50 years of declining worker negotiating power and bargaining power. And the employers have had the upper hand. They say capital has been beating labor for like 40 years. And for all that time, economists are like, well, there's nothing we can do about that. And then now we've had 18 months where workers have the upper hand and economists are like, we must put an end to this. immediately. And I just think, let's like let this breathe a little bit and see what

happens when, because I went back and read the book by Applebaum, which was, what was it called? The Economist. Yeah. The Economist hour? The Economist hour. So I read, he has a whole chapter on Volker and what happened back then. And one of the things. So Ronald Reagan was totally behind Paul Volker to put us into a recession. And Reagan basically said, listen. That was going by the way. Probably best economics book I've ever read. Very good. But he basically said, we need two to three years of pain to get through this inflation that we'd be dealing with for 15 years, let's just get it out of our system, and he was all on board. But the thing that was different then is that there was so much more union representation back then. So Reagan really

wanted to kill the unions. He said the unions had too much bargaining power, and that's what was keeping inflation high. And back then, it was like one out of every three workers were a member of a union. Now it's like one out of 10. So my thing is, we've had this huge bump because of remote work and all this stuff. But I don't think workers have as much bargaining power as they did back then in the 70s that people were worried about like this wage price spiral. So I just think that like the idea that this is the 70s is the wrong way to look at it. And I don't see what's wrong with letting people make a little bit more money and have more negotiating power over their employer. Nick Colas was on the compound and friends on Friday. Did you listen to that by the way?

Yeah, he's so impressive. Is he the best? Yeah. He's very good. And we were talking about how Neil Kashkarri said that he doesn't see any evidence that inflation has slowed. And I said, really, I gave like the blinking giff. And Nick, who obviously is 4,000 times smarter than me, said that he mostly agrees with Kashgari. Yes, we've seen a lot of the commodity stuff turn. However, I think wages are the thing. Labor is the thing. This is the sticky part of the inflation. And until they see this softening or slowing, forget about turning, they can't back down. Why do economists think people making more money is a bad thing? And I get it. If people make more money costs have to go up and then you worry about like it's going to be a self-fulfilling

property. I think that's it because there's nothing else that is sticky like wages because the more money people make, the more money people spend. But again, I don't know how you break that. We have 40 years of stagnating wages for a large percentage of the population. And that part of the population is now the one seeing the biggest wage gains. And I think you have to use your brain a little bit and think not just wage gains for the whole country, but wage gains for the lowest level of incomes are going up the most.

And I think I don't know why we want to just snuff that out right away and not let that happen a little bit. I'm surprised to hear you say that. Listen, I'm willing to sacrifice my stock portfolio so people on the lower on the income scale can credit to me. Credit to me. I'm just saying, I think you have to use some common sense when thinking about this, that the people on the lower end of the income scale are finally, finally having some negotiating power to be able to earn more money. And the economists just say, we got to put an end of this immediately right now. But here's a problem. They're still seeing negative real wage growth, unfortunately. Not in all cases, obviously. But now, I guess you could say, well, their wage gains will stick, but inflation will

come down, leaving them with better real incomes over time. Here's what the Applebaum said, which was, I think this is cherry picking a little bit, but he said, that's what they said last time. Volker and Reagan said, if we crush inflation now, and obviously inflation, look at the chart I put in here of inflation back then. It was above 4% every year from 1966 to 1979. Yeah, come on. This is not that. It was ridiculous. But he said, Applebaum says, American workers did not recover from the Volker shock at all, the median income of a full-time male worker in 1978 adjusted for inflation was $54,000. That number was not match or exceeded at any point during the next four decades. As of 2017, the median income of a full-time mail

worker adjusts for $52,000. So basically adjust for inflation didn't go anywhere. Now, we've talked about this in the past where people don't stay in the same income cohort. They go up, they go down. Those are kind of hard. But he's saying the nation's annual economic output adjusted for inflation tripled over those same four decades, yet the median worker made less money. He's saying the people who own businesses did so much better than the workers that it's time to put it to the workers or put it to the business owners and they can have lower returns now so people get paid more, which I think is a fair thing to say and say maybe these businesses should stop taking it all to the margin. So are you saying that inflation is going to fixed income

inequality? It kind of has. Look at the net worth of the lowest bottom half of people. They've had seen their biggest relative net worth increase in the last three years than they have in decades. You know, it's a good strategy for this week's show? Avoid the comment section. Fair. All right. So, this is from Barron.

Stocks look cheap. Go back up a little bit. So this is stocks in Italy, UK, Germany, Spain. All four of those countries have four PEs under 10. So forward PEs, they're looking at emerging markets, France, Japan. All these are really low. Even the U.S. is at 15 times forward earnings. Now, the smart thing to say right now, I've heard a lot of smart people say this.

And it seems like across the board, the really, really smart portfolio managers and macro people are all extremely bearish. I have not heard one, like, big name person who is not just like, this is going to get worse. Inflation is here to stay. The stocks are going nowhere. Like, all of them are saying this. Maybe they're right. One other thing to what they would say is that this is, and I saw Jim Bianca talking about this, I think people underappreciate the fact, this is what they would say. People underappreciate the fact that this is a regime change, that the era of easy money is over. And not only is it over, it's not coming back. The Fed, is not going to pivot. It's over. So the fact that stocks were trading in 23 times earnings over the last

decade or whatever the number was, throw that out. If you think 13 looks cheap, you might have another thing coming. That's fair. That's fair. And we'll say. But yes, also, the Fed's not going to ease in the next recession. I'm happy to be called an idiot for saying this. But come on. This is what Nicole has said. He said, this is a man-made recession. It's going to be a man-made recovery. And unfortunately, it kind of feels like all of our cycles are going to be man-made from now on, whether it's fiscal spending or monetary policy, I feel like we're just going to go back and forth for a while. They're never leaving. Like this idea, they're going to turn the Fed funds rate over to the two-year and let the market determine where rates are. Yeah, good luck with that. Never going to happen.

If you want to sound really smart right now, you say all of the current losses in the stock market, the 25% down, that's all re-rating from interest rates going higher. True. And you don't buy that, Ben? Well, no, but listen, what they say is what happens when earnings fall, that's the next leg down. But I'm one of these people that I don't know how you could understand exactly what's priced in. Like, I know this is all from rates, but earnings are coming next. So look at the, I did the earnings chart I sent to you. Agree again. Agree again, Ben.

We don't know what's coming next. This is earnings versus the stock market from 1930 to 1921. I looked at what happens when earnings are up year over year versus when they're down year over year. Can I tell you something? Before you reveal the data, I almost want somebody to fact check you on this. It just seems so outrageous. You'd be surprised.

People fact checked me on every data table I send. I must get four or five emails from people saying, hey, I ran these numbers just like you did. And this one number is off. Occasionally I'm wrong. All right, light out. Light out. I looked at when earnings are up year over year or down year.

So I'm just looking at calendar year up or down. And then I looked at what happened to stocks. Stocks are positive 77% of the time when earnings are down year over year. They're up 10% or more 60% of the times when earnings are down. My whole point is, hey, the stock market is forward looking. Earnings could fall and that could crush stocks more. Sure. But do you think the stock market is really that dumb that it doesn't know if earnings are going to fall?

It's like everyone sees that clearly. That's a good point in ways. You know what's interesting. I think we looked at this recently, just a very blunt analysis when inflation is rising or falling year over year. That is a material impact, maybe because nobody can predict inflation, but the market can suss out earnings growth. They're constantly changing and updating earnings estimates and the estimates are not always right, obviously. This really surprised me. So what Ben is saying is that when earnings are up or down year over year, that had no impact on average returns going back

to the last hundred years. When there's a recession, earnings get killed. usually they don't fall nearly as much as the market. So is the market front-running a little bit this potential earnings decline? It's probably coming. This is a true story. It happened right here in my town. One night, 17 kids woke up, got out of bed,

walked into the dark, and they never came back. I'm the director of Barbarian. A lot of people die in a lot of weird ways. We're not going to find it in the news because the police covered everything well up. On August days. This is where the story really starts.

Weapons. Man, Facebook. Facebook is down 67% from its highs. I blame the Metaverse Pivot. So Facebook had a market cap of over a trillion dollars, Ben, in September of 21. It's $340 billion right now. Jeez. $340?

Dude, it was $350 billion. in the summer of 2016. This has been one of the best performing growth companies. Forget about stocks. Just look at the fundamentals of this company. Since 2016, the stock is flat. I'm starting to think that stock banking is not easy. Jim O'Shaughnessy tweeted something about a book that Ben,

I think you and I both read, called A Very Good Year. I'm not somewhere behind me. Great book. I think he looked at the, was it the 10 best year? And it was a really good analysis of what was going on in the time, what led up to those good years. And not surprising, all of those very good years followed very bad years. So I think maybe 1975 was in there, 2009, 1908. I think 33 or 34 was one of the better years. Something like that. One of those. It's true. And market is getting clocked again. Here we go. The NASDAQ is now in a 35% drawdown. Here's another thing. The whole growth to value thing. Can the market do well if this has legs, given how big growth is compared to value? I mean, the S&P. Maybe this will be a stock pickers market. You know how following the dot-com bust, it was all about shifting away from growth. If you were in anything related to

value, whether it was dividend or share buybacks or whatever, anything that was not growth, you outperform big time. So you said the cues are down almost 35 percent, the NASDAQ 100? No, more, more. Okay. The Vanguard Small Cap Value ETF is down 19%. It's outperforming by 15% in this downturn. That's a big spread. That doesn't feel that great. You'd rather be outperforming 15% when things are up, but that's a pretty good spread. Ben, did you write a post about this where we were just talking about how's why are junk bonds outperforming treasuries? Yeah, I didn't write it. So I looked at the JNK ETF versus the IEF, which is JNK's high yield and then IEF is seven to 10 year treasuries. And this is as of yesterday. Treasuries are down 21% from their highs. and junk bonds are down 15% from the highs.

So people have been saying spreads aren't blowing out, so there's nothing to worry about. But my point is the only reason spreads aren't blowing out is because usually in a crisis, treasury yields either stay where they are or grow lower. This time they're going higher. And treasuries are underperforming junk bonds. That's why spreads aren't blowing out. And like, should we really not be worried because now high yield companies are going to have to borrow at 9 or 10 percent, does it matter that it's still relative to Treasury's

not that bad, but relative to where it was, it's way worse. So I would imagine that high yield debt issuance is down a lot. And I'm sure somebody can correct us or give us some color there. But these companies gorged on debt in 2021. They have a bunch of, they're like the homeowner sitting on a 3% mortgage because of all the debt they took out. Exactly. So State Street has this thing where they looked at credit spreads and Bloomberg high

yield energy index blew out big time in 2020 for reasons that are very obvious to everyone. And corporate high yield spreads are on the rise. Same thing with just U.S. corporate spreads. And they're above their 20-year average, but not by a ton. Not by a ton. So, for example, the lowest wrong, U.S. high-yield, triple C and lower, the 20-year average spread is 1,049 basis points? That's a lot. And right now it's 1175. So the 20 year averages is 1,049 right now it's 1175. So again, a little bit elevated, but to the point of when is the data going to turn. And now maybe we get it in Q3. Maybe we get decent earnings, but we get forward outlook that's like in the toilet. But we haven't seen stress a ton of stress.

Don't you think that the bond market pivots before the Fed that at some point the bond market is going to sniff out, okay, the Fed is going way too far and there's going to be recession and treasury yields are going to fall. But I think that kind of has to happen because if interest rates just keep rising and rising, that, I don't think that rates can keep rising and stops can keep falling. I think at a certain point, the bond market is going to break trend and rates are going to have to come lower. I don't think so. My opinion, my uninformed opinion is because I have no empirical evidence is that we've seen the stock market bounce way before the news gets better. In fact, when the news continues to worsen, right? And you're like, what the hell? This doesn't make

sense. I don't know if that happens in the bond market. I think the bond market will wait. I don't think the bond market will anticipate a Fed pivot. The bond market anticipated the Fed raising rates because bonds yields went way higher before the Fed even raise rates to those levels. Well, that's what people said. The Fed was behind the curve. I don't think it works in reverse. I think this time it will. I think the bond market is going to know when the Fed's gone too far and the bond yields are going to crash. And guess what? The Fed funds rate is going to be above all the other bond rates at some point. That will be very interesting. That'll be very interesting. If the Fed keeps raising 75 basis points and 50 basis points, the whole treasury yield curve is going to be lower than that at some

point. And people are going to be going, okay, the Fed's behind the curve again. I think that's coming. Put it on your calendar. For when? I don't know. Okay, so Connerson, you said a lot, Kashkari, who, by the way, I don't want to like disparage anyone's job, but this guy's the Fed president of Minneapolis. It's not like he's the Federal Reserve chairman. Why are we giving this guy so much airtime? He's in Minneapolis. I'm a Midwest guy, but come on. Self-loathing Midwesterner, but there's not that many Fed Bank chairbids. How many Fed banks are there?

Is there 10? It is kind of funny as how it's like Minneapolis, Kansas City. It's like Fargo. I thought like the New York Fed is the only that really mattered. All right, so Conner sent posted all these charts of like shipping container prices are crashing, use vehicle prices are crashing, home values are coming down, job openings are finally slowing, which we talked about. And he's saying, I think this is not a 70s thing.

I think this is an inflation burp. And I think the best analogy there is the World War II. You can see this chart I put in here. Inflation got to almost 20% back then on a year-over-year basis, which is just nuts. And I think back then, because of the war, people probably didn't even care or they'd used to it because they'd had the boom-bust stuff from the Depression in the past. But it took three years or so for this to sort of work itself off. And I think that's the problem people have is that no one's patient enough for this to happen anymore. where we can just kind of let it slowly go away because the spending purge that happened is gone. And so I think people want to see the inflation go down immediately when even if it was a

transitory thing, it would take years for it to slowly wean itself off. It's not going to happen overnight. I still think this is the best analogy, World War II. I would lean World War II over 1970s. How's that sound? Yes, with you. All right. So Eric Finnegan tweeted this out, five-year inflation break-evens are down 130 basis point since March, the biggest correction in 20 years outside of a major recession. Inflation expectations have now lapped the supply chain inflation drama of 2021. You can see it's below 2021 levels now, inflation expectations. Now, the market is not always right in pricing this stuff in, obviously. But it seems like investors in these bonds are not worried about this. I think investors will collectively price inflation better

than they will have Fed Pivot, at these bond investors. Okay, interesting. But you might be right. I think those two little hand in hand, though. So, Ben, you absolutely nailed this. Credit to you. Carl Kintanaia tweeted, Morgan Stanley has a 56-page report on an inventory. Quote, we believe many will turn to aggressive discounting, which is likely to spark a race to the bottom as companies attempt to come prices,

fast and then peers, and move out as much inventory as possible. And quote, wait, are we talking about deflation on the way? So, Ben, you've been pounding the table on the best black. Black Friday deals. Black Friday. In a long time. Black Friday.

I'm saying, get your shopping list ready. I feel like TVs and all this stuff is you're just going to be able to get it at. You can finally get rid of that line TV in your bedroom. It's that time. Just do it. All right. Let's do some real estate. So did you listen to the Adlaughts podcast this week with they had, I think he's from

Morgan Stanley's head housing analyst or researcher? Did you see this? No, can I make a confession? I haven't listened to a financial podcast in a while. What's the problem? I don't know. I don't know if I just needed a reset, a mental break. If we're just doing so much, I don't have time.

I don't know. My mental break has been from reading nonfiction books. I haven't read any nonfiction, but I'm only reading fiction now. And I think it's because I'm reading so much other stuff that I just, everyone's a mile of a history book maybe, but nothing on the nonfiction side of thing is catching my eye. I feel like you can do a nonfiction book and a podcast in an hour and get 90% of the book. Yeah. Is that fair?

Yeah, so there's two dynamics I play. One is football is back. So I'm listening to more NFL podcasts. By the way, how about the Giants? Was that a win? How early did you have to go? it up to watch the London game. Oh, it's 930.

We don't have the NFL network on AT&T Uvers. This is one problem with being a cable guy still. What's Ubers? I don't have NFL network. That's AT&T's cable service. Okay. Because I don't cut the cord yet. Best Giants win since, I don't know.

It's been a while. What was I said? Oh, I'm in a huge bear market with the lions. Dan Campbell, I thought I actually believed in. Oh, I bet they over. Same old lions. Yeah, they scored zero points. Anyway, I think it's a combination of football being back,

so I listen to a lot of football podcasts and not really going going many places. Podcasts are listened to on the go, walking, commuting, not doing either of those things. I listen to all my podcasts when I'm running, and I put it on two times speed. That's how I plow through them. All right. So this is from the Morgan St. The guy on Avats. It was a pretty good one. Inventory of single family homes is lower than it has been in at least 40 years. We're in a bizarre place where it's not a seller's market, but it's not a buyer's market either. We're in no man's land for real estate right now because it's not enough inventory. It's not affordable. Let me just check, let me just do some channel checks here. What's going on with that house in my neighborhood that was listed for seven and a quarter, which is just not even close. Yeah, they're not budging. They're not budging. They're not budging. They're waiting a while. They're at $6.85. But I think, Ben, I think this is the point. People are listing their house for 50% too high. And then they're cutting the price. They're cutting the ass by 10%. It doesn't work that way. If I was in the market for a house, I would pick 10 houses and I would lowball all of them. I think eventually,

someone's going to bite. If you were a buyer, I would start low-balling everyone and just waiting. This seems like the time to be patient. So who's going to blink first? Sellers or buyers? I don't know. It depends. It's going to be situationally dependent. At a certain point, if you're selling your house, you probably need to buy another one. Maybe you have one lined up to buy, so eventually you need to sell and get out of it. But here's the thing. Home buyers need to buy a home. If you are having a second child, you have to get out of your apartment. That's it. And the people who are selling their home, they have to buy. So that's a natural progression of some inventory will still be there.

My point is, sellers, generally speaking, don't need to sell. Oh, whereas people need to buy at some point for household formation. True. That's the thing that could get buyers to blink first and keep prices relatively from falling apart. So Rob Anderson from Ned Davis tweeted, unlike in the mid-2000s, home builders have shown restraint the cycle that have not overbuilt. As a result, inventories for existing homes remain relatively tight. See, this is the thing that stinks. Millennials and young people needed there to be housing overbuilt right now. Like, this is what they should have done.

We should have overbuilt this time. Yes. But alas, we did it. It was never going to happen because of the last time. And then he also tweeted, millennials, the largest generation in the U.S. should remain a long-term tailwind for household formations and demand. And he's got this chart that shows U.S. population age 35 to 44, going back over time from the baby booners to Gen X and millennials.

and it's showing 1.2% what is, is this gain per annum? Is that population growth or is that entering the 35-44? I think that's household formation, which I learned on the AdLod's podcast. Do you even know what household formation is? Is that just marriage? So the way that he explained it, let's say you have four friends. Go ahead. Hit me.

I don't know. This is the example of gay. Four friends moved to New York City out of college. They all live together. That's one household being formed. Then they decide to split up and each get their own place because they get married or whatever. Now that's three more households being formed because you net out the one that was already

formed. So that's how household formation works. It's basically people getting into a new place, whether that's renting or buying. Where the heck do they get this data? Is this on the blockchain? How do they calculate this? That's a good question. All right, one more from Morgan Stanley, the same one. Existing home sales falling faster today than during the great financial crisis. You can see that red line there, just dropping off. It's at a faster pace than after the real estate bust, which is kind of surprising if we're to stay on this trend. All right, Bill McBride, one of my favorite people to follow in housing. He says we're going to seven years of purgatory for housing prices. So he says we're up like 40% since a pandemic. He says the most likely scenario now

is nominal housing prices declining 10% or more from the peak, and real housing prices declining 25% or so over the next five to seven years, which I think that would be you go down 10, you stay there and then inflation eats up the rest over five to seven years. That would be basically like they'd go nowhere, which honestly with the amount of gains that we pulled forward probably makes a lot of sense to me. That might be a little on the high side in terms of losses that I would think. A lot of that depends on inflation for the real. But that makes sense to me. Don't you think? 10%. I mean, that would still put you at like 30 or 40 percent gains since the pandemic started. So like if you're a homeowner, you can't cry over

losing 10 percent of your home value. I agree. You have to zoom out and show where our price is coming from. Ben, two things. I'm sorry, got distracted by. Number one, ARC, new 52 week low. I'm sorry, new all time low, I guess. Or not all time, but you know what I mean. I can't believe their open letter to the Fed didn't work. I'm sorry. They were saying you're at risk of, like, creating a deflationary bust by raising too much, which I just think the whole concept of an open letter, I feel like anytime you call something an open letter, it immediately loses its value to me.

Why? Because it's too pretentious. It's like calling a blog post an essay. Yes, I'm penning an open letter. Yes. I think that immediately loses cachet with me. Ben, are you a crispy cream affixionado? Crispic cream is pretty good.

I prefer like a bakery donut, though. We have a bakery here in town. Forest Hills Foods. It's a grocer, but they have the best bakery. They're my favorite donuts in the whole world. We get them every Saturday. Why? What do you get? What don't I get? You know my favorite donut is? I don't. Two donuts. Something decaf. Oh, two donuts. Good joke. Anything. Long John with cream, the cinnamon with the chocolate on top. Wait, whoa, whoa, slow down. I don't know what you're talking about. What's a long John with cream? Is that not a New York thing? A long John with cream? A long donut with chocolate on top and then the yellow custard cream inside.

Oh, oh, we call those an Eclare. Okay. So that's a long John for us. Okay. It's like pop versus soda. Okay. What else? I mean, I'll have a jelly donut occasionally with the creamy frosting, apple fritter.

I mean, I don't discriminate between donuts. I go there. I get like three boxes of donuts after soccer games. You like to diversify. Yeah, I diversify. So I'm asking because. My kids, they take a donut and they take a spoon. All they do is shovel off the frosting in their mouth and leave the donut there.

They just eat the first. So I get like 15 donuts because I know they're going to do that. And I want them to keep the little grubby hands up. of my donuts. Well, no things are bad when you only get a dozen donuts. Yeah. Last week, the lady goes, okay, so I'm going to charge you for a dozen plus three. Yeah, 15.

A Carlson's dozen. Yeah. Somebody just emailed us, Ben, your local Krispy Cream is available for sale in case you're looking to diversify some more. Oh, okay. Do you know what your local Krispy Cream is? Well, there's, I don't know, four or five of them probably, but... Not to brag.

Yeah, there's a few of them. All right, okay. We talked last week to Ben Miller from Fundrise. going to come out soon for a talker book. And we were talking about how the whole housing slow down increases. Yeah, I saw that one. All right. You've never heard of a long town before? Come on. Is that a Midwest thing? I guess so. So we talked about how a lot of people have been saying to us, hey, all these investors and institutions have been buying homes, they're screwed because now that it costs 7% to borrow, their cap rates are going to be way lower. There's no way they're going to be

to afford doing all these rentals. And Ben Miller said, I don't think that's the case. We can raise rent. We can build all these things. We have economies of scale. We're going to be fine. And Wall Street Journal had an article about this saying, basically, the builders now are going to the investors and saying, buy 10 to 20 to 30 or 50 homes from us and we'll give you a discount. So they're looking at like discounts of 20% of what they would have charged homebuyers if they'll buy a huge block of them. So unfortunately, I think this is just going to make the situation and waste and worse where institutions who have the capital are going to be able and I'll get bigger bargains on houses, even though rates have risen and they should be. Finally, institutional investors

are catching a break. I just think they're going to look back in the future in 2020 and it's going to be this huge pivot point in the housing market. I think that's going to be the time where they're going to show like housing just went off the rails in the United States and a huge group of millions of young people were screwed for the rest of their lives. You understand why people are upset with the Fed? The Fed, but I think this, I think the housing thing is more of a government issue than the Fed. You obviously can blame the Fed now for the rates. They were buying mortgage bonds in March by the boatload.

What they did did, the rates didn't help, but I still think that it's the government's job to allow more houses to be built and get rid of all the red tape to build houses. They're not solely responsible. I agree with that. Ben Miller, little tease from Funrise. We speak to him on Monday about, Ben said to us a couple of months ago, where would things start to get dice and he set a 7% mortgage or maybe he even said 6? I was like, well, how does that happen?

What are you talking about? He said 8% is on his horizon, which is not that far from where we are. All right, here's an inflation thing that's rolling over. This is from, what, Real Page Analytics, Jay Parsons. The weakest Q3 for U.S. apartment leasing in three decades we've tracked. He said it's not a total collapse because vacancy and turnover are still lower than normal, but remarkable change in momentum. You can see the chart here.

Apartment demand basically is stalled out. And the idea here, hopefully, is that rents are going to start falling because of this. Because the demand, so this means household formation is slowing. Yeah, what drives apartment demand? A lot of it is household formation. So if you think a recession is coming, are you going to move out of your, with your roommate? If you have to share a roommate with someone, have a roommate and share a place with someone because it's cheaper, are you really going to go out on your own and get your own rent

because you're worried about losing your job? So I think the problem is they're trying to slow household formation. But again, rents were so elevated that you could have record year over your declines and still be higher than you were three years ago. True. But if demand slows, then that means rent's going to sell. And that's what's happening. rents are slowing. It's already rolling over.

Someone sent me this mortgage product interest variability, and it shows all across the developed world, Australia, Canada, UK, France, Germany, and then the U.S., and it shows variable rates or long-term fixed rates. In the U.S. is really the only country. It's like 90, look, if you're eyeballing it, 95%, 97% are fixed rates. Every other country is mostly short-term fixed or variable rates. Australia is like 90% variable. So Canada, Ben, Ben, Ben,

Are you seeing any changes in me physically? From what? Did you like eat a radioactive spider last night or something? I'm still working out. Robin asked me that she goes, are your shirt's getting tighter? And I said, glad you noticed. Glad you noticed. So yeah, I'm bulking up.

Still using your trainer. I'm bulking. I'm still using my trainer twice a week. So he's from Canada. And we talk about these things. And looking at this chart, it looks like it's all 90% medium term fixed. So if you were locked. into a sub 2% and they were like low low. If you were in Canada, and we have a lot of Canadian

listeners who I'm sure we're going to hear from about this, if you were locked into a 2% mortgage and you reset at 7 or I don't know where the numbers are there, that doesn't work. I can't imagine. I'd look an update from some Canadian listeners too. Is Toronto finally rolling over in Vancouver? All these, the hottest housing markets in the world are those places finally starting to roll over? They should, right? So yeah, my trainer's from Canada. I mean, from Toronto and he tells me about all these things. So at the end of the week, 42% of buy now, pay later users made late payments toward those loans as survey fines. That sounds really high. These places are going to have to merge together or something, aren't they? How do they all

make it on their own, the buy and now paylators with rates this high? I don't see how they all survive. It was a great business model for zero percent interest rate world, not five to seven percent interest rates. You know what else was a great business model for the pandemic world? That's no longer true today. Peloton. Are you using yours as a close hamper yet or a hangar? More or less. You still use yours. So I want to put this out there. One of my friends told me, try the interval classes. You can use like two to eight pound weights.

You ride for five minutes, and then you do five minutes of weights, and you ride for five minutes and five minutes of weights. I'm using eight pound dumbbell, so not huge. It's an amazing workout. You could do them with two and a half pound weights, and I think you get a good workout with your arms, upper body. It's very good. It's like a full body workout.

Okay. So Chief Executive Barry McCarthy took over in February said he's giving the unprofitable company another six months to significantly turn itself around. and if that fails, Peloton likely isn't viable as a standalone company. Boy, what's six months good to do? I mean, would you not be sending your resume out to everyone if you worked at that company? They've had six straight quarterly losses culminating in a $1.2 billion loss in the recent quarter. This was an $8.5 billion company at the end of 2019 before the pandemic boost. So they're an $8 billion company. They went to 50. Now they're below three. Three honestly does

still seem high. Do you think it honestly just goes out of business or? So let's just pause here. an $8 billion market cap pre-pandemic. Someone has to buy them. For me, it's a great, I love their product and I love their classes. Was this so poorly managed that they thought this growth would continue forever? Well, they went from like 2,000 employees to 8600 or something. So grossly mismanaged. I don't think Peloton is going to disappear.

Somebody will buy them because what's their recurring revenue? I think it's a few hundred million dollars on the software alone. That's the thing. People are paying $40 a month for their classes. They have that recurring revenue element. You'd think someone would find some use out of this company. Yeah, I think so. They both have the big screens.

Put a Peloton in the middle of a Tesla, and you can ride your car to work. All right, so let's do this. Who are the buyers? Nike, Lulu, Amazon. Apple. So they already started selling the bikes on Amazon. Not Apple. Amazon would actually make kind of sense.

Okay, a bunch of people sent us this. An economist from Yale did a study where he read through 50 of the most popular personal finance books over the last decade or so. Rich Dad, Poor Dad, I will teach you be rich, some from Dave Ramsey, Susie Orman. and he's saying the stuff that personal finance people tell you to save between 10 and 15% or maybe 20% at a young age is dumb. It doesn't work. He's saying you don't make and spend the same on all stages of your life. So you shouldn't have to force yourself to save the same at every age. Basically, he said you should have a negative savings rate early in your life, high in midlife and negative in retirement. So he's saying you should wait until you're in midlife to start saving because that's when you have more money. And at that point, you need to enjoy it a little more. I kind of get what he's saying. I think, That my takeaway from all of this is that there's just never going to be a one-size-fits-all for anyone. Boom.

That's where I was going to go. You can't give rules of thumb for this. This is so personal. It depends on your personality. It depends on your upbringing. It depends on how much you make, how much you want to spend, what type of life you live. It depends. I think some people don't have it in their psychology to be able to say, I'm just going to

start saving when I'm 40 because if they don't develop those habits when they're young, they're never going to develop them. Other people can. I hear that school thought. Other people could say, I know I'm going to start saving when I'm 35. and I'm making more money, and I'm going to join myself now. So, yeah, it's one of those. It depends.

All right, we haven't talked about crypto much lately. This is from Alex Good. On May 29th, 2022, Treasury directs quarterly website traffic surpassed Ethereums. It's now 1.8% larger, and he said, very exciting projects. Congratulations to the team. This is an interest rate chart versus crypto, obviously. I mean, I don't know. Maybe they're cherry picking here, but this is kind of amazing.

And one thing I will say about crypto, I'm surprised at how well it's holding up. If you would have told me the headlines and what's going on to the markets and the Fed, I would have been shocked if you'd have told me six months ago, Bitcoin's below 10K. You would not have been shocked. No, I'm surprised as holding up as well as it is. Yeah, over the last couple of weeks, it's not really doing much of anything, which I don't know if that's, I don't know what to make of this. I won't give my opinion if that's bullshit bearish.

I guess time will tell. But I am surprised as well, just seeing how poorly risk assets have been performing that Bitcoin and Ethereum are not doing worse. I'm surprised. Even like on a day like today, Bitcoin is down half a percent. S&P's down one, NASX down a point and a half. I mean, surprising. Maybe there's nobody left to sell. Everybody's already washed out. I don't know. I don't know. Do you think it is like the volume so low that there could be bigger players that are able to like Sam Bank McFried is propping up the prices somehow? Is that possible? I don't know. It could be. I don't know. All right. Last week we asked why are they called guilt for UK government bonds. A bunch of people sent us this. They're called guilt because the original certificates issued by the UK government. had guilt or gold around the edges.

Oh, interesting. So if you got the certificate, you had a gold on it. We went upstate over the weekend. We did the pumpkin picking thing. You did that yet? Oh, yeah. Just packed with people. We do it every year.

Every year there's another farm that gets into the game. Great inflation hedge, by the way. Great inflation hedge. One of those farms. Prices go up every year like clockwork. So we're going to get the kids of McDonald's. but the McDonald's that we go to, and I've gone there a hundred times, was closed. And the reason why I say I've gone there a hundred times is because I've never had an issue

with the fast food being fast. That's like top two important and fast food. You know the other thing as an inflation hedge, we can feed a family of five for like 25 bucks at McDonald's. It's still a pretty darn good deal. Yeah. Burger King, on the other hand. And by the way, who owns Burger King?

It used to be like Yumb brands. Is that it or not? They are by far the slowest. fast food place there is. Wendy's is a close second. Burger King is so slow. Okay. So anyway, for the grownups, we got Greek food. So we go to the drive-up line and there's like six cars and it's not moving. And I said to Robin, you go grab the Greek. I'll go inside and get Burger King. And I'm waiting there for 10 minutes and I'm like, this was a bad decision. It's not moving. There's four people in front of me. Nobody has ordered. It's just not moving. Robin gets back.

I said, there's only one person who had to me now. Should we just leave? I said, how does it drive-thru line, look, and she goes the same. So my question to you is, how does this happen? There was a chain on Long Island called Friendlies back in the day. Is Friendly's National? I don't believe it is, but I'm not sure. Nope. Never heard of one of those. So you went there with your kids, and the thing was they had this killer Sunday. I was a Reese's Peanut Butter Cup guy myself, but they had all sorts of Sundays. And so the deal with Friendlies was, it was notoriously slow. If you went there, you were in it for the duration. It's a two and a half hour ordeal. Rain or shine. That's just what it was. Just notoriously slow.

How is that ingrained in the culture of a company? And so my question to you is like, why is Burger King always so slow? They're in the same business as McDonald's, literally identical. Same exact business. And how come they just can't get their shit together? Didn't they get purchased by a private equity place? Was that Tim Hortons? Then they got spun back out.

Oh, maybe it's part of the Buffett Brazilian deal. I can't remember. But anyway, come on. I am a fan of the whopper. I like the whopper. I love the whopper. I like it with cheese. I like the junior.

I like the full-size one. All right. Recommendations? I got a bunch. All right. So I'm doubling down on Welcome to Rexum on Hulu slash FX. I think we're like 15 episodes in. I think it might be my favorite new show over the year. Wait, I'm sorry. What show? Welcome to Rexum. So it's the show where Ryan Reynolds and Rob McElhenney bought a team. You said in my blog the other day. Yes. Him and Rob Matt, I would be friends of those guys. They're awesome. And it's funny. The soccer stuff is good. I definitely appreciate soccer way more now than I did in the past.

I used to be one of those like football is the only real sport in soccer, whatever. I have so much of more of appreciation for soccer now. And I actually went and rewatched my Green Street Hooligans movie with Elijah Wood. It's also got the guy from Sons of Anarchy, the main guy. Green Street Hooligans. This is like a mid-2000s one. I could not find it anywhere. I had to watch it on YouTube because someone put the whole movie on YouTube.

It's about Elijah Wood goes to England because his sister lives there and married an English dude. And he joins a firm, like every soccer club over there has a group of guys who basically just go and start fights with the other team. fans. They basically don't even have any soccer and it's just these guys go on and getting fights and it's a great movie. Speaking of Hulu, are you watching The Patient? I watched one episode and haven't gotten back into it yet. Okay. It's okay. It's not great. All right. I thought it was all right. I got sucked into Dahmer on Netflix. Did you watch it yet or not? The Jeff Dahmer show. Robin watched it without me. That actor's good. He's very good. The whole show makes me very uncomfortable just because a real person did this and it was real victims and it's creepy and I can't

look away and I can't stop watching, but it makes me very uncomfortable the whole time. And I just can't believe that a guy like this existed and he was a real person and all the stuff that happens about him almost getting caught all the time. It's crazy. All right, finally. And speaking of serial killer stuff, I watched Blackphone with Ethan Hawk. It's on why, I think. Why? First of all, I told you that movie stunk, relatively speaking. It wasn't that great. Relative to Ethan Hawke's expectations. It stunk. And you're not a horror guy. This movie stunk. Serial killer is different than horror. I like serial killer stuff. But first of all, they never explained anything of why stuff was happening.

It was like moderately entertaining, but just bad. But you know what? Really surprised me. What, this doesn't make any sense. The critics gave it an 82 and the audience gave it an 88. I thought it was kind of a dud. It was it. That's exactly right. It's a great word. It was a dud. The only reason I watched it is because he was on Smartlist a few weeks ago and I listened to it. And they talked about a bunch of his old movies. Is he one of the most underrated actors of his generation? Perhaps. Because he does a lot of independent stuff. He's not a studio guy. He's got a lot of stuff that's not great. But back when he was young, he did Gattaca, reality bites. He did all the Sunset movies. He did Training Day, Dead Poet Society Alive, Boyhood, White Fang. At every stage

of his career, he's had like an amazing movie. White Fang was my favorite, one of my favorite childhood movies. Yeah, very good. Yeah, Ethan Ox the best, except for Blackflin. That was bad. So I didn't mention this movie only because it was so, it was like, I'm embarrassed to say that I watched it, but I blame Sean Fantasy, who was tweeting about it. The movie is called Speak No Evil. Just horrifying. It's not a recommendation. No, no, no, no. I can't say good because it was so disturbing that I feel like a psychopath saying that it was a good movie. I feel like you've watched a lot of disturbing movies lately. Well, it's true.

So here's what Robin does. She walks by me and she goes, what are you watching? And she goes on Wikipedia and she reads the plot. And so for this movie, she goes, did this happen yet? And I just, I said, like, this was the most f***ing movie I've ever seen. Okay. It did like international film festival type stuff. It was like, well received.

It was just beyond disturbing, beyond disturbing. Not a recommendation. If you do watch it, don't blame me. I've been thinking about this. I don't like all bad horror movies. So, for example, I was fuzzing around on Friday night. I was home alone. Robin went out with the girls, and I was alone. I'm searching through HBO Max, just seeing what's up, and I come across a movie called Tusk. And I go, huh, I never heard of this one. And I'm looking at the cast. I'm like, Justin Long, Haley, Joel Osmond, Johnny Depp, directed by the great Kevin Smith.

Horror movie. Huh. This looks interesting. Here's the info. A U.S. podcaster Justin Long ventures into the Canadian wilderness to interview an old man who has an extraordinary past. And the American learns the man has a dark secret involving a walrus. Okay. Now, credit to me, this movie was terrible. Okay. Absolutely, absolutely terrible. Now, it was goofy. It was going for... Oh, it's a Kevin Smith movie. So I said, I don't know if there's satire of what. It was a goofy horror movie that was just terrible. Just, just, just terrible.

Do you ever have a stop loss on your movies? Yeah, I do. I'm not going to finish this. I'm more of a stop lost guy with TV shows. By the way, House of the Dragon. I'm into it. They already lost me, though. I have no idea what's happening.

Do you? Do you? I feel like it's very ambitious to keep just pushing forward in like every episode. I have no idea who anyone's name is. My wife asked me, like, did you notice that this happened and this happened? And I'm like, no, I'm blank slate, but I'm entertained. I know 40 to 60% of what's going on, but I'm into it. Yes.

I like it. Yeah. The progression of the king, what's his name, Viserius or whatever? He's like the stock market this year. His progression of health is the stock market this year. That's my verbal meme. Is it Vesaris or Vesarius or Targaryen? I feel like they go both ways.

I got nothing. Credit to you for making it through the show after being up until 4 a.m. at the ER. I hear how glassy my eyes are. All right. Signed Kobe's cast for me. Put an animal spirits stick around there or something for us. Animal Spiritspod at gmail.com. Thank you for listening.

We will see you next time as the Dow goes green. Did it really? Yep. Okay.