Animal Spirits Podcast - Are We Sure a Recession is Coming? (EP.263)

Episode Date: June 29, 2022

On today's show we discuss stock market return expectations, the sell-off in commodities, the back and forth on recession predictions, fighting the last war on the economy, why crypto crashed so bad, negotiating your cable bill down 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. I got an update my portfolio performance as of June, and not to brag, I've got five paintings, four out of five are up. Now, it doesn't mean an exit, but according to the marks, I've got this nice here Cecily Brown painting, 44% up. Not bad. That's pretty good. My cash is down 8%, so I'll take it.

That's true. Still waiting for that elusive exit like Ben had, but I'll take the wins when I can get them. 2022 wins are hard to come by. I got an update too. All my paintings that have marks are up besides the new ones than have marks. My Gunther Forg is down a little bit. I knew I shouldn't have bought that Gunther Forg. Damn it.

How about this? Rich people are a good hedge against inflation. Because rich people like to complain, but do they really pull back during inflation? Not that much, right? I don't think so. All right. If you want to learn more, go to masterworks.io slash animal. Welcome to Animal Spirit.

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 Battenick 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 Ritt 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 Spots with Michael and Ben. Ben, you just mentioned something. You just said it out loud that we're in a bear market. Now, listen, I know we're in a bear market. But it does feel a little weird. To hear you say that, it's like, sure, we're in a bear market. We have been in one technically for a couple weeks, but realistically for a few months now, probably. We technically came out of the bear market. We poked our head above for a second. Now we're back down below. So we're recording this on Tuesday at 1220 Eastern Standard Time.

The only time for him that matters. Actually, every time is standard time. Everything is ST. But I feel like we all know that Eastern is, no offense, the real standard time. Yes. So the market opened up pretty positively and rolled over, which, listen, this is what happens in a bear market. You get higher lows. Okay.

Okay. That's it. All right. Okay. We got a K from Ben. Here's the thing about the market. So we had two down weeks of 5%. The last week goes up, I don't know, five or 6%.

It does seem a little bit like everyone in the market during a bare market thinks it's game seven. So they think that the outcome is determined by like that day or that week or the market is telling us this on this day. We're definitely going into recession. Then no, the market is telling us this and this day. We're definitely not going into recession. Now inflation is peak. The Fed's going to put like it. It seems like people want it to be like the end of something or the beginning I did see a lot of of bar market rally calls on Monday. A bare market rally to you, 4,200 on the S&P. Did see a lot of this. Could still happen. Could still happen. We're going to lean on bespoke to start the show. They have this great chart showing the 10-year treasury yield, the five-day rate of

change for the last five years. We went from the largest five-day increase to the largest five-day decrease. So huge volatility in the interest rate market is not something you really ever want to say. I guess maybe the biggest takeaway for a lot of people should be higher inflation or just macroeconomic environments that we haven't seen. Just increase the volatility in both the economy and the stock markets. That's not like a going out of a limb thing to say, but... You don't want to see volatility in the economy. By the way, Duncan's sliding into our slack saying that it's Eastern Daylight Savings.

It's EDT during the day that. Duncan, get out of here. We're going to you. All right. So last week we said, can the stock market sniff out inflation? And it seems like this week, everywhere you're seeing charts of commodities falling. And maybe that people are saying, well, the stock market rally last week was kind of sniffing that out. Is that a possibility? Or do you think that these are just head fake moves? I think it's

possible. You're looking at base metals in a bear market, industrial metals, like things like Freeport. Why are they called base metals? Because it's in the base, ace of base. I don't know. The base of what? The base of what? The base of the building. Yeah, I don't know. You see cotton? Ask them questions. You see cotton? No. I don't follow the cotton markets. Sorry. It's not on my screen. Cotton is crashing. Lumber is down a lot. So your Instagram T-shirts are going to be sale. I hope so. A lot of agricultural commodities are down a lot. Energy stocks, this chart from Mike McCarty, exiled fall 23% in the last 10 days. The last time we saw that over the last 20 years was October 2008, March 2020. So I don't know what's going on there, but there's just volatility

all over the place. Lizanne Saunders tweeted the percentage of commodities with a positive monthly return is the lowest it's been in quite some time. And if you look at like Freeport, MacMoran, Alcoa, these obviously highly sensitive. I would love to see. Commoddy stocks are down a lot. From our ETF experts who listen to the show, how much money has come in in the last couple months into commodities. And if a lot of that ended up top ticking some of this fall, now a lot of it could just be these things had an amazing run. And now they're giving it back a little bit. And trend followers are getting out. But it's interesting to see commodities rolling over. Is this people just trying to get ahead of stuff? Because they think, well, demand hasn't

fallen a ton yet, but because the Fed's raising rates demand is going to fall, so we're going to sell-off commodities. I just think the most interesting stuff about the market right now is people trying to front-run everything, trying to get ahead of stuff and guess what's going to happen next based on either what the Fed does or inflation does or interest rates do. I just think it's really interesting to see. Because it seems like, I don't know, a lot of this stuff, almost all the big moves, you could say that there have been certain people who kind of called in in advance, but they just didn't know the timing or the magnitude of it. Like even something like as simple as interest rates. Forever, we were talking about, why is inflation so high in rates aren't moving?

Whatever the reason was, a lot of people thought rates should be higher. And then when it finally happened, it just happened really, really fast. It seems like that's what's happening with a lot of these moves. The stuff that people think could happen or should happen, when it does happen, it moves fast, very fast. One silver lining of this is that prices have come down a lot. Earnings have not yet. Earnings expectations certainly have not come down. So we have this chart from Eurian Timmer looking at small caps. Russell 2000 fell 30%, 30% percent, 31% peak to trough. And the PE ratio of profitable companies only. I don't know how many companies in the Russell are unprofitable, but it's a lot. I don't know if it's a fifth or a third. It's a lot. The PE ratio of

profitable companies is under 10 for just the second time of the last decade. Looking at the forward PE also telling the same story. Now, if earnings collapse, then the picture changes entirely, obviously. This is basically a value ETF, but I'm surprised they don't have an ETF of profitable Russell 2000 companies. That should be a screen. Make that happen. So we got some weird dynamics in the market where all of a sudden you've got a lot of these gigantic mega-cap tech stocks, Facebook, Netflix, all added to the Russell 1000 value. It's where we are. Whilst you journal, the article on this, they said some of like the notable additions to the Russell

1000 value, Facebook, Netflix, PayPal, Zoom, Moderna. And this is as of the time they published this, meta was down 53% this year, Netflix down 70% and PayPal down 61%. This year, this year. I mean, obviously, some of these stocks are still in the Russell 1,000 growth, but I shared this with you and Josh the other day. I think this is as of the end of May. S&P 500, price to earnings and price to cash flow is 20.3 and 15.7. For Facebook, I refuse to call it meta. 11.8 and 11.1. Now, the second level thinking would be, well, Facebook's in trouble. They deserve to have a lower multiple because the company is screwing up or they're spending too much money or whatever it is. But Facebook is a value stock now.

Facebook is getting dinged because their user growth slowed dramatically. I think it might have gone negative last quarter. I can't remember exactly. But I think the market is punishing them because they're hemorrhaging money on the Metaverse play. And the market is just not buying what they're selling. I'm not buying it either. But I might consider taking a position. Might consider it. Catching a falling knife. Well, I don't like to do that. But this would be more of an investment. I wouldn't trade this thing. But nine times free cash flow yield. I mean, this thing is definitely as cheap as it's ever been, as a publicly traded company. So it sounds like a lot of the growth stocks are getting cheaper.

So this is from Bispoken again after a massive widening in late 2020 throughout 2021. The spread between the price to sales ratio of the Russell 1,000 growth and value indices is now lower than it was pre-COVID. So it shot up to like almost four times Russell 1,000 growth to value towards the price to sales. Now it's back to where it was. Again, another complete round trip here where we had this huge. Are we going to get books about like the 2020 to 2021 period?

I know we've gotten some like GameStop stuff, but that little boom there, it was kind of flashing the pan. I think that you're going to look back and see a lot of those numbers from that time period are going to just totally stand out historically over almost any other period. Yeah, this is weird, weird, weird times. Amazon's getting killed today, apropos of nothing. All the high beta names are getting rocked again. I've been questioning my fellow Fed coworkers the last couple of weeks here.

Jerome Powell was in front of the Senate, Economic, whatever committee last week. I don't know what it is. First question, Elizabeth Warren asked him, she said, will rate hikes bring down gas prices? He said, I would not think so, no. Will rate heights bring down food prices? I wouldn't say so no. So my question is, why is the Fed pushing so hard if the biggest problems they can't really solve? I think they have to do something. I think that they're making up for maybe missing the not transitory nature of inflation. They don't want to get fooled me once, shame on you? I mean, they asked him, could you push us in a recession? He said, I wouldn't rule it out. just seems like if the Fed does push us into recession, it seems like it's an avoidable risk because a lot of the problems are stuff again that they just can't solve and that they're going to make it worse on other areas to make up for those problems that they personally can't solve. I guess I just don't understand that line of thinking. I don't know. The Wall Street Journal had a piece from, I guess he's finance woege now. Nick Tee? Yeah, Nick Tee at the Wall Street Journal talked about how the Fed missed this. And they talked about one of the

big things is that they were fighting the last war. This chart is amazing. The employment of 25 to 54 year olds, which is prime working age. And it's showing the 1990, 2007, 2020, and then 2000 recessions. And you can see all these other recessions took a long time to get back to the prior place. So 2007 took over 12 years to get that employment ratio back to where it was from before. That's a really long time. The Fed did not want to do that again. Now it's almost back there. So it says they were motivated by the lessons of the last expansion. It took six years for the jobless rate to fall from 10 to 5%. Obviously, it's way lower this time.

Look at this percentage changing consumer spending. Goods and services. So services is still a little bit lower. Good spending is still way, way higher than trend. We've talked about this. So I guess maybe the overreaction is happening now, but what happens in the next recession? To the unemployment rate? Yeah.

Is the next one going to take a lot longer to come back then? Is that like, or are they going to do that on purpose? Well, I guess the question is all those job openings, we have like record job openings. 11 million or something like that, does that just get pulled? How quickly does that correct? I don't know. That's a really good question. Last week we talked about how high could the unemployment rate go in every recession? And I kind of ballparked it on the show. We had a research channel and a show and look at this for us. So the average low for before a recession is around 4%. And then where it goes to on average after a recession happens is around 8.5%. So you

essentially get a doubling of the unemployment rate basically during every recession. If you just eyeball this chart, it more or less doubles every time. So 3.6 to 7, call it, a little over 7, would be average. And the Fed wants maybe five. The problem is, once you get to five, how do you stop and overshoot on that type of thing? That's, I think, the hard problem. Well, I'll tell you how. You cut rates.

So did you listen to the Derek Thompson playing in English pod today with Connorson? Did not. It was a good zag pod, basically saying everyone, quote, everyone thinks, are they're in a recession are going there. I would put myself in that camp. Connors said and made some point saying, it's crazy to think we're in a recession now, and the consumer is in such good shape.

It's hard to see us going into recession anytime soon, which was interesting. Look at this one. This is our old friend Walter Bloomberg, why I still don't think is a real person. U.S. screen 2.45 million air passengers on Friday, highest number since February 2020. Then two days later, we just hit another record on Sunday,

2.46 million at airports. The crazy thing is, business travel is down 30% from pre-pendemic levels. I think we're still like five or 10% below where we were pre-pandemic, but it's getting close. The airports are basically back to where they were, a little lower. But they're doing that with 30% less business travelers. That's crazy. This is more individuals traveling and spending. I don't see how you could have so many people traveling and spending money because I know when people go on vacation, they spend a lot of money. This doesn't sound like a recession to me. You could say this is the last gasp and then comes

the recession, but this doesn't feel like a recession, all these people traveling and spending money. Okay, I agree. Yeah, listen, I'm definitely open-minded to the idea that we've been talking about us for a long time, that the consumer has never been better prepared to enter a recession, but depending on how long a recession goes on, if we do get one, eventually all of the savings and the spending, all the savings will be depleted and the spending will dry out. That's what happens in a recession. Here's the problem, though. I think it's very fair to say that, yeah, we're probably not in a recession today, but what's the problem? Let's hear it. Consumer spending makes up 70% of the economy. If the consumer continues to spend, even with

inflation being higher, doesn't that kind of push up recession off if people just keep spending? Correct. That's like the tug of war right now. It seems like people should be stopping spending. They're not. Here's another one about investing is hard. Look at the Jets ETF. So airlines are booked beyond capacity and they keep having to cancel flights. The Jets ETF is still down 40% from 2021 snapback levels. This one's interesting to me. I guess I would say the pushback is somebody tweeted the number of passengers flying is down 10%.

So we're basically, we've made back 90% of what it was, even with business travel down 30%. But the number of planes flying is down 50 to 20%. Because they jettisoned a bunch of them during the pandemic when they thought people were going to stop flying. And I guess it's a combination of workers not coming back and maybe bad weather. It's just crazy that airlines are busier than ever in the last few years. prices prices are higher than ever because a lot of the inflation rate is coming from airfares.

But what are energy prices doing to margins, number one. True. I think that's part of it. It's just a crappy business, unfortunately. And maybe investors are looking past the current environment of people just flying and traveling and they're looking forward to airlines are pricing in a recession like every other area of the market. Now, listen, I think we've been saying this.

If we don't go into a recession and the market is wrong, then stocks look incredibly attractive. Pretty much. It's just one of those things where looking at the headline numbers, it feels like 2020 was the year where if you just invested on headlines, you probably made a lot of money. And that's not the case anymore where you can say the headline says this, so invest based this way. Here's another one for your consumer thing. This is from All Street Journal. End of the first quarter, U.S. households held 17.9 trillion in cash and cash equivalence of a bit from the fourth quarter much higher than the 13.7 they had at the end of the first quarter of 2020. Indeed, before the pandemic, U.S. households never experienced anything like the increase. in cash they've experienced for the past two years. This remains true even after adjusting for the run-up and inflation. And if you look at this chart, it's just straight up, he's a crazy one. So you think, well, that's all just wealthy people hoarding cash because the rich got richer. People in the top 10% by wealth had 32% more cash in the first quarter from two years earlier.

People in the bottom half held 45% more. This is across the board. People of all income and wealth levels now hold more cash. Again, they're ready for a potential recession more than ever before. And if people are ready and can still spend it, you're right. Eventually, all that excess cash gets sucked out. But it's so much higher than it was before. Like, things were pretty good in 2019. People have way more cash, way less debt, way more wealth than they did back then. I think it's a matter of inflation. If we get 550 in gas as a national average, like at some point,

all these prices are going to hit the consumer. I do think that a lot of the economic data because, again, we're treating everything like a game seven. Every stock market day and every economic data point is game seven. This means this. And now that can't happen anymore. Isn't it possible we just have a lot of back and forth in like the coming months where this. Oh yeah. Oh yeah. This looks like an imminent recession from that data point. But wait, this data point says there's no way we're in a recession right now. And we just go back and forth and back and forth and it chops you up and makes you think, okay, I know what's going to happen now based on this. And then we just don't know. I agree with that. So a lot of the stuff we saw in 2020, early 2021 was if you would have just invested $10,000

in this, you'd be on Easy Street. You'd be making millions of dollars. We should flip that. If you shorted $10,000 worth. I think it's fair to look at the other side. So this... No? Yeah, I'm saying it's okay to look at the other side. So this is from Eric Newcomer. He's got a substack.

Talking about how Sequoia is down bad. And he said at current share prices, Sequoia's positions in... So they're talking about Unity and DoorDash were two of Sequoia's biggest positions that they took from private markets to public markets. Together, they're worth like $4.2 billion. It says if they had sold their current holdings

near the all-time highs, they would have generated $18 billion in returns. Or more conservatively, if it had just sold a year after they went public, they would have generated 12 billion returns. They own like 24% and 20% of these stocks, and they're down 80 and 75%. I think it's okay to look at this the other way, saying instead of the people, look at how rich you would have been if you would have just done this, to man, not looking up at the peak going, can you imagine how much money we left on the table?

There's a lot of that going on right now, especially in the tech world of, oh, man, if we would have just sold, can you imagine? So there's a lot of people who went from insane. Sainly rich to now only maybe a little rich. Speaking of DoorDash, on Friday night, I went to the movie theater. We got to that later. By yourself? Of course. It was date night.

Robin texted me. Oh my God, that was expensive. So I get an alert on my phone. Or not an alert. I have seamless connected to my phone, right? So I get like in my inbox like when we order stuff. All right. Here it is.

One medium Greek salad. By the way, the way I just said that reminded me of the seen in awesome powers. One Swedish penis enlarger. All right. One medium Greek salad with extra fed of cheese. My wife is a fetter lover. And chicken.

And Suzuki on the side. That was $25, which in and of itself makes me want to punch something. Okay. Not a New York guy. I'm a flyover state guy. What's Taziki? Suzuki. That's how I pronounce it.

There's a lot of Z's. It's the white sauce. Okay. You don't have Greek food in Michigan? I'm just not a Greek food guy. I'm sure we do. Really? What don't you like about it?

You know, like falafel? This is a revelation. Gyro meat? Cabab? I guess I doesn't get it very often. Yeah, but I probably would like the meat. Yeah, I guess we probably just don't have a lot of Greek food here. All right, Greek food is a staple in my household.

All right, so that's $25 for a medium salad with chicken and some fettageease and a side of white sauce. The delivery fee was $250. The service fee was $250. The sale tax was $2.50 and the tip was $6. This was $40 freaking dollars. $40 for a salad with chicken. And I forget who wrote about this. Maybe Alison Schrager that everything was artificially cheap

because the investors were subsidizing our lifestyle. And I think Derek wrote about this too. That's over. And we knew if DoorDish couldn't make money in recession, how were they ever going to make money? And so now you've got fees on top of fees and top of fees. Artificially low prices are now rising. So it's like, Dan, if they do, damn what they don't.

They couldn't make money charging too little. This is definitely going to cause demand destruction. Robert goes, what should I have done? I was like, I don't know, make eggs. I'm never doing this. No freaking way. I'm not on DoorDash and seamless and whatever. I'm all out.

But do you think there's a lot of people who just got used to the comfort of it and decided, ah, it's a lot of money, but I don't care. I'm paying for comfort and convenience. No. No. I'm done. I would like to know what the difference between the service fee than delivery fee. Yeah, what the heck? It's a lot.

So Matt Klein wrote about this on the overshoot about like a lot of people complain about inflation, but it's like, what exactly should we do? And he talked about this idea for energy prices, which I thought was really interesting. Energy is such a cyclical industry. And they always say the cure for high prices is high prices, the cure for low prices, low prices. And we just have all these different cyclical site. What's up? We've got Duncan and Charlotte at the peanut gallery over here. Duncan's saying, Suzuki is a dip, soup, or sauce found in the cuisines of Southeast Europe and Middle East. Okay. That sounds like a Wikipedia entry to me. He Googled it. Big Susiki guy.

So Matt Klein is basing this off of a paper written by Scana Amaranth, who made the rounds on the podcast. He was on Oblats and plain English last week. Talking about to make these businesses have more capacity and make sure that they don't pull back when we need it the most for energy capacity, the government can just do a futures contracts, basically. The basic idea is that the government guarantees prices of today. So the energy producers don't have to worry about the prices crashing three or six months into the future or nine months into the future. And if prices go up, then too bad you locked in on today. If the prices go down, then they did good. So it's essentially hedging for them in making the output more consistent across time. Worth reading for Matthew Klein or one of those podcasts. But I like the idea of thinking outside the box a little bit like this. I don't hate it. It makes sense. I think a lot of this stuff people in talking about is are supply chains are reliant on these other countries and these other producers, and why don't we

try to smooth out the cycles a little bit? It makes a lot of sense to me. All right, we've got some questions lately on inflation hedges, tips specifically lately. So I looked at this. TIP is the Treasury inflation protected securities ETF. Just the TIP. It was up 8% in 2019, 11% in 2020, 6% in 2021. Now, 2021 is the outlier there because bonds got killed in 2021. This year, it's down like 8% in 2022. People are saying, how could inflation be up and tips be down? Look at interest rates. They're bonds. That's the thing. So inflation is up 8% over the last year, but TIP is down 4%. So Adam Collins wrote a good piece on this. He changed his blog list. It's called Eversight Wealth. He has our tips broken. He basically said that rising interest rates

have hurt more than inflation. And the other part is a couple of years ago, tips yields were negative, meaning you only got the inflation component. So he was saying a five-year tips bought today will return future inflation plus 0.5% per year compared to last June's inflation yield of minus 1.6% per year. So you're getting dinged on that in the past. And the thing is these tips take into account the break-even inflation rate that people are expecting. And so the reason they did so well in 2021 is because it was unexpected inflation. Now in 2022, the inflation isn't expected. So it would have to go even higher for the tips to give you a bigger bang for your buck. A lot of it was baked in.

rates were rising. You okay over there? You had a sniffle. It's pronounced. Allergies. Oh. Yeah, I think I do got some allergies. Sorry. A lot of pollen around here. Anything else I'm doing wrong today? The mic, the sniffles, geez, like my wife. Listen, you muted yourself. That's not on me. All right. So his point is maybe it makes more sense to go short term tips. So those right, because if you go in that TIP fund, that's a long duration asset. The rising rates are going to probably hurt you more than the inflation is going to help. He was saying probably stick more towards the shorter-term ones because the yield changes and it's more correlated to inflation. Well, looking to that in the short notes. Ben, what's your biggest personal money pet peeve?

Okay. So Saturday, was it Saturday night? You sent me a text saying that your wife wouldn't let you wear a tropical brother shirt again. Was that outrageous? I had to stay on my ground. Did you wear it? Of course I did. Good for you. I was wearing one as well because we were getting ready for a tiki party. We literally were going to dinner on the beach. I said if not now, when? She was like never. Yes. I said, nope, now. So we went to a little tiki party. Neighborhood tiki party. thing and a lot of people there. And I didn't know, frankly, a lot of people was a pretty big party, kind of like a black party type of deal. And people are sort of talking and, hey, did you meet so-and-so who lives over there? No, I've never met them. Oh, boy, they really like to brag about

money. And they're talking about how much this house costs that they own, how much this boat they own cost and that other house is worth this much. You and I talk about money a lot. But I think one of my biggest turnoffs again, like talking to other people, is people who actually brag about how much money they have. I cannot stand. That to me is like, I'm out immediately. Someone who the first time you meet them is bragging about how much money they have or how much stuff they. Insta out. But give me more context because I've never been in that position. This is not like a member where somebody's like overtly bragging about money. Like how would that even work? I'm interested. What do you mean? People these days talk about how much housing prices are going up and stuff. And you don't have to even

say numbers to mention it. Oh, you could like sneak it in there? But also saying the huge boat I bought cost four times as much as my house or that type of thing. And it's like, really? Yeah. So anyway, a pretty big money pet peeve of mine. Oh, so here's like a humble brag or a flex. It now cost me $1,300 to fill up the boat. That type of thing? Yes. There you go. That's a good one. Thank you. Yes. That's a humble bag. Okay, real estate prices. Redfin looked at where we're getting the most price decreases from sellers. It has to be tech spillover, like Montana, I'd have. Here's a crazy one, though.

Look at all the way down that list, probably number 20. Ooh, Grand Rapids. Grand Rapids, so they looked at the sales price increase from 2020 to 2020, and then percentage of houses now with a price cut. And it's all these huge at the top is Denver and Salt Lake City and Boise and all these places we've talked about Portland. Grand Rapids is actually on there, but they showed all the places with a huge run-up are now having the most price cuts, which makes sense because eventually, kind of like

trading in stocks, you get an exhaustion of buyers. After a certain point, there's no one else to sell to. And the people who are trying to sell half to lower their prices. Look at this next chart. This surprised me. But yeah, speaking of price cuts, what was the number? I saw a number recently about price cuts keep rising. Where is it? I can't remember. Anyway, year-over-year transactions are dropping, fell 13.6%. So I think that you're going to see way more transactions. The number of transactions is going to go down. a lot more than prices, in my opinion. But this chart surprised me. We kept saying that it's not like this was speculation. It's not like it was like home flippers. This guy, Lance Lambert,

who works for Fortune magazine, tweeted frenzy and phomo to a degree did return to the U.S. housing market. So this chart that we're looking at shows the home flipping rate as a percentage of total sales. And according to this, it was 10%, which is higher than it was during the housing peak. I find this number's hard to believe. I've never seen this before either. I feel like if this was accurate, it would be a bigger story. I want to dig more into this. I wonder if a lot of this is people who bought second homes because there was a lot of second home purchases being made, but a flip would mean that you bought it then sold it. That's higher than I would have thought. Okay. This is interesting. The psychology of price cut. So Rick Palacios always has

a lot of good stats on Twitter about the housing market. More common for new home prices. dropped than resale. This is from 1965 to today. He's got this chart showing that builders meet the market faster on price for typical owner, especially in recessions. So he's showing that basically it's quicker for new home prices to fall than it is for people who hold them. And that's kind of like the Richard Thaler endowment effect. You own a home. You think it is worth more. So I think there's some psychology behind existing homes versus new homes, whereas the builders also new homes have to sell. They got to sell whatever the market is. They got to sell. I do think that's one of the other things that people don't put enough stock in for their continuing to be some housing transactions

is someone who's buying, it's not all first-time home buyers. A lot of people who are buying are also people who are selling. And it's kind of a chain reaction of transactions where someone's selling their current home for more than they bought it for, and they're also buying that piece of it. It's way harder for first-time home buyers now. But I think that's the kind of thing that keeps happening. People who already own existing homes, it'll be tough to take a 6% mortgage on, but it will make sense. And I'm wondering, do you think if, say, next year in 2024, we go back to 5% mortgage rates, if people will be cheering that because it's better than 6%. Do we start anchoring to the higher levels now? Good question. Could be. We spoke about layoffs coming in the real estate

market. Primarily, if you would think like mortgage brokers, all the refinancings were done, JP Morgan is laying off 1,000 employees in its mortgage division. So this is definitely not going to be the last we hear of this. It makes sense. That's, I think, how this current whatever slowdown period you want to call it for the economy. If you're in a certain sector of the market, if you're in tech or you're in one of these loan departments, it feels like a recession to you. It just doesn't feel like a recession in other parts of the economy. All right, bad quarter guys, great quarter guys, mixed quarter guys. I listened to a few calls this week. I listened to KB Holmes, I listen to Lenar, and I listen to Nike. All right, this was an interesting dichot.

Hey, you ever heard anyone pronounce it Nike before? No. There's still people who call it Nike. I've heard it. No, there's not. I swear to God. No. Okay. I've never heard that in my life. Name names. Name names. Is it a family member? Who calls it Nike? I heard it in another podcast recently. The other post called the guy out. It was a comedy podcast. You know what I heard on a podcast recently? Fintech Frank had an analyst who was talking about why Coinbase is undervalued. He kept calling it EBIT DA. You ever hear that one? You ever hear that one? So I'm listening and I press pause and I sent Frank a DM. I'm like, what is this? I've never heard that before. He goes, just wait. So the guy kept saying it. He kept saying EBITDA. There was an old, I rewatch Sopranos and I put it on, Paulie Walmott's talking about

EBITDA. I think he called it EBITDA or something like that. There goes a good Sopranos one on that. All right. Anyway, it was very interesting to listen to KB Holmes. You wouldn't really know anything was up with the housing market, but Lanar like led off with, listen, things are changed, mortgage rates have doubled. Like, it was just a very interesting juxtaposition. So, What we took out of the KB Holmes one that was interesting was loan to value ratios held steady at 85% translating to an average cash down payment of roughly $75,000. I thought that was interesting. It's a lot of money.

$75,000 average down payment and close to 100% of buyers use fixed rate products. I think both companies said on the call that they're not seeing people switch to arms yet, which is also, I think, notable. The average household income of these buyers was about $125,000 and their FICO score showed improvement to 734. Don't you think that a lot of these home builders are just high end now? If their average income is $125,000, $75,000 down payment, high credit score. The home buyer is strong. The ability to buy a home is just moving up and up and it's harder for someone on the lower income scale to buy a new home now. And I think they've probably

just stopped building entry level houses in a lot of cases. All right. We know these numbers, but it's still shocking to hear it. In the second quarter, our average selling price of homes delivered increased to $494,000 from $410,000 in the prior year period. Jeez. They said average selling prices were higher in each of our four regions, with year-over-year increases ranging from 18% in the southwest to 23% of the southeast, and they believe their average selling price for the full year would be half a million dollars. I would love to see the margins of this because obviously for a while there, the costs were

rising, and now I think that stuff is coming down and supply chains are easing a little bit. I'd love to know how much these home builders are keeping in margin. Well, I have it right here. We'll get them a sec. But they said they're talking about arms. And the quote is, it is already out there for the customer if that's what they wanted. And they're not moving there yet either, talking about the arms. So look at these charts I have been.

Look at lumber. Lumber ran up, crashed, ran up and crashed again. I would love to hear that guy back on with Joe and Tracy. I forget his name. I'm drawing a blank on his name, the lumber guy. Oh, Stinson Dean, yeah. Yeah, he's great. Look at these margins.

I'm looking at gross and profit margins for KB Home. Lenar looks similar. So gross margins, profit margins have never been higher. Pre-tax income has never been higher. These stocks are getting murdered. So if you look at it since 2019, that's an up and to the right for gross and for their profit margins. And look at the next chart. Look at the pre-tax income on a quarterly basis. And these stocks getting killed. Hockey, just vertical. And the stocks are getting killed. So again, stocks are pricing in a recession. It does feel like that. And or these stocks in particular are pricing a severe slowdown in the housing market. So they're not getting

credit for what they've done, they're getting killed for what might happen. So maybe if we get this choppy scenario of good economic data, bad economic data, and we go back and forth a little bit, maybe a lot of the biggest movement is going to be in some of these sectors where the market got ahead of itself. Like if we get some encouraging inflation data that's coming in and consumer spending remains strong and maybe mortgage rates come in a little bit, then homebiller socks could rip while the rest of the market doesn't do much, that kind of thing where we can see certain sectors move. Could be. So not switch over to Lanar. Again, a very interesting juxtaposition of the two of them, just very different tonally on the call.

So on Lenore, they said the weakening has continued to the third quarter. The housing market is cool as is expected in response to the Fed's aggressive and rapid reaction to inflation. The resulting very rapid, almost doubling of the 30-year fixed rate mortgage in six months has had the desired effect of slow price appreciation and moderating demand by increasing monthly payment costs and reducing affordability. Of course, we know all of that. Then they went out to say that these changes accelerated during the quarter with many

marking the most pronounced impacts. And they're saying that in June, new orders, traffic sales incentives and cancellations have worsened in many of our markets due to rapid-spiking. So it's just, again, it's very funny to see them handle things differently. All right, switch over to Nike. All right, take a guess. How much revenue does the Jordan brand do on an annual basis? Like as a percentage or total? Just total revenue. Three or four billion dollars. Very close. Five. Okay. It's not wild. It's a lot of money. Just the Jordan brand. So they said, your point about the consumer being okay,

the CFO said we continue to closely monitor consumer behavior. We're not seeing any signs of pullback at this point in time. You're probably not seeing a lot of sales from them yet either. You're a sneaker head, kind of. You're still buying Nike's? I'm pulling back. Listen, I'm tightening the belts. Recession's coming.

How many pairs of Jordans you got over there? I haven't bought a pair of sneakers in a while. Actually, I'm an on-cloud guy now. Oh, that's right. You've entered the dad level of sneakers. You go for comfort now. Look at this chart from the science of hitting. Nike annual revenues.

I know the stock hasn't been great, but this is why you own stocks. How did their revenue grow in 2008 and 2009? That's unbelievable. They had no drop off in 2008. I guess people don't stop buying Nike's. I'm not sure what to say about ARC anymore. So this is Eric Bell-Chunis. Arc took in $370 million last week, top 1% of all ATFs, and it's seen inflows in

eight of the last 11 weeks. Year to date, it's now a total of $1.9 billion, top 3% among ETFs, still down 50% on the year even after an 18% bounce in the last week or so. Money just keeps pouring into this. Is he the greatest marketer of all time? It's incredible. I guess retail investors are damned if they do, damned if they don't. On the one hand, people would say all the money rushed into the top and then it's going to rush out at the bottom. On the other hand, people say, well, actually it's going in, but it's just throwing good money after bad. But I almost have to applaud the discipline. I don't know if it's going to work out, but the fact that people are still giving money to her, it's not what

you would expect based on the history of people trying to time the market. No, it does not. I don't even know what to say anymore. All right, I got this email from Robin Hood. Margin interest rates has changed. They increased margin rate from 3.5 to 4.25%. And they also moved from a fixed rate to a floating rate. So they used to just put it at a fixed rate and they kept it there. They're talking about how they're going to float it to Fed Funds rate, which I guess with rates going up, that's probably good for them. But that's a little bit of a bigger hurdle right now. I think it was, I don't know, two percent or something at the lows, two and a half percent maybe for margin? For sure, it matters, for sure. That's got to sting a little bit if you're on a bunch

of margin. And your portfolio is already down 50 or 60 percent? Do you think FTCS is going to buy Robin Hood? Yeah. You do think so. Okay, so Bloomberg reported it. I mean, Robin Hood's down from a high of $60 billion to like a little less than $8 billion market gap. Obviously, that $60 billion was a meme stock high thing. But even from there, there were $30 or $40 billion for a while. Sam Bankman-Fried told Axios, there are no active conversations with Robin Hood. And they said, although that statement obviously doesn't preclude FTX from beginning talks at any moment, I know he's a billionaire so billionaires can do whatever they want these days, but he personally bought a stake in Robin Hood. That was his personal money. Can his company buy Robin Hood

if he took a personal stake in it? Is that illegal? There's a little wee work. I don't know. So FTX buys Robin Hood. They potentially buy BlockFi, which we're going to get into it a little bit. is CoinBased AOL at that point? I don't think so. I suspect that there is massive inertia in this market. I don't think everybody, put it that way. I don't think everybody will leave Coinbase and go to FTX. What's the FTX valuation?

Well, in real life, or as of their last raise? Was it $40 billion? Did they raise $420 million? I can't remember. Yeah, there rose $400 million at a $32 billion valuation. Obviously, you're talking about, yeah, what is it in real life? It would obviously be a lot lower than that. how can they afford to buy Robin Hood for $8 billion?

That's the thing I can't understand. And if you're the Robin Hood founder and you sell after your stock's down 80%, that's not a very good outcome for you, is it? Unless you really, really have to sell. You see no other out. The enterprise value is only $4 billion. Okay, because they have cash. Do you think FTX is going to do it?

I do. So there was, was it the Senate committee hearing on Robin Hood? There was some report that came out. I honestly don't know the details, so forgive me, if I'm misreporting this. but they did a deep dive into what went on. And Matt Levine just chef kissed the shit out of this. He said a Robin Hood product manager emailed this. So looking at like GameStop Mania, which was early, was March 21, February 21.

FYI, massive spike in Robin Hood account openings in the last 30 minutes likely caused by Elon Musk's tweet. And we could probably interact with this movement to promote Robin O'Grath. You know what the tweet was? Was it Dogecoin? No, it was Game Stunk. Remember what he tweeted that? So people open new Robin Hood accounts based on a tweet by Elon Musk. Literally.

That's where we were. It really was the stupidest bull market ever. It really was. So the product manager sent the message, conflict brewing. We have to keep the growth flywheel running. We bowl is right on our tail. Head of data science. Ha, don't worry.

We need to survive first. So what happened was, let me just quote Matt Levine. He said, as Robin and employees worked through January 27, to code position limits for meme stocks, they struggle with how to frame the trading restrictions to the public. Remember how they bungled the shit out of this messaging? It was just horrible. And they seemed to want to avoid giving their own clients the real reasons for imposing restrictions. A product manager at Robin & Financial asked, do we have a customer-facing rationale we can provide? In response, a manager and Robin Hood's brokerage responded, quote,

the real reason is firm risk and us needing to control the velocity of trading, but we shouldn't expose that. So Matt Levine said the meme stock crazed was so good for Robin Hood that 430,000 people tried to sign up for its service overnight, and so bad for Robinner that it had had to ignore all of them. So basically, they had to post $3 billion, which they ended up raising in the private markets. I think you remember that. They literally were on the brink of insolvency. How crazy is that? During their best month ever, they literally almost went out of business. Do you think that in some ways, financial literacy is just beating your head against the wall? If a tweet from Elon Musk and a stupid meme stock thing

can get 430,000 people to sign up for a brokerage account are most people just a lost cause at this point and you help who you can help? Sometimes I worry that. I hate to be cynical, but... If that's what gets you off the sideline to invest and put your money in the stock market...

Remember at one point... I think I weep for humanity. I don't know if it was Vlad or somebody at Robinhood had said that our customers do not day trade their investors. Okay. Well, anyway, in the first quarter of 2020, Robinon users traded nine times as many share as e-trade customers and 40 times as many shares as Schwab customers per dollar in the average

account. Here's another one. Citadel Securities employees estimated that the payment for order flow rebates it owed Robinon for GameStop the week of January 28th, 2021, were approximately 60 times greater than the week before. Jeez. I think they made $150 million from Dogecoin. What a scene. So if I'm FtX, I'm buying them at a discount, not a pretext. I'm buying them at a discount, not a premium. At this point? Oh, like a take under? That's not going to happen. Also, by the way, Vlad and what's this co-finder's name? I don't want to bottle it. I'm just not going to try. They own, isn't it a dual share class? I have no idea. I think they control the company. Okay. All right. Lots of smoke in the crypto markets, particularly surrounding BlockFi.

And we're going to have Zach on next weekend. We're going to ask some hard-handed questions. So I'm excited to have them on the show. the public news is that FTX offered or not offered there's a 250 million dollar line of credit that FTX has out and the smoke is that coin desk is reporting this it stood to wipe out block five shareholders there's rumors that mark use goes Morgan Creek is trying to put together an alternative packaging but the smoke that we want some clarity on is that this was the only deal that they could get where the equity holders were wiped out and the customer deposits accounts are saved, which by the way, if this is true, is obviously the way that it should work.

You don't wipe out customer deposits to save the equity shareholders. Hello, you're taking risk. You've got the upside. You take all the downside. Customer deposits. And so what I want to know is there's all sorts of rumors about the number of accounts, like a percentage of accounts that were pulled off the platform. platform. Obviously, we don't know. Meaning people that it left. The crazy thing is about this. So

Blackfine never stopped paying interest. They were still paying interest. They never gated withdrawals. So if you wanted your money, you got it back. In a way, this feels like the early 1900s bank runs. Like, you read this one, right? The panic of 1907. Yes. You read that book? Yes. This crypto run feels like that where it's so early. In a lot of ways, crypto was a victim of its own success because it feel like it pulled forward too much. But my only takeaway from this whole thing is like there was just way too much leverage in the system. And I think even if you have the most stringent collateralization rules and lending protocols, which it sounds like BlockFi did in some ways, and maybe the hedge fund one was the one that possibly did them in, but even if you still

managed to meet all of your obligations, if the price of your underlying asset that you're lending against falls 70%, you can't really stop a run in the bank and there's nothing you can do about it. And if your customers leave and there's no more demand for loans, your business just dries up. So this is what I want to ask, Zach, because they've been through bear markets before, but maybe not bare markets where a ton of customers pull their money. Now, Zach said on the Brink podcast that he did say that 10% of customer deposits left and that it has slowed down. Who knows where it is. But I think from my understanding as an outsider looking in, what happened was the terror unpegging caused a blowup and three hours capital, which was borrowing from

everyone. They all had the same exposure. And so it was just a domino cascading it. So FTX is also giving money to Voyager, I believe. Celsius. You still haven't gotten clarity on what they're doing. They froze customer withdrawals. I still haven't heard any news on that.

So if FTX ends up buying BlockFi for pennies on the dollar, that would be something. Block 5 raised a billion dollars from investors. And that could be wiped out. That could be wiped out in its entirety, which is pretty mind-boggling. I don't know how you could ever put a number on. How much of that run up to $65,000 in Bitcoin was leverage cost? Because I mean, $2 trillion or whatever has come out of the system. I don't know, 90%.

Who knows? We're very excited to have Zach on to hear his side of the story. A lot of this is speculation. We don't know what's real, but there certainly is a lot of smoke to say the least. Do you think coming out of this, if crypto is going to move forward, there have to be greater caps on this leverage stuff. That seems like a thing that cascaded everything. It's like leverage going in and leverage coming out just makes the pendulum swing so much

further than any other market. And there have to be some sort of caps on that to safeguard some of this. As we speak with the equity markets puking, yeah, puking strong. The Nye stock one is just down two and a half. S&P's down one and a half. Ethan Bitcoin are barely down. So maybe the worst of the runs are behind us, we'll see. You can't pay a counterfactual.

But remember like a couple of months ago, we were actually both. surprised how well Bitcoin and crypto in general was holding up given the nuclear destruction that was going on in all the other high beta names. I think that, and I was talking to my friend about this, so this is not like a unique insight, that all of the destruction and the puking in crypto that we've seen over the past few weeks has not been a macro shock with inflation and interest rates. It's just total de-leveraging. And so it's kind of a shame that we really never got to see, was Bitcoin an inflation hedge? Because I don't think it's getting nuked because of inflation or anything. I think it's getting nuked because of leverage coming out of the system.

Yes. And tech people getting crunched on their growth stocks and their startups and everything. I'm not saying that Bitcoin would have mooned because of inflation absent the Terra depagging. But I'm also saying, no, I'm just kidding. I don't know. We don't know. My whole thing is just there was way, way, way too much leverage. And I guess the whole point of the blockchain was the blockchain is there so you can see how much leverage. in the system. And I guess with all these different moving parts and pieces, obviously that was not necessarily the case. And it's harder to follow than you think. So apparently, everyone's saying that defy is running totally well because defy is truly, truly, truly open source. Everything is on chain.

It's ironic that the centralized places are the ones that are blowing up. And Wysithel was tweeting about this, if Voyager BlockFi and Celsius do disappear. And again, right now, I'm not saying blockfi is going to disappear. We don't know. where is the lending going to come from? Yeah, maybe it'll move to Defi, so I don't know. That's a good question. Maybe the lending just goes way, way down for a while because you've had essentially a run on the bank.

Yeah, anyway, fascinating times. All right, let's move on from that. Ben, the other day I was walking, and I think you were on the phone with me, somebody like screamed my name and I turned around, it was like, high school kids. They're like, oh, never mind. They thought I was their gym coach. Remember, we went to a comedy show a few years ago, and some guy said you look at JV wrestling coach. Right.

That's why I brought it up. All right, but I've got a theory. Okay. You like to brag about how you just call up your cable provider? It's not a brag. It's just I'm trying to give people the information they need to lower their bills, fight inflation. Okay. Here's a deal.

We don't brag about money. I try to pretty aggressively. Okay. Who's your provider? Verizon. I got shut down hard. Here's my theory. What's your theory?

People in the Northeast are. vessels, and 90% of Northeasterners call Verizon every time their bill is renewed to try negotiate. You're more willing to have conflict. Whereas people in the Midwest are generally nice. And so you are an outlier in the Midwest. You actually try and call and negotiate. Here's my theory.

So we have two different cable providers here. I'm out. I'm going to cancel. And the woman said, okay, Michael. So we have Comcast and AT&T here. And I use AT&T. And I think AT&T a number of years ago got me to leave Comcast. because they said, we're going to give you this great deal. We'll save you $100 a month from Comcast.

So I moved it over. And then every 12 months, my bill goes back up to the previous rate because the teaser rate came off. And so I call them and I say, hey, my bill just went up 50 bucks a month. Can I take it back down? Otherwise, I'm going to leave and cut the cable. And they go, all right, hang on. Let's transfer you to retention department. And then they give me $30 to $50 off. It happens every single year. So my bill just essentially stays the same. But my parents live in a city where they only have one provider's spectrum. And so they have no negotiating power. because there's no other alternative. I think there's a Tina element in here. There is no alternative. So I think the fact that I have an alternative that helps. Maybe AT&T is just easier

to negotiate with. But I'm sure you're right. People in New York probably travel a little harder. It's a geography. All right, let's move on to recommendations. We're running late. Okay. We watched the staircase over the last week on HBO Max with Colin Firth. Did you watch the documentary on Netflix a couple years ago? I did not. I heard about it, but it's like 11 episodes. So that's way too long. I need like 90 minutes for a documentary. Sorry, I'm not going to watch 11 episodes on it. But we didn't know. anything about the story going into it and my wife and I both said, all right, we're not going to read anything until after the fact. Let's go in blind. It's just a crazy story that the hard part

about watching it is there's literally zero characters that you like. All the characters are easy to hate. That's a hard part to watch. Here's my one finance lesson. It's a crazy story about a guy who potentially murders his wife, but there's all these different explanations for it. It took place in 2001. She worked for Nortel Networks. He did it, right? Well, he definitely did it. 98% for sure. He did it. He's a creepy dude. She worked for Nortel Networks had her whole retirement. in Nortale Network stock, and the stock was dropping, like, crazy, like, every time she looked to it was down like 20% in a day from the tech bust. And the big thing is, diversification. That's the lesson from the staircase. Besides, don't hit your wife in the back of the head and

push it on the stairs. Because it caused financial strain in the relationship? That was part of it. Yes, they were broke. Okay. So you told me to watch the old man on Hulu slash FX. I watched the first 10 minutes and I go, why does this story seem so familiar to me? It's based on a book by Thomas Perry. I read the book two months ago. Not to brag. Someone who's an animal spirit's watcher gives me, I get book recommendations a lot because I talk about wanting to read fiction. And someone said,

read the old man, you'll be hooked immediately. And I was. And I have to say, show is pretty good. There are some differences between the book and the show. The book is good. The show is better than the book.

Oh, really? Let me take a guess. Are the dogs in the book? They're in the book. That's how I knew. I'm like, I've heard these dog names before. But the John Lithgow character was not in the book.

Adding that gave it a totally different feel and it made a lot more sense. Oh, you know what I love to see? Remember in Severance how you saw John Totoro and Christopher Walking, Walking, Christopher Walken in scenes together. And I thought like, huh, that's interesting. Two legendary actors. I don't think I've ever seen them on screen together. Seeing Lithgow and Jeff Bridges on screen together, even though they're not physically together, I'm all in on that. Anyway, that's a good show, right? Yeah, Jeff Bridges, all-time hair. That guy's hair is amazing. He's got awesome head of hair. All right, one more. Sean of the Dead. Wait, wait, wait, wait, whoa, what's your verdict?

Did you watch all three episodes yet? We're two episodes in, and I think it's great. I liked the book. The book was a little over the top. The show is even better than the book so far. Good shot. Are you watched Sean of the Dead for the first time in a while? Remember the big zombie trend we had for a while?

I never saw that, never saw Zombie Land. Oh, okay. Sean of the Dead is a great take on the zombie movie genre. It's hilarious. It's satire? Yes, it's also really good. And there's a few serious parts to it. I think it's really, really well done.

One more thing. I can't remember what I was watching, but I think especially comedies, movies that have... I have seen Sean of the Dead. I have seen Sean of the Dead. Okay. I confirm a good movie. Very good.

Movies that have like an extra scene or an outtake or here's what happened to these characters at the end, that's 15% better movie. I don't want the comedy to just end. Great call. I want the extras. While the credits are rolling on the side, I want to see one more scene or something else. It makes for a better movie. You know where that didn't work for me? Anchorman.

Like the Brick character went to work for the Bishop administration. Oh, yeah, yeah, yeah. Okay, yeah, you're right. Okay, that's all I got. All right. The Boys season three, I was sort of out. I feel like they squeezed all the juice out of it. I don't really know what's going on, not really paying attention. The last episode brought me all the way back in, and Homeland there should win it on me. Okay.

That guy, he's pretty scary. We never made it past the first season for some reason, because like you said, it kind of just didn't like draw me back in, but I did like the first season. Okay. I went to the movie theater on Friday night, and I got to say, I was a little bit anxious because there was a lot of people there. I don't like being big of credit to people, but I was also. thrilled because there was a lot of people there. Movies are back.

You had Buzz Lightyear that was out. Jurassic Park's still in theater, even though it sucked. Top Gun. And I went to go see the Black Phone. Why? It's a Blumhouse movie. You know I like horror. Ethan Hawke.

You said you went to see this movie. You told me, and I never heard of it before. Who doesn't love Ethan Hawk? And it got good reviews on Rotten Tomatoes. And guess what? Yeah, it stunk. Kind of stunk. Oh, really?

Kind of stunk. You've had some bad reviews lately. Well, Jurassic Park really stunk. And this didn't stink. It just, it was like a 6.3. Believe you, me, I've seen worse. All right. Financial advisors, come join us.

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If you're looking for a change of scenery, camaraderie, technology, teamwork. Let us know. Here's the big sale. If you just want to be an advisor and don't want to do operations, you don't want to do marketing, you don't want to do sales, you don't want to do prospecting, we handle all of that for you. Info at redholtswalt.com. All right. And you want to email us where Animal Spiritspot at email.com. Thank you for listening. We'll see you next time. Thank you.