Animal Spirits Podcast - Business Optimism Crashes (EP.307)

Episode Date: May 10, 2023

On today's show we discuss regional bank failures, confidence in the Fed, international diversification, the V-shaped recovery in the labor market, vibes vs. data in the economy, the best company in the world, middle age and much more. Thanks to YCharts for sponsoring this episode! YCharts will be discussing the Scenarios Tool with a big emphasis on how it helps streamline the financial planning process for advisors with RWM COO Nick Maggiulli on May 24th at 12:30pm ET. Register at: https://ycharts.zoom.us/webinar/register/6316832319210/WN_hZWZbN3fSGm_ax8f92h9RA#/registrationFind complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by our friends at Y Charts. Big news coming up. RWMCOO Nick Majuli of dollars in date of fame. Also has his new book, a new-ish book, just keep buying. That's not a new book. Sorry. I said new-ish, new-ish. This year, right?

Maybe last year. Y-charts will be discussing their scenario tool with a big emphasis on how it helps streamline financial planning process with Nick on May 24th at 1230 Eastern. I just pulled up the scenario analysis tool this this morning, just to try it out again. It's been a lot of as I used it. $5,000 initial investment I put in the S&P 500, so SPY, $1998, $500 a month after that. Okay? What do you end up with April 2023?

$5,000 in 98, $500 a month from there on until April 2023. What do you end up with? Total investments is like $157.000. I got $685,000. You're pretty close. So it was like right around 600K. The funny thing is, by March 2009, you had contributed $72,000 out of savings. Your market value was $50,000.

So you're underwater after more than a decade. And now you're almost... That's why you should just keep buying. Come what may. That's right. So that's the thing. People don't realize like a bad market is a good market for savers. Anyway, we'll have a link in our show notes to sign up for this webinar with Nick.

And if you want to try out Y charts for the first time, you never tried them out before. Tell them Animal Spirits send you to get 20% off that initial subscription. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ridholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben.

In the intro, Ben mentioned Nick's new book, which it's not new, but it reminded me of something. This week, I was on a phone call. Actually, it was, I'm sorry, was it Friday? Last Friday. Speaking of time dilation, I'm getting, I'm losing track of time. Okay, so on Friday, Ben, I was on a phone call. catching up with you seriously i was on a okay i was on a zoom call on friday and the guy goes how was a weekend and i repeated the question i said how is my weekend he goes yep and i like took a half a second

i was like it's good thank you now i could only i'm assuming he meant how is your week right but i repeated the question and he's he confirmed that was in fact the question that he asked so i was i was a bit taken back that's actually maybe that's That's a move. If you talk to somebody on Friday, what the other weekend was. See what sort of response you get. Okay.

Maybe he's just like one of those hustle bros who, you know, he uses his weekend in like four hour increments. Right? He slows time down. I'm, I'm hustling. Look at this jug.

Yeah. We were on a call yesterday and you opened up your water jug. And it was like the most aggressive open I've ever seen in my life. I mean. How so? Well, it did. Yeah, that's aggressive for a call right next to a microphone. So Robin got this for me.

I'm back on a diet. I sent her a video. Actually, Ben, you were with me. I sent her a video. It's not too flattering. There was a little bit of belly hanging out. I said, all right, all right. So she got me this.

I took that video. You took that video. I took that video. Wasn't that bad. All right. Do you want to talk about it now or save it for like the forehead? What happened to your head? What?

Oh, went on to my head. This actually, it looks a lot worse than it is. So for people that are listening, I've got like two red dots on my head. It looks like someone took a stapler to your forehead. Yeah, a little bit of a scab. So bald people, when you put on a hat, you lose your peripheral vision. And I was boating on Saturday. This is not a good story, but I was boating on since you ass.

I was boating on Saturday. And on a boat, there's like a little rack up top. with some places, some holders to put the fishing rod in, you know, and I stepped up and I got whacked in the head. I whacked myself in the head because I couldn't see it with my brim. And it wasn't bad. I mean, it was a bit of a ding, but it could have been much worse. Okay.

We had that in our, not me, but my youngest daughter, Kate, was just running down a hill, like six foot hill running. And you know, when you're a kid, you don't have no control over your body, just flail. She ran faster than her body could carry her. That's scary. I've had that before I saw her doing in slow motion and she landed on her face

and her face was the fulcrum for a somersault her whole body and just on her face so her whole side of her face was just a sidewalk rash like oh no like a hard of blood a little bit she's good she's tough she did just say why didn't you catch me

so really just hit me in the dad you know but it was not going to anyway speaking of road rash regional banks did you see this chart here boom good transition there right yep all right Mike Bostock tweeted this

and this shows bank failures by year and you can see all these little banks in 2008 2009 2010 and he has them I don't know how he created this chart I love these graphics they really they really get me the bubbles I wish I wish I could create something like this Washington Mutual is the biggest circle

in 2008 and then it shows the ones from this year, signature bank, Silicon Valley Bank, First Republic Bank, all pretty similar size to that. I don't know. This is just one of those, a picture, speaks a thousand words kind of things. Very good. Here's another one from New York Times. It kind of shows a similar thing just in bar chart form. Circles are better, but basically just showing that like these three banks, this is a huge. So the three banks held a total of 532 billion assets. That's more than the 526 billion when adjusted for inflation that held by the 25 banks. that collapsed in 2008 at the height of a global financial crisis, saying that, like, this is,

this was kind of a big deal, that these big banks failed. And I guess it's almost surprising that there hasn't been more carnage from this. Well, okay, a few things. Yes, maybe the assets size were the same, but there's a lot of other things that mattered here. I don't think this is exactly apples to apples. The banks back then had... The reason for 2008 were, it was much different. Way more leverage.

Yeah. And everybody was pretty much screwed and everybody was in the same boat of shit. Whereas this time, it really is, it really is centered on either a concentrated deposit base or geography, which I guess is saying the same thing. And the failure of these banks was like the, what got wiped out was the equity and ostensibly most of the bondholders, right? It wasn't like, I guess what I'm saying. Yeah, I'm not minimizing it. It's just, this is not 2008, even though the assets might be the same size. You could also say that.

These regional banks are not going to take down, are not potentially going to take down the global financial system. But I think this, the smoothness of this transition or this, how this has been handled, probably doesn't happen about 2008. I think the fact that 2008 happened made it easier to save the banks this time around, where it could have been a lot messier had that not happened. So I pulled up the S&P regional banking ETF, KRE. The inception of this ETF is like 2006, and I did total returns.

So this is including dividends because most of the bank returns come from dividends in a lot of ways. It's up 17% in total going back to whenever it came out in 2006. The S&P is up 355% since then. The ag is up 68% in that time. This thing has basically gone nowhere for close to two decades. So this is true Indisputable But this is sort of like

That Bess and Bender stuff That we were talking about You know what I mean Where it's like Yes Obviously KRE Bitch by the way I bought on Thursday

Fully disclosed Really what's your timeline on that Time horizon It's 12 hours Short No I'm gonna give it a week This is short Well we'll say

I don't know we'll say I jumped out of the airplane Without a parachute type of deal You know what I mean You should wait until you get your dividend at least. So here's the thing about catching a falling knife. I'm, well, I guess I am guilty of this. I've tried to catch a fallen knife a lot of times. But I think there's a difference between buying a stock that's in a 60% drawdown where it's just a melting ice cube and it's

been going lower for the better part of 18 months or whatever the case may be versus buying an ETF that got of regional banks like a cut in half in like three weeks. You know what I mean? So anyway, what I'm saying is I'm more apt to buy panic than I am a stock that's just in a 70% drug and it and, you know, probably will never recover. Does that make sense? That's fair. Even though you literally tried to do that twice with Facebook and Netflix.

Successfully, I might add. But to your point about, but wait, hold. Hold on. Oh, hang on. The Netflix buy, the Netflix buy was not, I did not, I did not buy that on the way down. I bought it after it had already bounced. And the Facebook was, that was a special situation. You had, you had somebody on TV crying about how wrong he was.

And it just felt like, it just felt like peak pessimism. So special situation, Ben. Okay. But it is, a lot of those tech stocks are, have had, huge bounces. So Shopify, for instance, was down 85% from the highs. It's up 85% this year. It's still down 60% or whatever from the all-time highs. So the falling knife thing depends on the timing, always. But you point about the best and mind of study. Yeah. This thing came public at 2007. So what did it lose? And what did it lose in the GFC? Well, yeah, of course. It had the bank

crisis. But the point is, you can have a sector like this that goes nowhere in the stock market can still do fine. That's my big takeaway here, is that it doesn't, you can have these, you could pick the wrong sector and be screwed, but you could have that sector be part of what you're investing in, you're still going to be okay. I mean, I think most of that is probably in the Russell 2000 as opposed to S&P, but still. So, Ben, from 2010, for example, through most of 2018, KRI and SPY, or the S&P 500, both gave you the same returns. They were up 170% over the same time period. Now, of course, there's been a gigantic divergence to say the least since then. But my point is, as you well know, starting and the start date and the end date, you know, is everything.

I'll tell you in any argument about the markets. So my whole thing you mentioned, of course, obviously this is not 2008. It would be silly to make that comparison, even though some people do. Even if everything works out fine with a banking crisis and it kind of seems like it will, even, I mean, maybe the effects down the line are contraction and credit or whatever, which is what the Fed wants, even if it works out fine. Fine. Raising rates twice while these big regional banks are failing is still dumb in my eyes. Like for the Fed, the fact that they're still doing it is like it's, it's an unnecessary risk to take when they could have just said, we're going to pause for a little bit to see how this shakes out. And then maybe we'll raise a few months for now. I just think it's, it's like

an irresponsible risk to take while these banks are failing. I just, I don't understand it. All right. Here's a counterpoint. And I'm not, I'm going to say these words. I don't necessarily believe them, but just I'm going to give you the other side. So what if the Fed is thinking these regional banks that are failing, we can backstop them like that, right? But if we pause now and we still think that the risk of inflation is to the upside and we pause now before we want to, and inflation ramps up again, that is a much bigger, greater risk than whatever potential contagion can happen from these banks failing. I mean, what else could they be thinking?

Like, they understand that banks are failing. I think part of it is they don't want to go back on their word, and they don't want to look like, for some reason, I feel like they drew this line in the sand, and they think that, like, they have to follow it. And they don't want to be seen as going back on their word, which is bizarre. Perhaps I'm giving them too much credit, but I genuinely believe that, well. Could it also be that they don't mind, they don't mind having a mini banking crisis that's. slows credit and slows the economy, which could slow inflation. That seems like a dangerous game to play to me, though. I mostly believe that they're doing this because they think it's the right thing,

not because they're worried about credibility. Okay, most people do not agree with them. A Gallup poll released Tuesday shows 36% of U.S. adults say they have a great deal or fair amount of confidence in Jerome Powell, and that's the lowest of anyone. You can see this chart here. It was highest for Allen Greenspan in 2001, which is kind of funny. It was almost 80%. Powell has a lowest approval rating.

What percentage of adults in America do you think know who Jerome Powell is? I mean, it's got to be a small amount, right? Like, if you ask your wife, who is Jerome Powell? There's no way she'd have a clue, right? My wife either. Zero percent chance. 10% of the population knows who he is, maybe? No, no.

What? How would one out of ten people know who Jerome Powell is? How many people work in the finance industry? I don't know. 10 million? I don't know. What is it? I don't know.

It's got to be a larger number, though. All right. The one thing they're doing, obviously, though, is they are giving savers a free pass here, it seems like. This is for- Oh, how about this? That's such a great point. We spent the last 10 years, not you and I, but people spent the last 10 years saying the Fed is punishing savers. You don't hear the same of the Fed is, what would be the opposite of punishing? Rewarding.

The Fed is rewarding savers. They're punishing the bomb. So this is from Julian Clemocho. Sorry if I pronounce your name wrong. For the first time in history, investment-grade corporate bonds. bonds yield less than three-month T-bills. Wait, what? How?

Investment-grade corporate bonds yield less than three-month T-bills. Look at this chart. So the spread historically has probably averaged three to four percent for corporate bonds. Oh, I was going to say, I don't get it. This just has to be, this is just the yield curve. I'm not minimizing. This is insane. But this is not Treasury's yield curve.

This is corporate bonds. No, I understand. but the corporate bonds followed the yield curve as well. Do they? But corporate bonds should have a spread to treasuries. No, I understand. Of course. Treasury should have a spread to T-bill.

So this is like a double, this is like a double inversion. Yes. My point is- A double-inversion. My point is that these U.S. investment-grade bonds have a higher duration, a longer duration than three months, significantly so, right? because the yield curve is so inverted, and things are so wacky. But this, yeah, it's insane.

So the bond market still does not agree with the Fed at all, like at all. The 10 years still at 3.5, which in the three months right now is 5.2. Hey, wait a minute. I haven't really thought about the corporate bond yield curve, but I would just assume, and I'm, please feel free to inbox us. I would just assume that corporate bond yields actually do not. follow the treasury yield curve. In other words, there's no inversion in corporate bond yields, right?

You're not going to, there's no way. Yeah, that's true. You don't really see that up. I don't know. Yeah, you're right. There's no way. Yeah. Yeah, no, doesn't follow it because spread, no, because spreads blow out.

There should be a spread, but then spreads blow out. I'm not talking about, I'm not talking about spread. I'm not. I thought, yeah. I've never seen a corporate bond yield curve before. Right. Can that invert? No, because corporations are not going to increase what they're paying on short-term paper like the Fed is.

They're not that dumb. No, but what if investors demand it? I'm not saying that they would issue it that way. But that's the thing. The reason that the Treasury yield curve is so inverted is not because investors are demanding higher deposit rates. It's because the Fed is jacking up short-term rates to try to stop inflation. All right. We have gotten a ton of questions over the years about why diversify internationally.

Why I own foreign stocks when U.S. stocks are obviously the only game in town, and they've outperformed for a long time now? AQR wrote a good piece on this. Did you read this at all or not? I did not. International diversification is still not crazy after all these years, from Cliff Asness and a couple of his colleagues at AQR. It was really well done. So they showed basically since 1990, go back that far, and the U.S. has outperformed so much that if you own international stocks, it doesn't seem to make any sense. You and I think have shown it was pretty much international.

indices from MSCI I started in 1970. So it was like 1970 to 2012 or so. They're basically break-even. And then from 2013 on, that's when it looks silly to own international stocks. Here's from AQR. Since 1990, the vast majority of the U.S. is outperformance versus the MSCI EFA of a whopping 4.6 percent per year. So that's a lot, obviously. With due to changes in valuations, in 1990, U.S. valuations were about half of EFA, which had a lot to do with Japan at the time, obviously. Japanese valuations were so high. at the end of 2022, there are 1.5 times EFA. Once you control for this tripling of relative valuations,

the 4.6% return advantage falls to 1.2%. I'm sorry. I don't know if that makes sense to me. Look at this chart. Look at the chart. That's like take Durant, Clay, and Steph off that Warriors team, and they barely beat the Cavs. Okay.

So here's the conclusion. International diversification is still worth it. Even if hasn't delivered, most of the outperformance in this period reflects richeting relative valuations, hardly a reason for raising or even retaining U.S. overweights today. If anything, historically wide, relative valuations point the other way. Well, I agree with the conclusion.

I love this quote. This is the kind of thing I wish I would have written. A diversified portfolio that you hold today might look completely sensible. Tomorrow, it'll look full of mistakes. I think we, you and I might take for granted the fact that, like, diversification is so obviously, I did, I'm not going to use a phrase free lunch. I don't know what else to call it, the sensible approach to investing. It's a way, it's a risk management strategy.

Do you think that most people, do you think that, how, do you think that a lot of people would agree with that statement, that diversification is prudent? I think people, I mean, everyone knows the whole you don't put your eggs in one basket. That's a pretty well-known phrase, but I don't think people, I think people have varying degrees of their definition of diversification. Well, because you and I would say that the S&P 500 is one basket. other people might argue that it's what do you mean it's 500 it's 500 of the largest companies in the united states right i looked at it last week too apple and microsoft now make up almost 14

percent of the total index which is nuts the top 10 stocks in the s&p make up 29 percent of the index which is the highest it's been since probably the 60s or 70s kind of crazy to think and i do think you'd be fine if you owned the whole u.s stock market and could handle it but i think that owning other strategies, other types of investments, other geographies, just can help you if you have bad luck and you happen to catch the crappy period for the U.S. at the worst possible time. That's the whole thing for diversification for me. We're also talking about diversification through the lens of returns. But what about the psychological impact of going all in on one investment? Now, diversification is not easy either because if you're diversified and you own

global stocks, you're like, what the hell am I doing? So it's just, it's all about tradeoffs. Yeah. The Brian Portnoy quote, I think he said this is like it means always having to say you're sorry about something, but it's, you're damned if you do and damn it if you don't kind of thing. Yeah. All right.

Remember the Dave Portnoy ETF? Van Neck's social sentiment ETF, ticker buzz. Emory, a Kack Mack, did I say that right? I don't know. I don't know. Looks right today. Show that, uh, the, the, the, the, the, Fund is down 50% and it's lost 90% of its assets from its peak shortly after launch in March

2021. AUM went from 500 million to 50 million, which some, there's a lot of stuff in the market sets that's really hard to predict. This kind of stuff coming out when it did, I guess it seems relatively easy to predict. Yeah. Like, we didn't know the timing on when ARC would blow up, but we knew it would, right? That was a pretty easy prediction. I think the same thing is true of an ETF like this.

And I never heard him really mentioned it after he talked about it at the beginning. I don't know what the relationship was. Yeah, me either. Anyway, all right. Remember how when this bear market got going a little bit, and it felt different from the get-go? You said, listen, we're not going to get a V-shaped recovery this time. You planned the flag in that pretty early.

You were right. Well, we got a V-shaped recovery. It just wasn't in the stock market. Look at this. This is prime age, which is 25 to 54 employment rate versus pre-recession peak, and this is the, this is from Scan to Amaranath who had a great tweet thread on the labor market and how strong it is. We did get a V-shaped recovery.

It just was in the labor market and not the stock market. It's like we kind of chose this time because of fiscal policy or whatever, however things shook out. We chose to have a V-shaped recovery, but it was in the unemployment rate. We spoke about this a couple months ago. We did too little in the aftermath of the GFC to stimulate the economy. and we paid the price in terms of a really sluggish recovery. I don't know how long it took to get all the jobs back. Oh, it's right here.

It felt like it was 10 years, right? Yeah. It shows it took a really long time. Okay. And so we obviously were in the opposite side of the boat this time around. And the economy is fine, better than fine. Too strong, too fine, in fact. And the price that we paid for this recovery is higher consumer prices.

Right. Worth it? Supply chain stuff. Yeah. He also shows that labor force participation rate is continues to rise for people 25 to 54 because the reason you show 25 to 54 is because the baby boomer demographic is so large now that the labor force participation rate overall is going to slow or go down because people are retiring and mass, right? So it makes sense to look at prime age. And he says we're not running out of workers if this labor force participation rate continues to climb. He also says that full-time workers, so this is 25 to 54 full-time employment to population, is about as high as it's been since 2000, which is way better than it's been the last two decades.

So it's not just people having part-time jobs and doing DoorDash on the side or Uber or whatever. This is people with full-time jobs. This is my thing about the Fed, though, is that them raising rates, I think inflation is falling despite them, not because of them. Like, the Fed can control borrowing rates, and they can control the yield savers earn, and they can step in as a lender of last resort in a crisis, but they can't control the labor market or inflation, like they want to. Right? It's like their interest rates are like a blunt tool, and the labor market has not cared at all what the Fed has done.

Hey, let me ask you a question. Those are all good points. I agree with all of them. So this blunt tool word phrase that we throw around, can you explain what it means? Because I'm not quite sure that I get it. It's blunt. It's not like, it's like, it's not like very precise, right?

It's, they're trying to, let me think. No, like, literally, like, okay, I'm Googling a blunt tool. Think about it. A blunt tool is a hammer. Yeah, they're using a hammer, yeah, to try to hit a pin, right? Exactly. That's what you do with the hammer. So my point, I don't think that phrase makes sense.

I think it's the opposite. But if they want to like, get the job done. Not if you're trying to do something that requires precision and a little bit of a care, right? They're just haphazardly raising rates to five and a half percent and hoping nothing breaks. You'll never hear me say interest rates are a blunt tool. Okay. All right. I'm going to hold it.

I think we need to go on something about it. I just, I just incepted it into your, you're going to say it in like five minutes. and not realize it. All right, here's another one. This is, I think this is good from New York Times. Average hourly earnings climbed 4.4% in the year through April. That compared to 4.3% in previous months and more than was expected. Powell says, you know, the labor market is still tight.

But look at this chart. We've talked about this before. Wage growth in green has been lower than the Consumer Bryce Index since, since inflation took off in 2021. And now these two numbers are converging. Isn't this a good thing? inflation is falling and wages are ticking back up a little bit. What's wrong with that?

Let's say wages go above inflation, if that's possible. That hasn't happened yet in this whole time. Isn't that a good thing? Should we be celebrating that? Real wage gains? Yeah. Yes. Right?

I think this would be a good thing. You're doing a lot of defense on the Fed today. I'm just pointing this out. Is the shoe on the other foot? I'm not defending. You're defending the Fed a lot today. I'm not saying everything they've done is bad, and they've been in a pretty precarious situation. Because people have asked us, and we've mentioned this, isn't the way to fight fiscal policy like this just to raise taxes?

And no politician in the right mind is going to raise taxes to fight inflation. So the Fed is the, that's the blunt tool thing. They're the only ones, they're the only game in town now that are trying to stop this. No politician is trying to stop inflation. Politicians would probably make it worse. So I do give the Fed credit because they're the only ones who are even trying to do something. even though the tools that they have don't work as well as they would like.

It doesn't feel like I'm defending the Fed. What it feels like is this is not an easy job to... It's not. My whole thing is it feels like they're not even trying for a soft landing. Like, why don't they just, like, chill out a little bit and let, let things...

See what happens. Let things settle a little bit. It's like when you get a new pizza and, like, it looks so delicious and you know if you take a bite, you're going to burn the top of your mouth. You just know it. And every time you still take that bite

because, eh, what if it doesn't? And it still burns your mouth. Like, just let it cool off for 10 minutes. See what happens. So you don't burn the top of your mouth. I feel like the Fed is way too quick to burn the top of their mouth every time. Are they?

In both directions. I think they're done. What is a... I hope so. They should be. So target rate probably is for June. All right, 88% say 500 to 525. All right.

Here's a question for you. since you use this way more than I do, the probabilities. How do they calculate that? It's like Fed Fund's Futures. Okay. So I can't... Who controls those? Who's trading Fed Fund's futures?

Traders. I can't tell you how it's calculated, but... Okay. You don't want to see how the sausage is made. I'm just asking how the sausage is made here. Can't tell you. I mean, you're a big Fed guy, so you should know. How about this?

Well, there's a methodology. See, we've reversed roles. I used to be the Fed guy. The Fed apologist. You're the Fed apologist now. All right, here we go. The probability. of a rate hike is calculated by adding the probabilities of all target rate levels above or below the current target rate probabilities of possible Fed funds target rates are based on Fed funds futures contract prices assuming that rate hikes or cuts are uniformly set okay so there it is do I need to keep going man good enough I didn't really care I was just curious if you know well I think I think I did sir uh all right so they they spoke at the meeting about I think Powell said some

something along the lines of he does not expect a recession. And I think Yellen said something similar. So from the Atlanta Fed, on May 4th, the GDP now cast of real GDP growth into in Q2, 2023 is 2.7%. See, this is my point. Maybe everything the Fed's doing, it's useless and doesn't matter. We don't have a counterfactual. But if the Fed would stop at 3% or 4%, maybe we would just be in the same situation.

And it just wouldn't be as expensive for people to borrow or they wouldn't be getting as high yields on their T bills. We don't know. If they stopped at 3%, we just don't know. Here's another one. San Francisco Fed, approximately, and I think, I know we've spoken about this so much that maybe it's gone from over communicated to undercommunicated. San Francisco Fed, approximately $500 billion of excess savings remaining in the aggregate

economy. Should the recent pace of drawdowns persist, excess savings would likely continue to support household spending at least into Q4. I don't know, man. I don't know if any session's coming. I think we're spending that savings down to the bone. There's no way people are hanging on to that excess savings. Right?

Yeah, no, it's going. Here's another one. The ISM spring 2023 semi-annual economic forecast finds that amid continuing uncertainties, purchasing and supply executives in the U.S., manufacturing, and services sector, still expect growth in production capacity, revenues, and employment. Okay, however, 2025 recession is still on the table. However, the Small Business Index, U.S. Small Business Optimism fell to the lowest since April 2013. Okay.

I don't see how this, now, okay, counterpoint to my previous points. I don't see how this doesn't show up in the data eventually. Now, this is like the vibes thing, like don't worry about how people feel, worry about, like, the hard data versus the soft data. But if small businesses are so pessimistic on the economy, this is going to change their habits and impact the economy, no? How does it not? Haven't we been saying that for over a year, though? Didn't we say last year the, like, we could talk ourselves some to recession last year and it didn't happen? Yes.

So I don't know. The thing everyone else, the thing the really gloomy people would say is, listen, the Fed, operates on their monetary policy operates on a lag just wait that's a fact that's going to happen and also every time there's not a recession today there could be one in the future that's also a fact like duh something could happen in the future it's not happening day today things is still pretty good that that's where i stand things are still pretty darn good in the economy as they stand today could they get worse in the future yes they could always get worse uh we also talk about a recession like yes no right in in black or white as if there's not 50 shades of gray

See what I did there? Never saw that movie. I read the book. Remember that? Yeah, I read the first book. I'm not proud of it. I kind of wanted to see what the, all the hubbub was about, and it was a mistake. How about this?

Will there ever be a bubble in a book again? By the way, I'm picturing what Duncan and John are going to do to 50 Shades of Grey here for their Photoshop. Will there ever be another Da Vinci Code or? Oh, yeah. Harry, what do you mean? Yeah. Yeah, of course they will. Yeah.

That takes the nation, the glow by storm. People don't read books anymore. I think it's easier for books to do that than movies these days even. No. I don't think. You don't think there's going to be some sort of-top-gun. Hunger games sort of thing that, all right. I don't know.

Do people read anymore? I got a book recommendation for today. I haven't been watching many movies because movies stink all the movies stink these days, so I've been reading more. Okay. All right, so getting back to the shades of gray. Nick Gurley tweeted, looks like a recession is starting in the south. Southern states lost jobs for the third straight month in April, according to ADP.

Meanwhile, Pacific Northeast had huge job gains. Big implications for real estate. Okay. So this is a great chart. Listen, there's not one economy, right? Yes, it's very big dynamic. It's interesting that the West Coast has seen gains because they probably saw losses forever. So now it's shifting.

Yeah. I mean, this is kind of like, if you look at this, this is kind of like the housing market. Like, there are spots where the housing market is still on fire and spots where the housing market is falling off. We're going to talk about that in a minute. But, yeah. Dan Greenhouse tweeted, truly amazing how many consumer packaged good companies are able to still pass through significant price increases. Kraft is the latest here in the U.S. prices were up 13 percent, but volumes were down six and a half percent. I think we spoke about this with Tripoli, even though they're not nearly that bad of an offender, but like McDonald's, Pepsi, and the like.

I don't know. McDonald's... Didn't Pepsi say they're done? I think so. I can still feed a family of five at McDonald's for like $25. Like, I still think McDonald's is pretty darn cheap, relative to everything else. I saw the Burger King has like $7 meals or $6 have it your way, commercial. By the way, speaking of commercial, Verizon, you text me that you saw that Verizon commercial,

the not to brag. I mean, that was egregious. Seasons desist, Seth Myers. Stay away. 95 times out of 100, I'm like, you know, know, people do something similar. I'm like, yeah, it's a coincidence. We're not the, you know, but that, that was a bit much. I think the greedflation thing just shows the thing is, it's not like corporations ever get more or less greedy. I think they just, they take advantage

of being greedy when they can. And right this period, they've been able to take advantage of being greedy because people hear about supply chain stuff and rising costs and rising wages. And there's going to be a time when they're not going to be able to take advantage. I feel like, I feel like corporations don't get more or less greedy. They just, they, they pick their spots depending on the environment. They've been greedy now, but it's not like they've been the cause of inflation. You've probably seen this chart before. Andrew Lokenath tweeted this. We were just talking about Pepsi and consumer staples.

11 companies that own everything. So it's Procter & Gamble, Coca-Cola, Unilever, Pepsi, Kellogg's. I didn't realize like Kellogg's was in this vein. Mars, General Mills, Mondalays, Johnson & Johnson, Kraft Heinz, and Nestle. And these 11 companies own more or less everything that you see at like Stopp at Shop or Shopper, ShopRiter. This is our don't short junk food, right? Yeah.

By the way, do those names mean anything to you? Are those national chains stop and shop and shop right? No. Or are they regional? Nope. I don't know. Are there national grocery stores other than like Whole Foods or is everything regional? I think most things are regional, right?

Yeah. We have Publix in Florida. We have Meyer here, which is like a Midwest thing. What do you have? we used to have wall bams back in the day that place is great what do we have we have local stuff like yeah regional stuff all right so speaking to the real estate thing so this is a tweet from connor hughes it shows a group a bunch of people in a line line out the door trying to find a house in 2023 a line out the door for an open house i think i'm just going to take my wife and baby

and move back with my mom sadly i hear there's already five similar offers i think he said this is in new jersey those are dad shorts yeah those are definitely dad shorts I think... Respect. I think this is... The guy needs a pair of bird dogs. Yeah, not the starch khakis. I think this is why it's so hard to do a national housing thing right now.

Because there are certainly markets like this where there's going to be multiple bids still because supply is so low, but there's going to be other markets where prices are falling and people say, no, no, no, real estate is dead and it's all crashing. And I think that's why, like, you jumble it all up and we're kind of in like this going nowhere, steady state, sideways kind of real estate market. But if you happen to be in the wrong market, you're going to think, you saw that someone sent us that Instagram or TikTok video of the guy rapping about like where's, where's this big crash in housing prices. And it was actually pretty good for as far as those kind of videos go. I laughed a little bit.

I just think the 2008 system resetting that people wanted is just not going to happen. There's too many people that want to go to house. All right. Here's a good pie chart. You should be, this is an actual, this is like a legitimate pie chart. You mean a legitimate pie chart? When do you think my, when do you think my part chart?

When do you think I made that pie chart? What year do you think I made that? 2015, 2016, 2017? What do we did you do for the 10th anniversary? I don't know. I'm just saying it was kind of an illegitimate pie chart. This is from the FI couple on Twitter. 67% of homeowners in the United States.

By the way, that's bullshit. I'm sorry. That pie chart is properly labeled, and it shows exactly what it says it shows, with no intent to mislead. Just because some people have reading comprehension issues, I will not apologize for that. I think you should read how to lie with statistics. I did. Good book. Good book. All right, 67% of homeowners in the United States have, by the way, hard word to say, statistics.

Hard to say fast. 67% of homeowners in the United States have a paid off home or at least 50% equity in their home. So almost 39% own their home free and clear. Hello, boomers. And then nearly 29% have greater than 50% equity in their home. So this is the reason why I think people, we've talked forever about low mortgage rates are going to be trapped in that low rate.

This is the reason why low mortgage rates won't last forever, though, in terms of trapping people. I mean, you and I say we're trapped in these, like I have a 3% mortgage rates, even if they go to 5%, you're going to say, why would I trade out of this 3% mortgage? As you build that, what do you mean? Eventually, if you have 50% equity in your home, you're going to go, if you need to move.

And we've heard from a lot of people who say, listen, my family is growing. I need, like, this is what happened to us. My wife and I said for our first house, we were there for 10 years. We had conversations like, this could be our forever home. And then we had twins unexpectedly, and we moved because we needed more room. That's going to happen to people. And eventually, you'll look at your 50% equity in your home, and you'll go, I'm going from 3% to 5.5%. But you know what?

the payment is not that much different because of the equity to have in the home if I roll it over into the new place and I think that's what's going to eventually it's going to be a slow thaw of this but eventually that's going to happen. Very slow. But it's going to happen eventually where life gets in the way and people are going to want to move and they're going to say

you know what I'm not staying here any longer just because I have this 3% mortgage. It makes more, I'd be more comfortable taking 5% rolling the dice that I'll be able to refinance lower and I'm going to move. It's going to happen eventually. Maybe.

People get married, people get divorced, people die, people have kids. This stuff happens and life will go on. Let's do some quarter stuff. By the way, guys, I've been listening to tons of earnings calls the last week. Performing your channel checks? No big deal. The new, the quarter desktop app, although I do these on the go, but I use the desktop app for like the transcript stuff. it's it's really incredible

the search function is great that's my favorite part for sure it's all right so what was that data point we had about the earnings earnings coming in pretty well huh earning season earning season looking for it here we go

Sam row tweeted this is from Bank of America revision to consensus first quarter earnings since the start of April heck of a chart S&P 500 earnings revisions since Q1 are up 5%. Isn't this always the case, though, where, like, earnings come in better than expected because

they just sandbag and low ball? Do you ever see, like, 70% of companies missed expectations? It's always... No, no, no. This is versus, like, analyst estimates, I think. Okay. But don't... But one of the companies getting the analyst to sandbag so they can beat expectations,

isn't that always what happens? No. I mean, maybe in normal times. But Josh and I spoke about this a lot in 2021 or two. that analyst estimates are still way too high. And they came in pretty aggressively. So S&P 500 revisions up 5%. Materials up 16%. Discretionary up 15, 14%. All right, this is, this is interesting. Also, I think, and this also looks like it's from Bank of America. Goodbye, cost cutting, hello productivity. Margin expansion from globalization and cheap

financing is behind us, but productivity gains could be the next multi-year bulk case for margins and multiples. This quarter is rife with evidence. Efficiency mentions jump 27% year-over-year, it is dangerous to underestimate corporate America's margin preservation skills. Let me repeat that for emphasis. It is dangerous to underestimate corporate America's margin preservation skills. These companies are really freaking good at making money. This is like the one thing Jeremy Grantham taught us that seems to be disproven, that like mean reversion in margins is like the...

Gravity. No, it's not. philosophy of capitalism, and it hasn't been. And I think, I think he got a technological piece wrong. It made sense. I, I don't, I'm not, I don't fault him for being wrong there. Just something changed. Technology. Technology.

We spoke about this. I spoke about with Josh talking about like AWS and the ability for companies to quickly dial up or down how much they need versus like, think about what it went into like ramping up and slowing down factories, for example. You know what I mean? Like, you could. to just turn on a dime. Now you literally could say, you know what?

I'm going to take less data. We need less storage, less software. I mean, the simple thing for me that I've been telling my kids lately is I used to go buy a CD, a full compact disc for one song that I liked on the radio and like roll the dice that I was going to like the other songs, and most of the time you didn't. My kids can listen to any song they want on demand right now on like any device. And it's like just think about something simple like that, how much easier it is to get access to things these days than you could in the past.

because of technology. All right. So, Ben, before we talk about some of these companies, I had a self-realization in terms of the type of stocks that I'm attracted to, not just like trades, but like stocks that I actually plan on holding. I'm not going to sit here and say that I'm going to hold any of these stocks for years, right? If I have a 100% gain, I'm out. But anyway, the stocks in my portfolio all have something in common.

So let me read you these stocks. Zillow, Spotify, Schwab is not a good example of this, Netflix, and I just recently added Airbnb, and Disney. We have some overlap there. So what these have in common, I buy great brands,

and if they are founder-led, all the better. Now, these are not cheap companies by any stretch of the imagination. That's kind of like a really good CNBC pitch there. Thank you. Like talking about your, like your, your ethos. But those are the, those are the companies. I buy great brands.

Like I believe in Rich Barden. So let's get into like Zillow, for example. All right. Over 80% and I like, and I especially like to do buy those stocks after they got killed. I should, I should mention that. Over 80% of people who go to Zillow go their direct. Isn't that kind of nuts? They do have the brand in real estate as far as the United States goes.

They said housing is a growth industry with $300 billion in transaction fees. $300 billion in transaction fees. 67% of U.S. home buyers use Zillow today. I'm not even in the market for a house, and I'm on Zillow all the time still. So, yeah, of course. All right, so some charts. Number one, U.S. online residential real estate app by wide margin, daily active app users. So here's a pie chart.

in terms of people that use an app for home searching, 63% use Zillow, 20% use Realtor.com, 13% use Redfin, and then the rest is the crumbs. All right, housing is the growth industry. I showed you that. Look, but look at this. The average industry commission, this blew my face, 4% average annual growth in commissions. The average industry commission. Now, why?

It is not rocket science. Existing home transactions value. So the dollar amounts goes up because home prices go up. It's not like the percentage. So they show significant long-term growth opportunity. I wonder if it's a redfin's still down 90%. Why doesn't Zillow just buy them? Or would that be taking too much of the market?

Don't know. I don't know how they view them in terms of competition. All right. So they have a chart showing the significant long-term growth opportunity. By 2025, their financial targets of $5 billion in revenue and 45% adjusted EBITA. So that would be like, let's see, almost a jubble-ish from where they are today. So, yeah, they're projecting to go from $2 billion to $5 billion by 2025. This reminded me a little bit of that scene in succession where the CFO, Carl, said to Ken,

if you f*** me, I'm going to squeal like a pig. Right? He said, like, don't throw bullshit numbers on the screen. And I saw this and I said, a little bit optimistic. True. Where are you at in succession? I'm all caught up.

I'm a week behind. I'm a week behind. Okay. I thought the first five episodes were like all A pluses and the last two have been Bs, but I feel like they're setting the stage. And I'm at the point where. Oh, I love the one two weeks ago. Okay. After the nor.

I thought they just, they just cooled off a little. I mean, they're, they're like great shows in terms of TV about I'm, I'm, I'm, creating a curve for other succession episodes. I thought they were, but they were like setting the plate. But my only conclusion is that like there's zero chance that this show ends like with a smile. Like there's,

that's going to end happy. It's going to end. So it's going to be. It's going to be hard to watch. Yes, but I'm, I'm fully on board. Wherever they take me.

All right. Check this chart out. Moving is offline, complicated, time consuming, stressful, and expensive. And for people listening,

there's real estate, agent, inspector, mortgage lender, appraiser, title co, escrow, mover. They say it's estimated $26,000 to $40,000 to move. I was talking to Benny Marketer. I was talking to Benny Marks about this. He's asking me about buying a house, like short, I'm like, dude, you don't buy a house for the short term. That's not what this is. I think you're underestimating the cost involved, the headache. I would say seven years minimum should be your starting point, right? I mean, again, life gets in the way it happens, but that should be where you, where you, where you, Because it's true, this number might be low in terms of cost to move.

Yeah, I don't know what the number is in terms of how many years, but you should buy a house with no intention of moving, right? It's not realistic to think that the first house that you buy, you're going to stay in forever, but you should buy the house with no intention to get out of it anytime soon. Right. Michael McDonough from Bloomberg tweeted, the AI revolution is unmistakably underway as evidenced by the significant increase in AI-related mentions during earnings calls and company transcripts. I mean, look at this. It was basically, it went from effectively zero to all the way up. Which companies haven't said anything? Like, that'd be interesting to me.

Like, Apple probably hasn't said anything yet. I'd love to hear some of the big companies that haven't said it yet. So they asked. So biting their time. I did listen to Apple. They asked Tim Cook about AI, and he was pretty vague, pretty noncommittal with his comments. But I had, I don't know if an epiphany is the right word, but a realization, and I could be way out of bounds here. but hearing Tim Cook talk about Apple

and how they're bettering the world and all this sort of things that struck me as nonsense like he's like the bad guy from Jurassic World another like the bag you know the latest Jurassic World Apple has not made your what your life better AirPods Apple watch iPhone it has totally made your life better love it but no I'm saying like

do you think that the bad guy in and Jurassic World was modeled after Tim Cook because he looks exactly like it they do kind of look They have the same manualisms. I agree. Okay. Apple Q2 revenues. By the way, I was talking, it seems so long ago, on the compound and friends, I was saying that like the stock market looked really kind of shaky going into Apple's earnings

calls. I don't know. I know you're not a stock market guy, Ben, but just take my word for it. It looked kind of shaky. And I think I said something to the effect. I'm just not, I'm not a chart guy. How's that? I said something to the effect of I don't think, or my, my, my, my, my,

what I intended to say was I don't think that Apple can necessarily save. I don't think that Apple Beanie will, like, be a boon to the market. But I think if Apple misses, it could definitely, like, take the market down 5% in a hurry. And I was 100% wrong because on the day after Apple reported, the S&P on Friday had like, was up 2%. So thank you, Apple. Thank you, Tim Apple. All right, so Q2 revenues.

Not quite at a record, but right there. Who made this chart? I can't remember this from transcript to somebody else. Category revenue. I don't understand, Ben, how they are doing almost $7 billion a quarter with just the iPad alone. That blows, that absolutely blows my mind. The iPad is a $7 billion a quarter. Because every parent buys one for their kid now.

So when they go out to eat, they can have a meal in peace. That's how it works. Going on your iPad, scram. It's unbelievable. What else did they say? So I think somebody was, I think I saw a tweet like, like, this is two consecutive quarters of Apple revenue being down year over year. I don't know if that's exactly right, but it was something like that.

And the implication was, in fact, the president explicitly said that Apple is no longer a growth company. They are kicking butt and taking names in emerging markets. There was a lot of talk on the, a lot of talk on the call about India. If you're the biggest company in the world isn't hard to be a growth company, just by definition. Like you're past the growth stage. you're more mature. Yeah, that would stand to reason

with the $2.6.20 market cap. Anyway, Apple is still killing it. All right, Coinbase. The most impressive company in history. We might have said this before. At least an hour history. I don't have any experience with the East Dutch trading firm or whatever,

so South Sea, all that stuff. Ben and I did record a listener mailback episode with Fidelity Digital Assets that's coming out on Monday. And in the intro, Ben, you and I were talking about Coinbase and how in the earnings call, Brian Armstrong was talking about people are unhappy with the current financial system and they're making it faster and cheaper. And then I told you the story about trying to buy USDC with a near 4% commission. Consumer trading volume was $20 billion. I'm sorry, yeah, $20 billion in the most recent quarter. Institutional trading was $124 billion.

So there were six times as much volume from institutional traders as there were from retail, okay? Transaction revenue, Ben, for consumers was $350 billion, I'm sorry, million versus $22 million for institutions. So institutions trade six times as much, volume, but consumers pay 15 times. Is my math right? I don't know. between 15 and 20 times what institutions pay

this has always been my bare case for Coinbase is just fees coming down that's I mean maybe they're the only game in town now and that holds that off but that's been my since they became public I thought that the fees coming down is the problem with them

oh wait here here's here's a quote on the consumer side we had an increase we had increased our spread in the second quarter so I guess they're like I kind of assumed that a commission was static, which I don't know why I assumed that, but it sounds like it flexes based on whatever they want to do. All right.

Here's a crypto thing for you. 48% of U.S. adults say they're concerned about their money at banks, including 19% who are very concerned, 29% were a model are concerned. 30% are not worried at all, or 20% are not worried at all, 30% are not too worried. So 50% or so are worried about banks. This is an interesting one. This is from Apollo. So less than 1% of bank accounts have a balance higher than 250K.

So more people are worried than should be worried. How does that sound? That's exactly right. And I would follow that up with, of those people that are extremely worried or very worried, how many of them have moved their money? Right. Or will, yeah, exactly. All right, here's a good one from Middle Age.

This is in Wall Street Journal. The age when you stop feeling young. Okay. A lot of people have commented lately how it's really funny to see in real time Michael realize that he's reached middle age. and you've slowly hit that realization. The early 40s, specifically 42, is when the average American starts noticing

physical signs of aging, including achy joints and gray hair, according to a September poll conducted on behalf of found a weight management company. I turned 42 in three months, and I feel great, but I do occasionally feel like I have like some sort of like tendonitis or something, like after lifting weights,

I'll have like a sore joint for like a month, and that'll just kind of go away. But that's happened two or three times to me. where I'll just be really sore in certain spots, knees or elbows or stuff. It's funny to mention this. Yesterday, I was tying my sneakers on the couch. And I felt something in my knee. Pop is too strong a word, but I don't know.

What's between nothing and pop? Felt something. And then I was like, what was that? And it doesn't hurt anymore, but it bothered me for the rest of the day. Tying my sneakers. It happens. Did you see this thread from Airbnb? about their new

that's the one that's the one I try to listen to the Airbnb call every quarter so that's tonight I'm going to listen Brian Chesky tweeted you told us what you don't like about Airbnb here are 50 things we're doing about it there's a tweet thread of 50 things that they're changing

for example you said check out instructions can be a surprise when you get to your Airbnb now all checkout instructions can be viewed on the listings page before you book and again there's 50 of these things yeah I like it they seem very consumer friendly Beyond the guy next to us in Florida

who yelled at us for being too out of the pool. He's not an Airbnb fan. Oh, I got something. Okay. Two things from Texas. On the way to the airport or from the Uber driver

had a live rearview mirror, which I feel like I've seen before. I think I want to get that. What do you mean a live rearview? Like on the screen? So the rear view mirror is video of behind you. So instead of looking to your rearview mirror

to see what's behind you, like with a mirror, there's a camera, I guess that goes in the back of your car and I don't know if it's a wireless connection where you can literally see the cars behind you in your rear mirror. So my new G-prangler does not have the like side alerts where there's like a light comes on. So instead of looking up, you're looking down?

What? So instead of looking up in the rear of your mirror, you're just looking down to the screen? No, the screen appears on your rear view of your mirror. Oh, okay. Instead of it being a mirror, Somehow it's a camera to the cars behind you. It's a view of the cars behind you.

What happens in a speed situation where someone loops in a video of a different background and someone's really coming up behind you? I'm just saying. Ben, I don't know if you saw this speech, and I can't even remember if it was from Allison Levine or Eric Maddox, but I'm thinking it was Allison Levine, just given the nature of the quote, talking about how a lot of people are, or maybe it was Jason Carp. I don't even know if it was, I don't remember who said this quote. forgive me. But they're talking about why some people, so many people with money are not

happy. And the quote was this. I think it was chasing carp, actually. I think it was, yeah. He said, I got to the top of the mountain and there was nothing to see. Yes. And boom, there it is. That was very good. For people that are chasing money that thinks that that money is going to somehow change how they feel about, I don't know, their happiness situation. It's just... So Jason Karp was a hedge fund manager, investor who became a, who started his own health food company. And it was interesting because he talked about how he doesn't like all the processed foods,

you know, like, eats naturally, and he's talking about, like, how much of it endemic it is that we have this, this obesity in this country, and then someone asked him at the end, well, what does your diet look like? Do you eat fully healthy and natural all the time? And he says, well, I have like the 85-15 rule. 85% of the time I eat clean and 15% of the time. of the time I eat burgers and fries and pizza and stuff because I don't think he said I basically think you go crazy if you live at the extremes like that and I I subscribe to that

notion as well where you need to have a little bit of balance in there all right recommendations Ben somebody recommended this to me it's a show called the juror on Amazon Prime and it's got a great premise do you know about the show no so there's a jury there are so many shows right know there's you've got a judge you've got the defendant you've got some prosecutors and you've got a jury everybody on the show is an actor except for one dude who doesn't know that it's it's rigged oh it's a reality show it's a great premise and apparently like things go nuts but here's a problem it's on amazon prime on this service called like free v and there's commercials and i can't watch it also the juror was not a bad movie alec baldwin and demi more was that

John Grisham? I think so. I never saw that one. Not bad. Okay, I was listening to the town podcast with, I don't remember who it was with. I think it might have been, I don't remember who it was. And I learned that the Meg 2 is coming out. Are you kidding me? So many people tag us on Twitter for this. I also learned that the first one did over $500 million in global box office. See, you're part of the problem. You're the reason we can't have nice movies anymore.

I'm not going to see the back there. Yeah, you will. I also think the reason we don't have, if you watch a show like Succession, I think you just realize that people have decided, why would I write one single movie anymore when I can write 10 episodes of a TV show that could be four or five seasons?

I think all the good writers that used to write good movies are now writing TV shows. That's my only, it has to be. So I caught a little bit of ghost. What year did Ghost the movie come out? For younger listeners, This is Patrick Swayze, Demi Moore, and Whoopi Goldberg.

Eighty-nine. 80s? 90. Okay. So I don't know when I saw this. I was young. I was maybe like six or seven or eight. I don't know if I was probably six.

That's probably too young. Let's say that I was eight or nine. And I think this movie like taught me about death, like in a real way. You know what I mean? Like I don't exactly remember how I felt when I watched it. But if you haven't seen this movie, what a, What an incredible movie. Holy moly.

It really is. I mean, Whoopi Goldberg is so good of that movie. Yeah. Okay. I am very excited for the Confident, the Guy Ritchie movie, which doesn't really seem like a Guy Ritchie type of movie.

It's Jake Gyllenhaal in the Army. And I saw a commercial, like it said, coming to digital access today on May 9th. This movie came out in the theaters. Two weeks ago, I actually almost saw it instead of Evil Dead, but I saw Evil Dead. And I was reminded of bootlegs. Remember Bootlegs? Mm-hmm.

I was walking through Times Square in like 2004, maybe, and bought a bootleg copy of Gothica. We went and watched it, and it was a guy literally videotaped it. Yep, and Robert Donnie Jr. Yeah, that was the thing. And a guy literally videotaped it, and it was pretty good camera work, except when you'd see someone walk in front of him and in the row. In 2008. What year was it? I'm going to guess like 2007, 2008.

I was working at a restaurant. And I did that for about two years, full time, no big deal. And there was a guy that would come with bootleg DVDs. And I remember very, very vividly seeing no country for old men on bootleg. And there will be blood on bootleg. That's what we had to do before streamers existed. So this is what we had to do back in there. But it was always like, it was always like a roulette wheel to figure out, you know,

you popped it in and like, was it some dude holding a camera? But 50-50, sometimes it was like legit, like just a great copy, which was thrilling. Like that was thrilling to be able to see those movies at home for like five bucks. Yeah, the quality is always so bad. Never did it. No, I'm saying. I got a bunch of good ones. It was, I had a guy.

All right, lastly, there's, I heard or so, I don't know, commercial, whatever. There's a movie coming out called Blackberry. which is literally about Blackberry, like research and motion. And I don't know how I feel about this. What's going on? I don't know. I never had one, so I think I'll skip this one. I have no nostalgia here.

So there was the run of TV shows about like the WeWork TV show, the Uber TV show. On record, it's saying it's too much. So now is Air going to kick off a run of these type of movies? I'd rather have to be a movie than a TV show. We've been catching up on TV. I've been out of town and doing stuff. So I've been watching much in all the movies these days stink. No good movies.

There's just no good movies anymore. In the theater or what? Yeah. When's the last time a good new release came out? Well, Evil Dad, Scream. I'll watch Scream a little bit of Paramarion. I've been reading more. So Amazon Kindle finally got me.

I have the Kindle where it has the ads on it every time you open it up. And forever, it recommended me this book called Tomorrow and Tomorrow and Tomorrow by Gabrielle Zebben. and I think it's been a really good bestseller. It finally got me, it wore me down. I read it, and it's great. It's about three friends who start a video game company, and it goes from when they're young to when they're older and all these things that happen in between,

and it talks about how they develop these video games, and it's not like anything I read usually, but I really liked it. True story? Very good book. No, not a true story. I'm only fiction these days. Send us an email. Annal Spiritspot at gmail.com. Michael will come back next week with a healed up head.

I think Logan's sick All right Great good luck You have the worst luck with that All right Arnold Spurts Pod At the Gmail See you next week