Animal Spirits Podcast - Does Government Debt Matter? (EP.330)

Episode Date: October 18, 2023

On episode 330 of Animal Spirits, Michael Batnick and Ben Carlson discuss: inflation coming down, the continued strength of the US consumer, Howard Marks on investing for a sea change, the risk-reward in bonds, what would happen if the US government paid off its debts, EMH in crypto, the worst case scenario for the housing market, and much more! Thanks to iShares for sponsoring this episode. To learn more about the iShares Semiconductor ETF (SOXX), visit: https://www.ishares.com/us/products/239705/ishares-semiconductor-etf Thanks to Kaplan for sponsoring this episode. Learn more about the Chartered Retirement Plans Specialist designation at: https://www.kaplanfinancial.com/wealth-management/crps?utm_source=animal_spirits_podcast&utm_medium=podcast&utm_campaign=animal_spirits_partnership&utm_content=crps Find complete show notes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   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 iShares by Black Rock. Ben, what's the investing theme? I'd say investing because otherwise the theme of 23 might be Taylor Swift. But what's the investing theme of 2023? Well, I've heard you and Josh say that... I've heard you and Josh say that AI basically saved the market this year. So when Josh said that early in the year, I'm pretty sure I scoffed because he was early. That was like a key one to save, but I think he's right.

It's possible. The funny thing is, is that like if this trend is what everyone thinks it's going to be, it's probably still early innings, which is hard to believe. Is that fair? Early innings? I mean, well, yeah, we just got this damn thing. We just got this thing in November, in November 2020, that's when Chad Chb-T hit the scene. Of course, all of this stuff is powered by semiconductors, which again, credit to Josh, called them, I remember in like 2013.

He's like, stop looking at the transports. Look at the semiconductors. Those are the new transpores. Oh, semiconductors are the new transport. That makes sense. We obviously learned how important they are during the pandemic. when we had a shortage of them, right? No one could get a car because semiconductors are so important.

So, year-to-day, net inflows into the semiconductor subsector ETF, $1.8 billion. So that doesn't sound like that much, actually. It feels kind of light. Anyway, if you look at the at exposure to the burgeoning, the booming semiconductor space, but you're not into just picking individual winners, I don't know, Nvidia, AMD, who's to say? Which one is going to emerge and take the reins? So the ticker for that is S.OXX. To learn more about the I share a semiconductor ETF, hit the link in the show notes.

Today's podcast is also sponsored by Kaplan Schweiser, who helped me get through the CFA exams, one, two, and three. All of them, no big deal. And they also have other designations, right? Charter retirement plan specialist designation. So this is interesting because focusing on areas like 401K, pensions, Roth IRA, all that stuff. this is how you get to be an expert at that. And I think this is one of those things where a lot of advisors ask us,

how do I grow my business? I think having a niche in something like this. And if you can point to this designation and Kaplan can help you get it, it makes sense because that's a way to stand out to clients. Are you a niche guy or a niche guy? You said niche. Do you go both ways or are you always niche? I'm niche.

I'm not a niche guy. It sounds better, right? I think niche does sound higher class. So the chartered retirement plan specialist, that's the designation, is that the CRPS? I guess so. So it says that it helps you gain expertise on implementation and techniques and effective administration of company retirement plans,

which that's part of our business. We have a specialist who deals with that. So it's one of 11 designations the College for Financial Planning offers to help gain specialized knowledge in financial discipline. And Kaplan can help you study for all of these designations. They help me? Yes, they help me too. So check out the link in the show notes.

And I got kicked out of college and they still help me. That's how good they are. That's like a, yeah, that's like a double. tutor. They helped you with your, yeah. That's a big stamp of approval. Ben, where do we send people to learn more? Check out the link in the show notes. Kaplanfinancial.com. 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 Ridthold'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 Lund. Data. Tons of data. Retail sales this morning, inflation last week. Before you get into this, I was thinking, we do have an amazing amount of data at our fingertips. Let's say the technology for podcasting exists or we just had a radio show on like the 60s, what would we have talked about? Headlines? Would we just read the newspaper? Because there was like literally no data back then for people like us. We would have had pages all over the place, no Google Doc.

You know those, remember those newspaper things where we could, they had two sticks on the end in the library and you'd hold the sticks to hold the newspaper up? I don't remember. You never saw that? No. It was like a little sleeve the newspaper going to these huge long sticks and you'd hold the sticks so you could hold the newspaper open like a book. You never had that? No. Okay. You know, back in the day, did people just walk around with inky fingers from the newspaper? Oh, it's good. Probably.

Hmm. Oh, you know what's gross? I don't know why I just thought about this. Where did I see this? A temple. Handkerchiefs. How gross are handkerchiefs? Reusing one?

Yes. That is gross. No, but by definition, it's just a tissue that, I don't know, you just keep using and using and using. We've got a lot of stuffy noses in our household right now. And we're just going through boxes and boxes of clean. You know what I've got? A bad back, an achy back. For the first time since I started working out, I started working out. The guy said, what are you trying to get out of this? And I said, I don't want to hurt. I hurt my back sneezing. And I just don't want that to happen. So it wasn't sneezing. It was playing basketball. But nothing even happened. It wasn't like I twisted wrong. And I was like, uh, I told you this what happened. Old men playing sports. It's like, it shouldn't be a thing anymore. Especially basketball. I'm sorry. Well, I've been playing for a little while now. But you know that you knew this was coming. Well, whatever. Worth it. It's worth it. Okay.

I couldn't get out of bed this morning. I'm heating. I got the heating pad going on. It's a whole thing. It's annoying. But you're not middle-aged. I'm not middle-aged. All right. What kind of data we got here? Inflation. Year over year, headline, the core. I don't know. It just keeps coming down. Does it not? I mean, obviously some parts are stickier than others, but as a whole, is this not trending in the right direction?

You'd think so, but you wouldn't think so from listening. to investment people. Because investment people continue to harp on this time is different. Inflation is here to stay. And I don't know if they mean 3% instead of 2% or 4% instead of 3%. But that seems to be the resounding theme. And it's funny because a lot of people think they're a contrarian when they say that. Like, hey, inflation. I feel like everyone's saying that though. I feel like, yeah, I think that's right. It does seem to be consensus. You know, it's saying that inflation's going to stick around longer, although I don't know if that's exactly what this is saying, but interest rates are pushing to new highs, really across the curve.

Twos are at 4.85. The 10 year is at, no, that's the 10 year. I'm sorry. Twos are at 518. 10 years at 485. I don't know. Now, I'm not... Did you see retail sales this, Marty? The economy remains strong. I'm sticking with my, what if rates are rising and it's for a good reason? And that good reason is the economy remains strong. I still think people are not... Everyone, all the, all the, doomers out there think the consumer is going to be tapped out and they're just going to stop spending and that's going to make the economy roll over. I think it's going to have to be the opposite. People are not going to stop spending if they have a job. The questions people keep hitting their

head against the wall on are why aren't housing prices falling and why is the economy not rolling over? Yeah, move on. It's because people have a job and people aren't going to stop spending if they have a job. I think it's that simple. I wonder if the eventuality that people are waiting for and never happens and it's something else. So I don't know if you and I were talking about this or if Josh and I talking about this. Did we already have a soft landing? Yeah, that was my thesis a couple of weeks ago. I said, yeah, I think you subliminally stole my take. Maybe. I'm sorry, we do, we, we, we, we talk a lot. There's a lot. It's a lot of talks.

Yeah. I mean, I gave you the Bezos one that you got all the publicity for. I'm willing, I'm willing to share my takes. I think that I think that was a good one. So when you say open source takes, not bad, when you say that we already had a soft landing, That's not to say that we're in the clear, right? Like, kumbaya, no worries, there's no risk. Of course, it's risk. But I think we might have already had the thing. Yeah, it's been, it's been two years.

Look at this. This chart is from the White House. It shows G7 countries, which I think we're still trying to figure out what that means, just developed countries. I'm sorry, that's, that's not a mystery. That's true. But the U.S. has the, what was the other one we were trying to figure out one of those? But the U.S. has the lowest inflation, this is as of August, of any of the G7 countries.

which is crazy because somehow we were the cleanest dirty shirt for the whole 2010's coming out of the great financial crisis and somehow it's the same thing coming out of the pandemic like people keep saying like how can the U.S. continue to dominate and all these people are trying to predict like the end of the United States as like the Roman Empire is falling. Yeah. I just, I don't see it.

The U.S. continues to have the best innovation. We have like built in buffers for like our borders and our response to the pandemic and to the great financial crisis, although not maybe exactly what people would have wanted, are way better than what happened to other countries. I'm sorry, but we're still king of the mountain, and I don't see anyone else knocking us off that throne. Yeah, I think that's right. Let me ask you this.

Is the war on inflation over? You ready to say that? Boy, people were really, people were really mad at Krugman because he did CPI, X food, X energy, X shelter, and used cars, because I guess those have been the most volatile things. and he said the war on inflation is over, we won at very little cost. I think people should have been more mad at the very little cost thing

than the war on inflation is over. Yeah, that part is ridiculous. Because it honestly was a cost. I don't know. Paul Cugman, like, is he funny? Is he joking? Is he poking the trolls? I honestly can't tell.

It would be, it would almost be funnier if he was like doing this for purpose. I wonder if he's like this before. Like, I kind of. I watched, I think you mentioned this. What was the movie? Get him to the Greek? Which.

Oh, yeah, he's in that. He's in. I rewatch it recently. It's so good. And Joe, I did too. Jonah, it's a little over the top, but Jonah Hill's like, hey, my dad loves your stuff or something. You know, I have a fun fact. Paul Krugman grew up on the street that I live on. Oh, really? Interesting.

Actually, my neighbor lives in his house. On Long Island, not in Long Island, right? My neighbor lives at the house he grew up on. Oh, wow. Okay. But here's the thing. If he would have just said, here's CPIX shelter, this is the thing our friend Jeremy Schwartz has been harping on. He says using real-time series for shelter, alt-inflation, which is just because I think if you, we've talked about the shelter component being a lagging indicator. If you look at it, Jeremy shows this here for Wisdom Tree, the trillion 12-month inflation with alternate shelter metrics, which is taking like real-time data for rents. And basically what it shows is that inflation was way higher at the peak than we thought because of shelter and housing prices and rents going up, and it's way lower now.

if you take shelter out of the equation. And so he's saying it's below 2% already. And we should be, we should be saying, claiming victory here. Yeah, you don't have to X everything. I mean, Conlin has this chart, CPIX shelter. And it's at 2%. Right.

And I think that that's the one that makes sense because that's also the biggest component of inflation. If you take that out and you say, well, listen, rents already rolled over. They're going negative year over year in some places. It does make sense. And I think it also makes sense that inflation probably was higher

than like the reported 9% we said because the shelter cost took a while to catch up back then. So is the interest rate breakout that we're seeing today? Is this not necessarily inflation fears, but growth worries, which sounds dumb?

Is it growth? What's the opposite of worrying about growth? Well, maybe it's both, right? Is the market excited about growth? And that's why yields are rallying? I mean, if the thing is... Because the feds could have to stay tighter? I mean, if growth is, yeah,

if growth is going to be higher, inflation is probably going to have to be a little higher, too. We said this last week. I'm sorry. Not even necessarily with the stock market, but like, I can't, I'm not a, I'm not a good news is bad news type of guy. I'm just good news is good news. It just is.

I agree. I'd rather the market go up, uh, like, you shouldn't be cheering for the market to go up on bad news. Yes, I agree. You don't want like, that's like a short term, short term rush that's not sustainable. And it does seem like the market is like wavering on this. Sometimes when they have good economic news, the market takes off. Sometimes when there's good economic news, the market tanks, it's hard to find that equilibrium

of what's the right place to be for the Fed to not totally stomp on the market's neck. You know who didn't get the memo that the war on inflation is over? Chipotle. Hello. It's over. Paul Corpumann said it. Chipotle plan's price increases after pausing hikes this year. Uh-oh.

Imagine the Fed is following Chipotle's footsteps. I had a bad experience of Chipotle yesterday. Chipotle pause, the Fed pauses, Tripoli hikes, what if the Fed hikes? So I do the order online so I can just walk in and pick it up and I have to wait in line. You know, it's like I'm a VIP.

And I did it the other day and I walked to the door at like noon and it was like a sign of the door saying, sorry, we're closed temporarily. And I couldn't get my order. I already paid for it because it was on my app. I think I had to email them and say, hey, listen.

So yesterday I go to get it again and I called the place. And I said, hey, I just wanted to make sure you're open. And the guy gave me attitude. He's like, yeah, of course we're open. I go, you weren't last week when I came in. And he's like, he didn't say anything. He just sat there.

So I was not pleased with my customer service at Chipotle and now they're raising prices. Guess what? I'm still going to get it. I'm not going to go on a strike like you. But wait, did they give you a free order? Not free order. Did they make you pay for the second order? Yeah.

Well, they just refunded me. But yeah, it was whatever, not a big deal. Another inflation question for you. We talked about semi-conductors earlier. How is it possible that TVs keep getting? being so much better and cheaper. I, it was like Amazon Prime Day last week, and I've been wanting to get, I used to have a TV in my little workout room. I created a little workout room in pandemic in like my storage area. Nothing to brag about or right home about it. I got like a

bowflex in there and a treadmill or whatever and some free weights. My back is still fine, by the way. And I wanted a TV in there and I wanted to hang it up in the wall just so I could have something in there to have sports on in the background or whatever. And I got a 43-inch TV. It's an Amazon on fire TV, like an insignia, like probably their lowest level of TV. It was $160 for a 43-inch TV. Now, is it the highest quality? Probably not. But for what I want to do with it, how is it possible that every single year TVs get better and cheaper? Why wasn't there like an inflation scare with TVs at all over the past 24 months? They continue to get cheaper. Guess what? That TV is going to stop working in six months. Oh, I'm sure it is. But for what I want it for and I'm using it for?

TVs keep getting cheaper. I don't know if they're getting better, though. Like, I know. I notice. The smart TV stuff is not that, not, it's still relatively new. It's kind of like the iPhone. Like my TVs, and now at this point, they're all smart TVs with the apps. Every time like you click it to move around, I feel like it's getting a little bit slower, like all of them. It's true. They start, they start out, they start out blazing fast and then they sort of deteriorate. But they're so cheap that once every four or five years, you just get a new one.

Well, that's true. But I'm just saying, like the first, the first flat TV. flat screen TV that I got. I remember it was like 37 inches and it was expensive. I saved for a long time. I think it was like $2,300. But it lasted like 13 years. But these things are like computers now. Yeah. So the old ones, they weren't as good, but they lasted forever. Like there was no deterioration. My Samsung, I'm everyone remembers three years ago. I got a lot. I got a lot and a half to six months. I replaced with a Sony. Started out great blazing's fast. And now it's, you know, it's, I click the button to move to the app and it's, there's a second and a half delay. Like it's. They are slow. It would be nice if you could, like, pay an extra 50 bucks for a faster TV or something. Yeah. Like an upgrade. But I still, I'm still really happy with the Samsung frame TV that looks like a picture. Oh, that's a beautiful TV.

It looks really nice. So we got, we got retail sales this morning, as we mentioned. And I don't know if it's at an all-time high, but, I mean, it might as well be. It is. Smoked, smashed expectations. July and August, we both revised higher. This is what I get any time I post-economic news, just wait for the revisions. But then no one talks about when the revisions get made higher.

True. That's a great point. Hey, let me, let me say this. I was in the camp that these rates do take a while to filter through the economy, and we've given all of the reasons why it hasn't, and I think everyone understands that. I'm almost, but not quite, almost ready to say the economy can handle higher rates. The fact that it's been able to handle them this long, no one in their right mind would have ever said, sure, the economy can handle 8% mortgage rates and 5% treasuries, and it'll take 18 months to

get there. If you would have told people that, no one would have said, oh, yeah, everything's going to be fine. Now, I'm not ready to pound the table on that. Like, I'm not going to fight you if you think I'm an idiot or that statement is dumb, fine. But what I would ask you, if you're getting mad right now listening, is this, at what point in time would you concede? In other words, if it's April of next year and we're having these sort of same conversations with the consumer is still spending, home prices aren't crashing. Like, if you have to, there has to be at some point in time where you say, all right, hand up. Do you know nothing of finance people?

Finance people never concede anything. The goalposts are always moved out because, listen, it's just going to make the downturn even worse when it happens. Well, listen, I can't control the group, the mob psychology, but I'm talking to the individual. If you're part of the group, hold yourself accountable, give yourself a time frame where you say, you know what? at this point in time I was wrong. I think that's what makes it so there's so many

psycho-dumers out there now because they have other people that can find. It's harder for them to change their mind because it's like a group. It was like the people with the AMC stock. Like, we're never leaving. When you leave the group, you're a traitor. You're a sellout. Yes. Whatever happened. Changing your mind? What are you an idiot? What happened to all the diamond hand AMC people? It's down like, what,

99%. I think Taylor Swift basically put it back on life support with her movie, which I'm going to get to in recommendations. father of the year right here. I'm just putting it out there. I'm planting that seed. You are a great father. All right.

So this is an interesting chart that we've shared before from Michael McDonough at Bloomberg. Department stores versus non-store retailer, so online. During the pandemic, there was the massive spike, right? When we were just ordering everything online.

And then that is since come down and then bounce. And now we're drifting back towards those highs. It looks like it's kind of on trend still. Department stores, on the other hand, crashed and had like the tiny, tiny, tiny bounce, but they're still, that's still secular decline. I'm never going to shop in a department store for the rest of my life. I can safely say that.

Like, as far as clothing or whatever goes, I will never buy something from a department store again. How's that? I only buy. You still do. Well, once a year, I go to Nordstrom's and I call you. Although last time I didn't call you, I just, I just, I did pretty good. However, you're always like, Ben, how's this $350 shirt look? Why is it so expensive?

Well, then I put it back on the rack. But I did buy what I consider it to be an expensive shirt. I bought a button up. Right, because, yeah, the button down, the button down have the buttons by the collars, right? That's a button down. This is what we learned. Yeah, so a button up, it's just a collared shirt. And it's probably the most money I've ever spent in a college shirt.

I think it was $200. And I lost it. I never wore it. How is that possible? How is that possible? It just came home. Are you serious? This is you with sunglasses. This is why you don't buy $200 sunglasses or $200 shirts because you lose them. I don't understand how I could have lost that at my house. That's pretty good. You're helping keep the economy float by buying stuff and losing it. I'm sure it'll pop up at some point. Okay. This is a good anecdote from Pepsi. By the way, Speaking of these anecdotes, so I'm leaning on the transcript, which has a phenomenal substack.

They shoot out emails of like inflation and macro and micro and consumer and technology, and they just take like quotes from all of the earnings calls. So if you're into that sort of thing, could not recommend it highly enough. Okay. This is from Pepsi CFO. Here's a great nugget. The thing that I usually look at with the consumer to detect whether there's high stress is the convenience store channel.

Typically, when gas prices are up and consumer incomes are stressed, you see revenue in those channels under stress as well. For Q3, we saw revenue up 5% in beverages and up 8% in foods in the convenience channel. Number two is food service. That's also typically a leading indicator that's still growing double digits. This checks out, right? If you're at the gas station and times are tough, you're not getting the Nutsarages, which, by the way, is my favorite candy bar. Or a Diet Pepsi, a Diet Pepsi in your case. Nutsarages.

It's a Rhesus property. Okay. I like the recent fast break. I like it all. I like the big cups. I like the mediums. I like the smalls. I like the pieces. I like them all. My kids love getting snacks at a gas station. So we're definitely helping this. I wanted to comment on the Pepsi-O-Zempic thing. I think you and Josh talked about this last week. But I just think people are really bad at calling trends and what's going to be the end of a company in advance.

Like, remember for like three weeks, people literally thought Google was done? Like, listen, Chad GPT and Bing are going to take Google. And people really thought that Google sold off. And now Google's back to an all-time high, and it's kind of like nothing ever happened. But people were seriously saying, is this the end of Google? which seemed nuts to me at the time. This is an obvious overreaction.

The Ozympic thing, I think is the same thing. People are not going to stop being, people are not going to stop being unhealthy. Like, who's kidding who? No, I have a hard time seeing that, too. All right. This is from Fortune Magazine, Jamie Diamond, talking about the war in Israel. The war in Ukraine, compounded by last week's attacks on Israel may have far-reaching impacts on energy and food markets, global trade and geopolitical relationships.

This may be the most dangerous time the world has seen in decades, he said. I'm sorry. What do you talk about in the third quarter earnings report? Is this not not to discount the tragedies that we're seeing? But is this not recency bias? Yes. And I think, but I think people see this kind of stuff and these kind of headlines or see the geopolitical stuff and assume that they need to do something with their portfolio because of it.

And I think that's a big mistake to try to conflate anything going on in geopolitics with their portfolio because most of the time, it's very counterintuitive what happens to the economy or the markets when something like this happens. And you assume, well, I need to keep my hands in the steering wheel now and do something because this seems bad. I think that's a huge mistake for investors. Agreed. All right. I read my first Howard Mark's memo in a while. Investing for a C-change. You read in his stuff sale or not? It's been a while. Okay, so he did the whole thing where he- You know, somebody, somebody, I wrote a great quote years ago. Like, something about, like, you should graduate from your mentors, like that's a good thing. That's a healthy thing.

And I think so many investors, myself included, have learned so much over the years from Howard Marks. Right. People like Buffett and Marks, you don't read them as religiously anymore. Yeah. Like, I just, same thing with Buffett. I mean, I know what they're going to say. And sometimes, in fact, oftentimes it's worth a reminder. But to answer your question, I have not read him. So he went through this whole thing about C change is his big thing. And he talked about how we've gone from this same thing I said as consensus now. We've gone from a period of low rates and low inflation to high rates and high inflation. And it's going to be harder for people who own assets that benefited. He's saying that that's with a sea chain. He's the bottom line. If this really is

a sea change, meaning the investment environment that has been fundamentally altered, you shouldn't assume the investment strategies that have served you best since 2009 will do so in the years ahead. He says, S&P 500 has returned 10% per year for almost a century and everyone's happy. He says 10% a year for 100 years turns a dollar into $14,000. Not bad. Compounding. Nowadays, the ICE B of A U.S. high-yield constrained index offers a yield of 8.5%. The CS Levered Loan Index offers 10%. Private loans offer considerably more. In other worlds, expected pre-tax yields from non-investment-grade debt investments now approach or exceed the historical returns from equity. To me, this means allocators should ask themselves, what are the arguments

for not putting a significant portion of our capital into credit today? It is kind of crazy how So I looked at some high yield bond ETFs. It's like H.YG and JNK, they're both, average yield maturity is 9, 9.2%. And I asked you and Josh this morning on Slack, like what's the argument against this? And I know that the easy one is we go into recession and spreads pull out and these things get killed. But 9% yields on high yield is pretty, that sounds like a pretty darn good deal, right? What's the counter here? So let's look through this.

So you could say, all right, I'd rather I'd rather just wait for spreads. to widen and for some defaults to pick up, because we haven't seen that yet. And then I'll buy when yields got to 12%, 13%. You know what the average, I looked this up last. You know the average default rate is in high yield? 4%. Like, yeah, three to five, basically. So you could say I'd rather hide out in cash.

But if you're like an equity investor, if you want to take something from your equity sleeve, you could say, but if there's a credit event or a recession, high yield's going to fall 25, 30 percent, right? But guess what? So it's the stock market. at least with high yield, you have a 9% buffer. So, yeah, I think you can make a case for high yield, for sure. So in the pandemic, high yield felt 23%.

And it bounced back really quick, just like the stock market. But the timing is the thing to get to on these because let's say you are going to wait. I'm going to wait for spreads below, then I'm going to buy high yield. But what if it doesn't happen for two years? And then you missed out on 18% in yield in the meantime, which kind of makes up for the loss. So I don't know, bond yields approaching 10%. with a relatively low default rate. And I know a lot of these high yield companies

are maybe going to feel more pain because rates are higher now and maybe the default rates raise a little bit. But I don't know. That sounds like a pretty darn good deal to me. For if it's, like you said, kind of like an equity sleeve type of situation. I think that's...

How about this? I remember not too long ago when high yield deals like 5%. Literally. Right. And people were saying this is insane. Yeah. Right now actually is a little more normal,

I think. if there is such a thing. You saw this chart being shared around. Half of all, this is from Goldman Sachs, half of all publicly listed firms by profit margin. Half of all stocks have no profits. Meaning a profit margin is negative.

This is going to, I was going to say this is going to correct pretty quickly, but maybe not. I don't know. So here's the follow-up, why this chart doesn't really matter. It's like less than 10% of these companies, by revenue share.

So the companies who make the most money, 90% of them, 90% of the companies that make the most money have positive margins. So the point is these companies

that have such low profit margins are very tiny in the grand scheme of things. Well, it matters if you're an investor in them because these companies are getting destroyed. But don't you think,

though, that this is the kind of thing that isn't going to mean to ruin and it's probably going to stick around because of technology and, which part which part having more companies that don't make a lot of money that the market is

more forgiving for that or do you think that's going to reverse no that's over the market is not forgiven for companies that don't make any money all those companies got mangled it is kind of crazy how i mean it was less than 10% in 1960 and now it's 50% is this also a reason why we've had these discussions in the past where there was 7500 publicly traded companies in the 70s and now there's 3,500 or 3,000, and maybe one of the reasons for that, besides all the consolidation of these things, is that a lot of these companies just simply wouldn't have made it anyway. Yeah, maybe. I also wonder if there's another part of the story is that these companies are never, not never,

these companies, there's an exit strategy for these companies, which is M&A. So they don't necessarily need to survive and become profitable for there to be a successful outcome for the investors, right? bigger company to take them over. Think about the Mobus and piece about market activity with IPO. Like, M&A is still the dominant theme. Yeah, yeah, which is a big piece. And so a lot of these, I'm guessing that like a lot of M&A happens with these companies

that have negative margins. I could be wrong, but that would just be a guess. So Datatrek, Nick Colas, research company, had this chart. I really like it. It compares the current long-term treasury bear market to the 2002 to stock and then the 2007 to 2009. I'm just saying, I think I made this chart first. You made this?

Okay. I shared it with you and Josh last week. Oh, I didn't realize you put it on the same thing. Did you? I did. Yeah, I did. I didn't have, I didn't have 2008. Okay.

Yeah, but did you have the red writing on there like that? I didn't have that. The point that I made that I'm actually using this chart, the one that I made for what he thought tonight is that as we mentioned, TLT, it's a longer and deeper drawdown than 2000, then the dot-com bust. But what I did was I looked at like the worst days compared to the worst days for the queues. Oh, not even close?

Not really even close. But the thing that is, I think, most surprising is just the fact that it's lasted longer. Because that 2000 to 2002 bear market was a really, really long, that took forever. It's just surprising that's lasted longer. This is an interesting, if you're looking for asymmetry in the market.

at Katie Griefield from Bloomberg, she looks at the 12-month expected returns if yields rise or fall. And she looked at three different scenarios, if they, 50 basis points, 150 or 300 basis points, if they rise and fall. So, for instance, a 10-year treasury or 30-year treasury, if rates rise 300 basis points from here, which would be crazy, rates, long-term rates go to 8%. If that happens, back up the truck and buy 30-year treasuries for everything, right? Just do the 50 basis point rise and fall. Okay, sorry. That's crazy.

50 basis points for the 30 year, you would lose 3%. If they fell 50 basis points, you'd rise 13%. More than 13%. You'd rise. Sorry. But it's showing that, like, a rise in rates right now is you lose a little money. But if rates fell by the same magnitude, you'd make a lot more money. The duration thing is flip-flopped.

I think you could buy the snot out of long-term bonds. Even like, yeah, rates might go up. So, hold on, where's that chart again? So if rates go up another 100 basis points, I'm all parking this. You're going to lose 10%. Okay. Could lose 10%. Right?

But you'll get paid back. And if rates fall, you'll do exponentially well. Yeah. I mean, I still, like, I don't know, I shy away from 30. But even the 10 year, if 10 year yields rolls 150 basis once you're losing 6%, if they fell 150 basis points, you're gaining 16%. That's a pretty good tradeoff. Really good. Really good.

Right? This is interesting. This is another from Goldman Sachs. Ownership breakdown of U.S. Treasury market. We talked last week about, like, supplying demand being maybe the big thing that's causing yields to be messed up besides the economy. And they show households only own 9%, passive funds owned 2%, active fund zone 10. The biggest owner of U.S. Treasury is foreign investors at 30%, and that's falling a little bit. Look at the Federal Reserve, though. They actually owned more treasuries in the 70s than

they do now. It looks maybe similar, but they own 18%. I just have to imagine if the Fed wants to get control of the treasury market, I think they're just going to have to become a bigger piece of it. And kind of like, you know how Japan, the Bank of Japan basically buys all their bonds now? I honestly think if the treasury market gets crazy all the time, the Fed's going to have to take a bigger and bigger role. People will like that. All right. Last week, I just, I found this tidbit interesting. Last week, we showed like the Bank of America bond thing going back to like the 1800s, like the worst bear market going back to 1800 or whatever. And the longest bear market was in 1835. And so I had to look at it. I said, what, what caused this bond bear market from 1835 to 1839? It was the vigilantes. President Andrew Jackson, Andrew Jackson achieved his goal of entirely paying off the United States debt. It was the only time in history that the national debt stood at zero. And it precipitated one of the worst financial crises in American history.

I thought it was hilarious that he literally paid off the entire debt and it led to like a six-year depression. Like, kind of like, careful what you wish for people. I don't know. I just thought that was pretty funny that like they literally paid the entire debt off. That was his goal. And it led to a huge depression for like six years. Somebody on Twitter at Austin tweeted, would you invest in this company?

annual expenses, $6.4 billion, up 1.5% year over year. Annual revenue, $4.8 billion, up down 2% year over year. Net loss, $1.5 billion. Outstanding debt, $25.8 billion. And you're like, well, no, of course you wouldn't invest in this company. Change the billions to trillions. And this is the financial status of the United States federal government. And Elon Musk tweeted, replied to him, yikes.

And then, of course, you can imagine what the comment section in here looked like. I don't, I don't understand this line of thinking. I mean, I get what I get what. they're saying that this is unsustainable, but the United States government, needless to say, it's not a corporation, and you don't invest in them. Well, here's the problem, though. You're showing debt. How much is the United States military and land? Actually, I guess you buy, you do invest in the United States with the debt. I guess you do. Hell yeah. If I'm investing in a company that can literally print its own money, yes, I'm investing in that hand over fist. I'm already, I'm long America for

sure, but he shows the debt, but he doesn't show the assets. You know how much money, how much land the government owns? How many monuments? How much do you think they could sell? Monuments. That's true. The Statue of Liberty has got to be worth a couple of $10, $20 million. How much could we sell the Washington Monion for? The military, the ability to print their own money, I get it. I was actually at a speech one time, and a guy did this thing where he said, if the U.S. government was a household, this is the credit card debt, and he went through it all. And some guy in the-

Comment section. Yeah. Some guy at the conference raised his hand and just destroyed this guy. It was like a Colin Roche type of guy, just destroyed him and put him in his place. And the guy, like, he had no comeback. He's like, I just thought it was funny. So, I do wonder if this is going to become, as we approach the elections, if this is going to become more and more of a political thing, the debt. I mean, the debt is crazy. I don't know how it matters. I also don't know how it doesn't matter. You know what I mean? Yes, with higher rates. It, we said at the time, like, listen, if rates are 3%, the debt doesn't matter as much. With rates at 5%, it matters a lot more, I think. Yeah, it matters. I don't know how this, you know, I don't know where and how it matters, but I can't imagine it not mattering. All right. I thought this is a pretty good take from Connorsen. Over the past year,

inflation has come down a lot. Real growth has been solid. Real wages are up, which again, a lot of people probably don't know about. Oil production is up, gasoline prices are down. Rent growth is minimal. Supply chains have healed. And yet because of interest rates and financing costs, the vibes are still bad for many. I think, like, I talked in the past about how, well, the average rates in the 90s were higher than they were today. Same thing in the 80s. And the economy did great in the 80s and 90s. But I think there's something to the psychological impact of anchoring to way low rates than going higher versus going way higher and going lower. So even though average rates were higher in the past and the economy slept it off,

I think psychologically, people can't wrap their minds around these types of financing costs when they can look back so recently in their memory and say, well, wait, I used to be able to borrow for this. I think that's, I think psychologically, that's the biggest problem now, is the quick change in rates from such a low level. I think that's going to have an impact for a while. Like, if rates do stay higher for longer or whatever, people will eventually get used to them. But I think for a while, it's going to take, I think the vibes are going to constantly be off. So many people in the economy are insulated from higher rates. Like, have higher rates personally impacted your life?

Not at all. Like, at all. I mean, yeah, maybe I would like take more money on my home equity line of credit or something. But I don't know. What would I do with it? So, so for most, obviously not all, but a lot. of people have a mortgage below 5%, pay off their credit card, higher interest rates don't impact me at all. And this is not like, I'm not like, oh, what are the privileged ones? I mean, I am one of the

privileged ones, but there's tens of millions of people like this that aren't impacted. The home ownership rate in this country is 66%. Guess what? The majority of the people already own their home and have low financing costs locked in. So it really sucks for people who are first-time homebuyers or people who are changing jobs and moving or whatever. But that's a very small percentage of the population. Now, I know the cost of capital impacts everything. Right. So even if it doesn't directly impact me, I know it impacts me. But I don't know. I'm having trouble squaring the circle of why the quote, vibes are bad. And I was thinking, like, I don't know if it's a social media thing, but I don't think that it is. I don't think that's what this is. Because

if you just look at like small business surveys and things like that, like it, vibes aren't great. No. But I also wonder if this is the new world that we live in, where surveys, will never reveal things as positive. Is that possible? Yes. It's also possible. This is just a new world? And is it also possible that the pandemic just threw the vibes off too?

We went through this really crazy thing. Doesn't it, I feel like there is like a, you know, like the calendar thing that's like the BC and AD thing? Like it just has that break point. I feel like the pandemic for me is that. Like I.

Excuse me? The what? Like going back to year zero. It's like BC, like 10,000 BC, right? I'm sorry. I feel like the pandemic is like that in my life. Yeah.

I anchor to that pandemic starting point of like before then and after then. Yeah. And I feel like after then, I think it really screwed a lot of people up psychologically and mentally going through that experience. Vives are dead to me forever. I don't trust him. Vives are the vibes are the new surveys. What's that? We're an anti-vives podcast podcast.

Yeah, I think we are. That's right, Ben. I think we are. Remember all of the tech and fintech layoffs? Yes. 10,000 every day. And so that was like just the beginning of the rolling recessions that we were seeing. We saw a lot of the layoffs in financial services, specifically in the mortgage departments,

and it was just going to keep rolling through the economy, and it was going to hit this sector, and then leisure, and then hospitality, and then building and manufacturing, this and that. Well, not really. This chart is kind of crazy that it just, it rose and then it fell. It was like companies anticipated a recession, and I guess you're right, there probably was a mini-recession in the technology industry. But then it just rolled over and stopped. And it didn't go elsewhere. That is surprising.

What's this YouTube comment? Oh, we talked about how sometimes the best thing that can happen to you was a job you didn't get. And this person says it was 2007. I was pissed at a certain prestigious company that didn't want to interview me because I had a different engineering degree and they needed a different one, even though the coursework was 95% the same. They paid a starting salary of 75K, which was a solid salary for a new grad. Yeah, it was. I made $256. Fast forward to 2008, a couple months into starting full-time work elsewhere, Lehman Brothers

went bankrupt. So this guy was so mad he didn't get hired at Lehman Brothers in 2007, right at a college, and realized it was probably the best thing that ever happened to him. Not bad. All right. So yesterday, who was the crypto coin telegraph or something? There's all these crypto publications. I can't.

they in the morning tweeted out iShares crypto ETF has been approved by SEC right something along those lines and then people went crazy bitcoin spiked 10 percent and then they issued reportedly right like they changed it to me and then all these other people who actually follow this stuff Eric Belchunis and some of these other Bloomberg people and are like hey listen I can't verify this this doesn't this doesn't something doesn't smell right here. And apparently it wasn't. And then Bitcoin fell right back down. Here's my question, like, no, it didn't. No, it didn't. No, it didn't. No, it didn't. It didn't fall in back dad. I mean, if you look at the chart, like, it's still up pretty substantially. It's at $28,400. What was it before? But it fell, it wasn't at $30, though?

No, but on on Saturday, it was at $26,800. Okay. But yes, the spike from $28 to $30 came back down my efficient market thing like it's it's a when not an if for a bitcoin etf being approved like we it's going to happen so so why would if if bitcoin took off 10% why would it just stay there if it knows the Bitcoin ETF is coming at some point like the market should price this kind of stuff in should it not why is it not priced in yeah I was I was playing ping pong in my brain like obviously Bitcoin's got a pop when the ETF gets announced But why? We know what's coming.

But then the other side was like, but if everyone knows it's coming, why would it pop? And it's like, because it's going to pop because people are dumb. It may that maybe that's it. It's so dumb. It makes no sense. Like it should be at the prices. Like if like. Ben, Ben, you have to remember that Tesla was up like 10% when they announced a stock split.

All right. That's a valid point. Like if it gets not, if it gets an ounce of Dan, are we going to go up another 10%? Probably. It just makes like just stay there then. It makes no sense. I don't know. What really surprised me, I almost.

I almost couldn't believe it. Larry Fink went on Fox business and said the rally today is about a flight to quality talking about crypto. And he lumped, he grouped crypto in with treasuries and gold. Really? How did this happen?

He wants that Bitcoin ETF, I guess, huh? The funny thing is that there really hasn't been a huge flight to quality or safety in gold. The gold was down in 2021. It was basically flat last year. I guess you could say that helped, and it's up 5% this year. There hasn't been like a huge influx of investors into gold that you would have think with the government spending and all this stuff people are talking about.

Interesting take, though. Sorry, I do want to play this. This rally is way beyond the rumor. I think the rally today is about a flight to quality with all the, you know, all the issues around the Israeli war now, global. terrorism. And I think there's more people running into a fight to quality, whether that is in treasuries, gold or crypto, depending on how you think about it. And I believe crypto will play that type of role as a flight to quality. That's almost unbelievable to me. I mean,

listen, BlackRock manages, I don't know, 11, 12 trillion, whatever the number is. You really think that he's talking like this so that they get $50 billion into a Bitcoin ETF? Hey, credit to Larry, the constant salesman. I almost give him credit for this one. He's making a pitch. I don't know. I guess. I was just, I mean, that was, that was surprising. Oh, let's talk about real estate. Six point eight percent of listings had price drops. This is the largest number of price drops in October over the last four years, but barely. And I saw a data point that, damn, and I was way lower than it seems like it should be. There was a, there was a price drop either nationally or in some markets of like 0.1%.

I looked, we are starting to get more supply where I did a quick Zillow search in my area last week. And there's, there's starting to be more houses on. It's just the prices are so much insanely higher. And I feel like people are still not going to be willing to drop prices. I was talking with somebody in my town the other day. Like, I don't, this doesn't make any sense. Prices are crash, right? I'm like, dude, look around. Yeah. There's no houses. Right. That's the thing. It's like a collusion. Like if everyone lists their house for a house. higher price and no one decides to ever, like, lower the bar. It's, I don't know, when is it, how was it going to happen?

Well, let me ask you this. I was just going to say, how literally do prices correct the way that people think they are? It has to be a fire sale of someone who can't afford their mortgage anymore. People aren't going to panic, leave their house. Right. It's not like a stock where it's, it's down after an earnings report and you go get me out. It doesn't work like that. There's just no supply.

No. And I honestly don't see that dynamic. I don't know what would cause that dynamic to change. Right. From Bloomberg, typical family spent 27.3% of their income on their annual mortgage payment, which actually to me sounds relatively low. I think 30 to 32% is usually the number. Qualifying income for a new mortgage, though, based on a 20% down payment, was $107,000 to make, marking the third straight six-figure reading. So that's the haves and the have-nots. It's fine if you already had a mortgage, if not if you didn't.

I want to talk about the 70s and 80 housing market. I looked into this a little bit, looking at, like, people are saying that, like, housing prices are going to crash. and we talked about Josh's take last week that, like, actually, that'd be a good thing. It would drive up economic activity, pent-up demand would come off the sidelines. But I looked at, like, I think the worst-case scenario is if prices don't correct a little bit. So the 70s, a lot of people don't realize this. Stocks underperformed inflation, bonds underperformed inflation, cash was the only thing that was slightly positive on a real basis. The only thing for, like, the middle class that was up in the 70s was housing.

Housing prices are up 130%. Now, that's before inflation, but, and you could have bought. gold, I guess, but you would have probably had to have, like, coins in your safe or something. It was not easy to buy gold back then. So housing for the middle class in the 1970s is when it really took off as, like, an asset for people. And mortgage rates never got as low, never got lower than 7.2% in the 70s. And they ended the decade at like 10%. And then they went from 10% to 19% in 19, from 1980 to 1981. And guess what? Housing prices didn't fall. So housing prices were up 130% in the 70s. And then over the course of the 70s and 80s,

they're up 300%. And that's in a time when mortgage rates averaged 11% and got as high as 19% and housing prices never rolled over. They fell for a slight time on a real basis, but nominally, housing prices did not fall for that two-decade period. And I think, I'm not saying like housing prices are going to continue to take off because we've already pulled forward so many gains. But I think that's the, that's the nightmare scenario for people, is housing prices just refuse to roll over, even in the face of higher rates. I don't think anybody wants that. But I think that unless we just build more houses somehow, pull them out of thin air. I don't see what changes the dynamic.

All right. Let's do great quarter guys real quick. Here's from Delta. Our expectations of fulfill your revenue growth of 20% over 2022. Robust demand for travel on Delta is continuing into the December quarter where we expect total revenue worth of 9% to 12%. Oh, that would be a good search on quarter robust. I bet that word gets thrown out a lot.

Here's a good one. weighted average interest rate. Okay, we spend a lot of time talking about how insulated the corporations are. Weighted average interest rate of 4.5% with 89% fixed rate. Wow. Even for a company like Delta who ran into a ton of problems in the pandemic, right? That's, yeah, that's not bad. J.P. Morgan, kind of sent tweet of this.

Where are we seeing softness and credit? Nowhere. At least nowhere that's expected. I'm sorry. At least nowhere that's not expected. expected. Nothing? Okay. I, no, it's, it's the funny thing. The funny thing is, is that, like, the bank CEOs forever, and I don't, I hate to keep, like, harping on diamond, but it's like, the hurricane is coming. The hurricane is coming. And it's like, how is your business? Fine. No

problems at all. Everyone keeps spending money. And there's, like, no delinquencies and things are okay. All right. Black Rock. This is the CFO. Raid hikes over the last 18 months mean that for the first time in nearly 20 years, clients can earn a real return on cash. And the short-term that has benefited in many portfolios. Investors have been able to generate positive returns while waiting for inflation to cool and for more policy certainty from central bankers. This waiting has weight on industry flows, including here at BlackRock. Investors are being paid to wait. Yes, they are. So they're saying they're seeing flows into probably T-bills and money markets and short-term treasuries and that sort of stuff. Yep. All right,

survey of the week. We've got two this week, actually. There was an article in the Wall Street Journal. Is reclining your airplane seat upright behavior or downright rude? Now, there's two schools of thought. School, one is, it's my seat. I paid for it, a lot of money for it. If I want to recline, I can recline. School two is, well, yeah, but it's rude. Like, it's just rude.

And I'm in school, too. I don't think I've ever reclined my seat. Because I don't like when people do it to me. The worst is when you have, like, your laptop out or something, and they recline it back. Yeah. Yeah. I live by a very simple rule. Treat people how you want to be treated.

And so that's why I don't recline. Okay. In a recent survey. of 1,100 Americans, 46% said it is rude to fully recline and that they don't recline. 28% said it was rude, and they would politely ask if it was okay before reclining, and 23% said it wasn't rude. That sounds all right to me. Three out of four people think it's rude. One out of four people don't.

I think that's about what I would have expected. I don't know why. This made me laugh. Just the picture of the article of the CEO of Delta just sitting at an empty plane. smiling awkwardly. I've never heard anyone asked if they can recline, though. Hey, is it okay to recline my chair? Yeah, I think, what is that?

Okay, so 28% said it was rude and they would probably ask if it was okay, but all right, so 28% of the country are liars. Nobody asks. You're right, then. No way. Here's a great survey from John Huber. Buffett described Apple's customer value and pricing power by posing power by posing a hyposynthetical question.

If you were offered $10,000 to never buy an Apple product again, do you take that deal? No, 49% of people said no. I say no. $10,000, a lot of money. I need the Apple products. I'm hooked. Duncan is, Duncan's a recliner. He said it's the airline's fault for cramming people in there.

Wow. Duncan's like sneakily rude. Duncan's got a little bit of, of something in him. I don't know what the word I'm looking for. Duncan, you want to come on and defend your honor. He's too crammed in. Duncan's, you're not a big guy. I really don't want to do that.

You're in the one out of four. Okay, fair enough, fair enough. This is good news. More than 71 million Americans receiving Social Security benefits will see their checks rise by 3.2% next year to help the keep hands to inflation. And last year it was like 8%, wasn't it or 9%? So average benefit is $1900. That's not nothing.

No. It continues to be the best retirement program that there is. Okay, real quick on parenting from Derek Thompson. there was a study done. This is more of an opinion piece in a study. Our thesis is that a primary cause of the rise in mental disorders for kids, because a lot of people are trying to figure this out, like why are kids so unhappy these days? Is it decline over decades and opportunities for children and teens to play a roam and engage in other activities, independent of direct oversight and controlled by adults, more or less saying it's helicopter parents that are

causing kids to be mentally unstable. There could be some of this. Like parents put more pressure on kids today. I think that's almost a certain thing. Oh, absolutely. I was at the pumpkin patch the other day, and it's crazy. I saw some lady, like, hysterical, freaking out, like, Timothy, Timothy! And like, and not to, listen, I know, losing a kid is terrifying. Yeah. He was, he was right behind her. Yeah. We lost my son in the grocery store once. She turned around. He was, he was directly behind there. And she's like, you scared me. And, and I mean, my son would, like, he would bolt in the past. I'm sorry as we never lost in a mall or something, but at the grocery store, he ran back to where all the, they store all the food and

bring it in and stuff. He, like, ran to the doors and we couldn't. find him like frankly running around the thing he was fine i don't really think this is the i think part of i think honestly kids are just uh have more access to information and stuff these days and the screen stuff i think it's i think it's all internet based that in the past we were i mean yeah we that's the same thing internet is the same thing it's it's the same thing yeah i go this is saying like helicopter parents but i i just think it's it's kids know i don't think we were meant to know so much about what's going on in the world at such an early age. And I think, I think kids are just, they know what's going on more than people did in the past. Agreed. Okay. So culture

critic tweeted, once upon a time in the 1950s, a family could own a home, a car, and send the kids to college all on one income. What went wrong and how can it be fixed? Holy moly. I don't know. This one gets debunked once a month, I feel like. Yeah. Okay. Well, what's the debunking? Way fewer people went to college back in the day. That's the thing. Houses were way smaller, which is another thing. The home ownership rate was actually lower.

I think if you look through each of each one of these, you could go point by point and show why it never actually was this, and people have this nostalgia for a time that didn't exist. Most housesholds didn't have two cars. They do now. It's like all these things where things are much better today, but people don't want to realize it. Also, back in the 50s, people couldn't be miserable with their lives

because of social media. So there's that. There is that. They didn't have that. All right. So I got a call from Robin the other day. She's like, did you send Logan to school with a peanut butter sandwich? I'm like, yeah.

What? She's like, you can't send peanut butter to a preschool. Oh, he got yelled at for it or reprimanded? I mean, he didn't. You did? He did. Because obviously. I, peanut, there's a peanut salad, peanut allergy is like a huge thing.

Well, that's interesting because we have like a peanut free, but we actually send our kids with peanut butter and jelly all the time. Really? And we got one of the allergic, my son, he's allergic to like cashews and pistachios. Pistachios really bad, but who, what kid brings cashews and pistachios to school? I do like a good cashew. I like pistachios too. We can't have them anymore.

Hmm. He gets like violently ill. Maybe the 50s were better. Kobe loves, every day he's bringing home a new book. It's like animals versus animals. Scorpion versus tarantula, like who would win in a death fight? Apple doesn't fall far from the tree. I could see you doing that for sure.

You know how I feel about, imagine like the Meg versus, well, actually, the Meg too. It's a Meg versus a giant octopus. I loved it. Who would win? I don't know. I'm guessing the Meg won. The Meg won. Of course.

But would the Meg really win? It was a good fight. All right, Ben, I met somebody in. future proof that I've followed up with and his assistant sent me an email back saying they would love to catch up do you have any but their their schedule is busy or whatever do you have any time in November now I'm pretty positive that this was like two or three weeks ago that's a busy person I mean that's just that's is that incredibly rude that is I don't value your time very much but that's getting to thanks

like let's uh let's circle back after the holidays kind of thing that's like an early circle back after the holidays but i'd rather i think i'd rather the assistant which made me feel a little bit even worse have said like timothy is very busy he'll circle back like that would have been fine but like yes he's going to find a place for you put something on the calendar in november it's like we'll just say he doesn't want to meet right like he can meet in 40 days what no uh all right I got this email, hi, Michael, happy Thursday. Oh, and you know what, credit to this person, the subject line was Michael question mark. So I'm like, oh, Michael, they're getting smarter.

Yeah, what do they want? Hi, Michael, happy Thursday. I was searching for wealth management firms that came across your site. I noticed some simple changes you can implement to make the design of functionality 10 times better. Would you be opposed to receiving a completely free website mockup? Well, actually, yes, I would be opposed to that. But then here's what got me. P.S.

Because you read all this, you're like, oh, this is just computer generated, right? Yeah. And this is by a computer-generated tool. In fact, it must be. P.S. Cool to see that you graduated with a bachelor's degree with Quinn's College. I can only imagine how much work you put in. Yeah.

What a back-handed compliment. Yeah. Tons of work. Oh, my God. I never worked so hard in my entire life than when I had to. But anyway, but that also is pre-filled too, right? They just scrape the college. I have to imagine.

That's pretty good, though. All right, Ben. I got some recommendations. It's still Halloween season. I'm still cranking at horror movies. So I saw one, I guess this was on Netflix, I think. It's called Haunt. Got 100% from the audience, 70% from the critics.

Fewer than 50 verified ratings. That's like a sample size problem. 70 nonetheless. It means no one saw it. Oh yeah, I saw it. And if you are a fan of the horror genre, I know there's tens of you that are listening, this is pretty good.

Not great, but pretty good. But I bring this up to say that, so the movie was about six friends. I went to an extreme haunted house. I have no interest in that whatsoever. Kobe and I last year were on a Halloween walk. And this was not like an extreme Halloween walk. It was for kids.

And I was petrified. Petrified. There was people that you're not sure if they're, if it's like a statue or. Kids hate those things. Kobe loved it. He wasn't scared at all. I was freaking out. I was very scared.

I was using my phone as a flashlight. He wasn't scared and you were. Okay. I was very scared. And there was a documentary on Hulu, which I only saw a little bit of it, it was very bad about people. There's people that love extreme haunted houses. Like love.

And like there was one where it was just totally over the top. The guy was like torturing his guests. It was, I get too scared. So that would, that'd be a movie you'd watch, right? A haunted house for Halloween that takes things a little too far. That's the movie haunt. That's what I'm saying. Oh, that's what they did.

See, I could literally write these movies. Me and Chat GPT could write a horror movie easel. That's what, that's what Haunt is. Now, I don't, but I don't think, I don't think that I could call myself a horror fan because there's a horror series that I found on, I say found, like I discovered it, called VHS. There's like six of them. You ever hear of this? Okay.

It's found footage, basically. Blair Witch style? Yeah. Holy shit. Absolute nightmare fuel. The original one in 2012, if you liked the horror genre, this was super gnarly

and really, really scary. Like really, really scary. I have an analogy for your movie recommendations, and it's a Seinfeld reference that you probably won't get because you don't watch Seinfeld. But there was an episode

where George lost his glasses. And the whole point of the episode was George, his eyesight would come and go, and he could like spot a dime from across the room, but then he picked up an onion and ate it and it was like, Jerry didn't know what to trust. He's like, George is spotting dimes and he's eating onions. They can't tell which, which to trust for George because

it's like he's spotting a dime from across the room, but he also can't see what's right in front of him. And that's you with your movie takes because I don't get it. It's like sometimes he's way off and sometimes he's right on the money. And so you told me to watch somewhere in Queens with Ray Rano and it's on Hulu. And I loved it. That's what I'm saying. Some of your takes are you're eating an onion and some of them you're spotting a dime from across the room. Only Seinfeld fans will get this. You know, I knew you would like that. that movie. Somewhere in Queens was a good film. Here's, and

one of the things that it had that most movies don't, it had a high school basketball game, and the basketball was actually like relatively realistic. It was good. The kid could play. And here's my other take. Ray Ramona. How great was the, I forget, the final line that the mom said, was it like, oh, fuck

that. Yes. Yes. I love sort of family coming of age movies like that. It's just like a regular, normal family and they sort of name, but here's my take. Ray Ramano, underrated as an actor. Phenomenal. Phenomenal. I feel like he gets underrated because he was on a sitcom,

and it was like right as sitcoms were kind of tailing off, which I loved that show. Everyone was it, but I think he's great. All right, fine. Hold on. I got to defend my honor on this. No, I get it.

I get it. I know that I like bad movies. It's not like, but hang on, VHS is a good movie. But it's not like I think good movies are bad. I happen to like, I have, I have wide range of tastes. Yes, you do.

So here's my dad of the year. My two daughters and my wife wanted me to go to the Taylor Swift movie with them, the concert airs tour or whatever. This is a three hour long concert movie, okay? My son lucked out and got to go to a trampoline park for a birthday party instead. So I had to go. We went with some friends. And I was bitching and moaning about it all week just to make sure I got my points for this, right?

Like, hey, listen, if I'm going to do this, I'm going to complain the whole time. And I did complain. and it wasn't bad. It was definitely way too long for my taste, but... Was it busy? It was busy. There was no dancing. My daughter was...

My oldest daughter, Libby, is a great dancer and singer, and, like, she, like, rocks it out a little bit. She's not, like, self-conscious at all, which totally would be me. I couldn't do that if the once I had alcohol in me, which I kind of respect for her. I'm glad she didn't get that from me. But there's not much more you can say about Taylor Swift at this point, but I think the combination of her being, like, the girl next door, but also being, like, literally one of those confident people on the planet is just, like, it's kind of unbelievable.

And the fact that she's been popular for so long, she goes against my thesis of the more rich and powerful you get, the, like, if she keeps this up, I mean, she's kind of like LeBron in a way. Like, LeBron never got messed up, even though he was started from such a young age. But think about it, Michael Jackson was totally screwed up. Whitney Houston went off the deep end. The Beatles were really running around for like seven years. Like, she, her run as like this popular person is just unprecedented historically. It's, she's, it's kind of amazing. And yes, but anyway, I got dad points for the week. That's all that matters.

You know, but I also get self-conscious in public about those sort of things. It's a, that's not a skill. It's a trait that I wish I had. We went out to a Mexican restaurant and there was mariachi guys that came over and they sang Sweet Carolina. you're supposed to sing along with them? I couldn't. I was too embarrassed.

Right. My daughter doesn't have, and I'm really glad she has that because I think that's a great quality to have just to be not self-conscious at all. It's a wonderful quality. All right. What's our new email, Michael?

We got a new email. All right, listen, I know that this is the people are going to be perturbed because you're used to emailing Animal Spiritspot at gmail.com, and it was a great email address. We had a lot of fun there. So for our regulars, I apologize.

Please delete that contact. I don't know how you do, but just remove it. Get rid of the contact. We have a new email address. It's animal spirits at the compound news.com. Deal with it. Just kidding.

I'm sorry if it, uh... Michael's angry because everyone says that it's a way worse email. We had a vote internally. It's not just good. No, but listen. People don't like change. I don't like change. Animal spirits at the compound news.com.

Sometimes you got to change. All right. Send us an email there. If I could change and you could change. You know what Rocky said. That was another good part of somewhere in Queens. he was quoting Rocky the whole movie that killed me good movie all right thank you thank you Duncan Nicole John everybody who helps on the show thank you for listening we will see you

next time