Animal Spirits Podcast - Fast Food Inflation (EP.369)

Episode Date: July 17, 2024

On episode 369 of Animal Spirits, Michael Batnick and Ben Carlson discuss: the two types of Fed rate cuts, a positive outcome from high inflation, the stock market was right again, the number of millionaires worldwide, Wingstop vs. Chipotle, how many renters could afford to buy a home, how much it costs to build a new house, why private markets aren't in a bubble, Kevin Bacon movies, and much more! This episode is sponsored by YCharts and CME Group. Get 20% off your initial YCharts Professional subscription when you start your free YCharts trial through Animal Spirits (new customers only). Sign up at: https://go.ycharts.com/animal-spirits Access CME Group's valuable educational materials and trading tools and learn more about what adding futures can do for you at cmegroup.com/animalspirits Sign up for The Compound newsletter and never miss out: thecompoundnews.com/subscribe Find complete show notes on our blogs: Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   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. The Compound Media, Incorporated, 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

On today's Animal Spirits, Ben and I discussed the number of millionaires worldwide why Chipotle is such a great business and why an idiot never bought the stock. How much does it cost to build a new house? We'll tell you. I share my disappointment with Long Legs, a movie I had been very much looking forward to, and finally, Ben and I dissect Kevin Bacon's movie career. We hope you enjoy the show. Today's Animal Spirits is brought to you by Y-Charts.

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This communication is not a recommendation or offer to buy, sell, or retain any specific investment or service. 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. Michael, a month ago, you and I, on this very show, pounded the table and said the Fed needs to cut. That was a title of our podcast, June something, middle of June. It seems like last week that became consensus.

Not that we were really ahead of the boat, but we just said, hey, let's just rip the bandit off. And let's do it. Inflation appears to be cooked for the time being. Not according to my jet ski renewal, or my insurance renewal. I just got the bill today from Progressive. Okay. Up 21%. Yeah, but what do you pay on insurance for a jet ski?

Like $100 a year? No, it's not enough. I think it was, it went from, it's 960. It was, I can't remember what it was, 7.90, whatever the number was. Whatever to get to 21% higher. It's 960 today. It was 7 something a year ago. You pay more than $700 for jet ski insurance.

Mm-hmm. What is going on in the state of, I pay like $200 a month or a year for my boat for insurance? Yeah, well, you've got a pontoon boat. What do that, I mean, how many accidents happen on that lazy hunk of metal? Okay, that's fair. So the idea that you have a pontoon boat on a lake. Okay. I don't want to get into this right away, but the jet ski people, not you, with boats are the worst. Jet ski people are the, and I used to be a jet ski person. I know how this is.

Jet ski people. You know why? This is not you because you do it in a different way. But on a lake, jet ski people are the work, because they just try to go in and out of your wake all the time. That's okay. I get it. I get it. They go way too close. As a boater person who's trying to boat safely. The boater person. With kids, I can't call myself a boat person because I still call it parking and I get made fun of

because it's actually docking. Docking. Yeah, I'm sorry, I can't call it docking. It's parking. But the jet ski people go so close to your boat and I have kids and tubes and stuff. Like, just stay back, jetsky people. All right. Longview Economics.

U.S. core inflation X shelter has now been negative two months in a row. Last time this happened was in the pandemic. Otherwise, before that, 2015. So it's been a while. And we've talked about this for a long time that the shelter component is lagging. It's an average and it's backward looking.

And Jeremy Schwartz is impounded the table on this too. If you look at inflation with rent, it's where they are now. It's way lower. And that finally seems like it happened this past month. Which is funny because we've never been talking about it. Yeah. The consensus is that they should go amongst people that talk about this stuff. but in terms of like the market consensus, they're not going.

It would be just if you look at like the implied probabilities at the CME Fedwatch tool, they're not going. It would be, I mean, it would be a big surprise if they go in July. I'm not quite sure why Neil Dutta, the expert on this stuff. We spoke with him on TCAF. Also, not really sure why they're not going, despite all the evidence that suggests that they should. Sounds like it's going to be September.

Matthew Klein had a similar point. He said, for whatever reason, the Fed seems low to make changes in a quick manner. I love it for whatever reason. Yeah. I asked, I was like, why aren't they going? His answer was, uh, reason. He didn't know.

He said they prefer to move gradually in the same direction over multi-year cycles, even if the economy itself does not work this way. And I totally agree. Why couldn't they just say, hey, we're going to cut rates now? And if inflation does come roaring back somehow, then we'll raise them again. Why can't they just do that? Why do they have to wait and go so slow and have it be this slow gradual process where they want like they're talking to do more than their actual.

cutting or raising. I couldn't tell you. All right. So here's from Indeed, the U.S. has posted wage growth has stabilized. So they show wage growth peaked at 9.3%, now down to 3.1%. This essentially tracks the path of inflation, even if the values aren't exactly the same. This was the big one. This was the one that in 2022 had people worried, right, like one of the stickiest parts. And it turns out that we beat it. But do you think that the people are going to kind of look back at this and say, are they going to be okay with the tradeoff of, wait, slower inflation actually means slower growth and it also means slower wage growth. Are people going to be okay with this tradeoff?

I don't think people do a lot of looking back. I actually was listening to our podcast last week and you said, in 10 years from that, are people going to look back and say, what was wrong with us? We had it so good? No. I mean, do you look back to 10 years ago and think anything? You just live your life today? No, no, no, no, no.

There's a huge nostalgia element to everything that happens these days. You don't, people talk about the 2010s with this, like, glowing reverie now. At the time, everyone hated it. Who's they? Who is the, who does? The royal they. Everyone talking about zero percent interest rates and things were easier back then, and we didn't have inflation.

And you don't think the economic community, you don't think that there's talk like that? No. That the 2010s were like somehow golden years? There was no growth. No, like better than this situation. No, I think you're making this up. I think this is like in Ben's brain. I do.

Okay. I think there's economic nostalgia. People talk about the 1950s still all the time. You don't see this stuff? Okay, but that's the 1950s. I'm saying, we're not going to look back. Do you look back at 2017? How many political campaigns are based on the fact of,

are you better off now than you were four years ago? You're moving to the goal post. No. No, this is something people do. No. It's true. All right. I will say 3% inflation right now for my perspective.

is way better than getting to 2%. Because if it gets to 2%, like the risk then is the overshoot to the downside. I think that's like the resets. So I think inflation staying where it is now is actually a better scenario for us, right, than hitting some crazy Fed target

for whatever reason. Again, reasons. Okay, this is from Axios. Some parts of inflation were actually good. Just over 13% of workers in the U.S. are now earning less than $15 an hour. Two years ago, that number was 32%. This is from Oxfam. Even after counting for inflation, $15 an hour in 2024 is the same

buying power as 2022, which is in real progress. They say their definition of low wage worker this year has gone from $15 to $17 an hour. And they show this share of U.S. workers earning $17 an hour or less. So that part of it has gotten a lot better. And inflation is part of the reason for that. Obviously, part of that is just inflation, but those wages rose faster than the price increases did. So 23% of U.S. workers earn under $17 an hour. That's a lot. I think that's probably more than I were the guessed.

I don't know. When you think about young people in the workforce and it does sound like a high number, but the point is that's progress. It was way worse before. How's that? All right. We had a few people send us this chart from Visual Capitalist on Fast food inflation. So over the last decade.

McDonald's raised their prices 100%. They show Popeyes and then Taco Bell, Chipotle. We'll get to Chipotle in a second. But the food, so that compares to food away from home inflation was 49% over the last decade. And some fast food took more advantage of it than others. Like Burger King, for example, Burger King, Chick-fil-A, R.Bs, Wendy's were only 55% versus McDonald's, Popeyes, much higher. Do you think that part of that is, because the prices at McDonald's always used to seem to be so low that their inflation before was far under the rate of inflation?

Yeah, I mean, I remember in high school getting a junior bacon cheeseburger at Wendy's was the best dollar you could spend ever. It just didn't make sense. It made no sense at the time. I remember like, this is too good to be true. My taste buds are exploding with joy and I'm paying a dollar. They were too low. Maybe like how home prices were too low, fast food was too cheap. It's possible.

It feels like it's a little bit of this is catching up. Okay. Mike Sicardy tweeted from Bank of America. Chicken wing prices up 190% over the last two years. Do you guys have wing stopped by you? I have one right by my office. I've ever tried it. No.

Okay. I'm wondering about wings stop. a wing stop because somebody sent us a research report. We were talking about Chipotle. I think we were like, how the hell is their market cap so high? Were we having the conversation recently? Yes. Yeah, okay.

So, Chipotle's market cap, what did we say it was? I just got logged out on White Charts. Let me log back into White Charts. Isn't it 90 billion or so? I thought it was, okay. I thought it was 70, but either way, it's many, many tens of billions of dollars. Yeah, it's close to 80 billion, 78 billion. So somebody sent us this report.

Chipotle currently has 3,400 stores with the vast majority within the United States and is targeting an annual unit growth rate of 8 to 10%. So these are the economics on Chipotle. I'd never realize Wingstop was a publicly traded company. Is that where you getting to this? Yeah, yeah. Yeah, Wingstop is big. Wingstop is like $11 billion company.

How is that possible? Yeah. So Chipotle, these are the economics from this research report. They spent an average of $1.2 million in development and construction costs per new restaurant. Once a new store is fully operational, average unit revenues are expected to be $3 million in operational cost per store, average 76% of revenue, so operating margin is 24%. This revenue and operating margin profile implies $720,000 in expected annual operating income,

a 60% cash and cash return in a payback period of 20 months. It's a hell of a business, no? That's not bad at all. That payback period seems pretty quick to me in terms of restaurants where I was think about the restaurant business or any sort of food business, and the margins on them and how difficult it must be. But obviously, Chipotle's got it figured out. Anyway, so Wingstop was like a similar investment profile.

I can't believe, I don't think I ever own Chipotle, which is pretty embarrassing considering how long I've loved their food. I was a, I can't say quite an early adopter, but I remember getting Chipotle 10 years ago. But even still, I guess this was a revision of sister because 10 years ago, the stock price seemed insane. Didn't Bill Ackman put out a short thesis on Chipotle about it being just an expensive Taco Bell? Yes, he was saying that you could go to Taco Bell

and get just the same. But remember the whole thing with them? Because the prices, like the fundamentals never seem to justify the size. But don't you remember the whole food poisoning thing? Oh, yeah. Because some people got sick and that, like the stock actually sold off on that.

Yeah. That should be like a Warren Buffett-type buying opportunity like American Express with the salad oil stuff back in the day. Yeah. Right. But this is like basic B thinking.

Like, let's just say, what was the market cap in 2000? Like, it just, it always seemed too expensive. Yes. Which is the case for all these.

All the girls. All the girls. Yeah. That's the thing. Yeah. I think that we mentioned before, we mentioned last week that, geez,

why is this company so expensive? It's probably always been expensive. Yeah. Yeah. All right. Chart Kid made an incredible chart, an incredible chart, looking at all the,

the first, Fed rate cuts going back to 1970. And there is, I think, this idea that the Fed normally cuts out of panic. Something breaks, and then they rush to lower rates. Because that's been the experience for the past 20 years. Yeah. And that's just not what always happens. So we have a chart showing all of the rate cuts that did lead to a recession or did happen

in a recession. and all of the ones that didn't. You're looking at the S&P 500 performance in the year after. And it's about a mixed bag. Would you say like 55% of the time there is a recession? Something like that?

6040. But yeah, if you look, the last time it happened was 1995, but before it was in the 80s and the 70s and it hasn't happened very much lately where there was a rate cut and then there was no recession. So I think people just think in their mind

like that can't happen, but it happens. So that's all that, which this seems obvious to say if the Fed cut rates and we don't have a recession, the stock market probably should be fine. If they do cut rates and there's going to be recession, the stock market won't be fine. That seems pretty obvious, but I think some people needed to hear that. Yeah. All right, I did a little chart here.

The inflation rate against the S&P, and it's kind of crazy that the S&P bottomed in October 2020, when the inflation rate was still 8%. And the stock market got ahead of this, that like this was coming down. And remember people kept saying, why, you know, higher for long? Why is the stock market doing this? It doesn't make any sense. It should be going down more. And the stock market, once again, got this right in front, front, ran it.

Just like it did with COVID. The stock market has a pretty darn good track record these past few years. I have a very vivid memory of the day the market bottomed. It was Thursday, October 22nd. Josh and I were driving into the city. And inflation came in at over 8%. And the Dow opened down 1,000 points, closed up 1,000 points or something like that. And it had like this wild candle.

And that was the bottom. And then it turned green, right? Yeah. Yeah. That same day, I remember that. Is it too easy and too cute to say that when the rate cut finally gets here, that'll be the sell-the-news moment? If I'm just trying to put my contrarian card on the table, just slide it in there. Yeah.

It's too easy, right? I would say it's too easy. It does mean it's not possible. Right. But sounds a little bit too easy. Okay. It's like one of those things like everyone knows that that's going to be sell the news and then therefore it can't possibly. But now everybody thinks it can't possibly be the top.

So now it's actually going to be the top. So the other, you are getting after me about straw man arguments from before about people being nostalgic for the economy. I'm not, I didn't say it's a straw man. Say it's in your brain. But I think that that's a definition of a straw man. I think one of the straw man arguments these days is that some people always fight against like the zero percent rate. I don't think anyone's calling for zero percent rates. Right?

I feel like there's a lot of people who keep saying that. Actually, there might be one person. Who's that? Kathy Wood. Oh, okay. She won zero percent? All right. She probably would like those days again.

So I don't think anyone's calling for that. And that's the thing is that the Fed's starting to cut does not mean that pet, like, I don't know. What's a good number for them to get back to? 3% would be a pretty normal thing for this environment eventually. Like, that's the path. You would imagine? 3% to 4% and something like that.

We say what? The Fed funds, right? Yeah. Yeah, sure. Sounds reasonable. Until there's a recession and then they go back to zero again? No, I'm kidding. Anyways, but yeah, I don't think that 0% is happening.

All right. We haven't talked about flows in a while. One of your favorite topics of yesterday year. This is Bank of America. Inflows into large-cap U.S. equity funds on pay for the second largest on record. The thing that stands out to me here is not the past few years when there's these massive inflows into large-cap funds. It's the whole 05 to 19 range when there was essentially, no flows into these funds at all.

Do you think this is just the hangover period from the great financial crisis? Because it looks like here, there was one or two years where there's positive flows into large-cap funds, and other than that, nothing. I wonder what's in here. Without flows. What's in here, exactly?

Like, is the S&P 500 U.S. large-cap? It has to be. Right? Because all the flows these days are going into what V-O-O-O and SPI we said? So, whatever. Either way, this chart's pretty remarkable because to your point, from 15 to 20, given the sick run that large growth had,

no flows. Which, this is the whole funny thing about the 2010s to me is that housing prices and stocks were a very good deal in the 2010s. And few people wanted to buy them. Now they're way more expensive and everyone wants to buy them. I'm thinking about buying Chipotle now.

They just filled the gap, stocks had a pullback, a healthy uptread, looks good. I can't buy it at $5 billion. It's too expensive. It's $78 billion. Now we're talking. One of the themes we've talked about in recent months in years is just how so much smarter corporations are these days than they were in the past. Tors and Slok had his outlook for public and private markets, and he shows the public

investment-grade market has grown from $3 trillion in 2010 to $9 trillion today. And look at how this thing takes off after 08 and 09. that graph just goes from a minor up trend of huge corporations took advantage of the ZERP era look at that just a ton of issuance and I'm sure more companies in the high yield and leverage loan market would have done so if they could have but the corporations had the ability to borrow and they did so it's the Buffett quote about don't borrow when you need to borrow when it's cheap or when it's whatever the quote is corporations actually did this and that's why they're so well positioned for, they were so well positioned for the rising rate market because they

borrowed a ton when they probably didn't really have to. Yeah. Good chart. And the next one is just the profit margins. They're estimating profit margins continue to rise through 2025. This is Bloomberg estimates to further record levels. It is kind of crazy that S&P 500 companies could live through zero percent rates in COVID, going into five percent rates and high inflation. and then going back to lower rates that regardless of all those environments, profit margins just continue to rise. Well, they came in pretty significantly in 2022.

Eh, not really. For that inflationary period, I don't know, 14% to 12%. Yeah, it's big. Not considering how much they rose before that, though. It's impressive. I'm just saying it's not like they haven't. They were still on trend pretty much if you look at from the 2010 level.

Do a trend line on that. It's still pretty close. How about, I mean, the market, the rally is broadening. I know you're not really a stock market guy, but you're watching the stock market? What do you know, I'm not a stock market guy? I worship the stock market. What political party are you, Ben? I'm the stock market party.

That's me. You see the rally. So what was it? Small caps are up 3% and the S&P was down 1%-ish on the day the inflation print hit? Yeah. All right, let me, let me, some good data points in here. Let me go to this channel. Here we go.

Okay. From bespoke, the Russell, this is today, the morning of July 16th. It's Tuesday morning. The Russell 2000 is trading up another 1% pre-market. If the index closes higher by 1% today, it will be just the fifth time since 1979, that it has had a five-day streak of 1% gains. Ryan Dietrich tweeted something similar. The Russell 2000 is up 1% for 4 consecutive.

days since 1979 when the index started trading. This has happened only 13 other times and it was higher a year later, 11% I'm sorry, 11 out of 13 times of 25% on average. Why is this happening? It's quite simple. Higher rates are just really bad for small cap stocks. Why are higher? Because their debt is more floating. They don't have, they're not Microsoft. They don't have the luxury of paying 100 basis points over the 10 year or whatever it is. So higher. rates really, really hurt them. That chart of IG market, the investment grade market chart that we just showed, that was a bigger company's taking advantage.

The smaller companies couldn't take advantage nearly as much to get ahead of it and borrow a ton of money. We've used this chart from Bank of America a million times. The S&P 500, like 85 to 90 percent of their debt is long-term fixed. The Russell 2000, I think it's like half-ish. So this would be a very healthy development in my book. The Mag 7 stocks, silly but surely underperforming. which is kind of funny because I was told that tech stocks were a low rate phenomenon.

Then they did well when rates went high. Now if rates fall, they could actually be bad for tech stocks, which is kind of funny to think about the different iterations of rates we've had. Well, I guess, yeah. I mean, nobody's actually saying that lower rates would be bad for tech stock. It would just be on a relative basis. Yeah, yeah, because it would just be so good for small. But that would be good that the rest of these companies play catch up for a while.

It would be great. And the active managers we've been saying for the past few weeks that have been in the worst period ever, like this would be a good comeback for them. That makes sense. So this is a JP Morgan chart someone sent us. Implied equity allocation by non-bank investors globally. So they just take global equities as a percentage of total holdings. And I think this is kind of like taking the total assets and backing it out because there's so much money in bonds and cash. And it shows that it was, I don't know, the end of the 90s.

Equity allocations were 50, 55%. They got as low as 30% in the GFC. Now they're back up to hitting 50% and hitting the highs that we saw in, like, 2006, 2007. So equity allocations have really gone nowhere for this whole century. Couldn't you say this is actually bullish for future returns?

How? People have just been way too underweight equities for far too long. And I think that they've realized this. And I continue to believe this will drift higher with target date funds and automatic investing. And the counter would be, well, boomers are going to be selling in the years ahead. They're going to be de-risking. I think that you could make the case people have been way under-invested equities.

Or maybe the point of this chart is just that there's way more cash and bonds in the world than people realize. Yeah. I don't know. I feel like this is a pretty noisy chart. I don't see any signal here. But like you think it's going to break out? I mean, it does look like that, but I think the trend, like valuation trending higher over the years, I think equity allocations should be doing the same thing.

But don't you think this? I mean, this is more of a function of the performance of stocks versus bonds than people's allocating. But you know what I mean? Like, stocks are a bigger waiting because they've had a tremendous return. Bonds have gone nowhere for the last decade. So I don't think it's investors necessarily making decisions as much as it is market caps. Yeah, I just, I think this should be higher. And I think there's structural reasons for it to be higher.

Again, like the 401K target date stuff. And I think people, that those trends, I think, should slowly push equity allocations higher. I mean, I'm all for it. It should be high. That's all I'm going, getting at. Tom and Smith posted this chart on Twitter showing the competition. the composition of debt held by the public. Two-thirds of public debt is held by domestic holders.

This is a big topic, obviously, the deficit, how much borrowing costs the United States government. But the good news is that, what did he say, $892 billion in risk-free interest income, largely going into the pockets of the U.S. households, investors in institutions, pensions, funds, the Fed, the government itself, state and local governments, and some of our closest foreign allies. So, yes, absolutely the numbers are eye-watering, but we're paying ourselves. That's the other weird part here that it shows the Fed is getting interest on these and state and local governments. That's the bizarre part to try to wrap your head around. Yeah, it is switching money from your left pocket to your right pocket in some ways. Yeah. No, again, I've made in my

One third of public debt is held by foreigners. So it's, you know, we are reliant on foreign lenders, for sure. But two-thirds, going right back to us. But yeah, every liability is also an asset. That's the whole point here. Yeah. So the higher yields, yes, it's a lot for the government to be paying, but it's going, it's a lot of staying in the system. All right.

Good one from Data Trek here. I like their charts. They show the trend line for credit cards balances, going back to the mid-200. 2010s. Remember back that period, Michael, that golden economic period, everyone, everyone fawns over still? They won't stop talking about it. So they show the annual growth rate and credit card balances since from 2014 to 2019 was 5.9%. Then you had this huge 13% drawdown in credit card balances as people paid it off in the pandemic. And now it's right back on trends from 2020 to 2024. It was a 5% company annual growth rate. But Nick Colas was saying

about this that it's kind of surprising that this thing is just still on trend, especially with inflation, that you didn't get a much higher bump up in credit card debt. Is this like too zoomed out? I don't know. I think it's interesting, though. You would have thought there would have been like a big overswing to the other side of credit card debt going way, way above just from people spending more because we have a 20% higher inflation. Yeah, but there was. Like, look at, at the change from the bottom to the top. But it just put us back on trend, though. I'm thinking of an overshoot.

It's not that much. Yeah, maybe it's not. That's less than inflation rate. But is it from the bottom? Yeah, 2020 to 2024, we have 5.1%. So I guess you're right, 2020 includes the period where it's out. My point is, if you measure from the bottom to today, right? That's a lot.

That's a lot. I'm looking for an overshoot, though. It's just the fact that it's back on trend is just, that's interesting. You would have thought it had been higher. Good news on the credit card stuff. We've been talking a couple of months ago, weeks, months, I don't know, about delinquencies picking up. Jack Farley tweeted, 90 plus day credit card delinquencies looking at data from JPMorgan, Wells Fargo, and City,

and they're going lower. It's a good thing. I was listening to the JPM. These numbers are also, regardless of there was an uptick, they're really small. They're all less than one and a half percent. Yeah. But directionally, you want to see them obviously going down, not up. I was listening to J.P. Morgan's call on the quarter up, and there was a quote about credit card delinquencies.

So, Jamie Diamond wasn't on the call. This was Jeremy Barnum, I guess his right hand man, who was off on the calls with him. He said, I still feel like when it comes to charge off and delinquencies, there's just not much to see. it's still normalization, not deterioration. It's in line with expectations. Like, it's all good. There's nothing with nothing. Okay.

Eddard Denny did this one household debt to service ratio, which we've talked about for a few years now, still looks pretty darn good. About if you take away the pandemic period, it's as low as it's ever been since they're tracking this in 1980. So consumers are still in pretty good shape. This is a true story. It happened right here in my town.

One night, 17 kids woke up, got out of bed, walked into the dark, and they never came back. I'm the director of Barbarian. A lot of people die in a lot of weird ways. You're not going to find it in the news because the police covered everything all up. On August days. This is where the story really starts. Weapons. All right.

So this used to be the Credit Swiss Global Wealth Report. Now they are owned by UBS, which is bizarre. So they just kind of take them over. It would kind of be like someone else who would like, let's say some company bought Standard and Pores, right? Bloomberg buys Standard and Porras. And now it's the Bloomberg 500. That would be weird, wouldn't it?

Well, remember when they bought the Barclays aggregate? The ag, yeah. Used to be called Lehman. All right. So percentage of people worldwide who are millionaires. This is including household wealth. So this is through 2023. This is including household wealth?

What do you mean? No, this is including your house. Okay, okay, got it. So what percentage of, this is worldwide, not U.S., are millionaires? What do you think? Four? One and a half percent. That's up from 0.5 percent in 2000.

So it's not a big number of people. And they have this chart here that shows they break down the percentage of adults by different levels of wealth. So it's under 10,000, 10 to 100, 100 to a million, and over a million. And the biggest group in 2000 by far was under $10,000. This is worldwide again, not just U.S. 75% of people in 2000 had wealth equated to less than $10,000. That's dropped from 75,000 to or 75% to 39%. Wow. And now the biggest group is 10 to 20. So they show all these stats in here that show wealth inequality is still crazy. there's there's like 26 people who control 20% of the wealth in this in the world the people with 50 billion in a buck it's like 20 26 of them they control 20% and that that 1.5% millionaires they control 50% of global wealth which is just an insane number but you also have this progress of people on the bottom are slowly but surely progressing and obviously part of that is inflation but that bottom end is coming up too which is good very good

So, yeah, I don't know. I guess my point is that, I don't know, wealth inequality is always going to be here and always going to be a problem. But people on the bottom are coming up a little bit too. How's that? Good. Ben, I want to play a clip from car dealership guy. How much money are you making right now on selling cyber trucks? So it really depends what my cost is in them and what the offer that's coming in. I can still make $15,000 or I can make $3,000. I've been pretty much dollar cost averaging in any new cyber truck coming in and I'm trying to unload any ones that I'm heavy and for. How much are you buying them for? Dollar cost averaging the cyber trucks. Okay. I think I actually saw this clip. That wasn't the point of the clip. Let me keep going. I just thought that was fun.

So right now we're paying 105. And typically, what's your average sales price? Right now, but 117 is a pretty easy sales price. This time, I hope, for the next couple days. And what were you selling them for three months ago? Three months ago, I was selling them for 170. So it went from like $200 to $195 to $171,169 to $160. It's just kept dropping every single week.

And where are we going next? I think 115 is a good spot to stay and hang out at. It's probably going past them three, four weeks. Who knows? Isn't that wild? Could you imagine having spent $260,000 at a cyber truck or whatever the number is, $170,000? And now they're going for $1.15.

We spoke last week about like... It's like, this is like you with your Audi. Yeah, I'd be out of my mind. Now, I guess, listen, if you could spend $200,000 at a cyber truck, money is likely not an issue whatsoever. But nevertheless, it's kind of amazing how much this particular market has fluctuated. This is one of those cases where the first mover advantage was the opposite of advantage. It was a detractor to you, right?

Getting in first hurt you. No, what I saw my first one this week, the car with the toot horn. What's that? The car that we spoke about last week. I forget the name of it. Oh, yeah. Okay. That has two different horns.

Kevin said one of his family members got it. I think they're going to be coming. I got a horn question for you. So we're talking about horns. Okay, red light. There's a intersection here on Cascade Road where there's a red light and then in 100 yards there's another red light, right? And the person in the right lane of me.

How many lanes? Left turn lane and two lanes. So does a left turn lane and then two additional lanes? Yes. So this person is, as one car ahead of me, takes off when the light turns green, cuts me off and the other person in the left lane to get in the left lane to get in the left. lane of the next light. So total cuts across three lanes of traffic, basically. So they can make the left-hand turn. Let me, well, hold on details. This is important. When you say cut you off,

did you have to press your break or did they speed ahead and? Oh, I had to press on a break for sure. I would have hit them. Okay. I honked. Fair? Of course. Absolutely. All right. Aggressive honk. Thank you. Yeah. All right. Just making sure. Yeah. No, if somebody cuts you off, you, aggressive hunk. Yeah. Um, you know what somebody showed me the other day yesterday? The Rivian, not the pickup truck, the actual, the SUV? It's a cool, looking car, right? Looks very nice. I like them.

Looks very nice. That's your midlife crisis car, right there. How is that a crisis? How's that a crisis car? You're ready to spend up on a car. You've been talking about it forever. Just do it. Rip the bandit off.

They're, well, with the electric credits, they're like, not super duper expensive. Somebody said, 600 bucks a month. For Arrillion? Yeah. It sounds like a cheap monthly payment to me based on how much they are. How much are that? I'm trying to do math here. I'm doing Zach Alfanakis.

I thought they're pretty expensive, aren't they? 90 or 100? It's a least price. Okay. All right. Last week, funny off how much things can change in a week. Last week we were talking about the weakness in crypto and flows impacting prices or not. So Eric tweeted, Belchunas tweet, and this is a week ago, actually, during the drawdown.

He said Bitcoin had a 20% drawdown in a month flat, pretty nasty. I would have been impressed if 90% of the AUM hung in there, but it was over 100% as they saw inflows. The boomers hung tough, even tougher than I predicted and kept the, whatever. So what we're calling ETF buyer's boomers? Well, that's that I'm calling them. Is that the crypto nomenclature? But then this morning, he tweeted $300 million in flows yesterday, a billion dollars for the week. year-to-date net total crossed $16 billion for the first time.

Their estimate for the first 12 months was $12 to $15 billion. So already cleared that with six months to go. And Bitcoin has had a pretty substantial role in the last week. We've talked over the years about how stock market investors have become more attuned to, like, staying the course and understanding that there's going to be corrections and bare markets, even crashes along the way. And people, there aren't as many people who completely give up. Because of the volatility in crypto, it seems like, in, investors in crypto have learned this better.

So you have a 20% decline over a couple of weeks. Whoa, that seems crazy. But people are used to that kind of volatility in crypto. Yeah. And Bianco has done a lot of work on this. Like the average ticket, the average trade is not a giant number. I don't know what number is, but if it's $7,000, like, all right, you lose 20%, you know, probably not going to panic. Duncan shared this with us.

The R1S, that's what the review is called, is now leasing available configurations for $6.99 a month. Nice. Pretty good deal. I feel like you never get the deals on the commercials, though. The commercials say, like, come in now and get this truck for $2.99 a month. It's like $6,000 down. Yeah, it's like, oh, if you have a family number who works here and, yeah, it's, I feel like those numbers, but that doesn't sound bad for Rivian.

All right. From Zillow, in 2022, there was a hundred, there was 134 families residing in the U.S. who did not live in the home, do not own the home that they lived in. How money? 134 million. So on high to you, Lowe? I mean, that makes sense for the housing ownership numbers, right? Wait.

In 2022, 32, 39% of the roughly 134 million families residing in the U.S. did not own the home they lived in. Oh, yeah, sorry, so I read that wrong. Okay. So 134 million families, 39% of them didn't. So does that mean 39% rent? Is that what they're saying? Yes.

Okay. Okay. So they're talking about some families choose rent, but other. simply could not afford. Among those who did not own their home, 7.9 million were mortgage-ready, meaning their share of their income spent on a mortgage payment for the typical home in their local market would have been 30% or lower, which obviously a lot of people go higher than that. But that's a very small number to me, seems like, out of the people who were like could afford a mortgage. The question now that keeps coming up is what is going to happen with activity,

well, we know what happens with the activity. What's going to happen with prices when mortgage rates come down. And there's the thinking that like, well, just lower rates mean higher prices, right? Like, that's just what we've been taught to believe. You could make the argument that lower rates is going to do more on the supply side than the demand side, because lower rates are going to allow people to move. And so it would unlock supply. Which would be the opposite of history. Usually, if rates go higher, supply goes up, rates go lower, supply goes down. And I've been saying that, like, in my head, I've been thinking that demand hasn't really changed a lot. People were looking for houses.

They're still looking for houses unless rates got so high, prices got so high, which they did, that it just priced people out of the market. And if rates come back, come down, then all those people are going to come flooding back into the market. In which case, demand would outstrip supply again and prices would go higher. Here's the other thing. It's kind of like people always say there's no such thing as cash on the sidelines for the stock market because for every buyer there has to be a seller. For the people who have been waiting to sell their home, they would also be a buyer. Right. So the supply and demand would, there's people, young people who don't have a house who would be coming in off the sidelines, but also the people who are selling their existing home and looking to buy another one.

All right. Now my head hurts. Right. No such thing as cash on the sideline. All right, cool one from Luke Cowat at Sherwood News. He posts the thing from Bank of America about how much it costs to build a house in 2024. And they go through all the different features here and how much they cost. But this was interesting to me.

So this is from Bank of America. We estimate the bill of materials to build a house has increased at a compound annual growth rate. I can't make myself say Kager. You can only say that if you're a quant. No. That's like a West Great. Like, I can't say Kager. Just...

Well, listen, don't let your insecurities impact me. I'm a Kager guy. You know what else I can't say? I would never be able to pull this off. Fam. What's up, fam? You know, people do that? Yeah, no offense to people that say fam, but it's a bit of a...

It's a bit of a... Because it's like a, you know, if you're a 40-year-old white guy, I'm sorry, just stop. I mean, you think in your head it sounds cool. It doesn't sound cool to everyone else. All right. So the Kager company will have 3.8% since 1982. which is outpaced inflation, but not much. That seems relatively low to me.

Because housing prices have grown at way more than that, right? So 3.8% since 1982 to build a house. So they're saying outside of materials, raw land as well as development and entitlement costs are rising at a lot faster than direct building costs. So the point is, it's the land that's going up in price so much, not so much the amount it costs to build a home. Does that make sense?

Yeah. it's the land because they're not making more of it right is that what they say all right like simonson one of our favorite people for real estate stats this is interesting america's mortgage holders carry only 48% loan to value on their home down from 70% in a decade ago it's really hard to overstate how strong a financial position american homeowners are in i mean look at this thing go down it's it is pretty crazy this is the home equity boom that i've been talking about and waiting for because you need to have like a you know a 20% loan to value ratio right, you need to have at least 20% in your home and equity to start

borrowing against it. There's a lot of people who have the ability to borrow if they want. It's common. I would think so. I'll be, I'd be shocked if it didn't happen with lower rates. With lower rates coming and all this equity just sitting there, I just can't see people being like, nah, not going to do anything with it. It's just not the American way to let that money just sit there. Who did you open the show, taking a flame throw or two? I don't know. Did I?

I didn't take a flamethrowered anyone, did I? I feel like you did. No flamethrowers for me. Oh, jet ski owners? Oh, jet ski owners. Last week, I forgot to mention that, of course, Ben hates fireworks. No, I don't hate fireworks. My firework opinion has evolved over the years.

I hated fireworks when my kids were young, and it would scare our dog, and it would wake our kids up in the middle of the night. Now our kids are older, they see them, but my only new take for fireworks is, if you've seen one firework show, you've seen them all. I'm ready for the drone light shows to come. I don't, like, firework shows are all kind of the same.

That's true, but aren't they great every time? I mean, how often do you see a firework show once a year? Yeah, once a year. Yeah. It should be like the Olympics, once in for four years. Absence makes the heart grow fonder. Somebody emailed us. I feel like Ben wouldn't like me.

I drive a truck, love small talk, especially how fast time goes, and I don't drink. But I still feel like we'd get along when it comes to investing. Love me some targeted funds. I don't hate truck drivers. I just hate the fact that they take up my parking spaces. Although here's, all right. So if I'm going to do a flame door, you open up Pandora's box here. Here's my problem with truck drivers on the highway.

They never use their cruise control. This has to be true of truck drivers more than anyone. Wait, what? Truck drivers never use their cruise control on the highway. Because if you try to pass them, they speed up. Truck drivers do not like to get past. That's true. They have the personality of you will not pass.

Yes. I'm just saying they've got to be cruise control with all the bells and whistles they have now. Just turn it on, let it go. I don't care if someone passes me. You know who I hate, truly, on the road? People with loud motorcycles. They're getting louder, it seems like.

And then furthermore, there was a guy we were on our way to the beach this weekend in two lanes and a guy with the crazy obnoxious loud motorcycle. The type of that pass you, you jump, right? Oh, yeah. passed tightly in between the two cars, woke Logan up. Those people, I don't hate the motorcycles. I don't just hate the motorcycles, too.

Unlike Ben who won't take a stand against truck drivers. I hate the motorcycle drivers. Yeah, when they pass through, like, going between two cars, when there's no lane, that is, that's crazy that you would even try that. All right. Sorry, where were we? Private markets. Okay.

Allison Schrager wrote a post at Bloomberg. In 2023, the value of North American private equity assets under management was estimated to be $3.5 trillion, more than 10 times what it was two decades earlier. And there's a chart showing the North America-focused private equity assets under management. The title of the chart doesn't look like a bubble. And I don't know that the growth of an asset class alone is enough to call it a bubble. For example, investment-grade bond funds. Now, actually, I guess some people would say, yeah, that is a bubble.

In fact, was it Bill Gross who was calling bonds a bubble? Probably, yes. Do you remember that? When rates were at 4% or something, yes. And yeah, I remember having this conversation. How could bonds be in a bubble? At worst case, investors get their money back with a low return? Not at worst case, but absent a wave of defaults.

I started writing about worries about private equity in like 2015. So I can't. I'm willing to say I would never call this stuff a bubble because I've been wrong about it I was wrong about it for so long that I think the point is it just takes so long for this stuff to play out

that it won't happen right away. It's a slow bleed. So to that point, Ben, about you starting to write about this cautiously in 2015. I feel like this is like the new hot thing for the media is like asking questions.

Not that the questions are unfair, but there was an article in the journal. Pensions piled into private action. Now they can't get out. And the art, I mean, there just wasn't a lot in here. There wasn't a lot of new information in here. That's a feature of private markets. It's hard to get out.

There wasn't really anything salacious in here. That's just, yeah, it's, it's planning the seeds for in case there's a future problem. But it's not going to be a blow up here. It's going to be a slow death. So, so pension funds are selling private equity fund stakes secondhand, often taking a financial hit in the process. Secondary market buyers last year paid an average of 85% of the value of the assets. that were assigned three to six months before the sale.

Second-hand sales by private equity investors increased 7% to $60 billion last year. So it's not like there's nothing to talk about. Like, there's things to report on. But I feel like they're like just sort of really wanting the smoke to turn into fire here. My whole thing here is that the results that these pension funds and these endowments and foundations, the most of them, some of them are in good funds. Most of them are in crappy funds. And they don't even realize how bad their returns are. is it's a compounded annual return that you get in the stock market when you put $10,000

in one day and you get it out 10 years later is way different than the IRA they report to you for a private equity fund where the money gets invested slowly but truly over time. I think that the results are just way worse than these pension funds even realize. And they don't even know what their dollar for dollar returns are in a lot of ways. Yeah. So, yeah, it's a, it matters a lot because the holder, these pension fund, the people that make up the pension funds are often teachers, policemen, firefighters, like it matters, a great deal, but there's just not like a ton of news right now.

Yeah, it's not a headline event. Right. All right, survey of the week. This is the labor income finances and expectation survey. That's life. If you get that from the Federal Reserve Bank of Philadelphia, I feel you don't hear much from the Philadelphia Bank of Federal Reserve, right? St. Louis isn't a lot.

Minneapolis gets some hits a little bit. Not all from Philly Fed. You don't hear about the Philly Fed. That's right. I guess the expectations well. Okay. So they asked people the percentage of respondents reporting trouble paying bills, and they did this by age and by income, male, female.

The number of people over time is always around one-fifth. This goes back to April 2023, so it's like the last year. It's roughly 20-some percent of people having trouble paying their bills. And then it shows it by income, so less than 40 grand a year is like one-third of people have trouble paying their bills. people make $150,000 or over, it's now seven, wait, what's the percentage? Not 7%. 6.9%.

6.9%. Nice. These seem like the kind of survey results to me that I can't verify them at all, but they seem directionally right to me. And is this one of those things where it's literally always the case? When we did our show a couple weeks ago, we called it Living Paycheck to Paycheck based on some satirical Twitter posts that I wrote. And someone wrote in, hey, I thought you guys were really going to talk about living paycheck to paycheck.

And my whole thinking is that, unfortunately, for a segment of the population, this is always going to be a problem. Yeah. I don't know that this probably changes a little bit, but if you can see from the survey, this is just over the past year, it probably doesn't change all that much. Yeah. Unfortunately. But I think that these surveys are right because somebody knows how much of their past. how much they're make. Yes.

You're not asking how they're going to feel in a year from now. And they know if they're having trouble playing their bills for the most part. Yeah. This is a cool chart from Rick Reader. Click to door speed for U.S. digital purchases showing Amazon and other. And Amazon is just killing it. It used to take four days. Now it's one and a half days.

You know what I just ordered? This is going to look. Robert is not happy about this. I played basketball on Saturday outside. And it was steaming. piping hot, and I forgot to put on sunscreen, which, given my head situation, is dangerous. I'm surprised you're not a du-rag guy when you play your men's league. When we get there.

So, yeah, I was naked out there, and my head got burned. Not terribly, but, you know, not good. And if I put on sunscreen, which I usually do, like, it drips into the eyes, and then my day is ruined because it stings, like forever. So I bought a... You got to get the no-tier sunscreen like my kids have. Yeah, it doesn't work on a bald head. Come on. A bald head?

You could fry an egg on my head. The sun is directly, so I bought a Nike, I bought two things. I bought one Nike skull cap, like what Diba wears. Okay. Sort of excited to see how that one looks. And I bought, I bought like a big thick headband that has like, it's not, it doesn't cover the entire skull. There's like a, there's like a Yamika size hole. So I could do that.

look a little bit less ridiculous and just put sunscreen on the top of that, I think that's probably what I'm going to end up doing. I think you need to get the tie-dye hat backwards like Woody Harrison away. Dude, so many people suggested that. But I can't play basketball with a hat. Okay. And plus, that's, I mean, I'm not trying to be a complete clown. All right.

Well, the Nike skull cap. I need to see a picture of that. All right. So what you need to do before you play basketball is stretch out your shins and your calves better because we got so many comments from people saying when you said your foot hurts when you get out of bed, my class planar fasciitis. Which you keep fighting middle age,

middle age ailments. I don't think I plant the fasciitis. It doesn't hurt that much. If it's just sore like that, just stretch out your calves and your shins a little bit more. It just hurts. Go against the wall where you push your foot up against it and then... It hurts for three steps.

That's about it. We got a lot of emails about people that are fans of the manual car wash. Of course, our very own Bill Sweet washes his car. That doesn't surprise me. No. I could see Bill being a manual car wash guy.

Someone said, yeah, I do it in the morning, and it's my meditation, happy place. Good. Okay. I got it. Yeah. So we got another email about, we spoke about the Concord last week, and it's just physics. Like, why to go away? And this person said that the cost of flying faster increases, like, nonlinearly.

So if you go from 400 miles an hour to 800, it's not twice the gas price. It's a lot more than that. But Duncan did send us this boom factory that is trying to make supersonic airliners. What is it? Isn't it in North Carolina or something? So this could be coming back. I hope so. Supersonic revival.

We're looking to move fast. All right, Ben, recommendations. What do you got? I don't got much this week. I got a lot. Okay. I rewatch the girl the dragon tattoo on HBO. Which one?

The first one? No, the English one or the non-English one. Oh, I mean, the David Fincher one. Okay, really good. Yeah. So, I mean, I got really into those books. I read the book. Remember the whole story?

The Steve Larson guy. He wrote the books, then he passed away, and so it was this big... And the books were like a phenomenon. I remember it was like a beach reading thing. So good. And the books were really good. And the first movie came out, and it was an amazing cast. And David Fincher directed the movies.

And I thought they did a wonderful job with them. And then they just didn't make a sequel. Yeah, no, I'd sign up for a sequel. And I had to go read, and I guess the reason is they spent $90 million and it only made $100. And the studio yanked it, which is crazy to me that David Fincher would have wanted to make a trilogy based on these. And the second one, the second book I thought was just as good as a first. That would have been a really good movie. What was that called?

The Hornets Nest? The Girl Who Cook the Hornets Nest? I can't remember. That sounds right. Okay. Yeah, very good movie. Are you watching The Boys? I gave up up to the first season.

No reason. I liked it, but I just, for some reason, never got back into it. But I did like it. I stopped watching last season. It's like, it's just the shock value of season one was phenomenal. And I like season two as well, but just sort of wore off. It's not like the story's that great. It's one of those stories.

Yeah, it's one of those stories. I can see that. Okay. So I was in the city on Thursday night with my friends. And I stayed in the city to see Long Legs, which is a movie that I have been greatly looking forward to. Long Lugs is with stars Nicholas Cage as a serial killer. I feel like Nicholas Cage has a new movie out every three months. Check out this. So Nick Cage did an interview at the Wall Street Journal and they asked him, what time do you get up on Mondays and what's

the first thing you do after waking up? It could be anywhere from 2 a.m. to 5 a.m. It oscillates quite a bit. That's a wide range. He said the first thing I do is see my daughter. After I know she's comfortable and back to sleep, I get on the elliptical and do about five miles. then maybe some weights. With that early wake up, what time you go into bed? We start winding down around 7.30, so you should knock that at 8. Okay. Nick Cage, early morning routine. He should be CEO. So anyhow, all right, so long legs. Why was I looking forward to it so much? I don't know what the people at Neon did for to get this hype machine going, but it was hyped. Scary's movie I've seen in years. Just the trailer looked great. So I stayed in the city to see it.

because I could have seen it on Friday at 12 in the afternoon, I would have been the only person in the theater. So I stayed in the city and it was sold out. Sold out. I don't know if I've ever been to a movie that was sold out. I sat in the second row corner, obviously by myself. And the movie was just incredibly underwhelming relative to the anticipation.

Now, the movie itself was fine. Like, it was, it was good. It was, it was dark and dreary and dreadful. And it was like any decent shutter movie. But earnings missed estimates. Yeah, it was like a 6.6. It was a good shutter movie. I just don't, so I'm not mad.

I, you know, I liked it. It wasn't scary at all, though. And I just don't quite understand how they were able to catch lightning in a bottle at the box office. It did like 20, I think $22 or $23 million. So. You mentioned it last week, and I honestly, never heard of it before. You said, like, you were really excited to see it. You couldn't wait,

and I'd never heard of it. Yeah. Well, a little disappointed. Horizon, two, pulled. It was supposed to come out in August. Not happening anymore. This was the easiest entertainment prediction to make all summer that this thing was going to bomb. Yeah. So it did. It actually, it just came to VOD today. And I might watch it in three settings. Isn't it crazy how quickly these movies come to video on demand now? Yeah. It's pretty simple. It's like, it's just a couple weeks a lot of times. It's pretty exciting. All right, Ben, I've got something for you.

I was watching, I was watching Beverly Hills Cup last week, as we mentioned. And I had a thought, Bill Simmons' voice. Are we sure Kevin Bacon's a good actor? Hasn't he just played with a lot of really good actors? Are we sure he's good? Really? Make your case, because I'm ready to refute this. All right. So, so I did some work on this. I didn't put in the dock because I wanted you to go in fresh and be surprised.

I had Sean and Chart Kid pull some numbers. So now I'm going to drop some of these things into the dock. All right. You do that while I go on IMDP. Because, Ben, you don't need to do all that. I've got it. Okay. All right. I've got it all. Sit back and relax and let me cook. At least once a year, you do a movie like deep dive on a spreadsheet. So I saw this data, and I felt like, this is like my finest hour. I've never been, I've never felt more right about anything ever. Now, in fairness to Kevin Bacon, he's a character actor. He's a character actor.

And oftentimes, the characters that he plays are shitheads, right? Like, he plays bad guys. The River Wild, Magneto, Beverly Hillscop. For the most part, he doesn't, sleepers, he doesn't play people that you were for. Right? So, okay. So I had Sean pull the data. And what we looked at was the average box office and the total box office when inflation adjusted it. The average rotten tomato scores and the average audience score for the movies. And I have Tom Hacks, Ed Norton, Matt Damon, Denzel, DiCaprio, Tom Cruise, Brad Pitt, Joaquin Phoenix, Kevin Costner, Ben Affleck, Matthew McConae, Alec Baldwin, Sam Jackson, Will Smith, and Kevin Bacon. All right, Ben. Check the doc. First chart.

First chart. So, I was right. Kevin Bacon has the lowest average Rotten Tomato scores from the critics and the audience and the average.

I think this isn't fair, though. He's not in the same league as these guys. Agreed. Well, exactly. Chart two. Look at this high candy. So we have a scatterplot. Total box office.

inflation adjusted, and the rotten tomato score. Look at this chart. Kevin Bacon, bottom left, not where you want to be. I love Sam Jackson. Just about his bad at movies, but he made way more money. It's all the Marvel movies. All right, and the last one, this is really the coup de grace. This is gorgeous.

So we're looking at all of the movies, from all of these actors. See, look at where Tom Cruise is. That's just, he's in the perfect spot. Tom Cruise is the efficient frontier of movie, right? Yeah. He makes money and they're good movies. Tom Cruise is the efficient frontier of actors. All right, Ben, look at this.

Can you say this, or is it too small? Kevin Bacon movies, total box office inflation adjusted average. Okay? So there's a lot. Look at all those movies below 40 that just bombed. There's a lot of them. Okay, he did a lot. You know why he did so many movies, though?

Because he invested in Bernie Madoff. He needed to make all these crap. I understand. After the GFC, he made a whole lot of bad movies. And he did go on a great run. So his 90s was really phenomenal. Tremors? So it started with tremors. There's a lot of duds in here, but JFK, a few good men, the River Wild, murder in the first Apollo 13 sleepers. Mystic River in the 2000s? That's a good run. Yes. Okay. I'm just not sure if Kevin Bacon's a good actor. From a quality basis. You're right. There's more quantity than quality, but the stuff that he did good, but it's all character

stuff that he did. You know what's a good movie of his? Stere of Echoes. You ever see that one? I don't know if I did. Not a bad one. Was that a horror movie? No, it's more like a thriller.

Murder in the first was a very good one for him, too. Murder in the first was good. But yeah, so to your point, he could not carry a movie, which is why he had to do so many. Yeah. That's fair. This is good, good charts. Thank you. I'll give you credit here. Well, I feel like I was, I was, the numbers, the numbers supported my thesis.

It's my finest hour. I do like Kevin Bacon, though. Who doesn't like Kevin Bacon? But that's the point. Everyone loves Kevin Bacon. Maybe a little bit too much. Okay. How much of his star has been risen up by the six degrees of Kevin Bacon?

A lot. Okay. All right, Ben. That's it for us. Thanks to the production team, as always. John, Daniel. We appreciate it. Thanks to Whitecharts for sponsoring. And is that it? See you next time. Oh, next week we're talking future proof. I got excited again. We interview Matt Middleton for Talk Your Book next week. And we talk about future proof and what's coming this

year, what's different, what's the same. And I got like all ready to go again. It's two months away. You know what I was listening to yesterday? I went for a jog yesterday and was listening to music. Third-eyed blind the whole way. I'm ready. All right. See you next time.