Animal Spirits Podcast - Fighting Inflation (EP.359)

Episode Date: May 8, 2024

On episode 359 of Animal Spirits, Michael Batnick and Ben Carlson discuss: the suffocating bull market, the other side of government debt, Jerry Seinfeld on when money changed everything, consumers are finally fighting back against inflation, Wall Street translations, who is buying Bitcoin ETFs, the bear case against housing and much more! This episode is brought to you by Simplify. Simplify Your Access to Alternative ETFs. Visit https://www.simplify.us/ to learn more. Sign up for The Compound newsletter and never miss out: https://www.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

Today's Animal Spirits is brought to you by Simplify ETFs, option-based income strategies, all the rage. We've talked about these before, but do your funds offer high yield at the expense of high return? Check out Simplify ETFs active income solutions that deliver risk-managed monthly dividends via diversified options selling across multiple asset classes, including equities, fixed income, commodities, and even crypto assets. Visit Simplify.org for more. Info or to schedule a call with a member of their investment team, that's Simplify.us slash ETFs. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnick 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 Riddholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions.

Clients of Riddholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Did you check out the doc this week? I sure I did. Why? It's super long. So it's 43 pages. So I'll keep the StubHub ribbing to a minimum.

You don't want to do a 20-minute diatripping stuff up again? So two updates. We lost them as a sponsor forever. Number one, apparently. So I'm on the phone because. My ticket sold again. And I'm like, wait a minute. Wait a minute.

How are my tickets selling again? How could you sell the same ticket twice? And I'm on the phone with them and I'm on the phone with them trying to figure out what's going on and the tickets keep selling. And I'm like, wait, what is happening? What is happening? I'm like, take the listing down. I didn't do this.

Why would I list my tickets seven times? So then literally my tickets were listed seven times. So while I'm on the phone with them, they kept selling. and I'm like freaking out. So I had to delete them because apparently, I don't know there's a glitch in the app. I have no idea how my tickets got listed seven times. I certainly didn't do that. So they charged me the 900 that I mentioned last week.

And then they also charged me 450 because one of my pair is only one ticket sold. So I don't know what's going on. I think it's on the review. But needless to say, not thrilled with StubHub. Somebody emailed us. Time to retire from the game. We got a few emails that Michael needs a ticket broker. Guess what?

Somebody introduced me to a ticket broker. and the guy's wonderful. I'm never going through stuff up again. You need a broker to manage all of your brokers. A broker of brokers? Yes. You have like a fund of funds of different brokers. I guess I'm not surprised.

No, just. So when we go through bare markets, they can seem suffocating in ways where it seems like just relentless selling and it's like, oh, when does it ever going to end? But it kind of feels like bull markets are similar in a lot of ways. where if you're someone who's been bearish waiting for a drop stuck on the sidelines

and like, I just want a better energy point. When the market finally, you know, rolls over and falls 10 or 15 percent, that's what I'm going to get in. And it's like this for the, it's not allowing you to happen sometimes. So the S&P has, but this is the thing about bull markets. They don't let you in. They don't give you the pullbacks that you're waiting for. So we're taping this on Tuesday morning.

market just opened. Through Monday close, the S&P is back to down 1.4% from the highs. Well, that was fast. Five and a half percent at the low. So it's like, okay, here we go. We're going to get this correction. And then it doesn't happen. And that is too why waiting on the sidelines can be so debilitating.

Because it's like, when is it going to come? And obviously a correction is going to happen, but the waiting is the hard part. The narrative shift was interesting. about why we got the pullback was because accelerating data, increasing rates, the two-year got above 5%. It's now back to 4-8. So that was the narrative for why price pulled back. And I think it was a fair narrative.

I mean, we got the data and interest rates went higher and prices went down. And then we got some, I'm going to use the G word, some Goldilocks-looking data of a slowing economy, some softer data. Still okay, but just softer. Rates pulled back hard, and then the stock market re-accelerates. The narrative cycles are speeding up really fast, too, because it's like one week, it's, geez, inflation is sticky and growth is ticking here to stay. Then the next week you get one job's number, and it's like, okay, things are slowing. This is, it changes so quickly. And that's the thing is the bond market doesn't seem like it's like predicting what's going to happen. It's one step behind. And it's just reacting, which is interesting.

It's not like the bond market is getting ahead of this stuff. Okay, speaking of the bond market, a bunch of people posted this chart from Bank of America. Got to email the other day saying, hey, I'm on the team at Bank of America that makes these charts. Glad you guys use them. Oh, nice. It is, wasn't it you who said, like, you can tell who the charts come from by the look of them? Bank of America has distinctive looking charts. Well, guess what?

So do we now. We're in the chart game. That's true. We do. Okay, annual interest payments at $1 trillion in rising. And so this is projected interest payment. So it's like the previous 12 months of interest payments for the U.S. government.

So it's at $1 trillion in March. By April 2025, this is assuming rates stay stable. It just goes to the moon, $1.7 trillion. And then if we assume 150 basis point cut by the Fed, then it's only $1.2 trillion. But that $1.7 is the one that people look at and go, whoa. So if we say in the current trajectory, which... I mean, you could use the word. You could use the unsustainable word.

This is... You can't keep doing this, right, with no ramifications. I don't know what the ramifications would be, but you can't just keep, this can't just keep going vertical. Okay, so here's the other side of this, is Bloomberg had this piece about how the government is paying out $2 million per minute to investors.

So the liability of government, so it's essentially stimulus to investors. Yes. Right? And higher rates are stimulus. The $2 million per minute, I love these because when you're dealing in trillions, you can do this money any way you want. any, you know, you can make it seem it's crazy high. But they said last year, investors pocketed

$900 billion in annual interest from the U.S. government, doubly average over the previous decade. That's set to rise as over 90% of treasuries now carry coupons of 4% or more. In the mid-2020 per minute, was that the number you mentioned? Two million per minute? Yes. So again, the other side of the liability of the government is an asset for people. And the thing is, with rates, you can't, you can ever win because on the one hand, I did a tongue-in-cheek tweet about this, and I said, this chart is essentially a stimulus to rich people who own T-bills. But the other side of this is the 2010s where people say, savers are getting punished. And asset holders are the ones that are making out like bandits because stocks are growing up.

So you can't win with the interest rate. Josh was on this pretty early that higher rates are actually inflationary and stimulative. But it's funny, though, no one ever said this back in the 90s when rates were five or six percent for the whole decade. Why wasn't it inflationary then? It's just because people have more money now, the rich people have more money? I think it's a combination of rich people having just, there's just more assets, number one, and number two, coming off a base of zero is a shock to the system. So in the 90s, rates were, what were rates in the 80s?

We anchor that that's the part. So coming up from zero, this is a, yeah, it's different. So Bloomberg also has this cool chart in here that shows the margin of safety that now exists in bonds. And it's showing the amount of yields, very impurities, that they would need to rise for one year of losses to totally wipe out your income, right? Because in the 2020s, there was no, there was no margin of safety there. Yields needed to rise a little bit and your, all your income is gone. This is a wonderful chart. Yield would have to rise 520 basis points to wipe out all the yield and two-year treasury right now. So this is a good way to, I think, through risk for a lot

of people. But wait, but make the comparison. So for listeners who can't see this chart, in mid-2020, in order to wipe out a year of losses, the two-year only need to go up 20 basis points, which is what happened in way worse, obviously. Yeah, the sensitivity to duration is way, way higher at lower interest rates, or there's no margin of safety. So the five-year back then,

an eight-bases point increase could have wiped out the whole year's worth of gains. Now it's 130 basis points. So you wrote a piece, Ben, about like bondholders and why they're not freaking out. Well, this is the answer. Yeah. I yeah it really is

but just the I'm trying to have a balancing act on the government thing because as you say everyone keeps saying this is unsustainable it's unsustainable but on the other hand

it's also putting money back into the hands of investors so essentially it's but that's not a wash it's not a wash it's not a total wash but I don't know the unsustainable piece

is the one that I can never wrap my head around because people keep saying this but I've yet to see a good reason like okay what what happens because we can literally print our own currency and I think The risk is just inflation, which we already had. Yeah.

But I guess the risk would be, if we keep spending like this, then inflation will stay higher. I guess that's the point. That's the risk. Mopusson and Callahan had a really interesting article called Cost of Capital and Capital allocation, investment in the era of easy money. So they look back on... So sorry, not to throw a shade here, but this is like the opposite of a BuzzFeed clickbait headline. Yeah. Right?

this is like this is for true believers only this is yeah this is um this is airplane reading and so the thinking that interest rates are what drives decision making i think that's true for how people think about investing and it's true for the mindset of investors overall but if you're just looking within companies and how companies choose to allocate their capital r&D buybacks dividends whatever, the level of interest rates is shockingly immaterial. So they say surveys of executives over decades reveal that changes in the cost of capital have a muted effect on their decisions. This is relevant because in theory, the present value of $1 of earnings in perpetuity

is twice as high if you discounted by the perceived cost of capital than by the hurdle rate. Counter to the assumption that lower interest rates lead to higher investment activity, investments are 24.5% of sales from 2009 to 2021 versus 27.3% of from 1996 to 2008, excuse me, only intangible investments are higher. So if you look, there's a chart investment. And those are completely different rate environments. What's that? Yeah.

And those are completely different rate environments. So the point is that executives at these companies have a mental hurdle rate that does not change with interest rates. Interesting. Right. Yeah, they're like their minimum needed to fund this is not. It has nothing to do with the 10 year or the overnight cost, which is interesting. Because in theory, in theory, it should be a big input, right? Because the dividend discount or whatever you're discounting, it should be a big input to the models. But they have mental models. It's different. That is interesting. You know, my favorite Eddie Elfine tweet of all time. My favorite mental model is Kate Moss. So let me just jump around for a sec. So Connorsend tweeted, feel free to push back on this. But going back 50 years, most U.S. recessions played out as an energy price shock, followed by an investment collapse.

We had the setup for that in Q2, 2022, but that's long gone. So what's the thing going to be now? Like what's the thing that's going to be the thing that slows the economy drives us into a recession? I think that while we're on the topic of interest rates, low rates and high rates, as we just mentioned, matter a lot more to consumers and investors than they do to companies. And I think that the impacts of higher rates, not there was like interest rates, the impact happens on a lag. I think that the impact of high rates can happen on a lag for capital allocation from

investors. And so investors are just way more risk-averse or the heart. hurdle for investors, not executives, not companies, the hurdle for investors is absolutely way higher when rates are at 5%. I'm sitting on way more cash than I ever have, and I don't think I'm unique there, because it's really comfortable, right? I'm not taking money. I'm not taking money out of the stock market and doing it. There's no hurry to get invested these days. But my cash pile is building. And that's not unique to me. And that sort of thing, that takes time to see the impacts of that. So that could be the thing that ultimately, and I know it's like a nebulous concept,

but that could be ultimately the thing that maybe slows the economy. And that is the whole point. That is supposed to be one of the points of the Fed raising a lowering rates, right? If they lower rates, risk is pushed out on the curve. If they raise rates, it comes back in. Guess what? If I was getting 2% of my cash, would this find a way into risk assets? You damn right, it would. Yeah. No, that's fair. The thing is the recession question is a good one, because, like, we need to have some sort of excess to get the recession to happen. And I'm beginning back to the energy point, I'm shocked that we didn't have an energy crisis. After the war in Ukraine and oil immediately spiking $120 a barrel, it's crazy to me that it didn't happen.

All of the ingredients were there. Yes. It really were. We got an email about ZERP. The nice thing about the ZERP era was that it at least felt like companies were trying new stuff. Now it's just about nickel and dimming, raising subscriptions costs, fees and shrinkflation. Stuff just feel so boring these days. I'm a 35-year-old millennial and even AI is a fun gimmick for now, but I feel like our generation is just getting bored because we grew up in the Zher products. Interesting take. Well, that's sort of the ones counter to the cost

of capital thing. But again, I feel like we're just, that's an isolate. We're talking about an isolationary. We're talking about like a very tight window of time. So this doesn't, this doesn't like negate what Mobuson said. But to this email at the other point, companies are way more cognizant of the cost of capital because their stock prices was getting killed because investors were saying, we don't want these stocks. But you know what the big input is? It's not a cost of capital. It's a cost of labor. And I think one of the things people underestimate about the ZERP phenomenon is that all this stuff is happening is because labor was so cheap. So that's true, too. Matt Darling tweeted this. Mohamed Allen tweeted a post about how the cost of fast food is rising and people say,

this is the sign of a terrible economy. And Matt Darling says, no, no, no, no, fast food restaurants are expensive is a sign of a good economy, not a bad one. Yeah. We want labor to be expensive. Fast food was inexpensive in the 2010s because of a slack labor market.

And I think this is something people don't realize is saying, geez, a burger at five guys cost me $12 now. The economy is terrible. When the opposite is true, the burger was $5 in the 2010s because labor was so cheap. And now that people on the lower end

are making more money, that's actually the sign of a strong economy. but it seems like the sign of a... So I think that's one of the reasons... The reason you got such cheap Uber rides in the 2010s is because people weren't getting paid a lot to drive Uber's. Right. Yeah, that's a great point.

So I think that's part of it too. And that... But that's like the whole... That's why the economy is a balancing act and it's never completely perfect in every way, right? It's like, in the 2010s, it was, geez, the income inequality is crazy. It's like, now we've kind of helped that a little bit.

But guess what that means on the other hand? And so it's a teeter-totter in a lot of ways. And there's just no perfect economy and there's never going to be. All right. So one of, I think I've mentioned this before, one of my favorite things about where we are now

with podcasts and people having their own sort of media channels and just way more outlets is every time someone has a new book or a new project, like a movie or a TV show, they go on the tour. And so the one who's been on the tour and even did an SNL skit about this is Jerry Seinfeld. Did you see this?

He did like, he did an SNL thing about like, on the S&L News desk, you know, the weekend update, he was playing a guy who's done too much press. And he was on a million podcasts, he was on all these interviews, which is great because you get to hear Jerry Seinfeld wax poetic on this stuff. Sidebar, he did a one-on-one interview. And I pounded the table on this, but no one's listening because no one watches Apple TV Plus,

but the Steve Martin doc was just, it's the best thing I've watched all year, like bar none. But there was a part in the dock where they'd go back and forth, and it was just Seinfeld interviewing Steve Martin about comedy and just these two giants of comedy going back and forth about their process and how they think about it

and it was amazing. You know why people aren't watching it because we're old and Steve Martin is older. I mean he's just, to this gen, nobody knows who Steve Martin is. Nobody under 30

knows who Steve Martin is. He's got the new show on Hulu. But yes, you're right, but he's a way more complicated guy and I thought. Anyway, so Seinfeld was on Neil Brennan's podcast called Blocks and you're a big Neil Brennan fan, right?

I still haven't watched his new special, but those guys are buddies. And I feel like when you're friends with someone, you, it's easier for you to, you know, be a let loose and be a little more, you know. So Seinfeld was talking about him coming up in the comedy world and then how America has changed. And he says, in the 1970s, he's like, everything changed from the 70s to the 80s. And he said, in the 1980s, money became everything. And he said in the 70s, it was, how cool is your job? That's all that matter, right?

if my job's cooler, if your job's cooler than mine, you beat me. And no one talked about how much they're making. And Seinfeld said one of his friends explained to him that in the 80s was the first time that young guys could make a lot of money fast. He said, the people who were rich in the past were like shipping and iron ore people and like industrial, right? And then finance was born. And he said, it has poisoned our culture to this day. He said he had some people over some kids of his that he was kids' friends that he was trying to explain to it. And he said, if your work is unfulfilling, the money will be too. And so he was talking about this whole thing about money. But I thought it was really interesting how he said, like, the 80s was the dividing

line. And I think the reason for this is because that's when the finance industry really took off, right? You couldn't, before then, you couldn't really make a ton of money. Charlie Ellis has written about this in the past, how in like the 50s and 60s when he came into Wall Street, you didn't go there to make a lot of money. It was kind of tumbleweeds and boring. And I feel, you know, people always say the Gordon Gecko thing was part of it. But I think that's when Wall Street, as finances and industry really took off in the 80s. And then tech has obviously he's saying like that dividing line was like kind of one of the worst things that's ever happened to us because we just we worship money now yeah that's a good point but what

what what turned it on to realize like fine i mean it just because we we backed everything and securitized everything and made it push pushed paper on more and i guess the boomers having more money i don't but it's an interesting take that he's like it didn't really matter before Speaking of securitization, I rewatched the big short, which I think a lot of people in finance have this thing where like finance movies just like maybe you just know too much. And when they play to the general audience, it's just like not as great. It's like how doctors and nurses don't like shows about medical shows. Yeah.

So I didn't love the big short when it first came out. I rewatch it. Very good movie. Much better on the second watch for me. See, I didn't really love it either. But so I rewashed it on the airplane, sort of in the background. It was good. So just getting back to how.

I think about cash and how other investors are thinking about it. Here's a chart. I think from JPM Morgan. Yeah, this from Sambolist, ratio of cash yields to S&P 500 dividend yields. And look at the ZERP era, right? Like just being forced out on the risk spectrum. And now, you know, that's... So this is showing the ratio of cash is five times, four times as much as the S&P dividend yield. So it's whatever, five times to one and a half times, whatever it is. So the ZRP era had all sorts of impact on investor behavior capital allocation from investors, not necessarily from companies. And now we're well on the other side of this. And if this stays high for a long time, cash being high relative to whatever metric you're using. Your point about

corporations is one of the reasons that the stock market has been so good, especially the U.S. stock market, because these CEOs are so much smarter than they were in the past about capital allocation. It's like if the market looks like this, fine, we're going to buy more stock back. if the market looks like this, we're going to take out debt. If it looks like this, we're going to pay down debt. There's so much smarter now. As you say that, I'm just thinking about, like, there's probably people listening that have just a million anecdotes of CEOs

just acting like absolute morons. And I'm sure there are a handful of those situations. I mean, of course there are. But in general, I would think that that's probably a fair statement, that we know we're just better allocators, better business managers, better, this, better, we're better. Companies are better. Even with some of the mistakes these tech companies have made,

there haven't been any huge missteps by any of these big tech CEOs, right? The biggest thing Bezos has done is he got divorced and decided to start dating again. Like, whoa. I don't think that Tesla shareholders are thrilled with their leader. Fair point. Okay. All right, fair point. Okay, something we've been talking about a lot on this show is auto insurance.

And I guess I get my insurance renewal once every six months. I don't know how often your broker gets a hold of you for your rental. What's that you were saying about inflation? not being a big deal. Okay. So from six months ago to now, well, let me, I'll give some kind. So what do you think my percentage increase was

from six months ago for my auto insurance? Six months ago? Six months ago. 18%. 26%. But. That's karma. Why is that karma?

You've been, you've been poo-pooing inflation. Not auto insurance. I've been on the front lines of the report. reporting on auto insurance. The thing is, though, so here's the, here's the, here's the, here's the, here's the, here's the, in Michael batting terms. So it's 200 bucks higher. Is that really going to be the end of my life? It's a, it's like, geez, 26% that sounds like a lot. It's $200. Stretched over the course of an iPad. I, I, well, since, since the cost of everything else in your life is flat, no, $200 is not going to matter. I did search around.

A lot of people said check Costco, check all these other places. And, uh, I couldn't really find a better price unless you, I mean, you can, you can change the coverage if you want. So here's the thing. You value your time. You're a busy person. I value professional services. How much more am I paying my broker than by going direct to the company? I don't know. Do you know? No, and I don't care. Oh, okay. All right. There you go. But, no, honestly, the thing is, and please feel free to send emails. I could be way off. Is there an upcharge for broker services? Of course. Why, why are you saying of course. That person has to get paid.

I'm the one who's going in and putting the information myself on Progressive. You don't think that they have like some sort of wholesale relationship with these companies. Do you think I'm paying that much more by going through a broker than I would? I'm sure it's not that much,

but there's definitely a surcharge. Guess what? Happy to pay it. Convenience. Hey, that's convenience is a form of wealth. I said this recently. What's the other email we got here? All right.

The real reason I wanted to write was that the insurance industry is far wilder than you think. Standard PNC businesses like Progressive or Geico, are passing through huge price increases, but these price increases need to be approved by state regulators. In some admitted home insurance markets, large companies like Travelers are trying to pass through huge price increases because the catastrophes are much worse than they thought

and claims have accelerated. However, the state says, no, that premium is too high. And then Traveler stops writing insurance in states like Florida because it does not think it is profitable. What happens when admitted stops writing insurance is that non-admitted insurance swoops in, E&S companies do not need to have prices approved by the state. They start insuring people and they can charge whatever they want. Anyway, OGJN and Buffett were talking about this, that a lot of this is regulatory policy. Okay, that makes sense.

I also think that to the point of this email, home insurance is probably a bigger pain in the butt for people than auto insurance. I mentioned, like, my auto insurance went up, but at the end of the day, it's not that big of a deal to me. I think the home insurance, because it's more costly, that's the place where it stinks for a lot of people. So Jeff Wendiger has a chart. Auto insurance inflation continues to outrun general inflation.

So he's looking at CPI motor vehicle insurance relative to all CPI items, and it's skyrocketing. And then he's looking at a chart of auto insurance companies relative to the SP 500, and they're also breaking out. I mean, they're beating the crap out of the index. Connorsent tweeted, though. That's surprising because we had the data showing that a lot of these, the profits aren't that great for these companies. Well, the stocks look pretty good.

Encouraging news on the auto insurance inflation front from Allstate. Higher premiums and slowing cost growth have improved profitability, making future large premium increases less likely. So hopefully, maybe all this is behind us. Okay, yeah. So Progressive over the past year is up 68% versus a 27% gain for the S&P. I saw a great meme. You know the midwit meme?

So it's a bell curve and this is for cars. And on the bottom it says net worth. And on the poor end and on the mega rich end is Toyota. The tails, right? The tails. Up top, the midwits, it's BMW, Jaguar, Lamborghini, and Porsche. I like it. Changed that to Honda for me and I'm golden.

I thought this is pretty good. I was thinking about people spending money on cars. And not to judge, people could do whatever they want, obviously, with their money. But like, what's the – No, that's the one area where I judge people more than any other. Yeah, okay. And for whatever reason, it probably – like, there's other stuff to judge on. But for some reason, the car is the one that I always look at.

And I just wonder, like, how much is that person really saving? Well, it's interesting because cars are complicated because on the one hand, there are people that genuinely derive pleasure from driving the car, from getting in a nice car, from the social signaling of having the nice car, right? And so it's, it's complicated. Yeah, that's, that's personality base. I don't get any of that. The only part you like about driving a car is calling the dealership to complain every five months because something goes wrong. But I saw somebody today, I saw an older gentleman get into a really nice and very expensive range rover. And I was thinking, like, I don't know, are you, you like too old to be like, look how cool

the car I drive is? But who might have judged? Maybe, what's wrong with having? a nice car. A person likes a car. It's fine. Here's the thing. When you get older, you shouldn't care what anyone thinks about you. Like the whole middle-aged, uh. But that's the, but what if that, Ben, what if that's the point? What if this guy says, I don't care if you think I'm a prick for driving a nice car? F***er, I want to drive a nice car. I, I'm, I did well in life, and this is the car that I want to drive. So, so there's that, there's that too. You've got to, you got to, you got to, you got to respect that. Yes. I'm, I'm, I'm, I'm okay with people driving expensive cars as long as their finances

are okay. I just don't want to, I don't want that that's the one pain point if you're complaining with finances that and you're driving an $80,000 truck, that's the problem. All right, I've been saying, why hasn't inflation changed any behavior yet? Like, I've been waiting for this. Where is it consumer behavior? And the Wall Street Journal

hasn't been covered. It's here. And I think, so the average transaction price on a new vehicle was $46,000, almost $47,000 in March compared with $39.9.50, three years earlier. Repair and maintenance costs up 8%. insurance, obviously, as we've known, up 22% to cope. Many owners are squeezing more life out of their vehicle. U.S. vehicle average age hit a record 12.5 years in 2023, increasing

for the sixth straight year. So this was obviously in place before, and I'm sure the inflationary high cost of cars has increased it. The share of cars that are 10 or more years old climbed 16.9% in 1977 to 44.2% in 2022. I think a lot of this has to do with the fact that cars are getting better too. We've talked about this in movies. Like when there's a horror movie and the slasher is chasing the person in the 80s and they try to start the car and go and it wouldn't start. You don't get that anymore with a push button, right? The car starts. There's no cars out there anymore that have rest. Now with electric vehicles, you turn the car on and you don't know if it's on. That's true. So imagine in a new hard film, the person gets into

an electric vehicle and they turn the car on and off because I don't know if it's on or off. But except for an Audi, I'm not going to say Audi, these cars last. longer these days. They're better quality in a lot of cases, right? You can drive a car 200,000 miles and it's fine. Here's another one from Wall Street Journal. Consumers are voting with their wallets, and some of America's best-known food brands are losing. Coffee drinkers are leaving Starbucks loyalty program. Chips-ahoy cookies are lingering longer in the grocery shelves. Fewer customers are ordering fast food, drive-thrus and kiosks, pressuring companies such as Wendy's and McDonald's. So it's happening. So this is someone from Chips-A-Hoy. We have surpassed

certain price points, and that is having a big effect. This person in the, you know, interview the regular people on the street for the article. It's not that I can't afford it now. It's the frustration that the same meal costs double what it did. I've been waiting for this. It's finally happening. So this is, as far as inflationary signs, this is a great sign. Even if it's... Michael just took a sip out of like a giant leader of Starbucks. No, but I... I was saying to Josh that my Starbucks habits have changed. I'm not. I was a 100% of the year Starbucks drinker every single day, and I'm skipping a few days.

I'm probably down to 90%. So I'm changing my habits. My wife certainly is not. But I think if this actually is a real thing that companies are starting to feel it because they're talking about it and their earnings calls, even if it's only the margin, I say that's a great thing. Oh, it's a great thing for price pressure. Like, this is a good news. This is good news for inflation. Consumers fighting back. Like, we can actually have. I was early to the front line of fighting back against Chipotle. I put my stick in the sand three years ago. Did I not? Yeah. I don't know. Isn't it impossible to fight against inflation? Like in places like New York in Disney, like you can't fight inflation there. No.

It's like you kill a monster and another one comes. Yeah. All right. We have one emailer who is apoplectic that the media is not covering the rising prices and costs and inputs and all that sort of stuff in the health care industry. So let us disseminate the message on this person's behalf. Even after today's wage report, still nobody wants to call a couple hospital administrators just touch base with the crazy dynamic that has occurred since COVID, the largest employment sector in the country with one of the most profound increases in wages I have seen in the last 30 plus years. There has been more six figure salary nurses created in the last three years versus any other job descriptions combined. Wow.

I can't believe I've heard nothing from financial journalists about what is happening with health care wages. It's just a ridiculous journalistic malpractice. Well, thank you for sharing. My other health care thing, I've been hearing stories from people going and getting testing done and all this stuff. And it seems to be like the wait times are longer and longer and longer. Can our health industry handle 70 million baby boomers who are going to need tons of medical

care in the coming 10, 20, 30 years? isn't that just going to overwhelm hospital systems in this country? Think about how long it takes and how bad the customer service is when you call a doctor's office for something. Like, has there ever been one good customer service experience calling a doctor's office?

It's rare when it happens. No. So unless we have robots that are able to take care of baby boomers in their older years because they're going to need quality of life health care coverage, you know, that's the basic stuff. But all these other things,

how are they not going to overwhelm everything? How are there going to be enough employees to help in doctors and nurses to help all of the aging boomers? It seems like it's an impossible life. Yeah, I don't know anything about that. All right. Good chart. Commod. What is this?

Oh, lumber prices all the way back. Boy, this was a pandemic thing. We talked about this quite a bit back in the day. And how many builders are decreasing their housing costs because of this? Right. Approximately zero. Speaking of builders and houses, I sent you, Ben, over the week in a screenshot of a couple of homes listed in my neighborhood. It is, I mean, those are, these are split levels, houses built in the, I don't know, the 60s.

It's the one that you always described for us. I'm not going to do it. Yes, I'm not going to do it. But it looks like the Brady Bunch home, I guess, you could say? 2,300 square feet being enlisted. And what were they? 950 or something? 979.

I mean, I don't know what they're going to get, but they're going to go for over 900 and it's a travesty. It really is. Those houses, so this is a long time. me go at this point, but when my mother died and we sold the house in 2011, we sold it for, I think, $4.75. You sold at the bottom, man. We really did. But whatever. But these houses should be, I don't know, I'm making this up, $700? And the people who are buying them, you feel bad for it because it's like, they're at the stage in life where they buy a home. And you can't say, like, what are you doing, idiot? It's like, listen, we want or need to buy a home. So we're going to

pay the going rate. That's the Jeremy Irons one, right? Yeah. We're selling to willing buyers at the willing rate or whatever. All right. Economy stuff. Matthew Klein had some good stuff for the overshoot. I just want to mention inflation rate has been sub 4% for almost a year now. Surprising, correct? Like the volatility of it has gone away, which is, I think, interesting. So Matthew Klein says the best inflation hedges a job. And he shows, disposable personal income, consumer spending, and wage income only. And these three things, especially the last three years ago, just follow each other. So if you want to know why there's been more spending in retail sales, it's because people are making more money. But he says,

wages are starting to roll over a little bit. This is another good sign for inflation. And so he plots wages versus the PCE price index. And wages have slowly started to roll over a little bit. And again, I think this is another good sign for people worried about inflation sticking around and shooting back higher. Yeah, there's the thing. Yeah, so the thing is wages are inflation in a lot of ways. Yeah. I mean, it's a chicken and the egg problem, but yeah.

Talman Swift tweeted Tawson's Slocke with some more cool weekend charts. Inflation adjusted pandemic savings are up big time for the middle class in percentage terms these folks that didn't get the 20% raises or $15 an hour folks did fine, but between savings and smaller percentage bumps on much bigger base salaries, they're fine. So I would love to see these numbers non-inflation adjusted as well because it would show a huge increase in savings because right add 20% on these. Yeah. But I guess, yeah, this thing people are worried like when are they going to spend their savings down and it's still, I don't know, hasn't happened. I think this is the trigger point.

Like this is the thing that people don't like to hear. It's like, no, no, no, net of inflation, real wages are up. And I mean, there's, there's caveats, of course, you know, like it's not evenly distributed, but that's the data. Yes. All right. Headline from Business Insider, the U.S. economy is already in a recession and it's following the same path as China by becoming reliant on debt. Veteran forecaster says, I didn't even need to click through the article to realize this. Okay? Here's my Wall Street translation. Veteran forecaster equals this person is very confident, but almost always wrong. Is that fair? It's so funny you mention that. I listened to the entire Berkshire all six hours of it over the weekend. because I was all over the place for sporting activities. And it was so cold this weekend. I'm complaining.

It's not relevant. So I had one AirPod in. And I was able to watch a T-ball listening to Warren Buffett. Literally true. That's actually a factual statement. So Berkshire sold 13 million shares of Apple. I forget what they're 15% of their position. And somebody tweeted, just as I suspected, what started, like just about Apple shares.

And this is a person that I was like, wait, who is this person? This name sounds so familiar. And it's a person that's been bearish literally for as long as I can remember. And I Google this person just to see him like, there's a video in 2013, just like Uber bearish on the stealth recession, whatever, whatever. And it's just amazing. It's not amazing. And we know why.

But that there are actual people like this that are out there in the real world just only seeing the glass as half on. fire. And, you know, not to get too deep into the psychology of Uber bears, but what is this? It's just the way that they were raised, their childhood. The internet and the great financial crisis and the pandemic. Yeah, all that. Those three things. Yeah. All right. Tracy All the way, this is one of the great things about Twitter. You know, you take the bad with the good, but here's one of the great things. So she tweeted,

what just happened to construction jobs? So construction jobs collapsed. And, Daniel Zhao replied, the real answer is most likely a boring one, volatility and survey data, especially for an industry cut of jolt's openings, for an industry with a history of that volatility in jolt's data. And then Nick Bunker said plus one to what Daniel said, construction postings are showing a much smoother moderation and are still elevated. So the fact that, like, obviously, there's a lot of misinformation and bullshit and toxicity and et cetera, et cetera.

But this is one of the great things is that, you know, you can find the truth if you're looking for it. I like it. Yes. Like there's an outlier here what's going on. And the good thing is is that Tracy was asking a question, like, what happened? She wasn't saying like, look at this. This is the end of the world. Right. It was like, it was actual question. All right, we talked last week about how older people are doing really well. Axios did one for average wealth for Americans under the age of 40. And household wealth for those under 40 is up 49% from pre-pandemic levels, according to a new analysis from the left-leaning Center for American Progress. Look at the dip this thing took from 2005 to 2010.

It was basically cut in half. This is why, like, Millennials versus Gen Z for who has it worse? Is this the stock market? Well, that was, back then was the housing market. Oh. Right? Well. But.

Okay. So what's the takeaway here? Young people are doing better than most people think, but they're still have a right to be angry. because of the housing market. How's that? Yeah, fair. So I was driving in the car and Logan wakes me up, my four-year-old and he says, Daddy, print me something. So we're driving back home and what do you say? Oh, he just randomly goes, like out of nowhere. Daddy, I'm like, yes. He goes, can Stormtroopers talk? So we get home and he goes, print me Darth Vader with Stormtroopers. So I went to Mid-Journey

and I typed in a coloring page. This is exactly what I typed in. A coloring page of Darth Vader with Stormtroopers. And 15 seconds later, this popped up with three other ones that, and so now they're like obsessed with this. Print Me, Bowser, fighting Optimus Prime. That's the crazy thing about kids is growing up in an on-demand world of play this song. When we went to our Airbnb in Florida for spring break, there was no election.

And my son is just shouting, hey, Alexa. And I'm like, George, there's no Alexa here. Stop, stop yelling for Alexa. And like, everything is on demand for them. It is interesting. And to see them when they can't get it. But it's just going to keep happening. Yeah.

All right. Let's talk about crypto for a second. Jim Bianca posted a good thread. He said a city study shows that investment advisors hold 35% of all ETFs. The table shows the four largest Bitcoin ETFs, investment advisors. hold less than 1% of the new Bitcoin ETFs. Well, that's really surprising to me. So I'm sort of confused here because people are saying that May 15th is the date that 13

Fs are due for Q1, so I'm not sure where this date is coming from, but let's just go with it. So the ultimate point that Bianco is making is that these are not people that are buying holders. These are people that are chasing on the way up and they're going to panic on the way down. That's really the takeaway, I think, from him. He says another sign of DGM retail is the dominant. the ETF buyer is the average trade size. This is good. This is good stuff. The blue is the average of the Bitcoin ETFs, which is just $14,000. That's the average trade size. That's less than half the next smallest, which is, I can't see. What is that? Whatever. So he's comparing the average

size of Bitcoin with GLD and LQD, HIG. Basically, the, the, the, the, the ETF side advisors are predominantly using. So LQDHYG. My counterpoint would be, don't you think ETF holders in general are stickier? Hold for longer? Well, he's saying that the ones

that advisors hold are. There's a chart, a great chart, cumulative and daily flows into all spot Bitcoin ETFs. Black is the price. Blue is the average purchase price. Red is the average purchase price, less GBTC. So he says

58,000 is the average purchase price or 10% below current levels. And his basic premise is that they'll dump at the first sign of trouble. I think that's what he's trying to say. I would like to know what the level is for that. Well, he says 58,000 is a wide range for Bitcoin. He's showing 58,000 is the average purchase price. Bitcoin as of this morning is 63,400.

So we get like a 20% dive. People are gone, is what he's saying. A lot of these people. Yeah. And I don't know. We'll say he might be right. I'm not sure. interestingly black rock finally did have their first day of outflows this is a headline from

coin desk black leading record 563 million dollar exit from u.s spot products interestingly though look at this next chart gbtc daily flows it's just been an absolute rush for the exits until i don't know why maybe this is like just a reallocation type of thing and this should be a blip but there wasn't inflow last week what if it's just like grace What if it's just gray-scale executives who have made so much money off of the fees? Yeah, I got that. Just to screw with people. I doubt that.

Michael Santoli had a good take on Bitcoin. And he's kind of saying, like, whatever people insist crypto is, a store of value, a claim on a scarce digital resource, real estate, a fun spec. Since mid-20203 is traded purely as the next big thing along with AI play. So he puts Bitcoin and Nvidia on the same chart, and they more or less follow each other. And then he puts micro-strategy, which is levered Bitcoin, on the same chart as Superbron. microcomputers, and they essentially follow each other. So isn't that, at least for now, a good way to think about crypto is that it's just, it's a risk on super play, super beta play. And that's like the, and it's a way to access that beta at all hours of the day, right?

If you want risk really on, it's in crypto. I think that's a good way to look at it. Fair? Yeah. All right, let's get into real estate. Jay Parsons tweeted this. Interesting stat from Freddie Mac, even with higher rates and sticky prices, first time homebuyers were made the dominant force in the for-sale housing market representing 58.2% of all home sales. I think it's actually purchase applications.

But if you look in 2017, it was 56%, 2020, it was 55%, and then in 2024, it's 58%. So regardless of what's happening in the market, you mentioned corporations don't really care about interest rates. Homebuyers don't really care about interest rates. Would you say that home sellers care more than home buyers?

at least now in the current environment? Yes, because home sellers are either with a low mortgage or without a mortgage. So giving that up is very difficult. So I was looking at the numbers here, just to think through the supply dynamic. So 1.1 million existing homes for sale right now, right? Out of a population of 336 million and there's 158 million employees, people employed in the U.S. right now, okay? In 1999, there was 2.2 existing home sales, double the amount. But there was 278 million people in the population, right?

So 60 million less fewer people. And there was 30 million fewer people who actually had a job. So that's like the supply thing. So it's not only that there are fewer homes. There are more people too, which makes this dynamic even harder for people to find a house. But also another wrinkles. People are staying in their homes longer. Yes.

So it's just like a dwindling supply, which is not. So someone, last week we talked about 30 returns in stocks, bonds, and cash. Remember had that chart? Someone said a little about houses. So I pulled up Y charts, case show national home price index. Or the 30 years ending 2023, housing prices were up 300% in the 30 years. So that's 5% a year almost, a little less than 5% a year. Higher or lower than you would have assumed.

With the caveat that the returns aren't what you actually experienced when you buy a house. Because there's leverage and all that stuff. I thought it was interesting. Lance Lambert showed Home Price Growth by decade. And he shows the 90s, 2000s, 2010s, 2020s. We've essentially pulled forward a decade's worth of gains already. It was wild. What a chart.

Wow. So do you think that means, like, is a baseline assumption that prices will kind of stagnate here or kind of follow inflation from here. Would that be a reasonable thing to say? Or is that too hard to predict? Were house prices too cheap? Based on demographics and the number we were building, I guess. I mean, we could easily just do like a simple adjustment, like the national home price divided

by the national income or something like that to maybe like. Well, obviously based on, and I was arguing this for years, remember I kept saying housing prices based on interest rates where they were are still relatively cheap. Yeah. Remember people were saying housing prices were expensive before we had this whole thing. Remember having those arguments back in the day? Pre-pandemic? No.

Okay. I've got the receipt somewhere. 20-city case schiller price. This is from S&P. February, year-over-year, housing prices are up 7.3%. So that little blip we had of following housing price, I think they fell 2%. Wow.

Gone. All right. A bunch of people sent me this one. from uncharted territories, it's a substack. The guy says, why I don't invest in real estate? He's making the bare case for housing. So he's showing the real price index going back to the 19, to 1870s. It's probably Schiller data.

It basically went nowhere on an inflation-adjusted basis until the 50s, and then it skyrocketed from here. He's also showing world population in 1945 has just gone parabolic, right? We've taken off billions of more people in the world. His whole thinking behind why he's bearish on housing is, population is going to slow and that we've been in an aberration for the past 70 or 80 years for housing

prices. So is this like a bearish sentiment going out like 50 years or is that a near term thing? That's the thing. You'd have to think that this is a longer term play. There's a bunch of other charts in here on population growth and demand and fertility and urbanization. And so

this is not like a perma bear account as far as I can tell. He lays out a bunch of stuff in here that kind of, and I'm not, I'm still not sure that I buy it. Because you're right, 50 years out, if population is dwindling or slowing and fertility rates are slowing, I could kind of see it. But I feel like the way that we view the housing market has completely changed.

Oh, I hear that cling clinking on your Harvard floors. A few people made the case for carpet with us. That's one of them. Remember we said, why would anyone get carpet in their house anymore? Oh, because my dog. Because you don't hear your dog, like, clomping on the floor. I need to know what she is at all times. A few other people said the reason for carpet is they don't want to be cold with

their feet when they get out of bed. That's the reason you get carpet in a bedroom. Okay, that's fair. Not bad. So any, what do you think about, like, this is a bare case for housing that? Population is going to slow. I don't know. I didn't read the article.

I don't know. That's a big, big, big topic that I haven't thought much about. I kind of think much like Seinfeld said, the world of money changed in the 80s. The housing market changed too. I don't know. People in the past didn't. It was a whole different ballgame in terms of housing.

That's the way I look at it. All right. Here's something I don't buy. Survey of the week. It's been a while. New DCG poll. Let's say. One in five battleground state voters

consider crypto a key issue in 2024 elections. I'm sorry, did Bitcoin do this poll? I mean, my dad has occasionally asked me about Bitcoin. And I mean, for him, it's just, it's who, well, you're, you're in a, you're in a swing state. Is your dad, is your father one of the five? Certainly not. No, it, maybe, I'd love to see the average age of the people I ask for us, but yeah, I'm going to, I'm going to say no. All right.

We got an email, uh, we asked about refried beans last week. It's, this is interesting. It's a mistranslation of the Spanish verb. What does that say? Refere. I can't really read this. Yeah, refraer. It looks like it means refried to English speakers,

but it actually means well-cooked. That's pretty good. Mystery solved. All right. We asked about astronauts. Was that last week, too? People said Chinese space travelers are called tyconauts from the word space,

from the Chinese word space and the Greek word for sailor. Indian ones are called viomenauts. Who says? I honestly would have assumed literally everyone who goes to space or is in a space program is called an astronaut. But why are they called Cosmos?

Did we get to the bottom of this? All these countries have different words for an astronaut. Okay. Which is kind of funny because space travel is something that was invented in the last 70 years. I'm surprised that they didn't all just say

like, this is the word, right? We always complain about languages. Like, why do we... We're all astronauts. Yeah, come on, everyone. Astronauts. We're on the same level here. So I was talking about how Josh said that Kazam was a fake movie.

And it's actually Shazam was a fake movie. So I got an email, we got an email, something called the Mandela Effect, which is this thing that like everyone believes to be true, but it's not. And there's some mind-blowing shit in here. Did you take a look at this yet? No. All right. So let's go through it together.

So I pulled out a bunch. People remember a 90s movie in which Sinbad played a genie. Right? Shazam? Not a real movie. I remember the Shack one, not the Sinbad would. Okay. Well, all right.

Jiffy peanut butter doesn't exist. What do you mean? The name of the peanut butter is Jif. Oh. Yeah, I guess I knew that. You did? I thought it was called Jiffy. Wait, there is a jiffy one, isn't it?

Google it right now. Oh, okay. All right, this is a little bit less mind-blung, but still, the cereal is called Cap-in. Cap-in, Cap-and-Crunch, not Captain Crunch. Okay, I knew that. Okay. Hannibal Lecter never said hello, Clarice in silence on the lambs. See, there's a skippy peanut butter.

There's a skippy. But Hannibal Lecter never said hello, Cluress. So people just use that in their... Okay, that makes sense. I can see that. So it's called interview with the vampire, not interview with a vampire. Okay. I 100% said interview with a vampire.

That's not what it's called. I'm sure I did too. That, you know, that movie kind of, it was like a staying power movie for as big as the actors were in that movie, right? True. Well, it's not a great movie. Luke I Am Your Father is not a real thing. Okay.

Doug Fader never said that. He said, no, I am your father. Did you know that? Okay. Blame me that one on Tommy Boy. All right. Here's the last one that really blew my face off my head. South America is not actually directly underneath North America.

Did you know this? it's way southeast. Look, look at this picture. Okay, I guess I've never really thought about it before. But yeah, if you would have asked me, I would have been wrong. I pretty much thought it was directly below Mexico and to the left. Okay, that's pretty good article. All right, you read this one.

This is the best email we've gotten in a long time because just nailed it. So somebody said, flag football coach. I coach flag football because Ben brought up the different types of sports coaches. Not sure about the other sports, but Flagg has a particular type of coach. coach. So the coach that he describes is the coach of my flag football team. And I love this guy. We've all had this coach. We have this coach too. He's a great coach. All right. Guy who never played a down to football but has an NFL playbook for the team. It's literally a three ring binder, right? Yeah, literally. This guy always amazes me. Most leagues only allow one or two

hours of practice per week. Yet this guy literally calls out 30 different offensive plays in a 50 minute game. What always amuses me is that the kids who are between 8 and 13 end up confused or just don't understand. So they all end up running route, one and go routes, half the time and the cube, he just heaves it up. If there is one type of person who should not coach, it's this guy. These are not NFL players and a guy shouldn't get to love his fantasy of being Andy Reid with kids who can't process and comprehend the tenth of what is being thrown at them. All right. So my son is in a six and seven year old league, which we have to retire from for the remainder of this season because he broke his hand. And it's not like he even broke

it doing something cool. You know how the kids before practice screw around and pull each of those flags off for 10 minutes? Yes. Like idiots? Yeah. They were doing that and he fell and broke his hand. Yeah. That's how Kobe broke his leg. They play sharks and minos before the game. But no, the coach for five minutes in the huddle explains the play, and then they break the huddle, and then he has to explain it again for where to line up, and then it's like,

we're going to do a triple reverse here, and they end up running. It never works. Just literally put the kids behind the guy with the ball and hand it off. Yeah, yeah. That's all you need to do. Okay. As promised, parents you see at a youth sporting event, I've got a list here. Oh, man.

Okay. I got a long list. I've done a lot of sports. this is probably one of my favorite ones just the happy to be here person they're just there to socialize with their parents they're not really even paying attention to the game they're kind of just chilling okay i kind of like that person i have one foot in that camp except for the socializing part all right the go is really hard of the refs people that's a tough look especially when a lot of the refs are like younger kids that's not great um this one my kid is really better than they are like i think my kid is better than they are and so like if the if the kid is striking out it's like He was hitting great all week. He was hitting great all week. Yes. The other side of this is the parents who really do have the best player on the team

and constantly brag about them. Like, listen, we know your kid is the best player. You don't need to reinforce it, right? This is a good one. And I don't mean to stereotype, but this is a lot of moms. The parent who doesn't know the rules because I never played the game before. Like, what is that? And someone has to explain, like, actually, that's how it's how it, yeah.

Okay, the jerk who always comments on other kids play, right? Like if someone, and you, like, if the kid kicks into the wrong soccer goal and they go, ugh, you can't do that, right? There's obviously the parent who lives vicariously to their kid because they were never good at sports. The dad who tries to make jokes at other people's expenses, that, like, rarely lands, right? Like, the parents don't really know each other. They kind of know each other. I mean at the games.

There's a tailgating parent who has, like, the best setup of chairs and, like, tents and stuff, right? Like, they go way all out, like, the benches, like, out the ass. Wait, hold on to that part. Have you ever seen the chair inside a little, like, tent, like a personal tent? Oh, yes, like your single, yes. And it just gets everyone's away. For when it rains, for when it rains, that's a good tent. All right.

The way, the coaching your kid from the sideline, like, Timmy, center it, center it. So I experienced that big time for the cross this weekend. There's parents that yelled the entire time at the kid. The kid clearly cannot hear them and they're just screaming. Yes. The entire time at a seven-year-old. Yes. Scoop it.

Yes, and the going too hard on your own kid is a bad one too. Like, that's just like, like, you cringe at that. Like, what are you doing? What are you doing? Yeah. Okay, I get this occasionally. Secretly terrified your kid is going to be the one to mess up. Like, if they're on a pretty good team, you're just like, just don't mess up.

Just like, don't be the one who screws it up. I think, and mine is like, I was probably way too hard on my daughter when she, like, are too into it. And now that, like, I've got three kids doing this and I've seen come up, like, I'm the, I don't care about the outcome. I just care about my kid. like if they like are not screwing up and they're trying their hardest that's all I care about yeah I'm a few years behind you so I think that like with the seven-year-olds it's just like not that serious I don't think there's there's not too many psychotic parents yet I'm sure I know it's coming but that's true right yes I we've started to get at that as we do like club soccer

and stuff but at this point it's just cute and fun you know yes okay Rex Ben what do you got by the way good list credit to you yeah they had Albert Brooks profile on Atlantic about how he is The Godfather Waring Comedy, which is interesting, and you would never really think of him that way, but they said he's repeatedly turned down various Hollywood luminaries who asked him to star on their films, parts that went to Tom Hanks, Billy Crystal, Robin Williams, and Steve Martin, and in several cases, all the destructive of their career, he was offered the role in Big when Harry met Sally and Dead Poet Society. Oh, wow. And I guess just didn't want it for whatever reason. Okay. I finished Fallout, which, again, was a Josh recommendation for us on Amazon. on. I really liked it. There was enough mystery that I wanted. I'm excited for season two.

Like, it could have been one season show potentially. And I was surprised how much I liked this show. It felt like a movie that was made into a TV show. Okay. Eight episodes? Yeah. My wife and I flew through this one. Okay. I mentioned sugar before, which is the Colin Farrow one on Apple. Nobody's watching Apple. Next. No. Well, just, I got to talk about this. Go ahead. For the three people who watch this show, spoiler alert, if you're watching the show, all three of you. Wait, wait, wait, wait. Hold on. Hold on. Hold on. Before you spoil it, is this a show that I might be interested in? No, because I'm going to explain it to you. So if you're going to watch the show, turn this off now.

Wait, so. Pause. Pause. Pause. A lot of people get their phone in their pocket. All right, go ahead. So Colin Farrell, and I'm a big detective guy, private detective. I read all the private detective books. So it had all that stuff. It was like a noir kind of show. And he's really into movies. And he likes to drink. And he's kind of mysterious. And it's like, oh, he's looking for a film producer's long lost or lost granddaughter. And there's all this stuff going on. on and like the plot is like kind of like yeah it's kind of seen this before at the end of the last episode of the sixth episode he's kind of this mysterious guy who think he's like this part of like a global spy network and this is like his thing he takes a shot into his neck and the reveal is again this is literally just a private detective show for six episodes the big reveal is he's an alien what i kid you not the biggest w two f tv show reveal i've ever experienced that's where you're I left this show off. Was it, did you like it? He turned like green and blue. Did you like it? Did he laugh?

I was, I don't know what my reaction is. I have to watch it now, but it's, I'm like, that's a choice. Okay. Very crazy. All right, one more. My son, after he broke his hand, we're watching Netflix movies all day. He likes crappy action movies. So we put on the great wall for him on Netflix.

Don't they ever heard of it. 2015-ish, maybe. It bombed. but it was Matt Damon, Pedro Pascal, who's the This Is Us guy, been in a bunch of stuff, and then William DeFoe. So a pretty good cast, right? It's like a mythic, legendary tale of monsters that attack the Great Wall of China back in the day. And I guess this is just a good reminder that even really good talent and people can make really

crappy stuff because it is awful. Pedro Pascal's not on This Is Us. What do you think about it? What's the show called the Apocalyptic one? What's it called? um we're old yes last of us last of us okay close enough i rewatched on the flight

by the way one thing that i didn't say about los angeles the traffic the traffic is out of control and for no reason not for no reason so we're we're it's a parking lot and there's traffic in new york city and there's traffic in a lot of cities but not like this where it's literally like that's why the weather wears off because the traffic the traffic feelings you get are worse than the weather feelings are good. Not true, but I get it. Traffic is one of my biggest pain points in life. I wouldn't be able to handle constant traffic all the time. Oh, it's miserable.

So why was there so much traffic? Because a guy was getting a ticket. Now, I was joking about this with Michelle, busting her chops. Michelle is our advisor in Los Angeles. And she's like, well, did you look? Like, well, of course I looked. I was going a mile an hour. I had to look. You know who I blame, you blame the people in front who first started to look. You blame, you blame the top 10% of the, the first 10% of the traffic causers. It's their fault. If you're in the back, what are you going to not look at a principle? People can't help it. We really can't help it. Just keep driving. It's the other thing where you see an accident on the other side of the highway and it slows your side of the highway. Yeah. That I get, listen, accidents, if there's multiple,

but for a person getting taken. No, I'm saying it's on the other side of the median. It doesn't impact you. Yeah. No, you look. You look. Yeah, but you don't slow down. A little bit. Okay. Rotten Tomatoes released the highest rate of movies of all time. Now, this is as reviewed and selected by Rotten Tomatoes, critics and users, and we know how the tomato meter works, all right? So don't add us.

We understand. Let's just run through the top 10. Oh, LA Confidentials is number one. That is a great movie. I mean, number one is not. Very good movie. I wouldn't put it in a great category. But it sort of makes sense because who wouldn't vote this is a great movie?

You know what I mean? Like, it's like, I think what this means? Not controversial. What this list is measuring is just, these are unanimous great movies. Okay. Right? All right. Number two, The Godfather.

Number three, Casablanca. Could you just watch Casablanca already? I watched half of it. I couldn't make it through it. I can't. Old movies, I can't do it. Like, eh, I couldn't do it. Sorry.

Seven Samurai? I never heard of that movie. That's from 1954. Parasite, Schindler's list. Top Gun Maverick. Okay. Toy Story 2, Chinatown, and Rounding Out, Number 10 is on the waterfront. again in a 1954 movie.

I feel like you can't retroactively rate these movies because the only people who'd rate movies from the 50s or 40s are people who really love them. So you can't, it doesn't count. That's a good point. You're right there. All right, I rewatched. So I saw once upon a time in Hollywood

when it came out five years ago and I ate an edible, which was my mistake, hand up, because it's not the type of movie that I thought it was. And I have a low tolerance. I'm like a 2.5 milligram guy and I think I might have done five. So I was a little bit zonked

And the movie was just slow I don't think I've ever heard a good story About edibles before Like I took just the right amount And I had a great time You never hear that story 2.5 is just the right amount For me, for me, I have a low tolerance

And so it just wasn't what I expected I was miscalibated And I just didn't get it I didn't enjoy it at all I rewatched it on the flight Having just come from Los Angeles Like you know what Let me fire this up

And now that my expectations were reset To the proper calibration I really really enjoyed it Sometimes it takes some time for the movies to sink in, right? Yeah, what a hell of a cast. Oh, my goodness. I love that movie. I think it's great.

Late Night with the Devil, Ben, punch us up. I got a lot of emails when this movie came out. That sounds like a Michael Battnick movie. Are you seeing this? Of course I'm seeing this. So this actor is phenomenal. What's his name? He's a big that guy, but he's better than that guy.

David, I don't know how I pronounce this name. He looks like he should be in a horror movie. But you know this guy. He's been in a million things. So this movie was. interesting, effective, worth watching, but I'm just not sure. Like, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, in the, in the front, Tobias Harris in the

back. I'm just not sure. And these sort of movies are very difficult to land the plane on, but if you're a horror fan, um, is it a great movie? No, it's not, but would I recommend it if you're a horror fan? Yeah, good enough. Uh, lastly, you need, you need to have two, like, Rotten Tomatoes has their own scale, critics and fans. There need to be a Michael Batnik scale of like, an actual decent movie regular people would see versus like the deranged movies that you watch.

No, but I do that. I do that. I do that. I adjust. Like I said like Barbarian, like you don't need to be a big horror fan to enjoy Barbarian. Right. You and all your degenerates that email us in all these times with these crazy movies. Like you guys have your own movie scale over here. Talk to us. You don't need to be

a big horror fan to love talk to us. Did you see that movie? Or talk to me? No. Great movie. Okay. Another great movie that you probably need to be a horror fan, I guess. I don't know. This is borderline because it's pretty demented. Did you see hereditary? You've seen hereditary. No. What? Horror movies just don't do it for me. No personal preference. I don't, whatever.

Doesn't do it. All right. I only had the reaction because I swear I thought you did. But Hereditary, I think it was on TV. I just caught like 20 minutes and it's been a while as I saw it. What a great movie. What a great movie. A great movie or a great demented movie? No, it's a great movie. That's why we need to scale. Okay. It's a great movie. Hard stop. The hardest of hard stops. All right. We went in an hour 11. Man, we covered a lot. Good times. You're happy right now. You got a lot of your Knicks gear on. Are you just wearing it around town, smiling at all the Knicks fans? I love it. Listen, I ended up going on a thing now. I never left. Like, during the dark years of Jerome James and Eddie Curry

and the Zach Randolph years and the Marbury and then Steve Francis and the Jared Jeffries years and the Barney years and through it all, I never stopped. Like, were there seasons where I probably only saw 60 games instead of 80? Yeah. But I never left. So it's been, my dad took me to the garden when I was, I think, probably seven years old for the first time, six or seven. So I've been going to Nix-Ans for 30 years, and it's been 30 years of just pure, pure shit, just nothing to look forward to. You were a buy and hold investor through the lost decades. Decades. So I don't know what this is like.

Like game six when we beat Philly, like that wasn't fun. It was just a lot of anxiety. It was stress, and I've never felt that as a Knicks fan. These are new feelings, and I am enjoying the ride. I can't wait until we hear a story in two months about how your ticket broker stole other money. But until then, animal spirits at the compound, wait, what is it? Animal spirits at the compound news.com, personal emails, personal responses.

Thank you for listening. We will see you next time. Thank you.