Animal Spirits Podcast - Higher for Longer (EP.331)

Episode Date: October 25, 2023

On episode 331 of Animal Spirits, Michael Batnick and Ben Carlson discuss: higher growth and higher rates vs. lower growth and lower rates, why there is so much focus on 60/40 portfolios, bears vs. doomers, the annoyance economy, why no one is happy about the economy right now (or ever), a record jump in net worth, renting vs. buying, and much more! Thanks to YCharts for sponsoring this episode. To learn more about their advisor resources and tax efficient investing, visit: https://go.ycharts.com/how-advisors-use-ycharts-to-save-clients-money-on-taxes?utm_source=Animal+Spirits Thanks to Kaplan College for Financial Planning for sponsoring this episode. Learn more about the ABFP Professional Designation Program at: https://www.kaplanfinancial.com/wealth-management/abfp?utm_source=animal_spirits_podcast&utm_medium=podcast&utm_campaign=animal_spirits_partnership&utm_content=abfp Find complete show notes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by our friends at Whitecharts. It's that time of year, Michael. Advisors are gearing up for end of the year tax loss harvesting opportunities. I'll tell you what time it is. What's that? It's heat in the house time. We'll get to that on the show. Continue.

Okay. But Whitechart says clients don't want to be informed what steps they'll take to get them to their financial goals at the year end, right? That's where Whitechart steps in. They just released a comprehensive guide to saving advisors time and having more impactful client conversations surrounding tax efficiency investing, which makes sense, right? We've mentioned this before, but I think you could save someone $1,000 in their taxes

or make them $100,000 in their portfolio, and they would prefer the $1,000 in taxes. People hate paying taxes. Well, I would disagree with that. I think it's quite that skewed. I'm just saying that the response is bigger for a tax savings than it is for making something. Well, people would certainly rather save an equivalent amount in taxes than make an investing. That's for sure. All right, I'm just saying tax people back me up here.

They always say that if you save someone money on taxes or find a mistake, like, that's a client for life, right? So with Y-charts, you'll be able to optimize your strategy search, speed up your workflows, and more importantly, effectively communicate tax-saving strategies to clients, right? That's pretty good. So Y-Charts has this free guide on easier tax-efficient investing. Click on it in the link. And remember, as always, 20% off when you sign up with Y-Charts for the first time

with code animal spirits. Just tell them we send you. Link in the show notes. Today's episode is brought to you by the College for Financial Planning. Ben, there's a great quote by Charlie Munger. I'm definitely going to butcher this. If economics isn't behavioral, what the hell is it? Is that close?

That's pretty close. Okay. The other one I like is if you're not confused, you're not paying attention in regards to the economy. That's good, too. There was a, I think we're just to discuss this today, actually. BlackRock is launching target date ETFs. Investing's been figured out, right? But like, whether you're a target day person or an active person or whatever person, the

tools that investors need just from the like investing side, we've got it. The problem, of course, is coming up with the plan, sticking to a plan, getting scared, getting greedy, dealing with your emotions. Behavior is the final frontier. Yeah, it's a huge component of the value that advisors add to their clients. So there's the College of Financial Planning, which is a Kaplan company, offers an accredited behavioral financial professional designation program that helps you understand what drives decision-making and how to talk to clients through the ups and the downs and the sideways

and whether it's life and markets and all in between. So they sent us a study that said 40% of the value an advisor provides to a client is emotional. And I think for some clients, it's even higher than that. There's obviously a spectrum there, but I totally subscribe to that theory. So the accredited behavioral financial professional designation is one of 11 designation programs that the College for Financial Planning offers to help gain specialized knowledge in a financial discipline. To learn more, hit the link in the show notes.

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. I just want to brace the listeners. This is, the dock is beefy today. Ah, you showed up this week. Dude. Sorry, two times. That's it. You didn't show up.

Was I a literal no show? No. I remember the one week we were... I did remember one week you busted my chops. So I'm just saying, you brought it this week, I guess. I brought the heat. And then some. All right, so anyway, so this might be a long show. I wonder what the average length of the dock is. 36 pages? 30 to 40 range, at least.

Okay. Well, today it's 43. I want to give a reminder to listeners and viewers, I guess, in the Charlotte area, that we are going to be there. I'm going straight from Vegas from the Giants game, two and five, could be three and five after the Jets, could be four and five after the Raiders. We'll see. By the way, I have some football takes. So I'm going straight from Vegas to Charlotte. We're going to be there from November 6th to the November 8th. Of course, we're doing the live compound and friends, which is sold out.

if you're in the Charlotte area, whether you're a prospective client or an advisor that wants to talk to us, we've got the whole team coming or a lot of the team coming. And if you're advisor outside of Charlotte that wants to talk to us. I'm not making this one, but those are fun trips because we talk to advisors, we talk to prospective clients, we talk to current clients. It's a fun deal. And there's a bunch of people there. I wrote a quick post yesterday, I'm plugging the trip. And I mentioned that like, we do a lot of content, obviously. And it helps our advisors start the conversation on second base. Everyone listening probably knows my background

where I was cold calling, offering shitty products to people that definitely didn't want to talk to me, hence the $256 in 2010. But nobody, I say that to say that nobody's ever read a blog post, even when Ben's phenomenal blog post, we'd be like, take my money.

Wow, what a blog post. We have to demonstrate competence, expertise, empathy, listening, like solution-based, answers and all that sort of stuff. And our advisors do that in spades. If someone did say, take all my money because I like your content, that would almost be a red flag.

Easy come, easy go. Exactly. So, okay. And then I'm also going to plug a new email address. Animal spirits at the compound news.com. I almost got it wrong. Animal spirits at the compound news. com, most people follow the rules, not rules, follow the new link.

So I appreciate that. We still had some stragglers in the old inbox. We're monitoring both. But I'm saying with peace and love, at some point to talk. time. We will stop monitoring. It's a huge change. I've, I've probably had the same email since I was a freshman in high school. And I hate my email address. It's like a Yahoo one. All right. So, Ben, I think this is a great look into human behavior, which we spoke about in the open. It's inertia. No, people hate change. Yes. And so if people, if people are getting upset, now that they are,

except for Nicole, about our, the new change to our email address. Imagine how pissed off they get when they see gas prices fluctuating every single day and interest rates and prices. I think that's a huge part of this. I was going to mention this on the inflation category. I paid 308 last week, last weekend for gas. Super low, huh? I'm the one who always says there's conspiracy when oil prices go up, gas prices go up faster and oil prices go down and go down slower. This time, it's, did you see that? The thumbs up thing. Was that Duncan? It did it. No, I don't know. It did it again. Wait, what thumbs up? Oh, you missed this.

It must have been on Ask the Compound. Like, I did a thumbs up for some reason. And then there's a thumbs up emoji that pops up on Riverside. It just did it. Wow. Is that AI? Is that generative? It's weird.

Okay. Ben, before we get to the real show, see, I told us to be a long word. We were already going eight minutes here. How long are we to be doing this for? And when I say this, like, how long are we going to be podcasting for? Are you thinking, are you asking me out of your own from, from you or did someone ask this to us?

No, I'm just thinking. doing a lot of introspection lately as I enter my middle age years. I've been thinking a lot about life. When I first started my blog like 10 years ago, I assumed I would make it like six months maybe and I would run out of things to say. And then the writing process became part of my like learning and getting my jumbled thoughts out and I just enjoyed the process. So I kept it going. And I never thought I'd be be writing a blog. I thought because there's there's a lot of people that were blogging back in the day that you and I know that like had great blogs and they just kind of stopped and you're like oh yeah that person used to have a blog and I used to like

that and it they just kind of fizzle out yeah but it's been become such part of my process that I enjoy doing it and it's helpful for me personally and I think podcasting is the same way that it's it's a really good way to take all these jumbled thoughts in your brain and try to put them out there and I think it's very helpful and we have like a great audience that provides great feedback it's it's a great learning action. It forces us to keep learning and paying attention. So I didn't ask you if you enjoy podcasting. No, I like it too.

My roundabout way is like I don't see any reason to stop. Are you ready to retire and call it quits? What's what's going on here? No, I mean, no, I love every minute of this. I feel very blessed to be able to do this. I'm just thinking, I'm just, I don't know. There's not a leading question, but I'm just literally, we're going to be doing this in 15 years.

I mean, I'm pretty sure we'll be doing this in five years. probably 10 years. 20? Possible. Ask me to get when I'm 50 in 8 years. Nine years? I can't remember how old I am. Sure.

I think we got some time left in us, though. I'm not going anywhere. We're just seeing our stride. All right, Ben, I feel like higher for longer is sort of the consensus, and I feel like that happened over the last week. We're going to talk about a lot about the quarter app today. I said that last week. I just said that last, yes.

Sometimes I feel like you don't listen. no it's listen sometimes i subliminally steal your takes this is going to be this is going to be the end of us you're going to steal one too many takes for me and i'm going to get up and i'm going to slam my monitor and i'm going to walk out and you're never going to hear from me again well guess what credit to you you've got great takes last week you go you go did we already have a soft landing and i said yes i said that four weeks ago well i'm i'm i guess i'm just sitting on your shoulders no you're you're you're you're just you're i'm marinated i'm insepting these takes into your brain and you're you're taking them to the next level.

Speaking of Inception and Christopher Nolan, I rewatched the prestige last night. I did that a couple months ago. Holy moly. That's a great movie, right? Great, great movie. 2006, so on in theaters. Okay, so the quarter app, which is firing on every and all cylinder. It's just, it's incredible the progress that they're making. We're going to talk about quarter later.

And of course, you know, we've mentioned before that we're an investor full disclosure. but they have this transcripts, they have this search tool. And so I put in the term higher for longer and it searches all transcripts. And then it also will show you like where it was set in each transcript. It's really magical.

And look at this increase in higher for longer. Now it makes sense because rates have been higher for a little bit of time. But I feel like last week after you apparently intercepted into the world's ethos, ethos is not the right word there, brains, that it became consensus. But then, but then, so do you agree with that part? Do you agree with

what you said that higher for longer is becoming consensus? Yes. And I feel like these, these sort of narrative things can stick. And this, yeah, this chart is pretty cool, yeah. But now, on the other hand, the fund manager survey that Bank of America takes, they show the percentage of respondents expecting lower long-term rates over the next 12 months. And that number is 56% which is higher than it's been at any point by a long margin since 2003. So I can't really make the claim that consensus is higher for longer when 56% of fund managers are expecting yields to go lower or is there is there, okay, companies might expect higher for longer, but investors expect rates to come down or is this a, hey, fuck all that. There is no consensus.

You guys are making shit up. Anytime people say anything's consensus, it's just you say that to make your position feel better, to feel better about whatever your view is, right? I think it's the, this is the macro tourist consensus. No, no, no, that's consensus. What are you talking about? That's consensus. How about this? If you have macro in your Twitter handle, this is the consensus for those people. I think it's consensus for anyone who is, who is a macro person. That's, that's a great point. There's groups. Groups have consensus. And then I don't know if that filters up to the hole. Here's the other thing, though, just like with transitory, we never really defined it or we never defined soft landing, it's hard to define. How do you define higher for longer

above four percent for three years? Like, that's the thing. Like, if people in the 1980s looked at us and we said, rates are going to be higher for longer, they'd say, wait, you think 5% is high? So how do you define higher? Higher than it was three years ago, yes. But yeah, I would say if it stays at 5% or higher for more than two years, that'd be higher for longer for me. And I don't... What about four and a half percent? Is that... Four and a quarter.

That's my cutoff. I don't know. All right, the S&P 500, up 10 or 11% this year. As of this morning, we're recording this on Tuesday morning. I've asked you this before, but we're right in the middle.

And this is totally rate dependent, I would say, but more likely to finish the year up 20% total or flat? Up 20. Possible. So you're seeing a rally. The crazy, I looked at this yesterday.

The 10 years start of the year at 3.9%. It went all the way to five, and the S&P is up 11%. I know it was up 20 at one point and it came in. I know. But you really have to do the equal weight for this year. You really do. Okay. Here's a question for you. I looked at this yesterday because I posted this and someone replied, well, it's seven stocks. What percentage, I looked this up on the Y charts, what percentage of companies in the S&P 500 are positive on the year and what percentage are up 10% or more this year in the S&P. Okay.

So what percentage are positive on the year? Yes. I'd say it's close to 50%. It's half. Okay. So 50%. Percentage of S&P companies up 10% or more this year? 20%.

33%. One third of companies are up 10% or more. So that's not the majority, but that's not. Yeah, stocks are doing. There's other stocks that are doing okay. Large cap stocks are doing fine. Obviously, there's winners and losers. I have a question.

Wait, hold on. Do you have any, do you want to weigh in? more likely to be flat or up 20 or is that the Grand Rapids head? You're just going to ask a question and not even answer. I was just going to ask and not answer. I still say 20. I mean, if we're looking historical probabilities, 20 is more probable if that, if that's how you calculate it probabilities, like 20% happens more often than flat.

How about 15? Is that good? I don't know. So the Wall Street Journal had another 6040 one. The trusted 6040 investing strategy just had its worst year in generations. and they're talking about how it's the correlations are higher. You can see this. The correlation returns for S&P and Treasury bonds are at a two-decade high.

Why do you think that there's always so much emphasis put on the 60-40 portfolio? And people trying to pour dirt on the grave and what is it about the 60-40 that the media loves latching onto so much? It's the benchmark. Right? Like most of their readers have something similar. to a 60-40 portfolio? What else were they right about, the 20-80?

So here's one. Over their 50 years of marriage, Dave and Kathy adopted a time-honored to Wall Street strategy to safeguard and grow their retirement nest egg a mix of 60% U.S. stocks and 40% bonds. Now it is failing them.

There have been some days more recently where I've looked at my portfolio and gone, oh, crap, Dave said. Though they added even more bonds and protected against losing their principles as they age, their holdings are still down 14% from the late 2020 highs. Higher rates are hurting prices

of both bonds and stocks these days. Yeah, that 10% annual return of the last decade for 6040, it's been rough. I put this in here, the Vanguard balance portfolio over the 10 years through 2021, was up 11% per year. I'm sorry. The best 10 year performance like ever? That's, you don't, I'm sorry, you don't get 11% per year without having a year where you're down 15 or 20%.

That's the tradeoff. Sorry. I don't, I'm not going to cry. I don't get shed any tears for people who lost someone in a 60%. after just experiencing a decade-plus worth of amazing returns in that strategy. Yeah. Right. Here's another one, though.

Like, the correlation thing to me, having saying that bonds and stocks are more highly correlated, look at this, I can't remember I put this in here before and out, but I looked at the percentage of years, stocks and bonds rise together, and I did it by decade and then by total. In over the last 100 years or so, the stock market and the bond market, and this is, I use five-year treasuries in the S&P, two-thirds of the time they rise together. because guess what, most of the time bonds are rising. Remember, you know the number about, like, so, like, the fact that they have strong correlation sometimes, sometimes that's a good thing.

You want that. You don't want negative correlation all the time. Like, you don't want something to go up and suddenly go down. That's not the way you want your portfolio. Most of the time you want them going up together. Yeah. Right? And I get it, the fact that bonds didn't protect last year, but I don't know.

That's, sometimes they should be high accorded cord. I also think, I mean, I think risky adjustment returns are, this might be kicking a hornet's not bullshit because I think it's a I think risk adjusted returns can be a good way to try to measure manager skill I've always been anti risk adjusted returns okay so no no but my point is like let's just say you're a large cap growth manager and you're like well I I beat the S&P 500 for the last 10 years right it's like well okay but you're the large cap growth the category beat the S&P 500 compare me to your to your category okay and it's like well I beat large cap growth by 150 basis points a year for the last 10 years. Okay, great. But is that because you

owned Nvidia and the highest beta names? So like for people that are doing that to, it's like, no, no, no, it's not just Nvidia. Like, look at my risk adjusted. I'm not necessarily taking more risk and I've still beat the benchmark. That part of it, that part of risk adjusted returns to me is not completely useless. I understand it from that point of view. But from the point of view of selling risk-adjustive returns to an individual investor. I don't even, forget about the you can't even risk-adjusted returns, which is obviously accurate. It's not as if people are looking at their returns every single day. Right. Right. So you could be like, well, this portfolio had, you know, 10% better risk-adjusted returns. And so, therefore, it's a smoother ride.

But is it really like, first of all, people shouldn't be looking at their portfolio every day. But let's say that the S-P, whatever you're comparing yourself to it was down 40 basis points. And, like, you're down, like, 32. Does that small, tiny, risk-adjustive return increase, incremental increase, does that compound and make you feel better over time? Right. And people only tend to look when things are going really, really well or really, really bad, right?

Most of the time, other, yeah, you don't look or you shouldn't look. Yeah, so I'm not saying it's completely useless and nonsensical, but I feel like it's probably given too much credence, more credence than it deserves. They also had the old quote from Boggle saying, I spent half my time, he had a 50-50 portfolio. He said, it's been half my time wondering why I have so much in stocks and half my time wondering why I have so little. Which, it's a great quote. I love it. Now, you can say that over the last 18 months, everything that I thought that I knew about the way the 6040 portfolio work broke down. That's a fair statement. Yes. Right. The fact that rising interest rates

killed bonds and then also were the same thing that killed stocks, you can say, shit, I didn't think that was going to happen, right? It did happen. But to now say, well, now of the last three years, correlations are positive, so it's actually a bad thing. It's like, come on. We're actually, we're finally at a point where the 6040 portfolio makes more sense today than it did 15 years ago. Now, of course, 15 years ago, you could have never known that the S&P would do 14% a year. And it's definitely not going to do that again this year. But at least you're not, you're not fully reliant on the S&P to deliver decent returns, which is wonderful. One of the things I've been saying for the past five years,

or so as rates came down and kept getting to generationally low levels is you probably have to be more thoughtful about your fixed income allocation. And some mix, it can't just be as simple as I'm going to do whatever in my fixed income returns and be fine. I think you have to be a little more thoughtful about it and have a little more mixture in that bucket.

All right, Annie Lowry wrote a piece of the Atlantic called The Annoyance Economy, and she's getting to the vibes thing that we've talked about a lot here. But her thing is she went through everything. inflation and rates and all these things we've been talking about. But she's pinning a little blame on the media. So she says, when I looked at the top homepage one recent Friday of different news sites, I saw three headlines about employment numbers. U.S. job growth surges past expectations in troubling news for the Fed. The jobs report may hamper the Federal Reserve's efforts to cool

the economy and wrangle inflation. And interest rates are jumping on Wall Street. What will they do to the housing and the economy? Meanwhile, the Wall Street Journal, markets are jittery. Here's why the strong jobs report may not help. And she said each of these stories was a good story with a lot of nuance, but the overall message was, this is bad, not wow, what a labor market. And I do think a lot of it is like recency bias and that sort of thing. But we got a comment on YouTube last week saying, why aren't you guys ever bearish? Which I don't really agree with. Excuse me?

Yeah. And you get paper bearish like once a month. I feel like I'm like mentally always, I mean, I don't project bearishness because I invest like an optimist. But I definitely worry like a pessimist. I always lean glasses half full, and I've said that before. I have a positive outlook. And I think that that's like the right way to, we talk about this. The stock market is up three out of four years on average.

The economy is expanding 85% of the time, 15% of the time. It's in a recession. So I think that's like the right posture to have if you're going to have one. But I also think like my whole ethos of investing is the stock market usually goes up, but sometimes it goes down. And I don't think it's helpful for the people that are just literally bearish all the time. You see the cartoon I put in here about the, it's my favorite financial media cartoon about the guys scream we're all going to die. It's great. And listen, I'm not saying that this is like the media's fault either because we know a lot of financial reporters who do wonderful work, right?

I think it's a lot of times the people who weighed into like finance takes who aren't in finance that do it. But I just think that there's so much doom and gloom and bearishness, always in forever now, especially since 2008 in the pandemic, that what we try to do is refute it. and use data and clear thinking. If there's bad news, we're going to talk about it, but we're not going to say, sell everything and build your bunker. And yes, we're not going to use scare tactics. And I'm never going to do that. I definitely get bearish,

but I feel like I take the responsibility to the listeners seriously. And it would be very, very, very easy to frighten people and grow a bigger audience. I think we have no interest in that. We have no interest in that. And that is how you build an audience these days, unfortunately, is you use negativity and scare tactics to get people to agree with you.

And we're definitely not like, wildly, irresponsibly bullish. Like, that's not our thing either. We've been talking about a recession for 18 months here. Yeah, come on. Will they, won't they kind of thing. So I think that at the heart of this, like, what the fuck is going on with the disconnect between the hard data and the soft data?

I think there's a lot going on. I was actually thinking about this at the Giants game of the weekend, which I'll get back to in a second. But I think social media is at the heart of, is at the center of this in so many different ways. number one it is just virality it's all about going viral and the way you go viral is to dunk on other people to make other people look bad look at look what an idiot that group is making us feel smarter and then so it's social media doing that and then it's the media competing with social

media right the media wants your attention for for the media wants your eyeballs and so the way that they do that to compete with social media is write more and more ridiculous ridiculous headlines where the truth will be buried in the ninth paragraph. For example, there was an article, and we're going to talk about this, about like 60-day delinquency for subprime auto borrowers. Yes, I saw this. A lot of people were going crazy about that one.

And then buried in the ninth paragraph is like, but it's still below 2019 levels or something like that. It's like, well, you should lead with that. So anyway, the other part of it is, um outrage is a business these days yeah so anyway and then and then there's definitely listen there there is the inflation component like the pandemic component breaking a lot of people's behavior so when i was at it's funny because i actually i think the pandemic actually made it more mainstream just to complain about everything i think complaining now is like and just

distrust is at an all time high in all of our institutions like people like come together is like through complaints totally so i was so i actually had this in the doc last week i just forgot to, I just forgot to get to this. I saw a video, I don't know, in San Francisco, wherever it was, about a fight in the NFL stance. And I was thinking, like, what the hell happened to NFL games

where it just became a thing? Like, do people go there with the intention of like, I'm gonna, I'm gonna get into it with somebody with a stranger today. I'm gonna get into it with the opposing team. So I, uh, it's just bizarre. I was in, to my friend.

I've never understood the fighting thing. Like the amount of stuff that can go bad versus the amount of stuff that can go good. Look, I don't see the upside in fighting. I was in the second row behind the end zone as my friend's tickets that he's had for like, his dad's had for like 50 years or something. And side note, live events are great,

but it is impossible, very difficult, at least from the seats that I was in, to follow the game. It's like, Sequin got hurt. I wasn't really sure what was happening. You can't really tell where the lines are. It's just, it's such a better experience at home watching football. Isn't it though?

It's so much better to follow the game. So anyway, there was people in my, in my stands that were getting into it, almost close to throwing fist or cuffs. And I was just thinking about this on the, on the walk out. Like, what happened? When did this happen? When did this happen? Is this a post-posed? I know there's always a fights, but this is a post-pandemic thing where it's, it's, it's ubiquitous. There's just a lot more anger. Yeah, I don't know. And so, so, but I think that, but that's the same with like flights on the airplane. It's just something is wrong. Something is very, very wrong, even though things are like objectively pretty decent,

at least just quantitatively. Yeah. But you can't discount how people feel. You could get to the root of it, but people feel how they feel. People are pissed off. Yes. And I does get down to something of like, I'm fine, but everyone else is in a shitty position. I think that's part of it, too. So I sent this to you. The story last week came out, the Federal Reserve, there's a survey of consumer finances,

and they do this every three years. And they look at the well-being of households on a number of different perspective. So I dove into this big time. And there's a 37% jump from 2019 to 2022. And these are inflation to jobs. median numbers. Say that one more time. So inflation adjusted and median numbers. So I did I did median, not average. Median means middle. If you've never taken a stat class, median is the middle number. And net worth. A net worth is not not income. So if me, you and Bill Gates are on a room,

the average net worth is billions of dollars. The median net worth is not. Right? So we got that out of the way. So I did a post about this. And again, 37% I looked at it. So I dug through all these numbers. A 37% change. So a 37% change in three years in net worth, which is crazy. We talked about 2020, this is through 2022, which was the worst year ever, one of the worst years ever for a stock and bond portfolio. And net worth was still up 37%. And so I looked at it. And it was by far the greatest three year change in net worth. And they've done this going back to 1989. The previous one was through 2007. It was an 18% change. And actually through 2019, it was 18% as well. And I put this out on Twitter. I wrote a blog post about it. And I told you, look through the

replies. Because sometimes I think you don't believe me about the doomers. And these people were out like savages coming to get me saying, well, it's only the top 1%. I said, no, these are median numbers. And then they said, well, it's all inflation. And I said, no, these are inflation. So I went actually, usually I don't, I usually just block those people because I don't want them in my life. But this time I actually engaged. And I just said the answer. This is median. This is inflation adjusted. People don't want to believe that this was an unequivocally great report and people said, well, it's all housing prices. And I thought it was, too, until you realize renters experienced a bigger gain in net worth than homeowners. Renters saw their net worth

increased by 43% versus homeowners worth 34%, which there's still a way bigger net worth for homeowners, but still, that was surprising as well. Household debt grew less than 4% while net worth grew 37%. Like, I just, these numbers, to me, is like unbelievably good considering what we've been through. really high inflation, the pandemic, and you can put all the caveats you want on it. I just think it's okay to say, like, gosh, considering everything we went through, the fact that we saw one of the biggest increases

in net worth for households ever is kind of something to celebrate. And like, that's amazing. I agree. I think one of the reasons why people attacked you is because they're putting thoughts in your mouth. Like, oh, so everything's fine, Ben? Yeah, that's the thing.

People want to read into what you're saying instead of just saying, these are the facts. Like, these are the actual facts. Well, here's another fact. I don't think people's happiness is really correlated kind of at all to net worth. Now, I do believe... And that was the best rebuttal that people said

is like, well, money's not everything. And I... No, no, no, no, no. No, no, no. Money is important. I think people are concerned about their real income. Absolutely. But I think your net worth doesn't really impact

how you think about your financial situation. Yes. It's not like... Even though it should. Well, I guess. If somebody's like, well, I've got $70,000 in this IRA, it was only 47 last year. It's like, yeah, but like, things are still kind of shitty. Yeah.

You know? And like, yeah, I have more money because my student loans were on hold, but they're coming back and like, things are still kind of not great. Now, I'm definitely not saying everything's not great. And I know you're not saying everything's not great either. I'm sorry. I was saying I don't think everything's bad. I don't think everything's good.

I think the volatility of prices and perceived economic stability. is just... Yes. Not great. Maybe that's what we've learned. Economic volatility, people do not like that at all. No, no. But again, no one was really happy in the 2010s.

I'm not saying like, listen, idiots, you should all be happy. It's just like I'm saying there's more nuance than everything is awful right now. I also think, and I know we're, we are repeating ourselves because we talk about this all the time. I think asking people how they feel like just yield some really wild results. I think people can, people can, people. can live their life, go about their business, and be as unhappy or as happy as people were in the 70s or the 50s, generally speaking. People are people. And the environment around us is always changing. But I think surveys are just skewed to show you that

everything's really bad. I, yes, I agree with that. And I don't, like, when you, when you go out to, I don't know, the pumpkin patch or whatever, like, do you, is everybody like walking around, like, go all grumpy and shit? And like, no. And I don't, I don't think this stuff, these surveys are ever going to get better. Now that the Internet's with us, I think there's going to be a line of demarcation in the future where they go, why did everyone say they were so unhappy after the 1990s? And it's like, oh, okay, the Internet, social media. I think that's going to be a thing.

It's online people. If you ask your friends that don't spend time on social media, like, you know, how do you think it's going? They'd be like, do you think it would be like unanimously? Not unanimously. Majority would be like, kind of shitty, actually. Yeah, mostly will be like, I'm fine. Yes, depending on their situation, obviously.

Nick also did it, did a post on this. He showed the real median net worth by year. And, yeah, again, it's at an all-time high. Real median net worth by year for households under 35. Rock it up to all-time highs. But I just, I don't think real net worth really matters to how people feel. That's another surprising one, though, that I think the increase for under 35 was like 140-something percent on a real basis. Again, inflation-adjusted, median numbers.

But the people were saying me like, oh, great, it's coming off of a low base. So it's like, you can't win. But I think that's amazing. young people saw a huge, and these are young people who, for the most part, probably many of them didn't own houses and didn't get that tailwind. So, yeah, and I also think that people are just bracing for impact, right? A lot of people might feel like a recession is coming. Yes, everyone's been in this position for like 18 months, like just waiting. So, so Matthew Miskin tweeted, make that 15 months of negative year-over-year readings for the conference board leading economic indicators, the longest stretch of year-over-year negative readings before a recession was 17 months.

from August of 6th to January 2008. So we're getting there. And then... The pandemic broke economic data. I'm still... It did. It did. Here's an email that we got.

Peace delegates here attacked by U.S. activists on Russian policies. Electricity bills due to rise. The White House urges to land Russian trade. Food ferry to Egyptians. Oil curb spread worries Europe. Israelis cease fire only after Palestinian defeat. Jets flown by North Koreans are reported in clash with Israelis over mid-east. Bank funds in Sovents, Saudi cut oil output to 10%.

value of dollar change arms aides to Israel may cost 14 billion 50 million bushes of oats listed as disaster reserve you get the point i mean it's i'm almost done yeah but i'm like fuck enough like like is this really all happening like it's too much and then the kicker is this is a new york times headline from the week of october 1973 oh i love these kind of things that's great whoever i was it hard to read this i was like dude it's enough like stop um so so i don't think his point was like everything's fine or, you know, ignore all the horrible things that are going around in the world. This is the world. Yes.

Unfortunately, this, yes, this is the world. Here's some good news about higher rates, though. So I looked at this. The last week I looked at this and it was 8% mortgage rates and 4.9% treasury yields. Here's my positive. Are you about to spend 8% mortgage rates into a positive? You might want to take a beat. Here's my Ben positive spin for the next downturn that I feel like a lot of people are, people always say the Fed is pushing.

on a string, monetary policy is going to be very effective for the next downturn. Monetary policy? So for a while there because- Why, though? Why, though? Because rates were at zero bound, monetary policy was not doing much at all. And now that rates are higher, when the Fed lowers rates, if mortgage rates go from eight to five, and there's going to be a huge amount of activity in the housing market. Like, that's what I'm saying.

If the Fed does raise rates, if we get a downturn and they go from 5% to 3 or whatever, and mortgage rates go from eight to five, I think that monetary policy is going to be very effective. Well, there's two economies. There's those that are affected by interest rates and those that aren't. And the average effective debt for the S&P 500 is under 4%, which is kind of wild. We've spoken about us a lot, right?

About how much debt is long-term fixed. But there are, there's from Tors and Slack. There are 33 million small businesses. You know how much it cost them to borrow money? 10%. 10%. Maybe the next recession is when you, you go hand over fist into small caps because the large caps have benefited because they locked in

low rates and they did fine throughout this whole period of rising rates and the next period is going to be better for consumers in small caps. How's that? Should there be higher penalties for people like getting into fights at football games? Like, what do we do about this? Ban them for life? Sure, absolutely. Yeah. This kind of affected you, didn't it? I do agree. I took my daughter to a Michigan game like a month ago

her first time ever at the big house and just swarms and there's a hundred and ten thousand people or whatever and it certainly was on my mind like is my daughter going to see some crazy stuff here

and luckily nothing happened and it was a good game and it was fun but I didn't think about that football games like it's not like by the way they cut off beer at halftime

so I'm going to the nickam on Wednesday I'm sure I won't see a fight there I've never seen a fight at the garden that's actually kind of surprising is just more testosterone I don't know well people tailgating

yeah so more drunk people? True. All right. So I mentioned the monetary policy thing. I'll skip this inflation. Scanammernath wrote, as heretical as it might be to say, there's a growing risk that the Fed rate hikes risk stoking higher rent inflation in 2025, 2025, 2026, and 27, how the Fed's actions are currently reducing building permits for multifamily rental supply, exasperate, structural housing shortage. So we had the biggest build ever, I think, for apartments, multifamily, that sort of stuff because and to meet demand that's one of the reasons rents have been falling lately and now with you know 10% construction loans or whatever 12% construction loans those are falling precipitously so

it is there's going to be some unintended consequences of this period where I think the housing market's going to be even more broken in the future than it is now potentially I'm just preparing people for that great up wait do I see another door dash in here I said I wasn't going to do it Oh, boy. All right. Hit me with it. All right. Here's, uh, Indian, you, whoever sent us the Grubhub thing for Amazon Prime, I've been using that. Why aren't you using it anymore? Do you use the Grubhub. It's the Grubhub Prime, or I signed up for it. You gave us the link. All right. What are you doing? So Robin was out This is your own fault I wanted to get Indian food Here's where I was getting

One of the chicken dishes It could have been chicken butter Or butter chicken or butter chicken Or could have been chicken masala I don't even know what chicken it was But it was chicken that I wanted And I also got none So it was $30

Which is like I don't know I guess it's what food cost now Seems kind of expensive to me But fine, it's good food The delivery fee, $450 And I thought that I had Free DoorDash because of my chase car

but whatever. Delivery fee $450. Fee's an estimated tax is $7.5.50. Total. $47. Yeah, $4.47 for takeout Indian food? Your fault. Why aren't you using the Grubhub Plus that someone gave us? I'm saving money on that every time I do it. Now, mind you, I did not, I did not order this. There was no way in the world. Oh, you stopped yourself? Absolutely not. for takeout Indian food? That is pretty nuts. For one person. For one person.

That's crazy. All right. Someone sent me this piece from Slate, John Hussman. I would be remiss not to tell you that the stock market will probably crash. Henry Blodgett wrote this piece. John Hussman thinks there's a good chance the stock market will crash soon, 40 to 50%.

And even if the market doesn't crash, Husman thinks stocks are priced or produce returns of only a couple percentage points per year over the next decade, far below the 7% inflation adjusted long-term returns that everyone is used to in the double-digit returns of the last few years. This is the coupie gras from Blodgett. If you want to feel comfortable and happy,

go ahead and ridicule John Hussman with everyone else. If you want to prepare yourself for what seems like a possible stock market future, however, read on. That's him writing? Henry Blodgett writing. Henry Blodgett. Oh, really, Henry Blodgett.

Give me a fucking break. I was in the airport on my honeymoon, In 2013, reading this nonsense. Yes, I didn't, this is the punchline that this is... Remember when every Blodgett stopped reinvesting his dividends? Ooh, what a courageous call. No, but that's the thing for the listener. This is, this was written 2013.

I'm taking the bait. I'm taking, I'm taking the bait. Shame on me. The S&P 500 is up almost 12% per year since this was written. I just, I just want to point this kind of stuff out when you hear people continue to call for a crash. This post is from 2018, 2013? Yes, so this, it's been 10 years. So he said in 10 years, you're going to see a couple of

percentage points. This was written in 2013. Someone sent this to me. Oh, I thought it was a reflection. Like, hey, it's been 10 years since he wrote this. And so he was saying the Dow was going to crash from 15,000 to 7500. The Dow is now at, what, 30,000 something? So, like, you'd have to crash 50% from here and then 50% from there just to get to the original crash call. What do you say to somebody that listened to you 10 years ago about this crash call? I'm sorry? Well, I hope you didn't listen to me. I think there's confirmation bias and people just continue to want to hear it, I don't know. But I just want to point that out when you hear someone say this, like, this is the kind of stuff people are always saying.

The 2008 crash is going to look like child's play compared to the next one. Right? This is the stuff why we're not like. Bad things happen. Yeah. Bad things happen in the world and in the stock market. And that's why risk assets pay you to bear that risk. It's very simple. Yes. But you're paid to But to, to, in the times, the times the bad stuff does happen, the, the people shouting about it are not going to be the ones who help you out. Okay. Ben, are you a buyer of Target Day ETFs? 529 plans for my kids. I'm in Target Day funds, yes.

There's a Target Day ETF. So BlackRock is launching them. It says that they did, I feel like they had these already. They did. In 2014, they launched them. You mentioned that before, and I thought, like, why is he talking about this? I didn't think about it, but there are no target date on ETFs, are there? Well, so BlackRock launched one in 2014, never took, but they just launched one again.

I don't, I don't see target date ETFs gaining popularity. I don't either because it's mostly a 401K, 433B kind of thing. That's where they make sense. That's where they probably belong. I'm not saying they don't, they can't make sense in an ETF. I just think people are prone to invest that way in a retirement account, not a brokerage account. Okay. What's the out?

All right, this is interesting. biggest outflow from money market funds on record last week. I bet it's all going into bonds. Yeah, I wonder if this is like skewed by like a gigantic sovereign wealth fund or. No, but don't think it makes sense now. If bond yields are matching money market yields that you can lock it in for longer, that money would go out of money markets and that's cash on the sidelines for bonds. I think that makes sense.

Oh, yeah, yeah. Oh, yeah, I think that. Absolutely. Here's another one. More likely, 4% rates, 6% rates. On what? The Fed funds? Ten year. Uh, hmm. You've been talking about how we missed the bond yield rise and saying like once

it's 3% people are going to buy. Doesn't 5% kind of feel like a kind of a line in the sand? I can't say that. I would say four over six, but I've been wrong about this for who knows how long. I would say four over six, too. I kind of, I don't shuddered to think about either situation, right? Like, what would have to happen for either of those things to transpire? Huh, that's a good question. The economy would have to be really, really strong to get to six.

Would you rather see weights at four or six? I think four would make people a lot happier. If it happened because of falling inflation, I think that's the better scenario. But what if it happens because the economy is slowing? Would you rather 4% because the economy is slow in a recession or 6% because the economy which just won't stop growing? Six. Give me six every day.

If the economy is still, if the economy is strong enough to push us up to 6% rates and people are making more money, sign me up for that. I think so, too. I think so too, but I don't know. So last week I talked about the efficient market hypothesis of Bitcoin. Like, why doesn't it just stay at 30 or whatever because we know the ETF's coming? So maybe Bitcoin did continue to pricing an ETF? So in the last month, Bitcoin has gone from 26 to 35.

I think it hit 35 overnight. Yeah. I don't know what's out right now. It's up 110% this year. Just a wild, crazy asset. Just saying one of my predictions for 2023 was Bitcoin going up 100%. Seemed pretty ridiculous at the time. Did you really?

Yeah. That was one of your like 10 surprise predictions. What are you quoting? Let me allow myself to quote, myself. What did I say? Now, I'm sure I got a ton wrong in here, obviously, but all right. Crypto doubles in 2023. It's hard to make the bulk case for an asset class that feels like it comes with career risk. With all the negativity surrounding the space right now, I'm amazed that Bitcoin isn't below 10,000. And maybe that's what the Bulls can hang their hat on. Bulls will say that we've been here before.

Look at the drawdown chart. Yeah, prices have seen these types of decline before. But in every other decline, crypto is just a fringe asset. I'm not going to read the whole thing, but. Okay. All right. That was a good prediction. Read us one of your terrible predictions. Okay. Let's see.

Oh, the market avoids a recession and stocks gain double digits. Pretty good. Looking pretty good. What was bad? The housing market doesn't crash? Check. Gold makes a new all-time high. Getting close there.

All right. Oh, IPA market remains frozen. That was pretty easy to say. Oh, here's my bad call. Okay. Value app performs growth again. There we go. That's a horrible, not even close.

You know, it's another one that I'm glad that didn't pan out. Tech continues its layoffs. Not really true. Oh, that is true. And that's actually such a great reminder of what we spoke about earlier in the show. When layoffs were happening, that's all that was being reported on. I understand, rightfully so. You're going to report on Salesforce and meta layoffs, of course.

Why wouldn't you? Right. But there's no reports when there's no layoffs. Yeah, so there's no headline thing. There's no like, there's no headline thing. There's no like, oh, remember all those layoffs? Well, that stopped. That's probably a good thing, right?

Google just hired another 3,000 people this week. No one talks about that. I didn't hear about it. All right. No, I made that up. Oh, great chart from Goldman showing the distribution of rates on outstanding mortgages. And there's so many mortgages. Actually, the highest bar is like under 3%.

Looks like almost 15% of mortgages are at like the 2 and 7thth level, would you say? Is that about what I'm looking at? I'm sure there's a future value you could do with interest rates and stuff. Like, how much would you say your 3% mortgage rate is worth to you as a financial asset? Everything. It's worth so much money, right? If you tried to, like, do the math behind how much is worth to you versus having a 8% mortgage right now? If I was in the market for a house right now, I'd be very, very upset.

Stressed out? Stressed out is the right word. All right. So mortgage purchase applications index is at the lowest level since 1995. housing market is effectively frozen. The home builders were able to subsidize a lot of these, you know, give buyers a lot of points. But with rates at 8%, I don't think they can do it anymore. Chen Zhao is the economics research lead at Redfin estimated that total existing home sales in 2023 would be 4.1 million,

which would mark the smallest number of sales since about 2008. It is crazy that we're back to like housing crash levels without a housing crash. Look at the chart from the Wall Street Journal, showing the amount of home. that are sold and the median median price. Now, the median price is still basically near-alternized. This is like one of those things pre-pendemic. You tell someone, the number of sales are back to 2008 levels. Housing prices are at all-time highs.

What made that happen? I don't think you could come up with an explanation. Like, what would cause this to happen without knowing what happened? You're so right. There's no way that you could be like interest rates skyrocketed. and made people trapped in their homes. You would never come up with that conclusion. But when you lay it out like that, it makes sense.

It makes total sense. People can't afford to move. There's no supply. There's still buyers. Prices are still high. So on the odd lots, they had the guy from Morgan Stanley. That's it, Jim Egan, something Egan. And he talked with this last time, but it's worth repeating.

He said for years, 25% of homes in the U.S. are owned by people over 65. Now it's up to 33%. And a lot of those owners own their house free and clear with no mortgage or no impulse to sell. So even if we see a recession in a rising layoffs, there's a large swath of the housing stock that won't be affected by macroeconomic conditions. The boomers are like, in a lot of ways, they're insulated from a lot of the economy. That's why they're spending and why they're not impacting the housing market, right?

They're like, boomers are in a pretty darn good position. They have, they can earn interest and yield on their savings now. Boomers are in a good place. There was a ton of hullabaloo about the media. median about what somebody must earn to buy a house? Yes. The number one, it says Bloomberg reported buyers must earn a whopping. They use the term whopping.

That's their words, not mine. A whopping $114,000 a year to afford a typical U.S. home. Well, Matt Klein, average household of income of an American in the 35 to 44 age bracket was 170K last year. Which is shocking to me. Someone, and I looked at the comment. Someone said, okay, what's median? Because that's what you do on Twitter.

He said median's 100. So it's pretty close. So he's saying the group that is in their home buying years, 35 to 44, is pretty close to what you need to buy a typical U.S. home. Yeah. It's not like you can't compare it to the total. That's pretty good. All right.

The Wall Street Journal had another one on rent versus buy, saying there's never been a better time to rent and a worse time to buy. It's the premium discount of buying a home versus renting. It goes back to 1996 from CBRE. And here's my question. What causes this to mean revert? Because a lot of people say, I mean, housing prices have to crash. Like, a lot of the landlords have locked in 3% mortgages, too.

So they can actually afford to charge cheaper rent. Like, rents don't have to. And the reason, again, I said rents are rising because they're building more apartments and more multifamily housing, as opposed to single-family housing. But I don't see what causes this to change. If you're a landlord sitting on a 3% mortgage, too, your costs are covered. You don't have to keep jacking up rents, even though you probably. That's a good point. So what causes this to mean revert?

There's not like a catalyst that's going to make this happen. And should, you might have said this, shouldn't there be a premium for buying a house, for buying a house? I think there should be a little, there shouldn't be this big of a premium. But I think the fact that there was a discount after 2008 when the housing prices crashed, I think that was an aberration too. All right. Here's a quote from the attorney at the DOJ.

There's no reason that homes. or should be forced to pay a buyer's agent. Here, here. That is one of those things that's like, why do we do that? Because we always done it like that. Yeah, because that's how it works. But don't you think that if, I know a lot of people say, like, the 6% real estate realtor commission is criminal and we should take it out.

Like, don't you think that housing prices have kind of adjusted for that commission, though? Like, if it completely went away and everyone could just, like, for sale by owner, wouldn't housing prices adjust to account for that? Or do you think that the market is not that efficient? I don't know. I don't know. That's a good question.

All right. There was an interesting chart from Carter. Highest number of shutdowns in the third quarter of 2023 for startups. That makes sense. That makes sense. We talked to Samir last week about the state of the venture capital industry and talked about how it is interesting, though, how like vibes and not, I want to say speculation, but interest rates don't matter as much to venture capital. because they're not borrowing a ton of money, right? So it's more investor appetite for risk than it is anything, right?

Like, the private equity should be more impacted by higher rates. Which is tied to the cost of capital, but you're right. Yes, but venture doesn't have that. But it also makes sense that people's appetite for risk changes when rates change. But, yeah, I guess this is not surprising concerning the number of companies that were funded in the past couple of years. All right, let's do a segment on some of the earnings reports that we got this week. all right here's a plug for quarter they uh as i mentioned earlier in the show the desktop page has gotten so so good it like it kind of looks like an iPhone app the funny

thing is is when when we first saw quarter and they gave us a demo must have been i don't know two years ago two and a half years ago they didn't even have a desktop app no it was just an app and they they all the things that they've added it is pretty well when they started there's no transcript, there's nothing, right? It was just the call. So that now, so they have they have live calls now, but also they've live transcripts. So you know, it transcribes

AI, I don't know how they do it. And they're looking to, they're looking to expand into United States. They're looking for a salesperson. So they're crushing it in, in the Nordics with with analysts and sell side shops. And so if you want, if you're, if you're that person in the United States and you're like, I have a network and you want to reach out to them, just go to quarter.com and hit get in touch. Okay. Netflix.

I don't think I spoke about this. I did buy back Netflix. Wait, I didn't realize you ever sold it. I did sell it. Yeah, I sold it. I bought it back early in October. I thought there was going to be supported like the 200-day moving out, which I just wanted to buy it. There wasn't. It broke pretty aggressively. But I have a Netflix take it. I'm saving for my recommendations. Okay. But then they had a great earnings call. We now expect free cash flow of $6.5 billion for $23. Up from our prior forecast of at least $5 billion. They repurchase $2.5 billion with the shares in Q3. They increase their buyback to $10 billion. That's interesting that no one ever talks about like Netflix becoming a company

that's buying back shares. Yeah. Adoption of our ad plans continue to grow with ads plan. Membership of almost 70% quarter over quarter. So the password share and crackdown is working 30% of signups in our ads countries are on average our ads plans um they added i think 11 would it grow 11% yeah they grew their subscribers 11% Alex Morris shows has this great chart showing the number of subscribers which which did flatline right like a totally flatline hence we have to do something okay time to time time to turn the lever on or pull the lever on the sharing crackdown you know it's kind of nuts just like what Netflix is able to do with with with its content distribution. I never watched

suits. I know it was a popular show at the time. But they bought it from, I don't know who owns suits. USA. It's like USA Network. So who owns that? Is that Paramount? Probably. And now they're buying shows from HBO. But suits is like, was the number one show in the world. A show that's probably been off the air for 10 years.

They're tastemakers. For sure. So you can, which is the United States and Canada, added 1.75 million net paid subs. its highest sequential gain in 18 quarters. Over the past six months, you can add a 2.9 million paid subs. Wait, what's you can? United States and Canada.

Oh. So they added 2.9 million paid subs of the last six months, which compares with 4.4 million over the previous three years. So the crackdown on passwords worked. Oh, yeah, it's working. And advertising their partnership

with Microsoft seems to be gone well. I know people jump in and jump out of these things. For me, once I sign up for a streaming service, service, I'm basically in it for life. Yeah. It's going to be hard to get me out of there. So it is interesting when you compare them versus like, I mean, Paramount still looks like horrendous.

It's basically at a 52-week low. Disney popped on some of the news to divest its India operations, but Disney's not looking exactly great still on that as well. Warner Bros. Discovery, I mean, there's got to be. There's got to be consolidation in 2024. there has to be. Well, it doesn't have to be, but given debt loads, there should be. It's just will the ego is allowed to happen. All right. So I listened to Tesla's call. Does Musk do these calls or not? Oh, yeah, yeah. Okay. Yeah, yeah. But it's interesting. Like, their operating margins are

going down so bad. It was 18% in, in 2022. And it looks like it's gone down for. Wasn't that because they've cut prices so quickly? They've really cut prices at Tesla. So, so they, so they, so they asked the CFO like about it and it was he gave sort of a garbage answer but there just if you listen to the conference call the actual results were not great but if you listen to it there was not really downbeat at all it's not like the questions from the analysts were exactly pressing and I think that's probably mostly the case unless the company's just like a whatever company that nobody really cares about like nobody wants to step to Elon like nobody really held his feet to the fire at all yeah but don't you think that's the way it is with most analysts do they really

hold the and especially well especially with Elon they're not going to and I was just thinking about the volatility of Tesla stock so it was down it fell 17%

in three sessions and look how many times it's done that of the last five years that's like nothing like yeah it is just a wildly volatile stock so here's a couple of quotes

I pulled from Elon also in the quarter app you could highlight you can highlight right in the app and then like go like it keeps like a notes section for you it's just incredible

we will continue to we will continue to invest significantly in AI development, as this is really the massive game changer. And I mean success in this regard in the long term, I think, has a potential to make Tesla the most valuable company in the world by far. So he said stuff like that before, but I didn't know that he was that AI was going to make Tesla the most valuable company in the world. He didn't mention something about interest rates and how it was impacting the consumer. He said, talking about the cyber truck, I think this is potentially our best product ever. And I think it is our best product

effort. It is going to require immense work to reach volume production and be casual positive at a price that people can afford. Often, people do not understand what is truly hard. That's why I say prototypes are easy. Production is hard. I got even credit. He is good on these calls. People think it's the idea or you make a prototype. You design a car. And as soon as you design a car, it's not just anyone can do it. It requires taste. It requires effort to design a prototype. But the difficulty of going from prototype to volume production is like 10,000% harder to get to than to make the prototype in the first place. And then it's even harder to reach positive cash flow.

That's why there have not been new car startups that have been successful for over 100 years apart from Tesla. So I just want to temperate expectations on cyber truck. It's a great product. But financially it will take, I don't know, a year to 18 months before it is a significant positive cash flow contributor. Guess what? There's no way.

It's just based on the way that he's saying this, it's not going to be a year to 18 months. I would definitely take the over on that. So here's my, here's the cyber truck cycle. The tech burrows will buy it for sure, all the Elon stands. But then some people will, because it's a weird looking car. I think it's heinous. I think it's heinous. Yeah, I think it is too.

But I think some people, people are going to buy it ironically at first. And then unironical. That's how things work now. You like something ironically to show like, I'm kind of hip. And then you just, at some point it gets murky and you just like it unironically. That's what's going to happen with the cyber truck. I was looking at Ally. An ally is a great look through to the consumer. They've got a huge huge, they're the gigantic digital bank, but they've got a huge auto department. So auto

delinquencies are going up, as we mentioned earlier in the show, about the subprime number. So 1.03% are, I think it says 65 days in the delinquency. But if you look at the year-over-year change and 30-day delinquency, it's well off the highs. So that peaked in Q4. It was 1.4% in Q4. Now it's down to 0.93%. This is where it makes sense for higher rates to have an impact is the auto market, right? Way more than the housing market that the higher rates can impact autos really quickly. So last week, we mentioned the Apple Buffett thing about like when you got $10,000 or never have an Apple product again. And somebody emailed us. He's like, actually, I was the one that got that thing going, and it was on CNBC. They said, here's what the actual

quote was. If someone offered you $10,000 to never buy an iPhone or Apple product ever again, you wouldn't take it. If someone offered you $10,000 to never buy a Ford again, you'd take it and go buy a Chevy. That's good take. Do you remember Cameo? Yeah, it's the thing where you pay someone to, like, say, happy birthday to your friends or whatever. So there was an article about Camio in the New York Times. The CEO, Mr. Galanis, he met with Masayoshi's son on Zoom in February 2021. And Masayoshi offered him $400 million in cash, four times the company's fundraising goal and told him to spend $100 million of it at the Tokyo Olympics. He didn't take the $400 million. So I assume that company has crashed. It had to, right? So it's nearly 400 employees have shrunk to

33. Magic Johnson, who was paid for his role left, Kami was bored after not the filling his obligations. Still, Mr. Galanis argued that cameo was thriving and absolutely still on track to become the next Disney. Sure. Revenue has not grown year over year since January, June, 2012. I mean, it's the kind of thing that maybe you'd like do it once as a joke. Like, hey, this person from a 90s sitcom, here's their cameo video.

Like who it's a, yeah, it's not a business that's, you use over and over again. Ben, I tried to send somebody who I don't follow or who doesn't follow me, who doesn't follow me. Yeah. I tried to send somebody who doesn't follow me a DM last night. I can't do it. Can't do it. It said get verified to message this user. Only verified users can send direct messages requests to people that don't follow them. Oh, okay. I paid the eight bucks. I thought like I was going to get fewer ads, but no. And I thought. And also, I appreciate this is going to sound like a humble brag. I get 10 messages a week in DMs from people saying, hey, there's a bot of you. I reported at Twitter. And I say, I say, like thanks I appreciate it but I there's like 10 Ben Carlson bots I can't even imagine someone who's actually famous how many they get I get fake accounts for me all the time and I don't think they care about it what do you get for paying I mean I think you probably get boosted like I've I've seen a lot of people saying like I have no no engagement anymore like whatsoever I honestly I have not if there's a difference I in paying versus not paying I haven't noticed it yeah so

whatever I'm doing my part I guess all right uh Somebody, so we spoke about the survey last week about airplanes. Here's an email that came in. I find airplanes seems to be very uncomfortable when in their fall of our position and far more comfortable and reclined even just a little. I'm on golden rule type of guy. So the way I would like to be treated is to not have people get mad at me when I recline. And as a result, I don't put a grudge a person in front of me for reclining. That's an interesting spin.

I never thought about it that way. Right? Because my golden rule is like, well, I wouldn't want it done to me. So that's why I don't do the person behind me. This person's like, well, I wouldn't mind if the person did it to me so long as I could do the person behind me. I get it. I get it. All right. Another survey. Zillow survey finds. 35% of prospective buyers would buy a haunted house if it costs less less. Of course you would because haunted houses are not real. Okay. I'm all in a haunted house movies.

I'll welcome back to that in the recommendations. But the people who say like there's a spirit living in my attic and it's like I heard something. Yeah, if you're if you're going to discount that house for me? Sure. I'll take it. How about this? I will never live in a haunted house. In my, in my parents' neighborhood, there was like a murder down the street and like trying to sell that house and went fine. Like that's a like if someone was really murdered in a house and like there's a murder crew to come clean up, I think that should be a discount. Yeah. Not a haunted house. Wall Street Journal, too expensive to have fun. They looked at nearly 60% of Americans say that cut back on spending on live entertainment because of rising costs. The average cost of a ticket went

from a little less $100 pre-pandemic to $120 now, after dropping to $60 in the pandemic, of course. 37% of respondents say they can't keep up with the rising price of events they want to attend. 20% still are willing to take on debt to continue to be able to afford their favorite entertainment activity. See, Ben, this chart looks exactly like real net worth,

but it's not real net worth. It's what should cost, and therein lies the difference. True. But I think it makes sense, though, that costs for live events should be going up. I actually think this makes a lot of sense because everything is so online and screens these days

that people are willing to pay up for an experience and I think it makes sense and these prices should be higher. How's that? Okay. Well, how about this? We went to Billy Joel on Friday night, which by the way made me feel quite old

because when he played River of Dreams, I was like, oh, his new song. Because I remember that when that song came out. I think that song came out in like 1994. Billy Joel is like he's like the king of Long Island. He is. Like, I feel like if you live in Long Island, like, you have to go see Billy Joel, like, six times a year. So, so there's so many songs that it's just like the Pledge of Allegiance for Long Island.

So anyway, yeah, his new song came out in 1993, and it did make me feel old. But anyway, at the concert, Robin got a Casamigos, silver, just regular with Club Soda. She got a double. $47. That was my reaction. She just started laughing. Like, okay, that's just what we're doing now. this is this is where it is it's $47 for two ounces of tequila it is true live entertainment movie

theaters and airports like all sense of pricing decorum goes out the window all right let's blow through some of these random stuff somebody says this is a great winning the poo thing equity bucket on top equity sleeve it's a good one I'm on the bottom who fan yep uh Ben you have a new dog no I don't yet you didn't get a new dog we're trying uh oh that's a little bit of a mishap, but yes, we're working on it. Let me ask you this. I know we're not doctors. How did dogs sleep under blankets?

Not every day, but a lot of mornings, my dog will come, put her nose under the blanket, and I lift it up, but she'll, like, just plop her entire body. How do they breathe under the blanket? Our dog used to be out of the blanket, too. I don't know. That's a good question. Dogs have good lungs? There's still some air under there.

Not much. Okay. We, uh, I set up a call with us for somebody to come on and, you know, and explain to us some of the bond methods going on. And he said, we'd be happy to do it as long as I don't end up getting shamed on next week's animal spirits for violating your scheduling procedures.

See, you've laid it out there. Everyone's walking on eggshells around you for emailing. Don't mess with me. Listen, I'm sorry. Don't say that you can meet in 50 days. Just say no. Blow me off. Yeah, people are going to be scared to email you now.

Do you have heat on in your house? Yes, in the last couple weeks. Okay, where do you draw the line? Because the other day, it was like, I know people, people are like pretty insistent about holding out. Like, I can't do it yet. I can't do it yet. When my house gets to 65, that's it. That's my line in the sand.

That's pretty cold. No, my wife is a total wimp with temperature, so she jacks it up right away. Okay. Same. Oh, there you go. When I, my first apartment by myself, I would keep it at like 61. I like, I didn't care. When I was like young and broke, I, I, and not have to pay utilities.

But your nose gets cold. Doesn't your nose get cold? Your fingers get cold? Your fingers stop working? Yeah. I grew up in a household where my dad was awful with a thermostat. And like I got used to it, I feel like. And, uh, yes. So Ben, the Taylor Swift movie. Did you see it? You did, right? I saw it. We've, my daughter's gone to see it twice. She went once with us, once with friends. My son couldn't make it because he was at a birthday party. He made my wife take him to go see it because he was jealous. So we've, we've gone multiple times in my family now. Well, you're not alone. They've done, it's done $130 million so far at the box office globally. Oh, no, domestic. That's domestic. Wow.

So this weekend it did, this weekend, an out, it outpaced killers of the flower moon, which I might see tonight, but oh my God, it's three and a half hours. That's really long. See, I would rather just them break that up into a mini series and put it on Netflix or Apple. Make it like a four-part mini series. Honestly, I'm having a hard time getting through the book. I'm not going to lie. Oh, I love the book.

it's it's kind of a slog for me I it's interesting but it's it's it's not as I thought it was going to be like a page turner it's not okay I don't remember it's a little it's pretty slow so this is interesting 46% of opening night moviegoers

for kills of flower moon were under 35 what do you make of that old people don't go to the movies anymore but is that is that true I don't know isn't it mostly young people go to the movies as it is isn't that I don't the case Matthew Ball tweeted with 71 days left

the 2023 domestic box office has already passed 2022. Are we back? That's about, I don't know, from a low level, I guess. Not bad. All right, recommendations. I'm going to start. Netflix actually had a pretty decent comedy. Old dads with Bill Burr, I think he wrote it, and it's,

this is a thing where, like, you're a 45-year-old dad has a kid. Like, that's a thing that happens a lot lately. You see, like, a dad that's a much older having kids. That didn't happen when you were younger, if you like. And it's just about that experience. But there's a great scene at the beginning of like having to discipline your children in front of parents and other parents, your friends. It's so awkward because if you go too hard, everyone's like, whoa, take it easy, Psycho. But if you go too easy, everyone's like, geez, you went pretty easy on that kid. Just let them off.

So there's no way to win discipline your children in front of friends or other parents. But if you like Bill Burr's comedy, it feels like, it kind of, the movie feels like his stand-up in a way. So if you like Bill Burr, you like the movie. I was surprised. Like, there was multiple parts that I laughed out loud. I rewatched the Forks episode of The Bear. I know you didn't care for the bear. The episode where Richie works in a high-class restaurant to learn how things work in, like, a really upscale restaurant.

And it has a Taylor Swift. I forgot, there's a Taylor Swift song, like, lead into the show that, like, paid off of the Taylor Swift song. I think it's one of the best TV episodes of the past year or so. Wait, you rewatched a specific episode? Yes, I don't know why. I just put stuff out of the background when I'm writing your stuff at night. And it's just an amazing. I think it's one of the best episodes of TV in a while.

I think the other ones were, what's the zombie show on HBO? The Last of Us? The Last of Us. Yeah, that episode where Ron Swanson was in the bunker one, that was good. You could probably put a few succession ones in there, but Forks for, as far as I'm going, the bear, one of the best episodes of TV I've seen in the past year. That's all I got. I heard from a lot of people about VHS.

I watched a bunch of them. They are, they are scary. They really are. There's a lot of horror psychos out there. You got a lot of people who are defending your horror takes saying Michael's been on a role lately with horror takes. Well, I've got more. Somebody emailed us, hey, check out Deadstream. I can't believe you haven't run out yet.

You literally watch like three horror movies a week. Somebody said, check out Deadstream. And I said, I replied without even looking, I'm in. It's the opposite of live stream, but it's the same type of thing as Chad gets the axe. I'm not done with it. Yeah, but it's really scary, quite scary. What else did I watch? Oh, I took Logan to Paw Patrol on Saturday.

It was raining. So him and a few of us friends with to see Paul Patrol. Now, Logan already saw it. I'm not watching Paul Patrol. So you know what I did? I downloaded a movie into my iPad. You sent me a picture of it. You were watching a movie on your iPad.

Brought my noise-canceling headphones. The movie was called. and this is not a joke. And actually, now, like, here's the thing. When I'm talking about these movies, so I watch a lot of movies that are just, like, garbage, like, just horrendous, not, like, not even, not even bad good, just bad atrocious, like, wouldn't even, wouldn't even dare have somebody think it's a recommendation.

All these movies that I'm talking about right now, while they are obviously selective, right? Like, if you're not into horror, which is most of the audience, you don't, you don't care about this. But if you are into horror, I'm only mentioning these movies because I think they're I enjoy it. I'm just saying. So that's a lot of throat clearing for what I'm about to say. Okay.

So here's a movie that I watched at Paw Patrol. And it was a very interesting juxtaposition of a bunch of four-year-old boys watching Paw Patrol. And you know what I was watching? Hell House LLC. Now, Hell House LLC, much like Haunt and much like Deadstream, is about it was, it was, so this was inspired by like Blair Witch. It's like found footage, like what really happened. And it was very effective. and frightening is all get out.

And guess what? I had to take my headphones off at some points because that's how scared I was. I was watching it with the volume off. I couldn't take it. It was too much. Okay. I can't believe you bring an iPad.

They don't look at you weird when you bring an iPad into the theater? It was like a kid at the box office. It was like a one o'clock show. Now listen, Hell House LLC, 75% from the critics, 72 from the audience. I'm surprised they went with the LLC

instead of like a solo entrepreneurship. no you can't put a you can't put a haunted house in a sea corp everybody knows that okay all right say our email address again so people don't forget it because i already forgot it oh wait one one last thing one last thing i listened to the the uh sorry marion ax murderer rewatchables i did too and i rewatched i love that movie as a child it was on it's on hbl right now i watched i watched it again after i listened to the rewatchable the first 20 minutes of that movie the when he plays the scottish dad are just the Heed stuff. It just kills me every time.

Yeah, Heed. Kids definitely don't know about Mike Myers. Yes, Mike Myers, he, yes, he had it going. He kind of fell off the map, but that, that's a great 90s movie, too. It's no Wayne's World, but. All right. Out of those spirits at the compound news.com, thank you for sticking with us. If you made it this far, I know we went long.

Thank you to Duncan and the whole production team. We will see you next time. Oh, girl.