Animal Spirits Podcast - Is a Recession Bullish For Tech Stocks? (EP.248)

Episode Date: March 16, 2022

On today's show we discuss the probability for a recession, crazy commodities prices, housing as a commodity, rising mortgage rates, why dogs are so awesome, the new Batman movie and much more.   Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by Y-Charts. Netflix is in a 50% drawdown. It's deepest since I shorted the stock, not to brag. I bought puts, that was my best trade ever, actually. I like 20xed my money. I bought weekly put options on Netflix. Remember when they split off, when they were about to split their DVD business from the streaming and everybody went nuts?

Yeah. And I was ready to stick with the DVD business because I was still, using those at that time. So I bought puts. The stock went down 30% on the next morning, and I made a killing. I thought I was going to retire in three years. I just extrapolated it out. So anyway, Netflix is getting creamed. I'm sorry, that's a huge number to me. Netflix being down 50% when so many people have gone into streaming now, that's a big number. Well, that's the point. So Netflix market cap had $300 billion. Now it's down to $150, back where it was in the beginning of 2018. And there was an article in Bloomberg showing what's popular in Netflix.

And here's why. You know what's funny? We spoke for a year. years about competition, about streaming war competition between Amazon and Apple. This is like even before Peacock and Hulu. Do you remember like an AT&T? It never materialized. It never mattered. And now it's here and I feel like we don't talk about it for whatever reason. But this is what's going on. It's just competition. So it showed that TV is more popular than movies on Netflix, which makes sense because TVs are longer than movies. But this is the thing. The average Netflix hit, disappears after two weeks or less. So the amount of money that they have to spend competing for viewers' eyeballs is beyond astronomical. And the cows come home to Roos? No, the

chickens came home to Roos. I'm not a farmer. The chickens, right? $150 billion still seems like a lot. Are they worth $300 billion or $150 billion? I don't know, but either one seems like a lot. That's a good point. It's hard to say. But if your clients own Netflix, because they're probably experiencing some volatility. We have people reach out all the time. Probably. Well, factual. A little bit.

Certainly, we have a lot of advisors reach out and they say more people come to us. This happens to us during periods of volatility. So Y charts has decided that people are dealing with more. They want to show their clients more. For the month of March, they're going to give the first 100 submissions. I got it, Ben. The WISE of March. Eh, not bad.

The Wides. All right. They are going to give you a free trial through the end. end of, let's see, through April 30th. And then after your free access ends, but this again, the first 100 people who don't have a Kotlip Whitecharts right now, then after that you get for 20% off through Animal Spirit.

So we'll have a link in the show notes because it's a long thing. And I don't want to say like H-T-TPS, that sort of thing. First 100. Yes, first 100. So we'll have a link where you can get a free trial through April 30th if you sign up for the first time. And then 20% off after that once you turn into subscription. Y-charts.com.

Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holt's wealth management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Ritt Holt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Charlie Belello tweeted that we are in the midst

of the fourth worst start to the year going back to 1928. That's the bad news. The good news, and history is not a guide, but it's all we got. Of the six worst starts to the year, again, And this is the fourth worst start. The other five from day 49 to the end of the year, up 49%, up 37%, up 64%, up 63%, up 28%. Matter of fact, the only one that had a negative return, like a meaningfully negative return through the end of the year, was 2008. It's got to make you feel okay. So we're getting the bad stuff out of early, hopefully.

It is interesting that every year, on average, we experience a 14% of, the client, Pete to Trough and the S&P 500. For obvious reasons, this one feels a lot worse than average. The weird thing is, is that there's a lot of those where you have a double-digit drawdown. Of course, it doesn't happen every year. That's just the average because there's a wide range around the average. But I think it's like two-thirds of all years we'll have at least double-digit drawdown. But a lot of those with double-digit drawdowns will actually finish the year with double-digit gains.

So you have this huge range in between where like just, yes, it's a wide range. And as you said, it's average and we're kind of text guys, so we have to say that. What was that? What am I missing here? No much. Okay. Were you trying to do this? Top Gun?

All right. All right. You lost me. So here's a fun fact I found. So Robin Williamsworth, the FT said that NASDAQ is down on 20%. So in the last year, the NASDAQ has basically vaporized $5 trillion of wealth. which is a lot of money, and we're barely in a bare market. I found this when I was doing some research for a piece last week, when the NASDAQ fell 80%

from 2000 to 2002, and that dot-com blow up, that 80% correction, guess how much money that vaporized? One and a half trillion. $5 trillion. So the whole point was, like, this shows how much bigger tech stocks are now than they were back then, so it took 80% drop to lose $5 trillion then, and now it's 20% to do that. I also looked, these are the top 10 stocks in 2000. GE, Exxon, Pfizer, Citig, Group, Cisco, Walmart, Microsoft, AIG, Merck, and Intel.

A lot of those seems just like the Dow or they're gone, basically. Now you have Apple, Microsoft, Amazon, Google, Tesla's in there, Nvidia, Facebook. My whole point is that tech is just so much more important now than it was back then. It's 25% of the market, but it's really even bigger than that. So look at this chart I put in here of the sector sell-offs. I did it through last Friday because that's when I did my post. The only sector that has positive performances here is energy. It's up almost 40%.

And it's just a 4% weight in the S&P. But there's only three sectors underperforming the S&P 500. Tech, which makes sense. Communications, which is basically tech because it's Google, Facebook. And then Consumer Discretionary, which guess what the biggest holding in consumer discretionary is? Amazon. Tesla. Amazon.

So the only three sectors underperforming the market, which is down 12% are all tech heavy. So we talked about like, well, what's holding of the market? But industrials are only down 7%. Materials are down 10%. Financials are only down 7%. Consumer staples are down 7%. Healthcare is down 8%. Utilities are barely down and then energy's up.

So this is a tech sell-off more than anything. So obviously the worry is what happens if everything else rolls over and that's the big worry. But here's what I want to say. Everyone is more heavily invested in tech this time that they're in the dot-com bubble. Whether it's tech-heavy funds, whether it's startups, whether it's in an index fund.

Whoa, whoa, whoa, whoa. You think that? I think that index investors are more exposed to tech. I think everyone is now more exposed to tech. But everybody was all in on tech. But by definition, more investors are on in tech this time because of things like index funds. And every actively managed fund is a closet index fund as well. So they own all these tech stocks too.

So I'm saying more people are probably worried about either another leg down in tech or how do we get tech to come back? So let me throw out this to you. What happens if like some of these tech stocks are down, you said you were looking for the ugliest charts today. You're going to show it on what are you just on? Before you get to your theory, just we skipped over this robin-wiggles-worth-true real quick. Okay. So this chart is showing the percent of the NASDA composite that's down 25 percent and 50 percent

and 75 percent. This is the highest number or percentage of 75 percent declines, which is basically a total washout, 75 percent since the GFC. So 20 percent of the NASDAQ composite is down 75 percent or more and 40-something percent is down 50 percent of more. So just a total wipeout. All right, back to you. Okay.

So let's say we do go in recession and the stock market falls 20 to 30%. What happens to these companies that are already down 50 to 75 percent? Do they fall another 20 or 30 percent? Probably. But isn't a recession actually bullish for tech stocks? Hear me out. Bullish in the long term because what happens in a recession? Growth slows.

Inflation comes down. Rates go lower because the Fed has to lower rates. Isn't that bullish for technology? So people start repaying for growth or people start paying up again for growth? Right. So the reason value started working is because we went into recession and we had a pivot. So we had all this government spending, supply stuff, whatever. That's why value and energy is working right now. Isn't a recession actually bullish for techs long term, even though it's probably bearish in the short term? Could be. I see what you're saying. Think about it. Do you also think

that a recession is now consensus? I feel like all the smart people I listen to say. I don't know about that. Consensus? No. Higher prices are going to hit consumption. Now we're going to have the China lockdowns from COVID. So that's going to make the supply chain worse. The Fed has no other recourse. but to tighten, yield curve is really close to inverting, and it is. I looked at this morning, a recession is inevitable. I wrote a post about this last week saying, the only way inflation has come down to the past is through a recession. You don't think that that's almost consensus among smart people you follow these days. I don't know. Who cares? Put it this way. Here's the bottom line. The odds of a recession are way higher today, in my opinion. Actually, what is Kalshi

saying of the odds of a recession? Did you bet on that? I bet against it. Of a recession starting by second quarter. By the way, it's so freaking crazy how quickly things could change because when we first looked at that bet, there was no reason to think that a recession was coming. The only case for a recession was that the Fed was going to completely mess things up and tied in too quickly. That's what I mean. In the last two to three weeks, everything has flipped.

Okay, it's still 79 cents for no for recession for the second quarter. So not in the near term, they say. So I want to look at the other side of this. In your article, you showed that we've never had. inflation come down from high levels without a recession following. Now, the question is like the timing on it, though. Like, it could be a very long lag. Recession started coming down after World War II for like two to three years and then a

recession happened. Sometimes the recession happened coincidentally with like the peak in inflation. So like the timing of it would be the hard part, of course. But it could be different this time. It could be different this time. How many things over the last two years happened that have never happened before? Yes, definitely. This could be the time where it's different.

Who knows? Here's the counter argument. So the Fed released its survey of financial accounts of people as of the end of the year. And this obviously doesn't include the first couple of months of this year, but they looked at this and they said they look at the difference in household wealth from one year to the next. And Bank of America did it a little right up on this. The surge in household wealth last year was an increase across all Americans of $5.3 trillion dollars.

That's the biggest increase ever. That's obviously because stocks went up and housing went up. They're comparing that surge, $5.3 trillion in increased wealth to energy prices. is they say a $1 increase in the average price of gas cost households around $1,000 a year on average. But last year's increase in net worth went to $19 trillion or something after a $5 trillion increase. Like, is the amount of net worth people have created in their home and their financial assets? Is that enough to offset? And obviously, the counterargument to that is the rich people hold all stocks.

But two-thirds of the country owns a home. That's the middle class. They've got a ton of money in their house. Could they tap their home equity? Now, long term, is that a good thing? I don't know. Could they tap their home equity and put this thing off to slow down from inflation off for a lot longer because of this?

Yes, and how about this? We talk about recessions as if it has to be the end of the world because the last recession basically was, not 2020, but 2008. There are such a thing as moderate recessions. Yes. Oh, and I think if we had one, this would be because of all this. I mean, do you see Disneyland full of people, Disney World's full of people as we're about to go on a recession?

Do you see people want to travel all the time? Do you see, remember Logan Motishamier? housing expert posted a picture this week. Did you see this of like 75 people waiting outside of a crappy little house in California for sale for 600K? And there was like a line out the door down the street to get into this house. That doesn't sound like very recessionary behavior to me. Yeah, I mean... I'm talking out of both sides of my mouth now. I'm saying it feels like there's a higher probability for recession. And I'm also thinking that consumers right now are not acting like that's going to happen. The other thing is we have not even begun to feel the

potential knock on effects of the commodity spike. And we don't know where that's going. Which is already gone, by the way, in oil. We said oil's going to fall 20 or 30 percent. It already has. This isn't bespoke. Oil just had the biggest pullback from a 52-week high or the quickest, like ever, I think. Yes. That might be the best call that I've made X housing over the last four years of this podcast,

is that markets are moving faster. Oh, yeah. This is the fastest move ups from this since ever. This is the fastest move down on this. These things are happening all the time, it seems like. Credit to me. Credit to you. So IPOs are non-existent, not surprisingly.

First two-week period without an IPO outside of a vacation period since 2009. U.S. IPOs conducted over the past year are on average 30% below their offering prices. So not great. I wrote a quick post today. One third of tech companies that went public in the last four years are trading below their last private round valuation. Wow. So not even like their IPO level, but where they're trading in the private markets? Holy cow.

Those VCs made out like bandits then. Is that what we're saying? Yes. The thing is, though, if those markets are all supply and demand driven, it kind of makes sense, yeah, or private valuations, it kind of makes sense that they're able to prop those up if there's enough people willing to say, let's prop this thing up. Like, there's no impetus for markdowns in private markets. By the way, I'm going to talk about this with Josh Stein and what are your thoughts.

This is kind of hilarious. So since February of 2021, DoorDash and the company bought Grubhubber down 70% or so. DoorDash has a valuation of $26 billion. Fidelity got into Instacart in February 2021. They just marked it down by 18% compared to 70% for DoorDash. TRO price marked it down by 5%, to which I say. So, but if you're an employee at one of those companies, in your head, you're marking it down 50% whatever your options are worth?

One of the questions that we've got repeatedly, and we've shared a lot on this podcast over the past two years, was using leveraged ETFs. If I have the time horizon, why not do it? And I think our answer was something along the lines of. You don't know what it feels like to lose 50% in a month and a half, which is where we are today with the TQQQQ, the ultra NASDAQ one. And this is down 20% of the NASDAQ. Let's say the NASDAQ loses another 20% here, not totally out of the realm of possibilities.

And this fund goes down 50% or more again. That gets you to the loss of 75%, right? You think, going from 50 to 75 is not bad. This is us doing simple math here. But still, another 50% crash from here. Can you imagine that? That's why this kind of thing is so difficult. And everyone who's emailed us has said, listen, I have a stomach for volatility.

I can handle it. It's tough, especially if markets are exceedingly volatility. Like, let's say you just get caught up in a choppy market for a while, and you don't get a bounce back immediately from a bear market. The volatility on these things kills you, too, because of the way they're structured. So we talked about Kelsey a minute ago. I don't look at this. They have the ability to bend on what inflation will be in 2022, and they give you ranges. What does that mean what inflation will be in 2022?

I don't get it for the year? The inflation rate for the whole year. What does that mean, the average inflation rate for the year? I'm sorry. What it ends up being from January or December. Oh, okay. I understand. So that 12 months ending in December.

So they have it priced and they have it in a range. from below 3% to all the way above 8.9%. And right now, it's murky because they go by 1% increments. The winner right now is between 6 and 6.9%. I think I might take the under on that. No, not nice. I might take the under on that because when we see the monthly inflation rates, that's showing over the previous 12 months.

But now the inflation rate for 2021 was like 7%. So you're going off of a much higher base now. I actually don't like this. It should be like between, whatever. The ranges are too tight, in my opinion. So 1% range? You got to really nail it. Or you could say no to a bunch of them.

So you could bet a bunch of nose. So you could basically bet the field. Yeah, you could bet the field. But I'm saying the winner right now, even though it's very close, is 6 to 6.9%. Nice. I would take the under on that. I would take the field because you're going on a base effect. And if you're thinking that it's going to be 7% again this year, that seems pretty high to me.

Even because you're going off of that high from the end of 2021. Yeah, but, okay, I don't like these bets because you're going to buy no for 80 cents. So there's 25% upside? Actually, I guess that's not bad. by a handful of them and then hedge with a couple of yeses. Come on. Can you put us on a Target Date fund? Can you put us in a Target Date fund?

It's a parley. All right. So how long is it going to take for gas prices to fall now that oil has dropped 30% or whatever? Okay. Look at this chart from Lizanne Saunders. Scroll down a little bit. We see this daily national average gasoline price. So the white line is gasoline price. The blue line is crude oil crashing.

Ah, okay. So it's going to take a while still. Well, I don't know. How quick does it come down? Probably not as quick as it went up. How high did it get in your neighborhood? Mine was like 425 was kind of the high. I don't know.

And now it's plateaued there for the last week. Can't tell you something? I let my tank go empty. What do you mean? You're running it all the way down? Yeah, my light went on. Okay. That's dangerous.

I can't do that. Like a quarter tank and I'm filling up. Oh, yeah? I like to live on the edge. Well, like my phone, I don't let the battery go below 40% at the low? Can't do it? I feel like you let your battery get to orange, don't you? Oh, yeah.

I can see you doing that. My phone dies before I plug it back in. Oh, see, yeah. No way I could ever get to that level. That's way too dangerous. So this commodity stuff, look at this one day change. Massive volatility, massive, massive, massive volatility. Also, we should mention since this is up on a Saturday, it was a bonus episode.

If you didn't listen to our episode from Saturday on agricultural commodities, I actually learned a ton from that episode. That's the most feed-up we've ever gotten for a commodities type episode like that. And I learned a lot, and it also kind of scared me, but it gave me a little hope for the future. Why? We talked from sale, from tucrium, because he said, they always say the cure for high prices is high prices. And he was saying the one silver lining here is everything is worth so much more. Farmers are going to come out of the woodwork and they're going to be planting crops anywhere and everywhere they can to sell them because prices are so much higher. You know what I learned?

And that will eventually bring stuff back down. That Ben Carlson and pigs love atomami. Did you really ask if pigs eat at amami? I did. I think you did with some seasoning on it. Look at this chart from Yuri and Timor, who, by the way, has great charts, follow him on Twitter. Commodity blowoffs. I mean, this is some wild shit that we're seeing.

Yes, in everything. Everyone focuses on gas prices at the oil. Actually, what's happening to agriculture commodities? I haven't checked since our episode. Do we mark the top? That would be poetic. I hope we did. I mean, so Sal told us, listen, this stuff is going to be very volatile.

Let's see what the wheat ETF is doing. I'm looking at lumber. Lumber's choppy. Coffee's crashing. Oh, coffee's crashing. That's a win. You know what the best hedge is? I swear to God, I mean, I'm trying to be funny, but this is not a joke.

The best hedge against coffee inflation, which was up 10% year over a year, are Starbucks reward cards. Literally, 50 stars on Starbucks is still 50 stars on Starbucks. My coffee used to cost $2.80. Now it costs $3.0.50, but 50 stars is still 50 stars. Yeah, but what happens when they start increasing those rewards? They haven't done it. They haven't done it.

So they told me my Marriott Bondboy, when I'd called to reserve a room for a couple months, They told me, user points now because the value of them is going to get inflated away. If it used to cost 40,000 points for a room, it's going to cost 70,000 in the future. Yeah, that makes sense. So corn has not given anything back. It's still hanging high. We had a sharp pullback and it's going higher now. Soybon oil not coming back down.

What was sales stat to us that? 30% of all wheat exports come from Ukraine. And Russia. Something like that. It's a big number. All right, this is not good. Jason Furman tweeted, average hourly earnings have been declining for more than a year as inflation is outpaced nominal wage gains.

This is larger than any 12-month pre-pendemic declines since 1980. This is really bad. Ben's personal finance advice, I just wrote about this. Isn't this the time, if you're valuable to your firm, you go and you pound the table for a raise and you say, listen, inflation is out of control. We have employees. To be paid in Bitcoin, paid in Bitcoin. But I'm just saying, isn't this the time that you say, listen, inflation is 8%.

I need something here. If you're a valuable employee and you provide a good service to your employer, now is the time you're pounding the table or you're looking for another job potentially. Do you think a company like DoorDash or Uber is screwed right now? So Uber, this from CNBC, is going to add like a 45 to 50 cent per trip charge to a gas surcharge. Same thing for Uber eats. They're going to put like 35 to 45 cents surcharge.

They say it's going to last for two months. I don't buy it. I'm guessing that prices are going to go up. They're going to raise the prices on. Why would they be screwed from that? Okay, well, aren't they going to have a harder time finding drivers? Why would you want to drive for DoorDash right now if gas prices are through the roof? Wouldn't that be harder to get drivers?

Well, don't you think the 50 cents surcharge per ride covers that? But I'm just saying if people are worried about higher prices, don't you start seeing substitutes? Geez, I've been paying DoorDash for two years. But is it really worth paying that extra 20 bucks instead of just getting off my butt and going and getting it myself? Like, don't people start having those conversations and you get substitutes? I think these gas surchargers are coming. So I was at the happiest place on Earth on a Friday afternoon. Do you know what the happiest place on the earth is on the Friday afternoon?

Don't a shop. That's Saturday morning. Liquor store. If you go to a liquor store on a Friday afternoon, that's the happiest place on earth. Because everyone is like getting psyched for the weekend, getting ready for their party plans, or what they're going to do? You're not a liquor guy. What were you doing there? Rushi's on 28th Street.

Shout out, International beverage is the best liquor store in the city here. They have the best selection of beer in the city. You're right. I don't really drink liquor. But I go there and I grab a couple six packs for the weekend or whatever. And I do my channel check. So I ask him, hey, how is the inflationary stuff? impacting you. And he said, of course, there's higher prices on a lot of stuff.

Did you say, he said, Ben Carlson, Animal Spirits? Yeah. He said the craziest thing is, though, he got a $30 delivery of ice to fill one of those white things of ice, you know, which is kind of crazy. It only cost $30 bucks to fill and they charge, what, I don't know, three or four bucks. But he said that they charged him a $60 delivery fee for a gas surcharge on a $30 delivery of ice that he's never seen before. So I think these gas surcharge stuff, I think that's coming like to a lot of different places. Speaking of DoorDash, we spoke earlier about Instacart. DoorDash's revenue, I think, was $4.5 billion, something like that in 2021.

Instacart's was $1.8 billion, and yet somehow Instacart has a higher valuation than DoorDash. Sure it does. Len Kiefer shares this chart about mortgage rates. I don't want to say they're spiking because they're still pretty low, but that's a pretty sharp increase. It's kind of like looking at you gauge the stock market to the all-time high. With mortgage rates, we're going to anchor it to the all-time low and go, wait, I could have gotten two-seven like six months ago. Now I'm paying four to five or whatever it is. Or wait, four and three-eighths.

How do you say it? Eighths. Four and one-16th. But yes, they're much higher. I forgot to put this in the dock. I saw a tweet from Nick Tamaros from the Wall Street Journal this morning talking about the two-year yield. What was the exact stat that he gave? Bear with me, bear with me.

He said the two-year treasury yields have risen by 160 basis points over the last six months, a larger magnitude than observed prior to any of the previous three Fed hiking cycles. So maybe the new thing is just that long-term rates are just never going to rise. But mortgage rates are rocketing. I'm talking about Treasury. 30-year rates have not. 30-year treasury is still like 2.4%. It's just barely budging.

I'm moving at all. How much money is in 30-year versus near maturities? It's got to be a fraction. I mean, don't you think a lot of pensions have money in that kind of thing? Insurance companies because they're matching liabilities? I guess. Okay. To tell the truth, I've never seen the breakdown of biomaturity like that. If someone has that, they can send it to us. What do we think about this pie chart? When are our savings rates going up? Never?

Oh, that's never happening. Gas prices are never going down? That's never happening. Okay. So the S&P 500, geographical revenue exposure. It's 72% U.S. I guess the rest of the pie is in the rest of the world. I don't know. I feel like the global economy is so much more linked than it used to be. I get it. I think that the U.S. would fare better in a global recession than other countries. But isn't this that like 40% of the actual revenue comes from outside of the U.S.? So just because we have more landmass? Wait, what?

This is geographical revenue exposure. I thought the number was like 40% comes from outside the U.S. Is that flipped a little bit? I don't think it was that high. Okay. I swear it was that high in the past. Okay. That's surprising to me.

I thought the number was way higher internationally. Still me? I don't know. Oh, by the way, check out next Monday. Listener question. We had a bunch of questions about investing. internationally. Yes, we did. Okay. Here's one more thing. Like the, let's say we go into recession here. I'm trying to look for the bullish glass stuff, what kind of stuff from this. Job openings

in the U.S. are now over 11 million. The highest number of this was ever before the pandemic, and this data goes back to like the turn of the century was 7.5 million. We still have 4.4 million-ish total quits in the U.S. You understand this. The job market is still on fire. Obviously, that can change in an instant and it did in March 2020 with a crazy shock to the system. But That sort of thing. People are wealthier. Job market is booming right now. These are the two things that counteract the weight, there's high inflation. We have to have a recession. I'm arguing with myself here. Same. I don't know what to say. It's not black and white. There's conflicting views. So what's this underinvestment thing from Matt Klein? I didn't read this one. Okay, this is

interesting. So Matt Klein at the overshoot was talking about, he's kind of comparing the way we think about budgets for governments. And he's saying, listen, like in Germany, they balance their budgets for the last 10 years. And that sounds great until you realize the fact that balancing your budgets didn't get you anywhere because you could have been investing in stuff that people could use like energy independence and you're not so relying on Russia. And this idea of not spending and his whole point is, no, you don't spend money when you have to because spending money now when commodities prices are higher and supply chains are all messed up and wrecked, that's not a good time to invest your money. The time to invest your money is when things are fine and commodity prices

are low. And people look at it like, oh, if things are going well, that means the government can cut back. Actually, like, that's the time to invest. You don't want to invest when you have to. You do it when it makes sense to. And so, like, the people that want the U.S. to balance its budget not spend as much, I think maybe the problem people have is that we just don't spend our money in a good and efficient way on stuff that actually matters. There's no counterfactual. A lot of people that are mad about the deficit and government spending, it's out of control, it's creating inflation. Yeah, what about if we did it Germany's way? And we paid for everything that we spent.

And there was, I don't know, 0.4% nominal GDP growth. Would people be happy if that was a case? Yeah. And unfortunately, we had another shock to the system that made it worse. I don't know. By the way, it's again, no counterfactuals. Do you have any inside information as to what might happen tomorrow with the Fed? Blink twice.

The Fed is raising interest rates. How's that? But, I mean, let's be honest. A quarter percent of interest rate is going to do nothing for anyone about anything. Are you saying that you dissented? You wanted the 50? What do you think would happen if the Fed said we're raising raise 1%? I think it would be Armageddon.

But let's look at the other side of that. The bond market would puke and so with the stock market. Maybe. I'd like to see the two timelines on that. What would happen? I'm still out there. All right. I had no frame of reference for this, so I had no idea what to compare it to.

This is from Redfin. There's now a record number of homes worth a million dollars or more. 8% of all U.S. homes are worth a million dollars or more. Does that number seem high or low to you? 8%. Pretty high. In 2000, it was 1%. So this could be cash on the sidelines.

If the market falls, just tap the value of your home, boom. The crazy thing is, seven of the top ten cities with a million-dollar homes are in California. This summer's crazy. Half of all homes in the Bay Area are worth a million dollars or more. I don't know how normal people live there unless they've all become rich owning housing and the people who don't have to move out. I don't know. What does a million-dollar house get you in San Francisco?

Legit. I can't even imagine. I don't know. Three bedrooms, a thousand square feet? Probably. All right. During the four weeks ending February 27th, this is awesome Redfin. The number of homes for sale plummeted 50% two years earlier to an all-time low of $456,000. That helped fuel a 33% rise in the median U.S. home sale price, which hit a record high of $363,000. The way that I look at it, housing is a commodity right now. Because just like the commodity market, we're experiencing a supply chain problem in housing, and then there's way more demand and that's pushing prices up. What do you think about that? Housing is a commodity. Housing is a commodity. It basically is right now. It's acting the same way as commodities markets, but you don't see the volatility as much. It's just the volatility's all to the upside.

There's been no volatility to the downside yet. Let's talk about crypto. This strikes me as big news. Stripe just announced that, well, let me just read it. So Stripe gives crypto businesses access to today's global financial infrastructure. Whether you're an established crypto business or simply exploiting possibilities, you can process payments for fiat currencies globally through a single integration. With fraud prevention, I mean, this strikes me as big news.

And I want to talk about the actual technology of blockchain for a second. So we're about to talk about the NFTs that we've been talking about. But before we do, Ben and I are advisors and shareholders in a company called AudioGraph. And Quinn, one of the founders at Audiograph, is a, I guess, computer engineering nerd. I love him. I mean, then it's such an endearment. And we were talking to him about building these NFTs and working with the blockchain and how it's been.

And he was gushing. He said, Michael, it's magical. That's an actual quote. He said, what, five years ago would have taken me weeks or months to build, we could do an hour using the blockchain. What are they using? I don't even know what blockchain they're using. He said, being a developer on the blockchain is crazy.

And I thought he was going to say it's much harder. He's saying it makes my life so much easier. And he's like, doing it on here, I can't believe how much easier it is and how much more efficient. And that actually surprised me when he said that. The new BMO, V.I. Porter MasterCard is your ticket to more. More perks. More points, more flights, more of all the things you want in a travel rewards card, and then some.

Get your ticket to more with the new BMO ViPorter MasterCard and get up to $2,400 in value in your first 13 months. Terms and conditions apply. Visit BMO.com slash ViPorter to learn more. So we made a collection of NFTs, but they are going to have utility, and as we mentioned, actually, this is exciting. Ben and I are not making a dollar from this. AudioGraph is not making any money from this. So I want to make sure I'm clear in the language of this. As far as I know, all of the proceeds, meaning the gas fees are a separate thing.

You pay gas fees separately. And I think they're doing this on Polygon, so the gas fees will be de minimis. We're not getting paid. They're not getting paid. So all the proceeds are going to charity. And as a matter of fact, what are the charities that we spoke with and we will unveil this next week can get paid in ETH so that we could actually. put their wallet into the address or their address into the wallet. So we don't have to do a transaction. It could just go straight to them. So we're going to tell you who the charities are

and what are people going to get? We might have said this last week, so forgive me. We record the podcast on an app called Riverside. Audiograph is building functionality such that you can connect your wallet to Riverside through audiograph so that you can listen to one live recording, like actually one live recording a month. If you want to, what else are we giving people, Ben? Oh, we're giving them an actual NFT. So there's a collection of, I don't know if we have like 40 or 50 different varieties, 25, I can't remember. But it'll be random. Yeah, stuff from the show, charts, a lot of stuff, our logo. There's also going to be direct access to ask us questions. They're going to be Q&A directly to us. That will be easy. And we're going to answer via video. So it's kind of a commitment on

our end, but this is all for a good cause. The price is going to be 0.1Eth. So where's ETH right now. And for those who are not crypto-native, the guys at Audiograph are going to make it easy in terms of listing a direction. And it's not going to be expensive. We're going to do it $100 each for these. It's not going to be expensive. No, no, no. I've got it to be 0.1.0. Sorry, sorry, point. Sorry. Sorry to bet. Didn't crypto. Sorry. So right now the price is $265. Obviously, the price of it fluctuates. So we're asking you with peace and love, even if you don't plan on using the NFT, even if you don't have a wallet, we're going to make it as easy as possible because we want to raise as much money as possible for charities, which we will unveil, I think, next week.

They're going to have not only directions on how to do it if you're not crypto-native. They're also going to have customer service set up to help walk you through it if you need it. All right, so we're psyched about that, and I hope you are too. This AMC story is absolutely bananas. So AMC took a 22% stake in a mining company. I'm reading the press release. This is not a joke. So from the AMC press release from investor relations, okay, commenting on the investment

in Highcroft, Adam Aaron, chairman and CEO of AMC Entertainment, said, quote, the strength of Spider-Man, No Way Home, and the Batman, as well as 2020's promising industry box office, heightened AMC's entertainment's conviction that we are on a glide path to recovery. Our strategic investment being announced today is the result of having identified a company. Okay. What? Here's my theory on this guy, not knowing him at all.

Batman was a success, or we're going to invest in a mining company. So he's obviously doubling down the meme stuff. One route is this guy ends up in jail from doing a Ponzi scheme and something crazy. Do you think he's seeing So there's all these movies being made There's a movie being made about the WeWork guy There was a documentary made about the Fire Fest guy What's the one on Netflix about the socialite girl

Who swind a little people in New York out of money So there's all these people are becoming celebrities For doing scams And I'm not saying this guy is perpetuating a scam He's doing it through a public company Does this guy want to be one of these stories Where he's like they're going to make a movie out of him someday in a documentary

You don't think so? Like the stuff he's doing seems crazy to me What is he doing then? making memes. I don't know. I mean, would it not have made way more sense for him to buy a Bitcoin miner? Like, that makes sense. A gold miner. What? Yeah. Nuts.

Speaking of nuts. London Metal Exchange. This chart is nuts. So the price of nickel went vertical, the biggest producer of nickel, and also the biggest short seller for, I don't know to what extent there was hedging versus speculation, basically got in a bind, you couldn't post enough margin. price went from $20,000, so a metric ton up to like $100,000 almost. I'm sorry, whatever. And there's this amazing chart from the Wall Street Journal showing that a lot of the orders were actually canceled. They canceled 5,000 nickel trades, estimating the exchange had wiped

out $1.3 billion of profit and loss on the deal. And they said it was in the interest of the market as a whole. Obviously, this smells fishy. Is the London Metal Exchange done? I honestly don't know enough to have an opinion on this one, to tell you the truth. I've never operated in these markets, so I don't know if this is crazy or if this is like it would have put so many people out of business that maybe the exchange would have been done either way. What if there are two options were we pay these out and our biggest customers are gone or we don't pay them out and then no one trusts us anymore? I know there's a lot of people angry about it and yelling about it on social media. I don't know enough about how these markets

function, but if you look at this chart, obviously that's the kind of chart that some sort of counterparty is not prepared for in any way imaginable. So this is from the Bloomberg. J.P. Morgan, which is the leading bank of global metals trading by far has the largest single short position on the LMA. According to people familiar with the matter, to be clear, that position is held for client businesses and there's no suggestion that the bank is placing its own short bet on nickel prices. I think some of the chatter is that like J.P. Morgan came in and. Oh, playing this on Jamie Diamond. I mean, I don't know enough to comment. All right. This one was surprising to me. This is a Twitter one.

The unemployment rate for adults without a high school education just hit its lowest level in American history, under 4%. So no high school degree. Unemployment rate is as low as it's ever been. How weird is this? Unemployment below 4%. Inflation at 10%. The 10 year at 2%. Stocks 13% off the all-time high.

This is such a weird world. Yes. It's like you put these economic indicators in a hat and shook them up and pulled out random ones and said, Okay, you're going to be this. You're going to be this. You're going to be this. And it's not even... And by the way, you know what else is crashing alongside with oil? Gold. Is it again? Yeah. Straight up, straight down. Okay. This is from pure research. More than half of American survey to quit their jobs amid the great resignation in 2021 are now earning more money and have a better work-life balance, though nearly one and four are making less. So I think it's like 56% of people in this survey are making more money and that's why they quit their job, which makes sense. Now is the time to do some of that. Here's another one that I, just like the housing

one above how many percentage of houses are worth a million dollars or more. I never would have known this. 34% of American households, 40 million households, or in $100,000 a year or more, that a higher low to you. These are like numbers that I never would have thought of before? One in three? One in three households make $100,000 per year. You know when you say it doesn't sound a higher low to you? I really can't answer that because if you asked me beforehand, then I would be able to give you an answer. If you said guess how many people, but once you tell me, I can no longer pretend I don't know. It's in the dock. You could have looked. No, I'm just saying, I don't know. The funny thing is, it sounds

what it sounds like. When I see it, one third sounds kind of low, but 40 million, that sounds kind of high. That's true. Denominator blindness for me. I guess it sounds about right. This is complete bunk. Complete another bunk. One in three Americans is a side hustle.

Was this study performed by a guy with a sidehousin newsletter? It's 40 million people. Oh, when he put it that way. Come on. Come on. All right. A tough week in the Carlson household this week, our beloved dog Ella, 14 years old, finally had to be put to pasture, she went into the big open field in the sky.

I got to say, way harder to have that talk with my kids than I thought it would be. We've shed way too many tears in the household, so I just want to talk for a minute about how awesome dogs are because we had like a week to prepare for this. It was kind of weird because it was really sad, but also, like, I spent a whole week thinking about like how awesome is that. I know you have a dog, right? I've met your dog. Yes, Bianca?

Yes. How old is your dog now? She's 10. Okay. And honestly, like, our dog was 14, so she made it like way longer than she probably should have. but it still hit us like a ton of bricks when it actually happened because it happened so quickly

but I started thinking back to all the things we've been like this dog's been in my life for more than a third of my life they just have the best life they love to lay on the couch with you endless games of fetch and I think the thing I'm going to miss the most

by far is just every day her greeting me at the door like we just won the Super Bowl together is that not the best thing the dogs do is just they greet you at the door no matter how your day went they are so pumped to see you

yes if I ever need to cry in command not that I would ever need to, but I could just think about my dog dying. Like most people, I am in love with my dog. I am not prepared for that. So I can't imagine what you guys are going through. We're thinking about stories. So you can't see out the front of our house really if the blinds are drawn. And the Amazon guy told us that every time you walked up to drop a package off, our dog would

hear him come up. So he made it a game every day to try to sneak up to the house as quietly as possible to place the box up there. And he said our dog would bark at him every single time she knew was there. We were just talking incessantly about stories like that and thinking about her. So, right, it was 10 times harder than I thought it would be in telling the kids made it even harder than that, I think. But still, like, it is so weird. It's like not a pet.

It's like part of the family. Absolutely. I mean, more than a family member. I don't even know what's more than a family member, but yeah, I can't imagine life without my dog. I can totally see why so many people get another dog right away to like just take that pain away. We're not going to do that. I can see exactly why people do that because it is really painful. That's like someone you're with every single day.

Well, condolences to you and the wife and kids. It's the worst. And I will say that like going to the, I've never done that before. That whole process was actually very sweet and gentle. The way they did it was way more humane than I anticipated. How they did it was actually very thoughtful. So there's a chart from Nick Bunker. The percentage of retired workers returning to work. Breaking out, people are coming back to the workforce, as is Tom Brady. Who had the better Tom Brady Twitter joke? Me or you. What was yours? I said that Tom Brady looked at a 10-year treasury yield of 2% and talked to his financial advisor and looked at the 4% withdrawal rule and realized fire was not for him, so he's delaying retirement.

I think yours is better. I can't remember what was yours. I said between Bitcoin getting cut in half in inflation, Tom Brady's got to put foot on the table, something like that. Okay. That's right. He did the laser ice thing, too. Okay.

That's not bad. I loved the story. I loved the story about the guy the night before he announced he's not retiring, buying his football, his last touchdown pass, and then, of course, not being... Somebody tweeted that is the worst rug pull I've ever seen. At this point, he should blow it up and turn into an FTA, pull up Banksy.

Because I don't know what else you do with that. Oh, one quick follow-up. I don't know if we'll do listener questions today because we did a whole show of them. We talked about the VPNs and the Russian apps last week. Someone said that VPNs are not random apps, but stands for a virtual private network, which oftentimes are used to bypass information

about where IP address is located. Basically, people in Russia are using these to bypass restrictions and see other stuff on the internet. So I guess basically the internet always wins. I didn't know that.

Can you imagine? Let's say you're in the middle of a Netflix show and you know, I'd say it shuts down access to Netflix for you. If you're like one episode away from finishing Ozark,

would you not lose your mind? That's I'm surprised there aren't more rights in the streets than that country to stop this. No questions. No questions. All right, I'll start.

I saw Batman in the theater. Oh, how was it? And I will say, I'm so glad I saw it in the theater because it's way too long. I would have been on my phone if I was at home. I would have been distracted. More than two and a half hours?

Like 240, at least, yeah. So I'm sitting in the theater. And actually, it was the most full theater that I've been to since pre-pandemic, by far. I'm sitting in the theater waiting for the movie to start, listening to Tim Ferriss and Boyd Vardy. Boyd Vardy is my favorite podcast guest of all time. It's the only podcast that I've listened to multiple times when he was his first time with Patrick O'Shaughnessy. He's like the Sahara guy. Yeah, in like 2018, I'm guessing.

So he was on with Tim Ferriss, and it is beyond good. Like, I would absolutely pound the table on that. So anyway, if you've listened, you'll get it. So I'm listening to that podcast in the theater, and he tells a story about being attacked by Killer Bees in Africa, and I'm sitting in the Batman, waiting for it to start, and I was laughing very hard. I had to actually turn it off because I was laughing so hard. All right, so back to Batman.

What I liked about it was that it was truly dark. And Robert Pattinson was an excellent Batman. And what I like about it, I'm not going to have any spoilers, obviously. There was basically no Bruce Wayne, which I love. We don't even rehash that. We get it. It was a crime movie that Batman happened to be in. You want to know why no more Bruce Wayne?

Because billionaires are canceled. No one likes a billionaire. There you go. It was a crime movie that happened to feature the Batman. It was very good. I listened to an episode with Fantasy and a few other guys talk about like the best Batman's. In my opinion, it's definitely like top three, top four. So definitely worth seeing, but it might be a tough watch at home.

I probably would have had a very different experience. If I watch it, I might probably have been like, yeah, it was good, it was good. Sammy the Ball, I revisited, I stopped listening for a while. Season three, episode six, he talks about the mafia, obviously, and the Kennedys and Marilyn Monroe. and I almost couldn't believe what I was listening to. Oh, yeah, I listened to it. I'm through season three. Okay, amazing.

This has been on my list for a long time. I finally watched broadcast news. I guess William Hart Passing gave me a reason to watch it. You ever see that one? Yeah, I've never watched that, actually. No. You would like it. It's an 80s movie.

Like, it's not really particularly exciting, but it was just a good movie. Just solid. Like him, Albert Brooks, and Holly Hunter, sort of rom-com. It was just good. It was just good. And he was a great leading man in that. And finally, Chris Ron. on The Ringer, talks a lot.

I'm a huge garbage crime of Fixianado. Love it. His favorite garbage crime movie is Den of Thieves. Gerard Butler. You ever see that one? I've never seen that one either.

It's garbage crimes. Obviously, it's not a great movie, but it was just okay. It's sort of, yeah. Pounding the table. Are you a garbage crime guy? Yeah, I'll do that occasionally. Yeah, like a heist movie?

Yeah, exactly. Oh, yeah. They're robbers and some good action scenes. Anyway. All right. I like the Friday night movie dump on a streaming channel. So last week we had the Red Panda

movie, I think it's called Turning Red on Disney Plus for my kids. I know I'm at a family movie night. Not like a classic Pixar movie, but my kids probably watched it three times over the weekend. Wait, I have a question about this. Libby's older than my kids. Do you watch the Disney movies on the couch with them? We're getting to that point now.

We watched the entire movie. Am I a bad dad? I don't do that yet. No, obviously I play on my phone. I'm not going to watch the whole movie. But we're getting to the point where we're having sit-downs. And I think that was one of the first ones we watched all the way through with our kids without getting up and they just have popcorn and sit and it. That actually sounds very nice. But my kids like it. Yeah, I kind of like it. And then later in the night, my wife and I got to watch the Adam Project on Netflix with Ryan Reynolds. Did you watch it yet? Are you anti because of you don't like

Ryan Reynolds? I saw the first 20 to 25 minutes and I said, you know what, this is good. This is a good. I will say the first hour is really good. I liked it. It's pure Ryan Reynolds. The last third of the movie kind of goes off the rails a little bit. I'm okay with that. The ending they went up, they didn't allow to land the plane. Whatever. Yes. It was a good time travel. Ryan Reynolds's sarcasm. I liked it. New show that we're watching almost through now is The Tourist on HBO, which is a

guy wakes up in a hospital bed with amnesia trying to figure out who he is. Worth it? And it's a crime one. Yes. It's not great, but it's very good. Amnesia, and you're a criminal? You don't really do it. I'm in for amnesia. All in.

It's a mini series, so I think it's only six episodes and that's it. Oh, perfect. Oh, here's a question I got from the Adam Project. Why do 95% of little boys in movies have asthma? What's the percentage of people in America that have asthma? But every little boy

Not to brag. But doesn't every kid in a movie have asthma? Every time they have an inhaler. All right. Wasn't it you who said Paul Thomas Anderson overrated? So overrated. He made two good movies. Actually, one and a half good movies.

I know everybody loves There Will Be Blood. It's a good movie. It's like it's not that good. Relax. I love Bougainites. There Will Be Blood was a good movie that you don't rewatch. Yeah, rely. It was good.

I mean, Boogie Nights is great. Okay. I've heard mixed reviews on Liquorice Pizza, his newest one, and I watched over the weekend. How bad? I am the audience for this movie because I love coming of age movies about high school or college kids. I love those movies.

I was angry. This movie was so bad. It was so boring. So I looked at Rotten Tomatoes. 91 for critics, 65 for audience. Audience wins again as all like here's the thing. You don't make a film about high school kids. You make a movie about high school kids. And he tried to make

a film. And honestly, within five minutes, like you know the tone of a movie you can just tell, like, oh, no, I'm not going to like this at all. That's what this movie was. In the first five minutes, I go, I'm out, but I still watched it. Can we cancel Paul Dom Sanderson? I never got better. I honestly, I was surprised at how much I disliked this movie.

I didn't like it at all. I think I watched two of them recently. I could have, the master and what else? What was the other one I couldn't watch? Oh, Inherent Vice. Inherent. Oh, that's the one with Daniel Day Lewis? Maybe Joaquin Phoenix.

I don't know. Oh, Daniel Day Lewis one was, no, I can't think of it. But I watched that one, too, and it was not, I turned it off. Oh, I watch the her advice. I watch it in her advice. God, that sucked. What a cast. I hated that movie.

Yeah. Sorry, PTA fans. I tried. Duncan's going to be rolling over his grave. Paul Thomas Anderson. Which is the worst Anderson? Paul Thomas or Wes? Paul Thomas, I think.

I think it's true. Sorry, PTA fans. All right. Remember, listener question next time. I think next Monday we'll have more concrete news about the NFTs. where you go. I can get them. I think we're getting there. Send us an email, Animal Spiritspot at gmail.com. We'll see you then.