Animal Spirits Podcast - Live From Future Proof (EP.274)

Episode Date: September 14, 2022

On today's show, we discuss the worst first 8 months ever, the illiquidity premium, Q2 earnings, The Robinhood Investor Index, 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 show is sponsored by our friends at Y charts. I believe they have a booth here somewhere. I don't know where this is the team of Y charts. There's Rushi, Kara. I don't have Caleb's there. Sean Tanya, thank you to the whole Y charts crew. What are we looking at here today, Ben? We got a chart?

All right. So we just wrapped up earnings season for the second quarter. So we don't, I don't think we officially have the numbers on Y charts yet because they're still rendering. We're not totally done with Q2. But I do believe, despite all of the doom and gloom and. and bearish narratives that have been out there, I'm pretty sure that Q2 will be an all-time record, at least nominally.

I don't know if it's record real earnings, but things were better than expected. So there's that. Take it. If you want to try out Y charts, go over to them. They're right over there. Tell them I sent you.

I'll give you 20% discount if you sign up. 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 Batnik 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 Spears with Michael and Ben. We're live. We're live, yep. We are in Beautiful Huntington Beach, California. pretty nice backdrop.

What do we start the show with today? We are starting with a chart via Sam Rowe taken from Deutsche Bank. And Sam Rowe is here somewhere. This chart is showing all of the historical recessions, bare markets, and what Deutsche Bank is saying is historically, the S&P 500 normally always, normally always, normally always, normally always, only only normally always only what the hell does that mean okay that's their words not mine normally always only bottoms in a recession which makes sense and usually not until midway through okay so there wasn't a recession i don't think i usually don't invest this way when it starts with normally always i'm in no the only

got me okay they said that we are almost certainly not in a u.s recession yet but that one is coming in 2023 then history would suggest that markets are only like to the bottom in 2023, when the June lows will surely be taken out only always normally. What do we think? Counterpoint from Michael Batnik. This is from you last week. You said it's the worst year ever. So you compared the return on the S&P 500. Hang on, hang on. It was factually the worst eight months to start a year ever. Okay. We're splitting hairs here. Eight months. All right. You plotted. What do you call it? It's a dot plot. Scatter plot. Scatter plot. That's what a cell calls it. Okay. So you did stocks versus bonds. And you showed. how they do relative to one another. And you showed that this year, stocks and bonds are both doing

horribly. So what you're seeing is there's a red dot on the screen that is so far outside of anything that we have ever seen. Normally, only always, when stocks are down a lot, bonds tend to do okay. So my counterpoint to the, and can we be honest, Deutsche Bank, it shouldn't be pronounced that way. What should be called? Doish, dude. Sorry. Ben. This is a family show. Excuse me, slip of the tongue. We're drinking Mamie Vices here.

It's 10 in the morning. Everything goes. It's one on the East Coast. All right. My counterpoint here, things are already pretty bad. Let's say we do have a recession, 2023. Haven't we already priced in that? I don't know.

Throwing out there. Also, here's another thing. People look at your chart and they say this is the worst year ever. If you're a 60, 40 portfolio person, you're screwed. What are you doing? You're an idiot. This doesn't work anymore. Is it really that bad?

on a relative basis. This year, yes. Well, yes. Hank. This year really is that bad. The math. But compared to other stuff, the NASDAQ 100 is down 25%.

Long bonds are down 35%. Zero coupon bonds are down 45%. Bitcoin is down 70%. A 6040 is still the cleanest shirt and the dirty laundry pile, right? I think what investors can hang their head on it is, even though this has been a really rough year, three, five, 10-year annualized returns for

risk assets, whatever you're doing has been phenomenal. Still pretty good. So it's bad, but come on, not that bad. All right,

allow myself to quote myself from Twitter. This year alone, this is the S&P. January or early March to the end of March plus 11, end of March to mid June

from that level, it was down 20. Mid June to August, mid August, it was up 17% and then mid August to the recent, whatever that was,

was down almost 10%. Actually, Do you see the bounce? This is through the, yeah. Yeah. So Ben tweeted this on September 7th. Since then, we've actually, stocks are up today. This has been the best

four-day run for the S&P 500 since the bottom in June. Did you know that? Well, no, because I stopped looking at the stock market when we flew into California. I don't know how anyone gets anything done here. I just, I'm not paying attention to email, the stock market, nothing. Right, can I just say one thing while we're on the California thing? No offense to anybody's taste buds. And maybe we just went to a bad one, but we went to In-N-Out, and I've had it in-out before. It was horrible. Don't do this. Come on.

No, this is a podcast thing where... No, wait, no wait. You argue five guys versus In-N-Out, and then someone gets mad. I'm just going to say that. This place says better fries. The meat was fine. It was obviously average, like fast food burgers, whatever. The bread was like the bread that you feed to the geese at the pond.

It was terrible. For anyone who doesn't work with people from New York like I do, every conversation evolves into a competition about food. Because they have the best pizza. It's okay. So, get back to my stuff here. So my favorite investing author of all time, William Bernstein, I think he is probably the smartest investor who also is very clear-headed. The Four Pillars of Investing is one of my favorite books. He's actually, this is inside information. No one tell anyone. He told me he's working on a new version. Well, if I could insert a not to brag for Ben, Ben, Ben's email buddies with him. Like, pen pals. Wait, wait. What is he working on? The Five Pillars? It's an updated version. He attributes his to Ralph Wanger, who was, I guess he runs the Acorn Funds. And his whole thing about the stock market was, pretend you're walking through New York City and you're walking a dog.

Where? See, I don't know anything in New York City. So he says, Columbus Circle through Central Park, to the Metropolitan Museum. And so you know the person who's walking the dog is going at three to four miles per hour. They're going in a straight line. The dog is going everywhere, dark in each direction. And he says, the astonishing thing is all market players big and small pay attention to the dog and not the guy walking the dog. This is the stock market.

That's one of my favorite analogies of all time. And who's the dog walking? That's me. Yeah, I control the stock market because I worked for the Fed. All right, sentiment trader, we're going to take the data that it's good data, but it looks so odd. Like we were questioning if this is like right data, far be for me to question this data. Here's what we're looking at. Sentiment trader tweeted, sometimes there's a chart that just blows your hair back.

In 22 years of doing this, none stand out like this one. Last week, institutional traders bought $8.1 billion worth of put options. They bought less than $1 billion in calls. This is three times more extreme than 2008. Well, the good news is they were wrong because this date is a week old. And as I just said, we just had a 6-ish percent footed around the stock market. So the good news is that it's already wrong. This feels like a normally always situation.

When I see a chart like this, I don't know what to think. I'm waiting for someone to debunk it. I think what this has shown is that options have become such a bigger piece of the over market than they were in the past. I'll take it. And people are very much. Okay. What's your,

to your treasury rate thing here? This is one of the charts. So I interrupt you. That's usually your job. The way that we do this show typically is Michael and I, I'm in Michigan, Michael's in New York. And the way that we set this up is we have a Google Doc.

And throughout the week, we're throwing charts in there. We're throwing stories, anecdotes. And we fill it up and it ends up being like 35 pages. And this is the first time we've done it live. And we're following along with the Google Doc as we go here. Just trying to keep the people listening at home. Up to speed here.

Pulling back the head. That's what we do. That's right. All right. One of the things that has world markets this year all across the globe is obviously inflation, but it's interest rates. And the pace of change or just the change that we've seen in interest rates over the last 12 months in two-year treasuries and 10-year treasuries and pretty much everything else that

is interest rate related, we haven't seen this type of move in, I don't know, a long, long, long time. The two-year was effectively zero for much of the last 10 years. years and it's now, where is it two year out? Oh, it's at three and a half percent almost. There we go. Anyway, savers are no longer being punished. Some people look at this and say this is a bad thing. It's rising. I think it's a good thing. Fix income investors can finally earn a yield on their cash. It's been a long time. And people are taking money on the stock market in droves. Stock fund outflows of $10.9 billion in the week of September 7th, which was the biggest exodus in

11 weeks. It was led by technology stocks. And again, for the fourth time now at the show, we had a very, very, very nice four-day bounce for the market for the last week. You're hanging your hat on a four-day bounce here? I'm just saying, I don't know. It's content. Or not your hat. What do you call this? This is a headband. A du rag, okay. Which we have for after the show. We have one. Sorry, there was three, but two are taken.

You're giving one away? Okay. So two are taken right before we started. Michael's idea was to create these headbands because he's a bald and he needs to wear it because it drips a little. He wanted to give out something to the audience like a t-shirt cannon and you have one. Chris, give me that back. Damn it. La Rosa, get it over here.

That lucky winner back there. All right. I feel like ever since 2009-ish, the macro doom and gloom crowd have been predicting the end of the U.S. dollar as we know it. It's no longer going to be the global reserve currency. The dollar is going to crash. there was a lot of credible people, maybe not credible anymore, saying this. Wall Street Journal had an article. This is just this year.

The dollar index versus the euro, the pound, the yen. The dollar is going crazy. If you look at it back to like 2014, the dollar is up like 35% against a basket of global currencies. If you like zoomed out a little bit more, I think if you go back to like the 1970s, the dollar has basically gone nowhere, which what you kind of expect. There's huge bounces all over here. These other currencies are doing well sometimes and the dollar's doing it. So it kind of nets out at the end.

But the people who are saying the dollar is going to collapse, I just don't understand that line of thinking. What was the, was it debt? Like the debt clock? Well, the Fed was printing trillions of dollars, zero percent interest rates. Anyway, I just don't see it. So one of the things that we've been getting a lot of questions about lately is global stock market, basically global XUS has been just awful for a decade plus now. And I think you can attribute a lot of that to the strength of the dollar. The dollar is not just impacting U.S. investors' experience with overseas stocks, although it certainly is doing that and more. It's also impacting S&P 500 companies. In the second quarter, S&P 500's earnings grew 6.3%. For stocks that derive 50% or more of their revenue outside

the United States, that number plummeted to 2.1%. And for S&P 500 companies, I get less than half their revenue outside the United States, it is 13.4%. Here's a dumb. question. Why aren't small caps doing better then? If small cap stocks basically have all derive all their revenue from the United States. What's a myth? That small caps are more exposed to the U.S. economy. It's not a myth? No, no, no. How could that be a myth? It's not a myth. I'm saying that there's stock prices. The businesses obviously are more sensitive to U.S. stocks. Are you saying fundamentals are detached from reality? I think that's the patulating us on here. All right, what's this next one? Stocks that are particularly exposed to international markets, and this is why

information technology had such a rough quarter, 56%, or 58% of the revenue of tech stocks comes from outside the United States. So this is the S&P as a whole, too. 40% comes from outside of the United States. Is that correct? 40%. Okay. So this is from J.P. Morgan Guide to the Markets, and it shows cycles of U.S. equity outperformance

versus international. And the lines in purple are when international did great. You can see in the, especially in the 1980s, international stocks crushed U.S. stocks. that was mostly Japan, but they also show the magnitude of the outperformance and then the length. And the U.S. stock market has been outperforming international stocks for 15 years now. Longest on record, but a long margin. So what changes this? Is it just the dollar goes back down? Well, one of the other things that they do, J.P. Morgan does in this chart, is they break down

international stocks from U.S. investors' point of view, and they show the local currency return and the currency return, which is a dollar. And they say, like, what impact is the U.S. dollar having on international stocks from the U.S. investors' point of view. And it looks like this year, I mean, obviously it is adding to the underperformance in a serious way. So what turns this around? I don't know. Bitcoin kills the dollar. I have no theories there. I don't know. I think that's the thing, though. It's so cyclical. I don't know that there needs to be a

huge reason for it. I don't know. In good news, U.S. gasoline prices, 89 consecutive days of down prices of the longest streak of decline since 2000. And this is having a material impact on consumer sentiment. Is the human brain really this naive? Like we look at interest rates and macro factors and earnings and all this stuff. And really, it's like no dummy. It's the huge numbers on the gas. That's the only thing people care about.

I think earnings don't drive consumer sentiment the way that filling up your gas tank does. And speaking of that, 515 in California, it's like 350 in New York. Okay. I was going to talk about this later. Let's do a pros and cons of California. Okay. I was in the wait room about 6 a.m. today, not to brag. I'm no stranger to the wait room.

Ran into our friend of the show, Tyrone Ross, and Tyrone moved out here from New Jersey a couple years ago, and he was talking about the quality of life. And I'm weighing the pros and the cons, and it's kind of like earthquakes, wildfires, really expensive gas. Housing is expensive. But then you have this, being outside all the time and the quality of life.

I think it kind of balances out. One more thing that's in the bag, ice cubes are hard to come by. Why? I don't know. We were out of the Sanchez yesterday, and they said, like, take it easy on the ice cubes. Oh. Do you think anyone actually believe, like, listens to those sides? The side was there.

I filled it up to the top. I like seasons. I like variation. I feel like, yes, the weather here is absolutely marvelous. It's perfect. It cannot possibly be better. But how long does it take? And I ask you, Californians, how long does it take before you're like, yeah, it's just Tuesday?

Like, you probably adjusts fairly quickly, six months? Counterpoint, you could drive your Jetsky 12 months of the year here. I'm a New Yorker. I could get used to this lifestyle. That's all I'm saying. All right. So anyway, the point is that gasoline prices are a massive driver of consumer sentiment, which is bouncing off, I don't know if it was all-time record lows,

but people were feeling very, very pessimistic. I also think this is a relative thing. Our brains, we like to make comparisons from highs and lows. So now having set that new high, I feel like these prices are still much higher than they were 12 months ago, 15 months ago. I think that, because people have that comparison level now, I think it makes it easier on them. All right. There's no way anyone can see this chart with sunglasses on.

Americans are feeling better again. I think it's just a gas price story. So the Federal Reserve has still been talking tough. They want the stock market to go down. They want financial conditions to be tighter. I think they still water them. This is from Conor Sennar, Bloomberg. I wonder what Kash Kari thinks about this recent four-day bounce.

So. You think he's best? anyway, we're averaging 381,000 jobs adding per month, which if you annualize it over the course of a year, would be $4.5 million. Conner-Sense says that's the fastest job growth in U.S. economy is ever sustained in history, if that level would be sustained. So he's saying even if it decelerates to, I don't know, $200,000 a month, saying that's the Fed's goal, we're just going to bring it down a little bit.

That's still a labor market that's adding a ton of jobs. And do they still have so much breathing room? Two words, soft landing. I mean, I think the Miami Vice is the 60-40 portfolio of the of the drink world. I think we're getting to that point where we're at a 60-40 between soft and hard landing. I don't know which one's which. The gap is closing is what I'm saying. I would say, so we were talking, Josh and I were talking to Brian Belski last week, and he was making the point that if things are so bad, how come the data isn't revealing itself to be bad?

Why is the job market still so strong? Because everyone says, just wait, it's coming. It's the just wait. It's a just wait. And so I think normally I'm not a just-weight guy. Like, what are we waiting for? It's been 16 months of high inflation. When is the data going to soften? When are earnings going to come down? I think you could reasonably make the case that due to all the stimulus, due to us being locked up, there were so much pent up demand and that people got all of that out of their system and that the data will show itself to soften in the second half of the year. More likely, three more years of economic recovery, recession next year. Three more years of economic recovery. economic expansion or recession next year. Recession next year. I think we can put it off. Okay. You're heard of here first.

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

Weapons. This morning, Goldman announced that they are cutting several hundred jobs. Any thoughts there? I feel like any time Goldman wants to get in the headlines, they can. Like, Goldman's sex isn't serving coffee anymore. I don't know. Isn't it a little much with them? By the way, Walter Bloomberg at Delta 1 tweeted this,

can anybody confirm? Is that a real person? I think he's a real person. Ben thinks it's a bot. I think if he's a real... What ever met Walter Bloomberg? If he's a real person, he should come to Future Proof next year and tweet the whole conference. Michael Batting just had his six Miami Vice in the pool.

He's really going for it today. Before the show started this morning, I was checking Zillow in my neighborhood. We were in the hotel conference room over there. I'm diligently working, getting this show to be perfect. And Michael's looking at housing prices on Zillow. How is that stock down 90% with people look at that every day? Well, the stock has been acting better lately. But as I've been saying on the show, there's a house nearby made that is still like probably

$150,000 over what they should reasonably be getting. And there's still just a wide, wide, wide gap between what the buyers are willing to pay at this point, given that mortgage rates are up a lot. And sellers are anchored to the crazy prices of the last 18 months. And so you're seeing mortgage applications, Kathy Jones, mortgage applications fell for a fourth consecutive week. We've only had 10 positive reading since the beginning of 2022. I just think if you're a person who is in the market for a house, I think you're out of luck for a long time. What do you mean? All right. This is from Survey of the Week. If you haven't

watched the show before, we're an anti-survey podcast, but everyone's in a while we, if they back up our assertions, we go with it. This is from Rick Palacio, who is now a writer at fortune. 85% of outstanding mortgages are locked in at sub 5%. 24% are below 3% mortgage rates. He's basically saying good luck persuading someone with that to relinquish their house. And they did a survey saying 51% of all home purchasers are reluctant to buy 64% are reluctant to buy again if mortgage rates say above 5%. Basically, no one's going to trade up. My mortgage rate is 2.875% not to brag. I can't go from that to 6. I just think if you're someone who's in the market for a house and you're renting, your rent has gone up and housing prices have gone up and mortgage rates have gone up, you're screwed.

unfortunately, and that's why I think the Fed should start buying mortgage rates bond again and bring it back down to 4.5%. Stop it. I half believe that. Just stop it right now. What if they cap mortgage rates at 4.5%? You would see the floodgates open again and people would sell their houses. Fair? Do you think that them buying mortgage bonds in March was a mistake? Well, obviously. And you want them to stop buying mortgage bonds as Debra? I don't think they should have let mortgage rates get to 6%. I think that was a huge mistake. To let it happen in three months or however long it happened? Show a hand. Should the Fed, by mortgage bonds.

Is this guy nuts? Nobody raised your hand. Nobody raised their hand. We got one. We got two. Logan, there he is. Our housing expert, see? I trust Logan.

All right, what we got on venture capital here? All right. Kai Wu did this incredible piece. Kai has a blog, a company. He's here somewhere. He's here somewhere. He's in the audience somewhere. And he revealed that of the 1,495 U.S. venture deals in the first half of the year,

only 4.9% have been down rounds, which is a historic low. Illiquidity premium. So meaning no one is marking anything? No, no, no. There were 1,500 deals. So what does that mean that there's just so much money pouring in? That down rounds have not yet begun. I don't know.

This sounds completely absurd to me. But what Kai did in this piece was he recreated what the venture capital index performance would be using liquid stocks. scroll down so that people could see it. So there's a Cambridge Associates U.S. Venture Capital Index. And so what Kai showed is that the liquid venture replication index, so just public stocks, is 30 something percent off its highs. And from its peak, the venture index is only down 4%. I'm not going to lie. I did not read this. But I feel like it's pretty hard to create a venture capital portfolio in the public markets. Well, look at this chart. Is that not a tight chart?

It's lines on top of lines, but I'm just saying the profile is completely different. Read the piece. All right. I'm going to challenge Kai to a debate at the bar later. I'm just saying, I think it's hard to do because if you look at the founding dates, I'm sure, so he shows Amazon and Apple and Google and fake Facebook and Microsoft, those companies are coming public so much later. How does that equate to a venture capital portfolio in the public markets anymore? Kai, what do you have to say for yourself? He's not here.

All right. So, as we mentioned, Q2 is in the books. We're done with earnings season. 75% of companies reported EPS growth above estimates, which is actually slightly below the five-year average. It's normally 77% companies beat EPS. That's how the game works. The second quarter was the sixth straight quarter of year-over-year revenue growth above 10%. All 11 sectors reported year-over-year growth, led by energy, of course.

And this was interesting. This is a huge departure. So remember Q1 when a lot of the arc names were down 60%, 70% in some cases going to earnings. They missed and they were down 25% the next day. You saw a total reversal of that with the second quarter earnings releases. I think here's the thing people don't realize about inflation. Inflation. Yeah, what? Inflation just means higher prices for companies. And their margins are still so high that they've been raising prices that earnings are going to look way better than people think. The 1970s revenue growth was amazing.

growth because companies were raising prices the whole time. How is it for shareholders? Inflation is good for corporations. Moderate is. Moderate inflation. So stocks that beat earnings were up 1.9% the next day, five-year average is 0.8%. And stocks that fell short of earnings only fell 0.1%. So the market for whatever reason, you could be bullish, whatever, like the market is acting pretty well. Does the market know something we don't? Are you saying fundamentals matter again? Well, they're detached from reality in small caps, but they matter for the S&P 500. Was this the most important quarter for earnings ever?

Stop it. Stop it with the nonsense. Financials had the largest decline out of all 11 sectors, 22.9% in earnings. Higher provisions for loan losses is what did them in. The guidance hasn't been terrible. Guidance has not been terrible. I feel like the companies that guide down and get all of the attention has not been that bad. 61% of companies have been issuing negative guidance.

Where'd you get all this information from? Five-year average. Don't worry about it. I've got a source. This is from facts up. The five-year average is 60%. So pretty much in line there. Airlines, $2.9 billion in profits in the second quarter

compared to a $3.3 billion loss in Q2. We were thinking about this. I was talking with Kevin Young about this, doing some back-of-the-envelope math on airplanes. There was 100 seats in our flight, just doing some quick math. What do we say? There was like $800,000 in revenue, something like that. Maybe not even?

How much did the fuel cost? I don't know if they hedged or not. Low margin business. Not a great business. What else do we have here? You know why else? It's free movies. They're providing way too many free movies.

Do you know how long it took me to find one on the way here? Save it for recommendations. I was scrolling for a half hour. But earnings estimates are coming down. They are coming down. The 2002 bottom-up EPS estimate declined by 1.5%. So analysts are bringing it down. And this is the part of the show that gets edited.

You don't hear the pauses. Thank you to our producers. But the good news. is, as I said, earnings are at all-time highs. All right. And inflation is bringing down multiples. There we go. Let's say there is no recession in 2023.

Let's say that's possible. Isn't it just a possibility that higher inflation, higher rates, means multiples contract for the stock market, and that's what happened this year? Well, that's already happened. Multiple is down 20%. Well, for a while there is growth is up 6%. But for a while there, it was the stock market is pricing in a recession. And it sure felt like that.

But maybe the stock market is just pricing in, hey, interest, rates are higher and inflation is higher. That means that multiple should be lower. Historically, that's what happens. Which should happen this time too. What do you think about the Robin Hood Investor Index? All right. So, Robin Hood announced this week they're going to do an investor index. Is it going to be investable? Yes, I think so. So the top 100 most owned investments on Robin Hood in aggregate, weighted by customer conviction. So I assume that means how much of their portfolio they have in the stock. They say that to ensure that all customers are equally represented, they calculate the average conviction

for each investment across all their customers whether they have $20 or a couple million. I did a back of the envelope back test on this this year. You want on us down? 86%. That's a guess. So here we go. The top 10 investments are Tesla, Apple, GameStop, Microsoft.

Oh, my God. Ape, which are, I guess, the AMC preferred shares. Amazon, Neo, Disney, Ford, AMC. Why is Ford always up there? Do they give, I think they give away shares of Ford. Is that what it is? I feel like they created this index just so we could.

Is Ford not a clear outlier? Why is Ford the top 10? I think for a while there, they were giving way free shares of Ford if you signed up for the account. I think people probably just still hold that. They showed a back test, and I'm going to call a total shenanigans on this.

Look at this. The Rob Hood Investor Index is in the exact same spot of the NASDAQ, two and a half years later. Do you believe this? No way. Not for a second. This thing would have been up 100% in 2020 and early 2021 and down 70% from there.

Not for a second. I agree. All right. I have some. crypto talk here. Okay. I'm just throwing this out there. Bitcoin hit $20,000 in 2017. We had all this money pouring to crypto for five years. We're basically back to 20,000 now, maybe a little over now. It was below. All that money that poured in all those smart brains that came to crypto. I'm just playing devil's adikid here. Okay. Did it do anything in those five years where the price went

nowhere? Or did it just cause another bubble? What if I said to you, the price in 2017 was 2000? You're picking from the top. You're cherry picking. Fair. It's true, though. For five years, basically, it's done nothing. And I don't think anything has changed. I'm talking Bitcoin specifically here.

Nothing has changed in what happens with Bitcoin or how it gets used or... Clearly, you have not been following the news this morning because did you hear about Starbucks Odyssey? No. Did you? You're not a coffee drinking. I don't drink coffee, so I'm not paying attention. All right, today, Starbucks unveiled a new experience powered by Web3 technology. I'm reading from the site that will offer Starbucks rewards members and Starbucks partners

and employees in the United States the opportunity to earn and purchase digital collectible assets that will unlock access to new benefits and immersive coffee experiences. Did Doug Bonaparte write this? This is an onion article. There's no way this is real. They missed the boat by like 12 months here. Our vision is to create a place where our digital community can come together over coffee, engage in immersive experiences, and celebrate the heritage.

in future for Starbucks. Nobody wants us. That means nobody asked for this. Here's one more thing. I'm just reading from the site. Well, it says no crypto wallet or cryptocurrency will be required. So, yeah. So how was this? It's Web 3 without the crypto. But this was a counterpoint to my Bitcoin argument? This is totally decaf. No, no, no. Well, I'm kidding. Okay. They said members can engage in Starbucks Odyssey journeys, a series of activities such as playing interactive games or taking on fun challenges to deepen their knowledge of coffee in Starbucks. Members will be rewarded for completing journeys with a digital collectible journey stamp. I'm guessing you're out on this. I had a joke there, but I'm just going to let it go. We saw a good journey stamp at the bar last night.

Sorry. Sorry, inside joke. All right. By the way, I think we're going to leave enough time for questions. If we do the slido thing, if you want to put some on there. We kept it short this week. Before we get to our recommendations, we're going to do an email from a listener, which I thought was interesting. Pretty well describes our animal spirits listener. Longtime listeners show and Twitter conversationalists with both of you. You've probably never done it. because you don't check Twitter anymore, right? Anyway, the other night, my wife was in labor with baby number four,

and we piled into the car at 1 a.m. for the traditional rush to the hospital. As we are backing out of the driveway, she is in the midst of a painful contraction, and suddenly my car picks up Spotify on my phone. As she is grimacing in pain, we hear Ben say, on today's animal spirits.

You can imagine the reaction of her was not pleasant. I quickly turned down the volume so she could scream in silence, but don't worry, guys. I had already finished this week's episode earlier that day. That's pretty good. All right, before we do some recommendations, let's take some questions here. All right.

You already answered this one. SoCal is awesome. Would you either of you ever relocate here? Nope. You're never leaving New York, are you? No. Well, we got off the plane and went to Starbucks and waited literally 15 minutes for iced coffees. Have you ever been to New York before?

What do you mean? You don't wait. 40% of my trips in New York is waiting for something. An Uber, get off the airplane, walk somewhere. One of the things that I love about living in New York is every time you leave, it's special. Because most places are, like, objectively better to visit than New York is, at least from the perspective of New Yorkers. So I love living there, but I love leaving. Leaving is the best.

Okay. Oh, that's a good one. How did you two meet on the Internet? Yeah. So Ben wrote a post for Josh called Confessions of an institutional allocation. in 2013, 14? I was a little unhappy in my previous line of work and sent Josh an email. I think he'd never respond.

He wrote back to me and he said, everything you're telling me is great. Why don't you write about it? And I just started my blog. And I got to know you guys. I probably knew you for 12 to 18 months where we ever talked about working together. But do you remember the first time we met? I don't. I came to New York, Phil Perlman, who is somewhere around here.

Oh, that was the first time? the three of us met for dinner in New York, had drinks. Where'd we go? I don't know. All the bars that looked the same. And then we started talking, and every time I came to New York, I would see you guys, and we'd get dinner or drinks, and it progressed from there. One thing led to another.

We've been married ever since. Favorite asset class today? I don't think in those terms. So I don't base my own investments on that. We don't do that for our clients. What's our favorite asset class today? Stocks? I don't know.

I like stocks. Well, last week, Michael recommended socks. I did. If you haven't bought any new socks lately, Michael says you should get them. Okay, we'll start here for recommendations. Michael, what obscure movie should I watch on a flight home? This is not obscure, but I watched this flight on the way to Italy a few years ago. And the older folks in the crowd have definitely seen it, but Annie Hall was a good flight movie.

You might have missed it. I should never seen that one. I don't know if you could give Woody Allen recommendations today, but. So we bought Top Gun Maverick on. digital. You can buy it now through Amazon or whoever and didn't see it in the theater. You always make fun of me for never going to a theater anymore. You say that I'm ruining the theater experience. Somehow I personally torpedoed. My local theater just closed last week and I blame Ben. I hold them personally responsible. I saw a guy watching Top Gun Maverick on the plane here

because when you're watching a movie on a plane, you have to watch whatever else is watching. You cannot experience a movie like this on a plane or at home. It has a 20 to 30% premium going to the theater. You have to see it in the theater. It's better. But still, the last half hour, 40 minutes of this movie is still amazing. Counter-Counterpoint, movies are 20 or 30% better on the airplane. Possible. So it offsets the theater. I said it took me forever to scroll and find something.

15 movies from Tom Cruise, probably that I stopped and thought, I could possibly watch this. He easily has the most rewatchable movie category ever. I was going to watch the firm, a few good men, Jerry McGuire, any of the Mission Impossible movies, the Top Gun. Is there anyone who comes close to his rewatchability in terms of a catalog for movies? Tom Hanks? That's my first thought.

So I ended up on War of the Worlds. I watched it for an hour. The beginning's okay when the aliens come, and then it kind of peters out. Not a great movie. When the sun goes and joins the army. Here's a problem. So we watched the new Pinocchio.

You mentioned Tom Hanks? Wait, it's out? It's on Disney Plus. That is good? Not great. What do you got? I'm actually kind of upset because I value my plane experience for the movies.

And nothing really caught my attention. So I watched Bridge of Spies, which was a very, very Tom Hanks, Stephen Spielberg movie about the Cold War and it was totally fine. It was 2 hours and 20 minutes, which was good, killed a lot of time, but I don't know. Sort of underwhelming for the point. It was a fine movie, but not what I was like. And then I watched The Northman, which I'm so all the way out on that guy, Robert Eggers.

Is that his name of the director? He did like The Witch and the Lighthouse and this movie was absolutely trash. Anybody see this movie? The Northman? I'm kind of surprised you didn't like it, to be honest, because you like bad movies. No, but this is bad. This is bad, bad. All right, someone here. One more question here. I think that's your last recommendation. Your movie tastes always surprise. What is your biggest film disagreement? Easily Top Gun, the original. We're not doing this again.

That's it, though, right? Another good one. Do you miss the three second delay? No, it's awful. Hate it. Better not have some technical difficulties for the past few weeks on the podcast. I don't know if they have like high speed internet in Grand Rapids. And so I was talking and two seconds later, he was hearing me. It was a bad experience. All right. One more. Wait. Doing it? of your local clients who have local business owners give you shit for buying too much stuff from Amazon? No. Do we talk about buying stuff from Amazon too much on the show? Okay. What is your BTC and ETH price

action over the next 12 months from a TA viewpoint, non-biased? Great question from Brent. We'll finish the show with this. When is Tropical Brothers going to sponsor the show? Wait, I literally just asked the question. You steamrolled me. I mean, does anyone want to hear your technical analysis on crypto right now? He said

that he wants a non-biased viewpoint. I was about to give it, but fine. All right. The charts look like crap. The charts look great. That's your technical analysis. J.C. told me last night there's a fibretacement coming. I cannot have put it better myself.

What was the last question from Brent? When is Tropical Bros. going to sponsor you? These are our shirts here. I have no idea. I got a Tropical brother's shirt the other day in the mail. This is a good business strategy. There's a business card with the owner's cell phone in there.

So I figured that I would like text him a picture of myself with a new shirt and introduce myself because we talk about tropical bros all the time and i will reiterate it's phenomenal material i am very breathable i'm a sweater and so you know like the dry fit shirts from nikey and under armor i sweated them they're not great these shirts into the hand i don't know what material is but it's phenomenal phenomenal so anyhow i text this guy and he said oh my god thank you so much i hear about you guys all the time and then i said oh cool i'm actually going to be wearing tropical bros out in future proof, it's a conference with over 2,000 people there. And you know what he said?

That's awesome. All right. Thanks everyone for attending here live. Thanks for listening. We appreciate it. It's been Animal Spirits. Animal Spiritspot.com. Me as by the pool later for a signature drink, Miami Vice. Thank you. Thank you.