Animal Spirits Podcast - Permanent Stimulus (EP.208)

Episode Date: June 9, 2021

On this week's show we discuss why crypto is sucking the air out of the room for investor attention, the future of bear markets, the insane cost of building a new home, meme stocks, the impact of stimulus checks, how to spend your money wisely and 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. A listener emailed this past weekend, said, not sure if you guys have covered this in the podcast, but Vanguard's international developed EFA ETF has finally reached a new high for the first time since freaking 2008 financial crash. Happened a week ago, pretty cool. So I punched this into Y charts, VEA is the ticker. It's the Vanguard Footsie developed markets ETF.

And sure enough, this thing topped out in summer of 2007, which is not too far from when it actually first became a problem. product on a price basis. It just recently took that out. And this is probably a psychological thing, but we always really glom on to these highs and lows. And I like the white charts feature where you can add in the high and the low, whether it's the price or the return or whatever it is. So you can see now it's, I think if technical analyst Michael would say this is a breakout situation, potentially from old highs. But I also did the returns on this. So for my charts. You're putting words in my mouth. Oh.

I'm not a fan of like multi-year potential resistance. In other words, the idea of supply and demand means that, like, there will be supply because people that have held are now getting back to even. Okay. You didn't need to get so serious about it. No, I'm just saying. I'm just saying. I think all the buyers from 2007 are pretty washed out at this point.

Okay. Go on. Anyway, sorry, my technical analysis is a little shoddy here. On a price basis, though, since like early 2007, when this came a product, the VEA, the price is up 6% in total. Since 2007, obviously the crash in 2008. it didn't help. With dividends, it's up like 60%. In that time, the S&P's up 260%. What if you priced this in the Fed's balance sheet? I don't know if that'd be better or worse.

Translation, though, is that anywhere outside the U.S., on a totally, in a total basis, has done just awfully since the 2008 crisis. Take that for what you will. Anyway, it's always going to kind of play around with these charts and Y charts. So go to YCharts.com, tell them animal spirits than you. You two can play with the highs and the lows and make yourself feel either really good or really bad about where you bought something. 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 Rittholds wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. We want to start with a listener question. Why do you guys talk about crypto so much? It's not a criticism. I'm just generally wondering. It's not just you. It's almost everyone in the financial media. They said, I haven't quantified it, but the crypto talk is probably a couple of orders of magnitude more than the amount of time you spent talking about, say, Microsoft. And I bet that your audience has a reverse

proportion of their savings in Microsoft via spy versus crypto. Of course. I think you could make a case that this is the, through Friday's close, the S&P 500 is up 13% in change on the year. Pretty good gain less than halfway through the year. How hum. Is this the quietest double digit gain ever for the S&P, at least in the information age? No one cares because we've had crypto to talk about gross stocks got crushed. The meme stock stuff is going on. I mean, look at all this other stuff. Can I just say, there's no bias, like, recency bias. Whenever we say, like, is this the most ever?

Yes. Oh, yeah. Well, yeah, true. But the recency bias thing is... This is a very quiet, 13% gain. I put some other ones in here. Small cat value is up 26% this year. No one cares. Emerging markets are doing... Okay, 13%.

Even the NASDAQ, which some of these stocks have gotten crushed, is up 7% this year. It's still pretty good gain. That's like 100. All this stuff is doing fine. That's so boring compared to Michael Saylor taking out $400 million worth of debt to buy more Bitcoin. I mean, obviously, it's new and exciting. That's the reason people talk about crypto, because good investing should most of the

time be boring, and there's not much to say about boring old investments most of the time. But don't you think that's the point? It's exciting to learn about something new? Yeah, totally. That's part of it. That's what this is. That's like 95% of this. And then, well, I shouldn't say that. A big part of this is like just watching the price is crazy. So if you just looked at price, you could have a heck of a good time, but it's fun to learn. And this is new and exciting and we're learning. If you're not interested in crypto, maybe it does seem like enough already. I get it. One of the most interesting fast. of the market for me, in the short term, is always the human element of it. And crypto is human

nature on steroids. So that's part of the reason it's so interesting. The psychology behind it is fascinating to me. And the psychological component of the regular markets can be just as crazy. But crypto, it's even more so, I think, because it's so young. That's part of it. Okay, this is from Bloomberg. The Fed exits credit markets that it changed forever. Now, it was pretty small in terms of dollars. Remember, this was probably the thing that the Fed got criticized the most for by pretty normal parts of the market that people pay attention to. Obviously, people thought the Fed is manipulating things and those people are always going to complain. But for us who, I guess, are Fed apologists, people call us. You certainly are. The thing that made the least

one of sense to us Fed apologists here is the fact that they were buying corporate bonds and ETFs. It made no sense. And it looks like they only put in less than $14 billion. That's the portfolio they have now. So it's such a small amount of money. And it didn't really matter. So they're exiting this. So I guess you could say this is their first tapering from the crisis. I think this is not a big deal from a money perspective. Obviously, it's more psychological than ever. But I think this just opens the door for next time this happens, they're going to buy more. So I think this, every time that there's a crisis, the Fed is going to do a little bit more the next time because they almost have to. So next time, regardless of the size of the crisis, the Fed will be buying more

bonds and ETS. Agreed. I agree. That was the bottom, by the way. That was on March 23rd. The day that they made that announcement, that was the market bottom. So they said, we're going to be buying corporate bonds and that was the bottom? Yes. The psychological impact of that was massive, even if it was only, was it even $20 billion that they bought? It wasn't a big dollar amount. Okay. And so on our last spaces on Wednesday, which we're still contemplating whether we can record that somehow or try to figure it out. You're okay. You're doing a lot of fidgeting. Sorry, I'm a fidgety person. I move a lot. You look like you have literal ants in your pads.

Sorry. I was just trying to get comfy here. Wait, you're about to drop like a massive point, aren't you? No, no, not really. I'm just saying we hashed it on our spaces, which not as many listeners listen to because it's all live. Just we were trying to figure out, is it possible that bear markets will be quicker in the future?

We have more of these Vs that straight line down and straight line up because of stuff like this. And I think one of the cases to be made for that is the fact that the Fed is an ever-growing part of the market. And they almost have to do what they did every time going forward now and more. I don't think that they can take their tentacles out of the market now. I think that that relationship is too far gone. So Matthew Bolzer from Bloomberg did this post on the implications of permanent stimulus. And this is like a big part of your thesis of Ben's thesis for why their markets will be quicker going forward. So Cullen. Which by the way, before we get into this, go ahead. I can't predict

the future. So I don't know that this is going to happen. I like to think within a range of... Stand by your take. No, no. I'm... Stand by your take. This is my take. I said I'm 51% sure this is happening. But you have to invest in a range of outcomes without knowing the future. And I think it would be foolish to not view this as a potential outcome in the future. If you're totally dismissing. I'm sorry. I'm sorry. You have to go past 51%. If you're 51% confident, why say anything. Just keep your yapshut shot. Fifty one. No, 51% is going to win you a lot of money at the casino over time. If you have that much of an edge over the house. All right. So,

here's what Colin said. He said, let's say the government responds with big fiscal stimulus to the next time the economy and markets get a whiff of a recession. Well, the markets will roar back to life in anticipation. They'll become more overvalue than they'll become more overvalue than they'll argue that the stability will breed in future instability and the markets will become more volatile. And when they do, the government will respond to it with another stimulus and then become unstable. Rinse, watch, repeat. Unstill, the stimulus causes enough inflation in the real economy that markets realize that this is all destabilizing in a real sense. The cure becomes the disease. So, I think that you could be right and he could be right and I can be right, that what you're saying will work in the short term, but it's not going to work forever. I think it's like a psychological impact where you'll have to go three steps ahead next time instead of two steps because I think the psychology of it will be, okay, the next time this happens, people will probably be a little quicker to jump in because they fool me once, shame on you. What did Bush say, fool me? No, don't fool me again. Can't get fooled again. But there's a big difference between the Keynesian School of Thought where when there's a downturn, then you turn the spigot on versus and, and, and,

MMT, and Cullen wrote about this, which is just basically permanent, let's just keep going. Like, if we could eliminate recessions, if we could make people whole, why ever stop? Those are two very different things. I still don't think we can eliminate recessions at all. I don't think anyone is smart enough to get ahead of that stuff. And I do agree with the stability breeds instability. That's why I think, let's say my 51% happens. Then we have these air pockets and we have flash crashes more than ever.

And then I think we have more 20 to 30% crashes that happen in an instant in a blink of an eye, as opposed to the 40 to 60% crashes we had in the past. We just have more of those smaller ones. You know the Kobe Giff where he's like calling Dwight Howard soft? He's just shaking his head and saying soft. That's my take at your 51% take. Okay, sorry. This is how the take machine works. Sorry, I'm not going to ever go out in a limb and try to predict the future. I can't. But that's my take. So we were talking on spaces about what if it's conceivable that AMC, which is roughly like call it a 500 to $500 to $2 to billion stock in its history. That's like where it fluctuated. That was its range. There was a world where in 2018, 2019, AMC gets taken private for whatever reason and then comes

along the pandemic and they file for Chapter 11. That could have happened. But they're a public company. They survived largely in part to liquidity from Reddit, WSB, now hedge funds. And now it's a $30 billion company. I don't even know. I think it's up another 20% today. It's just, it's extraordinary. So somebody said, hey, could Reddit have saved Lehman? By the way, that's, I think, the biggest difference between now in the dot-com bubble is this fact that this stuff kind of, so someone, this was going around on social media last week, and it's this Forbes cover from 1998, and it says a bunch of kids are tormenting Wall Street, high-tech renegades score big bucks by making their own NASDAQ markets. And it's like, see, we've seen this before.

Yeah, see this, we've seen, but I still don't think even in 2008, we saw anything close So there wasn't the coordination and the just gamification. And I think this is still something completely new. And I don't think professional investors have quite wrapped their head around this. And people say, well, there was message boards back then, but they. Not like this. No. And not everyone was on them. Speaking of movies that we've seen before, this past week, I watched the mummy. Love that movie as a child. The original. Yeah. Loved it. Loved it. I just watched it before. Not great. Oh, did it age well? I mean, it's okay. It takes a lot longer to get to the good stuff than I remembered.

Okay. That was like peak Brendan Frazier. He was pretty good in that, I thought. Well, I remembered him being fantastic. He wasn't really great. A lot of cheese. Anyhow. Okay. So we've seen movies like this before, but I think that this is a lot different. Yes. Just the coordinated effort. Counterpoint to my counterpoint. But you can make the case that it's the same sort of thing. It's euphoria. It's kids saying, no, you don't understand this is different. Like, I'm certainly sympathetic to that part. I just think it's bigger than it ever was in the social media component is now just this new added element on top of it where the market has steroids. now. Let me ask you this. If when there's a washout, a real washout, does this go dormant? See, that's what I think is different. Because we had the washout of meme mania. That was in January, and there was a washout. AMC fell 75%. And I don't remember people dancing on their graves,

but you would have thought that that was the end. All right, we washed it out. The economy's reopening. They got it out of their systems, but they're back. Yes. And it didn't take very long. I don't think this is going to get worse somehow. But the crazy part about it is this isn't dog coin where it's just a funny meme and it's not impacting the real world. Matt Levine wrote about this. In the first quarter of 2021, AMC sold 187 million shares at an average price of $3.19. On Tuesday, this is from last week, sold $8.5 million more shares at $27 each. Yesterday, it sold almost $12 million more shares at $50 each. The market is insatiable. What's their cash on hand? I think they've got like $2 or $3 billion with the cash. Yeah, they're taking advantage of this.

And credit to their CEO and their executive committee for like, They didn't ask for this. They're just taking advantage. I don't know why GameStop didn't take more advantage, too, or it doesn't still at this point. But it's having a real world impact on this company. But let's say movie theaters are still more or less dead. What does this do, buy them some time? Actually, I was talking on Friday and I said, I'm going to see The Conjuring.

Very glad I didn't. You told me that it was on HBO Max. I'm a conjuring guy. The reviews were not good. It was not good. You told me it was on HBO Max. So for that, I was perfectly happy to watch that bad movie at home, and it wasn't very good. So thank you.

The third one? The third one. Has there ever been a good third version of something besides, I don't know, naked gun? I was listening to it on the Ringer they were talking about this. Indiana Jones in the last crusade. Oh, yeah, that's a good one. Star Wars. I know you're not a Star Wars person, but there's been a few.

It's tough. It's tough. All right. Here's another one. Someone posted this on Twitter. I don't know where it came from. But Bedbath and Beyond the Bank of America analyst on there basically just said, I'm taking my rating off because this is one of those that got caught up.

And I don't know, how much were they up in the last thing? Like that's, how is Bedbeth and Beyond a meme stock? What world are we living in? Okay, it's up another 10% today, year-to-date basis. It's up 100%. It's actually had a I love how you say 100% and you shrug your shoulders. Like it's nothing. But it was up 200% earlier in the year. And I guess maybe it was one of those stocks that had a lot of short interest and they're just targeting all of those, which is another thing against the 99 comparisons that I told you back then people were optimistic about the future. And that always happens

when there's this innovation. People are not optimistic about the future of these companies at all. They're optimistic about the present of them. Correct. That's a great point. Nobody's trying to justify AMC's valuation. This guy said basically because of there's no fundamentals, we're not trading it. Investors should no longer rely upon our previous investment opinion or price objective, which credit to them for saying this because it's true.

What intelligent thing can you say about how it's being priced? Oh, based on 2047 earnings, Bedbeth and Beyond looks pretty reasonable here. Yeah. It's bizarre. Okay. Robin Hood, going after Coinbase. How about this? Here's a take. I'm 68% sure about. I said a few shows ago, Robin Hood is going to be bigger than Coinbase at some point. I'm pretty certain about that. They're going after them on crypto. So they put out this, they've got some ads. I see them clogging up my Twitter stream every once in a while. They've put out this blog post, why Robin Hood crypto is commissioned free. And they're making this point where they're showing how Coinbase and Gemini and Venmo, if you buy crypto with them after fees, you're going to walk away a little bit less versus Robin Hood. They're going after them. I think.

they're going to make a big, big push into this crypto stuff still. I think it's coming. And I think that's going to be potentially a thing that moves Robin Hood even higher when they go public, which sounds like could happen this summer. Coinbase is not trading very well. No. Okay, on a technical basis. Wait. Just on a real basis, man, you could look at a chart and say, this is going up or it's going down, all right? It's going down. I want to be a technical analyst for one day just so I can say, man, this chart looks like crap. Just look at the chart. When I say a chart looks good or bad, I'm not saying it's going to continue forever. It looks good now, or it looks bad now. That can change tomorrow. Are you 51% sure about that? I'm 100% sure this chart does not look good. Yeah, I didn't cover my paper

short there yet. Sorry. The Wall Street Journal had a piece on Defi. And before we get into this piece, I wanted to talk to something that you said. You and Josh started this new podcast called The Compound in Friends, which has got a very cool logo. It's a subway logo. I mean, it's a little East Coast elitist because we don't have subways here in Michigan. Okay. It is what it is. But you had Pachy McCormick, who, if you've listened to this show for more than five minutes, you know, Michael can't go five minutes until mentioning him.

Very good for a show. And you basically said, how do you ever wrap your head around this DFI stuff and how do people have the time and energy to learn? And he said, listen, you just have to like do it and be part of it. And my thing about that is like there are people learning here. But I would say probably most people don't bother learning because learning is way harder than selling and promoting. What do you mean by selling? People who are promoting this stuff. Oh. If you're promoting, you don't have to learn. You just promote and say buy because it's going

up. So I think there's probably more selling and promoting going on than actual learning. There are like the engineers and people that understand this or try to understand it. But I think that's the reason it's so hard to understand for people outside of it because the sellers and promoters just try to make you feel bad if you don't understand it or don't buy it. And the people who are actually doing the work are probably the more geeky engineers who don't have the communication skills to then tell you how to actually understand it. I don't know what this thing is called, what the term for this is. But like, Nick McGulley tweeted the other day, is there anybody that retired early that you don't know about? And the

point is like, well, you only hear from the people that you hear from. Obviously, there's plenty of people that do retire early that don't have a fire blog. I think maybe it's kind of the same thing with the crypto spaces. There's tens of thousands of people that are making a living here, that are learning, that are working every day. And they're not on Twitter promoting because they're actually doing the work. I do think there is a hole in the crypto space where they don't have someone who will tell it to you straight without sounding like a person up preaching to the pulpit. I think there's a lot of that. Yeah, but I've been looking for that person and I just think it's difficult to explain in plain English what's going on. I don't think it's for a lack of trying.

Like even Packy's post on the internet, I had to like read it twice. I listened to it. I read it because it's really hard to dumb this thing down. It's just complicated. Probably. Joe Wisenthal at Bloomberg had a really long piece on Crypto Day, like 4,000 words. And I thought he does a pretty good job of, he compared Ethereum to Chucky Cheese tokens. That resonated with me. We'll put a link to that. Anyway, so this one kind of surprised me. So this is from the Wall Street Journal. While margin debt represents only 2% of the $49 trillion U.S. stock market, total locked value for Defi comprise about 6% of the $1.6 trillion cryptocurrency market. I actually thought that number sounded low to me. Me too. That's surprise is not higher. So they're saying 6% of it is being

used for leverage purposes and used to stake this stuff. That seems like less risk there than I would have thought. I thought it would have been way higher. I was shocked. I was very surprised by that as well. His whole point was that like all this assets that are being posted as collateral on these DeFi platforms, which is used to basically make things happen. He's saying the amount locked has grown to $100 billion, which a year ago was a billion. His whole point I think was saying that a lot of this is inherently leverage in the system that could also lead to volatility in the face, which makes sense. But again, I thought those numbers were lower than I would have thought. So it seems like the narrative around Ethereum versus Bitcoin is slowly going in the direction

of to favor Ethereum. This is a good stat. Defi accounted for about 40% of the ether moved down to the Ethereum network in the 12 months through April, up from 7% in the prior 12 months. By the way, Wisenthal called people who believe in Ethereum, Ethereum. I like it. Almost reminded me of a group of people in Avatar or something. It's like a race of people that at war with the blue. I don't know. All right. Micro Strategy is no longer public company. It's a crypto fund. So this is from the block. Nasak listed micro strategy announced Monday. It plans to raise $400 million via senior secured notes, a type of debt offering and use the net proceeds to buy more Bitcoin. Did we find out the details of their? I don't know. I would love to see who's

actually buying this debt because and what the board thinks. Obviously, the board is letting Michael Saylor do whatever he wants. No details on who the underwriter is or anything like that? I don't know. Does it matter? I'm just curious. I didn't read the prospectus. But they're inextricably linked to Bitcoin now. And they're probably an even more leveraged way to play Bitcoin. I don't know why you would buy shares in this company instead of just buying Bitcoin. What is the point of buying this? I don't know why you would want to own this public company at this point when you could just buy Bitcoin. I really don't know. The notes will mature in seven years and can't be bought back to

for three. Jeffrey's Financial Group is a sole bookrunner on the deal. So the person who asked not to be identified as the details are private. So the world will never know. But I was saying to you earlier, you buy debt securities because you know you're going to get a lower rate of return, but if all hell breaks loose and the company goes under, you have seniority versus equity holders. So I guess in that case, Bitcoin crashes, micro strategy goes bankrupt. You own these debt securities, you're getting Bitcoin at a much lower price? That's your end game, I guess. I don't know. I'm sure that the market did a decent enough job pricing this risk. I'd be very curious to find out what it is, but we can't. All right. From Bloomberg, they interviewed Bank

of America CEO and said, basically, our customers have a ton of money in their checking account. Here's a quote from Brian Moynihan. They have not spent about 65% to 75% of the last couple rounds of stimulus. Still pretty big number. He said spending that consumers at the bank exceeded one trillion dollars so far this year, which is up 20% over 2019, so already ahead of where we were pre-pendemic. And he said that the thing that could get people to spend and take some money out is that loans are finally starting to pick up because they were so constrained. So there's still cash on the sidelines, it sounds like. Don't you think that debt is really the next leg higher for the economy here? Not that that's always a good thing. What do you mean? Like what type of debt?

if people start tapping their home or a different type of debt? It sounds like people were able to shore up their debt throughout the pandemic. So if people start getting a little looser with that, credit card debt, refinancing, taking equity out of their homes, that sort of stuff. The fact that that stuff has all come in and people have repaired those balance sheets. Did you see this chart, median profit on home sales in the U.S. by quarter? No. It looks quite strong.

So what if inflation is coming from inside the house? Explain that to me. To your point, what if people tap their home, and go on just a spending spree. Self-reinforcing cycle? I'll borrow money out of my house to buy a bud. I'll borrow money to do whatever. Well, technically for a lot of people, if that 4% inflation rate over the last year, whatever,

throughout the base effects and stuff, we already talked about transitory nature. If inflation is 4%, you're borrowing at a negative real rate right now for majority of people who hold a mortgage. Not a bad deal. All right. Bloomberg had this really good piece on the cost of building a home, and they profile like this Boise, Idaho building a home. who went through and showed the price of their materials between 2019, 2020, and now.

And they showed, like, copper has gone up, cement has gone up. Lumber, of course, I've been paying attention to. By the way, lumber is down another 5% today. Lumber is crashing, which is good news. Yeah, but they showed the cost for an average home of theirs. In 2019, the average cost of lumber was 30 grand. By 2020, it was 32 grand. In 2021, it's 104 grand.

Good Lord. What is it showing? and the cost of lumber per like an average house. These are these higher-end homes in Boise, but up 3x from a year ago. Obviously, this is another thing that could be transitory, but does the cost of new housing implicitly mean the prices of existing homes should go up more?

Because the replacement cost is now higher, or does that not factor into decisions for a lot of people? If you're weighing buying an existing house versus building now, How much in equilibrium are those two things? I don't know. I'm just thinking out loud here. I guess it also depends on the geography. We've had this talk before how, like, I think used prices were more expensive than new prices, but that's because a lot of the new prices are in areas of the country that have cheaper housing, so not really apples to apples. But you would think within a certain geography that certainly buyers would compare used versus

new. Yeah. This one kind of surprised me from the Wall Street Journal. The inventory of existing homes on the market priced between $100,000 and $250,000 slid more than 30% in April from a year ago, while the supply of houses for sale above 500,000 rows. Well, maybe because people on the lower end of the market can't afford to move. This is another reason why, like, a starter home purchaser is just screwed right now. I think part of it is just, I think it's actually more people at that price point want to move or want to buy, whereas you have a much smaller market above half a million dollars to buy.

I think those prices, like we had a friend who is in a neighborhood where houses are like 600,000 and above. and they said every time a house went for sale, the price inched up a little bit. And they're looking at these housing prices and going, wait a minute, that house is way older than ours. Why is it selling for more? And then finally someone listed one for like $750, which is way above anything else. And the other ones were going away in a weekend. This house has been sitting in the market for four or five weeks. So it's like at the higher end, when you don't have as many people there to offer, eventually you hit your ceiling a little bit. I think maybe that's what happened there.

But I wonder if there's a limit to how far prices can come in. So let's say that every buyer just agreed with each other, hey, that's it. Let's all cooperate, take buyers off the market. We're not going to buy until prices come down. If everybody would make that agreement, which they're not, but people will step in if prices fall 5%, 7%. I think the floor on how much prices need to fall before people come back in is super high. Yeah, definitely. I agree. I don't think it's like 15% lower. I think like if prices even slow down, if they plateau, maybe buyers will fill But, like, if it comes down a little, I think they'll see a Russia buyer's going to die. If you get your Zillow alert and it says this house has dropped by 15 grand, a ton of people

rush it. It's not like the stock market where buyers are going to be like, well, let's see if we can get a better deal. I don't think it's like the stock market. I guess we'll find out. But I don't see prices crashing. No, I don't either. This is in the shortage stuff.

So this was in the Detroit Free Press. They talked about how there's the semiconductor shortage in cars. And so GM, it said, has been storing like tens of thousands of. of incompletely built pickups SUVs and vans in Michigan, Indiana, Illinois, Missouri, Texas, and Mexico all over the place. So these cars are ready to go besides their chips. They're just waiting for this chip shortage. And they said they're getting there and they're starting to send out dealers. I wonder when we're going to get to that point of the bottleneck where some of these bottlenecks are removed, whatever makes that happen eventually. I don't know how long it's going to

take where a lot of these companies are now preparing for that eventuality. And we have just this flood of supply and how much demand is still waiting there to meet it. And are we going to have like the boat goes from one side to the other. Well, I guess it depends on the industry. Did you listen to odd lots this morning? Not yet. They had Ali Wolf. I think she's the chief economist for Zanda, Zonda, and she was talking about how scarred home builders were. So there are a big reason why the supply is what it is. So like, for instance, they're not going to go overboard. I don't think. I don't think all of a sudden there could be an explosion of new homes. I just don't think that's going to happen. Yeah, that's the one where the shortage is going to remain probably for a

long, long time. So I'm sure there are industries that are going to go the other way and oversupply the market. I just don't really know what they are at the top of my head. That's probably more home goods and furniture and that sort of stuff that people have been waiting for. I agree. Maybe the Bowflex dumbbells will finally be in stock after 18 months. I still think you should probably put yours up for sale. I think you could make out a look like. I'll be honest. I feel like, what are you trying to say? You caught me. It's been a few weeks since I used me. I forgot. Someone sent you the workout and you started doing it. I did start doing it. Yeah, we went over this. Remember, I hurt myself in 15 seconds.

Okay, then you stopped using them? I stopped using, I went down. I went down on weight to the appropriate weight, which was five pounds. Okay. No shade being thrown here, as long as you haven't there. All right, so we've been talking a lot about the differences in wealth between generations. And I think this report here is from this new school for social research retirement equity lab, whatever that means, said at least 1.7 million older workers retired early because of the pandemic crisis. So, I don't know, a lot of it has lost their job or, conversely, their return. I still can't believe that 10,000 baby boomers retire every day.

I know we already, like, bunk that, meaning we didn't debunk it. It's a real thing. It's just a lot of people. There's 75 million baby boomers. Do the math. No, we've done the math. You still can't wrap your mind around that. So somebody was in my DMs asking, there's around 32 million millionaires.

I think Nick would really wrote a post on this. Worldwide or in the U.S.? In the U.S. is it that hard to become a millionaire these days? So saying is it now easier than ever? I feel like this requires deep thought and data could probably help us. But my knee-jerk reaction, which I could easily be convinced is wrong, is that it was easier in the past to go to work and build wealth and become a millionaire over a, say, 20-year period.

If you went to work and you were a decent safer and you earned a decent amount of money, granted, I'm specifically looking backwards. Obviously, the win was that you're back with the stock market. market, but if you were a decent earner and a good saver, you could have accumulated a million dollars. I don't know if that's going to be the case going forward, like for this generation, how easy it is going to be. So that's one out of ten, roughly, is a millionaire is what you're telling me. And you're saying it could be lower than that going forward. Yeah. Even inflation adjusted. And by the way, I still think a million dollars is a lot of money. Remember how

there's some people say, oh, and this is what a million dollars was a lot of money? I know it's not what it used to be, but I still think a million dollars is quite a lot of money. I think it's always going to be a threshold until hyperinflation hits and everyone has million dollars in the wheelbarrows pushing them around. Well, because it's a million dollars. Like, that's a big round number. It's never going to be two million dollars, I don't think, even with inflation. Yes, millionaire is always going to be a thing.

I wonder if, like, there will be a point in time where we just skip like $9 million where we go from a million to $10 million. If in 2075 people will finally go, maybe it's time we stop talking about $1 million. That's true. It depends how much money that Fred prints. All right, I sent this the other day. I've kind of retired, semi-retired from the credit card roulette game where I'm always getting a new card for the bonus points.

I just haven't got one in a while. You're retiring early? Kind of. From the credit card game? I'm fired in the credit. It's just been a while. I've done that seven times over the course of my life probably where I've signed up for a bonus. I probably walked away with thousands of dollars from credit cards from this easily.

I use my credit card points to buy my 82-inch TV, which now needs to be replaced. Wait, does it still have the line on it? I'm hodeling. Have you tried to, like, hit the side of the TV really hard? Yeah, I won't give in. Is it getting worse or just the same? Let me ask you this is a question. If I'm going to replace it eventually, what am I waiting for?

That's what I'm saying. You have to just do it. You can't watch a TV with a line on it. At a principle, I can't do it. Yeah, I think you... All right, so anyway, what are you doing with your points? Let's hear it. So the points guy had a story about like the Chase Sapphire preferred card, and it's like

100,000 bonus points, and it says, if you use it the right way, that's like a $2,000 value. You have to spend, I don't know, three or four thousand dollars in the first two or three months to get this bonus. That's kind of how it works. That's a pretty good deal. I think you're going to get a lot of these deals with the travel people competing because... Well, look at all the cash on the sidelines. Well, think about how many rewards are on the sidelines for airline points and hotel points and all that stuff.

I'm just saying, I think you're going to get a lot of these card sign-up bonus deals in the coming months trying to compete for new spenders who are traveling. I think it's going to be a buyer's market for credit card rewards points. That's what I'm saying. All right. I signed my wife up for this preferred card. We're going on some trips this summer. I think it's probably worth it to go through the hassle of some of these bonuses. Anyway, did you see this New York Times piece about the stimulus checks?

I did not. All right. So they did this study. Basically, the Census Bureau of this study said that the last two rounds of AIDS significantly improved Americans' ability to buy food and pay household bills and reduce anxiety and depression. So they found that among households with children, reports of food shortages fell 42% from January to April, a broader gauge of financial instability fell 43 percent. Among all households, frequent anxiety and depression fell by more than 20 percent. Obviously, this is survey data, so who knows, but

they were basically saying that actually like the further round of stimulus checks that a lot of people said probably went too far did a really good thing in reducing poverty and anxiety and food shortages. It's such a privilege to be able to say that the Treasury went too far. But this is such a beautiful quote. We see an immediate decline among multiple lines of hardship concentrated among the most disadvantaged families. So I just don't see, obviously, all this stuff wasn't perfect, but I don't see how you could look at this and say that the government is going to be able to pull this back now and not continue to send checks out to people. And obviously the child tax credit is the first step forward to this, but this is what I say in terms of like this stuff, whether it's

the next recession or not, this stuff is here to stay. I don't see how you can pull this back now. So Twitter spaces, it's really taking shape. I'm into it. Last Friday, Connor, San, and George Perkins, I forget there was a few other speakers, did a immediate reaction to the jobs data, which is great. It's so much easier than scrolling through the timeline, just you have to listen to people, not be assholes, just communicate like regular human beings. It was really nice to be a fly on the wall for that.

And then this morning, it's Apple's, what's their event today? Whatever it is. There's an Apple event today. Tech Crunch is hosting a live chat. I'm bullish on this. Very bullish. I like it, too. As someone who runs our Twitter spaces, the trick is trying to bring a speaker up 15 seconds before you need them. There's still a little lag time. I think I don't know between people's phones or whatever. So you have to bring them on early. That's good intel. Let me ask you this. And this is hyperbole. But has any company ever generated

more value for its users relative to its shareholders than Twitter? It probably should be a public utility at this point. Hang on. I'm looking at up the returns since it went public. Not great. Actually, I don't even think they're positive. Barely positive. That's if you were able to get the IPO price because it shot up the first day. Okay. It's been a hell of a frustrating ride. Earning gap downs all over the place. It's been a terrible for public shareholders. Private shareholders did quite well, but for public shareholders, if you bought on the very first day of the IPO, you're underwater right now still. Like, buy what you know? This is the words buy what you know stock in the entire world.

Yeah. But your point, last week we talked about users supporting a stock. I'm guessing most people who use Twitter wouldn't buy it. No, I kind of hate Twitter. I don't know. I still find it kind of endearing, even though if there are parts of it that annoy me. All right, survey of the week. May survey of 1,000 U.S. adults showed 39% would consider quitting their job if employers weren't flexible about remote work. And among millennials and Gen Z, that figure was 49%. So the story was kind of people are being asked to come. back to the office, and Apple was the big company that is getting some pushback from employees. And employees are saying, I don't want to come back. I like working from home now. Let me keep working from home. The pendulum is swinging to the worker. Yeah, but I mean, let's say you said this. We're coming back to work four days a week and 50% of your employees say, uh-uh, we don't want to. What do you do? Amend your policy. You have to succumb to it,

probably, right? Of course. I think so. You're not finding new workers right now. No one is. All right. Here's another 51% theory. Ready for this? Fifty three, maybe. All right. I'm on the edge of my seat. I think it's possible for the majority of our lifetime, you and I, that we don't have higher interest rates. I don't think that the government can allow it to happen, at least on the short term. So this is from a Barron's piece that they aggregated a bunch of strategist notes. And they say a 3% jump in yields going from whatever, one and a half now to four and a half, would send the debt service ratio from $303 billion to $975 billion.

In that situation, we'd spend more on debt service than defense and would approach the cost of funding Social Security. What if interest rates do rise and we just start spending less money because it becomes too expensive? Then I doubt that. People riot because all the services could cut. But in that scenario, let's say that market yields have to rise. Couldn't the Fed just keep short-term Fed funds rate short and then fund everything

with that. So everything would be short-term debt effectively. That would wipe clear a lot of assets for people, too, where they wouldn't be getting new 10 and 30-year bonds or whatever. But isn't that the solution? If the government really wanted to keep debt service low, I would not be at all surprised of rates to stay low for the rest of our lives. And I think that's more a story of maturing economies than like anything that the Fed can and will do. Right. In demographics. Yeah, I'm just saying, I think that's a pretty good possibility. By the way, how much does the Fed pay you? to be a biologist. That's my point is that I don't think they have a choice now.

They're painted into a corner. And with that shirt, you look like the opposite of Albert Edwards. I was waiting for you to comment on my attire today. Thank you. I wasn't going to it. But Albert Edwards dresses kind of like what you're wearing, except he's on the exact other end of the spectrum. I'm just trying to freshen it up a little bit for the reopening, okay?

You look great. You look great. You look beautiful. I should mention your t-shirt, the new Boil shirt. We have a new merch store for the compound. We have the Animal Spirits shirt there, the compound one, there is a Ben doesn't drink coffee mug with our brand new animal spirits label. We just got a new, what do you call it? Design, logo design. Oh, let me see this. Ben doesn't drink coffee? Yeah, it's a Ben doesn't drink coffee mug. Oh, there it is. And it's, I don't shop.com because you said that you don't shop for anything. You just buy stuff. You don't shop. I don't shop the way I don't usually scroll TV. I don't waste time. I'm very efficient. I know what I want. I can't see you being a guy that goes in window shops at the mall. No, never. I could never see you walking in and out of stores of the mall. That was one of the worst parts of my childhood was getting dragged to the mall.

Horrible, just a horrible experience. Total opposite from you? Like, I kind of like shopping sometimes. And you know what? I definitely did not make my mother's life easy. When I was at the mall, I let it be known that I was annoyed. You were not happy. Okay.

I was not a patient child. All right, listen to this. Speaking of shopping, actually, I did shop for something recently. Our colleague Joey bought a house and in the house. house, or I should say attached to the house. I don't know. Somewhere in the house, it came with a jet ski. It wasn't a park. It was just in the garage, I'm guessing. The guy loved We don't want to move it. Keep the jet ski? Pretty much. Because I've learned that shipping a jet ski or dragging a jet ski, although this came on a trailer, but whatever. I don't know the details

of the seller. So Joey said, hey, do you by any chance to want a jet ski? And I said, actually, yes, I do. Brothers moving to the water. So yeah, I do want a jet ski, actually. Who doesn't want a jet ski? Right. So he said, okay, it's yours. So I have a looked at how much a new jet ski costs or even to use jet ski, but they're expensive. But there is barely a market for used jet skis. It's basically impossible to find one. Oh, you know this. Okay. So what's going on with jet skis? I own a jet ski. It's basically impossible and the old ones are more or less as expensive as a new one. So how much are they? 10 grand, more? I would say 10. Can you finance them? Yeah. Okay. All right. Anywho, so I was trying to ship the

jet ski, went to some, I don't know, I googled how to ship a jet ski. I contacted like three different places. And for whatever reason, I couldn't find somebody that wanted to ship the jet skits. It's like big. It's on a trailer. It's big and bulky. Cost of shipping is probably as much as the jet ski itself. All right. So there's a site called you ship.com where you can describe what you need shipped and you could field offers. And so the offers that I was receiving were higher than I wanted to spend, like in the $3,500 range for like two or three of them. And I said for that price, I don't even know if this jet ski works. It's a 2008 or nine. Like it's, I don't even know if it works.

I don't know how many hours on it. I don't know anything about Jetsky. I'm taking a chance. So fly to Oregon and drive across the country. So finally, I got an offer, $2,000. I said, all right, this sounds good. I'll do it. They don't get the money until they deliver the item.

So Joey is from Oregon, or that's where he lives now. He lives in Oregon. And the people that picked up the car were from Alabama. And they sound like the people, when you close your eyes, I think Alabama, like those shows on whatever the channels are, Discovery channels, the Swamp People. That's what they sounded like. So they call me, so Joey sends me the video of them picking up the trailer.

It was quite funny. They called me like two days later. I'm like, hey, how's it going? The guy's like, not too good. And I'm not even going to try to do an Alabama accent. Did I tell you this? No. The guy goes, not too good.

I'm like, oh, great. So he's like, tells me this whole story. I could understand bits and pieces, but he pulled over at a Walmart to sleep, heard some banging, turned around and the jet ski was going. on. So I'm like, all right, listen, it's a good story. It doesn't cost me anything. I'm not releasing the money.

Now I'm out of a jet ski. I'll go buy a jet ski. Do you think the guy really had a jet ski stolen or did he sell it? That's what I thought. But so he's telling me the story, called the cops. I'm like, whoa, whoa, whoa, where's the jet ski now? He's like, oh, no, I have the jet ski. So I'm like, so why are you even telling me this cockamamie story?

What do you mean you had the jet ski? Turned out that it really was stolen. It really was stolen because Joey, I think, had to go to, court to prove ownership and get the jet ski back. So then there was like other parts of the story that were ridiculous. They got into an accident. They needed new tires. So I'm like, Joey, we're not sending them any more money. It's enough. They scammed us for a few hundred bucks. They got a jet ski. It's enough. I got a call on Sunday. Sorry, they're running late. They're going to be here at 10.30. Are you going to be awake? I'm like, I'm not going to be awake. It's getting flipped to my brother's

house anyway. They called me. They called me at 1.30 in the morning. I woke. I missed a call. I woke. I I saw a few miss calls a text message. So the next morning I drive to the house, and they're there sleeping in front of the house with a car on. I guess they're leaning back in the car because I couldn't even see them. So I'm like, oh, my God, would. Anyway, I had to go take Hobbitist T-ball. Long story short, I actually did get the jet ski. And it actually works.

I can't believe it. Not a bad story. So you ship.com, if you ever need to ship anything, was actually a good service. it sounds like to they protect your goods all right let's do a listener question 32 year old guy married with no kids currently have accumulated a portfolio worth a little over $200,000 mostly index funds no crypto or meme stocks originally I was interested in pursuing fire but I don't know if that really is what I want I have a high steady paying job currently save 40% of my income and don't feel like I'm missing out on anything I live in a country with universal health care and pension

system so I don't really think I need to save that much for the future all right so not an American citizen, obviously. The question is, how do I start to spend more? What kind of things should I consider spending more on? I know that is highly subjective. How to avoid lifestyle creep so I don't blow my entire portfolio on something highly unnecessary. This is something they don't teach in personal finance classes. How to spend money to make yourself happier? I've got something that comes to mind. And I'm kind of was debating whether or not to share this because I don't want like the blowback of the privilege stuff. Yes, things are okay and I'm lucky I can afford this. But it's not too much money. And it is, this is the best money that I've spent in a long time.

My wife works full time. She's home at like, whatever, 4.30. So we do the kids. And it's just a lot. She comes home and we put the kids to bed at like 7.30, 8 o'clock. And so our laundry for like months, it just piles up. She does the laundry, but we don't put the clothes away. And the clothes just pile and pile and pile. And it makes our like room a disaster. So I said, why don't we just pay somebody to put the clothes away. I know that sounds ridiculous, but understandly, my wife, I'm not asking her to put the clothes away at 8.30 at night. Like, as soon as she puts a kid's on, it's the last thing we want to do. So, we found somebody that will come in once a week. I pay them 60 bucks. So it's not like breaking the bank. I pay them, I guess, $250 a month, which I know is a luxury, but they put my clothes away.

And that's an example of something. I can't even tell you, like, how thrilled I am. The first time that this person came and put my clothes away, it was like a hallelujah moment to see my clothes away, not everywhere. So that's an example of, I don't know if that applies to you. You're paying for convenience. But that's my point, is to pay for something, look at my clothes. I don't spend a lot of money in clothes. But to me, this is something that I was thrilled, thrilled to spend money on. I also think it makes sense to have these categories where you spend money on it, if it's not over a certain amount of money, and you always say yes to it, no matter what. And so for me, I used to go to the library all the time. My old job, the office was located

right by the library. I go to the library, and there would be a book I wanted, but it was on back order and a bunch of people already checked it out. Now, if there's a book I want to read, I just buy it because books are $10 or $15. And I never think twice about it. So that's on one of my list that's like, if I want a book, I'm going to buy it no matter what. Even though I have 25 books in my queue right now that I need to read still. So stuff like that where you figure whether that's going out to eat or like not worrying about getting an extra appetizer when you go out to dinner, whatever it is. Have a few things on your list that you want, Like, you always are going to pay for and not think twice about it.

For convenience, like, you don't want to drive to the library anymore because you don't have to. Yes. I have my Kindle, paperweight, and that holds thousands of books, whatever. It doesn't matter. So I think just finds those little things in your life where you can always have a yes and don't have to worry about thinking twice about it. Just one more thing. I know the idea sounds ridiculous of paying somebody to literally put your clothes away.

But you have them do your laundry, right? Yes, they do my laundry. She's here for two hours. She does my laundry. But for people with young children, you understand that's like a nice luxury. Yes. Since I had kids, there's definitely more things I pay for for convenience that I never would have paid for in the past. That's a big part of it. All right. Any wrecks for this weekend? Well, not really. I just want to say thank you for telling me that The Conjuring was on HBO Mac, so I didn't have to go to the movies. But I did watch, now I'm contradicting myself, because I'm saying I'm not a scroll guy, meaning scrolling the TV through the guy, but I guess I lied because I did it twice this week. Typically, I don't shop and I don't scroll twice this week. And I came across two movies, both Ridley Scott movies and both just fantastic. The Gladiator, or not the Gladiator, I haven't seen that in a long time. I feel like I saw it so many times. in the early 2000s.

I haven't seen it in 15 years. Excellent. Just so, so, so good. Timeless movie. Timeless movie. The other one, which I remember seeing, I remember when I turned this movie off and I was like, wow, that was awesome,

was matchstick men, which also, I had no idea that really Scott did that movie. I didn't either. Nicholas Cage and Sam Rockwell play con men. A con artist movie I'm always in. This might be Nicholas Cage's greatest role. Okay, that's going a little too far, but...

It might be. I'm just saying it might be. 51%. Okay. What do you got? I rewatched a rival this weekend, which Amy Adams and Jeremy Renner, it's the alien one. I think that's one of the smarter movies of the last cycle, basically, last decade or so. That's a really intelligent sci-fi movie, how the aliens communicate.

And it's a good one for a rewatch, too, because there's a reveal, the first time you watch it that, watching it the second time. I don't remember the reveal. Was it something about her daughter? Yes. And it's the time, I don't want to give it away, but it's the timeline of the movie. It's different than anything. Maybe I need to rewatch it. You know what's great with the alien movies when you figure out how they're communicating.

communicating. I'm drawing on one reference, which is really when Jeff Goldblum draws the circles to the president, to Bill Pullman, he's doing this thing. I love that scene. They're using our own things against us. Yeah, Independence Day. Let's go to Hacks on HBO, H-A-C-K-S. It's Kate Winslet's mom from Merivistown, plays a comedian. It's like a half-hour show. It's kind of good. A couple weeks that we're talking on, comedies are dead. This is a pretty good comedy show. And she's a comedian who's been doing it for like 40 years. And she's basically Joan Rivers. Yes. She's Joan River. You saw an episode or two? I saw the first episode. Okay. We're three episodes in. It's pretty good. The young Gen Z millennial. Oh, Dave is coming back. She brings in. Yeah,

Dave is coming back when? June, July? June something. Okay. But hacks, I think is a good one. I think any half hour show now, I'm willing to give it a shot out on the streaming platforms, just because it feels like it's so fast. Yeah, I'm much more lenient with quick shows as well. That's a good one. Anything else? All right. What are we doing on Friday? Friday, we are going to talk all things housing market and get kind of a summary of where we are with Logan Motishami, who's a really intelligent commenter on the housing market. Will he dunk on bears? Yes, 100%. He dunks in the housing bears.

All right. Animal Spiritspot at gmail.com. We'll see you then. Thank you.