Animal Spirits Podcast - The 3 Levels of Wealth (EP.302)

Episode Date: April 5, 2023

On today's show we discuss why investors are always looking to catch a falling knife, a reversal in the markets since last year, why European stocks are outperforming, how money market funds became the biggest market story of the year, de-dollarization, some vacation thoughts from spring break 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. ​​Thanks to Birddogs for sponsoring this episode! Enter promo code "SPIRITS" and get a free Yeti style tumbler with every order: https://www.birddogs.com/collections/pants?utm_source=podcast&utm_medium=influencer&utm_campaign=animalspirits(Wealthcast Media, an affiliate of Ritholtz Wealth Management, received compensation from the sponsor of this advertisement. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information.) Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by bird dogs. Michael, I'm on vacation right now. Not to brag. And not to brag. I've been wearing bird dogs the entire time. I've been wearing bird dogs for years. Here's the best part of them. One, they have a liner.

Beautiful. No underwear, no boxers. The bird dogs themselves act as the shorts with the liner. They act as your own underwear. Two, this is probably their best invention they have, and I don't know why other people haven't copied them. They have the side pocket for your wallet. I hate sitting on a wallet

but I want to have my wallet with me and the other thing is it's a zipper so if I'm on the go I'm jumping in and out of the water I don't carry cash I'm a credit card guy I can have my wallet right there it doesn't matter

never lose your wallet it's on the side you take your wallet in the water that's a stretch it's happened before I'm just saying if it happens on accident I jump in one of the kids

pushes me in the pool it's okay it's safe it's zipped in there it's not an open pocket number three have you tried the pants before of course I've got the joggers Are they joggers? They're joggers.

Yes. I'm a new convert to the joggers. I've always worn the shorts. I wear the shorts all summer, all vacation, but I'm a new convert to the joggers. I wore them to one of my daughter's basketball games a couple weeks ago. Someone said, where did you get those pants from? I said, oh, these are bird dogs. Also have the liner.

They're wonderful. I'm a huge fan of bird dogs. We're going to have a link in the show notes. If you would like to try bird dogs, go to our show notes at Animal Spirits at a wealth of common sense, a relevant investor, click on the link, get some bird dog joggers, get some shorts. You're yourself, I don't know, two or three pair, you're set for the whole summer. Look at you fashion guy, all jazzed up. Ben, I have a question for you, being the bird dog affixionado that you are.

I've got, I think, two pairs of shorts. Need to get some more for the summer. It's right around the corner, as you know. Actually, it's the first warmish spring day in New York, finally. We're thawing out here. Is there options for different seams you converted to me? I'm like a just slightly above the knee guy, but I don't want to show too much thigh. But there are people that want to show thigh.

So there are options for... Yes. Yeah, they have the 10-inch long ones or the 7-inch shorter ones. I prefer the shorter ones. You show a thigh. I don't mind to show a little thigh. You were a running back in college, so I get it. I don't skip leg day. So you do wear your clothes a little bagger. You could do the longer ones. They're nine or 10 inches. So yes. Well, yeah, I've got the dad about it. So go to the link at our show notes or go to birddogs.com. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, 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 Ritthold's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Ritthold's wealth management may maintain positions in the securities discussed in this podcast. Ben, that was a long little air read. I'm not surprised. You're jazzed up about this fashion guy.

I'm in vacation, though, with Michael. I've got nothing else to talk about. All right, a little housekeeping before we get the show started. We are hiring a tax associate here at Ridholt's Wealth Management. We're a little sensitive to the geography, preferably in the Northeast. We'd love Philadelphia. We'd also take Chicago, which I know is not in the Northeast. We're just trying to cast a net.

Wide, but focused. Wide and focused. We're discriminated against the West Coast. Is that what you're saying? Pretty much. Email us hiring at Riddholt. it holds wealth if you sound like this is a job for you. Get to work with a great couple of guys there in both of the bills.

Actually, we've got a bill and bill. So if your name's Bill, please don't bother. We're going to cap it at two bills. All right, Ben, what are we talking about this week? From Bespoke, five stocks in the S&P are set to close Q1 with 50% plus gains. So, Nvidia, Facebook, Tesla, AMD. I pulled up on Y charts. They have the comp tables.

So I pulled up the SP 500, and I did year-to-date gains. These are the top 10 stocks. I'm just going to name the tech stocks. Invidia, Facebook, Tesla. It's kind of funny Warner Bros. is in there. Advanced micro devices, Salesforce, and then it's also funny that General Electric is in there. So six out of the 10, I think, are tech stocks. And I thought about this in the way.

So last year, for the last 18 months coming into this year, maybe going into fourth quarter of 2022, too. The resounding theme from everyone who wanted to sound smart in the markets was, don't try to catch a falling knife. But guess what? This is why you try to catch a falling knife, because some of these stocks will see massive gains coming off the bottom. Obviously, we're not talking about the stocks that didn't have the huge bounces. To be fair, a lot of these stocks are probably still in pretty massive drawdowns, but this is the reason that you try to catch a falling knife. If you're going to catch a falling knife, make sure it's the right knife. Right, make sure it bounces? I could give you 50 other knives that didn't bounce. This is why people try to play

that game, though. It makes sense because you know they're going to get a huge bounce at some point. Also, buy low, sell high, ever heard of it? I'm guilty of trying to catch way too many a falling knife in my day, but there are easier ways to make money. Let's just put it that way. I think if you want to play hero ball, this is the kind of thing where you try to call the bottom in Facebook and you basically did? Not basically. I literally was at the bottom. Okay, so you caught a falling knife. And if Facebook would have just rolled over and it's up like 10% off the lows, you'd never be telling anyone. But because you bought it near the lows and you caught a falling knife, that's a great story. I'll also say Facebook is literally the only time I've ever done that.

And if I still kept my journal, believe me, for every Facebook, there's probably 67 others that did not bounce. I just understand why people are so tempted to do this because they see these kind of returns and they go, next time this stock crashes. I'm going to get in. And, of course, we're looking at these from an opportune time. We're not looking at them from the spot many people did buy. You bought at the bottom, so you say. And I haven't seen receipts yet. But I'll get this analogy real quick.

So I've never been a big fisher. I don't do fishing. I don't do golf. I don't do hunting. I just, I understand why people do those. You're an endorsement. No, I like being outside, but I don't have enough patience for those kind of endeavors. My kids love to go fishing.

And so we're at our place here on the water, and there's fishing poles at the house we rent. You just say our place? Did you just buy a house to mark around without telling us? Oh, no, no, the place we've rented, the Airbnb, it feels like ours. And so we've been fishing a lot lately, and I caught a fish. Is it like a dock? There's a little dock. And so we're put in and caught a fish this morning. Now, when I'm telling that story, it wasn't a 10-inch fish. It was 19 inches. It's a good size fish. That's like you buying the bottom on Facebook. Yeah. I really don't get the analogy. I'm saying a lot of people would like, when they're telling, these stock stories, they like to say that they bought at the exact bottom. I'm not saying you

didn't. I'm saying something. I believe you. You set it on air when you did it. I'm just saying that's kind of stories you get with these. When you see a stock that's bounced a lot, you don't say, like, I bought it and then it fell 40 percent and then it rocketed up 80 percent. You say, I bought it around the bottom. I also think that most people equate a stock that is down 70 percent with being good value. Yes. Those are not the same thing. Yeah, true. or like a low-price stock. Like, this stock is $3 a share. It has to be a market.

My modus operandi, which is a phrase that I don't think I've ever used on the show, is that the market is generally right most of the time. And if it's not right, I don't know when it's wrong. That being said, when stocks like Facebook are down 70% and Netflix is down 75%, I swing. You don't get an opportunity like that that often. It's not like I bought them when they were down 20%. Which is basically what I tried to do.

do. I bought stocks in around 30%, and then they crashed even more. That's kind of what happens. Well, I think that I have the benefit of, listen, you're a CD guy. Your first trade was a CD. My first trade was a triple levered inverse financial ETF. So I've been burned way more times than you. I see 30%. Talk to me when you're down 70. The greatest thing about the CD story is it's got you off of Target date funds and now you're on to CDs. So we've pushed Target date funds aside and now we're into CDs. You know what's kind of nuts? The story of the year in 2023 so far, the investing story of the year is money market funds. Yeah, that is kind of bizarre. I guess that kind of shows how boring markets have been this year, but yeah, you're right.

What do we got here? No, I'm just saying it's just the theme of 2022 is all about inflation. The theme of 2023, so far, it's money markets. It's crazy. How about this for a theme? We just talked about tech. Remember in Europe and tech were the biggest basket cases, and these were the following knives? So I pulled this up from Q4 because that's when these things really started taking off since the

start of the fourth quarter. So that would be end of September 2022, the EFA, which is just the developed country. international stocks is up almost 30%. The Q's are up 21%. And the S&P is up 16%. You're using the wrong index. What do you mean? Not the wrong index.

But if you really want to hammer home the point of how crazy this is, look at FEZ, which is the Eurostocks 50. The Eurostocks 50 and I thought Europe was uninvestable. That's what I was told. And listen, in fairness, it's been a horrible decade. FEZ is destroying the S&P. But that's the thing. It was like we were debating whether the U.S. would go into recession.

It was a foregone conclusion Europe would go into a recession. Because you're right. People were saying it's uninvestable. Why would you put your money in there when they're going to recession? They don't have the tech sector. The whole continent is screwed. Guess what? You want me to blow your brain out? Do it. FeeZ. The Eurostocks 50 and U.S. dollar terms is outperforming the S&P 500 over the last three years. Wow. I wouldn't have guessed that. Over the last three years. Including the massive, wow. Okay. How about that? That's pretty good. Over the last year, the S&P 500 is down seven and a half percent. The Eurostocks 50 is up 13%. Somebody explained to me how the Eurostocks 50 in dollar terms is outperforming the SEP 500, our great index, our beloved index, by 20%. I feel like nobody's talking about this.

No, it's true. 20%. What is the dollar in that time? Do you have the dollar? UUP, I think is the ticker. The dollar's got to be down. There's a big round trip. So a dollar's up 6%, although it's well off its highs.

Dollars and 10% drawdown. So that's been in tailwind for sure. But even in local terms, I think the tax is at an all-time high. Yeah, I think it's even better in local terms, But the thing is, I thought they were going to be eating their feet. That sounds like a Monty Python kind of thing. The dollar has basically been on a bull market since, I don't know, 2014, 2015. If the dollar goes into a period where it's lagging other currencies, this is not the

beginning of it if the dollar is going to be weak for a while, not that I'm a currency expert. If that happened, you'd expect that international stocks have continued outperform. There's a weird thing going on in the S&P 500 where Q1, 2023, was the exact opposite of 2022, more or less, mirror images. There's a great chart. And what I mean by that is the first quarter in terms of the stock market was all about large tech, mega-cap tech, in fact. Last year was high quality, did really well.

Low-quality or growth, yeah. The boring stuff did well last year. Settimate trader, who I feel like I haven't mentioned that name in a while, not sure. Why has a great chart showing the percentage of S&P 500 members that are outperforming the index over a rolling 21-day period, which is, I guess, a month in terms of trading days. You're a trading day guy. I'm a trading day guy.

It is ludicrously low, only 25% of members, which is basically about as low as it's been. Not basically. It got that low in 2000, in 1980. I mean, this is very rare. So I'm not saying that this is unsustainable or the market's being propped up. Well, I guess I am saying that. But I don't know what it means for forward returns. I just know that most of the index constituents, like if you look at the equal weight versus the mega cap, the mega cap are dominating.

I put this as another feather on the cap of diversification. Last year, a bunch of other stuff helped the index. And this year, it's this other stuff helping. Obviously last year wasn't a great year, but last year could have been way, way worse because all those big mega cap tech stocks were getting crushed. And now. The last year when all those stocks were down so much, Amazon, Microsoft didn't get killed that bad. But it was like the United Health's of the world that were saving the day. So this is like a rotation play, kind of. By the way, I have to say that shirt pops hard. Wow. Right? I'm working on the tan still. So this is a Tropical Brothers shirt, and I talked about my vacation attire is Tropical Brothers and Bird Dogs.

So I go party up top, party it down the bottom. And before I left, though, I got a sample of the Animal Spirits Tropical Brothers collaboration. You're a little salty because you didn't get one for some reason. I'm not salty. I'm not salty. I would have been salty, but I got one, and we've been working on this for a little bit, and they put the design together.

They used our logo, and they put Animal Spirits on the side, and I was happier with it than I could have imagined. I called you on a Saturday. I phacetimeed you to show you, and I absolutely love it, and I think we worked out the details, and we're getting to the point where we're going to be able to sell this thing pretty soon. Animal Spirits, Tropical Brothers shirt. It's awesome. I love the design, the colors.

Did you bring it with you? I'm not going to wear it until I wear it on the show. I didn't want to get a little wrinkle and stuff. I got a full closet full of these things. So I have to say, someone was asking us last, last week. It's coming out soon. We've been talking for 17 minutes, and we're only on page four of 35 of the dock. We've got to get going. We're just musing. Moosey. That's not a word. You said money markets are the biggest story. Eric Belcher, I think you updated this chart of money

markets like six times in the dock. So money markets have grown by $460 billion this year, six times what all ETFs combined have brought in. As a guy who likes to frequent in the flow data, you, that's a pretty good one. There's some other flow data here, but here's my question. This is a tease. I thought about this one. Is this cash on the sidelines for a future market rally or is this cash that's just sidelined that's not coming back. Come on. Come on. That we're talking. Get it? Cash that's on the sidelines or cash sideline. If money market rates go from four and a half back to two, does that money come rushing back into the stock market at some point? No. You think it's kind of there. You might be right. That sort of money just doesn't,

there's no velocity in that money. You know what I'm saying? That is slow. money. The speed at which had happened, because those rates have been high for a while. Why did it take so long for people to realize? Did it really take a bank run for people to realize, oh, that's right. I can get some yield on my cash. Why did it take so long for people to realize this? Look at this chart from Lizanne Saunders. I don't know, Ben. Just sort of just move on. I don't know the answer to that. I don't either. Lizanne Sanders tweeted lots of focus on the fact that money market mutual funds assets have searched to new high, but as a percentage of S&P 500 market cap, the share is still below COVID bare market level. That's a really interesting chart.

So she's got one line that shows the money market funds. Another line showing money market funds is a percentage of S&P 500 market cap. And it's still below the 2020 highs, which I guess is saying that people aren't panicked selling their stocks and going into money market funds. This is cash. These are deposits leaving the banks to go into money market funds. Very different story. True. So maybe you write about the thing about this being sideline cash as opposed to cash on the sidelines because it's not like that bank money was waiting to come into the stock market either. Exactly. Sticking with flows, which you're right. We haven't visited flows in a while. Again, from Eric Baltunis, equity ETFs took in a measly $27 billion in Q1, their lowest cash haul since COVID.

So how about that then? Because guess what did well in Q1? Stocks. True. Thoughts? Well, we talked about the fact that like it's flows over pros, but sometimes it's So it's not even the flow that really that lifted the stock market, right? So what was it? I think it's people being off sides.

I keep talking about positioning, but I really think it's people just being off sides. Short carbon rally. Yesterday, we got the ISM manufacturing number, which was not good. It was minus 2020. Like, if you take COVID crash out,

it's the lowest it's been since 2009. This is a data point that people look at and pay attention to. And yet, the stock market continued its rally. The stock market has been continuing its rally. And so the market is cheering on bad news, anticipating a Fed pause, which is bad news for the real economy, but potentially bullish for stocks. This is what causes or one of the primary

drivers of wealth inequality because we know who owns the stock market. And so when you see the market rally on bad economic data, it just reinforces the division and the bad feelings that people already have. Another example of this, McDonald's is doing something with closing offices and they're going to make a layoff announcement. Guess what the stock did yesterday? Rocketed to an all-time high. Have you been inside McDonald's lately? No. Like actually in, not just a drive-thru? I think a year ago or so, they've digitized, right? You get it on the screen. But the one I went to, like, they did away with all the pop machines. You can't, like, fill up yourself anymore. There was no ketchup. There was no napkins. You have to, like,

get it from the front. I feel like fast food these days is now it's a drive-through business or a door-dash business. They don't want you to come in to sit at the restaurant anymore, which I guess makes sense because that's more overhead cost for them. We spoke about the dollar early. Liz Saunders was another good chart as U.S. dollar has moved lower from its peak. The performance for companies with higher percentage of domestic sales has lagged those with higher percentage of international sales, which we know to be true. When the dollar is weaker, international sales do better. And so stocks that are more exposed to international markets, I guess Apple would certainly be one of those. Maybe that's one of the reasons why some of these mega cap tech stocks

have done better. Oh, that's true because they have more overseas. I think tech is the highest percentage overseas sales. So the dollar was a huge headwind on companies last year, and maybe we'll get a boost to EPS this year as that trade reverses. Be nice. So Lizanne Saunders just dominating the dock this week. Yeah, she stepped it up this week, took over. Corporate profit margins deteriorated to 13.9% down from a peak of 17% to still elevated relative to history. I'm sorry, they did not cause inflation, but corporations definitely took advantage. 17% they got to in the midst of the highest inflation we've had in 40 years and corporate profits hit a record high.

I'm sorry, they took advantage of this by raising prices to see how much pain people were willing to take. Well, guess what? Pain no more. I'm putting an end to my pain because I hate to say this, but Starbucks has been causing me pain, Ben.

I'm so glad you mentioned it. Let's see, just a straight up medium coffee. Just a medium hot. You know how much this is? How much is this? That's $3.20. I'm not a coffee drink, so what should it be? How about that?

That's actually not even terrible. That's really not terrible. What should it be? What should a coffee cost? Fifty cents? Forget about that. Now my gears are grinding. So my wife, she likes iced coffee.

I'm a hot coffee guy. Her coffee, just a regular ice coffee, $4.30. If you just both stopped drinking coffee, you could retire in like five years. I know that meme is silly, but I think I'm done with Starbucks. How about this? When I'm home, I'm going to bags. If I'm out, I'll get a Starbucks, but it's ridiculous.

$4.30. sense for a regular iced coffee? Do you not make your own coffee at home ever? I do here and there. I buy bags, but I think I'm done with Starbucks. They took advantage. Maybe other people are too. This is from the BLS. American saved 4.6% of actor tax income in February up from 4.4% in January. I think it got as low as three something. Savings rate is going back up. Remember, that was a thing that everyone's depleting their savings. Now we're looking for a little bottoming process here. That's good, right? Good news. People are saving again? Interesting. That's kind of surprising. So we got a few questions asking us about de-dollarization.

We are definitely not macro experts by any stretch of the imagination. Wait, wait, wait. De-dollarization as in like the dollar is not going to be the global reserve currency anymore, that, or what? This guy. What? This guy. What's de-dollarization? It's been in the news.

People are talking about it. Explain it to me. The dollar is going to lose its reserve currency status. That's what I just said. That's what people are talking about. So Bob Elliott, you should follow him. His handles at Bob E. Unlimited. he does great macro but credit to him because most of the macro or a lot of the macro is scary

the world is a scary place and so it's hard to be bullish if you do macro there are very few macro people who are ever bullish or sound bullish i'm not putting bearish or bullish thoughts in his mouth all i'm saying is that he's not gloom and doom and it's a breath of fresh air he does great work all right so he tweeted for all the speculation on the rmb which is the rem nimbi did i pronounce it right let's go with that 75% of the way there. Replacing the USDA as a destination for savings

sure doesn't look like the reality. Foreigners have been aggressively selling R&B bonds since the start of 2022 and recent reserve data indicates R&B was the only

FX actively sold in 2022. So he's got a chart of foreign holders of Chinese bonds and so he has a whole threat and he concludes with the next time you hear the talk

that the R&B is going to be the next replacement for the dollar think about this past year. This was an important stress test for the dollar relative to the R&B, the R&B failed. In terms of the long list of things to potentially worry about in life and investing, this, please do not let this be one of them. There are so many advantages that the U.S. has over other places. The biggest thing is there's no other substitute that you'd look at and you go, that makes sense that that would

take over the dollar. I mean, think about all of the big technological revolutions. China has basically stole all of our technology from us. Think about all the great technology has happened, the social media networks that they had to kind of steal. The AI invention is happening here. Everything is happening in the United States. I just don't see a good competitor that's going to come in and replace the dollar anytime soon. Honestly, even if it happened... Have you heard of something called Bitcoin? Everything is going to be tokenized. Nevada Casino's won $1.2 billion in February, a new record for the month. Las Vegas strip properties won 712 million of that, 19% more than last February. People want to go out and vacation so much and experience stuff

They're just giving money away to Vegas, I guess. I view that differently. You're paying for entertainment. Yeah, oh, trust me, I get it. Okay. So on what's the Guy Raz podcast, how I built this, a number of years ago, I still remember this, Stuart Butterfield, who is the founder of Slack. And I guess he also founded Flickr before that.

Is he still working with Salesforce, or did he kind of go away as Salesforce bought Slack? I don't know. I haven't seen his name in the news lately. So Guy Raz on that, I haven't listened to that show in a while, but he always asks people basically like, do you think you were lucky to get this place or was it hard work? and then he always asked him, like, what's it like to make a life-changing amount of money? Because this guy made a ton. I don't know if he's a billionaire, but he made a ton of money on Slack.

He said, you know, after a certain point, wealth can only give you so much. And he said, I look at it as three levels of wealth. So he said, level one, I'm not stressed out about debt. Level two, I don't care about what stuff costs in restaurants. And level three, I don't care what a vacation costs. This is very good. It's great. But my thinking, you and I have talked about the vacation stuff a lot lately, how packed Disney is and how packed

planes are, and I'm on spring break right now, and it's the same thing, is everyone just rich now then, since everyone can go on a vacation? Credit card points. Did you use points? You must have for the trip, for the flights. Oh yeah. I got a new credit card and I'm, yes. I mean, here's the thing. Everything feels more expensive. Flights are more expensive. Car rentals are more expensive. Hotels, Airbnb are more expensive. Restaurants are more expensive. Drinks are more expensive. But the thing is being on vacation, you get it. You get why people would want to do this. Going out and getting out and doing stuff is amazing. But I think the tradeoff is if you want to go have those experiences and pay a lot on vacation. Unless you're like insanely rich, then you can't

have the $1,000 car payment, and you can't have like the wonderful house that has a 7% mortgage on it, and you can't go to fine dining. I think that's the rub for a lot of people. If you're going into debt to go on those vacations and you're not saving elsewhere, that's the problem. There have to be trade off somewhere unless you're just a really wealthy person. We always talk about spend shaming. And like, if part of your rich life is going on vacations and having experiences, I think you should do that. But then you can't have everything else if you're not able to, save and put money aside and you can't complain, everything is so expensive if all you're doing is spending money on expensive stuff. Like, you can't have everything, I think. That's the point, right?

You have to be selectively cheap about certain things if you want to spend money in some other area that's expensive. Well, I was battling, well, not battling. I was thinking about this in my car payments, which we'll get to later on in the show. But you're absolutely right. You can't have it all. That's kind of the point. I understand why so many people are going on vacate. Like, it's going on vacation is amazing, but it's also really expensive. If you don't have the rest of your financial life in order, it can turn into a stressful thing down the line. One other vacation thing. So we go to get ice cream with the kids, of course, on vacation. That's the thing people do along lines. Why is there not a place that serves ice cream and then frozen drinks for

the parents? Ice cream is okay. I think I've mentioned this before. You know what my ice cream order is, right? If I go out and get an ice cream? No. I'm a diversified investor. What do you think it is? Swirl. Yeah, swirl. I like the twist. 50-50, right down the middle. I'm a diversified investor. But how am I not able to get a Miami Vice while the kids are eating ice cream? There should be an ice cream parlor that has a bar in it as well. Kids get ice cream, parents get drinks. What can possibly go wrong? Let's do it. All right. That's all I got. Twice in two days this week, Ben, on the weekend, people ask me if I was a cop. They seen if you're a narc? Why? Why? I've been called a gym teacher more than once.

One time I was with you, remember at the comedy store? Another comedy store. Yes, if you were a high school gym teacher, that's right. One time was at the Audi dealership, and the other time I was getting blood drawn, which I hate, hate, hate, hate. I'm not a big fan of needles either. I don't even care the needle. I don't know why. I was sweaty and nervous.

I don't like it. Oh, I don't get that bad, but going into finance and working with numbers and spreadsheets and stuff is fine with me, but I could never work in a hospital. I would not be able to do it. Robbins watching there's a show on Netflix, like New York City Emergency, and she is completely immune. She likes Dr. Pimpopper and all like gross shit. I can't watch any of it. I'm like, so it says, I'm like, turn this off now. I cannot listen to it or see it. I'm going to hurl. Yeah, but you watch the gory stuff on horror movies. That's different. See, I can't

watch like gory stuff in movies either. Okay, what's the Michael Burry thing? He retracted his cell statement, sell everything. So Michael Burry, everyone knows who he is, tweets all the time, and he always deletes them. And there's never a feed. Sometimes he just tweets sell, just one word sell. And then on March 30th, he said I was wrong to say sell. I don't know. I don't really know what to do with this. Doesn't it kind of feel like the people who became heroes in 2008 and had movies made about them and books written about them? Aren't they kind of like child actors in a way? Good take. People in finance shouldn't be that famous or that well known. Was it Damon Raffleck on Bill Simmons a couple weeks ago said, you stop maturing as a person or growing as a person when you

become famous? I'm not saying like Michael Burry is like that, but I do feel like, was probably not the greatest thing for a lot of people who became famous from that. And that's why I'm never going to call a bubble in my life because it's just not worth it. All right, do you want to this off landing back on or what is this? All right, core PCE and inflation. This is from Fed Woj. 4.6% of the previous 12 months, 4.9% over 3 months and 4.5% over the previous 6 months annualized. I don't know. It's coming down. I feel like if we get into range, I know they say they want 2% exactly or whatever. The narrative right now, which has changed 14 times this year, is, is, yes, inflation is still trending in the right direction, but now there's going to be a recession.

Okay. So Allison Schrager and her latest substack said, okay, what if we have a mild recession and it's pretty mild and it doesn't bring inflation where the Fed wants it? And I guess I never thought about it that way, but it kind of makes sense. If the economy is this strong and the labor market is this strong and it's not really bending to the Fed's will, what if it happens and we do get like a very minor, minor recession? And inflation just goes to 3%. The Fed says, ah, that's not enough, or 4% or whatever it is. And the Fed cuts rates because they're worried about the recession, then inflation takes off again. Not out of the realm of possibilities. I hadn't thought about that, but you're right. Could happen. By the way, you've mentioned Fed

Woj. We got an email. You guys keep talking about Fed Woj. We're talking about Nick Tim O're from the Wall Street Journal. He's the Fed Whisperer. Yes. All right, layoffs. Oh, again, Bob Elliott's showing up. Okay. He's tweeted layoff announcements are running pretty stable in the 50K range for the last six months, except for the big number in January. Also highlights some of the oddity of looking at these. Ascensure said they would downsize over the next 18 months is included in here even though it's not immediate. So it looks like layoffs are barely steady. A lot of tech stocks, right? Yeah, it looks like all tech. All right. McDonald's, we already spoke about, oh, this is early. This is just speculation. But Ben, what if? What if? Carl Kittania tweeted for the Bank of America

Tech Desk. They pulled a quote, a Jeff Bezos quote from 2016. And then they said, quote, I believe he can come back to Amazon in a prominent role for one reason to ensure, sure, not just AI participation, but AI leadership. It feels like an important fork in the road is upon us. Maybe they can, because does it surprise you with, like, how well the AI rollout has gone for ChatGPT that Siri and Alexa are just kind of awful sometimes still? Well, a lot of things aren't great. By the way, credit to me, it's early.

For what? What do you mean for what? Jeff Bezos coming back to Amazon. Or credit to us. Credit to you for stealing my take. It was a mutual take That'd be great Okay, so I know

I think we might have spoken about this So I've tried multiple services To like track spending Excel I know you use Excel It doesn't make any sense to me But a lot of the categories Are either uncategorized

Or categorized incorrectly I've been using this thing called Rocket Dollar And I think I spoke about it They send you like emails If you have a large transaction If something gets refunded I don't even pay for it I use the free service

25% of all your spending goes to Instagram T-shirts. But they categorize my daycare as, I think, Traveler or something. Here's what AI is going to do. I know this is a minor problem to solve. Oh, you're saying AI is going to be a good budgeting tool. AI is going to completely make sure that all of your spending is categorized so that you don't have to go in there and fix it. There are some tools where you have to, like, train the model on all of your line

item things and then it could like learn it. AI is going to completely fix it. It's going to, like, instantly give you all your spending. You know, the easiest way to track your spending? Just put it all in one credit card. Is that what you do? I basically spend everything on my credit card. There's occasionally, I mean, a check for something, like the mortgage payment or something,

but everything else is just, it's on a credit card. And for me, that's the easiest way to track stuff. I have multiple credit cards. I feel like a lot of people do. True. Wall Street bonus is fault by the most since 2008. The average bonus was $176,000 last year, down 26% from 2021. I don't think $176,000.

for bonuses, a lot of money. Just kidding. Just kidding. Not in New York City. Not New York City. I'm only teasing. Oh, but I did say that I don't think 4,000 square feet as a mansion. Here's more context of what I was talking about there, because I think this is very important. And I don't know what the doc said, Ben, you could pull it up. Okay, it says, this was on our, from the compound, we had over 3,000 votes. Is 4,000 square feet a mansion? I said no. 54% said no. 46% said, yes. What was the square feet that we said? 4,000. I think when we Google it,

didn't say 5,000 is considered a mansion. And that's what it said. So there are, in my town, I know there are homes that are more than 4,000 square feet. I don't know how many there are. Probably, I don't know, 20. I mean, there's not a ton of them. But the thing is, in my town, the houses are right on top of each other. So I'm looking out my window.

My neighbor's house is literally 13 feet away. Another factor to consider in whether or not something is a mansion is property. Now, that's true. So if you have it half an acre. Yeah. So like even if it House in my town is 4,000 or 5,000 square feet. Now, the 5,000 square feet is huge. But nevertheless, there's no property.

So I think that's a big factor. True. The other thing is, like, do you count mudrooms as part of your square footage or not? Actually, we get an email today from somebody thanking me for the nudge on the mudroom. I gave them permission, mental permission, or something like that. There you go. They got cut back somewhere else then. Moving out to real estate, or stick with real estate, I should say.

The restoration hardware, CEO, which is always a color for a conference call, He said, quote, I've never seen a luxury home market down 45% to quarter ever, not even in 2008 and 2009. So I think we're near the bottom. But could it get a little worse? I think it could. Seems like that guy is like a macro guy a little bit. He always has macro takes. I mean, he's sort of at the epicenter of it.

Imagine if. Maybe we were shopped at restoration hardware before? Uh-uh. Expensive. I guess he did say it's luxury. Okay. He said, I think we're near the bottom. It's kind of nuts that the housing market went through this period of time.

The high end got obliterated. sales basically stalled, and yet the economy didn't fall apart. I know there's obviously challenges in certain areas, but housing got destroyed. The housing market, if you add it all together, construction and furniture, all the insular stuff that goes with is 20% of GDP. It's a huge part of the economy. It is kind of crazy because it has just ground to a halt in a lot of ways. There's a great chart from Bank of America, weekly home improvement retail spending growth year for year, according to Bank of America, credit card, and debit card data. Crashing is the wrong word, but certainly heading down a lot. It's down 10% year for year. And then there's

another chart showing just weekly housing-related services spending. This is even worse. I'm guessing so much it was pulled forward. And also, the home equity line of credits, it's now 7% to borrow from a home equity line of credit. I'm guessing a lot of that has fallen by the wayside. I'm kind of surprised. Home Depot and lows are like, they're hanging in there. I mean, the stocks don't look great, but they're not like getting demolished. I still think that the renovation thing has legs for people, like, longer term, I don't know what it means short term, but longer term, people staying in their homes and being like, let's add another better on the back of the house. If you have acreage. Now, if you live in Michael's neighborhood,

maybe don't have acreage. No acreage. You have from a room. So the plots here are 60 by 100. So I don't know what that means, but. Yeah, that's right. In the Midwest, we have more room, but they're building houses now anywhere they can find open land. There's not many, like, lots left. The lots are bigger in Michigan, but they're putting homes anywhere they can. I feel Like, people want to build these days. All right. This is interesting. I don't know where George Papadopoulos got this chart from, but it's the median down payment

for U.S. homebuyers. The median home buyer, according to this chart, is only putting down 10%, which I guess made sense in 2021 when rates were low and prices were high. But now that rates are so high, I guess the problem is prices haven't budged. People can't afford it. That's the problem. But I'm saying, like, if you're borrowing 90% of the money, that's got to kill you on the monthly payment.

Yeah, but otherwise, you have to save for a lot longer to get that down payment. I think my first home, I did a 5% down payment. I get it. It's hard to, especially if it's your first home. All right, we talked about money markets before. This is a survey from bank rate. 22% of those with a savings account earning 3% or more, what, 24% are earning less than 1%, 16% are earning nothing.

I guess this is the money that's going into money market funds. Basically, 40% earning less than 1% still, to this day. I guess that's a lot of those SVB people who are, earning nothing. This isn't like checking accounts. This is savings accounts. It's kind of shocking. Do you think a lot of people just don't pay attention to this stuff in inertia and I thought rates were still zero? Like, what is the cause of this? I don't know. I think it's just lack of financial literacy. I guess. It's surprising, though. I think you might be right, unfortunately, that people just, they assume like, I get what I get and there's no other choice. Hard to believe.

So you put this credit card thing in here. Credit card interest rates are the highest in history. What are we at? 19%. That's tough. If you are putting a vacation, on a credit card and not paying it off. That's tough. Look at that. I'll hide that one. How much money do banks make from credit card interest? I assume it's a non-trivial number. How much of it does also get written off, though, for people who don't pay? Because it's unsecured debt. I don't know. Good question. All right. You saw this Ivy League parents thing from Bloomberg. I saw the headline. What story here? College consultants charging as much as 750 grand to build applications starting in seventh

grade. They interviewed this mom who talked about it and said her son applied to 22 schools and already has a spot at Yale. She said, we are fortunate that price is no object. Prestige carries a lot of weight and we want him to attend the best colleges. So they've been working at this place and they said they charge as much as 750 grand to work with students starting in seventh grade and as much as 500 starting in ninth grade. The guy who runs his company estimates clients spend over a million dollars to prepare their kids to get into Ivy League school. And then they show the acceptance rates for Harvard and Columbia and UPenn and Yale. And they're all like three or four percent. Dartmouth has the highest at six. I'm sorry, but reading this,

this is like a wealth inequality thing, but also I think, I know they added some sort of tax above a billion dollars. These parents are insane. I'm sorry. Listen, they are. Yes. I know that I don't have a child who's college aged and I'm sure that I will do whatever I can within reason to help my child be prepared to be in the best possible position to succeed. That's not what this is. This is insane. It's ludicrous, right? You're buying your way in. And it's also, if you knew your parents were doing this, maybe the kids do. I'd say, give me the 750 grand. I'll start my own business or travel the world or something and go to state school. This is such a small number of people. We're talking about. It's not even worth talking about.

So the fact that these schools let in 3% of applicants, isn't at time we just start saying we're going to tax your endowment more or tax the whole thing if you don't start letting more people in? I think the tax is like over a billion dollars, and it's like a small amount for the tax. why do these places get tax exempt status if they're like this? If it's just a place for really rich people to go, I don't understand why they still deserve the tax exempt status. I think it's ridiculous that they have these endowments that have tax breaks still. Yeah. But talk your book this week, we talked commercial real estate with the USQ fund and we discussed that there was a meme, Winnie the Poom meme. And I said, apartments for the regular Winnie the Pooh, multi-family housing for

Winnie the Pooh and you said, no, no, no, that's not multi-family housing. A lot of people in commercial real estate said, O'Contrere, actually, apartments are part of multifamily housing. I stay corrected. We didn't know, but I know, multifamily housing. All right, I also got a lot of emails on StubHub, just sucking so much. There's a site called Tickpick, where I'm looking at, like, so for the Knicks, for example. Careful on the Google for that one. Why?

Tick pick. Just careful, if you misspelled, anyway. Oh, bad. What I like is, you could buy a ticket, and when you're buying it. something, it gives you, it says all in or something. Yeah, it gives you the price all in. That's all I want. You don't have the 17 extra fees after the fact. Don't charge me a $25 servicing fee. Just show me what the price is. You're like, oh, there's a good price. Actually, no, it's not because it costs you 30% more than what you're seeing. So I hope

tick pick disrupts stuff. I'm sick of them. All right, this is, we'll move quickly on this because we're running a little bit long. But this is interesting. Something that I never thought about. There was an article in the Washington Journal, but the TLDR is there's way too many parking lots, and it's causing massive inefficiencies and driving up the price of rent. So here are some data points I pulled out. There is an estimated 700 million to two billion spaces in the U.S. and not so wide range of estimates. That equates to between two and a half to seven spots for every registered vehicle. In Los Angeles, for example, parking covers about 14% of the land area. There's one data point where it says a garage adds about 17%

to the average rent, almost three quarters of carless renters have a parking spot included in their rent, and they collectively paid $440 million a year for parking that they don't need. So somebody who studies this stuff said eliminating park requirements can have this huge impact on the quality of life and sustainability of a community. It is among the most significant changes that a local government can make. So to that end, Buffalo eliminated minimum parking requirements, and the city's population grew for the first time since the 1950 census. And if you look at there's some great charts in here showing the average number of parking spaces per new U.S. residential unit and the average number of parking spaces per thousand square feet of a new U.S. office construction. And they're way, way down.

Pretty cool. Do you think that's because of parking spots or Josh Allen fans? This is one of the things that the appeal of driverless cars could be someday is that you have your car drop you off somewhere and a car can drive off site somewhere that park itself or whatever. Isn't that the dream? Yes. Or is that dream gone completely? Remember like 10 years ago? We were like three years. away from driverless cars, people were saying, it feels like we've made no progress there. Not true. Kind of? Not true. You don't think so? So I'll get to this in a second.

Just put a pin in this. So we got some auto numbers this week. As dealerships get more stock, automakers sales rebound in the first quarter. Car buyers are finally starting to see something they haven't been a long time on dealership, lots, more availability of cars and trucks, which is great for all of us, but it's terrible for me. So when my wife's transmission blew out, they gave her a... an A5, which is like the sedan, and if you start to drift from one lane to the next, it pulls you back in. Pretty cool. I've seen that, but I think my wife's Hyundai has that. But I wanted us

to be further along at this point. That's all I'm saying. This made me laugh. We got a lot of emails about people being pro-Taha. We got a few pro-Kia tele rides. Got a bunch of people saying that that's great value. So somebody sends us a long email about being pro-taho, and then said, if you're using a car to commute, you should punt the Jeep and go by it. They use Tesla 3. Cut gas bottle zero and you can get them for 30K or so Just don't talk about owning a Tesla Because other people will want to kill you I own one and try to never talk about it

I hate those people That made me laugh Okay, that's pretty good So here's an update on my situation If you want, if you miss this I spoke about my leasing situation With car dealership guy On Saturday which was an awesome episode

So it turns out Ben So my thought was that I was going to go from my wife's Q7 Down to a Q5 Save money there Use some of that savings to up from a Jeep to a Tahoe, none of that is happening. Why? I'm underwater on the Audi by $12,000. What does that mean? So when I bought it, it was no good options. Thanks, Jerome Powell, or COVID, I guess, too. When I bought it, I could either increase my rent at the time by like $500 a month or just buy the car for what I thought was a fair price. So I bought the car and now I owe 40. The car's worth 28. So in order to get out of the Q7, I went to a dealership. like someone in 2007 with a house. Yeah, literally. So in order to get out of the Q7 and go into

the Q5, I would have to put down $6,000 and pay another $100 to $150 a month in rent. So why would I do that? Why would I pay $6,000 plus another $2,000 a year or so to get a smaller car only so that I can pay $700 more in my Jeep? Because the Tahoe, even with my positive equity in the Jeep. I have like positive equity in the Jeep. That would get rid of the down payment for the Tahoe, but it would still be like $11.50 a month. You bottom ticked Facebook and top tick the car market. I top to the car market. So I think the deal is that I'm kind of stuck. Now, I do want a towel, but not that bad. It's like a legitimately like $7 or $8,000 more a year really for no reason. And if I have the Q7, then I don't need a Tahoe. So anyway, I'm stuck is the bottom line.

I have no flexibility. Good thing you got that warranty to fix transmission. All right. You want to wrap this up? Yeah. Go ahead. What do you got? I don't have a lot of recommendations because I'm on vacation here, but I tried to watch a movie on the way down. A man called Otto with Tom Hanks. I don't know, man. Has Tom Hanks had a good movie since Castaway? Oh, stop it. He has to. He's a decent movies. He isn't at a great movie. This movie was about a guy who lost his wife and he's kind of a curmudgeon. And it was okay. I honestly couldn't. I watched half of it on the plane. And I'm like, I'll watch it on the way home. And I'm like, I don't think I will. I love, love, love Tom Hanks.

Wow, you're right. These are his last movies. And stop me when I get to a good one. A man called Otto, Pinocchio, Elvis, Finch, News of the World, Greyhouse, a beautiful day in the neighborhood. Oh, that was supposed to be good. Yeah. Toy Story 4, The Poist, The Circle, Inferno, Sully, a hologram for the King, Ithaca, Bridge

of Spies. That's 2015. That was decent. His last good movie is 2013, Captain Phillips. You're right. It's been a decade. I love Tom Hanks, but, his last 40 movies are terrible. Yeah, that's all I got for recommendations.

So some news dropped actually yesterday. Here's what's coming on. Warner Brothers, I think, is working on a Harry Potter show. Okay, my daughter is reading those books right now. She loves them. Amazing. Heat 2. Did you see that?

They're working on Heat 2, I think? I'm usually anti-remaking, but I'm reading the book Heat 2, actually. So it's like a prequel and a sequel together. Oh, like the Godfather Part 2? Michael Mann wrote the book. I think that's what it's about is like the prequel sequel kind of thing. And they're making a live action, Moana. That makes sense.

Which your kids must be stoked for. I think that might be the best Disney soundtrack of the last 10 or 15 years. All right, I got an email. This is from the guy who recommended Brawl and Cell Block 99 and Bone Tom Hawk, so you know he's reputable. I watched an affinity pool after you mentioned it on the pod the other day. I thought it was fantastic. Nightmarish and dreadful and deserving of a rewatch so I could follow it a little better. See, this guy gets it.

Did you see his other film, Possessor? Thought it was great, too. Did I? Loved Possessor. I have one for you You can't watch it with your wife Around or even let her know you're watching it Because she'll wonder what the hell is wrong with you

Believe me that's what it always is A friend recommended a long time ago For the first 45 minutes I kept telling myself why the hell are you watching this But if you keep watching I promise it pays off Martyrs check it out I did check out martyrs I didn't like it

How do they still have enough names left for horror movies How have they not gone through all the names yet But Martyrs was definitely demented I don't know it's old And then he said speak no evil Was also really good but tough to watch if you have kids Yes Speak No Evil was the most

most horrendous I felt after watching a movie Sean Fantasy was pounding on the table on that. It was, oof, it hurt to watch. Absolutely hard to watch. All right, last one, not a recommendation. So I guess I have no recommendations for the week. I watched Jurassic World Dominion with Kobe.

That's the last one, right? Yeah. And you remember my scalding take of how terrible that movie was? Yeah, it was not good. Robin was, like, walking in and out. She goes, what's happening? I feel like there's like a million different storylines.

I said, right? This is the worst movie ever. It was worse the second time. Just horrendous. The Jurassic Park sequels, they had never nailed a sequel. Just the two original ones, the original first one, and then the reboot was good, but other than that. I did like Jurassic World, and I even liked Fallen Kingdom,

but the third one was terrible. All right, Ben, you're a hero. You potted even on vacation. It's lunchtime here. I'm going to have Miami Vice. There you go. Wish me well. Enjoy.

Bye. Bye. Thank you.