Animal Spirits Podcast - The Animal Spirits Indicator (EP.270)

Episode Date: August 17, 2022

On this week’s show, we discuss Ben’s trip to Long Island, some good news on inflation, Disney’s sky-high inflation, confusing signals in the economy, and much more.   Find complete shownotes on our blogs...  Ben Carlson’s A Wealth of Common Sense  Michael Batnick’s The Irrelevant Investor  Like us on Facebook  And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by our friends at Y-charts. One of the cool new features Y-charts has added for us in recent. Months is a new dashboard. That means we get open-up Y-charts. I see the stock market performance, asset class performance, credit spreads, real estate, all this good stuff. One of the simplest ones, because I'm a simple guy, major index performance. I looked at it. We're looking at this as of Monday afternoon.

So I got the S&P 500, Dow Jones Industrial Average, and NASAC composite. S&P 500 is now down 9.9% on the year. The Dow is down 6.66%. Ominus. Kind of ominous. The NASDAQ composites down 16.2%. These numbers don't sound great on an absolute basis. On a relative basis to what they were two months ago, they're kind of fantastic. So we're going to talk about this today because the stock market has been doing well lately. Speaking of ominous, I saw a movie this weekend and there was a trailer for an Exorcist, movie. I don't know if it's like in the exorcist family, but just so you know, are you

fan of those movies? You're an exorcism guy? Probably not. I don't do horror. Sorry. Thank you, but thanks for thinking of me. If you want to check out the new dashboard for Y charts, go to Ycharts.com, tell them Animal Spirit sent to you. Michael will send you a free movie recommendation that you are guaranteed to not love, and Y charts will give you 20% off your initial subscription. 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 Rithold's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. There's a few things here, Ben.

First of all, oh, we miss an opportunity to shout out a milestone, a landmark, if you will, for animal spirits. For the regular Wednesday episodes, this one is now our 270th. I don't know. That seems kind of like celebrating your 12th wedding anniversary, like making it more special. 270? Well, I'm saying we, no. Because there's a round number. Are you listening to me?

I said, we missed a milestone. Last week, we missed one. Okay. Yeah. I don't know why you'd say that. There's nothing special about that number either. It's not nice at all. So my Instagram was hacked.

I don't know if like, when I say my Instagram was hacked, I'm not saying that literally my Instagram, but I think I have an impersonator. And I had a few people reach out to me. Is this you know what I think you might be hacked? And the message was, hey, how's your crypto trading going? And I'm here to tell you. I don't know if it's like New Yorkers are broken

and we don't trust anybody in our DMs ever, no matter how sincere the messages. But I'm here to tell you, if anybody ever DMs you, I don't care if it's Warren Buffett or whoever, how is your crypto trading going or how's your trading going in general? It's not real. I'm surprised that that needs to be a PSA, but that's not real, ever.

The free flow of information was supposed to make everyone smarter. I think it's actually easier for people to get taken advantage of now. I talked to you about it. I had a family member who gave out some information they shouldn't have bank account numbers, Social Security. And you hear these stories and it's like, why do people keep falling for this stuff? and it's almost like the internet people think it has to be safe and guess what i just don't trust anything on the internet until i have like full verification from like 12 different sources yeah yeah

i had a fake instagram thing too finally someone i couldn't get it taken down instagram would not take it down finally someone said all right i know people at instagram i'm going to get it taken down for you they made it happen boom there it is helps to be an influencer so we still have our discord channel open and philip who's on there posting quite regularly made kind of an interesting observation He said, look at the last, call it 15 or 20 titles for animal spirits. And the Fed is making a mistake. Elon buys Twitter. End of V-Shiparries.

Wait, hang on. Hang on. Are we a lagging indicator, Ben, or are we leading? I think it depends because there's... I think it's both. Yeah. But also, some of these titles are sarcastic because I think one of them said a recession is coming. Just read them in order.

Just read them in order. So end of V-ship recoveries, obvious signs of the top. So we had, Sean, our analyst, put these, mark them with the market. And if you look... So this is the animal spirit sentiment indicator. We're listening to offers, Bloomberg, Yahoo. If anybody wants to license this, we're open to talk. Go ahead, Ben.

So one of them was good news is bad news. Then the Fed is being punished. And finally, peak pessimism, right as the market bottomed. Nailed it. We had a title called Peak Pesson. Nailed it. We kind of did nail it. And then, of course, as the market goes up last week, soft landing.

I forgot to buy. That's the thing. Ah, well, yeah, that's the hard part. kind of interesting. Here's a take for you. If we get there, I don't think new all-time highs in the near term would be a good thing.

I actually kind of hope it doesn't happen. Because, I mean, I know we've been in this for eight months now in a correction. I feel like if we went right back to all-time highs, I don't think it's a good thing. I think I feel like a V-shaped recovery again, correct? No, this is not a V-shaped recovery, even if we get to new highs.

I'm not saying it would be, but I'm saying, I don't know, sometimes maybe having more pain is a good thing. On the other hand, or the other part of it is... I need more meat from you. I'm sorry. Why would New All Time Highs be bad? Because I think things are still pretty screwed up.

Even if the stock market is looking past stuff, I feel like that just risks another correction. I mean, I guess there's always that risk, but I don't know. Growth is slowing. The Fed is tightening. So New All Time Highs would be met with a lot of WTFness. Yeah, which might be kind of perfect. There's already a lot of confused people out there, like hand up.

Things were not as bad as they... Maybe the market got ahead of itself in terms of... selling stocks off to the extent that they did. Are you saying sometimes investors build their narratives based on price action? No. Never. All right, here's a good one from Connorson. It's fun that we can now say something that's never happened before is going to happen.

Either we get inflation down from elevated levels, a lot of recession. We've talked about that here. That's never happened. If any time inflation has gone above 5%, the only way it's come back down is from a recession. Or a 50% plus retracement of a major bear market sell-off goes on to make new lows. One of these things that's never happened is going to happen. So we've made back more than half of our losses. When that happens, a bear market is typically over.

So which one, what gives here? If you're a betting man. Wait, I know one of these needs to happen, but I don't think either of these happen. But I guess you have to pick one, right? I'm going to say, I hate to say this. I think new lows are more likely than no recession. I do. So the market bounce could as inflation has peaked.

At least that's what the market is saying. We'll get to inflation later. What if now we pivot to growth? worries. So, okay, so we got over inflation. So inflation is coming down. Cool. However, now earnings are going to contract. Now what? My only counterpoint there is if we already priced in a mild recession and everyone's already expecting a mild recession, then it would have to be more than a mild recession to get the market to really sell off more. Does that make sense or not? You never fight a land war in Asia. All right. Here's a good one from Bank of America.

Earnings explained nearly 50% of market returns pre-great financial crisis, but only 23% post-GFC return. This is 97 to 2009 and 2010 to 2021. How are they measuring this? How do they measure this? It's the R squared of S&P 500 forward EPS year over year. It's kind of convoluted. But I guess the point is maybe fundamentals mattered more in the past and they have since a great financial crisis.

I don't like this because there's so many other variables going on. I think the idea would be, well, the Fed is controlling everything. But I just think what if the market is just moving faster with everything these days? We should mention, we are recording this. In Long Island or on Long Island? Which one is it? On. I'm on Long Island.

I can finally say that. Visiting you and the team here at Ridholtz. We're in our firm's namesakes house. Barry's palatial pad in Long Island. I'm tricking a summer shandy. A lining cougal. Yeah, we've got to hurry up to get this done because we're going on the... Are we going to do story time now since I...

Oh, let's do it before we forget. Let's do it. All right. So I came into Long Island. I'm staying with Michael. We had a nice sleep over last night at Michael's house. Made up the guest room for me, which is very well done. You wanted to take me.

What's it called, the Long Island Sound? Is that what it's called? No, the Long Island Sound is on the North Shore. I took you to the Great, I don't know, the Great Outdoors. I take it to the Great Outdoors. That's where we went. Wow. Barry is such a boomer.

He has a landline. Oh, my God. And it says, call from flushing. All right, so keep going. So we went out on the water. So we went in the water? I wasn't sure if this jet ski was really mad. It's a two-seater, though.

It comfortably seats, too. And credit to Ben, I was expected the prom-style arms around the Life Fest, which I was game for, but what did you even hold on to? Ben, like, held on to the, there's nothing to the back. Yeah, the back thing. The back little handles there, which is okay. Hold on. Hold on. Before we left my house, I said, you're wearing a kind of t-shirt. That is a rookie mistake. And let me help you out. Take one of my dry fit shirts because we're going to get wet. Ben and sit, yeah, I'm fine. I'm fine. I'm fine. There's no way we're going to get that wet. Little did I know, Michael took a wrong turn somewhere because it's kind of challenging

back there. It's not like you live here or anything. I wanted to turn around and a wave hit us and totally dumped the jet ski. We both went in. It was a lot of laughs, but we got soaked. We both fell in the water, and the jet ski nearly tipped over. The jet ski was very close to, like, capsizing. In which case, we would have had to, like, wave for help. Somebody would have had to come get us because our phones would have been trash.

But getting back up on the jet ski, my sandals are floating away. I pushed myself up. And they went, ha, my muscle was not built for that. Anyway, do we have a good time? We did a good time. It was not a graceful fall. It happened in slow motion, but yeah, you shouldn't be a good time in the jet ski. We had a Miami Vice at the bar. And today, in related news, today I got a text message from Long Island Power Sports. Call Christina. She's got a message for you. So I did. And my other jet skis has arrived in February. So peak inflation, I guess. It arrived. You have fleet of jet skis now. All right. Anything else, Ben? No. Lovely time in Long Island. I'm on my one, sorry. Back to business. Ned Davis has a daily trading sentiment composite

and it went from, the short's sort of hard to read, but it went from like extremely bearish to extremely optimistic in not so long a period of time. I saw a stat, 92% of stocks are above their 50-day moving average. This is a healthy bounce. Healthy, healthy bounce. The thing is, if you look at any, this indicator, it happens a lot where it goes from very pessimistic to very optimistic. Happens fairly quickly. That's not a new thing. Was that it for the growth to value rotation?

Is it over? So Cliff Asnes posted this, the value spread and the growth spread. It came down, but not much. It's still above the tech bubble levels. But it came in, but now it's going back. But if you look at any of the flow charts, all the money is going back into tech and growth stocks, right? Interest rates have pulled back also.

It's tough to do that it's different this time. It just might be. I don't know. Color me confused. I'm not sure. Well, because the worst of the growth stocks got absolutely annihilated, and you still haven't seen this ratio come back down very much. That's got to be the disconcerting thing if you're a value person.

The worst of the worst got slant. Maybe that's the problem is what kind of growth you're measuring here, the cheap versus expensive, because the other stuff, it did get killed, Apple and Amazon and even Netflix and stuff, but a lot of that has come back. I don't know. How does Elon Musk still have defenders? I've kind of given up on having Elon Musk takes. I've got to say, I think I'm going to retire.

Yeah, fair point. I don't know what else there's to say at this point. But the headline was Musk sells 6.9 billion of Tesla shares, not nice, after saying he was done selling shares. I guess maybe what we learned is don't take this guy at face value from pretty much anything he says. I think he's just kind of a pathological liar. And if there's no consequences for his lying, then what does he care? He's the richest man in the world, so are one of them. Okay, I pulled up the latest JPMorgan guide to the markets.

Hadn't looked at it in a while. I always have some good charts. So look at this here. I talked last week about companies and profit margins and how they have some room. If they're slashing prices, they have plenty of room to go. Look at the S&P 500 profit margins. It came in a little bit from the very, very high highs, but every time we've had a recovery, it's gone to, what's the technical analysis on this one?

Higher highs? No, higher lows. Well, no, I'm saying the profit margins, the one of the left. It keeps going up and up and up. Every time it resets, it resets to a lower level or a higher level. A higher low. It's a higher low, Ben. There we go.

That's what I'm looking for. So I'm saying if companies have to start cutting prices now and then actually eating. So look at this other one. Labor share of income and profit margins. So it's comparing basically how well labor is done versus how well profits have done. And profits have done much, much better than labor. If they have to keep paying people more money and then they have to take a hit on their margins, I don't think that's a bad thing.

Here's a good one from Samro. We talked about worst case scenario stock market rolling over. Here's maybe best case scenario for a soft landing. He had this idea. Wait, before you get to this Samro, can I give you another Samuro? Can I interrupt your Samuro for my Samuro? Bring it. So Samro tweeted this morning, just 53% of S&P 500 companies had sales growth that cleared inflation.

So, to the point of margins coming in, they've already passed on all the costs that they could possibly pass on without just killing demand. So companies are going to have to eat these costs, i.e. margins will have to come down. Sorry, you guys have to take some, too. They've made it out of this pretty good. All right, Sam Rowe put forward this theory called labor hoarding. Can I just say my bald head looks pretty good with this light. Not bad. Is that like a summer tan I've got going?

I think that's just red mixed in with white bulbs. But no, it looks great with the Tropical Brothers shirt. We're still waiting on that call for the sponsor here. Eddie Dana. His whole thing that labor hoarding is maybe it's just cheaper to hang on to employees this time around if all these corporations assume that it's going to be a mild recession. And they had such a hard time hiring people these last two years. Maybe we're not going to see this mass round of layoffs from corporations.

And maybe they just stop giving. giving big wage increases and they say, you know what, we're just going to hold on to these people if we can. If it's just going to be a mild recession, maybe that's your soft landing where the unemployment rate doesn't go much over, I don't know, four or five percent. Because the lowest, if we're talking about, what do we say, lower, higher lows, the lowest level of unemployment has ever gotten into recession is six percent on the way up from the lows if they're four percent or below. The lowest that it's ever. I ought to be honest, we, me, have to do a better job organizing the stock because I've got wage data.

but way down the dock. That's not good planning. I apologize to the listener because we have to put a pin in this and we visit it later, which is after 270 episodes, you would have think that we can organize our dock. So can we put a pin in this? Let's do it. All right. Also, only something you say on a podcast.

Let's put a pin in it. Yes. Not a phrase I use in my real life. So this morning we got data from the Empire State Manufacturing Survey. They collected these responses between August 2nd and August 9th, so not too long ago. Just to set the stage here, this survey is set on the first day of each month to the same pool of about 200 manufacturing executives in New York State, typically the president or CEO, and about 100 responses are received. So I know that we're anti-survey here, but only in certain cases. If it fits their narrative, we'll run with it.

So let's run. Before you get into this, can I make a confession? I don't know why it's called the Empire State. I know there's the Empire State building. Why is New York called the Empire State? What does that mean? Because there are so many rich empowers built here? Is that the idea?

I think you're overthinking this. It's because the Empire State Building. But why is it called the Empire State Building? Well, so that's what somebody named it. It's a chicken and the egg thing, right? It had to come somewhere. The Empire State Building came first. Okay.

I think. But I can be wrong. Here's a quote. This is from the New York Fed. Business activity declined sharply in New York State, according to firms respond to the August 2020 Empire State Manufacturing Survey. The headline general business condition index plummeted 42 points. New orders and shipments plunged an unfilled

orders declined. Here's another quote. The general business condition index plunged 42 points to negative 31.3, which is the second largest monthly decline in the index on record and among the lowest level in the survey's history. 12% respondents said that conditions had improved over the month and 44% report that conditions had worsened. Ben, your thoughts. I'm going to need a smarter person than me macro-wise, so explain this one to me because I don't know. I just think the pandemic screwed up everything. That's my only thought that economic data and all this stuff is so messed up and

planning it out for companies right now is very difficult. Yeah, but here's the thing. I wonder if the stock market is misleading us. If we're getting, I don't want to say complacent, but if we're saying maybe things aren't that bad. But that's not really true either because if we're looking at earnings and if we're listening to what companies are saying, it's just a mixed bag. I think it's the bottom line.

Certain segments of the economy are. are in a recession, and others are booming. But the indicators that they're looking at in this manufacturing survey are what they call general business conditions. So I guess that's like a composite. They look at new orders, shipments, unfilled orders, delivery time, and everything's rolling over. Although delivery time rolling over is actually a good thing.

But so anyway, there's one piece of negative news. But then there's good news, like inflation coming down. Isn't this also the reason that shipping container stuff is getting better and supply chains are getting better because people just aren't buying as much stuff? So isn't that what happened? companies just got too much inventory. Yeah, I don't know what exactly has caused and effects. I don't know.

All right. So we got inflation last week. I thought my head was going to explode. I was getting confused by other people's confusion. So CPI was flat month over month. It was actually down a little bit. And it was up 8.5% year over year. There was this video that Corey Hofstein found.

I watched that one. What's his name? Cam Harvey. Kim Harvey. So Cam Harvey was breaking down the CPI report and showing that even if we get low inflation readings, flat inflation over the next three months, it's still going to be above 8% in October or September. Why is that important?

Midterm elections. Well, if you think about it, it's kind of like the stock market. The stock market has had wonderful 10-year returns. So even if the stock market goes nowhere for the next three years, the returns are still going to be pretty good long-term. That's the same thing that happened. Same exact concept. Jason Furman put this out and said, it was a great CPI report.

I think we could build on this. Lizanne Saunders said, used car and truck boom is fading quickly. Prices were up 6.6% year-over-year, the slowest gain since August 2020. I think this is, again, something coming off. I guess one month does not a trend make, but let's say inflation continues to fall in. We get in the next, all the higher numbers start to roll off a little bit. How much do you give in the Fed here for bringing inflation down if it keeps going down? Not much. Really? You don't think them raising rates and slowing the housing market and all that stuff put a cap on inflation a little bit and really kind of call the peak? Or you're just still blaming them for what they did before? I think they were super late. So I don't know. But why is inflation coming down? I think inflation is coming down because nature is healing. I don't think it's necessarily coming down because they're crushing demand. There's no counterfactual. We'll never know for sure.

We'll never know. What do you think, Mr. Fed chairman? Take your pin out of it. Let's do your wage growth thing now. I would give them, I think psychologically the Fed put a peak in inflation. I think the Fed saying we're going to go after this stuff hard. I think, psychologically, they helped. I think they helped a little. I give them 40% of the credit. All right, a few more things on inflation before we pick the pin out and get back into there. All right, so this chart is showing CPI month over month. Now, the price of food is still going up. Services are still going up. Goods are still going up a little. What brought CPI down? It was all energy, namely gasoline. That's it. No mystery.

That's one of those things where we can see that happening in real time. I don't know why this one was a big surprise a lot of people, but apparently, I guess expectations in the stock market were just so, so bad, because people keep saying inflation is still 8.5% over the last year, why is the stock market rising? Because when it hit 8.5% on the way up, people were not cheering it. People were worried about that. But I think it's just a relative game where things came in better than expected. And the stock market does not care about good or bad. It cares about better or worse. And things are getting less worse over time. It's all relative. Okay, Lizan Saunders, last thing. So far in August, we're seeing the largest monthly drop in average gasoline prices

since November 2008. And it's only the 15th. Okay. Not bad. Wages. So we've got nominal wages still coming in hot from the Atlanta Fed wage tracker data, median wage growth. 6.7%. 6.7%. But Matthew Klein of the overshoot had a great post breaking down wage changes. And even though they're still up, relative to where they've come from, they've peaked and are rolling over, whether it's at the lower end, especially. Because remember all those four help signs, how McDonald's was paying $35 an hour making that up, like, a lot of money to get people back to work? When I was in Northern Michigan last week, I saw $21 an hour and up.

Okay. But I think most of that is fixing itself. So Matthew Klein wrote, while this is painful for workers trying to absorb higher prices of gasoline, electricity, home heating, groceries, and other essentials, it also means that one of the potential sources of domestically generated inflationary pressure is rapidly dissipating. He's talking about wages. He said, put it all together and the data as of now appear more consistent with the Fed's desired soft landing scenario than the dire outcomes that others are warning about. End quote. I will say, if the Fed pulls this off, I do wonder what

history will say about them. I think history will be very kind to them. Probably. In this span of time, if they were able to stave off a depression in the pandemic and then have a soft landing from the highest inflation we've seen in 40 years, you have to give credit. If inflation comes back down to three or four percent and the history books, it just looks like this. It looks like low, low, high, and then basically it'll look like it came straight back down. Last week I talked about the tradeoff. So right below the Matthew Klein thing here, you're right.

We got a lot going on the dock this week. That's on us. That's on us. No one to blame but us. J.P. Morgan had this chart that showed unemployment. in wages going back to 1971. And you can see, if you look at wage growth, and over time, the 50-year average is like 4%.

But look when the highest wage growth came in. It was the 1970s. And what did we have in the 1970s? High inflation. So unfortunately, well, yeah, but unfortunately, the 70s really wasn't stagflation, though. I know people say that, but we had high nominal growth in high growth in the 1980s. What did we have? There was no stagflation in the 70s.

We had high nominal growth. It wasn't good real growth because inflation was so high, but. Anyway, if you look at this chart, just ignore the- Hang on, hang on, hang on. That's a good point, you raise. Stock inflation must be no real growth. Is that what it is? But we had very high nominal growth in the seven.

But anyway, look at the wage growth here. The highest wage growth we've had was in the 1970s. And look, the highest it's been in the last 40 years is these last three years. What's going on? Inflation. So, unfortunately, you can't really have one without the other. You're not going to get massive wage growth without high inflation. Unfortunately, that tug-of-war is just, that's how it works.

Well, you know where there's definitely inflation, and this is never coming down. Disney. Okay, you see this chart in here? Someone sent us this. It was actually a infographic that it moved over time, and it shows Walt Disney World price increase versus wages, rent, and gasoline. And this is only through 2020. So this is even the last couple of years.

Can Joe Biden tweet about Disney ticket prices being too high? Like you think gas prices? Help me out. I'm going to Disney. Help me out. So the other thing is they've added in the last couple of years this genie pass thing that you pay so you skip the line a little bit. You pay per person per ride. And it's way more expensive than their lightning pass or fast pass whatever they had before.

And people are still paying it. We're going to talk about Disney a little bit more, but... How much is the genie pass? I think you pay a certain fee up front and then you think you pay like $10 per person per ride. So we're talking 50 bucks to skip the line. You can do it. Yeah, but relative to the trip, it's probably worth it. I don't know that in this economy.

No, but that's what they get people with is you go, geez, I'm already spending so much money. I might as well spend a little bit more to not wait in line. I think we did it two or three times a day when I went. All right. Real estate stuff from Lance Lambert. This is interesting. U.S. inventory levels remain 44% below pre-pendemic levels. If there's a regional, okay, anyway, it's, if you look at the thing here, you can see it's getting better,

but it still has a ways to go for housing inventory, like active listing. We're talking in the past, and this is just in the past few years, 2017, 2018, 1.4 million houses for sale. That was a pretty healthy housing market. Our houses is just getting better and more comfortable and they're just lasting longer. Sort of like cars are. People are living longer in their houses. I also just think that the 3% mortgage rate thing, if that turns out to be an anomaly historically, if you're going to stay in their house.

You're stuck. Yes. That's right. We were out to dinner last night. your lovely wife, Robin, said, Michael, when are we moving from our house? And you said, never. We have a 3% mortgage. Yeah, get comfortable. So, Pitchbook had their U.S. Venture evaluations report. And interestingly, we really haven't seen downruns yet. Oh, it hasn't come. Interesting. You see some, like, headlines like Clorna and others. But look at this chart. You barely see

any. They're coming. That is surprising. Okay. So I've got an idea for business schools. I think all future MBAs should just learn how to be a psychopath or a sociopath because that gets rewarded these days. So Adam Newman, this is from Miles Ludlin, 816 is written its largest ever check to Adam Newman, who, by all accounts, I've read the books, I've watched the documentaries, I didn't watch the Apple TV show because I feel like I've read too much about it. This guy was a great-a-s psychopath, correct? He built people out of billions of dollars. Do you say built? Bilt? That's a word, right?

Sounds good to me. No? Okay. Google it, kids. I'm Googling it. This is from the New York Times. Newman has purchased more than 3,000 apartment units in Miami, Fort Lauderdale, Atlanta, and Nashville has aimed us to rethink the housing market, rental market by creating a branded product. You know that.

Obtain or withhold money from someone by deceit or without justification. Cheat or defraud? Billed. Yeah. Here's the coup de grace, to use a Michael Baddick phrase. Now we're talking. They gave this a billion dollar valuation, the biggest check Andrewson Horst has ever created. Exact details of a business plan could not be learned.

So I think they're going to do a we work for people in apartments, which, I don't know, some foosball tables and a beer tap. This is from Andrewson's post, and this literally made me laugh out loud. Quote, Adam is a visionary leader who revolutionized the second largest asset class in the world, commercial real estate, by bringing community and brand to an industry in which neither existed before. Adam, and this is the part that made me laugh. Adam and the story of WeWork have been exhaustively chronicled, analyzed, and fictionalized, sometimes accurately.

Huh? I think he's saying that the story of WeWork probably has been embellished a little bit. I don't know. By all accounts. So it's part fiction, part accurate. This guy compared himself to Jesus. Didn't he compare himself to Jesus himself? As one does.

Listen to this word Sally from Andreessen. Make no mistake. Okay. So they really don't describe. what this thing is at all. Is it we work for housing? I'm really not sure. Make no mistake,

this kind of mission is a heavy lift. Only through a seismic shift in the way industry relationships are structured and the mechanisms through which value is delivered, can we hope to address the underlying problems of the current system and build the solution. Doing this requires combining

community-driven, experience-centric service with the latest technology in a way that has never been done before to create a system where renters receive the benefits of owners. This means rethinking the entire value chain. From the way builders are purchased, and own, to the way residents interact with their buildings, to the way value is distributed

amongst stakeholders. And given the fragmented nature of the ecosystem today, we can only hope to accomplish any of this by bringing every aspect of the living experience together. I'm sorry, what the fuck does that mean? What does any of that mean? It was just word salad. It was just buzzwords. What it means is they're valuing it a billion dollars now, and they hope SoftBank is going to value it at $10 billion in two months from now. I think that's what they're hoping for. Anderson Horowitz is a lot of smart people. Maybe they'll think figure this out. This seems like a stretch to me. Just a tad. All right, I like the change. We're rooting for innovators, right? I want disruption in a good way. I want progress. I'm not rooting

for psychopaths. But what is this? I don't think we need to give people like him a second chance. All right. I like the change you did here. You made the change in the dock from it was bad quarter guys to actually the quarter wasn't bad. And you said decent quarter guys. That's a pretty good way of Yeah, I want to give quarter another shout. I know it's getting all. But listen, they keep him pretty. We don't want to tell you. So they've got this thing on their app where you could look at funds holdings. So, for example, they've got the Roundtold Ball Metaverse ETF. You click on that. You can listen to all the conference calls of all the holdings in that ATF. How cool is that? It's not bad. You put me out to a joke, a joke that they did today?

It was legendary investors, and one of them said Paul Pelosi Family Office. Pelosi Family Office. That was not bad. It's been a while since I've listened to a call. I listen to Disney this week. Okay. Let's do Disney first because I've got a hot take on Coinbase. I want to just pound into ground for you. So someone sent me this. Before I get to this week, it's just a tease for next week. And I think we're getting to the end of running season.

We've got retailers this week. I feel like retailers really mess things up for everyone. Because, Ben, I think you were right. I think they just over-ordered, and we read too much into the consumer being in pain. I did. I bought a hook-finding sinker. Shame on me. Fool me once, twice.

I don't get what they say. I'm not listening this time. I can't get fooled again. This is going to feel like the best Black Friday ever because the last two or three Black Fridays, they haven't really been many markdowns because they didn't need to. People wanted stuff. There's going to be some massive Black Friday markdowns. Mark my words. So listen, Wal-Bart. You can't fool me. Can't fool me. All right, where are we going? I'm doubling down on my Coinbase take from last week. I said they make way too money off of

retail. What happens when they have to go to zero percent trading fees? And you said, institutions. So Joe Wisenthal, in the last quarter, retail made up about half of the assets on Coinbase, but it generated nearly 95% of the trading fees. I think they're screwed. half the assets on our retail, but 95% of the trading fees come from retail. So institutions are basically trading for free. They're not bringing any money into Coinbase. If they have to compete on fees for retail, maybe they can magically come up with a better business model. But I think they're screwed.

Prove me wrong. You want me to prove you wrong? I can't prove you wrong. Yes. I think that Coinbase is the trusted name brand custodian. and I think that the business will grow over time. Listen, do they have challenges? Did they over hire?

Yeah. Did the stock fall 85%? Yes. That was a rhetorical question. You're supposed to answer yourself. Yes. I thought you're going to ask like four more questions and say, did they yes? Did they this?

Yes. Did they that? Yes. That's like a lawyer who's trying to like waste time in a movie. I don't own the stock, but you'd rather own Rob with her than Coinbase? I think I would. But if I'm choosing between the cleanest dirty shirt, the laundry hamper right now, that's a tough one. I might choose Robin Hood.

Okay. I mean, you're buying both of them are down 90%. To me, it's not particularly close. I just don't know where Robin Hood's next customer is. Okay, I don't know where Coinbase's next customer is either, though. All right, let's go to Disney. Disney Park's experiences and products division saw revenue increase 72%. Getting back to my thing, I don't know how these people are paying for.

So what they said on the Disney call, I can't remember who said this, but they said there is more demand now than they have tickets available. So I went there in February. This is a problem then when they're selling out. Just print more tickets? I'm just as a joke. It's one of those places, though, that, well, people are still spending money somewhere. That's the thing. I think it's just changing shapes.

Okay. My only point is this is one of those anecdotes where if you wanted to say, what recession, look at Disney, this is one of those anecdotes. How long does that last? I don't know. It's one of those on the good side of the ledger anecdotes, where you could look at retail inventories, Empire State Manufacturing. I still don't know what that is.

You'd say, this is the economy stinks. It's in the toilet. If you look at Disney, you say, there's no way in the world if you were walking around Disney that you'd think this is a slowdown by any means because people spend so much money at that place. By the way, we forgot to even get into the numbers on Coinbase. So, a trading volume from retail was down 70%. Okay?

Down 70. Institutional trading volume only down 46%. Big spread, no? Yeah. So institutions are diamond hands. Retail's not. So net revenue was down 31% compared to Q1. Oof.

Total operating expenses were up 8%. So again, revenue down 31, operating expenses up 8. Those are not where you want to be. Just a casual another 18% layoff. Okay, so if the first layoff round is always an even number like 10%, the second layoff number is always an odd number. It's like 23%. That's when the real number hits, 18%. That's when you left what you really wanted to do the first time.

So back to Disney, they're slightly below 2019 levels, but they are ahead revenue-wise because their average revenue per park goer is up 40% I think it was. I wanted to mention this part. Bob Chapick said, in terms of sports betting, we are, have been in conversations for quite a long time now with a number of different platforms to add some utility to sports betting and take away some friction for that for our guests. We have found that basically our sports fans that are under 30 absolutely require this type of utility in the overall portfolio of what ESPN offers. So we think it's important working hard on it and we hope to have something to announce

in the near future in terms of a partnership that will allow us to access that revenue stream and also make sure that our guests are having their needs met. How about that? Who'd have thunk it? Walt Disney World, the family of family experiences is getting into sports betting. Do you think ESPN could come in and own this space if they wanted to or not?

Is there going to be a sports book at Disney? That wouldn't be bad. All right, so we had Alex Morris on the compound that I'm friends last week. He's awesome. His subsect of science of hitting is worth paying for. I pay for it. They said they have 152 million subscribers.

By the way, the YouTube viewers just got a little quick shot of Josh Brown in the shot there. you that? The 152 million subscribers, they're currently paying $4.40 per month. To put that number in context, Netflix's average global subscriber is paying $12 a month. So Disney came in very low. Everyone knows it came in very low. They're raising their prices by 38%. They're going from $8 to $11. Hey, guess what? My best inflation hedge I made, I paid for three years of Disney plus ahead of time. That was a great inflation hedge. Nailed it. That's a great locking right there.

Do you think that it's inevitable that they just roll Hulu into Disney Plus? Because Hulu actually has some pretty decent shows. I think if they wanted to say, look at all the great stuff we're doing on our own, a lot of the shows on Hulu are very good. Very good. Well, they got to get Comcast out. Comcast still owns, I think, a third of it. Yeah, they have to buy them out.

Ben, do you still own Airbnb? I bought Airbnb at the IPO. I bought a little bit more when it took a hit. And this is a buy-and-hold forever stock for me. That's the way I feel. I like Airbnb. I think that the pandemic supercharged the viability of their business. We never, ever looked at Airbnb's before the pandemic.

Now we stay in them three or four times a year now. I'm getting phone out. I'm looking outside. Everybody's having pizza. I want pizza. There's a two-on-two basketball game going to the background. Alex has got a jumper. I haven't seen if any of have gone in yet.

He's got a good stroke. Oh, yeah? I think I still got some game. I could go take the young guys on. We'll see after this. Okay. I don't know. My shoulder's still hurting from that Jetsky injury.

When we fell off the Jetsky yesterday, Michael had the look of pain, like, it looked like you separated your shoulder, the look on your face. It was kind of a, uh, uh, we got some laughs. All right, what's going on to the Airbnb? I forgot that we were talking about that. Airbnb gross booking value was up 27% year over year, 34% when you take out the currency fluctuation. That's up 73% versus Q2 2019.

It's pretty good. The other thing is just how much longer people are staying? So people are staying, not just saying, not just say, 70s, they're staying 28 days and longer, and there's a 40% increase in average daily rates. I joked with Alex, is Airbnb an inflation hedge? Oh, yeah. Could be, right? Not bad.

So not a cheap stock is obvious. But maybe one of those stocks, it's a high-quality business that maybe it never gets cheap, like really cheap. Yeah, it's trading like 45 times even, but something like that. So definitely on the side. I say it's a buy and hold forever, willing to change my mind about that, but I think that's why I'm looking at it now. I'm not going to fight you.

Anything else you want to do before we get to the recommendations because we're going along here. One more thing. Yes. So there was a Wall Street Journal article this week called, what's the title here? Does anyone really need a $500 cooler? So it's talking about these Yeti coolers. Do you've seen these before?

They're $500? They're saying that there is another brand. A rover roller costs $495, for example, claims to keep ice salad for 10 days with optional tubular wheels. There are $200 more. So that we're talking a $695 cooler now. That can roll easily and sand. Wait, wait. It keeps ice cold for how long?

for 10 days. So I'm not here to spend shame people for buying an expensive cooler. We have a lot of friends with Yeti coolers. You can beat the crap out of them. And they use it a lot because they go boating or to the beach. All right. So then it's worth it. No? So I personally, I don't know if I could pull the trigger on something like this. I feel like you have to be selectively cheap in certain areas of life. And this is one of them for me. But here's my take. I feel like millennials are way more susceptible to spending money like this then like Boomers ever were. Boomers had those...

True. Remember those styrofoam coolers? Which, really quick side story. When we were in college, we went on a canoeing trip once in Northern Michigan on the Platte River. And we had a whole two styrofoam cases full, filled up with a 30 pack of ice. And we walked down to the dock and the guy who's renting us a canoe says, hey guys, just so you know, there's no beer drinking allowed in our canoes.

And we're like, oh, no, it's just pop and sandwiches. And right as we were saying, that the bottom fell out of one of the styrofoam coolers. and 30 bushlights roll down the dock and we kind of quickly grabbed them all jumped in the canoes and took off. Anyway, I think he just probably had to say that. Anyway,

my point is, I feel like millennials are more susceptible to spend money on name brand stuff than baby boomers ever were. And I think it's hard for them to get out of that mindset. I feel like there's just so much more relative thinking stuff. Anyway, all right, recommendations.

I got a number of them. What do you got? You start. No, you start. You're the guest. You're on my island, so you first. That's true. I'm in Long Island.

Michael Santoli on the Longview podcast with Jeff Rattack and Christine Benz. I think he might be one of the most underrated minds in all of finance. No way. No way. He is properly rated. You think he's properly? I think he's underrated. He is so sharp.

He can weave in his whole take on the stock market and the economy and the interplay between the two. I thought like everything he said was summarizing a lot of the stuff that I have been paying attention to and we've been paying attention to and he did it in a very good way. Have you ever seen, hang on, hang on. Have you ever seen anyone dunk on? Santoli or say Santoli is not great. He is great. Nobody doesn't think he's great. Properly rated. Okay. I'm just saying you're saying properly laid. I'm saying underrated because I think he's

just kind of a quiet guy who puts his head down and does the work. Anyone who knows anything knows that Michael Santoli is terrific. But I think the great thing, the reason he doesn't get dunked on because he's not making these stupid outlandish takes. He's very well informed. And I think a lot of people, a lot of other people put out these takes because they know it's going to cause a controversy even if they don't believe them. Like, people who say that the original top gun was not a good movie, people like that. All right. The offer on Paramount Plus I've been watching lately, that's the story about how they made

the Godfather and how it was such a pain to make in his old Hollywood. And I hear an interview with Craig Kilbourne on his new podcast, and he's talking about this show relentlessly, so I heard her watching it. Then he says, the guy who plays Bob Evans, and Bob Evans is a guy who used to run Paramount and used to be a producer. In the 1960s, he ran Paramount Studios. He's such a good character on the show, and Kilbourne says, they nailed this guy. And I'm like, God, how can this guy be this person in real life?

He seems like a movie character. So I started reading his biography on the way here. And if you love business, Hollywood, name dropping, the book is excellent. It is so stuff about Jack Nicholson and Carrie Grant and Jimmy Cagney and all these old actors. It's very, very good. Finally, hard knocks. I started watching with the lines. I haven't watched the last couple seasons, but I had to watch because, honestly, Aiden Hutchinson.

Is Jared Gough still the quarterback? Yeah, I mean, it's... It's tough. Dan Campbell is the man, though. It's very entertaining. I haven't watched it in a while, but I think the sad thing is Aidan Hutchinson singing Billy Jean

and the whole team jumping in and singing it with them. It made the rounds on social media. It might have been the best Lions highlight since Barry Sanders. That's how sad things have been for the Lions. And finally, the first 20 minutes of Blackbird totally suck me in.

Great call by you on that one. We're not always on the same wavelength when it comes to recommendations. This one, we are totally in sync. Blackbird is great. My wife and I were binging that thing very quickly, very good. Okay. I saw bodies. Wait. Have you heard of the movie Bodies, Bodies, Bodies? So I saw Bodies, Bodies, bodies, bodies. And it wasn't playing in my local theater. So I went to like one of those, I don't know if it was a regal or whatever, it's a name brand place.

And the guy at the ticket booth, he took my tickets that and enjoyed the movie. And I said the you too. And then I got embarrassed. I went to it. Yeah. What a fun movie that was. That is my cup of tea, so to speak. It was a one night, who done it, murder mystery, a la Clue, a la Knives Out, a la... What was it on the movie? Damn it. I can't remember.

Anyway, lots of fun. Lots of fun. If you're a moviegoer, if you venture to the theaters, then go see this one of the theaters. This was a fun one. Circling back to last week, if you followed me into Brawl and Cell Block 99... All three of you who watched that with Michael. Okay, so all three of you who watched Brawl and Cell Block 99, Bone Tomahawk

Bone Tomahawk is made by the same director Listen to this Ben of I spoke through this Bone, no bone tomahawk I'm sorry, I'm out Okay Go ahead though

I'm out Name alone, I'm out You haven't even heard Hear me out Okay, let's hear me out The cast is Kurt Russell Maybe you've heard of him

I do like Kurt Russell Patrick Wilson from The Conjuring Matthew Fox from Lost What were happening to that guy And Mr. Doback from Stepbrothers those four go on a journey to retrieve Patrick Wilson's wife who was stolen by a group of savages

What's a group of savages? You'll know it when you see it. It's 20 minutes too long, maybe 25 minutes too long. After I saw this movie, I said, I got to listen to a podcast about it. So I listened to two random podcasts about it because I was so taken by this movie

because there was one scene in particular. So I'm not saying this is like a great movie, but it was definitely a good movie. and it includes the single most disturbing memorable scene from any movie that I've ever seen and I don't even know what number two on that list would be and if you've seen that movie, you know what I'm talking about. All right, we did this last week with your Vince Vaughn one.

What do you think the box office was for this one? But last week's box office for the Vince Vaughn movie was 79,000. All right, let me just one more thing. So this movie was shot in 21 days on a shoestring budget of $1.8 million. So what do I think this movie did at the best? box office. I'm going to say this was a big hit. I'm going to go $2.6 million. $481,000. Didn't make its money back.

Hang on. It didn't make its money back at the box office, sir. The ratio of money made to movies you've recommended lately has got to be like out to seven decimal points or something. I'm just saying, if you liked Brawl and Cell Block 99, and I'm pretty sure you did, see this one next. You'll thank me later. Okay. Bone Tomahawk. Final answer. All right. We've got to go. We've got to go. We've We've got a pool party to get to. Got some summer shandies to drink. Excellent.

Hope they save some for us. All right. Thank you to Y-Charts. Thank you to Ben for coming out and jet-skinned with me. Animal Spiritspot. com. We'll see you next time. Thank you.