Animal Spirits Podcast - The Stock Market Crashed. Now What? (EP.407)

Episode Date: April 9, 2025

On episode 407 of Animal Spirits, Michael Batnick and Ben Carlson discuss the chaos surrounding tariffs, Dan Ives getting cautious, possible affects on the economy, fake headlines moving markets, cabanas are getting out of control, the White Lotus finale, and much more! This episode is sponsored by Betterment Advisor solutions and Morningtstar Investment Conference. Grow your RIA your way at: betterment.com/advisors  Don't miss Animal Spirits at the Morningstar Investment Conference in Chicago on June 25 and 26. Learn more at: morningstar.com/business/events/morningstar-investment-conference?refid=animalspirits  Sign up for The Compound newsletter and never miss out: thecompoundnews.com/subscribe Find complete show notes on our blogs: Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. 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. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. 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. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's show is brought to you by our sponsors at Betterment Advisor Solutions. Imagining a better future is the first step. Investing in that future with Betterment Advisor Solutions is the next. Whether you're launching your own practice, looking to streamline client onboarding, or just searching for efficient ways to scale your firm, Betterment Advisor Solutions is here to help. They automate to make tax optimization simpler. They provide support to make administrative tasks easier. At Betterment Advisor Solutions, they are building innovative technology, all for anyone who's

ever said, I think I can do better. So grow your RIA, your way with BettermentAdvisor solutions. Learn more at Betterment.com slash advisors. Investing involves risk. Performance not guaranteed. Today's show is also brought to you by Morningstar. Join us, Ben and myself, live for recording of Animal Spirits at the Morning Star Investment Conference at the Navy Pier in Chicago, June 25th, and June 26. I am excited for that. You know something, Ben? The first time I ever went to Chicago was in 2017 at the Morning Store Conference. And that's where we met Jonathan and Brian. And it was a pivotal moment in the history of Wittall's wealth management. Chicago also one of the better summer cities that there is. So this is at the end of June. Have

you been to Navy Pier before? Okay, Navy Pier is really cool. There's a fun ride there that we should do. I did with the family. Morning Star Conference is great. It's a always a ton of people, a ton of people that you know. I think the first one I went to was like 2012, 2013, and Morningstar tells us it is free to attend for all advisors. Okay. So go to our show notes, find the link, registered today, and we'll see you in Chicago. 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. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ridholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. It's a lot. It's going to be a long show. We've got 50 pages in the Google Doc. It's got to be approaching the 2020 COVID records in terms of the length of the dock.

We had a few people ask us if we're going to do an emergency pod. That didn't happen because I'm in spring break. I don't think we would have done it anyway, though, because I think we wanted to let things play out a little bit. Not that they still can't play out more, but where do we begin? I always love hearing travel stories, some observations from the aisle, but let's put that to the side. I can wait. I do have travel stuff, but yeah, I think there's more. pressing issues than my then my takes on cabanas all right so we're going to start with tariffs of course

a lot has changed inside the market in the last week and we're going to start with some wise words from our friend cullen rosh cullen said tariffs are perhaps the most nonpartisan issue in economics. It might be the only thing that Paul Krugman and Milton Freeman agree on, but somehow, some way, the narrative got hijacked in recent years. How did this happen? How did we get to this place where something that was once so universally believed has somehow become controversial? And part of the talking points are fixing some of the problems in America, leveling the playing field inside of our country and with the rest of the world, the global trade. And Cullen says, like, listen, inequality is real.

There are certainly problems in our country that need to be addressed. We can do better. We should do better. But with that context, these are some of the data points. Household net worth at record highs. This is before we blew it up. U.S. households spend less on necessities than ever. this is the sure sign of increasing living standards as our basket of necessities evolves

into items that the average American couldn't even fathom 100 years ago. So I read this in the, I wrote a post about tariffs and William Bernstein wrote what I think is the best book on trade called A Splendid Exchange. And he says that in the 1920s, households spent 25% of their budget on food. And now it's like 10%. And his whole point was, guess what made that number come down? Free trade. because we get food from other countries, then it's cheaper.

Inflation-adjusted median income is up 50% since 1975. The misery index is low by historical standards. Real GDP is at an all-time high. The median net worth, median of over $200,000, places the average American in the top 10% of global net worth. That's a crazy number, that our median is top 10% worldwide. Global life expectancy is improving dramatically. Child mortality has collapsed. We are experiencing exponential growth and technological advancements. The share of the world living in extreme poverty has collapsed. America owns 33% of all global wealth. When you exclude the UK, France, Germany,

Japan, India, and China, we own 50% of all global wealth. Yet we've somehow convinced ourselves we're being taken advantage of by the rest of the world. And that I encourage people if they want more from Colin on tariffs. He has a great video explaining in greater detail. Is it too far to say, and I know other people have said this, that we got to the point where things are so much better than they were in the past that we're starting to make up our own problems? Yeah. Yeah, I think a lot of the chronic complaining, and listen, there are problems, so it's not like to minimize it. But compared to any point in history, we've never lived in a better place than we are in today. And it's like we decided to just throw, just, yeah.

Fine. Well, I've made the case that you don't compare yourself to your ancestors. You compare yourself to your neighbors. And when you do that, the situation changes dramatically. I think it was Jonathan Haidt who said this, maybe with somebody else. Complaining the way that we do is a sign of success. Back in the day, of course, there was no internet, but there was no time for this nonsense. You went to work.

No. So the biggest question that we got in our inbox, and we got quite a few this week, is like bending your brain into a pretzel, trying to figure out the motivation. Like, what is he, what is the end goal here? What is he doing? What is he? Where are we going with this? Neil Dada from Renmax says, bringing, quote, bringing down interest rates to refinance debt.

He's playing chess while everyone is playing checkers, end quote. This is a talking point circling around right wing circles. Here's why it is dumb. Recessions are nonlinear in nature. The risk is always that things can get away from you. Trump's policy, if it is indeed deliberate, is the equivalent of cutting off your nose to spite your face. Will you refinance debt at lower rates?

Maybe. Then again, unemployment will be higher, which means fewer people will be paying revenues into the Treasury. What about households with bank stocks getting destroyed? What makes anyone believe banks are going to go out there and loosen lending standards to help people refinance in the first place? Trump is not, and here's the kudegra. Trump is not doing this because it is part of some grand plan.

The plan is the tariffs. He is doing this because it is what he believes. Trump thinks trade is bad. The market thinks trade is good. I would not expect Trump to be the one to de-escalate because he does not believe in trading with other countries. His heart is not in that. It really is that simple. Trump is playing Russian roulette, not chess.

This is the hardest part about this downturn is that every other downturn in history, at least in the last 20 years or whatever, you'd think, well, the government is going to come save us. We can throw money at this somehow. Rates are going to fall. The Fed is going to step in. But the government is causing this. They're causing this crisis. And do you think that a recession is the baseline now? I think it has to be.

Baseline is, I mean, I'm, I think it's 75% chances. It's very, very high. And it's that number shot up in the last month drastically. Yeah. So betting markets have it, I think, at 60%. I can't remember exactly where. But it's gone on dramatically. Base case is hard because the base is changing every day.

Larry Fink was on stage yesterday, and he said that CEOs that are telling him that we're already in a recession. And, of course, what we've learned over the past many years is that there are certainly going to be pockets for recessions, as there have been. The real estate market, for example, has been one forever. Whether or not the globe is going to be into a recession, I think it's early to say. But the longer this goes on, sure, the likelihood of that happening increases dramatically. So this is from Ryan Peterson, who works at Flexport, which is, remember, he was a big guy people were citing during the pandemic because of supply chain stuff. He said, 28% of all customers in Flexports call yesterday said that they're pausing all ocean freight bookings from Asia until there's more clarity on where tariffs will end up.

I think the biggest problem is even if, let's say, they say, we're going to put a, we're going to stop this tariff talk for 90 days like they've been talking about, or we're going to have a deal with every country in the world now. Even if that happens in the next two days or weeks, I think the confidence is the problem where does the market trust him and business leaders go, wait a minute, we can't trust. anything he's going to say now at this point. I think that's the confidence and trust partisan. It's going to be very hard to bring back. Okay. But so let's just say that we roll this back. He makes a beautiful deal and we sort of move on and this story is not over because we're still going to see the ramifications of this. But do you think that people are going to and businesses are going to say, all right, we've got another three and a half years. We're just going to coast until he's out of office. I don't believe that. I don't think people need confidence

and his policies. I think they just need him to remove the uncertainty. Yeah, and I don't know if we're going to get that. That's a problem. This is how crazy thing is Dan Ives is bearish. This is, Dan Ives put out this week. He said Trump tariff Armageddon will take U.S. world back a decade, China wins. He said, if U.S. tech companies are faced with this reality, saying if Trump, everything he laid out in that Rose Garden ceremony or whatever, it will negatively change the tech landscape for decades to come. The cost structure of the U.S. tech world would make it impossible to compete with China. would be a lot of ticket for the China tech landscape, B-YD, Hawaii, Alibaba, Tencent,

and thousands of other Chinese tech players to gain more global market share over the years. And he goes to all this stuff that he's been talking. He travels to globe. He talks to tech suppliers. I've never seen Dan Ives like this before, obviously. I've obviously been wrong on what he was going to do. I still don't believe it. Maybe I'm the idiot here, but I still believe that...

I think we have to... The door has been beaten down at this point. I think that's what the market hope is, and that is what worries me. So this is from Morgan Housel. It says, I spoke to an investor who said, if the market actually processes what happened yesterday, and he wrote this on Thursday, obviously, it would be down 30 to 40 percent. The fact that it's not is either denial or belief that it will soon be reversed. And I totally agree with this. If these tariffs are in place as they are laid out right now, the market could be down 40 to 50 percent. And I say this without, this is not. I'm not a scare person. I actually believe this. I believe that, too. I just, what I don't believe is that the tariffs as proposed are going to stay on. That's the part that I don't believe. Yeah, I sure, yeah, because again, it would nuke. There's no way businesses could operate. There'd be so many businesses that would be completely shut down. So here's the people who are trying to

wrap their heads around, why is he doing this? Here's my analogy. This is the Luca Donchic trade to the Lakers. So everyone says, okay, set aside the fact that this was one of the worst trades of all time. And it's funny that trade is in the both of these, right? The Luca for Anthony Davis is probably the worst trade in sports history for what you're giving up and what you're getting. Set that aside. The way that they executed the trade was almost as bad as the trade itself. And that's what's going. So that's the same thing that's happening with this. If people looked at these rates, these tariff rates that he created in all these different countries, and he did it on, it seems like every country in the world almost.

And people eventually figured out, like, wait, how did he calculate this? And people looked at the calculation, and it was basically like a fourth grader put it into chat GPT and said, and there was this formula, and people said, even if this formula made sense, he did the formula wrong. And so that's the thing. Let's say you really believed that you went to onshore everything and that the tariffs are a good idea. History shows and logic shows tariffs are not a good idea.

But let's set that aside. Let's say they are a good idea. the way that you do this, would you not say, listen, we're going to give you three years to get your act together and reshore as much as you can. And if you don't bring back a certain amount of, and we're going to incentivize you, if you reshore everything, we're not going to tax you or something. We're going to give you incentives to do this. Instead of just laying these tariffs on, he could have said, we're going to give you three years to get your act together. Even then, it probably is impossible. So, like, I feel like if he really believed this, he didn't, he gave it, he didn't give it a chance to succeed from the start. The execution was terrible. unless his strategy, and this strikes me as ridiculous, but let's go so far over the top

just to bring them to the negotiating table. People are saying that this is like as big a deal as the bread and woods, that it is going to reshape the future of global trade and the global economy. Maybe I'm in denial. I just, I think that the mega trends that are in place, like, I think that if you look, if you go back, if we're 10 years from here, I don't know that this is going to be looked back upon as a watershed moment in global capitalism or global trade. It's hard to say, again, because the trust and the confidence thing, if all these other

countries say, screw you, we're ban, like if, you know, China and South Korea and. Yeah, but we're the world's biggest customer. And so we have the leverage and he knows it. I agree. It's also a thing where, wait a minute, he's a lame duck president. In 24 months, we're going to be getting new candidates who are going to be throwing their head in the ring to be president. Could we ride this out for 24, 36 months? I guess that is the thought process, too. The funny thing is, is we do keep getting emails from people and comments from people saying, this is all political for you guys.

And the only people that say that are obviously, yes, the only people that say that are obviously they're being political, right? But so I am, I think you and I could probably count on one hand the number of times we've had an actual political conversation. You and I are not politics people, right? We would rather if we never had to deal with politics. We know we have to. time you and I have ever discussed politics off of the camera is through the lens of the market.

I've never asked you. Yes. That's not our thing. So I'm going to give a very nonpartisan political take because I never give political takes. So here's my, here's my political takes. I think the last two years have cemented the fact for me that we need to have age limits on the presidency. Because the Democrats screwed this up by Biden not leaving. And guess what? Trump is almost 80 years old.

Yeah. If that makes us age, I'll sign up for that. Yes. I think we should have limits on that. And also, here's my other thing. I feel like we have one party who is completely inept and doesn't get anything done and we have one party who is just completely insane and does crazy things. So why don't we have a third party?

Why don't we have someone come in and say, I don't like what these people are doing and I don't like what these people are doing? Let's do it a different way. Why don't we get that? Where is that? Probably never going to happen, I suppose. But those are my political thoughts. All right, let's move back to like, how did we get here and what in the hell is going on?

By the way, this morning, there's some faction in the party. None of that Elon's the party. Well, I guess actually is. And what I'm talking about? Elon called Peter Navarro, who is spearheading, who is like the microphone for Trump. He called him Peter Retardo. Is that what he called him? That sounds about right.

So this is from the Washington Post. Over the weekend, as Elon Musk launched into a barrage of social media post, criticizing one of the lead White House advisors for President Donald Trump, that's Navarro, his aggressive tariff plan, Musk was going over that same official head and making personal appeals to Trump. So this is the thing. A lot of people said, well, if Elon Musk is going to be the, and I think this is what a lot of tech people thought when they backed Trump,

if Elon Musk is going to be the de facto president, then that's who we're backing. It's not really Trump. It's, it's Musk. And it is kind of scary that he's listening to this Navarro guy as opposed to Musk. Okay, but I would disagree. I don't think. So my friend was like, doesn't he have advisors? Like, what's going on?

Who's advising him? I said, no, no, no, no. I mean, yes, technically, but he's, they're not advising him. Right. He's got a yesman around him saying, this is, yeah, great job, sir. He's not doing what Navarro says. Navarro says, Navarro is his map piece. You did awesome.

Yeah. Matt Klein said, like all sharp budget tightings, this will reduce living standards. And these tax increases are targeted such that the poor will suffer disproportionately. The tax increases are also sufficiently complex and arbitrary that they will create substantial costs for businesses, reducing productivity, and exacerbating the direct hit to income. So he's saying tariffs or taxes, which when you, it really is a tax. So he's saying it's like an equivalent of a 2% tax increase. And that to some people, well, that doesn't sound like very much.

But his point is this is going to hit the poor much harder than the rich. Of course. Yeah. So Jeremy Siegel said on CNBC, I think this is the biggest pause mistake in 95 years. So that gets back to the Great Depression thing. And I think that is that is completely true. I totally agree with that. This is like the biggest own goal.

And it's also, so I did a history thing where I looked at, there was, remember Michael assemblies did this thing of the 1890 tariffs. And then there's the 1930s tariffs. And the world is more global than those times even. It was bad back then. But doing it now is even 10 times worse because of how interconnected everything is. Yeah. It's surreal. Like just watching the screen these last couple of days and not just the market, but like, well, who am I kidding in the market? It's hard to understand. Here's my feeling, though, because a lot of people are thinking like, oh, boo-hoo, the rich people are going to lose money in their stocks. The stock market, the stock market is from the rich people. Most people in America,

meaning more than 50% own the stock, own stocks. 60% of people on stocks. The homeownership rating this country is 65%. Guess what? The majority of people own financial assets in the United States, even if the rich disproportionately owned. The other thing is, I keep thinking, I told this to you the of the day, I'm in Florida for spring break and people are, the restaurants are full, people are spending money. And I feel like one of those people in a climate change movie, you know, where like the world is going to end and you're running around telling people like, do you people not realize what's coming? Because if we keep these on, guess what it's not going to be the stock market, it's going to be the economy. And that's going to be

more painful. The market will eventually, like, the market has been through more than this. Stock market will come back. But the pain that could be causing the economy from this, that is going to hit people beyond their portfolios. And that's what I'm worried about. Right. So there's obviously been a political divide in the country. The haves and have-nots, the hollowing out of the middle class, as I like to say, the destruction of the manufacturing class. there was an op-ed in the Walsh Journal from Norbert Michel from the Cato Institute, which is not a liberal think tank. It's a conservative think tank. Right.

Okay, he said, populists such as vice president, J.D. Vance, argued that free trade agreements caused middle class wages to fall, hollowing out towns across America. Yet the only way to make this argument is to cherry pick the data to death. The U.S. middle class has thrived over the past 40 years. In fact, Americans of all economic backgrounds have done well. The share of households earning more than $100,000 has tripled over the past five decades, and the share earning less than $35,000 fell by 25%. For most of this period, workers in the bottom 10% of income distribution experienced

stronger wage growth than those with higher incomes. The middle class has shrunk only in the sense that former middle income earners have moved up the income ladder. Materially, Americans are much better off than they were in 1970. Over the past 40 years, 70% of working age Americans spent at least one year among the top 20% of income earners. I'm going to repeat that. Over the past 40 years,

70% of working-age Americans spent at least one year among the top 20% of income earners. And 80% never spent more than two consecutive years in the bottom 10%. So he says it's true. Those are really good numbers.

I've never heard that before. It's true that the number of manufacturing jobs is lower than it was in 1970, but that's because we can make so much more with fewer people. And one of the things that is always cited is NAFTA and the WTO and look what happened afterwards. Armand Domaluski tweeted, I am so tired of posting this chart. And it's the manufacturing share of U.S. employment with 1993 NAFTA passes on it.

But the thing is, it's been crashing since the 40s. It has been only going one way. And if you look at JP Morgan as a chart showing Germany as well, their manufacturing share of employment. Now, significantly than higher than hours, but it's going down because technological process, progress, excuse me. And we have more service jobs in this country. If you look at manufacturing versus service jobs, service jobs are the opposite. It goes straight up into the right.

And so this idea that the world has taken advantage of us and we're like, boo-hoo, it's just a complete fucking joke. There's a chart from Bloomberg that shows U.S. GDP per capita continues to grow up in an accelerating pace. we are the envy of the world. So let's talk about the other side, the people that are supportive of these tariffs, the people that feel like they are getting left behind. Because I don't want to dismiss those feelings. They're real and they're legitimate.

Everybody's life is personal. You're not, right? Like, you live your own life. And so I totally get people's point of view that are feeling that way. So Michigan is a perfect example of this because, so I lived into the Detroit area a few years and it's funny because if you drove like a foreign car in the Detroit area, like people would look at you side-eyed. Like you, everyone knew.

someone who could get an employee discount at Ford or GM. So, everyone, you know, luckily I was driving a Ford Taurus back then. So I fit in nicely. But obviously there was talk all the time of, of why can't we just have these people who could graduate high school and go get a factory job and live a middle class lifestyle. And look what happened to the car manufacturers. Because they gave these unbelievable pension medical benefits, they almost went bankrupt. GM did go bankrupt. I guess it was just an unsustainable period. And I think we'll probably never see anything like that again, that just didn't make any sense. And I understand people, like, wish it would be

that easy. And unfortunately, it's just, it's not. That world is gone. Correct. All right. So there was an article in the journal talking about the title was the first victim of Trump's trade war is Michigan's economy. Mary Bookseiger, CEO of Lucerne International, another local auto supplier, is also talking with customers about her need to raise prices because of the new China tariffs. About 80% of the automotive hinges, brackets, and other components, Lou Stern says, are made in China. She said, quote, there is no way we can absorb these tariffs. I don't have 20% margin to give. She's the owner of the company with 25 people. I'm sure that they look at this and they say, okay, great, we'll pass along that higher cost to

customers, but our customers can all of a sudden go, wait, okay, you're making us pay 20%. We had an email from someone saying the manufacturing of his small business product is is going to be, the tariffs will be in the 40 to 50% range. And he said, if they go through, I'm done. I don't have a business anymore. It's completely nuked. And there's going to be so many cases like that. And obviously, I think we heard an email from someone who said, like, I'm actually

on the winning end of this for whatever, because of steel or something. But he even said, I'm sure I'm going to be in the minority of this. So it's strong feelings on both sides. Like, there are a lot of people cheering this on. And I want to give some examples of that. So I saw a thread from Russ Latino, he tweeted, I just got off the phone with a business owner in Mississippi. He's pumped millions into a business distributing a product he imports from China.

His contract with a company prevents him from manufacturing in the U.S. He also contracts with a number of large retailers. He described some of these contracts as inflexible requiring him to sell a unit at a set price. He told me he anticipates paying over $1 million in tariffs next week and has no ability to simply up charge his retail customers to cover the expense. In his words, Ross, I don't have 54% profit. This puts me out of business stuff. I share this because there are probably tens of thousands of businesses in similar situations. I just happen to have one reach out to me. So here's some of the replies and some of the dialogue back and forth. And this went viral and toxic and blew

up. And somebody said, okay, well, maybe it's best you don't make a contract like that. I'm just a simple guy, but I would have never made a contract locking myself in. There's always a chance something like this could happen and there should have been provisions in the contract period. This is simply making this political. To which Russ replied, No doubt you're a tight enough international industry and are speaking authoritatively from a position of experience. There was another reply. There are countless businesses like this. They will all need to relearn the basic principles of free market economics.

I mean, come on. And move manufacturing back to the U.S. And that's a good thing. To which Russ replied, nothing screams free markets like you just have to do that here if you want to be in business. Somebody said, if your business relies on exploiting Americans, we're happy to shut it down. Russ replied, his business literally saves American lives. This is the hypocrisy that gets me is the people who have been screaming for years about government manipulation and the government needs to get out of markets for free markets

now want to see tariffs and price controls. This is literally controlling markets. And Colin's point from last week was this is going to drive prices up not only because the tariffs, but because it's going to reduce competition and give the businesses that win have more pricing power and they essentially turn into a monopoly. And so that way you get lower quality goods for higher prices. The opposite of what you want, obviously. All right.

I'm going to read an email that was kind of long, but I thought it was just really emblematic of the type of frustrations that people in this country are legitimately experiencing. To my favorite weekly podcast host, thank you. Your podcast brings up a survey a lot. It's a repeated survey whose conclusions are something like my personal situation is good, but the whole economy other than me seems to be very bad. It's always come across to me the same as it comes across to you.

People are just listening to too much dumer media, and things are actually pretty good. I have an econ degree from whatever, and until very recently, was a disciple concerning tariffs being bad. This, despite growing up and returning to living in the Quad Cities, an area that has been truly devastated by factory moves in the past, I still believe in the comparative advantage stuff. Something clicked with me today while thinking of all this tariff news.

Everyone in positions like yours are absolutely livid or freaking out. It seems like something seriously bad can come of this. It's frightening. But like, what are we defending here? I've got a good job. I'm the survey respondent that says, I'm doing well. I am doing well. We make a lot more than the local average, but I didn't start trying to have kids until I was 35.

I saw these plan closures when I was a kid. I still remember my father pulling me aside and telling me that I absolutely needed a degree in this info economy. I couldn't repeat his mistakes. So I did. I joined the Air Force to afford school. I worked hard to get a decent job out of school. I focused early in my career, the American dream baby, Ivy grad finance job. And then I was 35 and I just started having kids.

I'm 39 now and having kids is tough, but I have one drive to work with my wife, which is nice. and we drop off the kid at daycare along the way. And then I pick him up from daycare, return to my empty neighborhood, bereft of kids, maybe probably just like your neighborhood. Our communities doesn't have its own Little League anymore. I honestly don't know how to reliably get my kid at playmates. What are we doing here? In the 1970s, before shopping containers, we all had cars, a house, food, some form of TV.

And we had kids, people graduate at a job that paid enough to have some form of life. And if kids in their early 20s, in this information economy, it is really hard to have kids early. and I need a bit more animal spirits myself because let me tell you it isn't easy having kids late and my neighborhood is empty. Everyone says the person on the other end of the survey

that they are doing fine but their neighborhood is empty too. Anyway, thanks for all you guys do. So I can't empathize with this or I can't relate to this because my neighborhood is the opposite of empty. Yeah, so is mine. We have a ton of kids.

But I get the whole thing behind thinking in the past people having kids because that's a real concern is the fertility rate is dropping and people aren't having as many kids. I also wonder though what young... So my wife and I had

kids when we were, I was 32, I guess, 32, 33. And I think about what if we would have just had kids when we were like 22? I enjoyed having that extra buffer period to enjoy my life. I wonder how many people, young people want to grow up back quickly these days. You know, I think, I just think it's an affordability issue. So I don't think we're arguing whether it's good to have kids at 22 or 39. But I think it's also a maturity issue. In the past, people had to grow up and be more mature way earlier. And we, I don't think we, I don't think our young people are mature enough to have kids these days. So here's my takeaway from this email.

This person represents millions of Americans, right? This is not a completely, this is not a total outlier. However, so people, everyone's people have seen, especially in the Midwest, towns that have been howled out that once were manufacturing hubs that are not anymore. That's a real thing. Yeah. So if you are this type of person who lives in this type of America, of course you feel this way.

It doesn't mean that it's representative of the economy. it doesn't mean that the economy isn't, but for these people, it really isn't. And so I could cite Collins data points. And I am on the side that like tariffs are not the answer to this, right, which is a separate conversation. So there are millions of Americans that feel this way, but their attitude towards people like us complaining about the stock market, I understand where they're coming from, right? How could you not?

I don't like, I don't agree with their solutions, obviously, but I understand. I understand why they feel how they feel. Well, Frederick Lewis Allen had that great book only yesterday that talks chronicles the roaring 20s and then the aftermath. And he talks about the roaring 20s were this unbelievable time in America, obviously. The war was over, the Spanish flu was over, people decided we're going to spend money and have fun. But he also showed, remember back in like the 1800s, 85% of the country worked on a farm. And he said the 1920s, that was when people started going to manufacturing jobs for the first time. And he said that farmers of America got absolutely crushed as people went from working on farms to working in

manufacturing. In that period of transition, the farmers were like, to them, it felt like a depression. But to everyone else, it felt like the biggest boom time in history. And now we're seeing... And that's capitalism. That's progress. And unfortunately, people are left behind. Yes. Unfortunately, that is kind of what happens. And I think... And so it's weird to scream at these people, you're wrong. Because what do you mean they're wrong about their, about their own situation? Right. But the whole AI robotics thing is not going to make this, is not going to lead to more manufacturing jobs. We're not going backwards.

No. We're not going backwards. And so, uh, so this idea that we're somehow getting ripped off to, to the bereft of, that I didn't, that's not a, I didn't use that word, right? Uh, but. A for effort. Thank you. Uh, the rest of the world is ripping us off.

Ooh, not even close. Geez. Um, so somebody posted a chart. The US, the United States renamed for countries with similar GDPs. And this is, this goes back to 2019. But nevertheless. California does as much GDP as India, Texas as Brazil, Hong Kong, Illinois, I'm sorry, Netherlands. I always get Illinois and Indiana backwards.

So New York is Canada, Michigan is Belgium. So the point is that, like, we are the richest nation in the world by any metric. And this idea that the rest of the world is taking advantage of. And listen, I'm not going to pretend to be like an international cross-border economist. I don't know the details of how all this works. And I'm sure there are things that are, I'm sure there are areas in which it's unfair and we are getting ripped off. Can we discuss, though, too? There's the economic impact of this, obviously.

Can we discuss how the internet has brought us to this plates too? Yeah. This does not happen without social media of the internet. Of course. Right? It feels like we are being run in some ways by commenters on Twitter. Yeah, it does. Because it's true.

And the hard thing is, when you have a post that sort of blows up, I had to mute a lot of conversations on Twitter. I was, I'm not going to lie. Through this, the last couple weeks, this is probably about as angry as I've been about a bear market. Usually I kind of, like, you know, I think this is the dumbest bear market of all time. Yeah. And if we go into recession, it would be the dumbest recession of all time. And so I was putting some tweets out there and I was venting. And the comments I get, it's hard to tell the difference between a bot that's programmed to think a certain way and the way that some people are replying. Because they just, you know exactly what they're going to say. Yeah. If tariffs are so bad, how come other countries do it? think we've lost the ability to think critically. And that is a thing that worries me that this is not just a one-time shot across the bow. This is something that is. And this is something that I want to talk to, we're going to talk to Derek Thompson about his new book in a couple weeks. And I think one of the things I like about the book, I don't know if you've read it yet, is that it's an

optimistic book. It's not a pessimistic book. And my biggest worry, and I want to ask him about this, do we as a society have the ability to back an optimistic message like that? that. And I don't think we do anymore. I disagree. I hope we do. I'm worried that we don't. Getting back to the execution of these ideas, so some of the towns that have been hollowed out and some of the areas where we're vulnerable, that we have no production, that we're just reliant on China for whatever, I think most reasonable people would agree that we do need to protect national security interests, right? That should be like a bipartisan agreement. Like, yeah, some of the stuff needs to get fixed.

do it that way. Like, let's be a little bit more targeted these blanket tariffs on everyone everywhere. This is not the way to do it. No, if it would have been, if it wouldn't actually been targeted, that would have made sense to me. Listen, we're not going to let China rip off our technology anymore. We're going to produce chips here. That sort of stuff would have made sense. The way that we're doing it now is just, everyone's just going to end up paying higher prices and businesses are going to be hurt. And guess what happens? Businesses are going to protect their margins, and that means they're going to cut costs. And what does that mean? Layoffs are coming. There's going to be a ton of layoffs coming in the months ahead. We'll say. Oh, no way. I almost can

guarantee this. We're going to see a lot of layoffs because of this. Probably. Companies are not going to eat their margins. Let these eat their margins. What if they just make stuff with shittier products? Are we going to wear Nike's and they're just going to explode after the whole stitches are going to fall apart? Well, I tell you what, maybe we need to start making fishing poles in America again because I bought like five fishing poles already on our trip, and every time I do, they break. Car dealership guy tweeted, Mercedes-Benz to, quote, protect the price of its vehicles in the month of April. Parts pricing for customers will also remain unchanged through April. Incentives and discounts continue to be defined monthly and remain available.

Stand by to standby. So I just saw a commercial down here for like a Tommyami Ford, or however you say that, word, like they were having a pre-tariff sale. Buy your car now before the tariffs hit. You know what else is going to happen, too, is used car prices are going to skyrocket. So maybe you can actually sell your Jeep for more than it's worth. So what about this? We're going to see a lot of unusual data, people buying before tariffs, and there's going to be a surge in the hard data and Trump's going to declare victory? It's possible we see that. It's also, we're also. No, there will be.

funky data in the next month or two. Probably. As people get ahead of this, it is going to be weird. Somebody emailed us. Guys, last week, our team at a bank was debating, what's the opposite of animal spirits where we came into the year with? And they landed at sober resignation. Oh, that's pretty good.

I don't know. All right. I like sober resignation. All right. Last thing before we get to the market's reaction, we got small business optimism this morning. Mike Sucardi tweets that the index fell 3.3 points to 97, its lowest level since October 24, and its largest decline since June 2022, down three months in a row. I guess this is the thing like the Ron Bergerty, I don't believe you.

Again, maybe I'm just a complete idiot, but I don't believe him. I don't believe because if I'm wrong and. These are not a negotiating tactic, which I think they are. And these policies go through. Ben, I do agree with you that we will be down another 40% from these levels. So I made this point in a blog post. You remember the old story from Art Cashin about during the Cuban missile crisis, how he talked to the old trader.

And he said, we have to sell everything now. There's going to be a potential nuclear war. And the old trader said, no, no, no, no. When the missiles are flying, you buy. Because guess what? If the missiles actually come and hit our shore, it's not going to matter what you anyway because the market won't be open anymore. But if the missiles don't come and you buy, you're going to look a genius. And it does seem like that last week, your whole point was a binary

outcome. It feels like that because, again, if these tariffs are implemented as he laid them out in that stupid sheet of paper that he's holding, if they're laid out like that, the market is going to be down 30, 40, 50 percent. And I, again, I don't say that lightly, but that I really believe this. Yeah, so do I, for the record. Okay. So do you think, so I, I got a flashback to 2008 on Sunday night. So Thursday, down 5%. Friday, down 6%. When futures opened down 5% or 6% Sunday night,

that reminded me of 2008 because every time over the weekend, something really bad would happen, and futures would get slaughtered. So I looked at this, the two days, in the two days Thursday and Friday, the Dow was down 9%, S&P was down 11, NASDAQ was down 11, Amazon was down 13%, JPMorgan was down 15, Nvidia down 15, Apple was down 16, and Boeing was down 19 in two days.

It was pretty close to a Black Monday-ish for two days, which is just nuts. Yeah, market did not like that. Joel Wise and South said, this is the 11th worst three-day performance of all time. And if you look at this list, it's recessions, 1929, World War. two depression. It's the worst of the worst, essentially. This is a great looking chart from Luke Stein. I've never seen data display this way. We just finished the 10th worst week for the SP 500, down 9%. 10th worst week since 1940. You ever see it laid out this way? No, it would take me a really long time to learn how to do this on Excel, though I feel like.

No idea. All right, so we got a, where do we go here? Let's start here. So wait, let me, let me just lay out, like, where I was at on Thursday and Friday. So Thursday, the day after, remember we were all watching the futures market because he did the announcement at 4 p.m. or whatever, and the futures market originally was okay. It was weird because we rallied pretty hard into Liberation Day. Yes, because people are trading on rumors and who knows. And Thursday starts off and the stock market is slack.

And then it keeps going down and down and down. And we flew out for spring break at like 1.30. So I'm watching the markets, you know, on my phone all day, seeing what's going on, what are the announcements, and I'm taking off for spring break. And then the next day, Friday, we get into Florida. The next day, we had planned to go to a water park on Friday. We bought the tickets ahead of time, and I'm watching the market just melt down in real time. And the stock market goes on 6%. One of the worst days, I mean, since 2020, but one of the worst days of all time.

What was, I don't know where it hid in the hierarchy, but probably one of the, what, 25 worst days of all time? Something like that. It was bad. And so we go to a water park and I had fun at the water park all day with the kids and wrote a bunch of rides. You know those water slides where you go down the water slides straight down. And at the very beginning, you feel like you come like six inches off the water slide like you're floating in midair. You were done to those before. And you come down.

Then you scream at the bottom and it just gives you a huge wedge. Right? We had one of those slides and we did it a bunch. My kids loved it. and that's what the stock market felt like that day. But here's the thing that I realized. Me sitting in front of the computer screen was not going to make the sell off any better. Like, I felt like, I almost felt guilty that I wasn't sitting in front of my screen all day watching. But I also thought, like, what good would that do to sit and watch the stock market get hammered all day?

It's not like I could put my hands in a steering wheel and control it any better. I couldn't make it go up. So not being in front of the screen and watching it It was actually a freeing feeling Because there was nothing I could do Right? And my whole thinking was life goes on It does

Right? You can't let like a couple bad days in the stock market Throw you off from doing what you were doing anyway Although I'm sure you were in front of this screen all day I was, I sure was Are you trying to push it higher on your own? I was doing some buying I'll get to that in a minute

Bill Ackman tweeted, if you haven't noticed by now, I speak the truth regardless of the consequences to me personally or what other people think. Somebody responded. Good job speaking out, but it seems like you should have foreseen the chaos. Your anger toward Dems clouded your judgment in my opinion. Akman tweeted back, I have no anger toward Dems, just disappointment. This is the part that I want to italicize and bold. I don't think this was foreseeable. I assumed economic rationality would be paramount. My bad. And that's where I was. That's a lot of people, obviously. That's where I was. No one possibly could have assumed the president is going to crash the market like this on purpose. Especially the pro-business president. The guy who all he does, his first administration, is tweet about the stock market and any down day in Biden's administration tweet about how Biden should be impeached because the DA was down or whatever. So the analogy that I gave was there was a red button on his desk that said push to destroy the economy and he pushed it. I couldn't believe that he would do that.

And so that is still where I'm at. I still think that this is negotiation executed terribly. Tom Lee tweeted, or Tom Lee was on TV, saying we want to and credit to Tom for doing this. We got it wrong. We want to apologize as a terms of tariff liberation day were far worse than we expected. The resulting market theory is not due to a reaction to a trade word, but rather the fact that the White has broke a core covenant of capitalism. So Tom Lee owning up myself and Bill Ackman, I think this representative of a lot of people on Wall Street felt. By the way, I love that you just put yourself in with Tom Lee and Bill Ackman. man. Yeah. Me, Tom, Bill. Here's a thing. There aren't enough rich people who will say,

you know what, hand up, I was wrong. And I think a lot of it, I think a lot of people say, oh, thanks. A little too late for you, Ackman. I think that's a lot of people think, but, like, at least you're saying, like, I will, and again, I think a lot of people should just say, I thought we were getting deregulation and lower taxes, right? I didn't sign up for this. Yeah, it's okay. Listen, wrong all the time, publicly wrong. It happens. Yes. NBD. So I did write this in the dock, and I had to delete a lot of the stuff that was in the doc because it aged so quickly, so poorly, so poorly, so quickly. One of the things that I wrote was, this was, I guess, over the weekend. I'm a little bit nervous that I wasn't nervous. Like, I wasn't feeling any sort of panic whatsoever. Sunday night, I felt it. I felt the feelings of like, okay, okay. Sunday felt like the ship was going down a little bit. Yeah, Sunday night futures opened down, whatever. I don't know, 4%, 5% out's worst.

We finished green on Monday. But what was interesting on Monday was Walter Bloomberg, who we've been talking about, but I think he made the joke, is this a robot? Like literally is a- Preachery as an AI. Walter Bloomberg at Delta 1 tweeted, Hasett, quote, Trump is considering it a 90-day pause in tariffs. And we had the craziest intraday volatility I've ever personally seen in my career.

It was up 70% in the NASDAQ, was in like 20 minutes, then gave it all the way back and then it finished up on the day. But I think the fact that the market isn't down a lot more and the fact that you get this sort of rally on any type of news reaffirms my position that if we do get a resolution that the market will scream higher. I don't know, man. We were down almost, we were down 20% in like that. You don't think that was scary enough?

What do you mean? You just said that the market, that the market isn't down more. The market went down very fast. If you look at a drawdown chart of the S&P, it looks like it fell off. Oh, yeah, yeah, yeah. Trung Fan, this is fantastic. You see this meme? It's Walter and Jesse from Breaking Bad sitting at the diner.

And Jesse says, you follow Walter Bloomberg? Huh? So there's an anonymous ex-account, Walter Bloomberg, Swiss dude, but his real name isn't Walter and he doesn't work for Bloomberg. Weird. He takes paywold financial news and pups at it. to 850,000 people on his feed. This morning, he said Trump was going to delay tariffs by 90 days.

Markets ripped, and it wanted $2 trillion in minutes. Turns out it was fake news. Markets dumped again. He misheard of CNBC Q&A with the White House official. Then CNBC published a story with him as a source, which he then sources his source. People wondering if he could do it again and trade on it. Would be insane anyway. Farcoint is up somehow 100% since Liberation Day.

Walter says, Jesse, what the fuck are you talking about? Wait, Walter Bloomberg is from Switzerland? Mm-hmm. Okay. So, all right, a core tenant that I have when investing, and I can't help it, I'm proud of it, it's what I do, I have to do. When the market crashes, when the market panics, I buy. I have to.

When the markets around 5% in a day, I was buying on Thursday and Friday. It's bad as it felt I was too. And those may be turned out to be way early, and it felt like it after the fact. Because, again, I still think the prospect of like a 30% percent. percent crash in total is still very much on the table. Agreed. But what else are you supposed to do? Right?

So Pierce Tread. Pierce Crosby tweeted, U.S. economic policy uncertainty index. And obviously, spiked basically highs on record. Then he shows S&P 500 returns a year after the spike. And not a perfect track record, 0.1, 08, we were down more a year later. But a lot of people, and I don't know if this has to be nervous. Listen, this muscle memory, it's going to take a while to unwind. Bank of America tweeted, I didn't tweet this. Somebody else tweeted it.

Client U.S. equity inflows were the fourth largest in our data history since 2008. Balchunas tweeted VOO took in $4 billion yesterday. We're recording this on Tuesday, by the way. Its biggest inflow in about three years. So people are, at least retailers buying. And we asked, like, what would, what would, what would, have to happen for this to reverse, for the buy the dip, the every two weeks, like for there to not be some sort of, and I don't know if it puts a floor underneath the market.

I don't see how you could say that because we could still go a lot lower just to fight that people are anti to the 401K. But Jeffrey Patak, we asked, like, well, what are people doing 2022? And there were outflows from mutual funds, as there always are. And the outflow from mutual funds exceeded the inflow into ETFs. but the VOOs of the world, they bought them. Yeah. So that's the thing.

My whole plan, I was kind of laying it out in a blog post. Every week I buy stocks in my brokerage account. Every month I buy stocks in my SEP IRA. Every other week, I buy stocks in my 401K. I'm not going to change that because of this. If anything, it makes me feel better making those purchases because stocks are lower. And the thing is, if you're a young person, And this is not going to feel like a blessing if we get a complete wipeout in a recession.

We've said you don't cheer for a recession. That is you don't want to play that game. Again, that's a Russian roulette, where if you lose your job, who cares how low stock prices are, or if home prices come down or if interest rates come down. But the fact that stock prices are 15, 20 percent off their highs, and for individual stocks in some cases, it's more like 40, 50, 60 percent, you know, you still think of this is a good thing. And you don't try to overthink it. Okay. Here's the thing, though. Here's my worry is interest rates began to creep up again yesterday. That is a big problem. If we do get a spike in inflation and rates go up and the Fed says we can't cut rates, like this, that's where this thing is not just like one or two announcements and everything is back to normal. This is this is where this turns into a multi-year kind of thing and trust is broken. And then. then we see a sideways bear market for three years. And that is the thing that breaks some people's backs.

Totally possible. Sintimate trader tweeted the SMPHRATOX after the VIX hits a high of over 45 for the first time in a month. So I feel like you and I have switched roles here. Usually in the downturns, you're the one who's not panicking, but you're feeling bearish. I feel like we've switched roles where I've felt very bearish. And I'm not trying to take a victory out for last week, but what I felt, what I worried about was actually what happened. And I think it might even worse than I thought.

Yeah. So again, I'm a little bit nervous and I'm still not nervous. But when VIX over 45, so basically this looks at panic. And generally speaking, so two months later, it's higher 67% of the time. So certainly not always. Three months later, it's higher 83% of the time, six months, 92%, 12 months, 82%. So those are the odds. Like this goes back to 1990.

Those are the odds. positive 82% of the time after a panic. Not 100%. There's no such thing as a certainty with investing. Subaru trade tweeted what happens to the S&P 500

after two consecutive days of negative 4% declines. Which obviously doesn't happen very often. No, six months later, it was negative. So there's like N equals, whatever. 11 here maybe. Positive later, 90% of the time,

six months, 80% a year later. Look at those 1929 ones. It happened three consecutive weeks in the 1920s. So, and this is not to make fun. We got a lot of people sending this to us. This is nothing to do with Matthew Shaughnessy, so I'm not dunking on somebody

that's not a financial expert. I'm just, and I'm not dunking on the Wall Street Journal. People know that we like these stories. It's just funny that the Wall Street Journal does this. Whatever. Can't help it. Tickles my funny bone.

I'm just sending out as much cash as possible, said Matthew Shaughnessy, who runs an auto repair shop and pet spa in Idaho. If I try to catch his falling knife, I'm just going to get cut over and over and over on the way down. The 43-year-old said he holds his shares in Rivian, in Roblox in the days. He sold, I'm sorry. He sold the shares in Rivian and Roblox in the days leading to Trump's Rose Garden tariff announcement. He's still on shares of Novo Nordisk and he has some $10,000 in cash in a brokerage account, Shaughnessy said. He doesn't plan to buy any more stocks until the market carnage subsides. I don't know why this is necessary. Again, no disrespect to Matthewsie whatsoever. He's waiting for the dust to clear, right? Okay. So this morning, Trump tweeted, or he's social or I don't know what they're calling it. I just had a great call with the acting presidents of South Korea.

We talked about their tremendous and unsustainable surplus. We are likewise dealing with many other countries. He says, China also wants to make a deal badly, but they don't know how to get it started. We are waiting for their call. It will happen. God bless the USA. He's negotiating as far as I'm concerned. I hope so because if he's not, then things are going to keep getting worse.

All right. So is it premature to buy? Should you wait for the dust to settle? Here's how I see things. And why? And this is not blanket advice. You do what you want to do. Right. There's not like, there are many different personality types. That's what you have to

understand when you're listening to different people. My personality, my investing personality, maybe 180 degrees different than yours. It's fine. There are many different ways to do this. For me, for me, I buy panic. Because I know that if we, if we get the bounce and roll over, then there will be a point of time where I'm too scared to buy. So I'd rather like just buy before that point happens. Okay. I always buy too early as well. So here's, so here's the thinking. You might be like, Michael, how dumb are you? You're buying stocks. We haven't even, we're day four.

The towers, it's not even April 9th. What are you doing, you dumb bald asshole? Just, can we just see how this shakes out? Here's the problem. The market doesn't wait. The market didn't even wait. I wonder how surprised they were in the wayhouse to see the market just get completely slaughtered.

And back to the thing of the stock market, not caring what you say, you can tell the stock market all you want, that these are going to be wonderful, beautiful policies. It does not care. So here's the thing. To your point about being early in the stock market moving way faster than ever before, we could see the stock market rallying in the face of a recession. Big time. 100%. Like, we could, the recession might get here six, 12 months, whenever it happens, if he keeps going down this road. Just about 2020. Yeah. Remember when we made all-time highs later in the year? And you're like, you're telling me that stock XYZ is better today than it was in 2019, how does that make any sense? And people, myself included, it didn't make any sense

to me. But that's how the market behaves. It bottoms way in advance of the things turning. So we have this chart from JP Morgan that I suspect will be shown for a long time. And it shows the course of it's from Sembillus. The S&P 500 earnings, payrolls, GDP, the market on average bottoms, five months before GDP troughs. So the news will continue to get worse and worse and worse. and the market will stop going down. You're going to say, what? Why is it the market going down? Because it already went down.

It already went down. Apple fell. How much Apple fall? 30%. InVity was down 40%. In like a couple of weeks, it already did it. So we have this great chart from chart goat, Matt, chartkin Matt, showing since 1957 all of the bare markets,

and there was 11 of them, the stock market bottoms on average, nine months before earnings bottom. So on the one hand, I understand how it feels, way premature because this shit could get way worse. But that doesn't mean that the market's going to be like, all right, guys, come on in. We're all clear. We're just going to, we're just going to stop going down and we're going to let everybody back in.

Everybody come back in before we rally. It doesn't work like that. Yeah, the stock market bottom in 2009 in March and the unemployment rate went up all the way through October until it finally peaked in October, which was whatever seven months later. The thing is the stock market moves so much faster than they did in all these periods, too. So this is looking at all these different periods in the 50s and 70s and 80s. And even the early 2000s, the great financial crisis, the market moves way faster on what I did back then. Yes.

All right, let's just talk about some economic data real quick. Because people are waiting for like the hard data to fall off a cliff. And we got non-farm payrolls data last week, significantly better than expected. Yeah, the market obviously didn't. Don't you think, though, that at this point, you cut it off and whatever has just happened in the past six, 12 months for the economy, it doesn't matter anymore. I don't think it does. I think you have to start new and we have to see what happens from here.

This is a total pivot point, this is a before and after. I agree. I do agree. So while I don't think that we're going to look back on 2025 as like a global inflection point before and after, I could be wrong. I do agree that the data will continue to soften as a result of the lack of confidence But what if we do look at this as a global inflection point? What does that mean?

Then it's really bad. For everyone or just for us? Because I don't know. How could the rest of the world do bet do great if the largest consumer in the world is sucking wind? I don't see how that's possible. We are the global importer. It's true.

That's the thing that concerns me, though. What if in a small way, things are just different? And, you know, like, if you're, come on, you think, you think, you think, I don't know, you think we're going to let that happen. I sure, I sure hope not. Do you really think we're going to let that happen? I do think that if we, if we had a 40% stock market crash and the economy went into recession because of these idiotic policies. These people are going to be like rats in a sinking ship. Yeah, I do, I do agree with that, that I, I told eventually, I can't believe Congress hasn't stepped in to try to take these powers away from him yet.

Like, grandpa, give us the keys. you don't eat your drive anymore. Ben, what you just mentioned, the way that you just said, like, that's generally how the market behaves. The stock market, investors tend to expect the worst. And the worst doesn't usually come to pass. Now, again, I could hear somebody saying, Michael, we're flat you over year. What are you talking about? This hasn't even started. I get it. I get it. Unemployment rate, still pretty low, creeping a little bit higher, but still low. All right. Anything else you have to say. That's what makes this so, infuriating is that he inherited a pretty darn good economy

with low inflation, low unemployment rate, and he's just going to blow it up for no good reason. That's the problem that I think so many finance people are just ripping their hair out right now. What are you doing? Why are you focusing on this? You focus on a hundred other different things. Why this?

And again, this idea that this is going to only hurt rich people is so foolish. It is so foolish. Yes. Guess who will be able to weather the storm, rich people. They'll be fine. Okay. One thing on AI, I thought it was kind of cool. And this is a plug for Exhibit A. So Michael Kitts has put on the Exhibit A on the Advisor Technology heat map, or I don't want to call it a heat map. And I uploaded this onto Chat, GBT, and I said, put a circle around, a red circle around, or a red square around Exhibit. And it did it. but it changed, like, a lot of the images, which is weird.

But back in the day, you would have to, like, use snip, maybe paste it to a spreadsheet, like, hit the square button, remove the, the shading or the color. And it did it for you? Okay. Let's talk about crypto real quick. We haven't talked much about that. So it was very bizarre. I think you even sent me a message, or me and Josh being like, crypto is holding up really, really well right now. And last week, as that was on that was on.

Friday. Yes, I think Friday, Bitcoin held up pretty good. And it might even have risen a little bit as the stock market is crashing. It seemed weird. And then over the weekend, one of the Winklevoss twins said, look, Bitcoin is finally decoupling for risk assets. And almost to the minute after he tweeted that, crypto just completely crashed. But why was it for that one day, why was crypto still doing okay?

I mean, there must have been some flow. I don't know. I have no idea. So this tweet from punk nine. 9059 says this chart looks at S&P 500 daily returns versus Bitcoin over the past 15 months. And he said pretty much every day the S&P was down 2%. Bitcoin was also a negative territory. So I don't know.

I can't tell you why. It was an outlier. Certainly he's not holding up. But then it played catch up over the weekend. And do you think that's why features were down so much too? Because it was following crypto's lead? I don't know. Okay.

I mean... I think absent crypto features would have still be down quite a bit. Anything else you have to say about the market? Listen, I'm not, I'm still not naive to the risks, right? Like if this is not a negotiation and the tariffs are the point, then low we go. I'll believe it when I see it. I am still a long-term optimist. And again, I think the stock market eventually will be just fine.

My biggest worry is that there wasn't a huge margin of safety coming into this in terms of them. I mean, the consumer balance sheets there is. So I think that the consumer is not going to get crushed right away by any means. but in terms of valuations for U.S. stocks, there wasn't a huge margin of safety. That's the, I suppose that's the concern. It's that, just the valuation premium, if that compresses along with the earnings,

that's the, okay, this isn't going to be very fun. We shall see. All right, I have some travel thoughts. Airplane first. This has happened to the last two times I've flown, the rush the aisle people weren't when you land because they either have, they want to get off the plane or because they think they had,

and it's just like when, you cut someone off in traffic to get in and you give them the wave, like, just say something. Just, hey, I really have to catch my flight, but the people, they run up and then they pretend they look ahead like you're not there. And I just want to be like- Nothing grinds my gears more than somebody who cuts in front of you as you're pulling to a red light. It's the rudest. Yes. All I want is, hey, I really have to, do you mind if I just go real quick because I really have to catch a flight or I have to get off the plane? But the people that like run ahead four seats and then just get stuck, it's like, what are you

doing? Literally. You're going to make it off 60 seconds earlier. All right. Cabanas are out of control. We got to put a stop to this. There's way too much cabanas. So the first, we got into town. We couldn't get in our house until Saturday. So we stayed in a hotel. And by the pool, there's all these cabanas. And then the next day we go to the water park, there's all these cabanas. You have to pay it to run them, obviously. I know that there's some places that are these really, really nice cabanas. And they have like TVs and Air Mistres and stuff. And you pay like $600. And it's really nice. But these are like, we're talking like bedbath and beyond cabanas. you know, all it is is shade and two lounge chairs.

And they're charging, I don't know, $150, $200 just to get some shade. It's too much. Why does that bother you? Seems like a weird nit to pick. When did we start charging people for shade in the sun? When you were growing up, did they ever rent out cabanas? I feel like this is a new thing. It's just a new way to rip people off.

Shade is a scarce resource. I just think these cabanas aren't even nice. Right? And then you look at them. And most of the time, they're all empty and just sitting there and no one's using them. Yeah. Well, the nice combat is a really nice. And those are way more than $200.

Yeah, they're really expensive. I had a sentimental moment with my kids the other day. So I'm still the entertainment dad where I have to, hey, dad, you got to come in the pool of those. Hey, dad, you got to ride the bikes with my kids do stuff on their own sometimes. So they still want me to, like, be their entertainment. And I have to play games and throw balls. And sometimes I kind of like, can I just sit here and not do this? But I think I'm going to really miss it when it's.

it's gone. Like the day that they stop asking you to do stuff and not be the entertainment dad anymore, that's going to be painful. I'm already feeling it. I was in the moment playing with my kid. I throw the ball and they jump in or we play paddleboard or whatever. I'm really going to feel it when they don't want me to do that anymore. I'm the opposite. And I think I wish I was more like you in that sense. My kids are very self-sufficient in terms of like entertaining themselves. Sure, they want me to come in the pool and like the lazy room and stuff. and I do. But they are not reliant on me to entertain them. And I don't know that I'm going to miss that part of it. Maybe I'm wrong. Maybe I will. Time will tell. All right. So for some

reason, the laptop, I'm doing this from an Airbnb in Markle Island. And the camera on my laptop, for some reason, has never worked. We've had the tech people in our team look at it, the production people. No one can figure out how to get the camera to work on my laptop. And where was your laptop made, China? seriously. And it's never worked. I can't, I can't figure it out. And I got down here and I realized yesterday, I don't have a camera to do the podcast. And I ordered a podcast, or I ordered a camera on Amazon at 6 p.m. yesterday. It was here by 4 a.m. this morning. That is a benefit. Who says we don't have it good? Right. Another one, a lot of, I got a lot of emails about the Canadian

geese from people. Holy moly did we get a lot of emails. A lot of them. My favorite ones were the fact that a lot of people call them Cobra chickens. That is a great nickname for Canadian geese. Yeah, that's good. I like the covert chickens. Yes. Did you see this, Ben? Somebody tweeted, you're hearing the first howl of a dire wolf, excuse me, in over

10,000 years back from extinction. I saw the story on the news this morning about it. Using ancient DNA from fossils up to 72,000 years old, colossal reconstructed a full genome through precise crisp edits and brought the species to life. Holy moly, that's kind of neat. They interviewed the scientists and she's like, this isn't Jurassic Park, and she kind of gave a nervous laugh. It's like, this is Jurassic Park. What are you talking about? Yeah.

So these are giant wolves? What are we going to do with them? It's like the big wolf on Game of Thrones. They're going to protect blind kids. Quick plug for future-proof leaders retreat May 12th through May 15th at the Broadmoor in Colorado Springs. The Broadmoor is a gorgeous hotel. There will be no booths, no overcrowded panels or anything like that. These are wealth management, CEO, CIO, CTO, CMOs, CMOs, CMOs, industry executives from asset management, fintech financial services. One of the great things about this event, in contrast with all the others, is it's much smaller and more intimate. I think last year there was not, I think. I know there was less than a thousand people there. I don't want to give an exact number

because I'm not quite sure. But the experience as an attendee last year was different in the sense that it was much more intimate. And there's a lot of people that came that the feedback I got And I totally, I totally get this. Listen, I wanted to hang out with you guys. I didn't want to be one of 4,000 people. So, sign up May 12th, May 15th, Colorado Springs. People love those one-on-one meetings, too. Yeah, they do.

People get a lot out of those. It's nice. All right, recommendations, Ben. What do you got? All right. So I told you my daughter and I are going through the list of good classic sports movies. And we watched Hoosiers before, which you said was underrated, which I hope you were lying about. So we watched your favorite of all time, Field of Dreams, which is nice because they have Netflix and hotel rooms now.

And I don't know, I hadn't seen this movie in 25 years probably. And there's no better way to describe it than it's just a magical movie. The whole time I just had a big smile on my face. It's perfect. And at the end, I totally lost it because he's playing catch with his dad and his dad's name is John. And so I lost it. My daughter's like, why are you crying? Just leave me alone.

But there's the part where him and James Earl Jones go to the Red Sox game. and they get two beers and two hot dogs at Fenway. And this is 1986 or something when this movie came out, maybe, 87, something like that. How much did two beers and two hot dogs cost at Fenway back then? Two beers and two hot dogs? $9. That's seven bucks. That stood out to me.

That would be, what would that be today? $50, maybe? Yeah. We've been watching 1923 again lately, season two. I think we have one episode left. Wait a minute. I thought it just started. No, it's all out.

I thought that I would be done after one season, and it took me a while to get back into it, but it's still a good show. And there are some things that happen in the show, like the foreshadowing is like they couldn't be winking at you harder. Like there's this part where she gets over on a boat from Africa and she gets off and she's in the Grand Central Terminal in New York, and five people tell her like,

be careful, there's a lot of pickpockets around here. And it's like, be careful, someone's going to see her stuff. And then, of course, someone pickpockets her and steal her stuff. But it's still, it's, I'm surprised I'm not I still like it. It's like a fun background show, right? Yes. It's still pretty good.

Let's save White Lotus for the end because we'll do some spoilers. So why don't you go? Okay. I rewatched, I did it some Valkimer stuff this week. By the way, maybe I, I don't know, it's weird like you just, you don't appreciate these people until they're gone. Unfortunately, that's just reality of life. He was one of my favorite childhood actors and I didn't really,

I don't know that I would have listed him as one of them. but Willow was my first favorite movie ever. Oh, I loved Willow too. So I rewatched that one. Some new, some ones, not new, some ones that I hadn't seen, but I rewatched Heat. I haven't rewatched Heat in a while. I rewatch that one every two or three years, probably. They should do a release in IMAX because to see that on a giant screen with the machine guns.

Plus like the Dolby speakers for the sound. Yeah, close to a perfect movie as you get. You agree? Yes. It's the best type's movie ever made, obviously. Why is the pit only on Max? I didn't even realize until I went to watch it live on whatever night it was out. And Rob said, no, you have to go to Max.

I don't know they either. I guess I just watch everything on Max now. Because I'm a YouTube TV. Weird though, right? It is weird. All right. So I love the studio. I will make no apologies.

I love the third episode. I love the second episode. I understand some of the criticisms of why it's too much like KERB. I don't care. I love it. You're taking a little bit of contrarian stance here. I don't think so. The consensus that I've seen, the consensus that I've seen has been, like, wonderful. Okay.

My only problem is I think it's a little too over the top. It needs to be a little subtler. That's my only note. I love it. But it's great to see all those Hollywood people in one place. Wait. Oh, yeah. Go ahead. I'm sorry. I'm done. All right. White Lotus.

I watched the season finale. So, spoilers, if anyone wants to turn it off, they haven't watched it yet. I can't believe Tim Ratliff tried to kill his family with Pinacolados. I told my family, listen, I have respect. If I ever tried to kill you, and we're all going to drink the Kool-Aid together, we're going to do Miami Vices. Okay? Right?

Is that fair? I thought it was pretty good. It's the worst season so far, but that it still was high quality and really well done, and I'd still like it. Agreed. Worst season of the three. seasons, but I still had a great time. And I was happy with the episode.

Like, a lot of nits to pick, but landing the plane on these shows is very difficult. And I had fun. No complaints. The shootout and the, he always kind of surprised you like the fact that the women friends went back and they were all still friends together and I didn't expect that. So I enjoyed it. I'm ready for another season. I know a lot of people are pushing back saying they didn't like this season.

I still enjoy myself. Keep coming. All right, Ben, in conclusion, these are scary times. We're recording this at 1 p.m. or so on Tuesday. Scary times provide opportunities. I'm sorry. That is a core tenet of my investing beliefs. Not saying that this is the bottom or that the reward that you or that the risk that you take will be rewarded tomorrow might get more painful.

But I still believe this is the best way to building wealth. And I don't think that there is anything that could change my mind. I know that there are crashes, right? Like we've seen that. We've been there. We've done that. I know that's part of the game. This is why there's a risk premium, though.

The fact that the stock market could fall 20% in the blink of an eye like that, that's the reason that you get the long-term premium because of the risk there. I also, this is one of the things that just I will never back down on to having a automating good decisions ahead of time is so important because that was the other thing that made me feel okay to go on spring break, even though the market is falling apart around me. I've already made the good decisions ahead of time for not knowing that it'll happen like this, but knowing that the market could fall out about like this. Ben, in a hundred years from now, do you think you're going to be upset that you added to stocks this week? I don't.

No. I mean, by that point, I'll probably be like a, you know, I'll just exist in the computer, right? But in a hundred years, my great green kids will thank me. The S&P is trading at six times 2134 earnings. So pretty optimistic about that one. At this time next week, our stocks higher or lower than they are today? Not that we're a short-term, but I'm just either we're down another 10% or we're screaming back 5% or 7% higher, I think. I'd say higher, but, you know, sorry if I'm wrong. All right. Your handicapping skills haven't been that great the last couple weeks, but hey, keep trying.

All right. Hey, shoot or shoot. All right. Animal Spirits at the compound news.com. Thank you to everybody for the emails. We love to see it. stay staying out there hey listen

this is like scary times but it's still if you can take a step back it's still just fascinating to see that this kind of stuff can happen in markets still right if you get rid of the losses and all the potential

ramifications the fact that this can happen in markets is one of the reasons that I think that it's the greatest game that there is see you next time You know,