Animal Spirits Podcast - The Super Bubble (EP.273)

Episode Date: September 7, 2022

On today's show we discuss Jeremy Grantham's super bubble call, how "don't fight the Fed" has evolved, why all opinions are extreme today, how the bottom 50% are making the biggest financial progress, how the Fed screwed up the housing market 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 Masterworks. Michael, I was checking out my Masterworks portfolio the other day. Biggest win for me right now besides my one that sold is Cecily Brown Girl Trouble. It's up almost 40% from where I bought it, not to brag. But I've been noticing something interesting about Masterworks lately. When you and I first signed up, I think our minimum to invest was $5,000. Now, they still might have that same minimum, but new paintings are coming through. And I get the emails once or twice a week for new paintings.

and the minimum is now $500, which I think for a lot of people might be a little easier to stomach. A $500 minimum for a new painting is not bad, especially something that is a little illiquid because it's a piece of art because it's not going to trade hands every day like the stock. It's very illiquid. But you're not going to see the changes in it over time and having that one piece of your portfolio that's doing that. It's kind of Schrodinger's portfolio, but it makes it feel better. And I like the fact that they're now lowering those minimums again.

so you can now invest in a painting for $500 on MasterWorks. So go to Mass. I'm looking at my portfolio. What do you got? What's your biggest gain? Hey, wait a minute. How come, did you say 40% on your Cecily brand? I'm only up 37.

Or did you round up? I was running up. Okay. Come on. How about my Baskillat? Up 28, not to break. Do you have that basquiat? The loin?

I do. Yes. You have a loin? Yes. We're doing pretty good. All right. So see important regulation A disclosures at Masterworks.com slash CD. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnick

and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holt's Wealth Management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's Wealth Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management. management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. We're going to start the show today.

I'm going to hand the mic off, give a quote to a fellow bald of mine. Mr. Neil Kalshkari was on the Oblots podcast. Here's quote. I was actually happy to see how Chair Powell's Jackson Hole speech was received. People now understand the seriousness of our commitment to getting inflation back down to 2%. I certainly was not excited to see the stock market rallying after our last FMC meeting. because I know how committed we all are to getting inflation down, and I somehow think the markets were misunderstanding that, end quote. Ben, let me ask you this. How committed are they to 2%?

In other words, what if things start to deteriorate? What if recession talks pick up and the economy does slow? And inflation comes back down. And it's at 4%, but things are starting to get really funky out there, not just in liquid markets, but just things start to get a little bit nasty. Do they pull back? Are they talking tough? What do we think? It was a little weird to me to see a Fed chair openly rooting against the stock market because there's nothing that says that bringing inflation down means that the stock market has to come down too. Obviously, maybe that's what they want because they want tighter financial conditions. But I just, I don't know. I think it's, again, from last week I said,

it's easy to talk like this. Come back to me when the unemployment rate takes up above 4% or 5% or something, will they still be talking like this? Because I think they're going to reverse course really quickly because the thing is the Fed has changed their mind so many times. Remember, after 2020, they said, we're going to let inflation run hotter than ever before. And obviously, it ran way hotter than they thought. So the people who think that the Fed has got this hard line right now and they're going to do everything they can to do this. I'm sure they are, but they could easily change their mind again, too. That's not out of the ordinary for them.

Like if headline inflation comes back down to 5% and things start to get ugly, I don't think they're going to be like, sorry, we said 2%. Come hell or high water. We said 2%. I mean, you would hope that they're somewhat data dependent. if the economy really starts to buckle. We'll say, Ben, you made a really great chart on your blog showing corrections since the GFC. And this one's different. The other ones all came back relatively quick, like made up all their losses.

This one, the only one longer so far is 2011, and this one is going down again, whereas that one was already going back up. It certainly is different this time, this bare market. It almost feels like that bare market rally we had, or what we want to call it, kind of gave everyone a reprieve. And now it feels like we're right back to peak pessimism again. No way? No.

You think it was worse before? Oh, yeah. I think people were much more bearish in June than they are today. You don't think? I just felt like stocks rolled over and people got bearished immediately again, mainly because of the Fed. Yeah. The whole like don't fight the Fed thing for years, it was don't fight the Fed because they're keeping

interest rates low and they want things to get better. And I don't think you can agree. with that sentiment and not agree with don't fight the Fed now that if they really want the stock market to fall. But again, if the stock market got down to 25 or 30 percent and unemployment rates are going up, there's no way they can continue to talk so tough. That would be ridiculous, especially as you said, if inflation is falling because that's the whole point. So, but I think the whole don't fight the Fed thing here, I'm not a short term person, but I feel like if you're looking at like a three month window for the stock market and you're not a little bearish because of what

the Fed is saying, I think you're not paying attention. Counterpoint, if we're doing like fourth level thinking, maybe the stock market's going to say, we don't care if the Fed is bearers for three months. We're going to pay attention to what they're doing in six months or nine months or 12 months. So that's like the second and third order effects. Argue with myself, okay, there? Because yeah, it's easy to look at the market and be like, I don't really get it. Yes, the S&P's down pretty decent off its high, but what's it down year over year? It's not even down that much. It's like 12% over the last year, which if you think about it, it feels like it should be worse than that. Yeah. So is it not getting bad yet? Is the market looking past a tight fed? Jawboning. Who knows? J.P. Morgan had their guide to the markets out over the weekend or last week. And we've looked at these charts in the past, Ben, they do like the forward PE of the S&P 500 of the top 10 and the remaining 490. The top 10 stocks had a

forward PE of 35, that came down to 24. But look at like the S&P 490, I guess. So the S&P X the tap 10 stocks. Wait a minute. How is this not an ETF yet? The S&P 490. You should trademark that. I don't want to invest in the S&P X the best stocks or the big stock. It's not that. So the S&P 490 is trading at forward PE of 14.6 below its, what is this, 20 average? of 16.4. It started come down a lot, and a lot of those biggest stocks have crashed, Facebook crashed, Nvidia crashed. So a lot of those top 10 stocks have already crashed. But I think if you're hoping for like a really huge washout, you would have to see Apple and Amazon and Microsoft and Google really get hammered again, which they have. Apple did and then it came back. But

I guess if you want the Jeremy Grantham situation, you're going to have to see Apple at a 5 PE. What do you think? That's not going to happen. So Barron's had the cover story this weekend. I feel like we have this talk once every... Hold on. Hold on. Hold on. Before we get that, there was one other thing I want to show in this chart. Look at the earnings contribution of the top 10 in the S&P 500, based on the last 12 months' earnings. That is pretty wild. So we had shown that, like, yeah, the top 10 stocks are as big a piece of the market as they've been over the last 20 years, peaked at like 29% of the top 10 stocks. But also, they had never contributed as much to the overall percentage of

earnings, it was like 33% of earnings. That number collapsed. It peaked around bare markets and then crashed afterwards. Do you see that? Dun, dun, duh. With a little bit of lag. So I wonder what this is. Is this, whose earnings got killed? Was it Facebook? This is cyclical companies coming back, I guess, maybe? That's a good question. I'm trying to think. I'm trying to think if it wasn't the top 10 getting smaller so much it was just relative to the other 490. Either way. Either way.

Okay. Barrens, the stock market is in a super bubble. Renowned investor, Jamie Grantham says, I feel like once every six to 12 months you and I have this conversation because once every six to 12 months he calls this a super bubble. For someone who is, he's not just like a doom and gloom, hairy dent kind of guy who's a charlatan. Grantham is a thoughtful, intelligent, smart person. But he's been saying this stuff for like 12 years now. And I'm really surprised that he hasn't just said, you know what?

Stocks are overvalued, but I'm going to stop saying this is 1929. Like the lack of self-awareness for someone who's so obviously intelligent is a little surprising to me. So the reason why I almost debated like, should we even talk about this? But I feel like we have to because it's on the comfort of Barron's. People forward this to us. What he says matters. But he's been saying this to Ben's point forever.

So I did a piece on Grant. not to dunk, but just to, like, just to show people that he's been saying this for a long time. 2010, have cash, wait for stocks to fall. 2011. Grantham sees most global equities is ranging from unattractive to very unattractive. 2012, Jeremy Grantham warns 2013 will be a dangerous year for stocks. 2013, much of everything else is once again brutally, you get the point. Now he's saying that it's not just stocks, it's also bonds, and it's also housing.

But let's just use his own words against him. In 2015, he did a piece in Barron's, and Jeremy Grant him said, quote, I consider myself a bubble historian and one who is eager to see one form and break. I have often said that they are the only really important events in investing. I have come to believe, however, very reluctantly, that we bubble historians have, together with much of the market, been a bit brainwashed by our exposure in the last 30 years to four of the perhaps six or eight great investment bubbles in history. Japanese land in Japanese equities in 1989, U.S. Tech in 2000, and more or less everything in 07. For bubble historians eager to see pins used on bubbles and spoiled by the prevalence of bubbles in the last 30 years, it is tempting to see them too often. I'm never going to rule out bad stuff can happen in the markets, but it would be a little surprising to see in everything bubble that popped in 2008 to happen again less than two decades later. I'm not saying it can't happen, but they ask him in Barron's, well, what is the trigger here?

There has to be some sort of catalyst. And he said the twin shocks of inflation and higher interest rates. And the thing is, higher interest rates are going to stamp out that first one. The whole point is the Fed is raising interest rates to bring inflation down. Maybe you can say, well, they're not going to be successful. And inflation is going to be the thing that really gets it. But high inflation to me does not seem like the kind of thing that can bring down a super bubble, especially if it's already going to be falling at the moment. One thing that I definitely agree with him, though, is that the booms and the busts do define many people's investment careers and not just professionals for individuals as well who either do something regretful on the way up, regretful on the way down. Even if those booms and busts are just 5% to 10% of the time in the market less than that, that is where all the money is made and lost. Yeah, we're shaped by our experiences, whether that's good or bad. we've been talking a lot about all the time there's like record this record that this is never happened before that's never happened before when you look at a chart of consumer confidence you've never had a washout to the extent that we just saw ben you mentioned peak bearishness

a couple of weeks ago things were so it was a i it was consumer confidence it was everything right when gas was like five bucks so you've never had consumer confidence where it was and then the forward return of the stock market over the next 12 months be negative. I'm not saying it can't happen because it usually happened, has never happened before. Did you listen to the plain English podcast with Chuck Gloucesterman and Derek Thompson a couple weeks ago? So it was really interesting and I find a lot of the stuff he says really fascinating at a lot of levels because he's kind of trying to measure sentiment. His whole take was I can't prove the whole thing about sentiment because that stuff is impossible to prove. But he was basically saying that when it

comes to, the whole talk was about extremes and why people love certain things and hate certain things. And he was saying that there's no middle class anymore in terms of opinions. It's either love or hate and no in between. You have to pick a side. And hate is stronger. Yes, and hate is stronger. But I think that's the thing with sentiment now is that there is no middle class in terms of sentiment. People either love the economy or hate it, depending on their politics probably. And they love or hate the stock market depending on how their portfolio is. And if you ask them that, that's what they'll say, even if they're positioned for the middle ground. If you're a 60, 40 investor or whatever, you could say I love or hate the market, but you're positioned for the middle

class of opinions for the stock market. That was interesting. The whole point about it's much easier to unite people based off of sharing contempt for the other group. Jay Moore, you remember Jay Moore? He was like a 90s actor. He's in a lot. He was in Go and Suicide Kings. I know the name. Comedian now. You'd recognize him if you saw him. He had a stand-up bit before where he said, my wife and I don't share the same hobbies or love the same things. We share the same hatred for people. Yeah, this guy, yeah. Yeah, I think he ended up divorcing her. But anyway, that bit always kind of stuck with me. Wait, why are we talking about this? Because the sentiment number. You go to the extremes,

and I think that's the problem is that I don't think you can really trust these sentiment indicators anymore because they move so fast in both directions. Because I think asking people how they feel these days, they're giving you these premium supercharged versions of either their hatred of their like. Yeah, because the internet and social media, I agree with you. It's going to extreme. I agree with you. Here's my new rule. I have a new 20% rule. Okay. Anytime a company says they're laying off 20% of their employees, it's not the last time. The last time is always like a random number, 11.4%, 18.2%. 20% is a nice clean way to start. It's never the end. So a snap is canceling. This is from the verge. Snap is canceling several projects and laying off 20%

of employees won't be the last lie off. It's the first one. That's true. What do you think of that to I think you're kind of stealing my 10% theory, but... What was your 10% theory? That the first round of layoffs is always 10%. Ah, okay, fine. Did you see that? I think when they announced this, the stock price shot up, finance is a weird world where you can lay off 20% of your workforce and Wall Street rejoices.

Here's another one that always kind of gets me. I see this a lot. People talking about inflation, and it's usually like the Dumer people. Instead of talking about wages are rising for the lower class of people, they say wage price spiral. They make it sound like such a bad thing. And the whole idea is wages are rising for people in the lower level of income. That's what a wage price spiral is.

If people at Goldman Sachs get like 50% raises and their bonuses are up 50% year over year, we don't call that a wage price spiral. We call that a bonus. They deserve it. But if people in lower income spectrum start getting raises, it's a wage price spiral. And it sounds awful. And I get the idea. It's because they're worried about inflation.

and that's the biggest water I've ever seen. You're doing okay over there? That's a massive... I saw some Christmas test. He's a huge pelegrino guy. No, you hear my voice. I had a... So we had a blog party this weekend.

And the biggest takeaway is that the only thing people want to drink are high noons. I've never had one before. Kind of like coffee. I've never had a high noon. What's your deal? No, no. You're boycotting high noon? No, I'm just...

I have a very specific set of taste when I drink alcohol. The Pellegrino you're drinking, I don't like fizzy stuff like that. The only thing I drink is pop that's kind of carbonated. I don't like carbonated water. I don't like carbonated drinks. Got it. Just don't prefer them. Not like I hate.

All right. I understand. Everyone says that those things taste so good. But I just, that's not for me. I add three coolers. One full of beers, various beers, light beers, IPAs, and everything between. A cooler full of high noons and white claws. And we had some truilies.

Nobody likes Trulis or White Claws. You know, the hot. one here in Michigan is the summer, hot girl drink of the summer, long drinks. You've had that? That's Miles Tellers. L-A-W-N? Long. L-O-N-L-O-N-G. It's like a blue can. It's like gin drink, kind of a similar one. I'm like a year or two behind. Next year, long drinks are you going to be the hot drink of the summer? I'll find that about it next year. Okay. Oh, one last thing. I put Kobe on the school bus today. I was very nervous. Why? Just saying goodbye forever? Well, because kindergarteners should not go on the bus with sixth graders.

It is bizarre. Six graders are jerks. They're bullies. They sit at the back of the bus and they bully the little kids. Yes. You know what I mean? The kindergarten, they're so tiny. They don't know anything.

I think they make the kidney gardeners on our bus sit in the very front. Like my daughter's in third grade and she kind of can shepherd our little ones. But it is weird. You put them in their backpack and they're like, we got it. Don't worry. We can walk to class. You do feel like they could just walk off and go anywhere. I was very nervous.

I get that. What's guys I'm missing here right now? This morning on the way to work, I saw 360. I think I did 355 this morning. So gasoline futures, Mike Sikardi tweeted, this is the last week, it's probably more now. Gasoline futures are now 43% from the high, now below levels from October last year, which is pretty wild.

That happened very quick. Also, someone in the comments really wants me to give it up that oil is not technically flat this year. I think it started the year at 80 is now at 87. So I keep saying oil is basically flat this year. Technically, that's not true. Someone is really mad about me and wanted me to offer. Just sorry, I missed it.

Sarah Eisen tweeted more disinflation. Restaurant commodities costs are coming down, especially Jumbo chicken wings, just in time for football season. At what point do the biggest perma bears go from blaming the Fed for inflation to blaming the Fed for a recession? Because that pivot has to be coming. I think a lot of people are still stuck on inflation being the main thing. But if and when inflation starts coming down in a meaningful way, and it seems based on the annex data that it is, that pivot has to be coming. Do you not place any blame on the Fed for inflation?

No, no, I do. but I'm just saying the people who love to complain all the time, they complain about the Fed not doing enough, and now they're going to complain about the Fed doing too much. That hard pivot is coming. I'm just preparing you for it. Or they're going to say the inflation numbers are wrong and the government is manipulating when it's still 10%.

One of those two. I'm just laying it out there. If I could do options on this market, I would do it. Why just survive back to school when you can thrive by creating a space that does it all for you, no matter the size. Whether you're taking over your parents' basement, or moving to campus,

IKEA has hundreds of design ideas and affordable options to complement any budget. After all, you're in your small space era. It's time to own it. Shop now at IKEA.ca. Good tweet from Macro underscore Daily. It wasn't high inflation transitory after all. He's showing a chart of manufacturing ISM prices paid

with a three-month lead versus CPI. And, I mean, that's tight. This is not a chart crime. I don't know. Anytime two lines line up like that, I'm dubious. No, no, no. Hold on. Dude.

I'm not saying it's a chart. I'm just saying. This is measuring prices paid. Okay. A visa manufacturer. It's not like a random data set. Yeah, but look at the two axes there. So?

It looks beautiful. Anytime a chart looks this beautiful to me, I am dubious. Sorry. Okay. Well, you should not be dubious. This is not a chart crime. In my opinion. I'm not saying it.

It just makes me a little nervous. Anyhow, all right, we know what you're saying. Remember that book, Howdle Iowa Statistics? Daryl Hawth. Yes. It's from like 1940s. Awesome book if you've never read it yet. What this chart is showing is that the ISM, the manufacturing ISM prices paid index is coming down significantly, and that should lead inflation down lower.

You know, my favorite one is the number of Nicholas Cage movies with a number of people who drown in a pool every year. It's highly correlated. All right. So this is from Bloomberg. The whole trope has always been inflation. hurts low-income households the worst. And it makes sense because they're the ones with the budget where the budget could be impacted the most because they have the lowest disposable income. All right. So this is from Bloomberg. The bottom fifth percent of U.S. households.

This is the group who's generally with a net worth of $166,000 or less. Hold on. Duncan's coming in here saying hard seltzers is trash. Duncan, no offense. Actually, no, Duncan, come on in here. No offense, but you're not a drinker. You can't have an opinion. What do you mean? I love a good beer. I'm a beer drinker. Hard Seltzer is... Duncan. It's not worth my time.

Duncan. That's where I'm at, Duncan. But I think if you're drinking in the sun all day, I think the reason so many people like those is because it allows you to make it through the day. If you're drinking in the sun. I'm not saying you don't like the taste of beer, but you can't drink too many beers.

Oh no, I'm dead after like three. Yeah. So if you're in the sun, this is a very nice way to stay hydrated. Enjoy a nice little taste. Anyway, all right, off screen. Dunkin off. Hard seltzer's trash. Come on.

It's kind of trash. It's basically Z. FEMA in a better bottle. Let's be honest here. So the group with a network... Stop phone. You can't... Stop. You can't have an opinion that's something you've never had. Okay. I'm just saying, I think 70% of people drink them

because they taste like Kool-Aid and it looks cool on Instagram to post. Look at me. I'm drinking a high noon. Watermelon mango. Yay. That kind of thing. You know what I've learned? I'm just kidding, by the way. You know what I've learned? I learned this lesson twice. One time recently.

Unsolicited opinions are dangerous. You're on a podcast right now. Podcasts are made for unsolicited opinion. Yes, but, but, but an opinion like this, anybody who does this is a this. Yes, of course. So I told you this. To each their own kind of person at these days, like if you like it, have that. I don't care. Well, of course. But I told you this happened to me like a couple of weeks ago where I happened to make a statement, anybody who does this is a this. Yes. And then the next day, the guy that I was with sent me a picture of the this thing. And my foot was all the way inside my mouth. So now I know. The second time that's happened to me, you just foot right in mouth, say less. All right, go on. Bottom 50% of U.S. households by net worth. The group's collective inflation-adjusted wealth grew by 2.8% through the first six months of the year.

By contrast, those in the middle 40% were down 4.9% while the top 1% more heavily exposed to a bear market in a socks lost 10%. So the lowest, bottom 50% had the biggest gain in net worth in the first six months of the year. Short time period, obviously. But listen to this. Incomes among the bottom 50% adjust for inflation increased by 1.3% in the first half of 2022. Well, the middle 40% fell by 0.2%. Since April 2020, real income growth for the lower half of the U.S. is at about 45% roughly double the pace nationwide. This is the kind of thing that, to me, you never would have expected. Nope. I do generally believe that this idea that rising prices does hurt the lowest income class, the worst. It did it this time. And maybe you could say that's a lot because of the government programs and the government giving

out a lot of money and that sort of thing. But I don't think any economic textbooks would have had you believe this. No. All right. One more. This is another one from JP Morgan, the newest. What was it? Guide to the markets. Yep. I always forget it. Every time I'm going to Google it, I forget. Guide to the markets. Okay. So they looked at the average annualized return on a six-month CD versus CPI. And they did CPI by headline inflation, education, medical housing. And the 2020s is averaging 0.3% for CD rates, 2010s was 0.5. The 1990s, you could average a 5.5% almost in a six-month CD. Even in the 2000s, it was almost 3.5%. Basically just showing anything on interest rates is far below the inflation rates. Do you actually think things

in like the 70s with higher interest rates, do that make things better or worse on consumers? Because then the debt was higher. What's better for people? Is it better to have a low borrowing cost or is it better to have high interest rates on your savings? Well, first of all, the answer is it depends who you are. Yes, it depends who you are in financial assets. For society as a whole, I think it's psychologically more beneficial to have low borrowing cost and higher income on risk-free investments. I guess this is another thing that probably is better for people with low incomes because

they borrow more money. The wealthy people are the ones with all the money. They're the ones getting low rates on their savings right now. Also, when you have high risk-free returns, generally speaking, prices are higher. Don't know those two things go hand in hand. True. Was it the high noons that made you lose your voice? Is that what we're saying here or not?

Oh. I guess there was just late night. Okay. Just can't hang anymore. You're almost 40. Yeah. I rarely lose my voice. Not to brag.

Me neither. All right. Liz Ann Saunders, right before the pandemic started, the average rent in the U.S. per Zillow was a little over $1,600. Moved up to a little over $1,800 by August 2021. A year later is now at over $2,000. This is one of those things that why the housing market is so screwed up right now because rents have taken off and it's almost like if you're a renter, you're kind of screwed either way. It's way more expensive to buy a house right now and rent is going up exponentially.

I don't think you can say now is it either a better time to buy a house or rent. Like it seems like both paths in a lot of ways, you're screwed, correct? Like rent is playing catch up and it's unaffordable for most people. to buy a new home right now if they aren't already in one. How sticky is rent? I feel like this doesn't come back down. So if you want to blame the Fed for anything, like if you really want to be anti-fed,

I think the Fed really screwed up the housing market. So look at this is- Boy, answer my question. Am I making it up? Is rent sticky? I feel like that doesn't come down. No, I don't think so either. I think it would take a lot.

It would have to be a pretty bad recession for rent to come down. Home prices could fall much easier than rent. Am I making that up? No, I think if home prices fell, rent would lag it a little bit. rent prices seem to lag, they would probably be fall too. But yeah, you're right. I think they're relatively sticky because you can lock them in for a certain amount of time. So it takes a little longer. But so I think if you really want to like get after the Fed, my colleagues there, were they

still buying mortgage bonds in March of this year? I don't know when they stopped. So mortgage payments are up almost 40% year over year because interest rates are higher and housing prices are obviously higher and housing prices are relatively sticky. Pending sales are rolling over. They're down 18% year over year. These are all redfin data. New listings of homes are down 16% year over year. So the whole hope was, we'll raise mortgage rates, that'll stop prices, and inventory will rise. Well, they stopped prices from rising. I need 2019 on this.

That's probably fair. But the thing is 2019, it would dwarf all of these in terms of inventory levels and number of new listings and all this stuff. It actually probably would make it seem worse right now if you were going from not just year over year, but since 2019. The hope was to get back to 2019 levels. But I think the fact that prices are so much higher and rates are so much higher and they went up so fast, no one had time to adjust. And now I think we've talked about this, the buyer and seller strike, home builders are going to stop building.

People are going to stop selling their homes. Obviously, some people are still going to have to for whatever reason. But I just think that they screwed this up so badly that the housing market is going to grind to a halt. I think this is probably the worst thing that they did is what they did to the housing market. The housing market is obviously very seasonal. but you could see a cold winter. Well, yeah, you probably will. Did you see what I did that?

That was a play on words, Ben. Yeah. Sorry, winter is coming. Well, okay. So Bill McBride did his whole thing where he asked if housing prices are going to fall again. And his whole thing, this is the argument for it. Obviously, they're too high, especially when you compare to like price income and price to rent.

Monthly payments are going to have to put downward pressure on it. And he said there are in like some of the biggest cities, Seattle, San Francisco, San Diego, Portland, Los Angeles, Denver, and D.C. You're already seeing that a little bit. prices are going a little bit, but he's saying, he thinks it's still like a stall scenario where prices are just going to kind of peter out and maybe on a real basis they'll fall. I just can't see sellers who had every opportunity to get out of the house, be like, all right, fine.

I guess the bids are 27% lower. Could you see that happening? No. No. Yes. And it's the kind of thing where maybe some people put it on the market and then decided if there's no bids are going to pull it and go, all right, I got my 3% mortgage. I'm just going to stay for a while.

I agree. Unfortunately, I think that they should. to figure out how to cap rate somehow, say, all right, 3% is too low. We're going to let them go to 4.5% and keep them here for a while. I think you need, it's like the boiling frog in the water kind of thing. Having it go from 3 to 6 in a handful of months, that was way too much. I think the Fed should have stepped in and put a cap on mortgage rates to like allow. What would that look like? You don't think they could do that if they wanted to? They just start buying bonds again? Yeah, but the whole point was to get out of that market, no? It's enough. Yes, but doesn't that

seem like the kind of market you want to manipulate a little bit? If they're going to be manipulating markets anyway, I don't know. Let's put a cap on mortgage rates at 5% or something. Mortgage rates are, how high did the 30 you get? The average bank savings rate account, I looked this up last week, is 13 basis points. If you go to a brick and mortar bank, they'll pay you 13 basis points. And they are loaning that money out at 6%. I think the banks are doing okay.

I mean, there should be some sort of mechanism where savings rates go up with mortgage. rates or credit card rates or whatever. If those things have a ceiling, why don't mortgage rates have a ceiling? It still doesn't make sense to me. They should go up and lockstep. If you're raising my mortgage rates, they're going to double in six months. Well, I guess savings rates did double from six basis points of 13. But that spread is ridiculous to me. It is. All right. Survey of the week. More than twice as many people under 45 think they can beat the pros in terms of investing versus investing 55 or older. So 66% of people 35 or less think that they could manage their investments more effectively than an institution or investment professional. Now, I think a lot of

people would look at this and say young people are overconfident, the Robin Hood thing, they're trading options. How about look at this another way? Do you think more young people understand that beating the market is hard and they say they could beat pros because most professional investors don't beat the market and then index funds are the way? Oh, interesting. I read this as, no, no, no, I just read this as beat the market. I didn't even think it would beat the pros. Interesting. So it's saying way more young people think that they would rather do it themselves than have a pro do it, saying they can beat the pros. And I think if you just invest in index funds, that's true. I don't think most young people understand that most mutual funds like

the market. I think way more young people understand index funds are the way than any previous generation. That I agree with. What do you think about this Gallup poll? Percentage of people suffering. They've been asking the U.S. adults this question since 2008, and obviously you've seen a spike over the last 12 months. What do we make of this? This is just inflation, right? Probably. I want to say just. I'm not trying to finish it. Is this financial suffering? Like, what kind of stuff we're talking on here? I don't know. I guess just general suffering. Obviously financial. I'm a long-suffering lions fan. Does that count? I mean, I'd put myself in that boat if it was like football fandom. Are the lions going to beat the Eagles in week one? Oh, I don't know. I've given up betting on the NFL,

So it's point spreads and I'm not. I'm definitely going to be betting. We're going to be in California for the first Sunday. I'm kind of annoyed. Good point to mention next week's show. We're going to be doing our first ever live podcast on stage at Future Proof. Is that true? We've done live events before, but never done a live podcast. We did one from a podcast booth. Meaning that the podcast that listeners will hear next week will have been recorded live on stage. We'll be on stage in front of a crowd at a live podcast. stage in California. We're in Tropical Brothers shirts, probably.

Let's be honest. And maybe my advice or two. So if it sounds, you hear some breeze and some seagulls in the background, we'll be on the beach. That's why. Oh, Duncan. Duncan, get back in here. Speaking of that, Duncan, I got you a birthday present.

I got you a tropical bro shirt. You got me a tropical broo shirt? I did. I'll bring it to the office this week. You can wear it to future proof. Nice. He'll wear it on stage with us when you're producing. What a guy.

Thank you. Sounds good. All right. Speaking of young people in index funds. The wealth front UBS thing. Is this surprising to you at all, or does this kind of just make sense? I did not read the details, unfortunately. I was busy. I was busy drinking white claws. This one never really made sense to me in the first place. UBS is not going to buy them. Now they're just going to give them like financing or something. But remember for a while when

robo advisors were going to compete with regular financial advisors, that was a real argument. for like 24 months there. I guess this is tough for any of these companies ever to go public now. They might be kind of stuck. Yeah. I feel like Benet's been trying to go public now. Yeah, for a long time, I think. Okay. So as I've mentioned before, I'm still holding on a few things that I'm going to buy come Black Friday because I'm thinking better deals are coming. But I'm checking. I always Google like Best TV. CNET has a good one. Best TV for Price Point. Best TV for this. They have like six different brands. So I've been watching this TV, this Roku, TCL TV, got a couple of those. They're not bad. And I checked it on Amazon for the price.

And look at the thing I put in here. If you wanted to buy it, Amazon store card, it's like $80 a month for 12 months, 0% APR. Next to it is a firm. $53 a month for 12 or for 24 months, 10 to 30% APR. I thought the buy now pay later stuff was always 0%. So did they just do a hard pivot into being a credit card company? No, no, no. The buy not pay later. No, I don't think buy now pay later was always 0%. It was if you had, I mean, for people like you with phenomenal credit, they'll give you a 0% loan. Okay, but they're offering here 10 to 30% APR. That's really high. I feel like they went from 0% to 30% pretty quickly there. They're saying up to 30%. Pretty high. I was just kind of blown away by that. One other complaint we've gotten lately. People say the labor market isn't nearly

as strong as you guys think it is because anecdote, anecdote, anecdote, anecdote. People are saying that to us? A few people in the comments. My company laid off 10 people. people. And I think that's the kind of thing where if that happens to you, it probably feels stronger. Here's from the latest job support, Heather Long from Washington Post. 5.8 million jobs added over the last year. Employment is now 240,000 people higher than pre-pendemic. Men have fully recovered all job losses from pandemic. Women are close. They're about $264,000 or $64,000 people off. Manufacturing added 461,000 jobs in the last year. One more from Betsy Stevenson. Labor Force expanded by roughly 800,000 people, added $4,000.

442,000 people reported being employed, and they added 350,000 jobs added by businesses, meaning unemployment ticked up as the labor market wasn't able to fully absorb the swell of new entrance. And if you look at it, U.S. labor force is now higher than it was pre-pendemic, meaning more people are in the labor force. This is a gooder from George Perks. The nobody wants to work anymore trope is really pure fiction. There have only been 26 months since 1986 when a higher share of 24 to 50-year-olds,

and that's prime working age, had full-time jobs than August. all of them came at the peak of the late 1990s cycle over span of just over two years. So people in their prime working years, 25 to 54, it's about as its highest levels has ever been. Huh. Since the 1980s, taking out like the late 1990s, which is probably economic nirvana. Nobody wants to work hard anymore. Okay. That's true.

The other thing people try to get us with is, well, the employment numbers are only good because people have multiple jobs. Yeah, okay. As if, like, they count twice in the labor force. I don't really know what's going on with Duncan today. But he's all up in our comment section on Slack. Duncan, get back in here. What is this? What is this now?

Duncan said you guys are like the Dave Matthews band of podcasting. Why do you keep calling me? I meant because you're going to be doing a live episode on stage. Oh. The DMB. Well, I keep calling you up because you're in our Menchies. Well, I thought you were going to say because we're overrated. Yeah, I thought this was an insult.

Oh, I forgot. Oh, so you guys. Oh, I'm kidding. Trust me. I was definitely the guy in high school and college who went to like six Dave Matthews band concerts. Hand up. Yeah, I love Dave Matthews in high school. Who didn't? Yeah. No shame. It got to the point where the love was too strong and then it went the other way and you had the contrarian thing to do was say, Dave Matthews band stink. They're overrated. That was the

contrarian thing. Kind of like happened with Coldplay in a much faster pace. And friends. Yes. Friends is another one. By the way, there was a few comments people thanked me for reminding them to buy socks. You know what, Michael, actually, I was thinking about buying socks. Thanks for the nudge. Yeah. That was called sarcasm. Oh, is that what that was? If you follow me to stocks, my fellow balds, I have an announcement to make. I've been seeing this on Instagram. They've been following me.

Chris mentioned that he got it, so I got it. It's called a pit bull or pit bull shaver. Skullshaver.com. It's like a handheld thing for your head. Works very well. Okay. Like an electric razor for your head? It's like an electric razor for your head.

Do you ever use a regular electric razor? for your face instead, but on your head? No, so I'm like the razor. I just use a straight razor from my head. You pick it, okay. A little bit easier. You need your own product because you're going to be a consultant someday to tell people when to shave their head.

The best thing is, anytime the two of us have a Zoom call with someone else we're meeting for the first time and someone else on the Zoom call is bald, you love talking about, hey, it's a fellow bald. That's like your icebreaker. It's true. All right. What do you think about this Disney? membership program. We talked about last week how Disney is going to just try to get more rich people

and fewer people at the parks. Wait, I didn't read about this. What is this? I thought you put this in here. I did. Disney's going to look for like kind of like an Amazon Prime, which offers some sort of advantages to people at the parks. They don't really give any huge details, but they're going to talk about like some sort of exclusive events, merchandise, whatever. It's going to add on to Disney plus. And it could be a membership program for people who go to the Disney parks. I don't know if that gives them access. I feel like the parks are so gosh-down expensive. If you visit the park, you should have Disney Plus for a year, no?

Yeah, something like that. That'd be nice. They didn't have Disney Plus at the hotel when I was there. There was no free Disney. Yes, I couldn't believe that. How could they not say Disney Plus free for a whole week here? And if you're not on it, you should buy it because you're watching it in the hotel. Speaking of streaming, I'm going to pick all.

I don't know what to do now. I need some help. Last night, I tried to stream something on HBO. and I was told that there are too many devices are currently streaming. Someone steal your password? I don't get it. Well, nobody stole my password,

but I've given them out to multiple family members, I guess. But now HBO Max, Wonderbought, they're cracking down. Do I change my password and just not tell anybody? Definitely. That's the move. Yeah, because every time I change my password, I've got like five family members, like asking me. Just tell people like, if you want the password back,

it's going to be a 12 pack of high noon, watermelon. Is that the best flavor? All the flavors are good. All right. I got a new take here. Trying out. I'm preheating the oven. This is not a new take. You've had this take for a long time. Okay. This is from April Henry. Oh, my God, in the Penguin Random House antitrust trial,

which I didn't know that there was a thing. It was real out of 58,000 trade titles published per year, half of those titles sell fewer than one dozen books. So almost 30,000 books that come out in a year sell less than one dozen. 90% of titles sell fewer than 2,000 units. Maybe this is just because of my own reading lately because I don't read nearly as much as I used to. Podcasts are just so much easier. And most of the new books that come out, the author will do like 12 podcasts. And I feel like you can get 75% of the way there from the podcast and hear all the best stories, especially with nonfiction books. Unless it's a biography or a history book, I'm kind of done with reading nonfiction. And most of the books I read now, probably 80% of it

is fiction. Yeah, that's a good point. I do wonder if people go on like these press tours where they do 15 interviews, like Matthew Ball, for example. I wonder if, and he just published a book that I'm sure he's to do very well, but I wonder if more is less, if the more you speak, there's fewer books. Although Nick Majuli did a billion podcasts, and he's on a ton of books. So I think that theory actually might be bullshit. Not that podcast appearances are killing books, that it's just easier to listen to a podcast and get that sort of information these days

than it is to wait for a book to come out. How about this? Podcasts are killing books for you. It is. It's true. And I'm using that anecdote to lay it out in a whole industry. All right. Should we do some recommendations?

Yep. Next week we'll probably come back with some. Michael's going to have like six horror movies that you watched on the flight to California. They're all going to be awful. That's a fact. But like three people are going to email us in and say they love them and you're going to keep egging him on.

He's going to keep doing it. I just want to warn you. You know I love movie flights. All right. Oh, oh, I have terrible news. Speaking of movie flights, because of people like you and others, my local movie theater is closed. Oh, really? Was it a good one or a good movie theater? I mean, it was six minutes from my house. Did it have the reclining seats? Yes. Okay. It's going to keep happening, unfortunately. I'm very upset. And that is not my fault. Guess whose fault that is? Hollywood's fault because they're not putting out enough good movies that makes me want to go see him in the

theater. So, yes, I'm quite upset. That was a gut punch. I mean, I would go see Top Gun again in the theater, probably. You can buy it on digital now. I'd probably rather see it in the theater again. All right. So this Welcome to Rexum show on FX slash Hulu is the Ryan Reynolds and Rob McElhenney team. They bought a soccer team in Whale.

Ryan Reynolds, and Rob McElhenney is the guy from, It's Always Sunny in Philadelphia. I'm guessing you never watched that one. With the teeth? He's the main guy, not Charlie Day. Got it. They bought a soccer team that's like seven divisions down from the Premier League. and you know how the soccer games move up and down. And this, it's a reality show.

And I'm a huge Ryan Reynolds stand. Yeah, you really are. But it totally delivers. They interview a lot of the fans and the people who own the bars for the games and they show all the stuff that they have to do and all the money they're spending. It's just really well done. I'm halfway through. I like it.

Bad Sisters on Apple is a new one. Remember Sharon from our show Catastrophe? Sharon from, oh, yes, yes. Oh, she's very funny. I really like her. She's funny. This is a show. it's based in Ireland, she wrote it and she stars in it. And it's about these four or five sisters

and one of them has a husband who's just like the biggest jerk in the world. And the sisters conspired to kill this guy. And then the whole show is about the murder mystery unraveling and how they killed them and then life insurance money. It's kind of a dark comedy. It's 10 episodes. We're three episodes in. I really like it so far. Ten might be too much. But I'm in on bad sister so far. It's a good, like, dark comedy slash mystery one. Finally, my kids somehow got into the Harry Potter movies. We started watching them recently. They were all on HBO Max. Phenomenal. You watched them all? Oh, yeah. Everyone in the theater. You did. Okay. So here's, this is going to come off as a slight, but it's not. So we're five movies in. Of course, it started out,

they're all on HBO Max. And then when the month turned, they were all gone. Then we had to go over to Peacock and subscribe to Peacock because they went there. which is crap so we're five in here's the thing that I guess I didn't realize about Harry Potter

it's a kids series I mean it's for like kids and teenagers and it's like one of the highest selling book series and history

and the movies did amazing I didn't realize how much it was geared towards kids and this may sound like a directorate comment

to you for being a big Harry Potter fan but I wouldn't be watching if I wasn't watching with my kids Earth to Ben

of course it's for kids I'm just surprised you liked so much Well, grown-ups can enjoy it as well. I think maybe it's just grown-ups love fantasy. But anyway, my kids are so my son and daughter, one daughter, my youngest daughter, she's out. My oldest daughter and my son are just enthralled by these movies. They talk about it all the time they love them.

So from five, it starts to get progressively darker. I figured. I watched the Lord of the Rings on Amazon. It's very interesting watching Lord of the Rings and Game of Thrones at the same time. They're in the same genre, but polar opposites. So I think I might skip Lord of the Rings. Is that a good? I think I might do it.

I love the movies, and I hated The Hobbit. What should I do? The first two episodes were just okay. That's what I've heard is it's kind of like, eh. It's way too early to judge. Yeah, it wasn't like, put it this way. It was definitely not a holy shit. This is awesome.

A little bit of a slow start. But I don't know, I just like the feel to Lord of the Rings. It's just like whimsical and light and happy and dark. I'll probably be drawn in eventually. I thought I might just skip it. So I had a big oversight on my animal list last week. Deep Blue C. One of my all-time favorites.

L.L. Cool J and a shark Thomas Jane? Yeah. Did the shark have like a DNA transplant or was it like a helmet thing that? It was something in the brain. And you know the Swedish actor who's in everything? Always plays a bad guy? Yeah. He's in Avengers and Dragon Tattoo and he had his arm bit it off. Didn't Samuel Jackson die in that one? Wasn't that like a big reveal? He died? Okay. So Ben, everything in life is about expectations. We know this. I feel like oftentimes with movies, there's either like an upside or downside surprise.

Someone's like really hyped and you see it afterwards. You might be disappointed. If something that you watch and you're expecting shit exceeds expectations. This is why movies are like the stock market. It's all about expectations, especially in the short term. So when Nightmare Alley came out, I was out because I'm not a big fan of Guillermo Deltora. Did I think you got it.

So, but nightmare Ali has a killer cast. Bradley Cooper, Cape Lanchette, Runei, Tony Collette, Ron Perlman, William Defoe, David Strathorne, and Mr. Dobak, Richard Jenkins. Just a phenomenal cast. But it got, like, bad reviews. Even though it was an omit for an Oscar, did not get, anyway, my dad told me he watched it. He's like, I'm telling you you're going to like him. I'm like, fine, I'll watch it.

If you promised me, I like it, I like it. I really liked it. I really, really liked it. I was suspected to hate it. It was like a not good, not bad. It was kind of in the middle for me. It was like, it was okay. I liked the feel of it.

I liked the acting. I liked everything about it. It just delivered. It was certainly an interesting movie. It was unique. I'll say that. Like the story and the way it was shot and all that stuff. It was well done.

It didn't like totally do it for him, but I thought it was decent. All right. What else? What else do we have? Anything else on your mind, Ben? I got nothing. You got nothing. All right.

It's Tuesday, September 6th. You know what? I'm ready to say goodbye to summer. I had fun, but it's enough. It's enough fun. I feel like everyone said that. I heard a lot of people say that this weekend. I would appreciate if summer just stayed around forever.

That's me. I'm a big seasonal guy. I love seasons. We're extending summer for half a week in California. That's true. I agree. The seasons are good. But I could use like one month of fall, one month of winter, one month of spring,

nine months of summer. That's what I'm asking for. All right. Thank you for listening. Animal Spiritspot. We'll see you next time. Thank you.