Animal Spirits Podcast - The Yeah But Bull Market (EP.356)

Episode Date: April 17, 2024

On episode 356 of Animal Spirits, Michael Batnick and Ben Carlson discuss: why the stock market isn't down more, why the price of oil isn't up more, improvements in investor behavior, the auto insurance crisis, why home insurance is rising, why rich people don't feel rich, millennials and boomers powering the economy, higher for longer mortgage rates, customer service nightmares, and much more! This episode is brought to you by YCharts. Grab your copy of the Quarterly Economic Update Slide Deck, and get 20% off your initial YCharts Professional subscription at: https://go.ycharts.com/animal-spirits-referral. Sign up for The Compound newsletter and never miss out: https://www.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.   Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com   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 Animal Spirits is brought to you by Y Charts. Lots of good data and resources from Y charts. They have their monthly market wrap, top 10 visuals resource desk. I look at the good top 10 list. Quarterly economics survey, all this stuff. It's almost hard to get through all of the data that they have on there and find it sometimes. So I like it when they put it all together for you, consolidate it. Are you a list guy?

Big list guy. Yeah, are you? A other list person, right? Yeah. I feel like, I don't know if that's like a tipping point. Like my dad's a big list guy. He'll, like, just write down top 10 and just share it with me. Oh, his own?

Okay. He does a one-on-one podcast with you. Yeah. So after the end of the quarter, Whitecharts also does their economic update visual deck. So everything from interest rates and macroeconomic data, it's all client-friendly, PowerPoint deck ready. Can just add your own logo on there? We do.

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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. All opinions expressed by my friends. 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 Spurs with Michael and Ben. What's in your ear? What are those? Those are not AirPods, are there?

I lost my AirPods. I have these beats ones as a backup. And I have to say, it's not ideal because they're the sound cancelling ones. It screws with your equilibrium. I do not like, I'm a big fan of the Bose, like over-the-ear noise-canceling. I don't like the noise-canceling. What's that? Yeah, these are-beats are bows. No, but I don't like the noise-canceling inside of your ear.

I like the over-the-ear noise-canceling. Yeah, it's a weird sensation. I don't like them either. Ben, last week. Podcast problems. Yeah. I said that Pacer uses free cash flow yield to identify growth companies. That was on me. That was, this is a traction. I'm issuing attraction. Actually, they use free cash flow margin. Attraction or retraction? That was a Howard Stern reference. That was a very niche. That was a very niche reference. If you know, you know. And there's a difference. So the free cash flow margin, that's free cash flow over sales as opposed to the yield, which. It's been a while since the CFA days, but I would think that would be over the earning.

So there you have it. Traction, I should hand up. Okay. Free cash flow at enterprise value. Isn't it funny when we did the CFA, you literally had to learn all of those ratios? You remember the differences between there was like six different ways to get to free cash out of the firm? And then there was also a different metric free cash flow to equity. Do I know what the difference between either of those are?

Can I even calculate free cash flow if I'm being honest? No, I don't remember that formula. There was like you start here and you back out six things and you add two. I had pages and pages of formula cheat sheets. Yeah. Yeah, not very helpful, though. One more California announcement. I don't think we announced this on the show.

Maybe we did, maybe we didn't, but I'm going to do it anyway. On April 30th, Josh and I are doing a live podcast in Los Angeles in the downtown area, the arts district, I think it's called. And our first guest that we're revealing is Matt Bellany. And I cannot wait. I listen to the guy every single week on the town podcast. We talk about him a lot here. I read him.

at the puck. He is I was about to say the Mike Francesa of Hollywood. That's not true because he's not, but he's got his, he's got his finger on the pulse. Let's say that. So he had the CEO of IMAX on last week. Did you listen to that one? I did. It got me a little, a little intrigued in the stock.

So the interesting thing was he said, so IMAX made up less than 1% of Dune 2 theaters, right? Because IMAX, it isn't everywhere, but it was 22% of the revenue or something like that. Just mind-boggling, right? Yeah. We're going to put a pin in this, because I have more to add when we get into recommendations. I saw Civil War. And I've got some takes on the IMAX, AMC, et cetera, et cetera. All right, Ben, what's on your mind? All right. Where's our correction? We're in it. Like, let's do it. So as of through Monday, we're taping, we don't do the time and

date anymore as much. That used to be your thing. It's Tuesday morning. Well, sometimes I'd like to give a timestamp. I should do it more often, just so that the audience knows, hey, listen, it's possible that we're not talking about something that came out after we're recording. We're recording pre-market Tuesday morning. So the S&P as of closed on Monday was down 3.7%. That's the biggest draw on.

What about the queues? Probably pretty close. They're in correction territory, I would guess. Let's see. It just seems with everything we've, like, let's do this. This is nothing. You call this a correction? No.

you know the remember the scene from uh crackled Lundee where he says that's not that's not a noif this is a noif right like we need a correction are only down 3.4% from their highs too wow it with with everything going on in the world with inflation being sticky and the fed not cutting and war in the middle east and all this stuff i guess i'm surprised that we're not down more i'm surprised too but listen be careful what you wish for give it a day or two that's true oh hey Corrections are a good thing for many investors. I agree. They're necessary.

I don't even want to say evil. They're just a part of it. I was thinking last week trying to come up with a name because we like to label things. It's fun. A lot of people in relationships in high school are like, I don't like labels, right? That's what you're saying we don't want to date someone. I don't like labels. What are we?

But I'm a, yeah, yes, let's define this. I'm a label guy. So I'm going to tag this, the yeah, but bull market. Not bad. Because I feel like there is a yeah, but for everything. Yeah, but government debt. Yeah, but deficit spending. Yeah, but market concentration.

Yeah, but inflation. This is the yeah, but bull market. Yeah, I like it. I like it. Jamie Diamond was, I don't know if you read his investor letter, but it was written as if we were in a global crisis. And there are obviously many issues in this country, all over the world, as there always are.

But it was just weird not to be celebrating any of the success that we've had or any of the progress that we've made, which is undoubtable. Even David Solomon in his opening remarks on the call, it was positives, certainly more positive than Diamond was, but also, there was a lot of yet butts. Yeah, but. I think it's harder than ever these days to be positive or optimistic. and not be negative and cynical. I think it's never been harder to take a more sunny approach to life.

Well, I don't know about that. Never been harder? You don't think that we're just, I feel like we're just inundated with negativity and complaining. And I was going to talk about this later, but someone made a comment last week, and it said, if Ben was president, he would criminalize complaining about inflation.

And we had a lot of people that, actually a handful of people emailed us and said, I actually like the balance in animal spirits because Ben is looking at the economy and inflation through a more rational numbers approach, and Michael is more empathetic, which doesn't pay me in the best light, obviously. But I've been trying to look at it through a more clear lens

of just the numbers, and obviously I know, but my whole point is I feel like with social media and the Internet and everyone having an opinion, and complaining is turning into a personality trait. Yeah, it's in vogue, and I don't like it. Because it's an easy way to get other people to coalesce around you. And so my thing is, like, I understand that there are people who are, there's bad things going on. And the thing is, the world has always had really crappy stuff happening of it.

It's just never been easier to, like, to be hit over the head with it. And that's why I try to provide a sunnier outlook, because I'm trying to negate that a little bit. So I get it that people complain and people are in bad position, even though, like, the overall economy is doing well. My whole point is, I think sometimes people need to hear the hard truth of complain, get it out of your system, and then move on and deal with it. Sometimes you just have to play the hand you're dealt. And that's not like an easy thing to hear, but I think that's... Yeah, listen, when I went bald, did I complain? No, I just wore a hat for 10 years.

Did you turn him to a big hat guy? Is that why you wear hats all the time? Well, I was always a hat guy, but once I started to go bald day, I never came off. Okay. I can see that. That makes a lot of sense. See, you played the hand you were dealt. You turned into a black hat guy.

We have talked a lot about, in the last few weeks, like holding 10 baggers, right? Like, the people who have the ability to hold NVIDIA all the way through all the crashes and the big gains and not sell after like 100% gain. And we heard a bunch of good feedback from people on this and how they do it and that sort of thing. But it got me thinking, like, wait a minute, we're going to hold a 10-bagger eventually. It's going to be in an index fund. So I had our chart wizard Matt run this for me. And I looked at investing at the beginning of each year going back to 1980. And like, when was the last time we had a 10-bagger?

And actually, if I wanted to really cherry-pick the data from the bottom in March 2009, it's a 10-bagger. Oh, wow. I assume this is total return. Total returns. But the last year, if you did the beginning of a year, it was like 1997 is a 10-bagger. Starting at 2009 is pretty close. It's a 7-bagger. But if you go to the early 80s, we're talking 100 baggers. Early 90s is like a 30 bagger. So the longer out you go, even in the regular stock market, there's baggers there. I am doing some work on the likelihood of picking a 10-bagger in a stock, and what do the 10-bagers have in common?

It's complicated. It's a complicated exercise because, well, the data's hard to get. Like, if you look at the Russell 3,000 going back to 1990, I think like only 15% of the stocks today were even in it back then. So I'm working on it. I'm working on it once I have what I have, what I need. There will be a blockpost. There will be charts. How long do you think it's taken in a VDivier to be a 10-bagger?

Like, going from right now, how far? far back do you have to go for it to invest in it, be a 10-bagger? Because I looked at this. 2017? It's like 2020. You invested in the spring of 2020? Not even the bottom. It was like May.

And NVIDIA is a 10-bagger. Kind of amazing, right? Well, but there was a 70-plus percent drawdown in there. And that's the thing. True. All right. Torses-Slock. A regular on the show.

The U.S. produces more oil than Russia and Saudi Arabia. This is global crude oil, and U.S. is number one, Russia two, Saudi Arabia three. And I pulled up the chart of oil, and it's essentially gone nowhere for the past 15 years or so. I mean, it's rising a little bit, but it's really gone. If you took like the average of oil over the last 15 years, we're probably at average. And so we have simultaneous, this is back to like the correction thing. Simultaneous wars in Ukraine and Middle East. And oil has gone nowhere for 15 years. Macro is really, really hard.

I wouldn't believe that. Remember, we hit 120 in the spring of 2022 when the war started? Oil is still down 30% since then. I'm just, this is, it's another surprising thing to me. Yeah. Maybe I'm, maybe I'm jinxing it, like the stock market's going to roll over 10% from here and oil is going to shoot up 20% now that I'm saying this. I don't know anything about the dynamics for the oil market, if I'm being completely honest.

I just, I don't know if the first thing about it. I think maybe the point, though, is even the experts don't either, because how many of the experts said, $200 a barrel? Here it comes. Fair. True. Yeah, yeah. Maybe no one does. Ben, we've spoken a lot over the years and more recently about index funds and the fact that they're over 50% of all assets in mutual funds and ETFs. what are they potentially doing to prices and price discovery and all that sort of good stuff. And all of that is debatable.

Nobody, you know, I don't think we're going to get to the bottom of that and solve that. But there's one part of it that I feel like surely we can do better. And when I say we, I mean the index committee. And I don't know what the solution might be. But here's what I'm talking about. Jeremy Schwartz, what was this Jeremy? I know it was a true. Hold on.

I don't think he was Jeremy, actually. I don't know what Jeremy. Joseph Attila has a research person and Jeremy wrote a post. Will the growth of indexing lead to its downfall? And they looked at what happens with the stock before, in the periods before it gets added to the index versus after it's added to the index. And he compares it to what about the stocks that were dropped from the index? What happens before it's dropped and after it's dropped?

not great. So one month before a company is added, let's stick with companies that are added. One month before, it's up 4.4% on average, two weeks before, it's 2.6%. And then a month after, it's negative 1, 3 months it's negative 2, 6 months it's negative 2, 6 months it's negative 3, 12 months it's negative 5%. And then I'm not going to read the numbers, but it's effectively the exact opposite, but even more extreme from companies that are dropped. So 12 months after companies dropped on average, it's up 16%. All right, so you get a lot of front running in both directions. So in terms of removing companies

and then having them go on to have good performance, that's out of their control, right? Because they're removing companies almost by definition that just don't meet the criteria anymore. And they don't meet the criteria because they're not great companies. And therefore, the stock prices aren't good, right? So the question is, why do they need to make this public? I know they have to tell the ETF providers and stuff.

Why do they have to tell everyone else? Yeah, can there be like an embargo or something? now, there's always going to be people that, like, figure out what's coming and going. But I feel like there's got to be a better way. I agree with you. Instead of saying whatever weeks or months in advance, we're going to add these stocks or however long they give you. It's a couple weeks, I guess. Why give investors the ammo to front-run these stocks or get out early?

Yeah, exactly. It makes no sense. So I don't know, but I just feel like there's got to be a better way. Okay, so I think last week I mentioned to you, was it on this shock? I remember, they all kind of run together. But why have historically equity allocations been so low? And then you wrote a blog post about this, that things are actually improving. Yeah, so Vanguard did a post, and they showed the broad asset mix of U.S. domiciled mutual funds and ETFs. And historically, let's say from ETF's inception, the spiders started trading. So this would be like the allocation of fund investors. Right.

If you put them all together. Right. So the spiders started trading in 1993. And from 93 through the run up into 2000, and this isn't just ETFs. Again, it's mutual funds as well. The household, let's just say household allocation to equities doubled. It went from 30%, 33% to 62%. and then with the crash, it dropped all the way down to 40%,

the allocation to equities. And then right at the peak in 07 and ran up again to 63%, before crashing back down to 36%. And then since we- That 2009 period is wild. So money markets overtook stocks at the bottom. Wow. Yeah, yeah, they did.

And then since- And then it's a 10-bagger since then? Since 2013, give or take, when we reclaimed new all-time highs, the household allocation has been pretty steady, both in stocks, bonds, and money market funds. It is kind of funny that it's essentially 60-40 portfolio. We always say, like, we debate a 60-40 portfolio, but no one actually holds it. But together, fund investors do kind of hold a 60-40 portfolio if you include bonds and cash in the 40. It's like how the S&P 500 never has an average return. Yes. Right.

So their hypothesis, and I'm reading from the report, is that industry-wide changes in the delivery of investment advice and in the investment funds themselves, think target date funds, that's me not then, for the improved results. Those include the widespread shift to fee-based rather than commission-based financial advice, the related surging popularity of ETFs and model portfolios, and the dominance of target date funds. So there it is. And employer-sponsored retirement plans. I think that all is a large slice of the pie in terms of why the household mix has been less volatile. I also think somewhere in that pie, a not so insignificant slice, is it's been, depending on where you want to start the date, has been a 15-year bull market, a 12-year bull market, whatever it is, it's been a long bull market. And so investors have been conditioned, I think rightfully so, to buy the dip. to take a long-term view that equities are the best game in town. And I think it's going to be really hard to undo this. I'm not saying that this chart is permanent, that it can't be messed with.

But I think that the investor behavior has changed. And I think the market is a part of that. But I think it would take like a 10-year bear market at least, maybe with a crash in there to change the behavior. Maybe I'm being over optimistic about the lessons that we've learned. but I think that this is a structural shift. Is it fair to say that the increased amount of information has actually helped on the margin, too? People just know more about historical returns and that the fact that the stock market is your best long-term bet?

That's a part of it, too, for sure. Right. But I do think that there's something to the fact that baby boomers hold the majority of the money, right? Baby boomers are worth like $70 trillion or something. they've lived through many crashes. There was a cohort that just wants to say, I told you so, and would love to see this chart shift in a bare market. People are going to panic.

Well, we kind of just lived through that. If 2020 wasn't a bare market and did equity to the allocation dip, yeah, it did. But it came right back. And from 2022, all the way through just a couple of months ago, it was almost a two-year bare market. Let's call it what it was. It was bare market.

We had steady hands. Google fell, 50% Amazon got cut in half. Over two-year period. So if that's not a bare market, I don't know, you know, it's not a global financial crisis, but certainly this will, that period of time will go in the history,

the history books of a bare market because that's what it was. And investors didn't really budge at all. So, credit to them. People are coming, all right. I have, I want to take umbrage with some adjectives we use in the finance world, okay? You can see I'm splitting hairs here, but I just want to put this out there. So last Wednesday, inflation came in hotter than expected.

Everyone said, inflation is hot, so hot. Expectation is 3.3%, actual 3.4%. The next day, PPI, cooler than expected. So much cooler. Point 2 versus 0.3. I'm just, 0.1% is a literal rounding error. anywhere else in life, but in finance, it's hotter or colder. I just want to fill out there.

Counterpoint, 0.4 versus 0.3 or 0.3 versus 0.2, those are large percentage increases. Yeah, that's not, yeah, that's fair. I'm just, but. Right. If you said this came out at 400, we were expecting 300. These numbers also get revised later. That's the thing, too. That's true.

I just think it's funny. This is just the way we talk about stuff in finance. I know that's, this is the way the game is played. Yeah. All right. So is inflation actually hot or is it just a little higher than expected? All right. So here's where I'm holding hope on inflation. And obviously, inflation is one of the hardest things to predict. We've all seen it. It's not easy to predict these last few years especially. Ernie Tedeschi wrote that the excess and core CPI right now is much less broad than what we saw in 2022. In 2022, inflationary pressures hit many categories in contrast. Right now, there's only two that we'd expect under 2%. And that's housing, which is the lion's share, and auto insurance. And so the housing piece, you hope, if you, Jeremy Schwartz has written about this a lot, if you use actual rental data from Zillow or Apartment List or one of those places, that OER is, should be coming down unless rent spike from here.

The auto insurance thing, though, that's a crazy one. And I listened to TCAF, and you guys were debating this on there, too. And I put out the bat signal on Twitter, and we got a bunch of emails about this. And so I've kind of, I think I've pieced it together. I'm the guy, I'm the GIF of Charlie Day on Always Sunny with the strings attached. I've been, I've been in the lab working on the audio insurance. So look at this chart of auto insurance. This is from the BLS.

This looks like a meme stock. It fell a little bit actually in 2020, and it shot out of a cannon. And if you scroll down a little bit here, this, I put US CPI motor vehicle insurance versus the regular CPI. it's not like you could say like oh because a lot of people said me well it's greedflation they're doing this because they can and that that that always sounds like a good thing to people but look at this for 2021 2022 auto insurance CPI was below the actual overall CPI it's only really since 2033 this took off so those I feel like 2021 and 2022 were the point where corporations could have taken advantage of consumers so it's like why is this happening now yeah that's a that's an astute up

observation. Okay. So here is what I came on. And we got an excellent handful of emails from people. One guy sent us an email. He works in the insurance industry and just laid this out like piece by piece. I'm going to lean on a lot of this. But great email. So one thing is car prices are just higher. So use car prices skyrocketed. Right. We saw that. So when that happens, the replacement cost for cars goes up. Obviously, insurance has to go up as well. Right. I got to a Fendabender a few years ago. It was just my rear bumper. maybe a side panel. It wasn't a big deal. And they, I paid only my deductible, obviously,

but they gave me the estimate. And it was $15,000, which was like half the, yes. And I'm like, how is it so expensive? And obviously, it was supply chain stuff and parts, but all the sensors are in the bumpers now. You got the camera and the sensor. And so with more technology in cars, and with electric vehicles and then maybe now self-driving cars,

the parts are going to be more expensive. expensive. So you see the CPI for maintenance and repair. That's higher. Obviously, labor is higher, too. If you have more technical cars and vehicles, then it's going to cost more to service them. So labor has gone up. Obviously, inflation is part of that, too. Other thing, we're driving bigger cars and SUVs and trucks, right? More expensive, more cost of repair. This one, this one was surprising me. I did not realize this. So we're at a, last year, we had a 40-year high in pedestrian fatalities. And one of the thing, a couple of the stories said when traffic was reduced on the road during the pandemic, the roads were more wide open, right?

So people started driving faster. And they said, on average, people were driving 10 miles per hour faster and maybe a little more reckless. And that behavior didn't change once more cars came back on the road. So they're saying the pandemic calls people to drive more reckless. And the other thing is, people. have cell phones. How many times do you see someone staring down to their cell phone? All the time. Every time I'm on the car. It pisses me off. And when someone's like coming at you and they kind of jerk back, right? And so that is a lot of studies have shown that's like worse than drunk

driving. So you basically have like a bunch of drunk drivers on the road driving these bigger trucks and SUVs. And so that means there's more big accidents. That means more payouts from insurance companies. Okay. So one of the things that I said on TCF that I was dead wrong about apparently was like, I assume that they were taking this to the bottom line. I would have assumed that too. This emailer said, an easy metric of profitability to look at an insurance is combined ratio for every dollar of premium coming in, how much is going out. Most insurance companies are losing somewhere between 3 and 15 cents for every dollar

of premium they're earning right now. The exceptions are Geico. Their expense ratio is super low after massive layoffs, progressive, but many others are still eating it from a profitability perspective. That blew my face right off my head. I'm not going to lie. I'm surprised, too. So it's not like these insurance companies are rolling in it.

They're paying out so much more in claims than they're taking in a lot of ways. And well, also, this also feeds into the feelings part of inflation because f***ing insurance? Yes. You don't see any benefit from that? Yes. It's like, wait a minute. Why am I paying $400 more a year for something that, A, I don't even use, God willing,

and B, I don't derive any, I don't, like, perceive any benefit from that. And when you do use it, like in my case, when I had the fender bender, I thought, well, hey, I've been paying into insurance for decades now and never filed a claim. So it, and the other thing, the last one is Mother Nature, right? So the natural disasters and climate. So I think the number was in the Hurricane Ian, in Florida and North Carolina, it was like 360,000 cars were damaged or destroyed. And the Wall Street Journal had a piece about this for how it's infecting home insurance, too. So it's not just auto insurance, home insurance. Average annual home insurance cost row is 20% between 2021 and 2022 or 2023.

Another 6% increase is projected in 2024. So they say rates rose by 10% in average in 19 states in 2023 after a series of big payouts were rated to flood, storms, wildfires, and other natural disasters across the U.S. So this is home and auto. So my question is, what? stops this? What slows this down? Beats me. Remember that phrase? Like when you know to the answer to something, you'd say beats me? You don't hear that much anymore. But it seems to me that a lot of these trends for a guy on more electric vehicles and more technology in cars and people still driving these bigger vehicles, unless we ban cell phone usage in cars somehow, so you can't

text and look at your phone like an idiot, what's going to stop this trend? I don't think it's going to get better. I'm just learning about it. I'm just catching up. So, yeah, I don't know. I have no idea. Anyway, but that's kind of like the other stuff for inflation makes sense to me. Like, I think the trend is still, like, if you look at the wage growth, that's still going down.

The good news is it's still higher than inflation. But I think the other good news is if you're worried about the 1970s redux of people keep sending us the chart where it shows the 1970s inflation spiked. then it fell and it spiked again, saying, we're following that chart. This is it. I think wages continuing to fall is your one big out case against that, right? Wages are the thing. They are. Right. So I think that, and a lot of people were saying this, in fact, this is something that a lot of people got right about inflation. A lot of people were saying that the last mile was going to be the toughest part of it. And that's proving to be true. Yes, going from three to two.

I'm still in the camp that three and a half percent essentially is the long-term average and we're there. If I was the Fed, they can't say this, but they could, eh, we're there. I'd be worried again if it was above four, I guess. That's what I'd call it hot. Well, you see the thing, the last week on TCAF, we were talking about a chart from Michael McDonough over at Bloomberg. and he shows the components of CPI that are rising at more than 4%. And that's going a lot higher. More than you'd think.

Yeah. So, you know, that part of it rolled over, and it really is re-accelerating. This is another area, though, where I feel like information is both good and bad. Like, when did people, how many people in the 70s knew all the components of inflation? Five? Like five economists in a room somewhere? that that's kind of cool and kind of that we can all just look at this data now whenever we want if you want to yeah thing is people there's a lot of people don't even believe the

data well yes a lot of people yes obviously the data is imperfect but the the the trend that's what you want to understand true and there is there is true and certain components of the data are certainly imperfect yes in the aggregate and we've always said no household's actual average inflation equals to the overall average of the country. It's impossible because of the standard of where you live and what you spend in housing and what your household budget looks like. It's impossible for anyone to have the actual inflation rate of the average. It doesn't happen.

So getting back to the insurance stuff, what's going on with home insurance? Well, that's the same thing. I mentioned that too. It's just for that, for that it's more climate change stuff, it seems like. And houses getting more expensive to build. And obviously, the inflation component, if the, if housing prices rise 50% and your house gets destroyed, guess what? The insurance is going to have to make a bigger payout. So some of this is just general insurance and some of it is these idiosyncratic factors in these spots where it's not going to, it's not going to, it's not going to, this is another one that's, it's not going back, that's for sure.

Unless, I mean, I guess you could see with autos more of auto prices falling, but. Unless everyone decides to turn in their SUV in their truck for a Honda Accord, like my dream is, these rates aren't going back. Here's another one that's not going back. We got retail sales yesterday, warmer than expected. Look at the, again, Michael McDonough has this great chart. He breaks it down non-store retailers versus general merchandise stores and non-store retailers. That's just, that's online. They got to come up with a better name than that.

I keep seeing non-store retailers. Why don't we just call it e-commerce? Yeah, they must have came up with that name before. Or online or... People's done a lot online. Yeah, it just doesn't sound right. You know, but it's, what's interesting is the online piece of it is just, that's a secular shift higher and there's no slowing that one down.

But look how, look at the, like, jump we had during COVID, and we, a little bit of that came back because the economy reopened, but we're pushing back towards all-time highs. If you wanted, like, one graph to understand the economy, it's this, isn't it? We just keep spending. And obviously, higher inflation is a piece of this, too, but we just, we love to consume in this country. What was in this chart, did anything stand out to you in terms of the components? It's very pretty. The colors are very pretty.

Colors are pretty. I mean, it's the non-store thing, right? Yeah, that was a big one. What happened in March? Was it Cyber Monday? I don't know. That is a good question. Just we like to spend.

Okay. Another one from Torson Slocke, the getting back to the travel boom. Because of significant rise in the stock market and significant cash flows from fixed income, U.S. households have more money to travel on airplanes, state hotels, eat at restaurants, go to sporting events, amusement parks, and concerts. That's why inflation in the non-housing service sector continues to be so high. He shows, again, a record high share. of the population is planning to go on vacation in a foreign country within the next six

months. And this, this is a, what a chart. It's a massive rise from, so it's showing more than one in five people, almost one and four people are planning to leave the country for a vacation in the next six months. And still, we could trace this back to COVID. It's, uh, we're what, three and three years removed? So someone wrote in, I talked, I complained a couple weeks ago that the J.W. Marriott and Marco is just ridiculously higher price than it was even a few years ago. And it's called capitalism, son. Someone responded and said, it used to be seasonal travelers, right? And that's why you'd get a spike at spring break probably and some other Christmas or wherever. But now it's, it's year-round people coming to

visit. And I think that's part of it. By the way, just real quick, before, I don't want to gloss over this on the inflation part. You know who thinks inflation is going to be higher for longer? The market. Look at the bond market. It's hard. Well, you say the market does, but it hasn't impacted the stock market, though. So why is that? Well, I don't see that as, uh, I feel like you're, that's a, you're deflecting. I'm talking about the bond market. Okay. So the two year yield is back to, oh, wow, five percent again for the two year. Ten years for seven. And the 10 years. And yeah, I mean, the bond market is, remember the meme, the, this mean with the bond market, something like that? I just have trouble trusting the bond market because it was caught so off sides the last time when rates shot up to 5%.

So you don't trust, you don't trust the CPI subcomponents going higher. You don't trust the bond market. What do you trust? I have nothing. No one. I don't, that's why this is so hard because this year, none of these years have worked out how anyone thought they would. This year we were going to have six rate cuts, but it was because the economy was going to be slowing, and if anything, the economy just... Here, listen, you could say these two things. Clearly, inflation is, well, maybe not clearly. Inflation is not going in the right direction temporarily that we would hope, and the bond market is confirming that. You could also say that that doesn't mean that the bond market is right. Yes. But for now, that's how it's interpreting the data that we've been receiving.

market agrees with me, three and a half percent inflation with like six percent nominal GDP growth is way better than one or two percent inflation and three percent nominal GDP growth. Right? Because the fact that inflation is not slowing means growth is not slowing. So I think that's why the stock market says, okay, game on. Earnings are going to be higher. Yeah. Listen, this is a phenomenal excuse for the stock market to cool off.

And it looks like the market is taking that. Yeah, that's what I'm saying. is like, I'm surprised that the excuse isn't being used more. Like, let's do it. But I mean, I guess we did just have a 10% correction in October. Okay, Wall Street Journal has a piece. Got shared pretty widely on social media. I don't think of myself as rich. Americans crossing Biden's $400,000 tax line. Now, this is supposed to be an article about $400,000 being like the line in the sand now for you should pay higher tax. And it's supposed to be a tax article. But to me, this is a how do you view yourself article and am I really rich?

So nobody views himself as rich. It's pretty incredible. That was my takeaway. So according to this article, 2.6% of households make $400,000 or more. It's a very small share. They also have this chart where they show it by state. And so Michigan is, I don't know, less than 2%. New York is one of the higher ones.

I guess D.C. is the highest at 6.1%. But, I mean, come on. We're really calling D.C. estate. Right, only for the. But they, so they have these, these people they interviewed in here. And this, this one guy says, I don't think of myself, he makes 400 grand or something. I don't, I don't think of myself as rich. I think of myself as having worked really hard.

I've hit the American dream and I'm going to have to pay more taxes. That doesn't feel great to me. It's demotivating. Another person actually said, we have a pretty, wait, wait. But wait, I just, on that, that's an interesting quote. I don't think of myself as rich. I think of myself as having worked really hard. Because in that person's mind

They don't like to be called rich Because they feel like it cheapens the work that they put in They hear rich but they think luck They think that people are calling them lucky Where it's like, I'm not lucky I worked hard But it's like, but no, you're actually rich And you worked hard, that's okay

In fact, that's better than okay, that's phenomenal That's what this country is part of what makes this country great You could only be called rich If you're like the succession kids Where like the money was just handed to you Those are the real rich people Well, because there's nothing more relative than wealth and income. And that's the whole point.

This other person says, first of all, this person says in Kentucky, like, our money goes really far, but they said, but we're not extravagant people with high-end country co-memberships or a private jet or anything like that. What percentage of people do you think actually fly on private jets? Is it the 0.1%? 0.1? The 0.1% maybe? I would say there's like multiple decimal places. 0.0.0. Well, yeah, I guess it's 0.0.1%.

probably. But I guess that this is another downfall of the information age is you just, it's so clear that there are other people who have these other things that you don't have. And so you don't ever get to the point where you feel rich. Yeah, because now you're not just comparing yourself to your friends. You're comparing yourself to celebrities on Instagram. And that's a tough, that's a tough hurdle to clear. So it is just kind of sad that people who are in the top two or three percent still don't feel rich for whatever reason. All right. The FT had a piece. I feel like if if you really want to boil down why the economy has remained strong, and maybe by bond market deals are strong and inflation is strong,

can we just blame it all in the millennials and boomers? Like, millennials are coming up and making more money. Boomers already have all the money. They're spending like crazy. Is it as simple as demographics? Like, don't fight the demographic wave. What do you mean exactly? Think about...

I mean, well, the reason why I say that is because aren't millennials and boomers like 80% of the population or more? That's what I'm saying. I mean, millennials have now risen above this period where they, you know, had a tough time and they didn't have money. Now they have more money. The older ones at least bought houses. They own some stocks. And millennials are going to be inheriting that baby boomer money in the years ahead.

I'm not saying there's not going to any setbacks along the way, but is that just an economic force for, I don't know, a couple decades here? Good luck fighting it. Yes. Yeah. So the FT had this piece where actually inequality between, like, millennials and boomers is way worse than a place like English. So they look at the top 10% of millennials and boomers in the average. And this is, again, this is in Britain. And the top 10% of millennials are doing way, way better than the boomers at their age. But the average millennial is way behind.

And I'll scroll down a little bit and look at in the U.S. It's actually right on track. And millennials are actually doing a little better in some cases. So this generational inequality is way, way worse in Britain than it is here. their young people have a much bigger complaint interesting I thought so too but again our

millennials are either right on track with baby boomers across that they break it out by different wealth percentiles and at the highest end millennials are actually doing better all right did you read this piece by Derek Thompson

about how much people work so no he goes back to like the 1800s and the average married couple back then worked 68 hours a week. By 1965, he says, after massive tech and social changes, the average married couple was working 67 hours a week, 2003, 67 hours a week, 20, 20, 67 hours a week. The thing is, I actually believe the numbers in like 1800 and 1965 that people probably did really work 67 hours a week. Do you think people kind of lie about how much they work these days? Is it really work?

like no offense to you and me but we're not exactly out in the farm you know plowing the fields like that's work right like actual manual labor we're sitting in front of a computer we read some stuff we're on some calls

we have time to check social media occasionally I mean listen I'm not saying we don't work hard we work hard but there's a difference between working hard in a knowledge field and working hard manual labor which most people used to do in the past

So I think people say they work a lot these days, but it's way easier than ever to kind of shut your brain off and coast a little bit these days than it was in the past. Is that fair? Yes. Totally, totally, totally. Well, the real estate market's still screwed since the last time we spoke about it seven days ago. Okay. I have a real estate question for you. So about a mile from my house, speaking of really rich people.

This sounds like kind of a flex for me, but it's not. there's a billionaire family that has a huge plot of land about a mile from my house. It's like this enormous piece of land with woods all around it and they built like a fake lake in it and it's acres and acres of land

and they do a bunch of building way in the back you can't even see. They're building a house in the last couple months I've noticed there's these little houses that have been there forever that kind of are on the outskirts of their property and two of them now have been

knocked down by bulldozers. Two of these houses. I can't say for sure my guess is this billionaire family is paying these people to say, go away. We want to knock your house down for more privacy. Even though they have plenty of land. They're not even close. So a billionaire comes up to your door and says, kind of like, I think Mark Zuckerberg did this and wherever he built his house in California. He bought like the four houses around him and knocked them down, you know, and give himself more privacy. Knowing the mortgage market right now with rates back at 7.4% or whatever, what kind of premium price would you do in your house for a billionaire

there to say, I want you out of there tomorrow, pay cash. Because you'd need a premium for that situation, right? Because you know, what would you, would you accept? I don't know. What's reasonable? Like maybe double over what my new replacement cost would be. So if I'm spending an extra $100,000 a year on a mortgage, that sounds ludicrously on. But whatever, double that, whatever it is, I double it.

The funny thing is, is if you calculated what it would be the extra cost, it probably is, it's, it's high. Actually, no, my house with a new mortgage, I, no, I looked at it, would be over 10 grand. So that's over $100,000. So I don't know, give me a quarter million. You capitalize that, yeah. No, but wait, but I need a, I need a hassle premium. That's what I mean.

Let's make it a cool mill. It would be a big premium on what your price is. I mean, I'm moving as a hassle. So if I was selling a house, I'd be getting worried. Now that rates continue to stay above 7%, I'd be, it's 7.4 as of yesterday for the 30-year fixed. this is way longer than anyone thought mortgage rates to stay this high. The Redfin did their average payment on a median house at regular rates, hit another new all-time high, double the 2021 levels. I think what's going to happen is you're going to get a more bifurcated housing market

where there are going to be areas where the supply is still low and you're going to have some bidding wars. Like someone tweeted to me after I wrote about real estate last week and he said, I listed my house, 14 showings in two days. First offer came in 11% over asking with no contingencies. So he said, been in the house for seven years and has appreciated 60% in no renovation. So that kind of stuff is still happening. But I think there's going to be other places where with rates this high, the buyers are going to be like, wait a minute. I'm not going to give up all this for the housing cause so high.

So I think we're going to start seeing areas that do better or worse depending on the supply dynamics. You know what's in the correction? Homebuilders. Down 9.5%. Home Depot, down 15%. That makes sense with rates staying high. Like, they need, Home Depot needs that home equity to become unlocked and get 5% rates again or something, right? Yeah, we had a few people email in. Hey, Ben, I'm curious to hear you talk about taking money out of your home. What would you do with it?

I'd honestly probably just, this is the scenario if mortgage rates are at 3 or 4% again. Honestly, it'd probably just sit in cash for a while until I needed it for something. I wouldn't like immediately go invested in something. I would just pull it out to have it there. So you'd be opportunistic. Yes. I wouldn't like, I wouldn't take it and immediately do something with it.

I would have it there. What does Buffett say? You borrow when you can, not when you need to. Something like that? I'm being warm, I like it. I like it.

I really wouldn't do anything. You know, that's the right answer. When somebody asks you a question, you quote Warren Buffett. Even if the quote's probably wrong. Don't take my word for it. Yeah. Listen to Buffett.

Listen to Buffett's words. Yeah, that's true. You can't argue with that. No. Oh, this is a good email. Had to comment on the living full-time and vacation location. By the way, this isn't that I feel very strongly about. I feel like I'm very enlightened when it comes to this.

Like, I am very aware of the grass is greener bias. Right? Yes. It's a big thing. Okay. I am a North Jersey native, and I've been on Oahu for 19 years. It came out here in 2005. People asked me all the time how great it is living in Hawaii.

And yeah, it's a cool place. But if you're here full time, you end up living like you do in any city in the U.S. I do exactly what my buddies do in New York or Boston or whatever. Work, wife, kids, kids events, house maintenance, traffic. Warm weather, no snow, and beach access can only mask so much. You need to live where you have family and friend opportunities. where you can afford to make a career and in a place that you feel culturally included. Otherwise, when the novelty of the weather dissipates, you'll be a fish out of water.

It is interesting. The novelty of it kind of goes away, even a beautiful place like Hawaii. Yeah, we adjusts really quickly. Upwards and that word. So it works both ways, which is great that we're resilient. We can adjust to worsening economic conditions or life conditions. But it works the opposite way. You get used to things.

Luxuries become necessities, and they become, whatever. it's just part of life. I think Connman actually did a study about this, saying people who moved to California because they want to get the nice weather, they just get acclimated to it eventually. And it doesn't impact their life better or worse in the end. I also think this is situationally dependent on their personality. Yes. But generally speaking, I think we just, we adjust pretty quickly.

Yes. Like if I lived somewhere that was a nice year round, I would definitely be outside more doing stuff outside all the time. Yeah, well, for sure. And that would impact your overall mental health. it's nice outside and I feel so much better. Yes, it is true. But do we appreciate it or because we have the crappy times?

So exactly. That's why I love New York. Sometimes the weather sucks for a long period of time. And every time I leave, I get like a 30% weather premium. You know? So I don't, a lot of people, some people, when they leave New York for vacation, like, why the hell do I live in New York? I'm the opposite.

Right. I love leaving. And I love coming home. All right, we're a Silver Linings podcast. somebody emailed us over the last year I have reflected on some of the positives maybe silver linies is a better term for this environment talking about housing high rates kept us honest for what we could actually afford instead of a seven eight hundred thousand dollar house we may have been able to buy with three percent mortgage we bought a house for 550 with a five fifty with a monthly payment we could stomach at our six point nine point nine percent rate instead of heating and cooling and cleaning a three thousand square foot house we only have to deal with keeping up our nineteen hundred square foot house which is much more manageable also furniture costs are lower for our smaller home. Our property taxes increased 10% in the first year. This was much easier to handle

in our cheaper home than it would have been if we had a large and more expensive home. The three-bed, two-bath, 1,900-square-foot house we bought as a great starter home, which we will comfortably be able to raise two children for at least the first four to five years of their life. We are currently childless

and with the plan to have kids in the future. It's nice to be able to meet their needs with the possibility of upgrading to a nicer home in the future. And lastly, we have the potential to get an unexpected raise if we can ever refinance to a lower rate in the four to five percent range, that will be a significant cut to our cost of living. This would feel like a nice raise that we can use to pay for all the kids stuff or have some family fund.

Credit to this person for having that mentality. See, not complaining. This is a perfect Ben Carlson glass. This is a person has it all figured out. I love, I love, that's actually the interesting thing about the, don't have to clean as much. You don't get this bigger property tax increases. I like the way to look at work. This is, this person is wise.

That's wisdom. That is wisdom right there. All right. All right. How much do you need to retire? This is a study from Northwestern Mutual. $1.5 million, according to 4,600 adults. Sure, 1.5 million. Millennials say they need 1.65 million up from just under 1 million in 2020. So that millennials have given themselves a 60% raise in retirement. I'm sorry, this is such a dumb exercise. How would I know? I'm 38 years old. No, I'm not. I'm 39.

39. How would I know how much I need to retire? You really don't. You don't know how much you're going to spend. then. You don't know what your health is going to be. You know what? I don't know. Four million bucks. Does that sound right? I have no idea. Yeah. And no one. And the truth is, since we know that there's, I think, what, 5% of Americans are millionaires, something like that, if you take out houses. So we're just talking savings. People make do without becoming a millionaire in retirement. Yes. Millions and millions of them do it every year. They make do with social security. How much do you need to retire with? You will retire with however much money you have.

and not a cent more or less. Yeah, maybe the question should be rephrased. How much do you want to retire with? That's it the answer people are giving. This is so much I want to retire with. All right, so anyway, what else is in here? Anything? No, that's it.

All right. We haven't done an anti-survey PSA in a while. I saw somebody tweet, this is John B. Holbein on Twitter. How many people go to church weekly? Survey says it's about one in five Americans. Cell phone tracker data say it's actually closer to 1 in 20 Americans. Holy shit, mind-blown. So Kyla Scanlan tweeted a link to a Torson Slack post from 2023 that we missed Ben.

At least I think we missed it. I don't remember going over this. There's a chart showing the structural decline in response rates to surveys. Ah, I like it. I mean, we were ahead of the game here. These things are totally bogus. People don't respond anymore. Why would they?

So that's great. So people, this is watch what they do now what they say. So one in five people say, yeah, I go to church. but it's really... And it's really closer to 1 in 20. Wow. I mean, do we rest our case? Is this not the coup de grace?

It is. Nailed it. All right. Financial advice is really dumb sometimes. There's a Wall Street Journal article. It's like six mistakes or avoiding these financial mistakes before you retire in the next five years. And one of them says, overspending on your children. And they talk about this guy.

He says, this attorney has a estate planning attorney has a client who spent so much on one of his adult children that he has to work longer as a result. He's using his salary to support himself in one of his kids. If he didn't have to support them, he could have retired already, which is, yeah, if guess what? If I didn't have kids, I probably could have retired already. And do you think this guy would feel much better about himself if he retired early and let one of his kids flounder? And not, what is he? Really? He'd feel better about himself in that situation?

Listen, I say to Kobe and Logan every day before I give him a kiss and put them on the bus. Don't forget, in 20 years, you are on your own. See you later. Kicking the rear end. But I'm sure this guy feels better about being able to help his kids, even though it's not helping his own situation. So, Ben, I'm in a bit of a dry spell. I don't know if that's dry with things on TV to watch.

And I've... So I've been doing more scrolling. Max has gone to absolute trash shit. There's nothing there. Well, it's harder to find the quality stuff now. What do you mean? Just in general? Because they just keep adding these other services there and it's, it's reality shows and, yeah.

But there's nothing, there's not, I mean, it used to be a good library. I don't know what happened. Maybe it's May. But I can't seem to find anything. And you know what, conversely, you know, it's actually got a pretty decent library, Peacock. Not bad. You know what the problem is? There's so many streamers now.

It used to be where every month you'd get a ton of churn and you get a bunch of new movies here and a bunch of new movies there. And now they all own their own libraries and not sharing as much anymore. So there's no, there's not as much change. When you scroll, you feel like you're seeing the same thing over and over again. And nothing new because that's the best part. It's being like, oh, I don't know. This was streaming. I don't watch that now.

You don't get that as much anymore. We got a bunch of emails talking about why do Midwesterners go to the West Coast of Florida, East Coasters go to the East Coast. It's the highways. Yeah. We totally miss that. It's the highway goes to this side. This highway goes that side. It was as easy as that.

Ben, I've had several experiences in the last call it two to three weeks. where people have either just been dicks, for lack of a better word, just I am of the ilk, just do the right thing. Even if it's uncomfortable, even if it is something that you're potentially giving somebody news that you don't think they want to hear, sometimes you just, oh, you just owe it to somebody to just tell them the truth, right? Okay. And so I've had a few experience with that that annoyed me. I've had some customer service issues that really annoyed me. Audi. But then, on the flip side, I had two experiences that were so wonderful that almost made me even more mad about the way that certain people handled certain situations.

I'll give you an example. I bought, when we were in Colorado Springs, I bought, there was a boutique store with all sorts of really, really cool stuff. They had like a Lincoln signatures and swords from Gettysburg and George Washington pictures and signatures and Declaration of Independence, like really, really neat stuff. Those would make awesome NFTs. Yes, totally. That's what I was thinking. And so I bought a map from 1964 of Long Island. And she shipped it to me. And it like, It sort of, I guess it's glued to the parchment paper. I don't know what I'm talking about, but it fell down. And so it was crooked.

And I emailed her, and her response was, I'm so sorry, we found a local restoration place or whatever. It's already paid for it. Just go drop it off. Wow. I was like, that's how you treat people. That's hospitality. That's customer service. And you would recommend that place to someone else in the future.

Hey, check this place. I'm not a collector, but maybe, who knows? Maybe I'll go back. Another example, I signed a contract where the person, it's a monthly fee, the person told me the fee verbally or via email, the fee that they quoted was higher than the fee that was actually in the docu-sign, the legal document. So I signed it and I said, hey, just an FYI, there was a disparity. And this person said, that's on me, you know, keep it.

Like, we'll honor what we put in the contract. And I said, you know what? Like, good for you. I really, really appreciate that. Like, way to start a relationship. And it's just, like, simple things. And I don't mean to lecture, but the people that, like, didn't do the right thing, it was just, like, such common decency, like, courtesy, right?

Just get back to people. Like, don't leave them hanging. You just common shit. And so when you see something good, it really stood out. And I don't know where I'm going with that, but I just wanted to share. Golden rule. I tell to my kids all the time, right? Treat people the way you want to be treated.

There you go. It's a very simple rule of life. All right, so speaking of recommendations and streaming. Oh, Neil Brennan has a new special on Netflix. He's one of the few comedians that can consistently, like, make me laugh out loud and not just say, like, huh, that's funny. Very intelligent humor, too. Did you watch it yet? I didn't.

I didn't know. There was a new one. Okay. Yeah, there's a few really good bits in there. So, okay, so I saw Civil War. Highly anticipated. The trailer looked incredible, right? and I went to an AMC theater on opening night

Was AMC still in business? And there was myself and my friend and four other people. Oh, so it was empty. I mean, opening night. For a movie that did decent, I think it did $26 million over the weekend, something like that.

And this was an IMAX slated type of movie. IMAX did release it, and it would have been great in IMAX. And I'm not going to give any spoilers. so I almost hesitate to say anything about the movie, other than I will say that I very, very much enjoyed it. And I think it definitely got a 20 to 30% in theater premium. Okay, even though no one else was there. Well, just, yeah, the experience of the bullets wasn't buying and just being really loud and it was effective. I thought it was really well done. Okay, so last week I said a great movie

plot would be listening to an old song and it takes you back to that time. And this wasn't like a deja vu moment for me. I never seen the previews. Well, I was having the deja vu moment, and I couldn't remember what it was. There was literally a movie that came out on Hulu, like this week, called The Greatest Hits, that that is the plot. What is the plot? You listen to a song, and it brings you back in time to, like, what I said is literally a plot of a movie. So I guess it was, I love it.

I guess it was too easy. It looks okay. I didn't recognize any of the actors, but it's like a rom-com where, someone dies and she goes back to see with them because she keeps listening to the songs that they like all right uh i highly recommend the steve martin doc on apple it apple is one of them that i feel like they don't really advertise much you turn on apple tv you said you know you you turn on something

they'll just be something with a really good and so it's a two-part doc and i i'm a huge huge fan of steward he was his whole stick was i'm going to be like the overconfident idiot and my comedy stand-up is going to be so weird that it's going to stand out to people. And it's the funny thing is, it's not even technically funny his stand-up, but the way he does it makes it funny.

Yeah, you know, it's such a great point. I've never seen his stand-up, but obviously I found him to be incredibly entertaining. He's just entertaining. And he says... But is he funny? I mean, obviously he's funny, but not traditionally funny.

No, not, it's not like he's doing setups and punchlines and stories. He's just being a goofball. And he's like, that's what he said, I just wanted to make people happy. And they show the people in the crowd and everyone had the biggest smile on their face. And he's like, that's all I wanted.

And then he gets to the peak and he walks away. And it's honestly just an excellent, excellent, just his whole thinking about it and how he'd set it up. And it's really, really good. Okay, I also got into Ripley on Netflix. I have a lot of thoughts. You asked me, should I watch it?

And I said, no for you because it's probably too slow. So I didn't realize this. It's literally the talented Miss Ripley, but instead of a movie, and that's one of my favorite movies in the 90s, I think 70% of that movie is excellent. The last 30% is just kind of, eh.

But that movie has Matt Damon and Jude Law and Gwyneth Paltrow and Philip Seymour Hoffman and Kate Blanchett. So it's just, and this is before any of them were huge. And the that guy, the dad? Yes, the, yeah. Dickie Greenleaves Dad. So this new one, I'm going to say good things and bad things about it.

The first, the bad. Well, it's hard to not compare it to the original movie because, again, I love the movie so much. But the whole show is in black and white, which Duncan, I know Duncan is a fan of black and white because he's a cinephile. Italy is one of the most beautiful places on earth, and I can't see it in color. It boggles my mind why they made this decision. How many episodes have you watched? I think I'm a six in. So the thing is...

Oh, so you're in. I'm in. It's very, it's, it's very slow and a little, way more tedious than the original, but it's very good. So do you stand by the I won't like it? I think, try an episode. See what you think. It's, you know, I, I really appreciate that. And that's one of my, that's one of my, uh, meaningless superpowers is when you say to me, hey, you won't like this. I love it. I don't get offended. It's the opposite. Thank you for not wasting my time. I said that to Christ the other day. I said out this is a video. And he goes, what does that mean? Yeah. It's just no, no, no. I'm doing you a favor. That's what it means. You're welcome.

So I have a hard time comparing it to the original because I love the original so much. Jude Law is like the most charismatic guy in the world on that. But the black and white really irritates me. But I, whatever, I can move past that. The guy who plays Ripley, Andrew Scott, he's, he played Moriarty on, did you ever watch the Benedict Cumberbatch Sherlock Holmes? Mm-mm. It's really good. He plays the bad guy in that. He also is the priest in Fleabag, season two, remember? and he's so good he as Ripley is so creepy and good like he's better

than Matt Damon as Ripley. All the other characters in the movie are better than the characters that are on the TV show. But him as Ripley is he's so, so good. And so yeah it's like the movie but more slow and a little tedious and they made some different choices

but that's for Matt on Ripley. But if you're like a film person you're going to say this is the most beautiful thing ever. The black and white thing, the only thing times black and white ever worked, ever in anything. A Schindler's list in the Three Stooges. That's it. Otherwise, color.

Wait, no, no. I mean, there's others, but Casablanca, I know you won't see movies from the past, but you really shouldn't see that movie. I watched a little bit of it. I can't watch movies before 1970. So, but let's say Netflix did an A-B test, and they said, here's Ripley in color,

and here it is in black and white. How many people would choose to watch it in black and white? If you had two options, Duncan. One percent, maybe? Yeah, yeah. That's all I got. all right animal spirits at the compound news uh thank you for listening ben i'll see you tomorrow

that's right i'm coming to new york see you then and we'll see you next week