Animal Spirits Podcast - Tighten Until Something Breaks (EP.250)

Episode Date: March 30, 2022

On today's show we discuss inflation vs. the stock market, bonds getting killed, the crazy housing market, betting on the Oscars, why Twitter was built for pop culture moments 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 Y Charts. There was an article in the journal over the weekend. The Pro Shares Ultra Pro QQ has become the most actively traded an ETF this year. More than 119 million shares changed hands on an average day of 65% from last year. Jeez. People don't listen to us. Didn't we say no? We said no.

All right. So you pulled up this chart of AUM from Y charts. And I just added a little bit to it because, so you showed the assets going back. This thing really skyrocketed since 2020. It got to a high. I like the max and men and average values you can put on charts from Y charts. Good feature. Good feature.

You know what? We're like, we're sort of squinted. We're like, what is that? Plus, it's more fun to talk about stuff from the highs and the lows. It just is. That's like cherry picking butt. So this thing had over $22 billion. And even though it's gotten crushed lately, it's still, it's $18 billion.

That's a huge number for an ETF like this. Huge. We got another email about the leverage ETFs this weekend. I can't remember what it said. What do you think the difference is between people who are trading this with all this volume and people who are actually having a long-term holding in a leveraged DTF like this? I'm going to be optimistic here. I'm going to say it's 90% traders.

Maybe that's high. I would imagine it's still a huge, huge number. Anyway, if you want to play on a charts like this, remember we're still having our deal with Y charts where you have the whole month of April if you reach out to them. And until April 30th, you get to try Y charts for free for a month. And then after that, if you decide to become a paying customer, you get 20% off of your initial subscription, if you tell them, Animal Spirit, send you. One more thing. I just want to look at this chart.

Retail investors net purchase of leverage ETFs, they won't stop. They're relentless. They keep going. This is retail from Vandotrack. They keep going. Hopefully people are you doing so responsibly, right? But I'm guessing they're not. Welcome to Animal Spirits, a show about markets, life, and investing.

Join Michael Batnik and Ben Carlson. as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holtz 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 Rit Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rit Holt's wealth management may maintain positions in the securities discussed in this podcast. All right. Welcome to Animal Spirits with Michael and Ben.

It is our 250th core episode. meaning just straight up the Wednesday, the Wednesday episode, 250. Does it feel like more or less? That's about right. I would say directly even. I'm feeling good about that. Wait, how is it possible? So we started in November 2017.

Remember all the double-up episodes we had though during the pandemic? How many months did we do that for? Two or three months? I was getting burnt out towards the end. There was too much. Yeah, you were the one I wanted to stop. It was too much. Yeah.

So we've lived through a bear market in 2018. It was kind of our first one for the show. that was a minor bear market in the grand scheme of things. The corona crash in March, and now whatever this thing is, which... What are we calling this? Well, it's either a dead cat bounce or it's something to do with inflation, obviously. So I think the narrative is shifted because as price moves, narrative shifts. So if you look, as of this morning, the S&P is down less than 5%.

The Russell 2000 is down 8%. NASDAQ 100 down 9%. At their worst, the NASDAQ, this is on a year-to-date basis. The NASDAQ was down 20% at the lows. S&P was down 12 and change and small cops were on like 14 on a year to date basis for 2022. I'm sorry, not to be the

dead horse. I think those all need caveats or at least an asterisk, especially the S&P, needs an asterisk. These are the numbers. I'm just giving you the numbers. Well, and I'm just giving you the context, brother. We need an asterisk. Just because some people pick stocks and they're getting killed doesn't mean there needs to be an asterisk on everything. Right?

No, wrong. So here's the new narrative. This isn't a Bloomberg piece. Nick Colis, who was on the compound friends last week, from Data Track. Is this a Nicola's piece? Well, he was in Bloomberg. Oh, oh. He's saying that, like, seeing the tenure rise is actually healthy because that means

the economy's improving. But this piece was basically saying, wait, wait, wait, yes, inflation was thought to be bad, but actually maybe it's good for corporations. Oh, yeah, let's hear it. So they're basically saying, and Nicola said, actually, stocks kind of kept up with inflation in the 70s. So I looked at this recently, too. And it is kind of funny that everyone got all bared up right before the market's

ripped higher and who knows, debt cap bounds, whatever. Guilty. It could happen. Hand up. Look at this margin piece. With you and Josh, he was talking about how companies have a ton of room for taking sort of price shocks and maybe benefiting from them. So look at margins are still at or near record highest for the S&P, close to 13%.

Remember when this was supposed to be the one data point that everyone said, this has to be mean reverting because of capitalism and it just continues to go up? Well, we learned that's not true. But actually, maybe inflation was like the guys under which corporations could fatten their margins even more. and think that people wouldn't notice. No, no, no, no, we notice. We notice what you're doing. We know that inflation is up 6, 7%.

But we don't care. No, we notice. We do notice that your prices are up 8 or 9% because it shows up in the margin data. Shame on you, Kroger. Okay, but here's the thing. So the 1970s, profits on the S&P were up 10% per year in the 1970s. Obviously, that's an anomal basis, so take out inflation.

Prophets still did okay. So corporations could keep up. Stocks did 6% per year in the 1970s. I know it seems like the worst decade ever, But 6% obviously inflation at 7% meant on a real basis you were flung behind. But stocks as an inflation hedge can keep up. Context guy over here. I believe that the Dow did much worse than the S&P because I think at the time the

S&P was not mostly, but I think the biggest sector, and I could be way off. I think the biggest sector was financials. Well, come on. You can't use the Dow as a context. That's 30 stocks. The S&P is much more diversified. You know they get the same returns. Are we kidding?

Are we serious? We're serious. Who watches the Dow? No one uses the Dow for context. The people's index. We need to contextualize the S&P with the doubt. No, no, no. Dude, the 70s were horrible for stocks.

I'm saying they weren't as bad as you think. So there was the 1973, 74 bear market where stocks fell 50%. I don't believe you, that stocks did. 6% of you during the 70s. They did. I'm going to call bullshit. No. Okay.

6% per year for the U.S. stock market from 1970 to 1979. Which U.S. stock market? S&P 500. That's with a 30% drawdown at the beginning from 1969 to 1970. and then a 50% crash from 1973, 74. You know the Robbergen, Digg if I don't believe you? I'm just throwing it out there. It's true.

So I'm saying, so this is the new narrative shift that actually inflation is way worse for bonds. So money's going to pour into stocks because it has to go somewhere. And so if all the money doesn't flow out and go into commodities or something, the stock market could be the beneficiary. That's the new narrative. Obviously, that narrative is driven by prices rising 10% in a week and a half or whatever. But it's honestly not the worst. that's one of those things where you can't say this is bullish for stocks, but you also can't say this is ridiculously bearish because, let's say inflation does stay up and it's at 6, 7% for the next

couple of years. Let's say we get in that situation where it's really going to stick around and we get this wage spiral or whatever in commodity prices stay elevated because supply chains don't get fixed. That's not bullish for stocks, but that doesn't necessarily mean it has to be bearish. What if in two weeks interest rates have stabilized and stocks roll over? What are we going to say then? Well, then we change the narrative again. That's how this works. Price drives the narrative. I'm just saying people think immediately inflation has to be bad for stocks. You don't inflation rate wasn't in the 1980s when the stock market did 17% per year. It was high.

It was almost 6%. It was coming down most of the decade, but it was still really high. All right. So, J.P. Morgan put this out and they said, I mean, they're guessing as much as anyone, but if this is not a recession, the stock market pretty much bottom. What's the guy's name, Michael Sembless, who always has the really good pieces and charts? Huge fan. He looked at the difference between a correction in a recession.

and he looked at the SP 500 and Russell 1,000 and 2,000 and all these different NASDAQ 100. And then if it's in a recession, so basically saying if this was not a recession, that correction we just had is probably pretty close to average, and we may have seen the bottom. If this is a recession, all bets are often could probably go much lower, which I don't know if that's cold comfort to anyone because, of course, if we have recession, stocks are probably going to fall more. I don't like saying this. And of course, I hope I'm wrong, but I'm not bullish right now. Let's just say that.

My thing is, you don't have to be bullish or bearish. What if you're kind of just in the middle? Well, I mean, practically, I mean, if you look at my portfolio, I'm screaming ball. True. Needless to say, I'm always positioned for a screaming ball. How do NFTs perform if there's a recession? Well, actually, NFTs held up great during the latest decline. But my point is this.

Yeah, of course I'm in the middle. I mean, I don't actually know where the market's going. I don't think anybody does. I'm not foolish enough to say that I do. But if yes, my opinion, was at the bottom, I'm suspect. I think it feels more likely that that wasn't a bottom, even than like the March 20-20 bottom. that to me felt like that was a bottom.

This, it's like, I still think there are just so many headwinds. Now, counterpoint, so does everybody. Yes. Everybody thinks there are headwinds. That's the thing. It seems like everyone, and here, I feel like the take machine since the war has really ramped up. So here's what I've heard from the take machine over the last couple of weeks.

Globalization, done. Over. This war has ended globalization. Countries are going to hunker down and say, we're going to produce our own stuff and everyone else screw you. We're doing our own thing. The dollars reserve currency status is over. This proved it.

That's not a serious take. Nobody's seriously saying that. Oh, I've seen a lot of serious macro. I've seen some crazy stuff too, but you can't throw that out as a take. Here's the thing. Every new generation of macro take artists for the last 70 years has had to say the dollars reserve currency status is done. It's only a matter of time.

That's just what you have to do. Are these your internal takes? Are these your internal takes? Prove that you've seen these takes. I'm not going to name names. There was a huge piece by a few people. They may be in the crypto realm saying that was it. This strikes the end of dollars, global reserve currency.

These are serious takes. Here's another take. Commodity prices are big... Those are not serious takes. Those are absolutely not serious takes. I think that there are people who believe this because I've seen some substacks now refuting them saying, no, no, no, you can't say the dollar's global reserve currency status is over. That's crazy. What else? What else is in the take machine? Commodity prices are screwed for the rest of the decade. Oil at $200 barrel is coming. I've heard a lot of people say, like famine in parts of the world is coming. These are the

takes. Now, some of these things, especially in the short term, like the part of what food and stuff is a potential. I think it's kind of like government debt. People have been for a hundred years, I've been saying U.S. government debt is too high. And it's like a crisis is right around the corner. I feel like that's the kind of thing, just like the global reserve currency status, where you go with history and say, I'm going to bet that it's not going of the end. I don't think some of these tastes even need to be refuted. Some of them are so obviously ludicrous. The thing about people saying, okay, commodities are screwed. We're stuck. The supply chain stuff is here forever. I think that's a bet against human innovation and

capitalism. And that's the thing to me that it seems like we are in such a hard spot right now with all this stuff with the supply chain problems and potentially countries hunkering down and the war obviously making it even worse than it already was. I feel like that's just a bet against innovation and technology. I don't think so. Can it get worse before it gets better? Yes, but I'm saying it's like people are extrapolating now that these problems are going to be here for a long, long time and it's going to be hard to ever get out of them. And I think that goes against human history and our ability to solve problems. Well, I mean, inflation could be here for a long time.

Supply chain issues could be here for a while. My point is, I think we figure this stuff out. Sooner than later. Good. I hope you're right. All right. Sorry, so you think all of my points here are straw men? I know what you're doing.

I'm wise to you. I feel like every new generation of macro take artist has to have a take like this and be like, this is it? I'm planning my flag. Here's what's correct. Anytime we see a correction, the pessimistic takes heat up. going to overdrive. Is that what you're saying?

My problem with it is a lot of these people are almost putting these takes out with a grin on their face and, like, hoping it happens. That's something that irks me. Like, it's okay to say, like, here's data and here's why this is bad and this may get worse, as opposed to people who are almost cheering on, like, I want bad stuff to happen. You got to follow the thoughtful bears. They're out there. There's not many of them.

They're out there. Really? Thoughtful bears? You don't follow any thoughtful, but you think every bear is crazy? Most of them. 95%. permabairs. The people that are calling for a perpetual 50% crash. Yeah, obviously, those people don't pay that many mind, but I think they're thoughtful bears. All right. What's Sam saying here?

What's this chart? Okay. Not bullish, but not bears again. This is Sam Rowe put this chart in here from Goldman. Households have accumulated around 14% of a year's spending in excess savings with almost all saved in checking and savings accounts. They showed this piece of this Joseph Briggs from Goldman says, we estimate that around 70% of XX savings are held by the top two income. quintiles, but lower income households also hold a meaningful share suggesting that spending from excess savings could help offset decline in real income. Basically saying people have hunkered down so much over the last couple of years that even if inflation saves around for a little while and wages are not growing in real terms, people can handle the hit right now. Well, that's why it's

hard to get too bearish because the corporation and the consumer are both in pretty phenomenal shape. I guess it's just if there was some other sort of geopolitical or macro shock right now, I feel like adding something else to the mix makes it even harder. I think a lot of the bad news was pricing. We need a catalyst, I think, to send stocks slower. Again, I don't want that. I don't think anybody wants that. All right, what I do know is that bonds are getting massacred, relatively speaking. Jim Bianco had a great thread showing that if the month were to end here, it would be the worst month for bonds in, I don't know, since 1980. It's been a while.

The Bloomberg Global Aggregate Bond Index shows a negative total return of about 11%, which comes to $2.6 trillion. That's the biggest bond market decline. Obviously, the bond market is much bigger today than it ever has been, but it's the biggest dollar decline by a long shot. So I was looking at TLT the other day. I was doing a piece on like, what does a bond bear market look like? Because some people think that like bonds are going to crash and if interest rates rise

then they're screwed. That's a short-term phenomenon. You talked about this last week, too. If rates rise, eventually those rates help pick you up and then dust yourself off and over the long term, that's actually a good thing. But TLT has been around since, I think, like, mid-2000s, like 2004-ish, call it. The worst drought on ever happened in 2009, right coming off the bottom. A bunch of people poured into bonds, of course. Interest rates rose, bonds sold off, and I think TLT was down, again, this is the 20-plus year government bond. It was down like 24%. Right now, it's down 23% off the highs. So this is closing in on the biggest drawdown ever for long-term bonds over the last 20 years or so. You got to use the meme bond. The meme bond is zero Z.

Oh, zero coupon? That is... That is a favorite of yours. Well, because that's where all the juices, 32% off its highs. I mean, that's a full-on crash for bonds. Yeah, that's zero coupon meaning that's your fullest of full duration risk that you can get. All of it, down 32%. That's a pretty good crash. You buy her here? Of bonds. Of zero coupon bonds? You think rates are going to go lower. This is the thing, though, people predicting the end of the world and inflation getting out of control, the end of the world actually happening and going into a global recession is the cure for that. Yeah. I mean, then we could cut rates. Exactly. So here's the thing, though, over the weekend, five-year treasury yields went above 30-year treasury yields. So I think it's like

2.6% and 2.5%. And that's an inversion. I think it's still pretty close today. What if we get to the point where the Fed says, oh, we're going to hike and hike and hike, they never even get to the point where they get to hike and the market does it all for them. And they don't actually get to cut rates very much because they don't get high enough before the proverbial excrement hits the fan. Here's a good quote. I forget who said this, so I apologize. The Fed is now likely in a tighten until something breaks mode. The key question remains whether it's inflation or growth that breaks first. No, the Fed is going. Everyone's saying that they're going of three percent. So if they're doing these 25 basis points, 25, like, what if they don't have time

to even get there by the time something breaks? You mean something's going to break before they even get to their terminal rate? Could be. All right. So my biggest inflation hedge that I talked about last week is already gone. I got an email from Butcher Box, as I'm sure you're well aware. Food prices have been steadily rising over the past year. You might not know that our expenses for other factors like labor fuel and packaging materials have also increased substantially. The price of your beef and chicken box will not go to $146. I think it was $130. six before, 139. It's also bad.

They were behind the curve. I think so. By the way... What's in the box? You can choose either an all beef box, and all chicken box, or chicken and beef,

then maybe one other thing. And then you can do add-ons. Can you choose the cuts? They choose those for you. So it's kind of a grab bag when you open it. That's fun. Yeah.

They sent us... Oh, here's a liver. Yeah. Well, they gave us like a full chicken, like a full little rotisserie. What do you do with it? So we cooked yesterday. We grilled some chicken.

We grilled some steaks. Very good meat, actually. It's probably worth it. That's it? It's good. Okay. Well, you know what Hedges is still in place? My 50 stars at Starbucks is still 50 stars.

So I got that going from me. I assume if they screw with those rates, people will riot. With what rates? If they say it used to cost 50 stars to... Oh, people will riot. If they increase that, the Starbucks people will riot. So we're guilty of propagating, I guess, a nonsensical stat. You know that we've been saying,

Ukraine and Russia are responsible for 25% of world wheat exports? I saw this thread too. This is pretty good buster. So this person, Sarah Tabor, said, it's technically true, but it doesn't mean what people think. Missing wheat from the war is actually less than 1% of the global wheat crop. So when the headlot is 25% of world wheat exports missing, that leads people to think, oh my God, we have to suddenly come up with 25% more wheat in the world. It's only 0.9% because most of the world's weed is eaten in the country that grows it, which I kind of feel like a Muppet, like that makes a lot of sense. Yes, it does. This is a good, I'm always up for a good myth-busting. This makes sense. But again, you're still seeing a lot of people say, like,

especially in third world countries, this is going to still be a problem and lead to like famine and upheaval. And there are still certain countries that are going to get hurt from this. Dumburg is a thoughtful bear. They have a post out this week about the potential crisis, that is staring us in plain sight with food. And matter of fact, they explicitly wrote that they hope they're wrong, they hope that this does not come to fruition. That's kind of like a,

I know I'm going to be right, but I hope I'm wrong. Credit to them, you have to say that. You can't like be seen cheerleading for a famine. That's an anonymous blog. I do have to take umbrage with one thing there. I don't think I've ever done this

and if I have someone can shove it down my throat and shove it in my face. When bloggers say we, they talk in the royal we. Have you done this before? That's the Leonardo DiCaprio. meme where he's got his funny face where you say

we hope we're wrong. I know people do it. A lot of people do it. But what if there is actually a way? What if Duneberg is a group of four traders or writers or whatever? I do think that's a way to make yourself sound a little smarter than when you say we. But what if it is a way? What if it's a we? I think it's a team. I actually think it is a team. Just like

your thing like if someone gives you a macro take in a British accent, you believe it like 25% more. If you say we in a blog post I think, okay, this person is way smart. harder than me. Yes. That's fair. All right. This is from, this was interesting. This is from calculated risk. I'm going to start you for a way. I'm going to get you. All right. Yeah, it's possible. Go back to like 2014. It might be in there. All right. In 2021, the highest level of education of the population, 25 in old United States. Nine percent had less than a high school

diploma. Twenty-eight percent had a high school to graduate as their highest degree completed. 15 percent at some college, not a degree. 11 percent had an associate degree. Twenty-four percent had a bachelor's degree is their highest and then you lost me it's too many numbers what's the point okay look at the chart okay we've now got the highest level of people with a bachelor's degree or higher in history it's like 38% have at least that or higher now look at this next chart u.s. unemployment range with a college degree in high school no college you can see they both come down a lot if you have a high school diploma your unemployment rate is about 2.2% if you just have our high school education it's about 5% still. Wow. So 38%. I'm guessing that number shocks people, because we always hear about

the student loan crisis and all these things. It's still a minority of the country that has a college degree and has a college education. So more than, take the inverse, more than 60% of the people in this country, 25 or older, do not have a college degree. I'm guessing that's a higher number than most people would assume. And it's still at the highest level ever. I'm looking at this chart. The fact that that's rising, we always talk about young people are so screwed. because they have to pay higher prices for costs in college and all this stuff. Like, eventually young people are going to have, their incomes are going to keep rising and rising because of educational levels going higher.

We were screwed. Us young people, and I'm not young anymore, but when we graduated in 2007, 2008, we were screwed. There were no jobs. Yes. I think you hear a lot of that. Young people are screwed. Old people had the ability to buy houses at lower prices.

Well, there's some of that. There's some of that. But, well, okay, whatever. This chart is wild. how low the unemployment rate is. By the way, you spoke about Nicolax. We did speak about this data set. You have to listen to that podcast if you haven't.

The Compound and Friends. Nick Colis was amazing. He spoke about trading at SAC Capital with Steve Cohen. I mean, that guy is just awesome, awesome, awesome. All right, what happens to the number of job openings if we go into a recession? How quickly does that go from $9 million to zero or whatever the number is? That's the big question. It's at its highest level.

thing. Again, I said before the pandemic, it was 7.5 was the highest. It's not like 11. So even if you took off four million job openings, you still get back to pre-pendemic level. But so you could say, oh, we could absorb it, blah, blah, blah. But what if that just like gets the act? I mean, you would think that that will crash. I'm still seeing $15 to $18 an hour at McDonald's signs. I don't believe what you're saying. I don't believe what you're saying. You're seeing a lot of weird things out there. You don't see this too. I'm going to start taking pictures. Every time you go by McDonald's, you see a sign that says $15 an hour. Yeah. I mean, a burger in New York probably cost that much at McDonald's because I think it's a

ludicrously expensive burger the other day. Don't ask. That's the funny thing about people in New York complaining about inflation. You guys have the highest. I'm not complaining. No, I'm saying people in New York, generally, I'm saying it's like the majority of finance writers live in New York already. You guys have already had hyperinflation for the past 20 years. It's just going everywhere else now. I'm not happy, but I am okay to swallow inflation if the alternative was a great depression. I know that there's a lot in between. And I think the Fed should have gone earlier. But listen, I was wrong about inflation getting to where it is. So I can't complain. I'm part of the problem. I will accept inflation. I'm standing up for my colleagues at the Fed. I don't think there's much

the Fed could have done. I think this was a fiscal policy problem. If the Fed would have started raising rates nine months earlier, I don't think it would have mattered that much. They could have stopped acting as if we were in an emergency when we clearly weren't. Would you at least stipulate that, you freaking Homer? Yes, I'm just saying this was fiscal. fiscal policy, pandemic, one and two, way down the list, Fed three. They have stopped buying $40 billion worth of treasuries and mortgage-backed bonds a long time ago. Yes, but you're going to see interest rates rising. Yes, but, yes, but.

Interest rates are rising, and it's not impacting the housing market at all yet. It will. Maybe. Mark my words. Eventually. Mark him. It should. It might not for a little while.

All right. Nick McJulie wrote a blog post when the optimist are too pessimistic. And I've been thinking about this. He wrote, the common cultural fear is that you're going to run out of money in retirement. This thing that Nick is writing is clearly for a select audience of people that are fortunate enough to accumulate millions of dollars. But I've been thinking about this. What is the point? And I understand you have to say it for a rainy day, okay?

But what is the point of dying with $12 million? You're preaching to the choir. Same page? Yes, definitely. Enjoy yourself. Spend it and let people that you love enjoy it with you. That's my take. There are all sorts of competing ideas.

Or give it away to some people. And you have to say for a rainy day, but assume you've gotten past that, I just don't understand the point of forward. And I think a lot of this comes down to psychology where people are paranoid because of their early childhood experiences. And I get it. But like, I don't know, you can't take it with you, is all I'm saying. Sometimes the things that make you successful and make you a good accumulator of

capital make it even harder to get rid of it. And we talk about this with Chris, who works with us and as our head of wealth management, has had numerous conversations with our clients urging them to spend money. Yeah, a lot of people have a lot of anxiety. It's like you've got more money than you could possibly spend. Some people would scoff at that and say, that's ridiculous, but it's kind of everyone has their own thing. And I certainly see how that could be the case for someone. All right. Len Kiefer did this chart. Wait, didn't you want to say next example here? I thought I did. What did you say? Give it. I've talked about this before. Michael Kitts has did an analysis in the 4% rule.

He found that the 4% rule in a 60, 40 portfolio, which is 30 years of depletion of wealth, we're more likely to have four times your wealth than deplete any of their principal up to 30 years. There you go. It should be the 13% rule. Well, basically just saying so many people worry about the downside, but the upside risk is also there for most people. Like, for most people, it's not the worst possible outcome.

All right. So Len Kiefer has this chart showing that although interest rates arising, most American households have already locked in a fixed mortgage payment in 2005. And this was, of course, in the height of the real estate bubble where everybody was taking out adjustable rates and stuff. Two out of five mortgages had adjustable rates, less than one out of 100 recently. I think we learned our lesson. Maybe we learned it too good.

So then Jake tweeted, spicy take, at some point in the next few years, there will be the idea that an existing mortgage can be moved to a new underlying property because mobility will be so bad. So for example, if you have a two and a half percent mortgage, you're not moving. No way. You couldn't pay me double my house to move right now. Maybe double. But I tweeted this out the other day.

I said, people who have a two or three percent mortgage right now are never going to move if rates are at 5 percent. There's no way unless they really have to. And this guy from London tweeted back at me and said, you mean you can't move your mortgage to somewhere else and change a loan? I said, no, why? They can do it there, he said. Okay, so then why can't we do it here?

I need to learn how this works. But back to the rising rates hurting. So Mike Simonson every week does a weekly threat, one of the few threads I read. I'm sorry with the threads. I just can't take it. I'm all out, all out, 100% out. If you have a thread thing or a finger pointing down, I'm sorry, I can't read it. Immediate sales are still through the roof, even though rates are rising.

31,000 of the 93,000 new listings last week went into contract essentially immediately, meaning they hit the market and boom, gone, snapped up. There's still a huge demand. This is interesting from Redfin, and this is over like 200 Redfin users, sorry, 2 million. Share of homebuyers relocating reaches record high. So it's like basically one third of homebuyers now are relocated. And this was as low as 25% as recently as Q1 2019. So they say it's basically because remote work and also with home prices up so much,

people are more willing to move locations to find a cheaper area of the country. It's kind of crazy you think, okay, people are stuck in their houses. But also, if you're priced out in California or in New York or whatever and you move to the Midwest, I'm moving to Grand Rapids. You'd be shocked probably. How would I do in Grand Rapids? Would I fit in? I'm Jewish.

We've got some New Yorkers coming here. Do you have any Jewish people there? I have a shared office space right there for you. Welcome. Here's the other thing. I pulled this up in white charts. The last time mortgage rates were this high, there was well over a million homes for sale. How many are there now? 17. It's like 200 something thousand. It's way, way lower. I keep checking my neighborhood and it's just junk. It's junk relative to the price. I'm not trying to denigate it. By the way, but yes. This is how you can tell you're getting old. You don't need to look for a house and you

constantly check Zillow. I look at Zillow all the time. Well, I get a weekly report. I mean, I'm not on my app every day. But I'm saying. I'm interested. When you grew up, you didn't care. Like, now, if I, like, go to a new city, I'm like, let's check out the old local real estate market here and see some houses, how much they cost and what they look like. When I was in my 20s, would I care anything about that?

No, but now when you get old, you start looking for houses on Zillow that you'll never buy just because you're interested in a local real estate market. I'm saying we're old. Yeah, that's true. We're going to Florida in a couple weeks. Robin texts me, do you have any clothes for Florida? And it's like, yeah. Of course I do.

She goes, yeah, what? Hey, you sent me a picture of yourself in a bathing suit the other day. Making sure the length was right. Those were way too short. That's the look now. Okay, they felt very short. Like, they felt quite short. Uncomfortably short.

I'll try, I'll try. Don't go to like a five-inch inseam. Go to like six or seven, but that's the look now. Okay. Listen, I want to fit in. All right. Don't look at the houses in Marco Island. That'll blow you away too.

Here's another take. Comparing the median sales price to house buying. power in all the 50 top markets reveals that four markets are considered overvalued right now. Overvalued is defined by a market where the median sales price is greater than the home buying power. Most markets are still undervalued. This is propaganda. I don't like it. I don't know how they calculated home power, the ability to buy. But you believe it. I'm just putting it out there. There are some ways to quantify. Okay. All right. Sure there. All right. So what do we got? So the most overvalued places are San Jose, Los Angeles, San Francisco,

in San Diego. It's all California. New Yorkers in Las Vegas is right there. Detroit, Michigan, way down on the list. Still undervalued, it says. Detroit is a huge buying opportunity. The new BMO ViPorter MasterCard is your ticket to more. More perks. More points. More flights. More of all the things you want in a travel

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get people off the side. So there was this speech by a Fed governor. What's his name? Christopher Waller. Time out. Can you trade housing markets on Calshy? No, I don't think they have any housing data yet. I've asked for that. I wanted to bet you on housing price growth this year. Maybe you should just give me 100 bucks

because whatever we'd have bet I would have won. So just give me some money. I should honor the bet that we did it big, because I already lost. Pretty much. That's over. I'm not going to do it. Not in this economy. Sorry.

He had a speech called the red hot housing market, the role of policy and implications for housing affordability. And he talks in here. He gives all these crazy stats. Who said, Christopher Waller, who's a Fed governor. But then he says, listen, I understand what's going on. You can read some of the stats here if you want. But he said, I understand what's going on.

I am trying to buy a house here in Washington and the market is crazy. Now, here's the first thought that comes to mind. Why would a Fed governor be in? in the market for a house right now. He's been paying attention to this stuff for 18 months or however long. He knows what's going on in the housing market. He knows interest rates are higher. Here's where it comes down to.

He's like surprised, huh? Home prices really are high. Yeah. Here's the thing. Life events do not give a crap about interest rates or housing costs. Sometimes people have to move because of a life event or because they need more space or they need a job or whatever. Sometimes people have to move.

Eventually this clogged up housing market will get turning again because people will have to move. That's my solution. It doesn't make any sense that this guy would have to do this. Correct. We should make one more plug for the NFTs. One more plug for the NFTs. I just want to say to stop and think like how crazy the internet is,

Mr. Target Date Fund guy here is now shilling NFTs. That doesn't happen without the internet. I meet you over the internet. It also doesn't happen without the blockchain, sir. True. The blockchain solves this. I'm just saying how crazy the internet can be that it opens up these different opportunities and it's a win for the internet.

I know people like to talk smack about it. I'm also bullish on the internet. We had Quinn Stearns from Audiograph on the show. That was actually a good conversation. We spoke about leaving a comfortable job, starting a product, starting a business. Which characters? We would have been in Silicon Valley. Getting said no to by us.

We're tough cookies. But then coming around and saying yes. Anyway. You're a bad cop. I'm good cop. So yes. The NFTs are dropping on Wednesday. Buy an NFT, please.

Again, if you listen for the first time, it's going to be. no kidhungry.org, 0.1eath. Please help. And I'm going to have a blog post, I think I'm put on a Wednesday that's going to explain everything and give all the benefits, and then we'll stop bombarding you with it. But we think it's to be cool for people who are fans of the show and on a little bit more. My one question to Quinn that I thought was interesting, I guess essentially we were in a startup. You were there much earlier than me at Ritholtz. Ritholtz was a startup effectively, but it wasn't like it was just an idea.

That always fascinates me to no end how someone decides I'm going to quit this stable job, making a good living and salary, and I'm going to try to go for this idea. And the fact that we have so many people and young, smart people, you and I are talking to a lot of startup founders lately, the fact that people just decide to do this in their 20s and take these risks is probably something I never would have been comfortable with. It fascinates me that young people are able to do this and just jump with both feet and go for something like that.

And we asked Quinn about that. And that whole part of it to me, like that's when you want to do it in your 20s. I would have been way too much of a whim to ever do that, I think. All right, let's keep moving. Okay. We talked about Instacart last week. So they now went from, they dropped their evaluation by 40%, which is pretty big. I guess if you're that close to an IPO, you kind of have to because you don't want the expectations to be so high based on your last round. But for a private company, that's a huge drop in valuation. I think also attracting new employees. People know, hey, wait a minute, might get compensated in stock that's 40% overvalued? No way. Is this also like the Fed, though, where they're dropping it just so they can hopefully raise it in the future? Exactly.

Then you need to leave some juice for new employees. All right. A couple odds and ends here. I want to mention last week you asked me if I've ever been to a total wine before. And I said, no, we don't have those here. And dozens of people said, Ben, there's one on 28th Street in Grand Rapids. It's literally blocks from my office. And I probably driven by it 10 times.

Easily. I've never gone in it right over my head. I completely lost it. But yes, total wine is a thing in Grand Rapids. I'm going to try it out because you recommended it. Did you visit it? No, I haven't yet. But I guess I'm going to have to.

Okay. Here's a survey. Nearly half of millennials say they're living paycheck to paycheck up 6% from a year earlier, a new survey found. With so little cash to spare, more millennial workers, those between 25 and 40 feel they can't handle unexpected financial expense. There's no way that's right. I call absolute bullshit on this one. There's no way. Half of all millennials are living paycheck to paycheck. No way. Maybe half a Gen Z. And even still, it sounds high. I think that this may be a semantics thing of like the definition of paycheck to paycheck. I'm saving for my 401K. And then I have nothing left.

All right. I have an idea. So I've been late to a few Zoom meetings and I really don't like it because I think it's incredibly rude when people are late. So I'm not a fan of being late. Anyway, my point is this. You know, like sometimes this is 100% of my fault because I set my timer for alerts on my Google calendar to like 30 minutes before, which makes no sense because by the time 30 minutes passes, I forget. I do mine 10 minutes before. I think I need to switch to like a three minute reminder, maybe five. Zoom should automatically pop up on your computer. The meeting should automatically open. That's true. Or say, like, give you the option to say your Zoom meeting is starting yes or no. Yeah, it should automatically pop up. Here's what I learned. This is probably not news to anybody. Although it was news to me, so maybe it's news to you.

When you schedule a calendar invite, you can hit the Google Zoom or the Google Meet, I should say, right in the invite. Did you know that? You could add video. Yeah, I didn't know that. You looked up. I don't think you do that. I was thinking if you're telling me something groundbreaking and, yeah, I knew that. I don't think you knew that.

All right. I went to the Nick game the other day. So my friend and I who share a season, we share half a season. So we each get, I don't know, we go to most games. We sell some. It doesn't matter. We sold our tickets for the Wizards game and we sat like fourth row. I've never sat close in Madison Square Garden in my life.

It was just an amazing experience sitting there close. So then later, it was a day before my birthday, two days after my dad's birthday. And I've never taken my dad, my dad's been taking me to that games my whole life, like literally for 30 years, which 30 years, oh, my God, I'm old. But we've never sat close. So I was on StubHub and I said to my friend, dude, this is ridiculous. I'm trying to buy good seats against the Hawks. And it's a 25% service fee.

25%. I don't know how the blockchain doesn't fix that and cut them right out of the equation. But anyway, my friend goes, hey, dummy, you have. have tickets to tomorrow's game. We have seats and this is your turn to go. And I said, oh, awesome. I'm glad I said something to you. By the way, blockchain for tickets, that's the thing that everyone goes, lightbulb. Like, why isn't that a thing yet? I don't know. I don't know. I'm sure it will be. So I emailed my rep and she said, I'll upgrade you with like no fees. Just let me know where you want to sit. So there was not a lot of seats available because

Trey Young is a hot ticket, I guess. And I tried to sell my seats. I lowered them two times and I couldn't sell them. So I just said, eh, it's fine. My seats are good enough. I said to her, thank you, but whatever. So she texted me as I'm sitting down. I've got a surprise for you. Come meet me outside your seats. So my dad and I went down through the lounge, blah, blah, blah. We get onto the floor. And my dad's never been on the floor before. So we're like, oh, my God. And then she takes us directly to like the best seats there. Right on the floor, right next to Tray Young. He happened to be sitting at the end of the bench. I was looking that night.

I was just like, oh, how much? You were basically in like Spike Lee seats. No, no, no. Spike is on Celebrity Road. He's sitting in the center court. Okay. Yeah. But you sent me your tickets and it was like you were within feet of Trey Young.

I could have tapped his name. So they were $3,400 a ticket. And I'm guessing nobody ever spends that much money. They're probably like the suites at the penthouse. And the best part about it is you were almost a meme because Nick's lost, obviously. There was a guy shaking his head and you were sitting right next to him with your hand on it. And you looked, luckily, you weren't picking your nose or anything. and you were on TNT.

I could have been mad. So the guy next to me who you saw on TV said something to Trey. And by the way, there was a security. So it was that guy, me, then my dad. And the security guard was sitting next to my dad. You can't talk to the players. Like, obviously, they don't let you heckle the players. So the guy next to me that you saw said something to Trey.

Not so bad. I don't know if you said, you suck. Whatever. Trey looked him and immediately, like, just instantly said, shut your fat ass up. The security guy goes like this to the guy. So they needed that security guy at the askers last night. That's what they needed. I watch that live.

You watch that live? Top five Twitter nights of all time, easily. That's a kind of event where Twitter makes it a thousand percent better. And honestly, I never would have to watch it if I didn't have like 10 bets on Kalshi for the Oscar winners. So I'm watching it and I go, I was doing my little workout, doing some sit-ups, some lunges kind of things. You know, not to brag. Yeah, of course. I was about to take a shower and I had the Oscars on in the background because I wanted to see who, and it's getting to the time they're going to do my bets.

I'm going to take a quick shower. I'm like, oh, wait, there's Chris Rock. I'm going to watch this part. I thought it was fake. I thought it was staged immediately. Then I go to Twitter and everything gone. So two things on that. I also thought it was fake because first of all, Chris Rock didn't move before or after he was hit.

He took a shot pretty good. And he kept delivering, he kept going. But I think when everybody was like, wait a minute. The volume went off and they showed Will Smith yelling. And I think everybody at that point, at least me, I was like, wait a minute. Is this real? Then I rewound. And I was like.

I rewound it too. When Will Smith walked back to his seat, he kind of had like a weird sort of grin in his face. Do you know what I mean? It was like very... Yes. That was one of the strangest pop culture moments I've ever seen in my life. And I don't know if it'd ever be topped. How did Chris Rock keep going?

I'm guessing comedians are used to being heckled, probably not being slapped in the face. There was no mark on his face. Dude, what if he knocked him out? What if he got bloody? What if he punched him instead of slapped him? Could Will Smith have got an arrested before his Oscar? It was the craziest moment. If Chris Rock fell down and was bleeding,

Will Smith would have been arrested immediately. That's the kind of event that makes you appreciate and love Twitter more than anything because Twitter made that 100 times better. Not only jokes, but you had all these alternate angles. You had the videos. It was just an all-time or pop culture moment. And I would have never done it. Someone tweeted us last week.

I can't believe Michael and Ben Gamble. Don't they know the house has the edge? If I didn't gamble, I'm not watching the Oscars last night. I miss an all-time pop culture moment. So gambling is good. I popped on. By the way, Danique cleaned up. Although he didn't win Best Director, Snub,

Dani cleaned up, and I bet on, during the ceremony, I said, you know what, let me hop on, and let me bet against Power of the Dog. I just want a short Power of the Dog. I never saw the movie, but I hate that movie. I know I hate that movie. I bought No, and of course, I won.

I had some early ones. I bet on Cota at 13 cents, which means your upside is to a dollar. So look at this chart. Look at this chart of Cota. That is very cool, how you could see it building momentum. When did you buy it? Yes. I bought it at 13 cents

in probably early March. Why? Because you saw it. and you loved it? I can't remember what I heard it on saying like Coda is like the dark horse. I'm like, I'm going to put some money. I put a little bit of money. It wasn't much.

And I put a bet on. And I loved that movie. I think people should get Apple TV Plus and get that movie. And that was the only decent movie out of all of them that probably could have should have won. That was my thinking. I actually thought the ceremony prior to the Chris Rock thing, I don't know what was different about. And the movies sucked.

It was a horrible slate of movies, but it was quicker. It was. I like the Pulp Fiction or I like the Godfather, obviously. I like all like the quick stuff that they did. It was much more engaging. The last year was, like, I turned it off. This one was a lot more fun. Obviously, all-timer moment.

True. Real quick, they had a six-month customer retention among select streaming platforms. What did you just say? Customer retention for streaming platforms. Okay. Disney Plus at the top. Remember I said Disney has the biggest lock-in because people rewatch stuff? That's why I think they hold on your customers more.

All right. 31-year-old investment advisor really enjoying the content you guys put out. Wonder if you guys have any advice as a relatively young folks in the industry on mitigating the initial momentary flash of panic. I imagine some clients feel when they first. walk into the room and wonder, is this guy old enough to give me investment advice? Obviously, you build credibility of understanding their financial goals, blah, blah, blah. I know some folks are surprised when young folks rolls in to talk about their investments, so I thought I'd ask you, sadly, I can't grow much facial hair and rock the 5 o'clock shadow like Ben and I am

simultaneously cursed with a full head of hair, so I can't rock the wise bald guy, Michael, look. All right, first of all, shave your head anyway. That's true. You could do it. Shave your head, you'll look three years older. I remember one of the very first meetings I had. So I was with our colleague and friend Chris. We had a guy in his 50s walk in. It was on my very first meetings when I joined Ridtholes. And the guy mentioned it. He said, wow, you guys are very young. And I at the time, I was younger, but I'm also young looking, which is like a blessing and a curse. I still get carded sometimes, I swear. I don't. Probably since your 20s. But here's my thinking on that. And the way that we answered that was, yeah, you're right. We're a little younger.

Listen, we're building financial plans for decades and decades, not just a couple years. Don't you almost want someone younger to be working with you and see you along the way and maybe have people within your financial planning firm that have varying degrees of experience. Obviously, part of it is showing that you have the knowledge and expertise to put that together. But I think you have to spend it in a positive way as well. I mean, this person is a CFA, so I feel like that can't hurt. But yeah, well said, Ben. Recommendations for the week. How freaking good is severance? Holy moly. Oh, yes. So I think after the fourth or fifth episode, I said to my wife, I'm really into this show, but I need something to happen and move it along a little bit.

And the last two episodes were just amazing. It's just so well-acted. I think one of my favorite characters, especially after the last episode, is Mr. Milchick. I don't know who that guy is. Phenomenal. Who plays him. When he was doing the dancing scene, that guy is awesome. And he's equal parts scary and a little crazy.

Like, that guy is very, and I don't know. I've never seen anything else, but he's really good. We were worried about them landing the plane. I think it's past the point. The writing and the quality is so high that, I have huge confidence that they're going to nail it. But I do not. I am totally out on season two.

If they're going with that route, I'm out. Okay, I'm in. I think this show is awesome. I really like it. I love it, but I don't want any more. Okay. Here's one that I had to watch kind of like a train wreck. So deep water on Hulu.

I heard it got some pretty bad reviews. This is the new Ben Affleck movie. Anna Darmus, I don't know how to say it right. She was the housekeeper in Knives Out, the one she ended up with all the money. Yeah, really good. And the new bond. Okay. So I didn't see that yet.

So this got some. some pretty bad reviews. I'm a Ben Affleck fan. I had to watch it. It was one of the most ridiculous, weird movies I've ever seen. It tried to be like this erotic thriller, but then it also put these like other guys in who tried to do like comic relief. The plot was one of the most ridiculous plots I've ever seen for a movie. And yet I couldn't look away. I had to watch it till the end. Just a totally ridiculous movie in so many different senses. Don't watch it, but it was, trust me, totally ridiculous. And I couldn't stop watching it. Oh, wait a minute. This sounds pretty good.

Give it 10 minutes. Another one. I actually was listening to the guy from Severance Adam Scott. Adam Scott. He was on a podcast with Chris Ryan

and Andy Greenwald on the watch. He plays two personalities. Like that's a crazy thing. He was talking about Ben Stiller as a director and producer of the show. They said Ben Stiller doesn't

act in many movies anymore. He said, check out Brad's status. It's from like 2017, 2018. It's an Amazon movie. Like, all right, I'll give it a try this weekend. I really liked it.

I wasn't expecting much and it was about a guy who's basically having a midlife crisis and trying to think about success on a relative basis between his kids and then his old friends from college and seeing his friends from college

who are richer than he is but not understanding like what they had to give up and sacrifice to get there and the guy Mike White wrote it who did White Lotus and I don't know if it's a movie for Michael Batnik

No, Mike Judge. No, Mike Judge is the Beeps and Butthead guy. Oh, that's right. I'm sorry. Mike White is Ned Schneeble Yes. From School of Rock, that's right. Yeah, so he wrote that

and he's in it actually too but this might not be a Michael because it's kind of a coming age one and I know sometimes you don't like those but it was a very intelligent movie. One more. Hold on before you get to you. Somebody tried to tell me to watch Lickrish Pizza.

This weekend, I went nuts. I said, oh, for my dead body, I'm never watching that movie. They're like, why? It's Paul Thomas Anderson. I was like, exactly. Yes. No. Just good idea to save it from that.

And finally, I watched the half hour Aziz comedy special and the Netflix on the comedy seller. One hour is too long for comedy special. Half hour might be a little too short. 45 minutes is probably about right. But it was good, not great. He had some good takes. Anything for you this week?

I don't know why. I think I just honestly, I don't know. I did this for the content. I watched a Liam Neeson movie on, like, Friday night. Let me guess. It was about him getting revenge against someone. It was, yeah. How'd you know?

This was called a Walk Among the Tombstones. You ever see that one? Well, actually, I did see that one. It was okay. I think that was actually a decent movie, right? It was like sort of noir, like crime thriller type thing. Was it his sun or something? No, but sure.

Okay. And then on Saturday, I can't remember which streaming services was, but I saw, by the way, if you Google Liam Neeson movies, it looks like The Onion, Blacklight, the Marksman, Honest Thief, Ice Road, Cold Pursuit the Commuter. It looks like a joke. They're all the same movie. Yes. And then on Saturday night, we watched Unknown. And my wife was like, are you seriously watching another Liam Neeson movie? And I was like, well, it's funny. I'm watching because it's funny. So I watched Unknown. You ever see that one with January Jones? He hits his head and I can't remember who he is. I like those amnesia ones, so that one is okay. Not that for them really worth watching. I did it for the content. Okay. Is that it? It's about it.

All right. This time next week, we'll be NFT mentors. That's true. On OpenC? Yes. We'll make it easy and paying this for you. We had a lot of people who said, I'm not crypto-native. I don't want to do it.

It's very easy to do. That's our last sale. Animal Spiritspot at gmail.com, and we will see you next week. Thank you.