Animal Spirits Podcast - Wages Are Beating Inflation (EP.361)

Episode Date: May 22, 2024

On episode 361 of Animal Spirits, Michael Batnick and Ben Carlson discuss: losing a family pet, the S&P 500 is not the economy, everything is up this year, the stock market is NOT a casino, wages are cumulative just like inflation, consumers keep consuming, ETH ETFs, the Ben Carlson streaming bundle, and more! This episode is sponsored by Franklin Templeton. To learn more about the Franklin International Core Dividend Tilt Index ETF (DIVI), please visit: https://www.franklintempleton.com/investments/options/exchange-traded-funds/products/21412/SINGLCLASS/franklin-international-core-dividend-tilt-index-etf/DIVI Sign up for The Compound newsletter and never miss out: thecompoundnews.com/subscribe Find complete show notes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's show is brought to by Franklin Templeton, a company with a storied history. Ben, do you know when they opened their doors? 1776. Close. 1947. That is a long time ago. They wrote the post-World War II wave. Pretty good then. So Franklin now has 72 ETFs with over $20 billion in U.S. ETF assets under management, including the Franklin International Core Divident Tilt ETF ticker, DIVI. Ben, International. So hot right now. Premature to say that.

Well, much higher dividend yields for sure. Yeah. But the actual, the stocks, it's been a long time for U.S. investors that are globally diversified. It's been like a long time since they've carried their weight. But we're due. We've been looking much better lately. See the link in the bio for more information on the Franklin International Core Dividendtilt Index ETF, DIVI, and go to Franklin Templeton.com to learn more. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching.

All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Riddholz wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Riddholt's wealth management may maintain positions in the securities discussion. in this podcast. Welcome to Animal Spirits with Michael and Ben. Want to start off the show on a somber but happy note. Sumber but happy. I had to put my sweet angel Bianca down on last Friday.

She was, she's a boxer and 12 and a half years old. And I remember when we got her, Robert and I, like I never had a dog growing up. I always loved animals, but we had some allergic people in my face. family. So this is like your first wheel dog. Yes. My first, my first real and actual dog. We were animal lovers growing up, but a lot of allergies. So we had like iguanas and tortoises and anything that didn't have, didn't have hair, no cats or anything like that. So when we got her, we saw, remember the show like Animal Planet, the Channel Animal Planet? And there happened to be something on Boxers.

I was a big Steve Irwin guy back in the day. Sure. And it said boxers or a grape breed and blah, blah, And they live eight to nine years. And Rob and I looked at each other. We were like, eight to nine years doesn't sound like a long time. We probably should have done some research on that before we got her. Yeah, big dogs don't last as big dogs go a little sooner usually. So 12 and a half years.

It was an incredible run. And of course, for anybody that's had a dog, lost a dog, they're not just family members. They're the best family member. Right? Better than anybody else who lives with you in your house. Literally always happy to see you.

And they're also, I mean, this sounds a little degrading in a way, but dogs are like a piece of furniture. Like, they're in a house, they're just literally always there, right? So that's the weirdest part is when they're gone is like you look for them. You expect them to be there and they're not there anymore. Yes, I've had a few of those weird experiences. So she, the death was quick, which I guess is better than drawn out. So she had like hives all over her body. And so it wasn't completely shocking.

It turned out that it was like an aggressive lymphoma. But I woke up Friday morning and she had like a softball. in her face. And I don't know. I just assumed, what do I know? I just assumed it was like something that need to be drained

or something. So we get to the doctor and he said, you got to put her down. And I said today. And he said today because it could have been really bad if we didn't.

But I had thought, I'm taking it a lot better than that I thought I would. Over the years, I have cried so much like in anticipation of this day. Even when she was like a baby. Like the thought of losing,

losing her was like too much to bear. So I had cried over the years a lot in preparation for this. And I never would have imagined because I thought that I would be just a pile of boogers and tears. But I like pre-grieved while she was still alive. So I am holding up this sort of like the opposite of a by the room we're selling this type of thing. You did the premortem. With my emotions. Yeah, I pre-grieved. So. But yeah, it's, it's, I think like losing a dog, it just takes you back to all the experiences over the years. When I got her. We were, I was a different person. I was 20, how old was I, I don't know, 27, 28? I was unemployed. So I was with her every day for the first like seven or eight months of her life.

Got her in Merrick, moved to Astoria, Brooklyn, back to Merrick. A lot of memories with that girl. Sign of a good dog is when I would come stay at your house, uh, if a dog, like, hears a guest moving, she would come and say hi to me in my room, right? Like, nudge the door open. Yes. That's a sign of a good dog. And anybody that was here, here alone with her, she would lay with, put her head in their lap. She was a wonderful dog, and I'm going to miss her daily. When I told my kids, Kobe said, this is Kobe's reaction. Kobe 7.

He goes, uh-huh. And Logan, the four-year-old, asked if we can get a puppy. That was his reaction. So they're taking it, they're taking it just fine. If my son, so our dog has probably been a year and a half now almost, if our son gets upset about something or we're like, hey, what did you do that for? You know, like managing about something, he'll say, I still really miss. Ella, okay? Like, he uses it as a crutch.

Like, hey, come on. That, no, statute of limitations. You had four weeks. That's past. So, anyway, why isn't peace, my sweet angel? I'm going to miss her. All right. Torson Slocke. I've got a host of graphs from him. Okay. Someone mentioned that if we did animal spirits by the years, it would have been like

2019, Derek Thompson. What was the other ones? Packy. Packy was 2020, maybe. Torsten Slocke is 24, the animal spirit's MVP. Carl Kintanilla might have been

2022, 2022, I don't know. So we talked about this before about how the rising tide of the U.S. taking over the global stock market is just making it so more people buy U.S. stocks. So the S&P as a percentage

of global equity market. Now, this is not the whole U.S. stock market, because that includes mid-caps, small caps, microcaps. This is just the S&P. in 2008 was down to 20% of global market cap almost. Now it's up to 40%. So pretty substantial rise, obviously. Part of the reason going into 2008 was so low

is because international stocks outperformed. Right? So anyway, it's just a massive part of the global market cap now. But the S&P 500 is not the economy. Did you read this one from Torson Slok about how public markets are much smaller part of the overall economy? Didn't we say the other week that, oh man, this is like directionally right, 85% of companies with $100 million or more in revenue

in the U.S. are private? Okay, so that chart is in this book that he created. So the S&P makes up 18% of total U.S. employment, which is not that much. Yeah, it is. Only 500 companies employ one in five people? I don't know, but they're the biggest companies, though. No shit.

I mean, that seems like a high number to me. Okay. So privately owned firms, account for almost 80% of job openings. 87% of firms with revenue of greater than $100 million are private. I think that's one you're probably looking for. But here's the kicker.

So what did we say? 18% of all workers are S&P 500, but half of economy-wide corporate profits come from the S&P. Wow. Which is crazy. Yes. But you're right when you say the S&P 500 is not the economy because those companies and their business metrics look nothing like these private companies.

So look at one more I put in here from Golden Sachs. I think Sam Rowe shared this one. This is the path of S&P 500 profit margins. Up and to the right. This thing, I mean, it essentially looks like the stock market since 1990 without nearly as much of a downturn. We had, you know, deflation in 2008. We had slow growth in the 2010s. We had inflation in 2020s. And this thing just keeps going up. Amazing. Good luck betting against the SP 500, I guess. Speaking of Sam Rowe, did he see what he wrote about me, us, I guess, and his,

thank you very much, Sam. He said, he had a post, the free finance newsletters I read all the time. And he said about myself, he's super assertive and does. is fair share of humble bragging, but he's nevertheless a pretty humble guy. Nice. Now, in fairness, I said it right on my cover letter in 2008. I am confident in my assertions. He's right.

True. So actually, we get a lot of questions from people saying, which newsletters should I read? And I think Sam's list is a great place to start. Link in the show notes. Interesting, though, this is from Richard Bernstein, Advisors, country and regional returns in U.S. dollars this year. The U.S. is middle of the pack, actually, for 2024. China, Taiwan, Denmark.

Yeah, I told you. I said it in the beginning. The rest of the world, international stocks are on fire. Didn't you get booted out of your China trade? Because you did a China trade on at one point. I didn't get booted out. I stopped myself out two days later. I said, you know what?

Don't feel like dealing with the hassle. How much was it up since I sold it? Probably a lot. Here's a sentiment check from the Wall Street Journal. Investors are striking gold all over. Now, here's the lead. Most everything is going up. Established Dow stocks, faster-growing text shares, Bitcoin, other cryptocurrencies, even gold and other precious metals. Risk-averse investors have a bounty of options, too, including certificates of deposit, offering yields of about 5%. And rising junk bonds

and other fixed-income investments, adding to the glow. Basically saying that, like, this is, I mean, if you think about the markets where they are, this is the 90s. minus the dot-com bubble, I guess, everything is going up. 5% money market yields. And people are going to look back in like 30 or 40 years and be like, why was everyone so miserable? Why was sentiment so low

when everything was going so well for the markets? I mean, this is not the 90s, at least for the stock market. I mean... First of all, there's no IPOs. for i mean talking about returns though look at look at arc there's not unlimited appetite for risk

there is selective appetite for it certain things are working certain things are not this is interesting this reminds me of like the mid meme where on the one hand you probably have people like stand drunken miller now that there's a handful now there's a lot of them but i'm pretty sure drucker millers along this market right it's going up he's in momentum trend he's in and then you have the dumboes who are also saying,

the market's going up, I'm in. And then you have the smart people, our audience, not our audience, but you know what I mean, people that are involved in the financial markets who are like, see these headlines,

trying to outsmart themselves, outthink everything. I can't be, come on. Stocks are priced for perfection. Like, giving themselves a million excuses why they shouldn't be along the market. Well, listen to this one from Steve Eisenman.

In January, Steve Eisenman, a senior portfolio management at Newburgh or Berman. He's the big short guy, right? Steve Carell played him. Is that right in the movie? Said on CNBC, he worried everybody is coming into the year feeling too good. Today, Eisman says the market is in a better position than the 1990s, a time when the unemployment was low and excitement about the internet drove a tech frenzy.

I'm feeling pretty blissful, he says. Good for him. I always give the big short people a lot of guff because they all had, they were right once in a row, and they've been living off of that ever since. He seems to be one of the people who, is that? actually pretty grounded and reasonable since then and didn't let it go to his head. That midwit that was referencing, Frederick Geishin wrote a post

on this. And it's, he made a point that's so true. Like, the people in the middle that like to do research and like to, you know, it's intellectual stimulus. It's not that they don't like or want to make money. But

if you really dove inside their brain, their primary motivation is curiosity. having like mental frameworks. I thought you were going to say intellectual or something else. No. And trying to make order of the world as opposed to

now is a great time to make money on long stocks and like not overthinking it. There really is something to that. I thought that was pretty interesting. Sometimes I learned this after 2008. Sometimes you can be too smart for your own good. Like the really smart people were the ones who got totally off sides after 2008.

And that was like one of the biggest things I learned coming out of that crisis is I listened to all these smart people forever as things were going down and I'm like, gosh, these people are so smart. Well, the smart people, it's like their natural tendency is to fight a bull market. Yes, and they did it the whole way up. So listen, I would, I'd be like if I said I didn't feel, have some of those feelings. Like Mike Wilson turning bullish, everything seemed, you know, not everything I've mentioned arc, but a lot of things seem to be working in.

It's hard. It's hard to fight the urge to maybe take it a little bit. easy? Markets are just so much, they feel different today that we can have this type of behavior, but we just lived through a 18-month bull market or bare market. It's bizarre how quickly things can just shift and change. This tweet is from May 13th, and it feels like it's five years ago, right? Because the market has had hell of a rally since then. So he's talking about GameStop, which hilariously all the way up and all the way straight back down, right, went from 17 to 65 and now back down to 20.

So sentiment traders tweeted, I know it's cool to say retail traders are yellowing right now because of GameStop, but then why is this put a call ratio, the most accurate and reflective of retail sentiment we know of, still in the pessimistic half of its range. Whatever yoloing is happening, it's not in the options market. I think that's important. Like, it's so easy to look at the game style. I would be like, guess they need to raise rates, right? And it's just a small corner of the world.

People keep saying it's all retail and dumb money. But so this is from Yao Finance, and I take umbrage of this a little bit. They say investors who jumped into the latest online frenzy over shares of the struggling video game retailer lost $13.1 billion in just three days from the mania's high. That loss from May 14th high now far exceeds game stock's total value of $6.8 billion. I think some people look at this and go, oh, see the dumb money. lost again. Isn't it all those algos at this point, though? Yeah, I think it's mostly, I think it's mostly like professionals.

I think, and then when they say that they lost, that they say people lost 13.1 billion, all they're saying is the shares at one point were down 66%. So of that 13 billion, of that 13 billion, how much of that money is professional money versus retail? I'm, I would guess, I'm completely making this up, but I would guess 80-20, institutional to retail. Yes. And I don't think you can judge losses from the height of a meme.

stock that just mooned in the span of a week or whatever, you can't say, like, those are a lot, like, it's not everyone bought at the very tippy top. So, anyway. Yeah, okay, Dave Portnoy. And this is kind of gets into this, this same narrative of the game stop that done money. He says, my problem with this stock market is, is just one big casino where the people in charge rig it to fuck over the little guy and make all the money for themselves. And I watched this video.

And this is how to sound informed the people who don't understand the stock market. To be fair to Portland, he is a gambler. So he's literally looking for a quick, to make a quick buck. If you're a gambler and you gamble on sports all the time or horses or whatever it is, you know almost immediately, I won or I lost. And the stock market is not like that. Because the stock market is the opposite of a casino. If it was a casino, it would be the only one in the world where

the longer you stay and play the game, the better your odds of success. I looked at it the other day. Since 1950, the S&P on a daily basis is up, a little less than 54% of the time on a daily basis between a gain or loss. It's almost a coin flip between up or down. And obviously the longer, so ironically, for Portnoy, though, saying this, there's literally never been a better time to be an individual investor. Index funds, ETFs, target date funds. You can set up an account of Robin Hood and buy stocks immediately, automatic contributions. The amount of information and opinions and analysis

available these days. It's never been a better time to be, I would say individuals have an advantage over Wall Street. There's no benchmarks. There's no committees to answer to. There's no outside investors that get mad at your short-term performance. Individuals are in a better place than Wall Street. If you're day trading, yes, the market is rigged in the sense that you have no chance of competing. I don't know if somebody tweeted this or if somebody emailed us, but somebody said it's like it's like lining up at right tackle for a professional football team getting bulldozed. Who said this?

Sean said this, yeah. And saying that like it's rigged. Yeah, you're playing a game against professionals that do have unfair advantages. Maybe not unfair, but monstrous advantages where you literally have no chance of winning over the long term. The longer you day trading gamble, the more like the likely you are you are to get demolished. With investing, actual investing, it's the opposite of a casino where the longer you stay and don't f*** around, the longer you're able to grind it out, the higher likelihood of you

achieving success. And that's the opposite of a casino, as you mentioned. Yeah. But if you're someone who's not involved or doesn't understand it and you see Dave Portnoy say something like that, you go, yes. Oh, it's very galvanizing. It's, frankly, it's dangerous. It's counterproductive. It's not, it's not the message that we want to put out into the world. But that message is coming from someone who is legitimately a gambler and not someone who is an investor in the stock market. Okay. Good news on the inflation front.

Speaking of getting people riled up, I have some data on inflation that's going to get people really riled up. Planning the seat here. Do you want to go now or do you want to? No, start here. Go ahead. So Walter Bloomberg tweeted, Target had earnings this week. They announced that they're going to reduce prices on 5,000 frequently shopped items.

this morning, we got news that Wendy's will offer $3 a breakfast deal as rivals, this is a CBC headline, as rivals such as McDonald's test value meals to drive sales. So companies, at least fast food companies, consumer target companies, are going the other way. They've, what's the opposite of greedflation? I don't know. This is just falling in line.

They wait for the big players to do it, then they all fall in line and do it. the same thing. Yeah. Right? But yeah, I guess that's that. Yeah, I mean, the customer, we said how many times, for how many months do we say, when is the consumer going to change our habits?

Well, it seems like it's happening. All right. This is from the Congressional Budget Office. They did their report. And honestly, it kind of surprises me. So they say for households in every quintile or fifth of the income distribution, they looked at all these, they looked at a basket of goods and services that you bought in 2019 pre-pandemic and a basket of goods you buy now, and they compared them to how far your

wages would go. The share of income required to pay for the 2019 consumption bundle decreased on average because income grew faster than prices did over that four-year period. Look at the chart here. The average household in each income group could purchase the same bundle of goods and services with a smaller portion of its adjusted income after transfers and taxes because such income increased more than prices did from 2019 to 2023. The highest quintile, unfortunately, the best, they could purchase the most, but every income quintile, it's funny, for some reason, the middle is the one that got squeezed the most, their wages grew faster than inflation or what they were buying. Now, the thing that- But hang on, but not necessarily fast than

inflation, faster than, now I didn't read the article, but it's saying that the same bundle from 2019 to today, to which I would say, but the bundles look so much different, right? Things that people are spending money on in 2024 is very different than how they were spending money on in 2019 you think so i don't know i think they're looking at the goods and services people buy it in a regular basis but i'm saying the makeup of goods and services that people are buying today is vastly different than 2019 think about how much you don't think so think about how much more people are spending on travel and entertainment and dining out versus 2019 and that's the stuff where it's really gotten out of control okay i guess but then you can't complain about it if you're

just because your habits changed the point is Everyone always says, listen, you're being glibed by saying that inflation is 3.5%. Inflation is cumulative. It's up 20% since, but wages are cumulative too. That's the point. True. And this is showing that. And so people will come back to us and say, yeah, but I don't believe these numbers.

They're falsified. The government, you know, mine. All right. We can't talk to those people. So, but the Matthew Klein has the piece here. He shows that the best inflation hedges a job. And he shows disposable personal income, consumer spending, and wage income only on this, back to January 2018. And you can see these charts, these lines move in lockstep with one

another. So like the economy is the tell here that that wages have at least risen in line with inflation or slightly above it because as wages rise, so does consumer spending. Which makes sense. Like that, that's why everything is so much higher these days. It's not like people are really, everyone's going into debt to finance everything. It's that wages are up, so spending is up. Yes. Morgan Stanley, there's Carl Kintanee, tweeted this, Morgan Stanley, our survey shows nearly 60% of consumers are getting ready to travel the summer. Higher consumers are more likely to travel the summer and spend more this year versus last,

a net 32% increase in spending intentions. Does that sound crazy high? I don't know what history shows, but 60% of consumers are getting ready to travel? It does sound like a lot. You know, the funny thing is, I guess you talk about habits changing. my wife just said this like two days ago she said now that we've been on a few because we didn't go on a lot of vacations

when my kids were really young it was just too much of a pain of the butt you know we had twins so bringing two car seats with you right or a stroller to fit it was impossible so we for a few years that we didn't travel and then COVID happened and then now we've been making up for lost time my wife just like I want to start planning more vacations

now that we've got the taste of it we've gone on some I want to go I want to keep planning vacations and I think that's probably the habits you're talking about changing is people get a taste of that. And it's not like they're going, oh, that vacation was awesome. Let's not do that again. Again, Carl Kintaneda, this time from Bank of America, lower income consumers, no clear signs of cracks. Lower income spending has generally outpaced higher income spending. How about that? On a year-over-year basis since early 2023, even excluding necessities. This is consistent with the strength in blue-collar wage growth since the start of the

pandemic. So they're looking at weekly earnings by percentile versus prices. So versus prices, prices. And yeah, the bottom 10% are outpacing inflation. I don't know what else you want us to say. Well, that makes sense when you consider that this is the Matthew Klein chart we just talked about because wages are rising the most for the low income group. So that's why their spending is rising the most. That actually tracks. All right. J.P. Morgan had their investor day yesterday. And I pulled two charts. Consumer financial health has largely normalized and remains stable. Ben, see this chart on the right? It says median nominal income growth versus inflation. Okay. And look at the blue line. Nominal income growth. See, this is showing it

way above. Versus inflation. Cruishing inflation on the low end. I mean, this is the So what's the thing here? Is J.P. Morgan fudging the numbers? Is Bank America lying to us? I mean, this is the simplest explanation for the economy ringing strong is people are making more money. Yes, prices are higher too, but people are making more money and they're spending it. Okay. So look at this chart on the left. It's showing the median cash buffer. The historical average went up 84% at the pandemic high from the historical average. Today, it's 11% higher than the historical. average. That's the median cash buffer at JPMorgan accounts, which is, oh, by the way, the largest financial institution in the United States. Trillions of dollars, right? Then they show, so by the way, just to film those numbers that I couldn't see earlier, I have this chart up now because my eyes are terrible. Nominal income growth for the lowest incomes versus inflation. I must,

that sounds weird when you're saying nominal versus inflation, but whatever. So let's just say real real income for the lowest incomes is up 41% since January 2020. Oh, so that 41% is the lowest. Yes, that's the lowest income. Jeez. For all incomes, it's up 24%. Then they also have a chart on small businesses. And same thing.

Small businesses are also in great shape. I mean, it's not a mystery. Everything's saying the same thing. everything is confirming the same thing. Now, it's, it's not to say everything's awesome, right? The housing market's, we know that. Like, we understand that there are people struggling today, as is always the case. But, like, it's not a conspiracy.

Yeah. If you're beating your head against the wall wondering, like, how is the economy doing this? Why haven't we gone during recession? This is why. It's pretty simple. So all this talk about the lowest income group gets hit the heart. artist by inflation. I get why people say that. Right. Right? I get why people say that because that's probably usually the case. It's usually true. Historically it's been true. It's just not.

Which is, yeah, fascinating. Unless there's like data that we're missing that we're not, that we're just purposefully ignoring. Send it our way if we had, if it exists. The Fed wrote a new piece called, why is the US GDP recovering faster than other advanced economies since the pandemic? Like, why are we doing so much better? And so they broke it down. They looked at, at trend lines for the Euro area, Canada, UK, United States, and all these other parts of the world are way below trend, and we're right back on trend. And it's like, why is this gap ever else but not here? And there wasn't really a good answer, because if you look at fiscal support, they show cumulative government deficit. The U.S. is in the middle, right? Like Italy

and Canada and Germany are higher, a little higher than the UK, France, and Spain, but here's the one that really stands out to me for, like, what makes the U.S. different? And they show new business registrations in the United States and the euro area. And look at that chart. We're just capitalists. We're money hungry pigs. Let's be honest. They are essentially on the same wavelength they were on before. And ours just took off like a rocket ship. I think that that's the simplest explanation. Because they couldn't come up with a good explanation to say, like, this is the reason why the U.S. is doing so much better. Well, hold on. Do you think that the new businesses are powering our economy? Or do you think

that this just shows how dynamic the economy is. Yes, I'm saying we're just, we're more dynamic here. Yeah. And obviously, money spent, all that stuff. But this is just the, yes, so here's the other side of that. So Kevin Gordon from Schwab tweeted, the soft components of the NFIB, small business optimism say things are as bad as they were during the global financial crisis. The hard components say we're not even close to that. But we still hit a rough patch over the past couple of years. Clearly, that's the case. So soft is sentiment, hard, data. Yeah. So, listen, you can't argue that for reasons that we've discussed a million times, people don't feel great. And I think, you know, we don't need to rehash it. It's, it's,

I feel like we're beating that dead horse. But, but, uh, yeah, people still aren't feeling great. So, uh, although I do, I do wonder if this is just a format, like a, uh, I wonder if it's the way that these questions in the survey are asked or worded. So did you listen to Derek Thompson's playing English last week about smartphone usage? No, but just, let me just finish this real quick. I feel like if the question was worded, how is your business doing? How do you feel about your business? I just feel like the chart would look a lot different than this. If you ask people, how do you feel about the overall economy? Think people would say probably what this shows. And I think if you asked me about their

business, they would say, we're doing pretty good. People also think about the economy. So his whole thing was he wanted to look at the other side of our smartphones really causing teens to be so depressed. And this guy made the contrarian argument that no, no, no, it's not smartphones. It's we ask people more. People care more about depression. And it, I didn't believe everything that this guy said, but it was a great. We're just reporting on it more. We're more cognizant of mental health issues. Yeah, we're more cognizant of it. And we talk about it more and we change the way that we ask people about this stuff. And maybe the increases we're seeing in depression are just that it's a topic more people think and care about as opposed to they're being

skyrocketing levels of depression. Again, I didn't believe it totally, but it just the whole part of it made me think of how you can change people's perceptions by the way that you ask something or our knowledge of these issues. Yeah, I buy that in the pie chart of this issue. It's definitely a slice, for sure. Yeah, so it was interesting. All right, did you see, did you see this thing from Scarlett Johansson and Open AI? This has been my dream. The only thing I've said for AI the whole time is all I want is the Her system in my ear as the private assistant. So Her is a movie with Joaquin Phoenix that takes place in the the future. I don't know when this movie came out. I don't know. Six years ago?

Mid-2010s. Just like the, they, they probably nailed so much stuff about the future that that movie is going to age very well. So you had an AI assistant. Was it in your ear or in your room? I can't even remember. It just, you know, they'd listen to it through their. Is an AirPods? Airpod? And Scarlett Johansson was the voice of it. So Sam Altman asked her to be the voice of one of the open AI products and she declined and then they basically did it anyway. I can see why she declined. Would you want to be the voice? of everyone's personal assistant? I don't have, I don't like my voice, so.

Well, I don't either. But I can see, I think she was smart to say no. But then they did it anyway, and it's a bad look for him. Yeah, not a great look. Very bad look. Not a great look. All right, so some, a lot of news, a lot of news in the world of crypto. Last week, we got, it was 13F season.

Now, 13Fs have to be filed by companies that have. $100 million on their management or companies that have, and I guess this would probably be all of overlap, if you have a 5% position in a public security. So Balchun has tweeted, Ibit, which is the I-share's BlackRock ETF, ended up with 414 reported holders in its first 13th season, which is mind-boggling, blows away records, even having 20 holders as a newborn is a big fucking deal, highly rare. All right. So, you know, I think what we were looking for was like, well, are the institutions here? How much of this is retail?

So Bitwise said at its first 13F filing, gold ETFs had just 95 professional firms invested. Now there's 944 firms in Bitcoin. Obviously, this is apples and oranges, right? The gold ETF was, I think, no, 2005 or six. 2005, okay. So this, I think that price has more about ETFs, frankly, than it does about Bitcoin. But nevertheless, it's pretty wild.

So Hogan tweeted 944 firms, okay, I already said that. Collectively, they own $10.7 billion, already a massive success and just a downpaint of what's to come. So what's interesting is they own $10.7 billion, but as a percentage of total investment, professional investors own just 7% to 10% of all assets. So it is wild, how much money is in these ETFs. And it is mostly retail, because, again, only 70% are institutional investors.

That surprises me. So largely retail. Hodel 15 capital does a great job like summarizing this. As of yesterday, we're recording on Tuesday, May 21st. Total Bitcoin ETF inflows of $235 million. That's 3,518 Bitcoin versus a daily supply. So what comes to the market every day of just 450. So this continues to be, at least in my estimation, a supply, demand, and balance.

That's how I think about it. No need to overcomplicate it. But then, but then we got news yesterday that the ETH ETF, which it's kind of wild that Seifart and Bautunus are like the axis here. Like they are, they move the markets big time. So they had been saying that this is just not going to happen. I think they were giving a 25% chance. And then yesterday, they tweeted.

Not to throw shade. These guys were caught off sides. They were caught off sides. Dot Chun has tweeted, update. James and I are increasing our odds of the spot. Ether, ETF approval to be 75%. Hearing chat of this afternoon, the SEC could be doing a 180 on this. So anyway, people are giving them grief.

Dude, the facts literally changed. Yeah, they changed their mind. Also, James and Eric are the, like, the crypto-woge now. Yeah, it's kind of wild. But anyway, so I was listening to the bankless guys. They had a politician on, sounds like the winds are blowing a different way in Washington, D.C., that there might be a battle for the crypto vote. So, I mean, interesting. Interesting things are happening.

It is funny to me, too, that I always make this point, but nothing is ever pricing crypto. Like, I don't know. Hold on, hold on. This is, no, that's not this, because there was, everybody was positioning for ETH to not. But if it didn't happen now, it was going to happen in a year, right? Bad example. I think what you're trying to say is when there was whispers of a Bitcoin an ETF and it shot up 10% or 20% and then it went up another 30% on the announcement. That's an example of nothing being priced in. But this was literally, people thought the opposite.

So, ETH was up like 20-something percent yesterday. Okay. So you were saying this could be more of a regulatory shift then. Big time. All right. So interesting updates there. We're going to find out, I think, on Thursday, whether or not this thing gets approved. But it was looking like a hard know this entire time.

And then there is something called the, I don't know, I don't want to butcher this and embarrass myself. So the SAP 21 was repealed and Biden can still veto it, which has to do with like U.S. institutions being able to hold custody of these assets. And anyway, it's, it's definitely gaining momentum. Does an ETH ETF take a little bit of shine off Bitcoin ETF, though? I don't think so. No? Like my naive opinion here is that ETH, so if Bitcoin ETFs have, what do they have? What do they have?

100 billion more? So how quickly will we have a Bitcoin slash ETH ETF that just takes their market weight? So it'll be a 60, 40, or 70, 30, whatever. That'll happen right away, right? So I don't know. I would guess ETH would get 10 to 15% of the assets. Who knows? Okay. That makes sense. All right. Quarter had a great chart showing where is advertising spend going? Comparing the growth rates and scale of Googles. Google's alphabet, meta, Amazon and YouTube YouTube's advertising revenue. This is unbelievable. So it's YouTube, for those of you who are listening, YouTube, Amazon, and then

meta and Google are in like another planet. It looks like they're like two and a half, three times the size. They control everything. Here's a good question we got from an emailer. I do most of my investing, I want to ask you this. Most of my investing index funds, but still do some stock picking with a fun account. I've been filing five to ten different stocks for the past few years. listening to their earnings calls on quarter. Shout out the quarter. It's a challenge for me to find

the difference between legit insight into the business versus hearing someone talk their book. What are you listening for and how do you make the best of these data points? Great question. Because sometimes it's hard to know. What is just corporate speak that has gone through compliance and investor relations and what's actually useful and actionable? Honestly, I'm just looking for the market's reaction. All right. Like that tells you all you need to know. Is this guy full of shit or, uh, no, but so I think, I think a good way to, to look at that is forget the prepared remarks. I listen to the prepared remarks, but it's really the Q&A. The Q&A, but it's my favorite. But it's also, you have to have a bank of a library of prior listens to know, like what to pay

attention to and what makes sense. Like, and are they telling you what's actually happening or are they blowing smoke up your ass? Yeah, I think if you, if you're listening to a call for the first time, but sort of like, uh, wait, what's happening now? Yeah. And you probably might believe everything they tell you. So just back to the advertising stuff. So YouTube's advertising revenue is growing 10% a year. This is over the last three years. Meta's 12%.

Google's 13% Amazon, 23%. Now, it's a much smaller number, but still, they were $6 billion just like three years ago. Now it's already up to $12 billion, just their advertising. And by the way, everything in the world is advertising. True. Right? I mean, that's, I don't know, is advertising, I mean, it's got to be a top 10 industry now,

globally? I mean, yeah. I mean, your resume when you're looking for your first job, that's advertising, right? Everything that we, like all this, like the sports deal stuff and these companies

that are fighting for the deals from NFL to NBA, how are they paying for it? Well, think about the fact that Netflix is, it's advertising. But think about how long Netflix fought doing ads and they said they literally never do ads

on their platform. Now they are because they're realizing like, oh, wait a minute, it's probably more financially soundform. us to do this than not. Oh, just one more thing. The transcript tweeted this from Walmart.

They reported it this week as well. Spending is consistent. High-end consumer growth remains strong. In terms of the consumer, consistent is the best word we would use to describe spending across-income groups. We've had more growth among high-end consumers. That remains true. Again, is Walmart in on it, too?

Does Walmart really get high-end consumers? Look at you, you, snob. I'm asking a legitimate question. Duncan just slacked us. Advertise, by the way, this is, I guess Duncan asked a question on Google because I see the AI overview star. So this is from Google's Gemini. Advertising has traditionally accounted for one to two percent of the US GDP. Holy shit.

Is that higher or lower than you would have thought? One to two percent? You know what? Actually, that's probably lower. I think I would have maybe said higher. Yeah. But still, that's quite a bit of money. Do you want to read this personal finance email?

Happy to hear you guys talk about fly our states. I think we talked last week about different living standards across the country. I live in a 600-person tourist town in Missouri, one of the lowest cost of living areas in the country. While closely lead us like Michael, on the other end of the extreme, there are others on the other end. I just wanted to give you a breakdown of what it costs to living these areas. This is kind of mind-bobbing. Rent, studio apartment, $400 a month. Electricity, $70 a month, auto insurance, $90 a month, $90 a month, $90 a month.

at $65 a month, meal for one person at a restaurant, 15 to 20, standard three-bedroom, two-bathroom house, 175 to 200 grand. While these expenses might seem absurdly low, there are always two sides to a coin. Full-time work is hard to find. Entertainment venues such as movie theaters and bullying alleys are an hour away. Internet and cell service are extremely limited, etc. I make 45 grand a year and consider myself very lucky to do so. This level of income allows me to max out my IRA, save a little extra of my brokerage account and going one to two small vacations a year. I kind of like hearing this Some people are going to listen

These numbers go oh my gosh But this is this is the tradeoff we talk about Well listen nobody chooses where they're born Okay you think I would choose to be to live on Long Island Probably not my first choice I doubt this person Maybe they would Would choose to be born where they're born

But An hour away Hold on having to go for entertainment And fun Having to go an hour To go bowling That's a lot I mean

you know, fun is hard to come by. I'm a fun guy. I value fun. I like fun. I would love to hear what percentage of people actually do move somewhere else by choice. Like, well, I've never seen that stat like. You know why? Because it's hard.

It's hard to make the decision to just like leave your roots and say, see ya to your parents, your siblings and friends. That's really, that's a really difficult choice to make. I would love, I wish that you could get two choices at this thing, or two chances at life. Because I would love to have an alternate universe where I get to live, I don't know, somewhere else. Sounds really nice. Somewhere nice, yes. It's where you could drag your jet ski every day.

Yes. All right. New bundles. So Disney plus Hulu and Max announced one a couple weeks ago, potentially. Netflix, Peacock, Apple TV, plus last week. So we're getting there. If we could do, give me Amazon Prime, YouTube TV, and Paramount Plus, and have Amazon or Google or someone do the internet, and I think I'm in. I don't, I don't have Paramount Plus. How is it?

It's okay. I, uh, my kids watch some Nickelodeon shows on there, occasionally. Occasionally there's a new decent movie, but I'm saying just give me, those are my, give me all those and give me three different bundles for, what do you think? 30 bucks a month apiece. and one of these tech platforms has to just start giving away internet and get AT&T and Comcast and Verizon out of this. Have Google offer internet with YouTube TV. Then give me all these bundles and then we can talk. Okay?

That's the Ben Carlson bundle right there. Netflix tweeted, Dexter Seasons 1 through 8 are coming to Netflix in the U.S. on June 19th. Is there going to be a Dexter Assange? Is that going to be the hottest show on Netflix over the summer? there's going to be some major binging. The first four seasons of the show are some of the best prestige TV ever. Like, season four with John Lithgow is maybe one of the best seasons finales in history.

Is that fair? You watched the show, right? I stopped at season three. I don't remember why. I never saw the Lithgow one, but I've heard great things. You stopped right before the best season? You do this with shows all the time. See, I don't have sunk costs.

I try to finish stuff, usually. Okay. I have to defend Michael here from an emailer. Thank you. Ben gets on him about all of his brokers, not realizing that he has the weirdest broker of all. A clothing broker, Stitch Fix. He has a broker for clothes, boom, roasted.

That's very good. That's fair. How have we not thought about this for you before? Because you're terrible at shopping for clothes. You literally need the broker that I have. I really do. I'm going to sign you up for counting. And like I'm going to, so what you do is when you sign up,

you click like thumbs up, thumbs down. I like this. I don't like this. And then they kind of build the algorithm based on your, likes. I'm going to do the liking for you. Anytime I go to the department store, I FaceTime Ben. What do you think about this? Okay. This is a really good email. So we were talking about the 90s.

And somebody said, the 90s were the penultimate decade for culture for all the reasons you mentioned. Perfect blend of analog and digital. The future was yet to happen and it was easy to be optimistic. Such a great point. That is true. Like the perfect blend of the two. Thinking about the internet and what it could become as opposed to what it is. It is. Like, just the thought of, like, we're going to be able to stream porn.

Is that what 1990s Michael was thinking? All right. Big time fan of animal spirits and have my 23-year-old son hooked, too. Great. Wanted to share that at a hotel that solved a tipping issue. They have a QR code that brings you to a site where you can directly tip your room attendant using a card or Apple Pay and 100% goes to that person. No more need for cash.

Yeah, of course. Of course. It should be everywhere. Of course. A QR code tip. Uh, I got a, I was on my way out of the house. I got a phone call for somebody had bought us, um, edible arrangements for Bianca's passing. Hey, sorry to interrupt. Do they have, have they done this for weed yet? Literal edible arrangements?

I'm sure. Edibles arrangements? I'm sure. That's a good one. Okay. So, anyway. Uh, so he said, I'll, I'll be there in two minutes. He said, okay. I'm that side. So I'm waiting. I'm waiting. And I'm with Logan. And so I forget where we were going, soccer or something.

And after six minutes, I called him. I said, hey, are you coming? Because was this like the wrong address? Where are you going? So he said, is this cut that? I said, yeah. He said, okay, no rush. I just, you said two minutes.

So I just wanted to make sure that, you know, you were actually going to the right place. So I said, just for clarification, how long actually are you going to be? Because I'm just waiting to go somewhere. And he said, I don't know why I said that. I'll be there in 12 minutes. So he did a big time roundup. Yeah, but he said two minutes, and then six minutes later, I called him, and then he said he'll be there in 12 minutes. So he was actually 20 minutes away. It's a weird move. Now, credit to him, he apologized, but I am a stickler. I don't know if you know this about me. I'm a stickler for I'll be there in five minutes. If you're going to be there in 12 minutes, just say I'll be there in 10 minutes. Don't, there's no point in lying and saying that you can be there sooner than you are. This is something people do.

You get a 1.5 premium. So if you say five minutes, you get until 7.5 minutes. That's it. Correct. But do you notice that with people? That's a common behavior pattern. That's true. I'll be there in a few minutes. And then I don't have the house yet. Yeah. Yeah. I got a call from a friend. This was, so game seven, I went to. And I got to call the night before from a friend of mine who said, hey, somebody in a Facebook group is listing their tickets for Section 109 for 300 apiece. Now, he said, would you want to buy them and you could flip him? I'm like, hmm. sounds go on. He's like, no, no, no, they're legit. It's my, my wife knows this person.

So I'm like, 300 bucks. I'm like, dude, that's like face value is 310 or something. Like, they're going for $1,000. So I said, yeah, I'll buy, sure, I'll buy the four. And I'll give them to my ticket broker to flip for us. So he said, all right, she's going to call you. So he sent me a screenshot. Hey, please call Mike and my friend.

He's here. And the response was, sorry, no have internet in hospital right now. Oh, boy. And I said, please send money. Tell your wife. Yeah. Is this hospital in Nigeria? I said, tell your wife to call her friend and tell her that she got hacked.

Yeah. Oh, man. Okay. I have some advice for you. Go ahead. So you mentioned it. So there is a Rittholz 5K run happening through Central Park at the end of the month. And you said you asked your personal trainer, who's also another broker for you.

See, you have an exercise broker as well. Right? I mean, if you put it that way, I guess I do. I asked him, so I said to him, I said, so I've got a race coming up. He's like, yeah, said, 3.5 miles. And I said, I just ran, I ran 0.7 miles without stopping. Do you think that my adrenaline could take me, could carry me through to 3.5? And he goes, no, what?

So what's your advice, Ben? So here's my advice to get you through a little bit further on your adrenaline. This can take you a mile. You have to put AirPods in and have music on. So, of course. Metallica, okay, I didn't know if you were, listen, you're not a, you're not a big runner, so I'm just making sure you know this. So, like, really good pump-up music, I think it could take you a little bit further than you otherwise would.

That's actually good advice. What about Eye of the Tiger on repeat? I mean, but you're like a Metallica guy, right? You got, it's just to be like... I do. This morning, Logan called me master, and I was like, why do you just call me master? He goes, you're my master of puppets. Where did he get that from?

He listens to Master of Puppets. Oh. Oh. Oh, okay. Wow. Okay. No, that is sage advice. Thank you, Ben.

All right. Recommendations. I got a recommendation. It's a self-recommendation. The podcast that we did on Monday with Alex Morris from Benchmark was excellent. If you've, it's all about fixed income. And bonds are boring, but they can be a little bit confusing. Some of the terminology is, what does that mean? So we did a good deep dive on what it all means, duration, convexity, yield to maturity, all that sort of stuff. Yes, a lot of the questions we get from people on consistent basis. All right, Ben, on Friday night, we're getting ready to go to dinner. No, Saturday night. And I saw a movie on Netflix that I had never heard of before. It's called Blended. And it's with Adam Sandler and Drew Barrymore. And who doesn't love Sandler and Barrymore?

One of the best rom-com duo is of all time. I had never heard this movie. It's from 2014. Have you ever heard of it? Yeah, I saw it. Okay. I was a big 51st States fan, so I had to see. see the follow-up. So good. Well, Wedding Singer. Oh, that's true. They had Wedding Singer, too.

Okay, so 15% of Rotten Tomatoes from the critics, 64% on the audience score. That's like the perfect sign of a good comedy. The critics hated it. The audience enjoyed it. I loved this movie. It was a decent one, right? And when I said, I loved it. I was expecting pure trash, like pure trash. And I don't know if I've ever felt like more of a dad watching something than I did this, because I know Michael 10 years ago would not have laughed. Dad, turning 40, Michael. Right. I chuckled quite a bit. It's a middle-aged guy movie. Because it's like two families coming together, like the Brady Bunch, isn't that it? Yes. And then they go on a trip to Africa. I loved it. I really had a good time. So it did $128 million at the box office. Is that mind-boggling?

I mean, it would be a straight to Netflix movie today, obviously. So, I mean, I'm sad because comedies, they're done. And I don't know how. how they come back. Matt Bellany wrote about Judd Apatow firing his agency, his agent, and was there anyone hotter than Apatow in the mid-2000s? Like nobody. So Matt Bellany said, comedy has shifted online to TikTok and YouTube and Instagram and podcast. At the same time, film studios, for the most part, are making global got-a-see and theater spectacles. Apatow's funny people cost about $90 million to make in 2009, and the talent pool shared 20% of the first gross per two sources. Universal would never make that movie on those terms today.

Bridesmaids cost just over $30 million and grossed $300 million in theaters. It was an even bigger juggernaut on DVD. Now, without that home video backstop and with international prospects, dim, who would bother? Add in the fact that streamers want dramas because they play more globally than comedies, and it means far fewer opportunities even for proven hitmakers. This is, this is awful. It's bad. The 2010s is that was The Twilight of, think about, I had knocked up on a couple weeks ago. Think about how many good actors and actresses are in those movies. It's like 10 to 12 people. Incredible.

In all of those movies. That's just never happening again. Incredible. So the only two comedies I can remember in recent years that I laughed at, Cockblockers was pretty funny. That just came to me. My God, I'm a little bit. I don't remember the two that I was thinking about. Oh, the one with Jennifer Lawrence recently. that was it even called the Glenn Powell rom-com was not bad but that's not a comedy yeah that's true rom-com doesn't count as comedy and then the one the one that Ruegen produced with the little kids I forget what it's called something boys okay I didn't watch that one uh yeah it's it's bad there's not much it's bad uh did you read the GQ story on Kevin Costner no I'm waiting until I get the hard copy of GQ I'm still

a subscriber okay so spoiler alert he spent 38 million dollars Making Horizon. And this blew my face off my body, and I'm excited. This is a bold move. So the first movie, so it's a four-part series, the first movie is coming out in June. The second one is coming out in August. Yeah, six weeks later. How wild is that?

Here's my thinking, though. I like Westerns. Is there anything else you can do in a Western that hasn't been done yet? That's my only question. Like, haven't we squeezed all the juice out of that a little? Are you, you know what? I'm bullish. I mean, I'm going to be there. I think it's going to bomb.

Do you? I kind of do. I hope for him, like, I'm rooting for him. I know people have said that he's an A-hole and stuff, but... Okay. I was always... I love Costner. I think this, like, three or four months ago, random question and a recommendation, he said, what happened to Daniel Stern?

Remember that guy? I googled it. Did we talk about that? So he was on Mark Barron this week because he wrote a book, and he basically said, I made enough money on the Home Alone sequel and the City Slicker sequel and Rookie of the Year that he directed and I was missing my kids' lives

sitting in a trailer or hotel room and I just decided to stop acting. And he said 25 years ago, I bought a farm, a cattle ranch. He bought like a cattle ranch and an avocado farm and he more or less stopped working because he said he made enough money. I thought he opened like restaurants or bars.

Did I make that up? He did some other stuff and he said he'd like here and there he'd still pop in and do a TV show or a guest spot but he said he could have done way, more movies because, you know, after those sequels, he was on fire, city slickers. And he said he just decided to, he wanted to spend more time with his family. And he just, he said he, he sculpts and he does charitable work. And he sounded so content. And it just, it seems like that line of thinking. I was thinking like Rick Moranis did this too. Craig

Kilburn kind of did this after the late show. Like that whole striking while they're on hot and not selling out, even if your career goes down a little, you can still, you know, paycheck stuff. The ability to do that, I have so much respect for. Yeah. And he seemed totally content with his life and happy with the decision. Yeah. It was very interesting. One more.

Outer Range, season two just started on Amazon Prime. I think this is the best show no one is talking about. It's a kind of like... Is it sci-fi Western? It's sci-fi Western. Oh, Josh Brolin? Yes. It's kind of like dark.

The show Dark on Netflix and that it's kind of mind-bending because there's time travel involved. But it's not like a great show, but it's a very good show. and my wife and I are going to binge season two very quickly. We're already through a couple episodes. Okay. I'm dry, maybe I'll check it out. Oh, did you watch any of the Ashley Madison, Doc? I don't know what that is.

You don't know what Ashley Madison is? No. Wow. I'm not going to sing the jingle, but it was a dating site for married people looking for an affair. Oh, okay, maybe I've heard of it. Okay. Oh, and they got docs, right? It was all over like the airwaves.

I don't know if it was on series or whatever, but I just remember hearing that jingle all the time. So, yeah, they got hacked. And the customer list was leaked and blew up a lot of people's lives. But heck of a doc. Fun. On Netflix. On Netflix.

Okay. All right. Yeah, I'm dry. I guess between like, you know, I've been watching a lot of basketball. Not a lot of good shows out right now. That's okay. Summer. It's true.

Time to spend on some balance. But animal spirits at the compound news.com. Again, check out our talk your book for Monday. Alex Morris, very smart guy. Oh, and we have another going coming up next Monday. Really good. Yes. Yeah.

Oh, yeah. Very good. And we'll see you next time.