Animal Spirits Podcast - Will the Fed Buy Stocks? (EP.473)

Episode Date: July 15, 2026

On episode 473 of Animal Spirits, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠���⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ben Carlson⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ discuss: hyperscalers vs. semiconductors, 10 reasons to be bearish, Nvidia is cheap, analysts are good at forecasting earnings, why small caps are booming, investors still chase performance, why the stock market is more important now, the AI doomers are wrong (for now), bond yields are higher, what makes you rich, Dave Matthews Band, and more. This episode is sponsored by Nuveen. Start your alternative investments journey with Nuveen by visiting http://nuveen.com/alternatives Content sponsorship by Pimco ETFs. Sign up for The Compound newsletter and never miss out: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Find complete show notes on our blogs: Ben Carlson’s ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠A Wealth of Common Sense⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Michael Batnick’s ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Irrelevant Investor⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Feel free to shoot us an email at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[e-mail]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ with any feedback, questions, recommendations, or ideas for future topics of conversation.   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

The Hulu original series Furious is coming to Disney Plus, starring Emmy Rossum. Furious follows FBI agent Alice Black on the hunt for a mysterious and calculating serial killer. Both walk their own paths toward justice, and as their lives start to intertwine, the line between right and wrong begins to blur. Don't miss the three-episode premiere of the Hulu original series Furious on July 27th, only on Hulu on Disney Plus. to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ridholt's wealth management.

This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. It is It is Tuesday, July 14th at 904 in the morning, and it is a busy morning. We have the bank supporting. This morning we got Wells Fargo, Bank of America, JP Morgan, Cubs. We had IBM announcing disappointing results. The stock is down 23% pre-market.

Wait, do we really have to pretend that IBM still matters? You don't know anything about IBM. Nor do I know. I know it's coming back, but come on. Let's maybe this is the go-go years, then. How so? I don't know. People are pretending like IBM's a market moving event today.

It's like when is the last time IBM mattered as a company, 1993? Um, I know. The stock came back. Come on, dude. IBM is a what? It's got to be a $200 billion market cap, right? Or more? $270 billion.

That kind of matters. We're worried about IBM. This is the doldrums of the summer market days right now. You're being too dismissive. Dude, it's a $300 billion stock. Yeah. It's one of the 50 biggest companies in the entire world. I'm not, sorry, I'm not, I'm not a move-on sort of guy

when to stock. Of that size, falls 23%. Yeah, it happens all the time, though. All right. Keep going. And when it happens, we talk about it. You know, this is a podcast, right, for an audience? Yeah, but I'm moving past IBM.

IBM is dragging software down with it. You might move past it, but listen, I happen to like talking about stocks in the stock market, so that's what I'm going to do. If you don't want to participate, Ben, you don't have to. Okay. then we also have inflation. Inflation cooled.

Do you care? You want to talk about inflation? You know, let's just go home. Duncan, sorry, we're done. We're done here. Ben doesn't feel like talking about things. Okay. Inflation cool.

Keep going. Okay. Keep going. No, that's about it. Well, lots to talk about. The dock is busy. The dark is full. Oh, let me talk about another thing that you hate to talk about.

So prior to this morning's, welcome. cooling of inflation, interest rates of all sorts were moving up and out of the range that they've been in for the last couple of years to levels that would potentially... They were not. They were not. Every time they move up a little bit, people worry and then they come back down. That's it. That's where we are. You have to like look at the market a little bit more. You can't just, you can't just say this when you're factually wrong. Yesterday, the two year was at the highest level that it's been at in a long, well, maybe not two year. All right, fine. I stand corrected. It's pushing up against the levels.

you always, I guess rightfully, you deserve from credit. Every time interest rates get to these levels of people talking about it, you're right. They have come back down. Yes. Every time the 30 year hits 5%, people freak out. Every time the 10 year hits 4.75% people freak out. And then they go back down. Because I think the market rightfully so, inflation jumped to 4.2%.

And people are wondering why the market isn't more worried. Now it's back down to, what is it, 3.5% today? Okay. You've been right. I'm saying I'm giving the market credit, not myself. But yeah, you're right. But people are normal interest rates. These are, this is normal.

Okay. I'm seeing. These are normal rates. Normal. If interest rates were a stock, I'm looking at the 20 year yield, you would say this thing is about to break out higher, like meaningfully higher because it's been up against these levels, one, two, three, I don't know, six times. Yeah, but you need to smack upside the head if you're doing technical analysis and interest

rates. But okay, fine. Well, you know what? I am a more, I am a believer of buying. and sellers determining prices and the buyers of interest rates. If you look at rates for the past year, I'm looking at the yield curve right now. There's no way you would say that there's a trend involved. It's up and it's down and they're really not going anywhere.

The trend is range, range bound. And the longer, the base, the higher in space. Have you no respect for Luis Yamada? Fine. Let me just answer to this. So right now we're at 4 or 5 on the 10 year, which is a pretty important benchmark rate. That's the rate that everything basically is set off of, at least mortgages, I should say, not everything. Listen, the only level I care about right now is the height of your buttons on

your polo. Let's talk about this for a second. Wait, whoa, whoa, whoa, whoa. Well, you can talk about the buttons on my pillow for one in one second. But if, but if the 10 year goes to a 5%, are you still going to like say, oh, rates are normal? Five percent treasury yield on the 10 years is pretty normal historically. Okay. All right. So there's your answer. It really is. So I, I'm way on. How can we, how can we see this? How can we see a 5% tenure rate when inflation is coming back down. How can? That's not impossible.

Yeah, I don't think we'll see it. That's what I'm saying. Well, I hope you're right. Okay. And what's wrong with my button? So this is a three button polo. Sort of that you don't button to the top, right? What am I?

No, you go halfway, but you don't want your shirt collar hanging open like this. You look a slop. Do two buttons. Come on, button it up. There, two buttons. Is this really better? That's way better. You look much cleaner.

It's a nice looking polo. Do you know the average 10-year treasury yield is? I don't care. It doesn't matter. It's the direction. It's the direction. It's not the level. Right.

But everyone always worries when rates go higher. Oh my gosh, what does this mean? Maybe it means we're having higher economic growth. What about that? Maybe it means inflation means growth is going to be higher. Listen, I just want to talk about these things. This is a podcast where you talk about these things. You're trying to just move past everything.

You want to just get the recommendations? Every time people lose their... mind's about rates. All right. No. Okay. Let's talk about something that matters. The, this chart, after like every single week now, we have a new chart with the cash flows of the hyperscalers. And every week it gets a little bit better. We've seen this a lot. Like with the cash flows are crashing, now Bank of America put the four free cash flow for semiconductor companies on here. And it looks like a perfect tradeoff. This is to me so far the chart of the year. But this also, So this can't continue with hyperscaler free cash flow crashing and just handing it over to semiconductors.

It's like they're being extorted. Like they have bad information on them. Like, give us all your money or we're going to tell everyone about what you did. Well, this is why a lot of the hyperscalers are getting in the game. So, yes. So meta, scroll down a little bit. By the way, you have a great shirt. Is this new?

It's Tropical Bros. Is that a new one? Last year maybe Looks great So Mark Zuckerberg tweeted for the first time In I don't know Two years or something

He said today we're releasing Mews Spark 1-1 A strong agenic encoding model At a very low price It's available through our new meta-model API And I made a meme here I don't know if you can see this It's all the different Anchorman teams from Anchorman

What's Ben Stillers? He's for the part of the Spanish only No what's his name? I can't remember But so I guess my question is, what happens when this turns into an all-out brawl by the hyperscalers? And they go, and they turn on each other. At what point does, because it seems to me like if meta is going to release this low-price version. It was Arturo Mendez.

I never would have remembered that. So if they all turn on each other eventually, and it seems like, so I don't know how meta releasing a new lower-priced agentic coding model, to me, I don't know how that makes any of these companies. is more profitable, if they all just start undercutting each other, and it's like, wait, we're spending all this cashful and we're not going to be as profitable? Like, when do these firms that have seemingly gone in hand-in-hand, when do they start turning in each other? Because this chart cannot continue. It just can't.

A reasonable person would think this cannot continue. Yeah. I don't know. I don't know. But you're right. This is the chart of the year, for sure. Yeah. I want to say, I don't know.

I mean, I feel very unqualified to have an opinion on how long. this can continue. I guess I'm trying to think of what are the second order effects of these companies do decide to turn on each other and say, all right, fine, every man for himself now. That's it. Well, Apple is suing OpenAI. Microsoft, Satya Nadella, has spoken out against the power that these companies are now yielding. Yielding or wielding? Wielding.

Obviously, the simple answer is that these semiconductors, they've already started to fall. maybe in anticipation of this, that they'd be the ones that get hit the worst. Well, hyperscalers have already gotten here. This book has a chart showing the average absolute one-day change in the, in the socks index, and the absolute just takes the negative numbers and flips it positive.

So we're just looking at how much these stocks are moving on a daily basis. I did go to sixth grade math. What's that? Yeah, I went to sixth grade math and what absolutes are. There's an audience, Ben. Okay. They did. So three points.

36% has been the average daily change, the average absolute daily change over the last 50 days. And you only see spikes like that. You saw that during the COVID crash, during the financial crisis, and during the dot-com bubble unwind. So it's kind of crazy that I'm surprised that these numbers aren't closer to the dot com with as much as these stocks have been moving. I'm surprised that the dot-com bubble still makes this current iteration look kind of tame. Yeah.

Well, who knows how high this goes? I think they were down 5% yesterday, looking up 5% in pre-market. And a lot of this is the result of the leverage that we keep talking about. So Mike Sucardi tweeted the Goldman Sachs shared the momentum factor, had one of the largest three-week sell-offs on record, comparing it to the rest of the market was down, I guess, 8% or so of the last three weeks. Which is good. Those stocks can't go forever. Last week or two weeks.

No, it was last week, right? When Samsung, yeah, we talked about this last week. And I said to Josh, stocks top on good news. Right. Good news. That's just not as good as people were expecting. So would be fair to say that this is like atop.

Right. Like maybe the semiconductors got ahead of themselves and are going to, well, the question is like, is this the top? Right, which is obviously hard to know. All right. Last week on the show, we talked about chart kid Matt had a great piece on 10 reasons to be bullish. So I decided to write a follow-up piece called 10 reasons to be bearish.

I'm guessing you didn't read it. So I'm going to go through the 10, and I want you to let me know what you think. Okay. Okay. And honestly, it was harder than I thought. So the first chart is a good one to the hyperscaler. So point one would be most of the hyperscaler cap-x is just circular. that's reason to be bearish.

Two is the mag seven are underperforming. Wait, wait, hold on. I just have a quote. You know, just keep going. Who cares? The mag seven are underperforming. If they keep underperforming like this, eventually that's going to impact

their free cash flow usage, I'm guessing. Three, AI is bleeding into the economy. You guys had Michael Sumbliss on. T-Cath last week. He talked about how the change in GDP is being more driven by AI and is spending an AI. So if we actually do see a slowdown in spending an AI, It's not just a stock market thing.

It's bleeding into the economy. It could lead to an economic slowdown. Number four, retail is all in. We've been talking about a lot of these charts for Citadel Securities, leverage, all this stuff. Retail is in, right? Five, inflation still remains relatively high. It was 4.2%. It's still 3.5%.

Way above where people think should be reasonable, right? This is way higher than it was for much of the 2010s. Six, mortgage rates are still high. We're back to the highest mortgage rates of the year again, and we're closing in on 7% yet again. I know this hasn't mattered yet, but people probably say housing is the economy. At what point does this start? Okay, seven. Complacency.

The S&P 500 was up 10% for the first six months of the year. That was following gains of 18% last year, 25% the year before, 26% in 2020. We could have a minsky moment. Stability breeds instability. Okay? Eight. AI checks all the bubble boxes. We talked about this with Derek Thompson.

It just does. nine, we're due for a recession. We haven't had a real one in 17 years. It's been way too long since we've got to slow down. And finally, 10, the returns have been too good. 24% annualized since... Wasn't that number eight? That was 10.

No, well, what did you say for number eight? I feel like you just talked about returns being too good. Number eight was complacency. That's part of returns being too good. Sorry. I mean, it's all part of the same pie. It is. So it's funny because I took both of these pieces, and I put it to Claude, and I said,

here's 10 reasons to be bullish, here's 10 reasons to be bearish. What do you think? What's the better argument? And Claude said the bearish arguments are way flimsier because the bullish reasons are happening now. The bearish reasons are things that could happen, but they're not happening. So it was like actually the bullish argument makes way more sense. Yeah, I buy that. You'll notice.

I didn't, I mean, I don't know what else I missed, but I didn't include valuations. Right? Deutsche Bank has this thing on the CAPE ratio. I couldn't bring myself to do this. Yeah, I'm surprised at you that you didn't include that. Because the valuations, the valuations that matter, not the CAPE ratio, the valuations actually matter, have been improving for earnings. Right? You've talked about it.

This is your one reason we're not in a bubble. The Bloomberg had a chart that shows Nvidia's valuation is the cheapest since early 2019 on a PE ratio. Which is kind of nuts to think about. The valuation just keeps falling. is this becomes, I guess, we supercharged the cycle for Nvidia and it got so big, so fast that it's now turning into. I wonder, I'm very curious, is the market wrong on this? Like, is there an opportunity on the long side of Nvidia here?

Or is the market getting this absolutely right and saying, no, no, no, no. Like, peak in video happened in 2024. It's not going to continue to surprise to the upside. We know it's printing gazillions and cash, but we doubt the sustainability of this. and we're going to put a lower premium. Like, I think the market is probably right. So per my thesis of everything getting pulled forward faster, again, Invidia was not in the top 10 for the S&P or the NASDAQ 100 as of 2020.

Wow. So it, it, I think we, what if we pulled forward a cycle of Nvidia that took Apple 15 years to live through? In Invidian, I don't remember Apple had the cheap period now. Maybe that is what's happening. Can I blow your face off for a sec? Do it. you spoke about retail being all in. Yep.

Have you taken a look at, so we have a DGN Dow index or it's a fake index? It's like the meme ETF. Right. Looks terrible. Oh, rolling over. It looks terrible. So look at this chart from Vanda Research via Kevin Gordon via the Daily Chartbook. How's that?

The three for. Retail investors, net single stock buying has fallen to a new post-COVID low. we're looking at the one-week rolling net retail buying of single stocks. Do you think that's partly because you can buy single stocks in ETFs now? That's what I was going to say. It's still somewhat surprising. But it's still, it's not, it's still, like, I don't think every single person that's buying this is now buying the levered ETFs.

I still think this is an interesting data point. So here's another one on the why didn't include valuations in my thesis. I'm being bearish. This is from duality research. They have the forward PE ratio for the tech stocks. And it's down, it's below the 10-year average. It's well below the five-year average. And it's been falling.

And it's basically near the lowest levels it's been since the start of 2025. So tech stock valuations are improving during what many think is a technology bubble. That's surprising. They can say, well, Nvidia is a lot of that. But I don't think that the valuation thing. that the market is obviously overvalued is such a slam dunk like people think it is. No, I don't think so either.

That's why I didn't. What else did I miss on my bearish reasons? Is there anything else that I missed? Reasons to be bearish. I don't think you said the AI white collar potential recession. Okay. Well, we're going to talk about that later, how that one is way down my list of worries

because it's not happening. Yeah. All right. This is not a bubble. The only thing that you could say is in a bubble that I think is potentially credible to at least argue is the memory stuff. Well, it's the CAPX. You'd say the bubble is the spending by these hyperscalers.

You'd say that is the bubble. Fine, correct. Because it's not in the prices of the stocks. Again, memory micron aside maybe. And I don't know that microns a bubble. Who am I to say? But Oracle is down almost 60% still. That's pretty nuts.

Microsoft is down 35%. Wait, can Netflix come back in and buy Paramount now since Oracle's down 60%. Can David Ellison still afford it? That's piggy bank? That deal's not done. Did you watch the fight, by the way? What fight? Connor?

No, I don't really watch UFC anymore. Okay. Not for, I just, it's been a while since I watch UFC. Well, didn't the last 10 seconds? It did. Yeah, it was fast. All right. Aside from technology stocks, there's a lot to be optimistic about in the stock market.

I'm talking about the stock market right now. Alfonso de Pablo's tweeted. Great name. Yeah, it really is. The S&P 500 X technology index closed the week at a new all-time high. I don't even know that this existed. The thicker is SPXT. Here's another one from him.

his handle is, he's got great charts. It's at alpha charts, ALF charts. The advanced of climb lines for the SP 500, 400, and 600 have all pushed to fresh all-time highs. And this is with, what percent of the technology indexes in a bear market? I don't have that number.

Is it 20% or 50%? Josh and I were just talking about this last week. I can't quite remember. Equal weight, also at all-time highs, R-SP. Yeah. If I'm going to do my, what did you, looking for the base and the uptrend and the longer and base, higher, in space.

All right, here's another one. So, speak about where the bubble is. If it's in the memory names, then it's in their earnings per share, right? Because Micron's earnings went from $9 in January, $2025 to $135 today. A 15x, something like that? Huge a number.

So Chartkin Matt showed the S&P 500. So oftentimes when analysts are talking about earnings, you're talking about forward estimates. Okay? So when you're looking at like, when all these analysts are posting charts, it's always the estimated EPS over the next 12 months.

So the question is- Who cares about what already happened? So the question is, all right, well, are these estimates any good? Like, are they just completely... How accurate are they? Should we take them to the bank? The other thing is, like, these earnings are not a mirage.

They're happening, but can they last? That's like, that's the idea. So, uh, the answer is, yes, they are quite accurate. 67% of the time, actual earnings are within 5% of estimates. Furthermore, the only time that you see a, uh, uh, these lines divert is, in any meaningful way is when recessions happen. And when recessions happen, the gap is very large. This is a very good chart.

So yeah, you're right. So if you want to say that earnings are way overdone, you basically have to, if you really want to be bearish, you have to say, okay, we're going to have a recession. That's going to do it. That's what everyone is wrong because we're going to have recession, and that's going to cause earnings to crash. Based on this data, it's also funny.

Matt said that he showed me this chart yesterday, and he said, it's interesting that the E is easy to estimate, easy, but analysts are pretty good at estimating the E outside of recessions, right? Take recessions off the table. No analysts are good at predicting recession. They're good outside of it, but no one can predict the P.E. That's what's interesting. Like the earnings, it's kind of forecastable most of the time, but no one knows what people are going to be willing to pay for those earnings. But look at how high those forward earnings are going on this chart. This goes back until 1995. we've not seen something like this outside of like the jump after COVID.

Well, also, I don't know if that's sure or not. We did a lot chart. Yeah, fair. Because right now, you're right. Looking at this, it looks, it looks scary. Right. But again, if you really want to be bearish, I think you're banking on a recession. That's what you have to bank on right now.

If you really want things to be really bearish in this to get kind of ugly, even a mild recession, that's what you need. So the trillion dollar question is, Recessions are caused by something. They don't just happen. Yeah, but there's a perfect reason for recession to happen, though. AI, I think a slow-down in AI spending can absolutely cause a minor recession. Yeah. So it's a legitimate, I think it's a legitimate fear.

It depends how far. So that's that. We're all waiting for that to happen, it feels like. Yeah. How long are we waiting for? How long are we going to wait for it, though? Probably a while. I mean, they haven't, the hyperscalers, if they really want to,

to take this to the next level. They haven't really even started borrowing that much money yet. I know they're just dipping their toe in the water to borrowing money. They still have so much capacity to borrow if they want to keep putting their foot on the gas pedal. Correct? Yeah. If they want to. There's so many other areas in the market that looks so good, like we just discussed, it makes me optimistic. Speaking of, small caps. Last week we talked about, we couldn't figure out why small caps are doing so well.

Sonu from the Carson Group and Facts and Feelings Podcasts has our back. Why is it? Drum roll, please. AI. Even small caps are kind of an AI trade. Really? Which is surprising, right? I didn't really know that either. Okay. He broke these down into, because tech makes up a much smaller percentage of the Russell 2000.

It's like 18%. Industrials is the next biggest one at 17. He's saying a lot of the industrials are also AI. So he said 24% of the Russell 2000 index is tied to AI in some form. 52% of the total first half return comes from companies tied to AI. So it's not everything, but it's a big

part of it. So he's saying it's basically industrials and tech stocks. And it's a lot of them, AI exposed stock. Like they're somehow exposed to the AI trade. Oh, but yes. But the other half is not AI. And that's, you know, the index is up quite a lot. Right.

But that's, yeah. So anyway. Good line from, from, so Jason's, one of the greatest financial writers of all time, wrote a simple sentence, but a good one. Investors keep chasing performance, but they never seem to catch it. Yes. So we've been talking about the fact that I think investors are becoming much better behaved.

That doesn't mean to say that all, like, poor investor behavior has been rooted out of the system, obviously. So Jason looked at a bunch of different funds and asset classes and, basically showed that the behavior gap is still real, right? The performance of the fund versus the performance of the investors in the fund, there's still a gap there. He used some work from Jeffrey Patak, who we've highlighted before, and he talked about how, so Bitcoin was trading at 46,000 when all the ETS were launched.

It's now, what is it, around 60-ish. So you'd think people in those funds did okay. but in aggregate, people who started out in the Bitcoin funds lost an average of 5.8% annually jumping in and out of these funds. So the people who started out in those Bitcoin funds when they were launched in January of 2024. On a dollar weighted basis. I don't, not to pick Nets, because directionally I definitely believe in it. I think it's right.

This is like an extreme example to prove the point. Yes, it is. But I think the point still remains. The point remains. People chase the high. hot dot. I think that's still obviously a thing. Holy cow. Some people, some people do it okay. Some people, some people are momentum traders and they've done okay trying to find the next thing. But a lot of people are finding the next thing after it

already became a thing. And that is still happening. Ben, we got the opening bell. And IBM is down 23%. Your thoughts. I'm just kidding. It's 1987 crash for IBM. Okay. I love that the stock market can still do that. How is that? I love that the stock market can still say, you know what,

you're going to get punished bigly. You're just, see you later, right? 20% plus for a single day. Yeah, not for, you know, not for investors in IBM, but the general idea of the stock market is just, it's cold, Ben. It is cold. It's heartless.

All right. Really good chart from Joe Weizenthal. He shared, they had a podcast last week, and he shared an episode, a chart from that episode. He said, it's not just that U.S. household exposure to equities is at a record high, but that the stock market is significantly greater component of total household net worth than real estate now, which blows my mind. The stock market is the economy. So a lot of people look at this data and they go, this is reason to worry. Because almost every other time when stocks kind of peaked and took the lead, they crashed and these things are cyclical.

and I understand that sentiment. My takeaway from this is that this is the new normal. We're never going back to a period before where stocks aren't the biggest asset as a percentage of U.S. household network. And obviously this differs among different stratas of wealth. Obviously, this is aggregate. But I don't think we're ever going back to a point

where in the early 1980s, stocks made up 10% of aggregate household wealth. that's never happening. I could, I mean, these lines will cross it if there is a bare market. But think about how this, this happened to equities in the same decade that housing went on its best run ever. Yeah, I agree with you. Housing kept up a little bit.

I think that if you fast forward, this is the new normal. I totally agree. Fast forward 20 years and barring something entirely unforeseen, stocks will be above real estate for the majority of the next 20 years. I believe that. Unless we have like 10% interest rates or something. But the thing is, so I'm fascinated by how people own stocks and how it can change. And Josh has written about this with a relentless bid.

401Ks and IRAs absolutely changed this. And I wrote a whole chapter in risk and reward about the history of equity ownership in this country. So in the 1950s, it was like 4% of people own stocks. By 1983, it was 19%. So people were way underinvested in equities before. Now, you would say, what about pensions? pensions made up a bigger piece of it. But here's the thing.

A pension really is like a bond. It's not like an equity. And the pensions back in the day in like the 60s and 70s, they didn't really invest in stocks very much. They were heavily invested in fixed income. They were like rules that said you couldn't have more of than like 50% or 30% of your money in certain states invested in stocks in a pension. Like most of the pensions invested in bonds too.

So this is the new normal. And the stock market is just more important than ever. And we're never going to. going back to where that isn't the case. Okay? So Eric Balchunis, kind of on a similar note, he published this note in Bloomberg. That basically said, is the stock market too big to fail? And he said, you know, 55 to 60 percent of people own stocks.

And he gave all these rules or all these reasons why he thinks that the Fed could step in and buy stocks during the next downturn. And I think he's absolutely right. I think it could happen. It would not shock me. People would be so angry. Japan already done this. Japan did that for years. China has done this.

So here's his six reasons why the stock market is so important that we would maybe step in and buy. And in a financial crisis, that would not shock me at all. People would be so angry. And I wouldn't surprise me if it happened. So he said the stock market is our retirement fund. Totally agree. We have the biggest stock market in the world.

It's outsized, 60%, 65%, however. He says the Trump accounts are going to add a bunch of new investors. I don't think that's as big of a deal as he does. Like, all the new babies are going to get an account. We'll see. I think there's so many accounts out there. I think adding one more account is not really going to move the needle. We already have 4-1Ks and IRAs and Rath IRAs and HSAs and 529s.

Can I say something? There's so many accounts. Speaking of making people mad, that might make people really mad? Do it. I think that sending people checks during an economic downturn is the most effective way to fight a recession. Now, I don't know, Johnny Maynard Keynes think that. I know what happened last time. it caused all of the shit that we're living through right now.

Inflation destroyed the fabric of our society. Hugely unpopular, obviously. It was terrible. The way that you described inflation there, it sounds like it's like a bad guy in Avengers. Worse. But part of the reason why we got the inflation was not just the checks. It was that the supply chain was turned off.

Right. And there was a huge imbalance of way too much demand and not a supply. Assuming that is not the case in the next recession, assuming things are functioning normally, I don't, I think that it, like obviously it will be inflationary to some degree.

It's never going to happen because the political impulse will be so dead. Comrade Batnik, welcome to the socialist side of things, eh? I love it. Let's do it. All right. He also says,

rich people just own so many stocks. The top 10% owns 87% of stocks. Oh, wait, hold on, Comrade Batnik. This is a very important, this is a very important thing. I agree with you. If you want a slower recession, giving people money, like, you're right.

It totally... But there is a huge school of thought that thinks that the economy, that recessions are healthy, that people just need to take their medicine and things need to die in order to be reborn. And I totally get it. I'm not saying that I disagree with that sentiment entirely. But I am saying, what if... You could ease the pain a little bit and make people's lives a little bit less horrific. Especially for those who need it the most.

Because the people that say that the economy needs to take its medicine are never the ones that are going to be collecting unemployment checks whose lives are going to be turned upside down in a recession. It's think people, right? It's people, whatever, on Wall Street. People who will have the means to buy stocks going to down. All right. So the question is, let's say the stock market is too big to fail.

What is the second and third order effects here? And I don't know exactly what the risks are. Like, we lap off the left tail. It's gone. The left tail of Great Depression, see you later. What does that mean? Now, here's my thesis of what this means. It means that markets will punish bad behavior way faster.

And I think flash crashes now are not just going to be daily events. They're going to be bear markets. Like, bear markets in the future are going to be flash crashes. We've already had them this decade, essentially. Liberation Day. Look at IBM today. IBM. Liberation Day was essentially a flash crash. Where the stock market, so this started in 2008, when they did not pass the TARP bill and the stock market went down like 10% in a day,

and they essentially forced the politicians to come together and pass that bill. The stock market said, no, no, no, you're going to do this or we're going to cause more pain. Yeah. The same thing happened in COVID, right? The stock market went down so fast and forced the hand, the government had to send out money. SVB. Liberation Day. They forced Trump's hand into saying, you know what, I think I'm going to do a 90-day pause on these tariffs. This is what's going to happen. The stock market is going to hold everyone's feet to the fire and say, if you don't do this, see you'll later.

The market is going to be that. You're going to get way faster downturned. So the market, like makes people make decisions to do stuff. Yes, I agree. And it all works as long as earnings are going up. Because if corporate America slows, there's nothing politicians can do to make the stock market go up. It's just, it's just earnings growth. It really is. And guess what? Corporations are really good at producing earnings. Yeah. Especially when we have a 6% deficit from the federal government.

Yes. All right. The K-shaped economy narrative seems to be dying. Mike Socarty. In June, higher income, higher income households after tax wage growth eased, while that of lower income cohort improved to a similar level. So you had this thing for a while where, oh, higher incomes are having faster wage growth, now it's caught up. Maybe, just maybe, all of this stuff is cyclical, and it changes. And you can't subscribe, you can't make a narrative to everything about, like, the K-shaped economy thing, I think, has been kind of, it was kind of a flash in the pan, just like lower income households doing so much better was a flash in the pan. These things change. I think the K-shaped economy has been kind of debunked in a lot of ways. No. We talked about

last week with the guy, a couple weeks ago with P&C, how lower income households are spending more on their credit cards. All right. So, okay. So to be clear. And the whole idea that the top 10% are spending 50% of the money, that number was debunked. It's not as bad if people think it is. It's a lot of the money.

But it's always been that. I just think the key-shaped economy stuff, we took it too far. Okay, so the economy is absolutely case-shaped. Always has been. Yes, it is. And it always will be. So I think you're saying just the narrative has gotten too far. We took it too far.

It's the same as it's always been, essentially. Yeah. The thing is, if we really want to do a deep, deeper dive on this, the biggest anomaly in U.S. economic history of the past 100 years was the middle class being formed after World War II. We had a huge surging middle class. We built a bunch of homes. Everyone moved to the suburbs. That whole period in the 1950s and 1960s is never happening again. That was a one-time economic anomaly. And I don't think people have wrapped their heads around that yet. It was because of the aftermath of World War II. Yeah. Good point. I've got all my... yarn on the wall like the guy and all right

something else that's wrong for now at least the AI doomers are wrong well if Sam Alvin says it sure so far at least I'm pretty sure AI has been net job creating this was not what I expected although I was much less pessimistic than others

I thought by this level of capability we'd have seen some impact it's possible this direction keeps going so I think you could say I think he's just doing some I think finally the PR people got to him of course that said hey asshole But Dario from Anthropic

Last year was saying in six months White-Colour employment They were making these drafts and then people started throwing Molotov cocktails at their house But yeah But we're not seeing any of the predictions So I think you could say that the models Are now performing probably better than anyone

Would have assumed two to three years ago Okay Is it possible? I'm throwing a theory out Is it possible that people who sit in front of their desk And do computer coding their whole life don't understand how other white-collar work actually happens. Is it possible these guys made a wrong assumption about how this stuff actually works?

And they don't really understand people. That's on, okay, this is from LinkedIn. Head of Chief Economist Ed and D. U.S. Software Development Job Postings are up 15% since the launch of Claude Code in late February 2025, by overall job postings fell by 7% over the same period. And it's not a junior rebound. 71% of the gains came from senior roles,

37% from postings with AI in the titles. Okay? Software job postings are rising while we have the biggest software defeater ever that's been created that was made. This is what AI was best made for is doing software role, and there's more jobs available for that.

Look at the unemployment rate for ages 20 to 24 in the U.S. It had that little uptick from 2023 to 2025, and people go, see, this is it? It's essentially unchanged since the start of 2022 when chat GPT was launched. Ages 20 to 2024, the biggest worries that people have. So all the AI dooms, ConnerSend. Wait, question, question, question. Are job posting is the right metric here?

Why would there still be software job postings? But isn't there a chart that shows the number of people, the number of software engineers has gone way, way, way down? Or am I thinking of a different chart? I don't know. I got another one for you. Conradson, if you look at the chart of year-over-year growth in professional and business service jobs, it looks more like pandemic over-hiring bullwhip normalization than anything related to AI.

So you had all this hiring, and then you had this decrease, and now it's coming back. He said, the thing I find interesting about these charts now is every month that passes, we get more powerful models, more token consumption, more familiarity with how to use these models, and yet white-collar employment trends look better now than they did a year ago. The AI DOOMers are wrong. It would be so awesome. It would be so awesome if they've proved to just be totally wrong. As of right now, they are.

Now, everyone keeps saying, just wait. These models are going to get better. People are going to use them more. Companies haven't even started to invest in them. That's true. That's true. But how long can we keep saying that? I don't know.

I don't know if it's a year or two years. I don't know what the answer is. We know that corporations prize profits and efficiency over everything. If they could use these models to replace people, they would. If they can, they will. I just think it's surprising that we haven't seen all the AI people that have making predictions. Six months from now, just wait. Six months from now just wait.

Those predictions have not been coming true. Okay. True. All right, I've got some good news to you. All right. This segment is brought to you by PIMCO ETFs. They publish a market commentary piece called The Head of the Curve. And right now, they say bonds are offering investors attractive opportunities right now.

Now, they are a bond shop, but it doesn't mean it's not true. So they have a chart showing yields across most fixed income sectors are high versus recent history. Ben, we've spoken a million times about how Allocated to bonds in 2019. It was just, it wasn't easy. Part of the recent. Most of the 2010 through the early 2020s, it was rewardless. Paltry yields. People called them rewardless risk, right?

That's how people refer to bonds. part of, and that's part of the, well, that's not true. I was about that's part of the reason why people flock to private credit. Part of the reason people flock to credit, it's well-trodden, we've spoken about this a million different times. Now, because yields have come down, overnight rates have come down, rates and private credit have come down, and because interest rates are going up, look at the taxable equivalent yield and high-yield munis.

9% compared to private credit also around 9%. What would you rather own? And I know it doesn't have to be an all or nothing decision. High yield munis or private credit. Right. One in a more liquid wrapper,

one of not in the liquid wrapper. So they compare rates in Q4 of 2021 to today. And so the range of rates today is probably somewhere in the five percent to eight or nine percent range, depending on your level of credit quality and risk. And the funny thing is that I'm getting constant questions for asset compound about, can I just own cash instead of bonds? People are still so traumatized from the bond bear market in the early 2020s that no one wants to own bonds anymore. Inflation is scaring me. And cash has been a better

place to park my money anyway because there's no interest rate risk. Can I just own cash instead of bonds. Well, you can. There is a place, I think, for cash in a portfolio. I think people have learned in a rising rate environment with high inflation, cash is a really good hedge. But the yield curve, yes, the yield curve finally looks normal. You're actually getting paid. That's the thing. This is like a bond investor's Nirvana might be too strong of a word. But people would have killed for these yields five years ago. Yeah. And you have a, you just, people still worry about what would have inflation and rates, you have a way bigger margin of safety and bonds and you've had for any time in the last 15 years.

You know, that's so funny. You're 100% right. 8020 was the new 6040. Yeah, for a while. If you told investors in 2019 who were 8020, what would your asset allocation look like? If you could get 5% on investment grade. Yeah, 5% high quality bonds.

You say 6040. Sign me up now. Yeah. Yes. Anyway. All right. We got an email on this week's episode. You discussed how firefighters and police officers.

Hang on, I got a million emails about this. Oh, did you? A lot of people emailed about this. All right, so why do you take the lead on this? You read this email, and then I'll, I have rebuttal. On this week's episode, you discussed how firefighters and police officers in San Francisco are struggling. Compared to tech workers, the average starting salary for a San Francisco firefighter is 100K. If they work 20 years, they get 95% of their highest salary average, their highest average through your salary.

I have a family friend who is 58 retired from the fire department after 30 years and collects well over 200k in pension. Okay, a lot of people send this to me. Okay. Someone even said, like, hey, the meat. Median salary for a firefighter, San Francisco is $300,000, obviously isn't true. According to the BLS, the median pay for firefighters is $59,000 per year. That was in 2024. In California, it's $83,000, and the top 10% is like 140.

Now, a lot of people say, listen, I've heard these stories of people getting overtime and firefighters. But what about in San Francisco? Yeah, I think it was like 100 something. Okay. But guess what? Good. Good for them. They're literally running into burning buildings.

They should be paid a decent wage. What was the tenor of the emails? Like, what were the point that people were making to you? Well, I said how do, I said we should feel sorry for people like teachers and firefighters and police officers with having a higher cost of living in places like San Francisco. And what were the emails? No firefighters make way more than you think. Okay.

And they do make a decent, but guess what? They should make a good wage. They should get a good pension. They're putting out burning buildings for God's sake. I just got a reminder. in recent weeks about status symbols for rich people and why the whole idea of a status symbol will just never go away. Like personal finance people love to point out that like true wealth is what you don't see, right? Like it's the stuff you don't spend money on, which is obviously

true. If you want to build a big portfolio on a big bank account, it's the lack of spending money. It's very obvious. But I have a guy I know who drives a very nice car. But why should true wealth be the goal? Well, that's fair. So my point is- Seriously, like, is the goal in life to hoard as much cash as you possibly can? Well, for certain person finance people, it is. Right.

No, I know there's levels to that. Right? Like the hoarding cash at a million dollars versus somebody with five versus somebody at 10 with 20. You know, it's changing all the time. Right. If you say the person with $8 million is richer than the person with $6 million, you're not wrong. But if the person was $6 million has a really nice house and a fancy car and a boat,

who are people going to think is richer? The person was $6 million. Yeah, but I would say the person with $6 million is richer because they're living their rich life, as Rameet says. Yes. That's the whole point is to use the money to enjoy yourself. But I got a good personal finance reminder of this recently. So I know a guy who drives a very, very nice car, convertible, like luxury, luxury. And a friend told me, man, that guy is rolling in it, just rolling in it. Like, look at the car he drives. He's rolling in it.

And I said, I can't argue with it. That's a great, he drives like a $250,000 car. Anyway, a couple weeks ago, I'm talking to the guy who drives a nice car. He's in, I'm the finance guy, so people talk me about finance stuff. And he says, hey, I got to get like a new roof on my house. It's going to be really expensive. It's going to cost me 50 grand. How should I pay for it?

I'm a little light on cash these days. Can I borrow against my 401k to do it? I wanted to say, sell your car. But anyway, but this is just funny. Okay, yeah, wow. That's one of those things where, like, the status symbol will trump everything in the way that you perceive someone.

All right, there's a word for that person. And it's moron. That person's not rich. That person's a moron. Oh, yeah, but you, yeah. But that's the hard part about understanding who actually is rich and who is just pretending to be rich.

I'm sure that person has a very high income. Yeah, of course. You'd have to have to have a really nice car anyway. I just, I thought it was just, it was funny. Hey, you know what? As long as he's having fun. Okay. Exactly.

He's enjoying it. So, Comcast is splitting up. Comcast is, you know, a lot of these media companies are basically like family businesses that are publicly traded. Obviously, Paramount was like the famous one, right? Some of the Redstone, like, I am so happy to have Comcast out of my life. I had them as my cable providers. for years and years and years with their cable box.

What did you switch to? YouTube TV. Oh, oh, oh. And I'm happy. Never looking, never going back. All right, we'll talk about us in a sec. I don't watch YouTube. Do you?

I'm like the only person that doesn't watch YouTube. I don't mean YouTube TV. I just mean YouTube the service. Do I watch YouTube? I never scroll on YouTube. I know that's like the thing that... Oh, scrolling out? No, I look videos up.

I don't scroll. You're right. I don't use their algorithm means nothing to me. Correct. I guess we're too old for that. Yeah. So anyway, I was reading a... about it and I learned, so Comcast is going to split the cable business and the broadband apart

because the broadband is just, whatever. One is an anchor on the other. All right? So I learned that they own Fandango. Did you know that? I didn't know that. I think the way that I discovered was Rotten Tomatoes is owned by Fandango. I had no idea.

So I said it's Fandango a good business. And Fandango was spun out. So Versent owns Fandango. Versant was spun out of Comcast. That owns CNBC and the Golf Channel. I don't know. That's weird. Oh, CMBC and the Golf Channel kind of makes sense, actually.

And MSNBC, which is now MSN now. Anyway, Fandango, this is what Claude said. Fandango doesn't get broken out separately, but it's the biggest piece of Verson's platform segment. And that segment did $826 million in 2025 up 3.9%. the only version segment that grew year over year, and it's accelerating. Q1, 2026 platforms revenue rose 9.5%

driven by Fandango movie ticketing. So anytime I go to the movies, which as you know, Ben, is pretty frequently. Pretty frequently, I go through Fandango. It's the easy pass of movies. Okay. I don't think I ever really use it. Yeah, I don't use Fandango.

Okay. Anyway. But people also use them to buy like the video on demand and stuff, right? movies come out early. Pay 25 bucks to buy a movie that just got out of the theaters or whatever. So, correct. Last week we spoke about, get in here. My dog is doing that thing where the door's half open.

She keeps poking her head in and a half and an ad, like she's going to get hurt. So last week we spoke about the fact that season two shows for Netflix are crashing. Right. And this guy, Anish Munkah had a good take. not earth-shattering, but it's obvious. So people were saying that, like, part of the reason why the shows fail from season one to season two is because they're years apart. So obviously, you lose the interest of the audience.

But guess what? He said, look at HBO and the Gaff Theory falls apart. White Lotus grew its audience, 63% from season one to season two. And then another 57% from season three. House of the Dragon only dropped 8% between seasons. And House of the Dragon, I think the first, whatever, I think also that's years in between. Here's the reason why Netflix fails with season two.

He says the difference is the drop. Netflix gives you the whole season at once, and most people finish it in four to six days. After that, the show falls out of the conversation. HBO puts out one episode a week, so a season stays alive for weeks of theories, recaps, and arguments before the finale airs. By the time it returns,

people have been talked about it the whole time. So, House of the Dragon, Cape Fear, two shows that I am watching on a weekly basis. Guess what I'm doing after the show? That's a really great theory. The other part of it is Netflix shows kind of stink. Well, there's that too. It's quality. There's that too. Because I'm watching the agency, and I bet you that didn't have a gigantic drop-off from season one to season two. But HBO, Apple TV, I watch House of the Dragon, I watch Cape Fear, and I put on the ringer, and I listen to the recaps. And with the binge method, it just doesn't, it doesn't, it's very ephemeral. It doesn't last.

They might have to change. So they should experiment with, I don't know, it seems like a radical change. All right, there was a long article. Also, House of the Dragon. It's just, I feel like they just pull these random characters that I've never heard of out of out of midair. Like, oh, this is the new bad guy. And this is the new, like, they just bring people out of an, like, I'm already confused enough. It's like, but it's so good.

So episode four, like you been... In this season, it's getting a little shaky to me. No, no, no, no, no. Hard disagree. The first three episodes were 10 out of tens. They were good. And then it kind of has fallen off a little because they're like, hey, by the way, this is a bad guy now.

No, this is a bad guy. Just random person. Episode four, yeah, it's cooled off a little bit, but it's only four episodes. And the first three were tens out of ten. All right, but I agree with you. I have no idea what's going on. I still love the show.

All right. I'm still watching. It's just... My recap of episode four, my recap of episode four, I don't know, Agon got hurt, he saw his dragon and who knows.

You're not the bad guy anymore, you're the bad guy. Yeah, whatever, it's great show. All right, there was a long article in the Atlantic, the end of reading. So, this is not a new story.

Rudy has been dying for a long time. A study analyzing 236,000 responses to the American time use survey found that the proportion of Americans who read for pleasure on any given day fell from 28% in 2004 to 16% to 2023. In 1975, about half of 20-something said they read the newspaper every day. Today, less than 10% do.

This is not a mystery. That was the only way to get information back in the day. Right. Books were the way that you learned anything. It was the way that you entertain yourself. And similar with the newspaper. So I totally understand. There's nothing else to do.

I totally understand the fears of, oh, no, the medium is the message, and the medium is Bing, Bing, Bing, Bing, Bing, Bing. The idea is people are probably reading stuff more than ever these days. It's just they're reading headlines and short snippets and social media. Well, so she said that in the article. But then she says, I think this is the key point. If TV crowded out the silent time necessary for reading, broadband, internet, and the smartphone make it nearly impossible.

Not too long ago, at home screen entertainment was finite. sure is aired on a certain day at a certain time. If you wanted to watch an old movie, yeah, to put your shoes on and go to a video store, books could compete in that environment. Some people at least would turn off the TV and read a book before foremost see, wow, what a concept. Now entertainment is limitless, there's no hard stop.

One show bleeds into the next. People watch TV with their phone in hand. Monitoring social media or texting with friends. Netflix has reportedly told directors and screenwriters to assume that the audience isn't paying attention and to constantly remind viewers of what's going on in this environment, people have to really be determined to read and most aren't.

So I understand the hysteria, like, especially like, oh, my God, society is becoming so dumb. Nobody's reading books. I agreeocracy is around the corner. And it's not entirely wrong. But books are just not an efficient way to digest information, certainly not reading a book. So, for example, last week, we had a reader emailed me two book recommendations. One was a book about Jerry Warren. Ryan Trabb. I knew the name, but he wasn't really familiar with. It's called When I Stop

Talking, You'll Know I'm Dead. Useful Stories from a Persuasive Man by Rich Cohen. So Jerry Weintraub was a producer. He started in music. He was Elvis's producer, manager, whatever, and then he worked with John Denver and Frank Sinatra in his later career. And then he produced Ocean's 11 and that whole movie, that whole whatever saga. So had a very fascinating life. And I listened to the book. And he recommended that in the Portnoy book. Can't see me if you can. And I said, yeah, you know what? I actually haven't listened to an audiobook in a month or so.

I'll listen to the wine tribe. I'll not to listen to the point. The audiobooks going to a bear market during the summer, don't they? Yes. So I said, I'm not going to listen to the port and I'll do the wine tribe book. And guess what? I listen to the wine trial book in three days because it's so much easier. By the way, mild bone to pick with Spotify.

What I love about listening to audiobooks with Audible is when you dial it up from 1 to 1.25 to 1.75 to 175, it tells you exactly how much time you have left in the book. It adjusts. Right? So if a book is 15 hours and you're at 1.7, you know you're at 9 hours or whatever the math is. And it motivates you to keep going. Spotify doesn't do that, which is kind of annoying. So anyway, I read, I listened to the Jerry Weintra book and I enjoyed the shit out of it because I walked to Starbucks.

that's 35 minutes a day back and forth. I'm driving to the beach. Whatever I'm doing. You know, like you just, you fly through these books. And then you said, hey, the Portnoy book is actually pretty interesting. So I said, hey, you know what? I'll fire that one up too. I already, so, and I guess what?

Finish with that book. Knock that one off. Reading sucks. It's hard. Takes a lot longer. And this is coming from people. Ben and I love to read. Look at all these books behind me.

I've literally read all these books. This is, so a Franklin Roosevelt book, 800 big book, are you kidding me? I would, it's impossible. Yes. It's impossible. At our age to have time. I think you and I have both benefited from reading. Our careers were benefited because we read so many books.

And I'm embarrassed to say, I probably finished less than five books in my entire college and below career of academics. And it wasn't until after college, I realized like, oh my gosh, I am so far behind. I need to read, and I read everything I could. The first two or three years I got out of school, I lived in an apartment by myself. My wife and I were dating at the time. We had a long-distance relationship. I read all the time.

I still read a lot. I have a Kindle. I listen to books. But for most people, you're right, it's just not an efficient form of learning. However, having said that, a book, especially a nonfiction book, is typically like ideas and thoughts from someone that have been percolating for years. and years and years, and years. And they distilled them down into one thing.

That's why books are still such a great form of learning, if you will put the time in and do it. Most people won't. Yeah, but it's, anyway, reading a book, too much for time commuted. I love listening to audiobooks. I can't believe it. I still read fiction. I am the person who every single night reads for 20 minutes before I go to bed,

and it helps me sleep. I read for 20 minutes on my Kindle. Anyway, I guess my take is I don't think it's dire. I agree. People can now consume stuff on podcasts and on YouTube if they want to learn and now LMs that will help them learn so much faster than it would be a whole book. There's better ways to learn. All right, real quick as we as we wrap up.

What's a beach club we've been? Oh, that's me. I was going to say, I don't know. You know, it's funny. I thought that I thought that you were like, there's like a wave of beach clubs. I don't know what this is. All right,

I put that in here. So this has happened to me a couple of times this year and every time it's very embarrassing. When you wave to somebody and they're not waving at you. Ah, okay. This is a good one.

So I get in my car, lady pulls up next to me. And I mean like five feet away from me. And her car goes like this. So I reciprocate. I give her a wave. And then she grabs her belt buckle and buckles her belt.

Okay? Yeah. How about this for waves? I live in a neighborhood of probably 20 houses. We live there for 10 years. Am I supposed to wait? When I drive, I drive by the same five or six cars every day where my house is. Of course you wave.

Do I have to wave these people every day for the rest of my life? Because I feel like there's a couple of the cars where we've decided like, we're not going to wave at each other anymore. Like we've both simultaneously made the decision like, listen, I see you, you see me. We're not going to wave each other every day. Other people, they want the wave every single time. Every day after wave to these people, every single day? I mean, it doesn't cost you anything. I'm a wave guy.

Yeah, it's courtesy. I'm a courtesy. Okay. How about the Zoom? Here's something I've never done in my life, and I never will. I'm never going to wave after a Zoom. Bye. I can't do it.

I mean, no, that's, come on. That's silly. Although Duncan's a big wave guy. So Duncan comes into the office, and he gives one of these. It's a quick, it's like a vibrating wave. Okay. I can see that. that. I like it.

All right. Kevin Gordon tweeted, in this year's Gallup survey, 11% of U.S. adults currently take JLP1. That's shocking. Too high or too low? And it's probably underreported. Right. So that number shocks you that that's high.

It's so high. We need to crank it up. It's so high. So we've been talking about the impact on different companies sales for smuckers, snack division, which includes hostess. So they bought hostess. Oh, I grew up on those hostess cupcakes. They aren't just disgusting.

I had a Twinkly recently. You know, I'm a Yodels guy. I still love Yotles. I love hostas. I used to grow up on those. Anyway, nobody's buying Twinkies, is the long and the short of it. U.S. Snacks Nails are down 4% in the past four years.

Sales of sweet snacks generally have dropped 17%. How about that? That's surprising. I guess there are so many other snacks you can buy that are healthier. I guess it makes sense. So I didn't, I think there was an article last week I missed about the crash in drinking. Did Derek write it or Derek Thompson or somebody else at the Atlantic? I can't remember who wrote it.

People need to start drinking again. Yeah, we've been on this crusade. Yeah, I will not relent. I know some people don't like, don't like it. I don't care. I will not relent. If you go to a concert, people are drinking. Okay, I have a quick story time.

So when I was growing up in high school, Dave Matthews band came out, they were huge. And when I was in high school and college, like a lot of people love going to Dave Matthews band concerts. You definitely hated Dave Matthews. No, no, no, I was a middle of the road, Dave Matthews person. I went to two Dave Matthews band concerts in,

I was not like, I'd die hard. There was people who were diehard Dave Matthews band fans. I had a friend who went to like dozens and dozens of shows. And I wanted to be like, why do you keep going? He just loved Dave Matthews. So I went to two of them in college. And the only reason I went is because it was an excuse to go party with my friends. We went to, like, a cornfield in the middle of Indiana where they had a concert.

And I still remember me and a friend shotgunning beers before the concert in a cornfield. Anyway, and it was a fun event just to go with, like, young people at your age. It was all college kids at a time. Okay? So this past week, there's a brand new amphitheater in downtown Grand Rapids. It's beautiful. It's like 12,000 people all outdoors. It got, like, everything they've done right.

Like, it's a grab and go for your beers and your, like they just did it right. It's great. So the first time I've been there, it's a very nice venue, and Dave Matthews Band playing and one of our friends said, hey, I'm a big Dave Matthews band concert. Come with us. We went with one of our couple friends. And here's what I was not expected. So I haven't been to a Dave Matthews band concert since 2003, probably, 2002. I couldn't believe the number of diehard fans that still are that are kind of like,

almost like deadheads in a lot of ways. But it's people our age that have just grown up with them and continue to go to the shows in the intervening 20 years since they were such a huge act. Like, they haven't had a good, they haven't had a single in how long since there's a popular single? 20 years, probably.

You know? And so I'd say 30 to 40% of the concert goers were these people who are diehards. They have Dave Matthews, and jerseys on and all the tour shirts and, like, they were viving to every song.

And 75% of the songs were songs that I'd never heard before. So I'm expecting to go there and get the high school nostalgia tour. Right, right? I want ants marching. I want satellite. I want, you know,

They did dance marching, which brought a smile to my face. But then I realized, so he had two shows in one week, one week, Tuesday and Wednesday show, whatever. And he decided to play half the good songs one day, half the good songs in the other day, on the assumption that all his die-hard fans are going to go to both shows. Okay?

So this concert was not for me. It was for the die-hards. I was a little peeved that I didn't pay all the hits, but it wasn't for me. It just got me thinking, and I bring this background to the economy. There are so many ways for people to spend their money on things they care about these days.

And I'm not here to judge these people either. These people were so, the diehard Dave Matthews band fans were so happy. Swaying and maybe they had maybe Gummies help. But it just got me thinking like, oh, these people have been going to like multiple concerts a year like for a long time. And it just got me thinking like, I don't know, 100 years ago,

the ability to spend money on things you cared about just didn't really exist. It's a relatively new phenomenon. Like recreational spending. Yes. it really is kind of new. Yeah, what did you do 100 years ago? You went to the opera?

Yeah, there was nothing like this for people to spend their money on. Anyway, interesting time capsule for me. It was like, oh, all the people I went to these shows with other than college are not middle age and they're still doing it. Anyway, no power to you. Not my thing, but.

I watched over the past couple of weeks. I saw two watchable movies. So if you see them on the streaming, they're watchable, but skipable. skippable. I would say how to make a killing is a pretty good plane movie. Is that a Glenn Powell one? Yes. Okay. I did see that. He's got some stinkers actually, surprisingly. But people kind of give him a pass. It's an airplane movie. Okay. And the mummy. The mummy was like the

exorcist. It wasn't really a mummy movie. It was sort of like an exorcist movie. You can't do that. You can't use, reuse the name of another movie. Because I saw that. My son was like, oh, there's another mummy movie? So, no, this is a horror one. I don't like that. It was okay. It was totally watchable. But like, you know, also quite skippable. So you're welcome for your service for my service. All right. I told you this, Ben, I saw the invite on Sunday night by myself.

And you know I love to raw dog movies. And in this case, it hurt me because I really wish that I brought my wife. In fact, I might take her to go see it. Because it was a date. This is a date movie. It was made for people our age. It is made for it as a husband and wife movie. I pay 824, I don't know, 10 bucks a month.

Duncan told me about this. And you get a free movie once a month. So I support the arts. I like to go. I do nothing about this movie. Like literally nothing. It was written by Rashida Jones and Will McCormick. And it stars...

They have a good one that called Celest and Jesse Forever. It's also a marriage one from 10 years ago that I really liked. It stars Seth Rogan and Olivia Wild. are in a marriage that has lost its spark. And they invite their neighbors over, Penelope Cruz and Edward Norton for dinner. And that's all I'll say. Is it a movie that takes place in one night?

The whole movie is one night? Yeah. It was, it was, I think my favorite movie at the year, I laughed so freaking hard. I can't remember the last time I belly laughed to the point where, like, I couldn't stop laughing at a movie. It's been a long, long time. It was...

And that premise is not something I would consider a Michael movie. That's interesting that you say it's your favorite movie of the year. Well, I don't want to give away any of the plot. But it was... It was so good. I had such an awesome time. And it made me happy. All right.

Good to hear. A bunch of people reached out to me and said, Ben, your son likes the alien universe, which is funny. I don't know why we got talking about this. We started talking about our favorite movies. And I'm not a perfect parent by any means, but I think I've done pretty well in this area. My oldest daughter Libby, her favorite movie, is League of Their Own.

My youngest daughter, Kate, her favorite movie is Goonies. She wants to watch Goonies all the time. And George, I said, what's your favorite movie? He said, I can't pick, but my favorite movie is the alien universe. Right? All the aliens. So a bunch of people emailed and said, your son has to watch Alien Earth. It's a show on Hulu, and Noah Holly did it. He's the guy who did a lot of the Fargo shows, I think.

So we watched, pulled Alien Earth on, and he binged like half the season. in the weekend. It's probably too adult for him as a nine-year-old, but whatever. Who cares? He likes to aliens. It's a little trippy for me. It's a lot of like robot, human, human-robot-siburg,

but he loves it. Absolutely loves it. Is this first season or second? First season. It's kind of, it's a prequel to the alien movie, I think, in some ways. But there's flash forwards and flashbacks, and he's all in.

He absolutely loves it. So thank you for the recommendations of that. And finally, we moved on, Adam Sandler rom-coms for my, my daughter and I, watching our nightly rom-coms together. So we did Just Go With It This Past Weekend in 51st Dates, which are kind of funny, and the reason why I should just go with it is because Dave Matthews, Dave Matthews is in the movie, married to Nicole Kidman. Oh, oh, is this the Brooklyn Decker one? Yes. I mean, it's pretty, it's funny because my daughter, after watching two Adam Stanley movies, and I think 51st dates probably has one of the best endings of any rom-com that there is.

I love the ending of that movie. I love that movie. What happens at the end? I forget. They're on the ship. By the way, this movie is 15 years old, or 20 years old, so no spoilers. His dream is to go to Alaska

to study the whales or the wallersers or something. And at the very end, she still can't remember. She wakes up, she's on a boat in Alaska, and she looks at the table with her life, and they got married, and then he says, do you want to meet your daughter? And every day, she wakes up and meets her daughter because she can't remember the next day.

It's a great ending. But my daughter goes, are all Adam Sandler movie is just the same? Because in both movies, he's kind of a womanizer who changes his ways and he lies to women to get them to sleep with them and date him. And both movies take place in Hawaii. Both movies he has like a sidekick. One of them, it's, what's the guy's name? Rob.

The guy from Grandma's Boy? Yeah, well, those guys are in him. Nick Swartson is the in the one, the guy from SNL, Deuce Bigelow, whatever his name is. Oh, Rob Schneider. Rob Schneider. Anyway, and they both take place in Hawaii, and I'm like, yeah, he just likes that fun in Hawaii with his friends, I guess.

Anyway, we're on to stand the rom-coms. Next is McConaughey. So, that's all I got. I've never seen any of the McConaugns. Yeah, they're forgettable, as far as I'm concerned. Okay. All right, Ben. We did it.

I'm going to log off and now go watch IBM's stock price chart the rest of the day. I promise I won't bring it up again ever on the, as long as this podcast goes. Now that we've buttoned up the polo, very nice. Looks good? Yes. All right.

Okay. Animal spirits at the compound news.com. Personal emails, personal emails, personal response. So sometimes Michael responds and I said, wait, I wanted to respond to that too, and we both respond. That's happened a few times. I mean, I do 95% of the responding, so you'll forgive me if I don't wait for you to respond. That is not true. It's 80-20.

If I don't respond to the inbox, it will just pile up. That's a fact. 80-20. 95-5. Thank you for listening, thank you for watching. Thanks to the production team, for their help as always, see you next time.