The Compound and Friends - No Recession - Wall Street Economists Flip

Episode Date: October 17, 2023

Join Downtown Josh Brown and Michael Batnick for an all-new episode of What Are Your Thoughts and see what they have to say about the biggest topics in investing and finance! On this episode they discuss: earnings, the luxury slowdown, recession odds, long-term bonds, Bitcoin ETFs, and much more! Thanks to YCharts for sponsoring this episode! Click the link below to receive your own copy of the “Top 10 Visuals for Clients & Prospects” slide deck, and remember, you can get 20% off your initial subscription when you start your free YCharts trial and tell them we sent you (new customers only): https://go.ycharts.com/the-top-10-visuals-for-clients-and-prospects?utm_source=WAYT Sign up for The Compound newsletter and never miss out: https://www.thecompoundnews.com/subscribe Watch this episode on YouTube: https://youtube.com/live/eYZLrswLep8 Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown 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. Wealthcast Media, 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

Ladies and gentlemen, welcome to The Compound and Friends. It's your boy, downtown Josh Brown. We have an excellent show for you tonight, recorded an all new edition of What Are Your Thoughts? It's me, it's Michael Batnick, it's charts, it's data, it's interesting information, you're gonna love it. With no further ado, I'll send you there now. Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick,

and their castmates are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. All right, gangsters. All right, we're good. We're good. We got it figured out. Soundcheck was a success.

All right. If you're wondering what my background is, I am in a suite in the Encore at Wynn. Don't come by to visit. I've never been in this hotel. Have you, Mike? Nope. How is it?

The room looks good. Yeah, no, it this hotel. Have you, Mike? Nope. How is it? The room looks nice. Yeah, no, it's beautiful. What's not to like? The sphere is right next to me on the left. Like, it's the view out my window is the sphere. I feel like that's the view out everyone's window these days. What is on the sphere right now? Just ads for the sphere.

Like, there's no smiley face or anything. All right, so I'm in las vegas uh michael is on long island we are ready to play an all-new round of what are your thoughts welcome to the show tonight guys i want to say a couple of quick shout outs real quick uh tom whalen is here midwest cannabis cliff is back chris hayes is back uh let's see who else. Let's let's see some new people that we haven't shouted out. A.K. Wheeler. What's up? Mike Skyrose. Georgie D. Drew Hickman is here. Bob Sacramento. Welcome. Jay Luther. Hi. All right. Oh, Jonathan Gatt. Hello from Uruguay. Well, what do you know? Hey, Jonathan. Thanks for joining us tonight. Dave Airy. Rachel. All right.

All the gangsters are here tonight. It's the start of earnings season. These are always some of the more fun shows to do. And we're actually going to start off with that. But before we do, I hear there is a sponsor tonight. Michael, who is sponsoring the show? I just got signed out of my account. How about that? Sign back in. Uh-oh. Wrong password. Well, this is problematic. The sponsor of today's show is... Why'd you get signed out of Friendster? What the heck just happened? We hear you. We see you. All right. Well, good thing I have two computers. Not to brag. No big deal.

The sponsor of today's show is YCharts. Did you know every quarter, they do like a top 10 charts of the quarter? Hand curated by them. Yes. It's tremendous. Visuals galore.

Great for sharing for clients. Great for learning. There we go. If you would like to take advantage as a new customer of YCharts and get 20% off, contact them. Tell them that we sent you, and that's how you do it. And one more thing. Ben and I are doing the end of year webinar this year with YCharts.

So that'll be the first week of December. All right. I am a little bit shook that I got signed out of my account, but at least I have access to this. What account did you get signed out of? Is it like? The work one. Oh, all right.

Earnings. So Michael filled in a lot of the gaps for me here because I've been in transit all day. But I just wanted to start off by saying, and then we'll pop some charts. If your reason to not want to be in stocks right now is because of earnings. You have the wrong reason. It's not my personal opinion. It is not going to be the thing that knocks the market off course. By the way, it hasn't all year.

We have had declining earnings for the record. They weren't as bad as people were projecting as recently as the first quarter of this year. as people were projecting as recently as the first quarter of this year. And this time around, if you think about an average quarter where the market does about 3% better than expectations, if that's what we come in with this time, we'll be solidly positive on a year-over-year basis, which, not to brag, pretty good. And certainly not as bad as some of the worst expectations

that were out there in the first half of the year. You want to do some of these charts, Michael, while you get your situation resolved? I just told Nick that this is sort of urgent. I'm good for now, but if I get kicked out of the MAAC, I am sunk. All right, let's get it on. So, okay, as Josh mentioned, so we're early, right? We've had, what is this, like the second week of earnings season?

So forgive me if Josh- We haven't seen much. Forgive me if Josh had this. I was obviously typing to try and get my password back. But so we're reporting year over year revenue growth of 1.9%. This would be the 11th straight quarter of revenue growth. That's not bad. Yeah. So yes, costs are going up, but eight out of the 11 sectors are actually supposed to have positive earnings per share growth in this quarter. And I think the biggest gain is going to be in communication services. They're estimating 31.5% year over year, which is kind of explosive. I don't fully understand what's going on there.

Consumer discretionary sector is going to have 20% growth, and a lot of that's obviously going to have to come from Amazon if it's going to happen. If you actually pulled Amazon out, it would be a decline. Oh, really? It's that big? Yeah. So whenever you, according to FactSet, consumer discretion discretion would be down 14% if you pull Amazon out. And this is one of the points that I wanted to make.

Whenever you're looking at earnings on a sector basis, you have to adjust for the fact that in every sector, there's like two or three companies that matter the most. There's like two or three companies that matter the most. And oftentimes when you just say, oh, we're going to have consumer discretionary up 22%. Yeah, but a lot of it is an artifact of how bad Amazon's quarter was a year ago versus what this time around is going to bring. How do we adjust? Sell side research? I guess I think mentally adjust. Oh, a mental adjustment. Oh, okay.

That's good. That helps. Just remind yourself the sector is not growing profits 22% a year in real life. There's a giant weighting issue there with the biggest company in the space. That's all I'm saying. All right. So we spoke about what we're expecting at the index level in terms of revenue growth. So 66% have already beaten, which is basically in line with the five year average of 68%. That's top line. Bottom line though, we got some good news. 84% have beaten

and we're expected to- That's way high. We're expected, now that'll come down, obviously, as we get more companies reporting. The S&P is expecting 0.4% year-over-year earnings growth for Q3, which is the first quarter of earnings growth that's year-over-year since a year ago. Right. So if you get that, then the narrative that earnings have to come down, earnings are coming down, you have to throw that out. So back to my original point, if your reason for not wanting to be in stocks right now is there's going to be some sort of earnings recession, it's time to change your narrative

because that's not going to be the thing. No, we did that. The thing that – we did that already. What will knock this market off course is going to be something else. I don't think it's going to be corporate profits, at least not in the S&P 500. And I think that's my biggest takeaway. So I leaned on a fantastic sub stack called the transcript for some of the best quotes so far from banks. And JP Morgan, the CFO said, we are seeing a trickle. Actually, before we get to this, what did you make of Jamie Dimon's comments that we might be living in the most dangerous times in decades?

Is that crazy recency bias? Why does he talk like that? I don't think he's referencing financial conditions. I think he's referencing geopolitics. And he focuses a lot on that. And by the way, a year ago, he was saying like perfect storm or something. Early this year. Hurricane.

I love – listen, I'm a shareholder in JP Morgan, and I love that he sandbags the shit out of Wall Street every chance he gets. He is a guy that did not take the bait and load up on all these low interest mortgages over the last couple of years. And now you see Bank of America living with this shit on their balance sheet. They're upside down on 100 billion plus worth of mortgages. And JP Morgan isn't. And he just, he's a risk manager first. And that's like the, that's the swagger. That's the persona that he's cultivated on the street. And it's backed up by the way he actually behaves. He's a guy that figures, figures,

look, banking's a simple business focus on risk and the profits will take care of themselves. And that's what he's done. And that's what he's doing right now. So I don't think when he's the most dangerous time, I don't think he's referenced. I don't think he's referencing financial anything.

I think he's talking about Israel and the Middle East. Well, fine. Fair enough. And obviously not to minimize what's going on over there. But is this more dangerous, the conflict between Palestine and Israel, than when the United States was in the Middle East for however many years we were there? I don't know how you quantify it. I think- This may be the most dangerous time the world has seen in decades.

Whatever. I mean, that's a direct quote. You could take with it what you want. Yes. Listen, yes. I think it's reasonable to say that. Israel's in nuclear power. Iran is very much involved in all this bullshit.

And yes, I think it's a reasonable statement. And I don't think everything that he says is like a market call. I think sometimes he's talking about just the overall environment. And he's a global – he represents a global financial company. environment. And he represents a global financial company. So no matter what's going on somewhere in the world, there will be some impact on JP Morgan, on financial markets. And that's what he's saying. I don't think that he, like the second sentence in that is not, so make sure you go out and sell everything. Like that's just not the way he talks. All right. So getting back to the comment, we are seeing a trickle of charge-offs. This is from JP Morgan CFO. A trickle of charge-offs out and sell everything. It's just not the way he talks. All right. So getting back to the comment,

we are seeing a trickle of charge-offs. This is from JP Morgan CFO. A trickle of charge-offs coming through the office space. You see that in the charge-off number of the commercial bank, but the numbers are very small and more or less just the realization of the allowance that we've already built there. So that's on the- That's the CFO. Yeah. already built there. That's the CFO. Yeah. However, on the Goldman call from earlier today, Bank of America analysts, I just want to make sure I heard you correctly. Did you say you marked your exposure by 50% in the commercial real estate office? Yes. To clarify, for our commercial real estate in the office space, we've either marked or impaired that down by 50%. That's quite significant. Yeah, I'd say. Yeah, that's a big deal. I don't think Goldman is that big of a player in that space. I don't think they're like

a top three player in CRE, but listen, this is the reality. The thing about, as we've talked about a lot, the thing about commercial real estate, if that's the bomb that you're waiting to go off, it's going to be a really slow motion detonation. That's probably going to frustrate the bulls and the bears. The owners of office properties extend and pretend the banks do the same thing. It's a big game. In the end, the banks do not want to end up owning these properties. There's nothing for them to do with them. There will be numerous

refinancing opportunities along the way. A lot of this commercial real estate is owned by real estate families, dynasties, if you will, and they just don't let go. They don't give in that easily. This is not going to be a situation where all of a sudden one quarter, like every building on every balance sheet is going to have to be marked as impaired. Well, get this. I just don't see it going that way. Supporting that is the CFO from Wells Fargo. He said, the hard part of office right now is that there aren't a lot of trades happening yet. There's a few in certain cities and they're all a little bit different in their complexion. So you still have somewhat limited information. In the price discovery, I have a lot of places.

So yeah, there you go. And there's also a huge difference in A buildings versus B buildings. They might be next to each other in the alphabet. These are two different worlds. These are not comparable in any way, shape, or form. A buildings, class one buildings in the best neighborhoods, in the best metropolitan cities are not fungible with B buildings. And C buildings aren't even worth talking about. They're a speck. So that's another aspect of this. I know there's a lot of people,

They're a spec. So that's another aspect of this. I know there's a lot of people, they've drawn the, they've connected the dots. They said, okay, work from home is a new reality. None of this office space is worth what it was. There's a lot of debt. Therefore, blow up.

It's going to be really frustrating if that's what you think is going to happen here. When is our lease up? 2028? Our lease is up in 2028, but we're the idiots that are going to take more space, not less. But my point is that it's rolling. All right, let's talk about Goldman for a second.

So third quarter net revenues were essentially unchanged year over year, reflecting significantly lower net revenues in asset unchanged year over year, reflecting significantly lower net revenues in asset and wealth management, which were offset by higher net revenues in global banking and markets and platform. I'm not sure exactly what that is. But they took a $506 million write-down in Green Sky, which is a ton of money. John, throw this yellow text up. I can't read it off the screen. I got to screen. Okay, there we go. All right. Equity investments reflected net losses from investments in private equities

due to net losses from real estate investments and significantly lower net gains from company specific events. So private, they took $170 million write down compared to a $505 million gain in the same quarter a year ago. I mean, that's a monster swing. And then public, down $40 million compared with a $220 million gain a year ago. Yeah, look, Goldman is cleaning things up from the bubble years. And they did a lot of adventurous stuff. And they're not going to do it again. You're going to see Goldman get very conservative now.

I mean, you have seen that, obviously. They want nothing to do with consumer lending bullshit. They want very little to do with it. It appears based on news reports. They want very little to do with lending to the consumer credit cards. They want out of these businesses and they'll get out. What do you think their compensation expense was just quarter over quarter? Just quarter over quarter. Well, not enough because they're trying to murder this guy like a Shakespearean play. So you tell me. Do you have the number?

16%. That's wild. 16% growth? Since last quarter. Yeah. Compensation expense. It's a palace coup underway. Do you understand like every partner at Goldman Sachs is on the phone with the New York Post like on a weekly basis this summer?

They're trying to get rid of this guy, planting stories about him. It's not surprising at all. The bonus pool was down year over year. That's the headline. So that happened in the first quarter. Once that happens, it sets in motion a chain of events. The bottom line is people do not like to get paid

less one year than they were paid the prior year. Nobody takes it well. Nobody takes it well. That's the bottom line. All right. Anna just saved me because I just got kicked out on the Mac as well. But now I'm back. All right. Now we're cooking with gas. Welcome back. What are these ETF institutional long-term charts? This is, this is yeah. Mike, walk us, walk us through what this is.

Sorry. I'm just logging back in. Okay. The point that I wanted to make here is not necessarily, I mean, the top left is organic growth assets. I'm sorry, that doesn't make sense. It flows into ETFs. And of course, 2021 was, and 2020, which is not on this chart, was just crazy, crazy, crazy behavior. We all know that. But the chart that I want you to look at is, look at the bottom left one. Okay. What we're looking at is the black lines are operating income, which are- This is BlackRock specific? This is BlackRock. So we're down, or they're down, I should say, from their peak in 2021. Again, this probably peaked in 2020, but they haven't made any progress since 2020. It's been sideways. Guess what? This is operating income and margin on the ETF business specifically or the overall company? No, no, no. This is the entire company. Then their operating margin

is, that's not going the right way, right? It's going from the upper left to the lower right. And so I just wanted to make the basic point that if you saw these numbers, you'd say, yeah, I bet the stock's not doing so well. John, try it on, please. Yeah, stock's not doing so well. Neither is the business. It's in the middle of nowhere. It's fine. Yeah.

It's fine. It's not terrible, but it's not going anywhere. Net income and earnings per share are going higher. So what accounts for that? They're buying back stock? They're buying back stock. Yeah. All right. So that's what you have to do in some periods of time.

Let's do Schwab for a second. That's what you have to do in some periods of time. Let's do Schwab for a second. Net income for Q3 was $1.1 billion compared to $2 billion in the same quarter last year. I know you're not a math guy, but that's down 50%. That is dramatic. That is a dramatic drop in net income. So net interest revenue, which is I think it's 60% of their earnings, I think, they're a bank. Net interest revenue is down 24% year over year. So that's the bad news. There is some good news. Year to date,

we've attracted 248, this is Walt Bettinger on the call, or in the report, I should say. We've attracted $248 billion of coordinate new assets from accounts originally opened at Schwab. So not the TD merger. Which is an annualized growth rate of over 6%. Again, year-to-date, Schwab accounts only, $248 billion. That is a ton of money. Where is that coming from? The sidelines. Good marketing?

No, but really, where is that? I don't know. I mean, how did they do that? Wait, they added a quarter of a trillion dollars year-to-date? Yeah, I read that three times. And we have no idea where it's coming from. Okay. All right.

Good. Congrats. The economy's doing well. Gentlemen, congrats on the quarter. But cash sorting is still the story. And it hasn't stopped yet. So a couple of great charts. All right.

They call it cash realignment. For the audience. Let's just like, all right, cash realignment, cash sorting. Michael, will you give people a definition of this? Yeah. Okay. So turn off, please. So if you just have money in Schwab, it's a bank, it's effectively a bank. And so they sweep it into their cash management program and they basically, they give you nothing and they take from them everything. Is that a line from Gladiator? I think so. But now after Silicon Valley bank, which really woke people up to the fact that holy shit, I could get at the time, 4% of my cash, four and a half percent.

There was a tipping point where there was just a massive exodus out of their suite program and into something that yields what people deserve, which is what, what the fed funds rate is, which is, which was 5%. And so instead of them taking all of that difference and earning it in their pockets, you're earning it, smart person who moved their money out. So that's a huge drag. Now, the good news is most of that's done. So they showed the number of first... John, you don't have to put the chart on. Okay. So let me just say, and then you put the chart on. So number of first time, they're calling it realignment events. Number of first time people that are moving the money out

is down 57% from the peak in March, 2023. So if you were going to move, you moved. You did. And now even better, the size of the average realignment, which makes sense, right? If you had a hundred thousand dollars in cash, you're getting the hell out of there. That's a lot of money, right? If you have like $700 in cash, so, so, so not only if you were going to move, you did, but if you had a lot of money, you already did that. So the size of the average realignment is down 76% from the peak. So now John, please chart on. So on top, you're looking at, I'm sorry, the previous one. There we go. So on top, you're looking at the average daily pace of net cash realignment. And there was just a massive exodus.

You could see it shrinking. Just a massive exodus. I wanted to ask you about, so a lot of times when we say cash sorting or cash realignment, it's not necessarily people leaving Schwab. They're trading from a core money market account that's yielding nothing into a Schwab product that's got yield, like a Schwab higher-end money market fund. But they have to do it deliberately themselves. It's not the sweep. You have to buy it. You have to buy it. The sweep is nothing. But you can do it in your Schwab account is my point.

Yeah, but you have to do it. You have to do it. So that's not always money leaving an institution. Sometimes it's just that sorting. But either way, they make less money. Well, you could also buy a different money market fund. You don't necessarily have to buy the Schwab one. But then the money is not leaving Schwab the institution, but it's leaving shareholders'

pockets, right? It's just- That's right. The spread is getting- It's less profitable.- That's right. The spread is getting- It's less profitable. It's less profitable. The spread is getting smushed. But as you could see, the bank sweep flows are positive for the first time since March 2022.

So you have to think that absent another, absent nothing, if you were going to move, you already moved, okay? And now the question is, is that reflected in the stock? I don't know. The stock got killed. So we know. This is not- Well, the stock got killed, but profits got cut in half too. From a year ago, right? You gave me a figure, net income, 2 billion to 1.1 billion. So seen through that prism, I know it's only one

quarter, it's not a full year, but seen through that prism, the sell-off in the shares is like somewhat justified. It was $100. Absolutely. Absolutely. The stock got cut in half. Right. And so did their quarterly profits this quarter. I don't own the stock, but I am of the opinion that Schwab is the brand leader.

They have 12%. They have 12% market share. We speak about how nobody has market share. They actually do. They have 12% of the $65 trillion in retail money. So I would think that most of the bad news is behind them in anything. Right. You and I are a little conflicted.

We do business with Schwab. They're one of our favorite companies to work with. We have client assets at Schwab, obviously. So just to get that out of the way. That being said, we do business with a lot of companies. Schwab is pretty awesome. That being said, we do business with a lot of companies. Schwab is pretty awesome.

Like if, and, and in the eyes of when we talk to prospective clients, people come to us, if they have money at Schwab, they really don't want to leave Schwab. They'll work with us at Schwab gladly. People really like their, their accounts there and they like the services that Schwab offers. For people who don't have assets at Schwab and we're going to move their assets there, nobody ever says, no, not Schwab. I mean, the reputation and the services is amazing. And you're right. They are a brand leader. So it's not as though they are the only company facing cash realignment issues. Every financial institution, every bank, it's a universal issue. The environment's changed.

But I think by now, it's been changed for long enough that, to your point, we're not going to see another explosion in new cash realignment activity. So I think the stock has been very, very de-risked. Now, how do they grow their way out of this? That's another conversation. I don't have a good answer for that. All right. So two more charts that are worth sharing. Select client cash metrics. So this is from 2014 to today. And what they're showing is cash as a percentage of total client assets probably peaked that 50%.

I'm guessing that's March 2020, but whatever. But what you see is that it's never less than 10%. And if I had to say one thing is a great advertisement for why you should hire a financial advisor, obviously I'm biased, but this is the chart. People just generally speaking, for usually no reason, hold way too much cash in their portfolio. Now, finally, cash as an asset class is not a bad thing. In fact, it's a great thing. But just generally speaking, to have 10% in cash when cash is literally yielding you zero, that's not a good decision. Yeah, I guess it's like to find, like somebody said, should I have 10% of my liquid net worth in cash?

Well, define cash. Is it cash yielding a basis point or is it cash yielding 500 basis points? Right. Because it's not – it's now no longer – there's now no longer a universal answer to how much should I have in cash. Now the nuance is, well, what are you doing? Like it's cash, but cash doing what? One more chart that supports us financial advisors is the next chart, please. So what this is showing is quarterly daily average trades for the entire pie. And I don't know what the

mix of assets are. Oh my God, this is hilarious. Is AS advisors supervised? Advisor services. So let's just say it's roughly equal. Again, forgive me. I don't know what the exact numbers are, but let's just say it's split between DIYers and advisors. The money at Schwab, you said.

Yeah, 78% of the trades, of the total trades are done by retail. And what happens when you trade? Do things tend to go well? I can attest. You create alpha. From experience. What do you mean? I do not beat, I do not beat my 401k. You extract alpha from the market. Science, surgically, surgically extract. That's funny. So, I mean, it it makes sense I would guess that I would guess

that a retail Schwab account would have more trading activity than an advisor driven account simply for the fact that do-it-yourselfers or do-it-yourselfers

because sometimes they just haven't found someone to work with but most of the time they like the action they enjoy it they want their hands on it

and they want to do stuff so extract away. I'm all over it. All right. Enough about earnings. Enough about earnings. Let's talk about a potential luxury slowdown. Not in my house, but OK.

I promise you that. OK. Full speed ahead. The French group, this is LVMH, controlled by billionaire Bernard Arnott, said on Tuesday that sales grew 9% in the third quarter, down from a 17% rise in the preceding quarter. Here's a quote. After three roaring years and outstanding years, growth is converging towards numbers that are a little more in line with historical average.

As far as the aspirational customers, and particularly in the US is concerned, we have reported already some pressure on that front in the first half of the year. And unfortunately, there was nothing new there. So this really surprised me. Next chart on, please. So this is directly from the report. And they break it down in the US, Japan, Europe. That's great.

And what the heck happened in the United States? And more, what's happening in Japan? Japan, the stock market. Do you know the Japanese stock market is kicking the shit out of every asset class in the United States and more what's happening in Japan Japan the stock market do you know that you know the Japanese stock market is kicking the shit out of every asset class on the in the world this year do you know that I know that you told me I mean uh the Nikkei the Nikkei is going gorillas right now so that's that's what accounts for that I think it's very very simple um look I'm going to tell you that United States is a stimmy story when they say the aspirational customer here's what they're really saying

these are people that in normal times are not buyers of Louis Vuitton merchandise maybe they buy themselves one thing every five years like they buy one bun bag or they buy like one

piece from Louis and that's their Louis bag. That's the aspirational. The aspirational customer thought it was a regular customer in 2020, 2021, 2022. It was retail therapy. It was people that were getting a lot of assistance. And there was also a stock market bubble and a real estate bubble. So that aspirational customer, I think, is not coming back until the next bubble. And it could be a while, given where interest rates are right now. So Louis has to rely on their regular

customer. And their regular customer is doing just fine. And I think that's reflected in these results and the results that we're seeing elsewhere. You know what we're going to go back to now? Remember the term affordable luxury? There's nothing affordable about real luxury. The prices have doubled. Chanel doubled their prices. I have insider knowledge in my home about all this stuff. So I'm just going to tell you, about all this stuff. So I'm just going to tell you, like,

it's not affordable luxury at all, uh, in regular luxury. Why did Lululemon make an all time high? Uh, was that yesterday? Getting added to the S&P 500. Why is that company on fire? It's more expensive than,

than stuff that you would buy at the gap, but it's an affordable luxury. It's something people aren't going to stop doing. Like it's not luxury luxury. It's something people aren't going to stop doing. It's not luxury luxury. It's just nicer than. And that's what's going on right now. And the stocks that are working are the stocks that are answering that call. People don't necessarily want to stop shopping. We found out from retail sales numbers. They blew it out, retail sales today. People are not going to stop buying. They're in the mode, but they're going to stop buying Louis Prada, Gucci. So here's what they stopped buying. It's actually not so bad. They

stopped buying wines and spirits. They stopped spending stupid money on champagne. Stopped buying watches. Good. Good. Next chart, please. Stopped buying luxury watches. So, all right. So wines and spirits is getting demolished. Again, I don't know exactly why, whatever. Maybe the stimmy's over. People aren't popping champagne. So, all right. So, wines and spirits is getting demolished. Again, I don't know exactly why. Whatever. Maybe the stimmy is over. People aren't popping champagne. Rich people on Ozempic. So, yeah, there it is.

But fashion and leather goods is still growing solidly, up 16%. Perfume is – I mean, it's still fine. Watches are up 9%. So, it's not that bad. It's just wines and spirits got crushed. The stock, though. Stock's under pressure. Next chart, please. That's year to date.

Why are we comparing it to the S&P? Just because? I don't know. Just because. Okay. I'd be interested to see it versus Europe, but it's okay. This is like really the only true luxury play. There are two others.

Apple. Yeah. For me, that's a different category. Kering, which owns Gucci and a bunch of other brands. And there's a third one, Richemont, which owns Cartier. But they're all based in Europe, trading in the United States as ADRs. But LVMH is like the real bellwether for the group and probably always will be. So it's in a 30% drawdown.

Since Josh said that he likes luxury, he doesn't like Dollar General. That's right. Listen to this. I didn't buy the stock. Listen to this. I saw a great survey from John Huber. Buffett was describing the power of Apple, speaking of Apple, and said, would you rather get $10,000

or give up the right to own an Apple product for the rest of your life? You know Warren Buffett said that. I said he took that from Warren Buffett. Oh, God. Okay. So he did a poll. It was like over 1,000 votes. 49% said, I don't want $10,000.

I want Apple. Yeah. And I would have bet it would have been higher. That's pretty wild. Yeah. 100%. There's no other brand like that. I pulled this from what JP Morgan said last week, just on the consumer overall, quote, consumer spend growth has now reverted to pre-pandemic trends with nominal spend per customer stable and relatively flat year over year. Cash buffers continue to normalize to pre-pandemic levels with lower income groups normalizing faster. Makes sense, right?

End of period, I don't care about any of this. So if you think about this, again, this aspirational consumer, they are calming down because the things that affect them are things like gas prices and rates and credit card rates, and none of that is going in the right direction. So luxury will be fine. Luxury always has a built-in customer. They're just not going to have the whole world as their customers. One more on this. This is watches. This comes from Matt Phillips from Axios. Luxury watches are now down 35% from the peak, which you guessed it, January of 2022. This was basically an interest rate slash crypto story, the whole way up and the whole way down. Actually, if you were to overlay interest rates, it would probably look pretty obvious where this is going

next. It is not about the rebound, I would say. What do you think about this? This is like Rolexes and Breitlings and... oh, we lost your audio. Sorry. It's crypto. It's startups. It's free money's gone. So it's all that. Free money's gone.

It's all of that. All right. Next thing. Economists have flipped. So the latest quarterly survey by the Wall Street Journal, business and academic economists have lowered the probability of a recession within the next year from 54% on average in July to a more optimistic 48%. That is the first time they have put the probability of a recession below 50% since last summer. The median probability was 50%. So basically now it's a coin flip, but understand

there was a hundred percent, excuse me, a 65% certainty of recession as recently as, what does that look like to you? Late 2022? Yeah. Josh, do me a favor. Go turn your TV off. Oh, all right. All right. And while he's doing that, chart off, please. So listen, you got the data, the evidence ostensibly that they're looking at. It's changing. It's changing. I was talking with Benton and Animal Spirits. There's got to be a point. changing. I was talking with Benton and Animal Spirits. There's got to be a point. Now, like everybody else, I've been like, well, listen, it does really take a while for interest rates to filter their way through the economy. It just does. It doesn't happen overnight. However, at some point, you have to consider the possibility that maybe, just maybe, the economy

can handle 5%. And so at some point, you got to throw in the towel. Now, I'm not pounding the table that it's over, mission accomplished, we did it. But you have to be open-minded to it. Look at the numbers that we saw today from retail spending. Look at the jobless numbers. Look at the employment data. Wages are coming down. Inflation is coming down. People are still spending.

There's reasons to think that they just might pull it off. In spite of themselves, Yeah. Yeah, not because they nailed it. Not because they nailed it. It's just the situation that we're in. There's enough consumer demand fueling the demand for workers. And I'm sure it's not forever, but it is the case. Well, guess what? The story that we've been telling ourselves, I think you maybe got to pick another story. There has to be something that comes in and disrupts and there very well might be, but I don't think it's going to be simply the cost of capital increasing. It just, we've, we've done that already. So I have some more stuff from Matt Phillips on this

at Axios and Matt's been on the compounder friends, great reporter. Unlike their counterparts and other rich nations, Americans have been burning through their pandemic era cushion of extra cash, having a smaller ring. Oh, so reports from the New York Fed and the International Monetary Fund last week spotlighted the divergence of US savings behavior from that of comparable companies. The New York Fed said since 2022, the US savings rate dropped below the pre-pandemic average, while savings rates all over the world are still higher than where they were before the pandemic. This is really remarkable. I think the US labor market is probably stronger than elsewhere in the world. But I just think Americans are Americans.

68% of the economy is consumption. This is what we do. We buy stuff. It's not going to be the case that all of a sudden everyone stops spending at once unless you have a financial crisis. But those are so rare. unless you have like a financial crisis, but those are so rare. And I think because in the last 20 years, we've gone through the pandemic and before that, the great financial crisis, we overweight the probability of an environment where everyone all at once decides

to stop spending. But it's just, it's like, it's historically, it's not the thing that, that normally happens. Let's put the chart up. But Josh, don't you think it was reasonable to expect if you, if you told any investor, I chart off, hold on. If you told any investor that the 10 year or forget about 10 year fed funds were to go from zero to five and a quarter that the housing market would freeze over, you would probably guess, oh, well, something's got to blow up, right? Like something in the banking system, something with-

Yes, yes. And I think what we all learned is that somebody says, how could it not blow up? The Fed's going to take interest rates to 5% plus and then tell us month after month that they're leaving them there forever, how could something not blow up? Well, we know why. Now we do. Hold on.

Now we do. Of course. We know everything now. The question to ask is, well, how reliant is the consumer on overnight interest rates? Not at all. If the response is not very, then that's where you get to where we are now. But most of us weren't asking that question.

So I don't think, yeah, I just don't think we considered the shape. Well, we did say consumers have never been better prepared for a recession. No, we've said that. We've said that a lot. We've said it a million times. If there's going to be a recession, you couldn't be in better shape for a recession.

Put the chart up. Household savings compared to pre-pandemic norm in select advanced economies. So what we're showing here is Spain, France, Germany, Italy. All of these countries, you see their savings rate relatively stable, hovering around, let's call it 3% since 2021. The United States saving rate is hilarious. It looks like half of a McDonald's Golden Arches. So it goes from zero, USA. During the height of the pandemic, it gets up to about 7%.

And it's not really savings. That's like basically payments from the government, the pandemic, it gets up to about 7%. And that's not really savings. That's like basically payments from the government, but fine, whatever. There was also nothing to do other than buy workout equipment. And now it has now plunged through the zero line, chart off, and savings rate is negative 2%. Unique among Western developed nations. That's really interesting to me. I don't really have a great theory on it. One last thing I want to show you also from Matt.

This is US real personal spending on pleasure boats. So you and I are in here because jet skis are part of it. I mean, I would have thought boats would be interest rate sensitive. It's not exactly as though people show up to the boat show at Javits Center with a briefcase full of cash. There is borrowing, maybe not for everything, but at least at the high end and probably the middle of the road. Doesn't matter. When does this turn down? U.S. real personal spending on pleasure boats this year, 23, I don't know if this is annual.

This might be quarterly. Whatever. 23.4 billion pre-pandemic. It was like 15. Well, I bought the top. I mean, are we all pirates now? Not to brag, but no, Trump icon. You bought your jet ski at the top.

Literally the top. Trump icon. There is that line, that recession line, that's before and after. The world, we are living in a different world after the pandemic. We just are. Everyone's working from their boats. I'm not saying that this chart is going to permanently stay that way, but with so many industries and so much that we talk about. So retail sales today, next chart, please.

So I don't know. What the hell is going on here? Do you think it's appropriate for economists to come off their previous estimates of the likelihood of a recession given all of this? Yeah, I think so. Or, and hear me out, they could fight this until it turns back around, which is what a lot of people will do. They could say no, but and come up with conditions and qualifiers.

And then eventually it'll, it'll, uh, I don't know. I don't know. I don't know. I don't know what to say about it. Let's talk about the bond incinerator. Um, I made this chart of TLT, August, 2020 from the peak to today. And it's worse. Holy shit.

You know what? My bad. I mislabeled this chart. That's the S&P 500 during the dot-com bust. Sorry about that. It's as bad. It's down 50. The S&P, I think, was down 51% during the dot-com bust.

Obviously, the NASDAQ was much worse. And I think what you're showing is that TLT has had an equivalent sell-off in percentage terms. It's not, obviously, as many dollars. How big was TLT at the peak? $30 billion? Not even close. Next chart, please. And so you say, why aren't investors panicking?

We spoke about this last week. And so you say like, why aren't investors panicking? We spoke about this last week and there's two reasons. Number one, to Josh's point, there's $38 billion in TLT, which is actually- That's it? No, but Josh, that's close to an all-time high. In January 2022, there's only 20 billion. So this is the thing that's confounding people. It's like, how are assets under management going up when the price just continues to bleed and bleed and bleed and bleed? Does anyone, let me ask you a question. Does anyone in our world in wealth management use actual 30-year treasury bonds in separate

accounts for clients? It can't be all retail. No, I know. This is the ETF. I'm asking, though, to any large pools of capital and wealth, like do any of the $50 billion, $100 billion institutions or bigger utilize actual treasury bonds in separate accounts for clients? Or is everyone either using a mutual fund or a TLT just for long-term bond exposure I'm talking about, which admittedly is a small slice of people's allocation. Yeah, I don't know. I think, yeah, that's a good question. I don't know anyone that does. But we were talking about, we were wondering last week, how is money still going in?

Well, wait. Here's why I'm asking you that question, though. Because if you, let's say you have a 4% sleeve of long-term treasuries, and's your like disaster hedge right i know it's the disaster this year but i'm saying like that's what you're using it for if you own that in actual i was going to say physical if you own that in actual treasury bonds that have a maturity date you kind of can like just live through it easier than if you own that through TLT, where it's just in your face all day how much that ETF is declining. I know the asset value will reflect the decline no matter what form you own it in. But if you keep saying to yourself, well, if I don't sell until the bond matures, I

can't lose money, it's sort of true. You think people are using- You think people are- Oh, I'm asking. I don't- 20-year maturities in. I don't know. But behavior – No, I don't. 20-year maturities in SMAs?

Well, somebody is. No, not in SMAs. Not in SMAs. Okay. That's what I'm asking you. I don't know the answer to that. I don't know anyone doing that. But behaviorally, could you see that being of some benefit to just owning –

Dude, it's like, oh, great. My 2038 bond, yeah, it's trading at 63 cents of the dollar, but by never selling it by 2038, 2030. Yeah. No, I don't think so. I hear what you're saying, but not in this case. So, so the question is, so, so how is money still piling? And well, because bonds are much more attractive than they were. Ben and I were talking about this today, the 30 year, if, if rates were to go up 50 basis

points, they would fall, whatever, 4%. But if rates rise 50 basis points from here, the thing would fall 4%. That's not the actual number. But if rates fall 50 basis points, it would go up like 13%. The risk-reward is asymmetric. It's an asymmetric. I'm so glad you brought this up too. Here's what's different between stocks and treasury bonds. If you buy a stock, let's say a high-quality stock, and it gets cut in half, right, like the way TLT did, there's no guarantee that it's a better buy down 50%. It could be down 50% on its way to zero. It's going to be company-specific specific and there's so much uncertainty. If you buy a portfolio of treasury bonds, I don't give a shit what the maturity is, and it gets cut in half and it's

US treasury bonds, either you're predicting World War III to avoid buying it or it's an obvious no-brainer. And that to me explains why there's still 38 billion in TLT and that AUM is at a record high. Oh, I think it's an obvious. Because it's not the same. I think it's an obvious no-brainer. It's not the same as stocks getting caught in half. It's an obvious no-brainer, not in the sense that it can't go down another 15%. Who's to say?

I don't know. No, it's that who gives a shit if it goes down another 15%. But if it does, good. Buy more. That's right. I'm with you on that. I think there's a lot of rebalancing that explains the inflows into TLT also. So, wait. Hold on. There's one more chart. There's one more chart. There's a red of rebalancing that explains the inflows into TLT also. So wait, hold on.

There's one more chart. There's one more chart. There's a red and a black line, please. There we go. Okay. So again, I wrote QQQ daily change, my bad. That's the S&P 500. But this is the daily change during the dot-com blowup.

So yes, there have been some really bad days for TLT, but it's not disastrous days. You know what I mean? There's not like back-to-back down 5% days like there was. It's a grind. It's a grind. So it wears you down. But I want to talk about, I want to get back to this idea of people thinking, understandably so, that rising interest rates must be bad for the stock market, right? Because cost of capital, investor preference, all that sort of stuff, which intuitively makes sense, but it's just not true. So Brian Belsky shows the S&P 500 average rolling one-year performance based on the year-to-year change in the 10-year treasury yield. And actually, huh, look at that. It has averaged 13.6% when it's rising and 6.5% when it's falling.

I'd like to solve the puzzle. Wait, hold on. Last thing before you solve it. And you might say, well, we've been in a declining market since 1990. Well, not really. Next chart, please. There's been multiple periods. So the shaded areas, as you can see, indicate where interest rates have risen. There's been one, two, three, four, five, almost nine of risen. There's been one, two, three, four, five, like almost nine of them. There's been a lot of periods where interest rates have risen. Yeah, they've been bad. There have been – right.

So go back to the previous. So this is basically saying the year-to-year change in the 10-year treasury rate versus the S&P 500 average rolling one-year performance. Right. So we're saying like, what is the optimal time to be in stocks? Well, we know that it's when bonds are between 50 and 100 basis points because that's when there's just nature. No, no, no, no, no, no, no.

No, Josh, higher than the year before. Oh, 50 basis points is higher than the year before. It's not the absolute level. So again, this is, you would think, yeah, exactly, there's a Facebook. All right So again, you would think, yeah, exactly. There's a Facebook. All right, I have no opinion then. Wait, now I have no opinion. It's a Facebook. I think because when rates are rising, things are generally getting better with the economy, maybe. That would be an explanation. What do you think? Well, throw that chart back on. Let's look at periods when the market, when the interest rates have been rising.

So 2016 to 2018, well, that wasn't a great year. That wasn't a great period for stocks. We had a tightening cycle then. What do you mean? 2017 was Trump saved America, remember? That's true. 16 and 18 weren't great. We had a massive tax cut.

It was 2017 was hot shit. Listen, I don't know that I have a great explanation. All of this is to say, just because interest rates are rising doesn't mean you sell all your bonds. That's all. We have Belsky coming on soon and he'll explain it to us. All right, what's next? All right, let's look at investment grade maturity by sector versus high yield.

So what this is showing is US investment grade share of bonds maturing in 2024 by sector for investment grade and high yield. So what this is showing is US investment grade share of bonds maturing in 2024 by sector for investment grade and high yield. And of course, high yield is just, you're not getting a 10-year loan if you're a high yield company, which actually helped them, which helped them a lot in 2022. But eventually, so this is where it's going to matter. Do rising interest rates, do rising overnight rates impact the consumer directly? Well, sure. If they're buying a car, if they're buying a house, obviously. But in other ways, there are indirect ramifications. And this matters.

Like rolling your bar and cause at much higher levels, it absolutely matters. Right. Yeah, there's no way around it. It's just it takes time before it takes effect. Next chart. What's the next one? So this is the S&P 500 versus the Russell 2000. What we're showing is the S&P, this is from Bank of America. The S&P 500 debt is maturing in manageable chunks, but not the Russell 2000. So you wonder why are Russell 2000 companies under pressure? Well, here's why. This is not a mystery. Look at the maturities. So you're going

to hear this term a lot in the coming quarters, maturity cliff. And there's a lot of debt that has to be rolled. And unfortunately for the Russell 2000, and I think rightfully reflect, by the way, Russell 2000 over two years, it's down 21%. The S&P is up like five. 1%. The S&P is up like 5%. Next chart, same thing. Rightfully so. This is the share of high-yield market maturing within 36 months. Maturity wall. Okay. If interest rates stay where they are, if they stay higher for longer, these companies are going to be in a world of pain. So that's what the bankruptcy attorneys are waiting for. And I have a good friend who's a bankruptcy attorney. And he's like, we were very slow last year. This year, we're not as slow.

Next year, we're canceling our vacations. So that's the way they view the markets. They are following these focus lists of companies that are about to become really profitable clients. So I want to say one more thing. So for the companies of the lower quality and the smaller size, like I was listening to Delta's call, 89% of Delta's debt is long-term fixed. 89% of it with a weighted average interest rate of 4.5%.

They're fine, right? All of those companies are better than fine. Yeah, you're looking in the wrong place. But the non-Deltas of the world, those companies are up shit's creek. And also, not to get into this can of worms, but at some point, doesn't US government borrowing matter? All right. We have eight minutes left. We're not going to do that today. Rite Aid just filed for bankruptcy. So you're going gonna see a bunch of those all right uh can we spend one minute on crypto yeah what is this what's the latest bullshit with this uh grayscale thing so it was a rumor some somebody somebody jumped the gun and said oh so i know

it's not the sec declined to appeal the ruling that grayscale won over the weekend everyone was saying it's only a matter of minutes now until we get an actual ETF. And then on, was it yesterday, somebody spread a rumor or maybe did it on purpose or whatever that BlackRock got their spot Bitcoin ETF approved. And then BlackRock said, no, that's not true. And now what? What did I miss today? Nothing today. So the spike from 28,000 to 30,000 basically went away. But Bitcoin's at 28,500. It was at 26,500 over the weekend. So it was Cointelegraph, which is a media company in the crypto space, put out a tweet and the price of Bitcoin ran up $2,000.

But it had already been acting well. But it went from 28 up to 30 and back to 28. The thing that I want to discuss real quick is Larry Fink was on Fox Business yesterday, and he described it as a flight to quality in crypto, treasuries, and gold. I almost couldn't believe my ears. I love it. I love it. He hated crypto so much whenuries, and gold. I almost couldn't believe my ears. I love it. I love it. He hated crypto so much when it first came out.

But is this just to get- I really love it. Is this just- I mean, it's a lot of money. Yes. Like, just to get $10 billion into- It's not going to be $10 billion, homeboy. It's going to be $100 billion.

It's not going to be- Into iShares? Into iShares ETF? You don't know that. Listen to me and look into my crystalline blue eyes when I tell you. No. BlackRock is going to win. They're going to have a 50 basis point spot Bitcoin ETF that takes all the money, all of it.

It will be no different than GLD. It will be no different than SPY. You know the assets in GLD? It will be a great – it's going It'll be a great business for BlackRock. You know the assets in GLD? Not much these days. 50 billion. Okay, but what's the next closest gold fund? 6?

2? I don't know about that. ETFs are a winner-take-all business in the major categories. No, it's not, dude. Every single asset manager has $10 billion in an S&P 500 ETF. It's not true.

Is that a great, at three basis points, is that a great business? No, I don't think, but you're moving the goalposts. Okay, I'm saying- You might be right. You might be right, but you might not be. Who's going to beat BlackRock at this? Cathie Wood? Grayscale?

I just, it's hard for me to picture them not winning. They'll go to the lowest price. They'll have the highest security. They'll market the shit out of it. You won't be able to avoid their marketing. All right, let me ask you this. Let me ask you this, because there will be fee pressure all over the fucking place. Yeah, definitely. From them. From them. In two years, is a Bitcoin ETF under 20 basis points? Oh, that's a good question. Like how fast will that normalize to what other category killer ETFs have become? In other words, I guess the reason why I say this is I can't believe that Larry Fink would say that just because he's trying to shield the Bitcoin ETF. Maybe I'm naive.

I mean, maybe of course he is. just because he's trying to shield the Bitcoin ETF. Maybe I'm naive. I mean, maybe of course he is, but. I mean, he did like five years of ESG shtick. That's true. All right. Because that, I mean, this is their job. You're right.

What would you be doing if you were Larry Fink? You'd be talking that talk. This is, we're all working for a living. Let's talk, you're right. Yeah. Let's talk about the non, the other bubble, the non-AI bubble. Carl Quintanilla tweeted, Bank of America on GLP-1s. Now we're calling them GLP-1s?

I just discovered this phrase, this acronym two days ago. What does it stand for? So it's like the thing that it's getting inhibited so that you don't want to eat and drink and smoke and be out of control. Right, but they want to like – there's going to be like 10 of them. There are three of them or four of them right now. There are going to be like 10 of them in the next year. It stands for a glucagon-like peptide. Okay, sure.

All right. So the GLP-1's returns this high suggests a story has become obvious, popular, and is likely in its final innings. Extra innings are always possible, but chasing here is really hard. And they hashtag Eli Lilly. Look at this. I agree. I agree. So it's long XLV versus short the disruption risk. The disruption is stocks have gotten killed. And we don't have this chart ready, but if you want a cautionary tale, why not to chase a hot health theme? Ladies and gentlemen, may I present Moderna.

Oh, I forgot. Yeah, I saw that chart today. Moderna is trading like AMC if the CEO was also smoking crack on Twitter. I can't even describe how bad. It's down 80% from the approval of the drug. It's like round-trip the whole thing. It's lost 80% of its market cap.

Moderna, Johnson & Johnson, and Pfizer. I mean, Johnson & Johnson is a little bit different. If you need a reason not to go all in on GLP-1 drug stocks, Moderna. Okay, make the case. I'm going to do this really quickly. ITA, this is defense. We just got an earnings report from Lockheed. It was just okay, nothing special. Lockheed is the third largest component of ITA.

John, you want to pop that chart? Lockheed is the third largest component of ITA. John, you want to pop that chart? This is the 10-year look at the – I guess an iShares Aerospace and Defense ETF. And I know this is going to work because I just sold it a couple of months ago. This has been acting like shit all year. It's not a secret what? No, hold on.

Hold on. It's not a secret what no hold on hold on it's not a secret why anytime there's debt ceiling stuff going on in congress all of these aerospace and defense program spends look like they're going to be at risk but they never actually are we have an unlimited amount of money that we love to spend on rockets and bombs and engines so uh i think that thematically, unfortunately, for the next couple of years, defense is going to be a hot theme. We seem to be shooting off a lot of rockets and bombs and missiles in the present environment. That doesn't look like it's going to stop or that needs to be replenished.

Here are your top, I don't know, 12 holdings. RTX, which formerly was known as Raytheon, is 17%. Boeing is 17%. That's probably not great. Lockheed Martin, Northrop Grumman, General Dynamics, L3, Textron. I don't know any of these companies well enough. I just know I want to be in the category. I'm probably going to have to buy this thing back.

Okay. Well, I just scrolled through all of them. They all look like trash. Because there's a debt ceiling debate currently underway. It will not last forever. These stocks will begin to trade on what they should trade on,

which is our endless capacity for war. Okay. Next. Mystery chart. Watch me get this first try. You're not going to. This does, is this, you know what this is, Josh? This is what you would call a bottoming process. Is this a stock?

Would you not call this a bottoming process? I would. Next chart, please. That's a daily look. It's an inverse head and shoulders. And this is a weekly look. So, you know, not exactly higher lows, but it's shoulders. And this is a weekly look. So not exactly higher lows, but it's, again, this is a weekly. So we're going back to the summer. So now back to the

daily. Are you going to give me a clue? Now back to the daily. Okay. This is a ratio chart. So it's the denominator. Small versus large. The denominator is the S&P 500. the denominator is the S&P 500. Okay. And the numerator, which is in the process of bottoming, is a company that is one of the iconic American brands. Oh, bottoming versus the S&P.

I hate these. And bottoming in general. You don't need the denominator. Disney? It closed. I hate these. And bottoming in general. You don't need the denominator. Disney? It closed at the highest level since August 22nd. You got it. It's Disney.

Are you in it? I mean, it's one of my smaller positions, but whatever. It's got earnings in too. You see that it looked like it was bottoming versus the S&P in August also, right? Josh, it's a process. It's a process, my friend.

It's early in the process. Alright. Hey, guys. Did you know that tomorrow and every Wednesday for the rest of your life, there will be a brand new episode of Animal Spirits on your favorite podcast player? That's Michael Badnick, Ben Carlson, my favorite podcast. Make sure to listen.

Later this week, we'll have an all new Ask the Compound. If you want to get a question to Ben to be answered on air, here's how you do it. Send an email to askthecompoundshow at gmail.com. Duncan and Nicole read all the emails that come in. Speaking of which, great job on the show today gmail.com. Duncan and Nicole, read all the emails that come in. Speaking of which, great job on the show today, Duncan, Nicole. Thank you, John. Great job with all the charts. And thank you guys so much for watching and listening. We'll see you soon. Whether you're just getting started as an investor or you're managing a multi-million dollar portfolio, Ritholtz Wealth Management has the solution for you. It all starts with building the right financial plan. To speak with a certified financial planner today, visit ritholtzwealth.com.

Don't forget to check us out at youtube.com slash the compound RWM. Make sure to leave a rating and review on your favorite podcasting app. If you love investing podcasts, check out Michael and Ben every Wednesday morning on Animal Spirits. Thanks for listening. Ritholtz Wealth Management is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Ritholtz Wealth Management and its representatives are properly licensed or exempt from licensure. Nothing on this podcast should be construed as and may not be used in connection with an offer to sell or solicitation of an offer to buy or hold an interest in any security or an investment product. Past performance is no guarantee of future results. Investing involves risk and possible launch of principal capital. No advice may be rendered by Ritholtz Wealth Management unless a client service agreement

is in place.