Will the Fed Buy Stocks? (EP.473)

Summary

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

Date: July 15, 2026
Hosts: Michael Batnick & Ben Carlson
Main Theme: A candid, fast-paced conversation about the wide-ranging state of markets: inflation, interest rates, tech bubbles, “too-big-to-fail” U.S. stock market, AI’s economic consequences, household wealth, and media/entertainment—all with Animal Spirits’ signature playful banter.

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Episode Overview

Michael Batnick and Ben Carlson dissect the current state of financial markets, exploring whether the U.S. stock market has become “too big to fail”—to the extent the Federal Reserve might one day buy stocks outright. The episode covers recent inflation data, volatile tech stocks, AI's impact on employment and the economy, memetic behavior among investors, and the new “normal” for American wealth and retirement. The conversation also veers into side topics like the culture of reading, status symbols, and recent movies, always returning to what matters for investors and the economy.

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Key Discussion Points & Insights

1. Market Turbulence: Banks, IBM, and Inflation

• Bank Earnings & IBM Crash
  (00:56-01:59)
  • Major banks (Wells Fargo, Bank of America, JP Morgan, Goldman Sachs) were reporting earnings.
  • IBM stock plunged 23% after disappointing results.
    • Michael: “It’s one of the 50 biggest companies in the entire world... when a stock of that size falls 23%, we talk about it.” (01:59)
    • Ben: “Maybe this is the doldrums of the summer market.” (01:56)
• Inflation Cools—Interest Rates & Market Reaction
  (02:25-05:14)
  • New data: inflation down to 3.5%, from a previous 4.2%.
  • Debate on whether current rate levels are historically “normal,” with Michael pointing to range-bound yields but warning of potential breakouts.
    • Ben: “5% treasury yield on the 10 years is pretty normal historically.” (05:22)
    • Michael: “It’s the direction, not the level.” (06:13)
  • Interest rates’ movement still causes market volatility, even if levels are not unprecedented.

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2. Tech and AI: Bubble or Not?

• Hyperscalers, Semis, and a “Chart of the Year”
  (06:32-09:03)

  • Massive free cash flows from hyperscalers (like Meta), now being largely redirected to semiconductor companies (“like they have bad information on them...give us all your money or we’re going to tell everyone what you did!” — Ben, 07:07).
  • Concerns about sustainability: Will big techs turn on each other? Has the cash flow cycle peaked?
  • Some movement already: semiconductors have seen large volatility, reminiscent of past bubbles (dot-com, GFC, COVID crash).

• Bullish vs. Bearish: 10 Reasons Each
  (11:32-14:14)

  • Ben shares his “10 Reasons to Be Bearish”, including: circular hyperscaler capex, potential AI slowdown affecting GDP, high retail participation, elevated (though falling) inflation, stubbornly high mortgage rates, and the risk of recession after a long period of expansion.
  • Noteworthy insight:
    • Ben: “...took both of these pieces and I put it to Claude [AI]... Claude said, the bearish arguments are way flimsier because the bullish reasons are happening now...bearish reasons are things that could happen, but they’re not happening.” (14:01)
  • Valuations don’t necessarily signal a bubble: forward P/E ratios for tech are down to decade-lows; Nvidia’s valuation is its cheapest since 2019 despite explosive returns.

• Is There a Tech Bubble?
  (17:19-18:16)

  • Michael: “The only thing that you could say is in a bubble that I think is potentially credible ... is the memory stuff. ... the bubble is the spending by these hyperscalers.” (17:54–17:59)
  • Some specific tech stocks (Oracle, Microsoft) are down significantly from highs.

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3. Earnings, Small Caps, and AI’s Economic Ripple

• Earnings Estimates: Surprisingly Accurate
  (20:08-22:17)

  • Analysts’ forward earnings are within 5% of outcomes about two-thirds of the time—except in recessions. If you want to be bearish, you’re essentially betting on a recession now.
    • Ben: “If you really want to be bearish, I think you’re banking on a recession.” (22:27)

• Small Caps: Secret AI Exposure
  (23:26-24:36)

  • Russell 2000: 24% of index is “tied to AI”; 52% of first-half returns came from AI-exposed firms, especially in industrials as well as tech.

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4. Wealth, Retirement, and the Fed: Is the Stock Market Too Big to Fail?

• Stocks Overtake Real Estate in Household Net Worth
  (27:03-30:02)

  • US household allocation to equities has surpassed real estate for the first time ever.
    • Ben: “This is the new normal...the stock market is just more important than ever. And that’s—we’re never going back.” (29:08)
  • Structural drivers: 401(k)s, IRAs, ongoing secular move from bonds and pensions to direct equity exposure.

• Could the Fed Buy Stocks? (30:02-34:39)

  • Discussion of Eric Balchunas’ Bloomberg piece suggesting the Fed might step in to buy stocks in a major crisis.
    • Ben: “It would not shock me...Japan already did this. China has done this.” (30:41)
    • Michael: “Sending people checks during an economic downturn is the most effective way to fight a recession.” (30:47)
  • They debate the moral hazards and the systemic shift: if stock market crashes force policy responses, we may see fewer long, grinding bear markets—replaced by “flash crash” bear markets that quickly reverse with policy.

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5. The "K-Shaped Economy", AI Doom, and Job Robustness

• Is the K-Shaped Economy Narrative Overdone?
  (34:40-36:26)

  • Wage growth among lower-income Americans is catching up to higher-income, challenging the post-pandemic narrative of permanent, growing inequality. Ben: “The K-shaped economy has been kind of debunked in a lot of ways.” (35:39)
  • Formation of the US middle class after WWII was a historic anomaly unlikely to repeat.

• AI, White Collar Jobs, and the "Doomers" (36:26-40:14)

  • Despite dire predictions, AI so far has coincided with net job creation for software engineers and no visible spike in white-collar unemployment.
    • Michael: “If they could use these models to replace people, they would.” (39:51)
    • Ben: “Corporations prize profits and efficiency over everything.” (39:53)
  • They remain open to a lagging effect from AI—“six months from now, just wait”—but trends haven’t shifted yet.

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6. Bonds, Cash, and Portfolio Allocation

• Bonds Are Back
  (40:14-42:42)
  • Panel highlights a bond “renaissance”: yields for investment grade and high-yield munis are near 5–9%, dramatically better than most of the past 15 years.
    • Michael: “This is like bond investor’s nirvana.” (42:34)
  • Yet many investors remain wary, still “traumatized” by recent bond bear market and content to sit in cash.

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7. Status, Wealth, and Personal Finance

• Status Symbols vs. True Wealth
  (44:22-47:20)
  • Anecdote: the guy with a $250K car but no money for a roof—proof that status and perceived wealth don’t always reflect actual financial stability.
    • Michael: “There’s a word for that person, and it’s moron. That person’s not rich. That person’s a moron.” (46:52)
    • Ben: “But that’s the hard part about understanding who actually is rich and who is just pretending.” (47:06)

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8. Media, Streaming, and the End of Reading?

• Netflix vs. HBO—The Weekly Drop Effect
  (49:44-51:51)

  • Theory: Netflix’s “all at once” release model stunts sustained engagement, while HBO’s weekly drops keep audiences talking, helping shows thrive across seasons.
    • Michael: “After [the Netflix binge], the show falls out of the conversation. HBO puts out one episode a week... so people have been talking about it the whole time.” (50:40)

• The Decline of Reading & the Rise of Audio
  (52:45-58:10)

  • Stark drop in Americans reading for pleasure, but rise in alternative formats—podcasts, YouTube, audiobooks.
  • Hosts admit: “Reading sucks. It’s hard, it takes a lot longer.” (56:51)
  • Ben: “Books are still such a great form of learning, if you will put the time in... most people won’t.” (58:03)

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9. Cultural Notes, Consumer Shifts, and Lifestyle

• Snack Sales Crash & Weight Loss Trends
  (60:36-61:24)

  • US snack sales down 4% overall, sweet snack sales down 17% over 4 years—GLP-1 drugs may be a factor, plus health trends.

• Drinking is Down; Concerts as Modern Recreation
  (61:46-64:52)

  • Alcohol sales are slumping—"People need to start drinking again!" (Michael, jokingly, 61:46).
  • Ben’s story: Dave Matthews Band concerts as an example of modern, middle-class leisure—how recreational spending has evolved for today’s generation.

• Recent Movies & TV:
  (65:12-70:08)

  • Rapid-fire thoughts on new releases—mostly “watchable but skippable”—and generational nostalgia for Adam Sandler and McConaughey rom-coms.

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Notable Quotes & Memorable Moments

• On market reactions to inflation and rates:
  • “Every time the ten-year hits 4.75%, people freak out, and then they go back down..." — Ben (03:42)
• On tech’s cash flow shifts:
  • “It’s like [hyperscalers] are being extorted. Like they have bad information on them.” — Ben (07:06)
• On the bullish vs. bearish split:
  • “The bearish arguments are way flimsier because the bullish reasons are happening now...” — Ben (14:01)
• On the Fed buying stocks:
  • “It would not shock me...Japan already did this. China has done this.” — Ben (30:41)
• On personal finance vs. appearances:
  • “There’s a word for that person, and it’s moron. That person’s not rich. That person’s a moron.” — Michael (46:52)
• On podcasts & audiobooks taking over:
  • “Reading sucks. It’s hard, it takes a lot longer.” — Michael (56:51)
• On the future of economic inequality:
  • “The biggest anomaly in US economic history ... was the middle class being formed after WWII...That was a one-time economic anomaly.” — Ben (35:54)

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Timestamps for Important Segments

• IBM, Banks, and Inflation: 00:56–05:14
• Interest rates debate: 03:15–06:16
• Tech cash flow & meta chart: 06:32–09:03
• Bullish vs. bearish arguments: 11:32–14:14
• Valuation, tech bubble?: 14:57–18:16
• Earnings accuracy and recession risk: 20:08–22:39
• Stocks > real estate, household wealth: 27:03–30:02
• Fed might buy stocks: 30:02–34:39
• Debunking the K-shaped economy: 34:40–36:26
• AI & job market impacts: 36:26–40:14
• Bond yields, cash fears: 40:14–42:51
• Status & true wealth: 44:22–47:13
• Netflix vs. HBO & reading habits: 49:44–58:41
• Snacking, drinking, & leisure: 60:36–64:52

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Final Thoughts

This episode of Animal Spirits shows Michael and Ben at their conversational best: alternately skeptical and optimistic, always willing to challenge “received wisdom” (on bubbles, inequality, technology, or the value of reading). Their central preoccupation—a world where the stock market’s centrality could drag the Fed or Congress into direct support—anchors a discussion full of timely investing lessons, memorable data, and real-life perspective for investors trying to navigate 2026’s bumpy, opportunity-rich markets.

Transcript

[A]

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[B]

Welcome to Animal Spirits, a show about markets, life and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management.

[A]

This podcast is for informational purposes only

[B]

and should not be relied upon for any investment decisions.

[A]

Clients of Ritholtz Wealth Management may maintain maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. It is Tuesday, July 14th at 9:04 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, Goldman Sachs. We had IBM announcing disappointing results. The stock is down 23%. Premium market taking.

[B]

Wait, do we really have to pretend that IBM still matters?

[A]

You. You don't know anything about IBM.

[B]

Nor do I. I know, I know it's coming back, but come on, let's. This is. Maybe this is the Go Go years then.

[A]

How so?

[B]

I don't know. People are pretending like IBM is a market moving event today. It's like, when is the last time IBM mattered as a company? 1993. I know. The stock came back.

[A]

And 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.

[B]

If we're worried about IBM, this is. This is the doldrums of the summer market.

[A]

You're being too dismissive, dude. It's a billion dollar stock. 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 a stock of that size falls 23%.

[B]

Yeah, it happens all the time though. All right, keep going.

[A]

And when. And when it happens, we talk about it. You know this is a podcast, right? For an audience?

[B]

Yeah, I'm moving. I'm moving past IBM.

[A]

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. You don't want to participate? Ben, you don't have to. Then we also have inflation. Inflation cooled. Do you care? You don't 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.

[B]

Okay. Inflation. Cool. Keep going.

[A]

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

[B]

They were not. Every time they move up a little bit, people worry and then they come back down.

[A]

That's, that's where we 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 years. All right, fine. I stand corrected. It's pushing up against the levels that you always, I guess rightfully you deserve some credit. Every time interest rates get to these levels of people talking about it, you're right, they have, have come back down.

[B]

Yes. Every time the third 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, and people were wondering why the market isn't more worried. Now it's back down to, what is it, three and a half percent today?

[A]

Okay, you've, you've been right.

[B]

I'm saying I'm giving them market credit, not myself. But yeah, you're right. But people wait. If interest rates. These are normal interest rates. These are, this is normal. This is not seeing. These are normal rates. Normal.

[A]

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 1, 2, 3, 5, I don't know, six times.

[B]

Yeah, but you need to smack upside the head if you're doing technical analysis and interest rates.

[A]

But. Okay, fine. Well, you know what? I am a more. I am a, I am a believer of buyers and sellers Determining prices and the buyers of interest rates.

[B]

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

[A]

the longer the base, the higher in space. Have you no respect for Louisiana? Fine, let me just answer 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.

[B]

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.

[A]

We can talk about the buttons on my polo for in one second. But if, but if the 10 year goes to 5%, are you still going to like say, oh, rates are normal.

[B]

5% treasury yield on the 10 years is pretty normal historically.

[A]

Okay, all right. So there's your answer.

[B]

It really is.

[A]

So I'm wearing.

[B]

How can we, how can we see this? How can we see a 5% 10 year rate when inflation is coming back down?

[A]

How can. It's not impossible.

[B]

Yeah, I, I, I don't think we'll see it. That's what I'm saying.

[A]

Well, I hope you're right. Okay, and what's wrong with my button? So this is a three button Polo. Certainly you don't button to the top, right? What am I?

[B]

No, you go halfway but you don't want your shirt color hanging open like this. You look a slob. Do two buttons. Come on, button it up there. Two buttons as the. That's way better. You look much cleaner looks. It's a nice looking Polo. Do you know the average 10 year treasury yield is since 1962?

[A]

Doesn't matter. It's the direction.

[B]

5.8%.

[A]

It's the direction, it's not the level.

[B]

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.

[A]

Listen, I just want to talk about these things. This is a podcast where we talk about these things. You're trying to just move past everything.

[B]

You want to get recommendations every time, every time you watch, your mind's about rates. All right. No, okay, let's talk about something that matters. The this chart. I feel 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 for free cash flow for semiconductor companies on here and it looks like a perfect trade off. Th. This is to me so far the chart of the year. But this also, 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.

[A]

Well, this is why a lot of the hyperscalers are getting in the game.

[B]

So. Yes. So Meta, scroll down a little bit.

[A]

By the way, you have a great shirt. Is this new? It's Tropical Bros. Is that a new one?

[B]

Last year maybe.

[A]

Looks great.

[B]

So Mark Zuckerberg tweeted for the first time in I don't know, two years or something he said, today we're releasing Muse Spark 1.1, a strong agentic encoding model at a very low price. It's available through our new Meta model API and in Meta AI and I made a, I made a meme here. I don't can see this. It's all the different angle and teams from Anchorman.

[A]

What's Ben Stiller's.

[B]

He's for the part of the Spanish.

[A]

What's his name?

[B]

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

[A]

price version, his name was Arturo Mendez. I never would have remembered that.

[B]

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 these, any of these companies more profitable if they all just start undercutting each other and it's like wait, we're spending all this cash flow 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 on each other? Because this chart cannot continue. It just can't. A reasonable person would think this, this cannot continue.

[A]

Yeah, I don't know. I don't know. But you're right. This is, this is, this is the chart of the earth for sure.

[B]

Yeah.

[A]

When I say I don't know. I mean I feel very unqualified to have an opinion on how long this can continue.

[B]

I, 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.

[A]

Well Apple, Apple is suing open AI Microsoft. Satya Nadella has, has spoken out against the power that these companies are now yielding. Yielding or wielding? Wielding.

[B]

I obviously the simple answer is that these semiconductors there are, they've already started to fall maybe in anticipation of this that they would be the ones that get hit the worst. Well the hyperscalers have already gotten hurt.

[A]

Bespoke 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. Math, what's that?

[B]

Yeah, I went to sixth grade math. I know what absolutes are.

[A]

There's an audience, Ben.

[B]

Okay,

[A]

so 3.36% 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 in during the COVID crash during the financial crisis and during the dot com bubble unwind.

[B]

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 that surprises me.

[A]

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 a result of the leverage that we keep talking about. So Mike Zuccardi tweeted the Goldman Sachs shared the momentum factor had one of the largest three week sell offs on record. Comparing it to the, to the rest of the market was down I guess 8% or so over the last three

[B]

weeks which is good. Those stocks can't go forever.

[A]

Last week or two weeks. No, it was last week right. When Samsung. Yeah, we're talking about this last week. And I said to Josh, stocks top on good news.

[B]

Right? Good news. That's just not as good as people were expecting.

[A]

So would be fair to to say that this is like a top right? Like maybe the semiconductors got ahead of themselves and are gonna but the question is like is this the top right?

[B]

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 gonna go through the 10 and I want you to let me know what you think.

[A]

Okay?

[B]

Okay. And honestly, it was harder than I thought. So the first chart is a good one to the HyperScaler. So point 1 would be most of the hyperscaler capex is just circular. That's the reason to be bearish. 2 Is the Mag 7 underperforming? They can't.

[A]

Wait, hold on, I just have a quote, you know, just keep going. Who cares?

[B]

The Mag 7 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 Semblison TCAF last week. He talked about how the change in GDP is being more driven by AI and the spending on AI. So if we actually do see a slowdown in spending on 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 three and a half percent. Way above where people think should be reasonable. Right. This is way higher than it was for much of the 2000 and tens. 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, this hasn't mattered yet, but people always 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 2023. We could have 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 had a slowdown. And finally 10. The returns have been too good. 24% annualized since.

[A]

What's that number?

[B]

22. Huh? That was 10.

[A]

No, but what did you say for number eight, I feel like you just talked about returns being too good.

[B]

Number eight was complacency. That's part of returns being too good. So, sorry.

[A]

I mean, it's all part of the same pie.

[B]

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.

[A]

Yeah, I buy that.

[B]

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 this. You didn't include that because the valuations, the valuations that matter, not the CAPE ratio, the valuations actually matter, have been improving forward, forward earnings. Right. You've talked about this is your one reason we're not in a bubble. The Bloomberg had a, had a chart that shows Nvidia's valuation is the cheapest since early 2019 for. On a PE ratio, which is kind of nuts to think about. The valuation just keeps falling as this becomes, I, I guess we, we supercharged the cycle for Nvidia and it got so big so fast that it's now turning into, I, I wonder if I,

[A]

I, I'm very curious. Is the market wrong on this? Like, is Nvidia an opportunity, 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 Nvidia happened in 2024. It's not going to continue to surprise to the upside. We know it's printing gazillions in cash, but we doubt the sustainability of this and we're going to put a lower premium. Like, I think, I think the market is probably right.

[B]

So per my thesis of everything getting pulled forward faster again, Nvidia 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 and Nvidia, I don't remember Apple had the cheap period. Now maybe that is what's happening.

[A]

Wait, can I Blow your face off for a sec.

[B]

Do it.

[A]

You spoke about retail being all in.

[B]

Yep.

[A]

Have you taken a look at. So we have a degen Dow index or it's a fake index. It's like the meme etf.

[B]

Right.

[A]

Looks terrible.

[B]

Oh, rolling over.

[A]

It looks terrible. So look at this chart from Vanda Research via Kevin Gordon via the daily chart book. How's that a 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.

[B]

Do you think that's partly because you can buy single stocks in ETFs now and that's happening more?

[A]

That's what I was going to say.

[B]

Still somewhat surprising, but it's still.

[A]

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.

[B]

So here's another one on the why I didn't include valuations in my thesis on 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 5 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 could say, well Nvidia is a lot of that and. 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.

[A]

No, I don't think so either.

[B]

That's why the only thing. What else did I miss on my. On my bearish reasons? Is there anything else that I missed? Reasons to be bearish?

[A]

I don't think you said the AI white collar potential recession.

[B]

Okay, well we're going to talk about that later. How that. That one is way down on my list of worries because it's not happening.

[A]

Yeah. All right. This is not a bubble. The only thing that you could say is in a bubble that I think is. Is potentially credible to at least argue is the memory stuff.

[B]

Well, it's the capex. You'd say that the bubble is the spending by these hyperscalers. You'd say that is the bubble.

[A]

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

[B]

That's pretty nuts.

[A]

Microsoft is down 35%.

[B]

Wait, can Netflix come back in and buy Paramount now? Since Oracle's down 60%, can. Can David Ellison still afford it? So that's piggy bank.

[A]

That deal's not done. Did you watch the fight, by the way?

[B]

What fight?

[A]

Conor McGregor.

[B]

Oh, no, I don't really watch UFC anymore.

[A]

Okay.

[B]

Not for. I just. It's been a while since I watch UFC. Well, didn't last 10 seconds.

[A]

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 Pablos tweeted.

[B]

Great name.

[A]

Yeah, it really is. The S&P 500x technology index closed the week at a new all time high. I didn't 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 ALF charts. ALF charts. The advanced decline 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?

[B]

I don't have that number.

[A]

Is it 20 or 50? Josh and I were just talking about this last week. I can't quite remember.

[B]

Equal, equal weight also at all time highs. Rsp. Yeah, break if I'm a do my. What did you looking for? The base and the, the uptrend and

[A]

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.

[B]

Huge number.

[A]

So chart kin 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, the estimated EPS over the next 12 months.

[B]

So the question, who cares about what already happened?

[A]

So the question is. All right, well are these estimates any good? Like are they just completely. How accurate, how accurate are they? Should we take them to the bank?

[B]

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.

[A]

So 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 these lines divert is in any meaningful way is when recessions happen. And when recessions happen, the gap is very large.

[B]

This is, 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 a 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. Not 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 recessions. They're good outside of it. But no one can predict the pe. 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, this goes back till 1995. We've not seen something like this outside of like the jump after Covid.

[A]

Well, also we, I, I don't know if that's true or not. We did a log chart.

[B]

Yeah. Fair.

[A]

Because right now you're right. The looking at this, it looks, it looks scary.

[B]

Right. But think again, if you really want to be bearish. I think you're banking on a recession. That's, that's what you have to bank on right now if you really want things to be really bearish and this to get kind of ugly. Even a mild recession, that's what you need.

[A]

So the trillion dollar question is recessions are caused by something. They don't just happen.

[B]

Yeah, but there's a perfect reason for a recession to happen though. AI. I think a slowdown in AI spending can absolutely cause a minor recession.

[A]

Yeah.

[B]

So it's a legitimate think it's a legitimate fear.

[A]

It depends how we're all waiting for that to happen. Feels like.

[B]

Yeah. How long are we waiting for? How long we going to wait for it though? Probably a while. I mean they, the, they haven't, the hyperscalers, if they really want to take this to the next level, they haven't really even Started borrowing that much money yet. I know they're. 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?

[A]

Yeah.

[B]

If they want to.

[A]

There's so many other areas of the market that look so good. Like. Like we just discussed that.

[B]

Make me small caps. Last week we talked about. We. We couldn't figure out why small caps are doing so well. Sonu from the Carson Group and Facts and Feelings podcast has our back. Why is it. Drum roll please. AI he said that's 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. It's a big part of it. So he's saying it's. It's basically industrials and tech stocks and it's a lot of AI exposed stock. Like they're. They're somehow exposed to the AI trade.

[A]

Yes, but the other half is not AI and that's, you know, the index is up quite a lot.

[B]

Right. But that's. Yeah.

[A]

So anyway, good line from. From. So Jason Zweig, 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.

[B]

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. The performance of the fund versus the performance of the investors in the fund. There's still a gap there. And he. He used some work from Jeffrey Patak, who we've. He. Who we've highlighted before, and he talked about how. So Bitcoin was trading at 46,000 when all the ETFs 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

[A]

weighted basis, I don't. I. Not to pick nits, because directionally, I, I definitely believe in. I think it's. Right. This is like an extreme example to prove the point.

[B]

Yes, it is. But I think the point still remains. People chase the hot dot. I think that that's still obviously a thing.

[A]

Holy.

[B]

Some people do it okay. 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.

[A]

Ben, we got the opening bell and IBM is down 23%. Your thoughts? I'm just kidding.

[B]

19. 1987 crash for IBM. Okay, I. I love that the stock market can still do that. How's that? I love that the stock market can still say, you know what? You're going to get punished bigly. You're going. You're just. See you later. Right. 20% plus for a single day.

[A]

Yeah. Not for, you know, not for investors in IBM. But the, the general idea of the stock market is just. It's cold, Ben. It is cold.

[B]

It's heartless. All right, really good chart from Joe Weisenthal. 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 US 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 every. 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 US Household net worth. And obviously this. 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.

[A]

That's never happening. I could, I could. I mean, these lines will cross if there is a bare market.

[B]

But think about how this, this happened to equities in the same decade that housing went on its best run. Ever.

[A]

Yeah, I agree with you.

[B]

Housing kept up a little bit.

[A]

I think that if you fast forward,

[B]

this is the new normal.

[A]

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.

[B]

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 for 401ks and IRAs. Absolutely changed this. And I wrote a whole chapter on risk and reward about the history of equity ownership in this country. So the 1950s it was like 4% of people owned stocks. By 1983 it was 19%. So people were way under invested 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, they were heavily invested in fixed income their way. They were like rules that said you couldn't have more of than like 50% or 30% of your money in certain states in vested in stocks in a pension. Like most of the pensions invested in bonds too. So this is, this is the new normal. And the stock market is just more important than ever. And that's. We're never going back to where that isn't the case. Okay, so Eric Balchunas, 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 55 to 60% 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.

[A]

For years.

[B]

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 it wouldn't, I wouldn't surprise me if it happened. So he says 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 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 401ks and IRAs and Roth IRAs and HSAs and 529s.

[A]

Can I say something?

[B]

So many accounts.

[A]

Speaking of making people mad, that might make people really mad.

[B]

Do it.

[A]

I think that sending people checks during an economic downturn is the most effective way to fight a recession.

[B]

Now you and old Johnny Maynard Keynes think that.

[A]

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.

[B]

The way that you described inflation there, it sounds like it's like a bad guy in Avengers.

[A]

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, like, obviously it will be inflationary to some degree. It's never going to happen because the political impulse will be.

[B]

So yeah, Comrade Batnik, welcome to the socialist side of things.

[A]

I love it. Let's do it.

[B]

All right. He also says rich people just own so many stocks, the top 10% owns 87.

[A]

Oh, wait, hold on, Comrade Batnik. This is a very important. This is a very important thing.

[B]

I agree with you. If you want a slower recession, giving people money, like, you're right, it, it totally.

[A]

But there is, 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, especially for the.

[B]

Especially for those who need it the most.

[A]

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. It's think people, right? It's people, whatever on Wall Street.

[B]

People who will have the means to buy stocks when they're 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 what are the, 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.

[A]

Look at IBM, look at IBM today.

[B]

IBM Liberation Day was essentially a flash crash where the stock market, so this started in 2008 when they, 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 gonna do this or we're gonna cause more pain. The same thing happened in Covid, right? The stock market went down so fast and forced a 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 work, see you later. That's what's that. The market is going to be, that it's going to, you're going to get more way faster downturn. So the market whole like makes people make decisions to do.

[A]

So I agree. And it all works as long as, 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 earnings growth. It really is.

[B]

And guess what? Corporations are really good at producing earnings. Especially when we have a 6% deficit from the federal government.

[A]

Yes.

[B]

All right. The K shaped economy narrative seems to be dying. Mike Sicardi 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 cake 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 pnc, how lower income households are spending more on their credit cards.

[A]

All right, so, okay, so to be

[B]

clear, the whole, the whole idea that the top 10% are spending 50 of the money, that number was debunked. It's not as bad as people think it is.

[A]

It's a lot of the money, but

[B]

it's always been that. I just think the K shaped economy stuff, we took it too far.

[A]

Okay, so the economy is absolutely K shaped. Always has been.

[B]

Yes, it is. And always will be.

[A]

But it's. So I think you're saying just the narrative has gotten too far.

[B]

We took it too far. It's the same as it's always been, essentially.

[A]

Yeah.

[B]

Thing is, if we really want to do a deep, deeper dive on this. The biggest anomaly in US 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. And it was because of the aftermath of World War II.

[A]

Yeah, good point.

[B]

I've got all my yarn on the wall like the guy in. All right, something else that's wrong. For now at least. The AI doomers are wrong.

[A]

Well, if Sam Altman says it, sure.

[B]

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

[A]

think he's just doing some. I think finally the PR people got to him, of course, and said, hey, asshole.

[B]

But Dario from Anthropic last year was saying in six months white collar employment like he, they were making this transplant.

[A]

People started throwing Molotov cocktails at their house.

[B]

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 in 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 Indeed US software development job postings are up 15% since the launch of Claude Code in late February 2025, while 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 roles and there's more jobs available for that. Look at the unemployment rate for ages 20 to 24 in the US 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 the biggest worry that people have so all the AI doomers Connor Sen.

[A]

Wait, question, question, question. Are job postings the right metric here?

[B]

Why would there still be software job postings?

[A]

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 a different chart?

[B]

I don't know. I got another one for you. Connor said. 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 and anything related to AI. So you had all these, all this hiring and then you had this decrease and now it's coming back. It's interesting, 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. It would be so AI doomers are wrong.

[A]

It would be so wrong. It would be so awesome if, if they've, if they prove to just be totally wrong.

[B]

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.

[A]

That's. But that's true. That's true.

[B]

But how long can we keep saying that?

[A]

It I don't know I don't know if, I don't know. I don't know if it's a year or two years. I don't know what the.

[B]

We know that corporations prize profits and efficiency over everything. If they could use these models to replace people, they would.

[A]

If they can, they will.

[B]

I, I just think it's surprising that we haven't seen these. 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.

[A]

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 Ahead of the Curve. And right now they say bonds are offering investors attractive opportunities right now. Now they are a bond shop, but 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.

[B]

Part of the reason Most of the 2010s through the early 2020s it was reversed. Bonds were offering paltry yields.

[A]

People call them rewardless risk. Right. That's, that's how people refer to bonds. Part of. And that's part of the. Well, that's not true. I was about to say that's part of the reason why people flock to private credit. Part of the reason people flock to credit. It's, 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 on 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.

[B]

Right. One in a more liquid wrapper, one of. Not in a liquid wrapper. That. So they Compare rates in Q4 of 2021 to today. And so the range of rates today is probably somewhere in the 5% to 8 or 9% range, depending on your level of credit quality and risk. And the funny thing is that I'm getting constant questions for Ask the Compound about can I just own cash instead of bonds? People are still so traumatized from the bond bear market in the early 2000s 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?

[A]

Well, you can, you can't.

[B]

And 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.

[A]

But the yield curve, yes, the yield curve finally looks normal. You're actually getting paid.

[B]

That's the thing.

[A]

This is like, this is like bond investors. Nirvana might be too strong of a

[B]

word, but people would have killed for these yields.

[A]

Yeah.

[B]

Five years ago.

[A]

Yeah.

[B]

And you, you have a. You just. People still worry about what if inflation and rates. You have a way bigger margin of safety in bonds than you've had for any time in the last 15 years.

[A]

You know, that's so funny. You're 100, right? 80, 20 was a 6. Was, was a new 60. 40.

[B]

Yeah, for a while.

[A]

If you told investors in 2019 who were 80, 20, what would you, what would your asset allocation look like if you could get 5% on investment grade?

[B]

Yeah, 5% high quality bonds. You said sign me up.

[A]

50. 50. Yeah.

[B]

Yes.

[A]

Anyway. All right, we got an email. On this week's episode, you discuss how firefighters and police officers.

[B]

I got a million emails about this.

[A]

Oh, did you keep going?

[B]

Okay, a lot of people emailed about this.

[A]

All right, so why don't you take the lead on this?

[B]

You read this email and then I'll. I have a rebuttal.

[A]

On this week's episode, you discuss 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 3 year salary. I have a family friend who is 58, retired from the fire department after 30 years and collects well over 200K in pension.

[B]

Okay. A lot of people send this to me. Someone even said like, hey, the median salary for a firefighter San Francisco is $300,000, which obviously isn't true. According to BLS, the median pay for firefighters is $59,000 per year. Was in 2024. In California, it's $83,000. And the N. The top 10% is like one hundred and forty. Now a lot of people say, listen, I've heard these stories of people getting overtime and firefighters.

[A]

What about in San Francisco?

[B]

Yeah, I think it was like a hundred something.

[A]

Okay.

[B]

But guess what? Good, Good for them. They. They're literally running into burning buildings. They should be paid a decent amount.

[A]

What was The. What was the tenor of the emails? Like, what were the point that people were making to you?

[B]

Well, I said, how do you. 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 we'll say, 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 and 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.

[A]

But why should true wealth be the goal?

[B]

Well, that's fair. So my point.

[A]

No, seriously, like, is the goal in life to hoard as much cash as you possibly can?

[B]

Well, for certain personal finance people, it is, right?

[A]

I. I know, I know, I know. There's levels to that, right? Like the, the hoarding cash at a million dollars versus somebody with five versus somebody 10 with 20. You know, it's changing all the time, but.

[B]

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's. Who are people going to think is richer? The person with $6 million.

[A]

Yeah. But I would say the person with $6 million is richer because they're living their rich life. As Ramit says.

[B]

Yes.

[A]

That's the whole point, is to use the money to enjoy yourself.

[B]

But I got a good personal finance reminder of this recently. 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. I'm the finance guy. So people talk to me about finance stuff, and he says, hey, I gotta get, like, a new Roof on my house. It's gonna be really expensive. It's gonna cost me like, 50 grand. How should I pay for it? I'm a little light on cash these days. Can I borrow against my 401 to do it? I want to say. I wanted to say sell your car, but anyway. But this is just funny.

[A]

Okay. Yeah.

[B]

Wow. That's one of those things where, like, the status symbol will trump everything in the way that you.

[A]

All right, There's a word for that person, and it's moron. That person's not rich. That person's a moron.

[B]

Oh, yeah, But. But you. Yeah, but that. That's the hard part about understanding who actually is rich and who is just pretending to be rich.

[A]

I'm sure that person has a very high income.

[B]

But yeah, of course, you. You'd have to. Have to have a really nice car. Anyway, I just. I. I thought it was just. It was funny.

[A]

Hey, you know what? As long as he's having fun, okay?

[B]

Exactly. He's. He's enjoying it.

[A]

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. The Redstone.

[B]

Like, I'm so happy to have Comcast out of my life. I had them as my cable provider for years and years and years with their cable box.

[A]

What did you switch to?

[B]

YouTube TV.

[A]

Oh, oh, oh.

[B]

And I'm happy. Never looking, never going back.

[A]

All right, we'll talk about this in a sec. I don't watch YouTube. Do you like the only regular YouTube? I don't mean YouTube TV. I just mean YouTube, the service.

[B]

Do I watch YouTube?

[A]

I never scroll on YouTube. I know. That's like the thing that.

[B]

Oh, scrolling. No, I look videos up. I don't scroll. You're right. I don't use their. Their algorithm means nothing to me.

[A]

Correct. I'm. I guess we're too old for that.

[B]

Yeah.

[A]

So anyway, I was reading about it, and I. I learned. So Comcast is going to split the. 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?

[B]

Didn't know that.

[A]

I think the way that I discovered was Rotten Tomatoes is owned by Fandango. I had no idea. I said, is Fandango good business? And Fandango was spun out. So Verant owns Fandango. Versant was spun out of Comcast, that owns CNBC and the Golf Channel. I don't know. It's weird. Oh, CNBC and MSBC and the Golf

[B]

Channel kind of makes sense, actually.

[A]

And, and msnbc, which is now Ms. Now. Anyway, Fandango. This is what Claude said. Fandango doesn't get broken out separately, but it's the biggest piece a version 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, it's the easy pass of movies.

[B]

Okay. I. I don't think I ever really use it. Yeah, I don't use Fandango.

[A]

Okay.

[B]

Anyway, but people also buy, use them to buy like the video on demand and stuff, right? When movies come out early, pay 25 bucks to buy a movie that just got out of the theaters or whatever.

[A]

So let. Correct. Last week we spoke about get in here. My dog is doing that thing where the, the door is half open. She keeps poking her head in an app and an app like she's gonna get hurt. So last week we spoke about the fact that season two shows for Netflix are crashing, right? And this guy, Anish Munka had a good take. Not earth shattering, but it's obvious. So people were saying that like, part of the reason why these 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 talking about it the whole time. So House of the Dragon, Cape Fear, 2 shows that I am watching on a weekly basis. Guess what I'm doing after the show?

[B]

That's a really great theory. The other part of it is Netflix shows kind of stink.

[A]

Well, there's that, too.

[B]

It's quality.

[A]

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 after. 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.

[B]

They might have to change.

[A]

It doesn't work. So they should experiment with.

[B]

Yeah, they did a little.

[A]

Seems like a radical change. All right. There was a long article.

[B]

House of the Dragon. It's just. I feel like they just pull these random characters that I've never heard of out of midair, like, oh, this is the new bad guy. And this is the new. Like, they just bring people out of. Like, I'm already confused enough. It's. But.

[A]

But it's so good. So episode four, like you this season,

[B]

it's getting a little shaky to me.

[A]

No, no, no, no, no. Hard disagree. The first three episodes were 10 out of 10.

[B]

They were good. And then it kind of has fallen off a little because they're like, hey, by the way, this is the bad guy Now.

[A]

I'm definitely random person. Episode four. Yeah, it's cooled off a little bit, but it's. There's only four episodes, and the first three were tens out of ten. And by. All right. But I agree with you. I have no idea what's going on. I still love the show.

[B]

All right. I'm still watching.

[A]

It's just my recap of episode four. My recap of episode four. I. I don't know. Aegon got hurt. He went. He saw his dragon, and who knows?

[B]

You're not the bad guy anymore. You're the bad guy.

[A]

Yeah, whatever. It's a 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% to 2 in 2004 to 16% in 2023. In 1975, about half of 20something 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.

[B]

Right.

[A]

Books were the way that you learned anything. It was the way that you entertained yourself and similar with the newspaper. So I totally understand.

[B]

There's nothing else to do.

[A]

I totally understand the fears of, oh, no, the medium is the message, and the medium is bing, bing, bing, bing, bing, bing.

[B]

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.

[A]

Well, so. 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. Shows aired on a certain day at a certain time. If you wanted to watch an old movie, you had 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 falling asleep. 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. Idiocracy 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 email me two book recommendations. One was a book about Jerry Weintraub. Who? I knew the name, but I 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 Eleven 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, cancel 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 Weintraub. I'm not going to the point.

[B]

The audiobooks go into a bear market during the summer, don't they?

[A]

Yes, I'M not. So I said I'm not going to the point. No. 1, I'll do the Wine Tribe book. And guess what? I listened to the Wine Tribe book in three days because it's so much easier. By the way. Mild, 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 15 to 175, it tells you exactly how much time you have left in the book. It adjusts, right? So if a book, if a book is 15 hours and you're at 1.7, you know, you're at nine hours or whatever the math is. And it motivates you to, to, to keep going. Spotify doesn't do that, which is kind of annoying. So anyway, I read, I listened to the Jerry Weintraub book and I enjoyed the out of it because I, I walked to Starbucks. That's 35 minutes a day back and forth. I'm driving to the beach, whatever I'm doing like, you know, like you just, you fly through these books. And then you said hey, the Portnoy book is actually, actually pretty interesting. So I said ah, 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.

[B]

It's hard, it takes a lot longer.

[A]

And this is coming from people, Ben. And I love to read.

[B]

Look at all these books behind me. I've literally read all these books.

[A]

This is so like a Franklin Roosevelt book. Are you kidding me that I would. It's impossible.

[B]

It's impossible at our age to have time. You, I think you and I have both benefited from reading. Our careers were benefited because we read so many books and I, I'm embarrassed to say, I probably finished less than five books in my entire college and below career of academics. I. 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 was, I read, I lived in an apartment by myself. My wife and I were, we were dating at the time. We had 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 non fiction book is typically like ideas and thoughts from someone that have been percolating for years and years. And years, and they distill them down into one thing. That's why books are still such a great form of learning, if you will put the time in to do it. Most people won't.

[A]

Yeah, but it's anyway, reading a book too much for time commitment. I love listening to audiobooks. I can't believe it.

[B]

Sorry. I, I still read fiction. I, I am the person who every single night, reads for 20 minutes before I go to bed and helps me sleep. Good.

[A]

For.

[B]

I read for 20 minutes on my Kindle.

[A]

Anyway, I, I guess my take is. I, I, I don't. I don't think it's dire.

[B]

I agree. People can now consume stuff on podcasts and on YouTube if they want to learn. And now LLMs that will help them learn so much faster than it would be.

[A]

There's better ways to learn. All right, real quick, as we, as we wrap up, what's a beach club wave been? Oh, that's me.

[B]

I thought I was gonna say, I don't know.

[A]

You know, it's funny. I thought that. I thought that you were like, oh, 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.

[B]

Ah, okay.

[A]

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.

[B]

Okay, yeah. How about this for waves? I live in a neighborhood of probably 20 houses. We lived 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.

[A]

Of course you wave.

[B]

Do you have to. Do I have to wave to 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 gonna wave at each other anymore. Like, we've just. We've both simultaneously made the decision, like, listen, I see you, you see me. We're not gonna wave at each other every day. Other people, they want the wave every single time, every day. I have to wave to these people every single day.

[A]

I mean, it doesn't cost you anything. I'm a wave guy. Yeah, it's courtesy. Common courtesy.

[B]

Okay, how about the zoom here's? Something I've never done in my life and I never will. I'm never gonna wave after a zoom. Bye. I can't do it.

[A]

I mean. No, that's. Come on. That's silly. Although Duncan's a. Duncan is a big wave guy. So Duncan comes into the office and he gives one of these. It's a. It's a quick. It's like a vibrating wave.

[B]

Okay, I can see that. I like it.

[A]

All right. Kevin Gordon tweeted, in this year's Gallup survey, 11% of US adults currently take GP1. That's shocking.

[B]

Too high or too low.

[A]

And. And it's probably underreported.

[B]

Right? So that number shocks you that. That's high.

[A]

It's so high.

[B]

We need to crank it up.

[A]

It's so high. So we've been talking about the impact on. On different companies. Sells for Smuckers snack division, which includes Hostess. So they bought. They bought.

[B]

Oh, I grew up on those Hostess cupcakes with a little squiggly on them.

[A]

I had. I had a twinkly Twinkie recently. Yep. My. I'm a Yodels guy. I still love Yodels.

[B]

I loved Hostess. I used to grow. I used to grow up on those.

[A]

Anyway, nobody's buying Twinkies. This is the long and the short of it. US snack snails are down 4%. In the past four years, sales of sweet snacks generally have dropped 17%. How about that?

[B]

That's surprising. I guess. There. There are so many other snacks you can buy that are healthier. I guess it makes sense, but.

[A]

So I didn't. I think there was an article last week I miss about the, the crash and 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.

[B]

Yeah. We've been on this crusade.

[A]

Yeah. I will not relent. I know some people don't like, don't like it. I'm thinking of drinking. I don't care. I will not relent.

[B]

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. And when I was in high school, in college, like, a lot of people love going to Dave Matthews Band.

[A]

You definitely hated Dave Matthews.

[B]

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 a Die Hard. There was people who are Die Hard Dave Matthews Band fans. Okay. I had a friend who Went to like dozens and dozens of shows. And I want 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. A cornfield in the middle of Indiana where they had a concert. And I still remember me and my friends shotgunning beers before the concert in a cornfield. Anyway, and it was kind. It was a fun event just to go with like young people your age. It was all college kids at the 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. They got like everything they've done right. Like, it's a grab and go for your beers and your. Like, they. 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 been playing. And one of our friends today I'm a big Dave Matthews Band concert. Come with us with our. One of our couple friends. And here's what I was not expecting. So I haven't been to a Dave Matthews band concert since 2000, 2002. I couldn't believe the number of Die Hard fans there 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 these shows in the intervening 20 years since they were such a huge act. Right. 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 Band jerseys on and all the tour shirts and like they were vibing to every song. And 75% of the songs were songs that I had never heard of before. So I'm expecting to. I'm expecting to go there and get the High School Nostalgia Tour.

[A]

Right.

[B]

Right. I want an marching. I want satellite. I want, you know, they did an 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 or 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 the. This concert was not for Me, it was for the diehards. I was a little peeved that they didn't pay all the hits, but it wasn't for me. It just got me thinking. And I bring this back down 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 like judge these people either. These people were so. The diehard Dave Matthews Band fans were so happy, swaying. And maybe they had, maybe gummies helped. But it just got me thinking, like, oh, these people have been going to multiple concerts a year for a long time. And it just got me thinking, like, I don't know, a hundred 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.

[A]

Yeah.

[B]

Yes, it really is kind of new these days.

[A]

What did you do a hundred years ago? You went to the opera?

[B]

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, I was in college, are now middle aged and they're still doing it anyway. Not my thing, but I watched over

[A]

the past couple of weeks, I saw two watchable movies. So if you see them on the streaming, they're watchable, but skippable. I would say how to Make a Killing is a pretty good plane movie.

[B]

Is that a Glenn Powell one?

[A]

Yes.

[B]

Okay. I did see. He's got some stinkers actually. Surprisingly, the people kind of give him a pass.

[A]

It's an airplane movie.

[B]

Okay.

[A]

And the Mummy. The Mummy was like the Exorcist. It wasn't like really a mummy movie. It was sort of like an exorcist movie.

[B]

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. No, this is a horror one.

[A]

Like that. It was. It was okay. It was totally watchable, but like, you know, also quite skippable. So you're welcome. For your service. For my service.

[B]

Okay.

[A]

All right. I saw. 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.

[B]

This is a date movie.

[A]

This is a date movie. It was made for people our age. It was made for. It is 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. A free movie once a month. So I support the arts. I like to go. I knew nothing about this movie. Like, literally nothing. It was written by Rashida Jones and Will McCormick and it stars.

[B]

They have a good one that called Celeste and Jesse Forever. It's also a marriage, one from 10 years ago that I really liked.

[A]

It stars Seth Rogen and Olivia Wilde 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.

[B]

It was a movie that takes place in one night. The whole movie is one night.

[A]

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

[B]

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.

[A]

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.

[B]

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 asked my. 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, you, son has to watch Alien Earth. It's a show on Hulu and Noah Hawley 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 9 year old, but whatever, who cares? He likes the aliens. It's a little trippy for me. It's a lot of like robot, human, human, robot, cyborg, and it's. But he loves it. Absolutely loves it. It's got 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 to Adam Sandler rom coms for my daughter and I watching our nightly rom coms together. So we did just go with it this past weekend and 50 first dates, which are kind of funny. And the reason why it's just go with it is because Dave Matthews. Dave Matthews is in the movie married to Nicole Kidman.

[A]

Oh, oh, is this the Brooklyn Decker one?

[B]

Yes.

[A]

Yeah.

[B]

I mean, it's. It's pretty. It's funny because my daughter, after watching two Adam Sandler movies, and I think 50 First Dates probably has the. One of the best endings of any rom com that there is. I love the ending of that movie.

[A]

I love that movie. I don't what happens at the end.

[B]

I forget they're on the ship.

[A]

By the way, this movie is 15 years old or 20 years old, so no spoilers.

[B]

He. The whole. His dream is to go to Alaska to study the whales or the walruses 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 movies 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 him 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.

[A]

The guy from Grandma's Boy?

[B]

Yeah. Well, those guys are in him. Nick Swartzen is the in the one. The guy from snl, Deuce Bigelow, whatever his name is.

[A]

Oh, Rob Schneider.

[B]

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 the Sandler rom coms. Next is McConaughey.

[A]

So I've never seen any of the McConaughey Rom coms.

[B]

Yeah, they're forgettable as far as I'm concerned. Okay. All right, Ben, we did it. I'm gonna log off and I'll go watch IBM's stock price chart the next rest of the day.

[A]

I promise I won't bring it up again ever. On the as long as this podcast.

[B]

Also, now that we've buttoned up the Polo. Very nice.

[A]

Looks good.

[B]

Yes. All right.

[A]

Okay.

[B]

Animal [e-mail] personal emails, personal responses. Sometimes Michael responds and I said, wait, I wanted to respond to that too. And we both respond. That's happened a few times.

[A]

I mean, I do 95% of the responding, so you'll forgive me if I don't wait for you to respond.

[B]

That is not true. It's 80 20.

[A]

If I don't respond to the inbox, it will just. It will just pile up. That's a fact.

[B]

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. Job site moved. Your crew needs four more rooms tomorrow. If you booked on your own, you could be left high and dry. But you booked with Engine, found the right hotel with one a click and avoided cancellation fees because Engine lets you do that too. Yes. Change no charge Engine free to join Flexible when plans change, teams travel spend managed Head to engine. Com Flex to get started.