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- [00:00]
Michael Batnick
Welcome to Animal Spirits brought to you by Cullen Capital and divp. Most income strategies make you choose between yield and growth. The Cullen Enhanced Equity Income ETF divp doesn't Unlike strategies that write calls on the entire portfolio and cap your upside every month, DivP strategically covers only 20 to 40% of the portfolio holdings at any given time, meaning 60 to 80% of the portfolio retains full upside potential. And rather than applying that to a broad index exposure, we do it on a concentrated portfolio of high quality large cap value oriented stocks. Value driven income focused, built for the long term. This is DivP and this is how we think about income differently. Today's show is sponsored by YCharts. One thing we're excited about is a new offering from YCharts called Communities. It gives advisors a way to follow research insights from voices they already trust directly inside the platform. Thousands use for daily investment research and client communication. That means instead of trying to recreate the charts or analysis after listening to our show as a wide chart subscriber, you can quickly pull it up and work with it inside the platform. It's designed to make following market commentary feel more actionable and integrated into one's daily workflow. We're excited to be one of the first communities available, helping advisors bring our charts and market commentary into their day to day Y charts workflow. Click the link in the show notes to check it out. Plus get 20% off your initial Y charts. Professional Subscription New customers Only. Welcome to Animal Spirits, a show about markets, life and investing. Join Michael Batnick and Ben Carlson as they talk about what they're reading, writing and watching. All opinions expressed by Michael and Ben
- [01:36]
Ben Carlson
are solely their own opinion and do
- [01:38]
Michael Batnick
not reflect the opinion of Ritholtz Wealth Management.
- [01:41]
Ben Carlson
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.
- [01:55]
Michael Batnick
Welcome to Animal Spirits with Mike Lynn. Ben, if you've been following the show for the past two months, you know that Michael is a kind of a Knicks fan. Based on his attire, would you say 90% of your clothing these days is Knicks related? It's gotta be close, right?
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Ben Carlson
Yeah.
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Michael Batnick
Congratulations to you. It's gotta feel great. You're a die hard Knick. You're not just like a casual fan, you're a diehard fan. So I have a personal finance question. You're a Knicks season ticket holder and have been for how long?
- [02:21]
Ben Carlson
I'm almost crying just thinking about the Knicks. It's been so long. My dad started taking me to games when I was probably my kid's age, around seven or eight. And as much as sports can be an absolute waste of time, and, and it's, it's sometimes I'm envious of, like, Chris, who literally has not a care in the world about what's going on. Right. It's a giant time commitment.
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Michael Batnick
But the mental, It's a mental commitment to you. Like, why am I so mad about that anguish?
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Ben Carlson
Why am I so mad about this? Sports, sport. Sports are constant misery, punctuated, if you're lucky, by a little bit of happiness. Yes, that's what being a sports fan is. But the bonds that it builds between parents and children, between friends. It's like I was about to say, it's all I have. But that's what my dad and I talk about.
- [03:22]
Michael Batnick
Yeah, me too. My dad and I. It's the same thing. And, and yes. So Michigan's won two national championships this decade. It's been a long time between those two. And I got to do it with my kids. That made it even sweeter. So here's my question to you. You're a Nick season ticket holder. I want to bring this back to finance. So you be in. The greatest thing is you have anticipation while I wait for the series to go. Like, so this week you're just on cloud nine all week. You don't have to worry about the games for a little bit. It's great. So you, you will get the, you guys won't be the home team, right? Either way.
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Ben Carlson
Correct.
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Michael Batnick
Okay, so you'll, you'll have game three in New York. How much money would someone have to give you to take those tickets from you? What would be enough money where you'd go? No. Okay, fine, I have to take it. If someone said, michael, I'm going to pay for your mudroom for your tickets,
- [04:03]
Ben Carlson
I'm glad you asked. I'm glad you asked. So one of the benefits of being a Knicks season ticket holder is I am able to get season ticket prices. Tickets are a fortune, right? An absolute fortune. So for round one, my face value was 350. Then I went to 580, then 750, and the finals are 1350. If you were to buy off Ticketmaster, which is like the primary secondary market, it is obviously a lot higher than that. And secondary market, like, if you want tick pick, forget about it. It's bananas. So one of the nice things is I now have flexibility. So, for example, we sold game five. Now there is no game Five for the Cav series. Right. Because we swept them. But we sold my tickets for. I can't remember, $2,200, something like that. And we bought tickets in the. Section 200, were 100. We bought section 200, like the second bowl for 900 or whatever it was. So we got paid a thousand. We would have gotten paid a thousand dollars.
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Michael Batnick
You can trade up for a nice receipt.
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Ben Carlson
Yeah.
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Michael Batnick
So you're gonna be sitting by Chalamet.
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Ben Carlson
No, no, no, no, no, no, no. You're. You're missing it. We would have traded down. So we would have paid. We would have gotten. We would have gotten paid a thousand dollars to go to the game.
- [05:19]
Michael Batnick
Okay, gotcha. I gotcha.
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Ben Carlson
All right, so for the finals ice, my friend texted me. We sold our tickets for game four for $4,400.
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Michael Batnick
Okay.
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Ben Carlson
And I said to him, wait, whoa, whoa, timeout. What are we. What are we doing here? And he said, we spoke about this. I don't remember speaking about this, but fine. So if we are down three nothing, it will be the greatest sale of all time. I'll give him a big, fat wet kiss. All right, but assuming we're not down three nothing. Now I'm a little. Now I'm getting a little bit nervous, right, because we have to buy back in. I'm not missing any games for the finals. We have to buy back in.
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Michael Batnick
Of course.
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Ben Carlson
So what would. What would I sell to? Well, I guess there's your answer. Although I didn't hit the sell button. He did.
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Michael Batnick
Okay.
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Ben Carlson
So I'm not sure. I would not have sold. We know your friends amount 4400. So I will be traveling. I'm going to. I think I'm going to game five, assuming that we're not down, you know, assuming that's not a sweep. If we're down 3:1, I'll still probably go. So I bought tickets for San Antonio. Might be premature. I think San Antonio is going to win, but I'll buy tickets for Oklahoma City if that's the case.
- [06:20]
Michael Batnick
All right.
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Ben Carlson
In any event. In any event, it's a. It's been a long, long time, and I'm feeling good.
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Michael Batnick
Yeah, that. It's a great feeling. It's a wonderful feeling.
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Ben Carlson
It's a great feeling.
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Michael Batnick
All right, let's talk IPOs. Paul Kadraski wrote about IPOs. He talked about. So it's OpenAI anthropic SpaceX. These are going to be massive companies, each of them probably a trillion dollars at least. That's pretty fair to say. I'd Be shocked if the AI companies weren't a trillion, right?
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Ben Carlson
Oh, yeah, yeah.
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Michael Batnick
Okay. He says people aren't focused on the right things. That much new equity supply hitting in a few months creates a math problem. The money has to come from somewhere. Most of it will come from existing holdings. Passive funds will be forced buyers once these names join the indexes, which will happen much faster than usual given exchange. So he's saying, like, what if this is, this is a thing. And there's gonna be a lot of stories about this, like, okay, this is gonna ding, ding, ding. Yep, this is gonna mark the top. The funny thing is, is I'm not worried about where the money will come from. People keep worrying about that all decade. About, like, where's the money going to come from for this? Where's the money going to come. The money always just comes from. People have money. People have more wealth than ever today. The money will be there. I'm not worried about the money. I'm also not. I. I just don't think it's cute enough to say a headline thing like this will be it. I know that's, that's usually how it works historically. I just don't think. I think that's a little too cute.
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Ben Carlson
Yeah, I agree. Where will the money come from? You also have to think about. So there's a lot of smoke around the SpaceX S1, which was, which was filed last week. Their average revenue per user is coming down on Starlink. That was the headline. You know, I love and hate the Internet. I. I hate it because the headlines get all the attention. Nobody reads anything for the most part anymore. I love it because there are still people that do the work.
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Michael Batnick
So.
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Ben Carlson
Oh, Malik somebody who I only recently discovered, he's been writing about the Internet for, for decades. That's the Braun Broadband Bandits book that I'm reading. So he wrote about the ARPU crowd.
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Michael Batnick
He's like, literally, which is first bloggers in history. So it's kind of funny that you just discovered him.
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Ben Carlson
Yeah, I'm a little bit late to that. So there's a lot about the numbers. Right, Obviously. Like what's going on with SpaceX, which is.
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Michael Batnick
Can I read you some of the numbers from Axios real quick while you find?
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Ben Carlson
Sure.
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Michael Batnick
So this is from Axios. SpaceX is wildly unprofitable, reporting a $4.9 billion net loss on $18.7 billion in consolidated revenue. For context, 200 companies in the S and P had more revenue last year than SpaceX. This includes Tesla, whose sales were five times higher. Okay. So if you look just at the surface level, numbers. The thing I love about this SpaceX is that the two narratives are so compelling. One of them is going to be, this is a wildly over like $1.8 trillion company. Are you kidding me? They don't make any money. And the other one's going to be no dummy. It's because they're going to have huge growth in the future and AI and all this stuff like. And both of them are going to sound reasonable. They're both going to make sense.
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Ben Carlson
Yeah, but the, the valuation part is always a lazy argument. So it's a spectrum. Right. Of exit liquidity. This is. You guys are sheep. This is the dumbest shit ever.
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Michael Batnick
Yeah, but the valuation always sounds the future. That's the thing.
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Ben Carlson
No, it doesn't. No.
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Michael Batnick
When you look at the numbers.
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Ben Carlson
Because you, you think people that cite valuation sounds smart.
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Michael Batnick
No, I'm saying they sound smart. I'm not saying it is smart.
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Ben Carlson
No, I don't, I don't think so. Not me. Not to me. Not anymore. We've been doing this a long time. That sounds lazy to a lot of people though.
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Michael Batnick
The valuation is like, you can't argue with the numbers. The numbers are the numbers.
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Ben Carlson
True. I would agree with, I would agree with that. I think people, you're right. The, the headlines and the average casual investor will gravitate towards the headline numbers, the money losing numbers.
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Michael Batnick
There's going to be a lot of throwing, throwing your hands up for this. Oh my gosh, you kidding me? There's going to be a lot of that.
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Ben Carlson
But that's the, it's the same stuff with the macro. People that have no understanding of what's actually happening. They just cite historical numbers.
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Michael Batnick
Right.
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Ben Carlson
Lazy. Okay. So on a spectrum of.
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Michael Batnick
You're right, that's not doing the work. Just looking at the numbers at face value is not doing the work.
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Ben Carlson
Correct. So on the spectrum of dumbest shit ever. $2 trillion. LOL. Which I, I get, you know, it is a lot of money. It's an ungodly amount of money versus changing the world. I'm like closer to changing the world than now. I'm not like, I'm probably like, you know, I'm, I'm Grand Rapids hedging this a little bit. I'm not all the way there because I'm not buying the stock. But we'll talk about in a second. But on the, on the ARPU crash. So getting back to what Ohm wrote, the customer mix explains it. Maritime terminals. So Starlink is Basically broadband in space. There are satellites floating in space that are connecting difficult areas, previously difficult areas to connect to the Internet. Okay. It's a huge Global unlock. Obviously.
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Michael Batnick
10 million customers makes Wi fi better on planes. That's good enough for me. That's all I want.
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Ben Carlson
All right, so maritime terminals, which are shipping vessels, oil rigs, they pay between 250 and $5,000 a month and have no alternative. Aviation is even richer. A commercial aircraft terminal runs 12,500 to $25,000 per month. These customers anchored Starlink's early ARPU. Consumer residential is where the growth is now. It is the lowest paying tier and outside North America increasingly price sensitive. Add satellite to mobile users via carrier partnerships at a fraction of direct subscription revenue and the mix explains the slide from $99 to $66 in three years. Maritime and aviation grow slowly and pay well. Consumer grows fast and pays less each year. Thank you person on the Internet O Malik for looking past just the headlines and giving us the actual story.
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Michael Batnick
So I guess my, my grand repetitive would be like could this also be an Airbnb story where the valuation at IPO is so high the stock just doesn do a lot for a while. Like I'm sure there's, there's going to be a massive pop on day one. I'm sure. But if, if you're like shorting this, you're probably not going to be happy. But if you're going super duper long, maybe you're not happy either. What if that's the, the hedge there? Like Airbnb stock has just gone nowhere since it went public because everyone says the valuation is way too high.
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Ben Carlson
Yeah. So same thing with Snow with Snowflake.
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Michael Batnick
Right.
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Ben Carlson
If you go public at a hundred times price to sales ratio and if you are buying and holding the stock for three years, of course I can't see the future. But probability, historic probability says that's probably not an awesome idea. Might does it's not 100%. Might SpaceX be the one that delivers world changing results? Yeah, but I think most people, most people don't give a. About three years from now. They care about the next three weeks. You don't think they want the term
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Michael Batnick
value DCF calculations on this?
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Ben Carlson
Right.
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Michael Batnick
Right. So how long until, how long until all his companies are under one umbrella though? That's, that's the end game here, right?
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Ben Carlson
Well, they are everything except for Tesla.
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Michael Batnick
That's what I mean. It's going to be all together. Tesla's going to merge with these companies. It's going to be one company, that's, that's the end game.
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Ben Carlson
So SpaceX owns Xai, which is Grok, and they are, I think, trying to buy Cursor, which is not an Elon Musk company, for the record. But how, oh, oh, Twitter, x dot com. How long before Tesla gets absorbed? Who knows?
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Michael Batnick
But here's never going to x.com, just so you know.
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Ben Carlson
Okay.
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Michael Batnick
It's Twitter to me forever.
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Ben Carlson
Here is where a lot of the scrutiny falls. It's with the NASDAQ 100 rejiggering the rules for a fast entry. So previously a company needed to be. I think the term they used was seasoned, whatever that means. I don't think that it was like an X number of days or anything like that. I think it was three to six months. They're going to get into the index in 15 days. And this unlies the, the thing that people are excited about because. And credit to nasdaq. So yes, they changed the rules for fast inclusion, which people are like, ah, this is passive exit lead to liquidity. Okay. But they also protected investors because what they did was. So SpaceX is not going to be selling or issuing a lot of new stock to the public. It is going. So a lot of it is not going to be publicly traded. Elon Musk's portion, for example, is not going to be publicly traded. Okay. Or not going to be available. He controls it. So what NASDAQ did was he said, we've been burned once before with a similar IPO where it was a lot of insider shares being held. We're not going to give you the benefit of the doubt of your full $1.75 trillion valuation. What we're going to do is we're going to do a modified market cap, which is not unusual. We're going to allow you to have three times your float inside of the index. And that's what we're capping it there. So if they float, I'm making this up. If they float $30 billion worth of stock, then the index will hold 90 billion. The market cap in the index will be 90 billion.
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Michael Batnick
Right. It's not gonna be the full value. Right.
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Ben Carlson
I think the actual numbers are closer to, to 150.
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Michael Batnick
There's gonna be a lot of people going, oh, the bag holders here are the index fund people that there's gonna be a lot of that.
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Ben Carlson
So there will be a lot of. There will be a lot of stock that has to be bought inside of the indexes. That is true. So if the NASDAQ 100, we're looking at like 4 to 5%. I mean, obviously it's a, you know, it's a range. So that's a lot of buying. And with a float that small, the number of buyers is a. If you can't see me, I'm holding up my arms. A gigantic circle of buyers, pool of buyers that want the stock and the pool of supply is much smaller.
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Michael Batnick
Right.
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Ben Carlson
So the valuation does not matter in the short term. But could you imagine if it goes up to 2.9 trillion, because of the way they financially engineer this, people are going to lose their minds.
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Michael Batnick
Yes.
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Ben Carlson
There also. There's also like weird cliff divesting, unlocking up of the shares where insiders can sell, but insiders are not selling at the open. This is. They are. They are diluting the shareholders. What's interesting is that they're giving a disproportionate amount to retail investors, which is. Numbers are still being finalized. But anyway, it's certainly, it's certainly. It certainly captured everybody's attention, as you would. As you would expect to do. It's a big deal.
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Michael Batnick
And maybe this will be the first level thinking again, like this. This really will be it. Right? I'm waiting for that to happen.
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Ben Carlson
Could be.
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Michael Batnick
I don't know. All right. Kai Wu, who was on the Compounded Friends with us a couple weeks ago, writes these long. What will you call them, white papers. Is that fair enough to say? I pulled a little. He had an AI disruption paper and he talked about moats and value traps. I just wanted to pull out one thing here that I thought was interesting just to show how hard stock picking is. So he shows the biggest disruptors of all time. He showed how Netflix disrupted Blockbuster, Amazon disrupted Borders, Amazon disrupted Radio Shack as well, and then Google disrupted McClatchy, which I didn't get McClatchy. Is that encyclopedias? Is that a disruption?
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Ben Carlson
Was that Encyclopedia Britannica? The owners, I can't remember.
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Michael Batnick
So he's got a great chart, and you're showing the returns of each, and they're both going in opposite directions. Right. Where these other ones are just fall like a, you know, fall off a cliff. But he also shows the stock prices of these disrupted companies. So Blackball, Street Borders, Radio Shack and McClatchy. And it's funny because as the stock price is dropping, the revenue per share is either holding still or going up still, as these things are getting disrupted.
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Ben Carlson
And that McClatchy has newspapers. Okay, it says right there on the chart. Yeah, that's wild.
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Michael Batnick
That's what's Going to make this stuff so hard about the software companies is like you look at the results right now and you go, these companies are fine. They're reporting great earnings. And then this could happen. That's what's going to make this so hard. And that's why stock picking is difficult.
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Ben Carlson
Yeah. Because the market is, the market is obviously pricing in the market is saying the terminal value is Radio Shack.
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Michael Batnick
Yeah. So we. So every time I see Radio Shack, I think that I had a friend in elementary school and I think we were watching the movie Coming to America, something like that in New York. And there was a Radio Shack on a corner, right. So on each side, each corner there's a Radio Shack sign, right? Radio Shack on one side, Radio Shack on the other. And they show it overhead. And my friend goes, totally serious. That's really weird. Why are there two Radio Shacks in the same corner? Because each sign, you know, didn't get it. Anyway. I don't get was a store on the corner. So each corner had its own sign.
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Ben Carlson
Got it.
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Michael Batnick
Anyway.
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Ben Carlson
Got it, got it.
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Michael Batnick
All right. Last week I talked about interest rate concerns. Okay. John Arnold, very smart, one of the best, maybe the best energy investor of all time. He's on Patrick's o' Shaughnessy's podcast recently. Very smart guy. He said a fire alarm is going off and everyone is ignoring it. And he shows the long term bond yields. I think this is a Bloomberg chart of United Kingdom, France, United States, Japan and all these long term bonds, 30 year bonds are going vertical. Right. We talk about this a lot. People are very concerned with this. All right, I want to talk about that worry, that five alarm fire with this email we got. Hi, Ben, I've noticed that the yield curve is no longer inverted. I haven't heard anyone talking about this. It has been observed that recessions occur, occur not when the yield curve inverse, but when it inverts. Looks like that hasn't happened this time. Harvey's recessionary indicator has experienced his first exception. What are your thoughts? And this is what I want to point out. When the yield curve was inverted, short term yields were higher than long term yields. People were screaming, this is going to be a recession. Because this indicator has always done that. You and I said, wait a minute, this is just the Fed jacking up short term rates. It doesn't have to be that. Right. We were kind of saying, let's pump the brakes on that a little bit. Now what we've seen is a normalization. Short term yields have come down, long term yields have Gone back up. That's a normal yield curve. This is normalization. This is not a reason to freak out people. Okay? I'm throwing cold water on this all day long. This is a normal state of affairs. Long term yields should be higher than short term yields when you're accounting for risk. Because there's way more risk in a long term bond than a short term bond in terms of volatility and interest rate changes and inflation. And maybe, just maybe, the bond market is saying, I think we're in a higher growth and inflationary environment. Listen to this from Warren Pies, another fellow TCAP person. S&P 500 forward sale of growth is projected at 18% over the next 24 months. Historically, this corresponds to 12.4% nominal GDP growth, 6% annualized. Something to consider as yields in the Fed look for new equilibrium. So he's saying we're probably going to have higher economic growth. And what if, what if the bond market is just telling us, you know what, that period, the last 15 years were not normal for interest rates. We're trying to normalize here for higher growth and higher inflation than we had in 2010. Thoughts? That makes more sense to me than the alarm situation.
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Ben Carlson
Yeah, totally. I also think it's weird that everyone, the, the everyone is ignoring it. I know it's just a tweet and he doesn't mean it literally, but I feel like a lot of people are doing the opposite. I think there's actually an overwhelming amount of worry relative to the potential outcomes about rising rates. What I would say though is the, the, the part of the worry that I think is valid is it's not the spread between short term and long term, which are, which are healthy and normal. It's the speed at which these lines are all accelerating. Like, I think people worried, like, what if this doesn't slow down? It doesn't. Nothing has to happen. Okay. Because I was about to say it has to slow down. It doesn't. If the long end keeps going up and we're at, I don't know where the line is, 6%, 7%, I'm going to start to get nervous. Like, I would very much like for this to slow down.
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Michael Batnick
Yeah, we're not going to get there. That's not going to happen.
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Ben Carlson
I don't think so either.
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Michael Batnick
Timestamp, double stamp, triple stamp, not going to happen. We'd have to be way higher growth. And the thing is, here's the problem, here's the psychology behind this though.
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Ben Carlson
You can't triple stamp a double stamp.
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Michael Batnick
Come on. Here's the psychology behind this, though. Everything is happening faster. So when we have these moves, that's what freaks everyone out. Because people are not used to it. When inflation went from 0 to 9, it freaked everyone out. Cause it happened fast. When oil went from $50 a barrel to negative $37 a barrel, everyone freaked out. When mortgage rates went from three to eight. This is just the markets now. People are going to have to get used to things happening faster. And just because they happen fast doesn't mean something is breaking. This is just how markets work now.
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Ben Carlson
You might be right.
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Michael Batnick
Okay. All right, here's the, here's the positive side. I think there's pros and cons to rising rates because obviously rising rates are not good for every, like, borrowing. Mortgage rates are back near 7%. I don't think that's a good thing. Okay, here's the positive behind this Exhibit A chart of the week from last week. Bond yields are historically linked with higher forward returns. So we're looking at the 10 year starting yield. We've talked about this before, versus the forward annualized return. And guess what? The starting yield's a pretty good predictor of future returns for bonds. So you're getting probably 5% now in high quality bonds.
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Ben Carlson
That's great that you're right. That, that's, that is the other side of the coin. And it's a, it's a really shiny side of the coin. Hey, we give a ton of love to chart. Matt, for making a design of these charts as he is, has earned every ounce of praise. That kid is incredible. So is Eric, founding cto, architect of exhibit A. So I just wanted to give Eric some love.
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Michael Batnick
He's the guy behind the guy.
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Ben Carlson
He, he built the architecture that allows Matt to paint. So he's the, he made the canvas and Matt is the painter.
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Michael Batnick
So here's the potential. So let's say you're right, that we do have a sustained rise in rates. So I look, I looked at this like, what happens if we get a sustained rise in rates? And this is the 10 year going back to 1950. And I looked at the total return for the S and P over that time frame versus the drawdown. And now the total return actually is pretty comforting. Like most of the time, stocks are up in these rising rate cycles. This is every time the 10 year had a sustained rise. And what is this?
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Ben Carlson
Oh, one more. Okay, got it, got it, got it.
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Michael Batnick
Okay. Yep. And that also shows the drawdown. And there was, there was a correction in every single one of these of 10%, except for one time and that was 1994. And so every time this happened and some of these are pretty big.
- [24:04]
Ben Carlson
Yeah. It's just supposed to make me feel better. This looks really bad.
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Michael Batnick
But the thing is we're not in a sustained.
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Ben Carlson
Ben's like there's nothing to worry about except for the 40% declines in stock prices.
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Michael Batnick
Well, short term hiccup. But the thing is, is this really. Didn't we already have the sustained rise in rates?
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Ben Carlson
Yeah.
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Michael Batnick
I feel like now we've been range bound forever. Right. So the thing is, is this another till you have a sustained rise in rates? Like, like you said, we have to see 6 or 7% for that to be another cycle up. We already had the one cycle up. Okay. Yeah, you're right. So I think we already had it in 2025. This is another thing from Goldman Sachs. Median annual S&P 500 total return based on nominal 10 year treasury yield. And they break it down by 0 to 2%, 2 to 3, 3 to 4. All these different ranges. Just 1% all the way up to 8 plus. And there's no discerning. There's nothing to learn here.
- [24:49]
Ben Carlson
Well, yeah. When you present the data this way. I don't love this chart. I do think the, the, the direction of the speed of the, of the, of the ten year matters a lot. I agree with you. Just knowing where, what bucket you fall into doesn't tell you anything. But I really do think there's something to the, to the.
- [25:05]
Michael Batnick
I know we can't do technical analysis on interest rate charts. Is that the thing? Like we can't do that, right?
- [25:10]
Ben Carlson
Well, no, you can. It's supply, demand, def.
- [25:12]
Michael Batnick
I want to see like every time we've hit 5%, that's been a higher range essentially. And the rates have come right back down. People freak out, then we come down. It's happened like five times. I just want to see a sustained breakout above 5% before I start to worry. Deal.
- [25:25]
Ben Carlson
You know? Yes. You know the meme where it's the musician who looks like Jennifer Aniston? Is that, Is that Iggy Pop? I can't remember.
- [25:31]
Michael Batnick
Yes.
- [25:32]
Ben Carlson
Is that who that is? Okay, so it's, it's like the five year on the way up.
- [25:37]
Michael Batnick
Yeah.
- [25:37]
Ben Carlson
Is him. And the five year on five, 5% of the way down is her, right?
- [25:41]
Michael Batnick
Yes.
- [25:42]
Ben Carlson
So it matters where you're coming, where you're going from.
- [25:44]
Michael Batnick
So last week we, last week we talked about. I just want to talk about oil prices real quick because this in this, this whole geopolitical situation because oil's back to down to like $96 a barrel. I think the high was actually when you and I were at that dinner in Miami for future proof. I remember people, everyone around the dinner table was like a game of telephone, was talking about oil prices spiking, super duper high. They got like $120 a barrel. They're up like 20% after hours or whatever. Remember that? I think that was the high I remember very well. So I think this is another game of really smart people, because you listen to all the oil analysts and they're like $200 a barrel. It has to. It has to. There's no situ. There's no situation that doesn't happen. And then it just didn't happen.
- [26:26]
Ben Carlson
Did the market get it right on from, from jump? Kind of from the jump? Because I, I've told this story, you know, a couple of months ago when it happened, but we were at dinner and me and Dan Ives were looking on our phones and I said to him, bitcoin's flat S and P is down like a buck ten or something like that. The market didn't really react the way that we thought it would. And it continued to underreact. We were like, this doesn't make sense. This doesn't make sense. And eventually we're like, okay, this does make sense. But the market was right immediately. Not overreacting. It's. It's wild.
- [26:58]
Michael Batnick
Yes. The good lesson is always like, the market is usually smarter than smart people, which is hard to wrap your head around. You. Yeah, usually the caveat there.
- [27:06]
Ben Carlson
We've done this rap a thousand times, but it is usually the facts. Okay, I did an awesome. This is like random. But as we get into investor behavior, which is actually shockingly blank this week, this has been one of the most popular. What's that big fat text called? Categories, topics. Geez Louise, my brain, you know, something about this microphone breaks the brain. Investor behavior is one of our most popular, most most, most packed, jam packed categories of the show. And nothing in here.
- [27:39]
Michael Batnick
The Wall Street Journal's got to get a profile interviewing traders how, what they're thinking about right now, that's what they got to do.
- [27:45]
Ben Carlson
Anyway, in here I put Brent Sullivan, who has a great substack on a lot of the mechanics of tax treatment for custom indexing and particularly long, short strategies, which are becoming a bigger and bigger part of the advisor toolkit on talking wealth. Him and I had a great conversation. So if you're an advisor and you Want to check that out? I cannot recommend the show.
- [28:09]
Michael Batnick
There was a big piece in the Wall Street Journal on that last week. Bloomberg had a thing on tax harvesting a couple months ago. This is something that I'm surprised it took so long. Yeah, it's getting big in the wealth management space, and it's going to be something you're going to be hearing about more and more as we talk about it. Okay, let's talk about broken sentiment. So, University of Michigan consumer sentiment index at all time lows since this index started in 1950, the lowest this has ever been.
- [28:37]
Ben Carlson
Yeah, it's kind of stupid, huh?
- [28:38]
Michael Batnick
Okay, we've been talking about this for a while. I feel like we're. Maybe we're a broken record here. The Atlantic had this piece. The Vibe session is over. The perma session is here. Why Americans are so Unhappy by Annie Lowry. Now she's trying to get to the bottom of this. Like, why. Why are sen. Why is sentiment so low? There's no way you could objectively look at this. Someone on Twitter last week, as a young person, I couldn't tell if they were, you know, engagement farming or what, but they said, was 2008 really worse than this economy? And again, that's probably rage baiting and engagement baiting. But I think there are some young people who truly think this is a terrible, terrible economy. And they have to see what an actual bad economy is. So here's a quote from this article. People have stopped believing that the economy can be good and have lost the willingness to admit that they are doing well. That pessimism might be harder to fix than an actual downturn. She goes through. Why is this Housing costs and inflation and higher cost of living and all the stuff that you and I've been talking about forever. But this is. This boils down to one thing, and it's the Internet.
- [29:34]
Ben Carlson
This is just inflation.
- [29:38]
Michael Batnick
We've had inflation in the past and it's the 70s inflation. My God. I did a whole chapter on my book.
- [29:43]
Ben Carlson
Yeah, but the 70s inflation destroyed the country, too.
- [29:47]
Michael Batnick
And it's worse sentiment now than it was back then. Yeah, I mean, the inflation.
- [29:51]
Ben Carlson
We've had this Internet of that. Nothing to just say it's the Internet is. Come on. That's not. It's not just the Internet, okay?
- [29:57]
Michael Batnick
It's the Internet and it's Covid. And then sprinkle a little inflation on top of that. But it almost didn't matter what it was. I think everything is just amplified these days. And we had no chance. Humanity had stood no chance. Against social media. None. We had no chance.
- [30:12]
Ben Carlson
Whether you want to blame Covid or inflation, this line broke permanently after that. So the Internet wasn't created in 2020.
- [30:21]
Michael Batnick
My point is, if bad stuff that happened in the past would have happened in the social media era, that's what would have amplified it. Okay. It didn't matter what it was. It was something bad always does happen. Social media made everyone's sentiment worse and now sentiment is a broken reading for all of history. It's never coming back. Not that it's not going to spike in the future, but as a reliable indicator of how people are actually feeling about the economy, it's useless. You can't use it anymore.
- [30:46]
Ben Carlson
Well, but for the stock market, for sure. And for real life too. But it does have political. Like this, this is a direct line to the. That's political.
- [30:54]
Michael Batnick
That's. It's political. Politics is the thing that it matters for. And that's why we're going to have. People are like. Are politics just going to go back to normal eventually? Like, will we not have this like, craziness of the extremes? No, I think it's going to get weirder.
- [31:06]
Ben Carlson
And could you say that even though it being lower than it was in the bottom in 80 and the bottom in 2008, even though that's stupid. Right. Because this, this, this metric is objectively broken. Even the way that they collect the survey. We've been over this a hundred times. I still think it's directionally, it's right. Like people, the mood of the country is not awesome at the macro level. At the micro level, things are fine. And not for everybody, believe me, I'm not suggesting that they are, but I think like the average person feels way better about their situation and this is always true than how the country is doing. That's not like a, that's not like an insight that I just made up.
- [31:40]
Michael Batnick
Yes. And my point is, because we are just inundated with negativity at all times. That whole thing of the country is going to hell is never going to change. That's always going to be something now.
- [31:49]
Ben Carlson
Yeah. And also people like us just give this, this sort of stuff too much, too much oxygen, potentially.
- [31:55]
Michael Batnick
But it's ob. It's. It's a thing, obviously. Right.
- [31:59]
Ben Carlson
All right. U.S. household ownership of corporate stocks and mutual funds now totals $58 trillion, which far exceeds real estate assets totaling $48 trillion. And this is part of the, this is like part of, part. You know, one of the key ingredients of the pie of, of discontent is all this wealth is in people's faces. And if you don't have a piece of. Feels really shitty.
- [32:22]
Michael Batnick
I also think that the, the. What we experienced in the 2020s with simultaneous booms in housing prices and stock prices, we're never going to have that again. Okay? So people are going to look at that if they miss the boat and go, oh, my gosh. Here's the thing, though. Two thirds of the country owns stocks. Two thirds of the country owned homes. Most people have financial assets. I know it's skewed. I know it's.
- [32:47]
Ben Carlson
You're right, it is funny. A lot of the people that are, like, yelling at each other about how bad things are have benefited and they're yelling about how bad it is for people that don't have part of it. It's like this weird. It's weird virtue signaling all all over. All over the Internet. All right, Jeff Bezos calls for zero income taxes on bottom half of earners. I didn't, I didn't read this. Listen to the interview, did you?
- [33:07]
Michael Batnick
I listened to a CNBC interview, yes.
- [33:09]
Ben Carlson
Okay.
- [33:10]
Michael Batnick
What did you.
- [33:11]
Ben Carlson
All right, so
- [33:14]
Michael Batnick
the tax were running wild with this one.
- [33:16]
Ben Carlson
Okay. Somebody said it's great that Jeff Bezos thinks this way because too many people who don't make money because too many people who don't make money think that giving money to the government will solve a lot of their problems. They think these government programs are the answer, and it's clearly not. I would agree with that. Jeff Bezos quote, tweeted and said, thank you. The important part is zeroing out taxes on the bottom half. Best way to put someone. Best way to put money in someone's pocket is to not take it out in the first place. Bottom half is only 3% of total tax revenue, but it's very meaningful to that person. Zero it out. My thoughts on this are. This is a very, very complicated topic and there's obviously very strong feelings from coming from every angle here. I think that it's a really potentially scary thing and slippery slope to divide the country like that between. Think about how bad the class warfare will get if we. If the country allows a certain portion of the population. And I'm not talking about people giving the system, I could give a. About that. But if it's like the US versus them and you really create like a caste system of haves and have nots, like formally now. Yeah, I think it's. I think it'll be phenomenal, like in a vacuum.
- [34:26]
Michael Batnick
Right.
- [34:27]
Ben Carlson
To not have people pay taxes that don't contribute a damn thing like I in a vacuum. In an ideal world, yes. Who says no to that? Who says no? What type of monster says no to that? But I think it has real big societal ramifications that people much more thoughtful about this topic need to spend a long time thinking about.
- [34:46]
Michael Batnick
Yes, I this, aka mind you, go. Well, I'm in the 51st percentile and I'm having to pay now. I moved out of the bottom, now I'm paying. If you're close.
- [34:55]
Ben Carlson
True. Yeah, yeah, yeah, yeah.
- [34:57]
Michael Batnick
So you're right.
- [34:57]
Ben Carlson
It's, it's, there's got to be, there's got to be, there's got to be a better system.
- [35:01]
Michael Batnick
It's never going to happen though, because we just keep. Everyone keeps saying taxes have to go higher and all they do is keep going lower. They keep finding different ways to take taxes away from people. So I think we're just going to keep testing how many taxes, tax rates we can take down lower and see what happens. That seems to be my only.
- [35:16]
Ben Carlson
This is, this is a true rabbit hole that I care not to go down. You know what, speaking of that, when people say I went down a rabbit hole. No, you didn't. You spent 20 minutes on Claude.
- [35:23]
Michael Batnick
True.
- [35:25]
Ben Carlson
Right now, like there's some people, there's some people that genuinely go down rabbit holes. But I'm gonna say 90 of people are full of rabbit holes are easier now. Speaking of Claude, this is, this is unbelievable. So Ben got an email from a famous author and entire inbox. I'm like, this is so weird. Who writes this way? Like, it was just. There was a line in there that was, I'm not even sure it was like, I thought it was like too cheesy to be AI But Ben's like, this is obviously AI. I'll write back, whatever. So Ben responded and the person responded with what was clearly an AI response. And I said to myself, you gotta be. Excuse me for the F bombs. You gotta be kidding me.
- [36:03]
Michael Batnick
This is a, this is a very well known person who sold millions of copies of books. And the thing is this, this is,
- [36:07]
Ben Carlson
this is how you behave. You. I'm about to use the F bomb again, you freaking weirdo. You think this is normal behavior?
- [36:14]
Michael Batnick
So I.
- [36:14]
Ben Carlson
Are you a human being?
- [36:15]
Michael Batnick
So since my book was released, I probably get two or three AI emails a day from like people who want to promote the book. And I can tell because they stole the, the summary from Amazon and it like re. Summarizes the book to me. Hey, you did a good job Explaining this, and then it says, would you like to join our PR department, help promote your book? And I get two or three of them a day. And I can't tell you how quickly I delete an email that I know is written by AI. And I can't believe that successful people. I get it, you want to be more proficient and productive and have an AI agent help you. But it is so cringe when I see an AI email from someone I can't. I immediately delete it.
- [36:53]
Ben Carlson
It's unbelievable.
- [36:54]
Michael Batnick
I hope that's just something that happens in the future with people where they go, no, we're not going to give you the light of day for this. Like, you can sign off using AI Somehow, like, yes or no, this worked. But like, an actual personal email to someone using AI is no way. Sorry.
- [37:07]
Ben Carlson
It's unbelievable. So Google had a big demonstration of their new capabilities. It's called Spark, and it's basically like the AI assistant that's. That's. That's coming. So Ben Thompson wrote a lot about this, and a friend of mine actually was texting me yesterday. He's like, dude, it's here. Like, everything that we've been, like, waiting for to, like, the really, like, holy effin crap moment, like, that's what this is. I haven't used it yet, so I'm excited to take it for a drive. But this is what crypto was supposed to be, right? Where it was like. And I don't mean the promise of a different future per se. I mean specifically, like, oh, the. The. You won't even know that you're using crypto. It's just gonna be in the background. All the companies are going to start to use it. This is what Google is now going to be pushing, and a lot of these hyperscalers going to be. They're just going to be integrating AI more and more.
- [38:06]
Michael Batnick
So before you get to the.
- [38:06]
Ben Carlson
Without us even knowing it and what's so funny? What are you laughing at? Oh, no, we have Duncan.
- [38:10]
Michael Batnick
Duncan B. Duncan was trying to guess who the author was. So did crypto, like, miss its moment is what I want to ask? Because there was a story last week about Mark Cuban's like, I sold all my bitcoin. Like, I'm done with this. Like, do you think that AI has just sucked all the oxygen out of the room and crypto had its moment to, like, really get a consumer use case? And all you people say stablecoins, and maybe that will be integrated with AI? But crypto never had its thing. It's like, oh my gosh, this is the thing.
- [38:36]
Ben Carlson
Yeah.
- [38:37]
Michael Batnick
And it never happened. Did it miss its moment?
- [38:40]
Ben Carlson
It's easy to say yes. I don't know enough about what's happening in the crypto economy to say like, yes, it's dead forever. But the short answer is yes. Shy Ballor tweeted Robinhood's crypto COO is stepping down. That's a big signal. As their crypto revenue growth slows. This is a, a, a gut punch or at least a jab. SEC delays plan allowing for crypto versions of U.S. stocks. So is crypto dead and buried forever? You know, I'm not going to say that. I have no idea.
- [39:04]
Michael Batnick
I wouldn't say that. But it's missed it. Like AI has the, the thing is,
- [39:09]
Ben Carlson
AI is sucking up all of the talent in the world.
- [39:12]
Michael Batnick
That's what I'm, that's part of what I'm thinking. Remember before it was like, everyone's going to work in crypto now, all those things.
- [39:17]
Ben Carlson
And that's what drives innovation. It's the talent that builds it.
- [39:21]
Michael Batnick
Right.
- [39:21]
Ben Carlson
And who is going into crypto now? Like, nobody. If you were gonna. If you're of that mind and of that spirit, you're going where the next thing is. And it's clearly not crypto.
- [39:33]
Michael Batnick
Right. That's what I'm, that's what I'm thinking. Who knows? So Benedict Evans has his. I think he does it every six months. He updates his presentation. And this one, of course, was on AI. This was interesting. We talked about this last week. He said everyone is already using this as the title of the presentation. He says OpenAI reports 900 million plus weekly users, but only 5% of them are paying, which is kind of nuts.
- [39:56]
Ben Carlson
So getting back to the crypto stuff. We were so early was the rallying cry. And it's very easy with the AI stuff that we're talking about non stop. This is a bubble. It's got to be a bubble. Look at the numbers. These are unsustainable. The spending. Blah, blah, blah, blah, blah. But. And also the reality is getting back to like the earlier conversation of headline talk versus people that actually do the work and contextualize where we are. We are in the top of the first inning. As hard as that is believe now the stocks might be in a bubble. Right. It might be that we discounted everything. Okay, fine. I don't know. We'll find out. But in terms of AI adoption, we really are so early.
- [40:42]
Michael Batnick
Yeah. And the use case is obvious once you start using it. So you talked about the Bezos interview on cnbc, one thing he said, he said I'm taking the other side of the labor disruption. He said he thinks AI is going to make people so much more productive. The productivity is going to go through the roof. People are going to have more money. He said AI is going to lead to deflation and labor shortages. He said we're going to have more desire to for things in the future because of AI and is going to create more businesses and more jobs than ever. He's taking the positive spin on AI, which is actually kind of refreshing to hear. Someone last week commented us and said, I'm sick of all the AI doom from you guys and I think we've been pretty fair about it all.
- [41:18]
Ben Carlson
Doom.
- [41:18]
Michael Batnick
But I know, but Bezos says no, no, no, no. It's going to lead to job shortages because people are going to be more productive and richer.
- [41:27]
Ben Carlson
Very plausible.
- [41:29]
Michael Batnick
I hope so.
- [41:30]
Ben Carlson
All right, Ben, I bought a stock. This is definitely not financial advice, people like when Josh and I talk about stocks and what are your thoughts? So as much as anyone ever say
- [41:41]
Michael Batnick
this is financial advice. Has anyone ever said that before?
- [41:46]
Ben Carlson
This guy. As much as part of me would like to never pick stocks again because it's stupid and it's a waste of time and I don't make money and blah, blah, blah, blah. I love it. Keeps me young, Ben. And it's great for the content. All right, so whatever. I'm picking stocks again.
- [42:03]
Michael Batnick
What'd you buy?
- [42:04]
Ben Carlson
So I bought Floor and Decor. Floor and Decor is a. Looks like an incredibly beautiful, perfectly perfect downtrend. The stock sucks. Floor and Decor. Do they have one by you? There's like, I think there's like 500 stores in the country.
- [42:22]
Michael Batnick
I mean, it sounds like a place my mom shops at.
- [42:24]
Ben Carlson
Okay, so it's. They do. They do flooring, obviously, and other home improvement stuff. Okay. So they compete directly with Home Depot and Lowe's. Matter of fact, I think they sell more flooring. So I house this even on my radar. So Alex Morris, who I follow, wonderful writer substacker this is bit. He's been on this beat for a long time and I followed him right into the stock.
- [42:47]
Michael Batnick
Stock is in a 65% drawdown.
- [42:49]
Ben Carlson
So he. So he gave me financial advice. So if any. If this doesn't work out, that's on him, not me. So anyway, you know how we were talking about, like how fast things change and part of the lessons, at least from recent history, is that stocks just don't let you in. Like by the. When the Story changes. Like, look at intel or. Or any of these. Like, it's like, wait, what just happened? Why is the stock up 40? I can't buy it now. That's how it works. Okay, So I am very confident that at some point in time, there will be a changing of the housing cycle, and I don't want to miss it. Okay, so this is the stock that I'm betting on. And will I sell in three months when I get bored, I don't make money? Yeah, probably.
- [43:29]
Michael Batnick
So this is. This is your way to bet on the home renovation boom. Yeah, people not moving.
- [43:34]
Ben Carlson
Yeah. So anyhow, that's a long setup, but I thought this was interesting. So the Wall Street Journal has a piece showing the age of America's homes, and most of the homes are 55 years are old or older. A lot of the houses in my town, I'm sure in every town, when they sell, there is a lot of work that needs to be done. And floor and decor and all these other housing stocks are in an absolute ice age. This is a great depression. This is a great recession for these housing stocks. The news cannot possibly be any worse unless it just goes on longer than even the market is suggesting, which obviously is happening. Right? Like, who knows? All right, so I saw a chart from Torson Slack, who we mentioned all the time, and it says higher rates, more renovations locked in mortgage rates are keeping homeowners in place and driving a surge in renovation spending. See chart below. Ha ha ha ha. See chart below. This chart is bunk.
- [44:37]
Michael Batnick
I actually thought about this. So wait, let me see if I can guess.
- [44:40]
Ben Carlson
Go ahead.
- [44:40]
Michael Batnick
So the reason this is bunk because it's renovations as a percentage of construction spending. Is it because construction spending is falling? Is that why?
- [44:47]
Ben Carlson
Yeah, the denominator.
- [44:48]
Michael Batnick
Right?
- [44:48]
Ben Carlson
Nailed it.
- [44:49]
Michael Batnick
Okay, so.
- [44:51]
Ben Carlson
So Claude decoded this for me, and if you look at improvements. Now, this is. This is a little bit data. The data, but it's. It's. It's growing, like 2% a year. It's barely growing. It's barely growing. And if you look at. If you look at the comps of all these companies, Florida Core, Mohawk, Sherwin, Lowe's, Home Depot, William Sonoma Restoration, they're all saying the same thing. We know the housing market is an absolute shit show. Okay? It is terrible. Whirlpool that sells dishwashers, whatever annihilated. There is nothing happening. There is nothing happening. So high. So locked in mortgage rates are keeping homeowners in place and driving a surge in renovation spending. Yeah, I suppose if you're Looking at a denominator as a percentage.
- [45:38]
Michael Batnick
Okay, so what's your thesis here then? You're trying to get ahead of this?
- [45:43]
Ben Carlson
Yeah.
- [45:43]
Michael Batnick
Okay.
- [45:44]
Ben Carlson
Yeah.
- [45:44]
Michael Batnick
So that's, here's, here's. So I think this is actually like not like a one or two year trend. I think this is like a 15 or 20 year trend because Redfin has the data that shows like 2/3 of all baby boomers have lived in their homes for 15 years or longer. And something like 40% have lived in their house for 20 years or more. A lot of those houses gonna need a ton of renovation to meet the standards of young people who grew up on hgtv. Okay. I think that's gonna be a big, huge thing for baby boomers who just said, you know what, I don't need, I'm old. I don't need to renovate. I'm fine with it. We did a renovation 20 years ago. We don't need to renovate again. And young people who come in to buy those houses are gonna go, nope, we need to gut this new, this new countertops, new flooring, updated bedroom, open up for entertaining, all that stuff. That's gonna be a 20 year trend. But does it. Is it just dribs and drabs or is it like this? You know, that's, that's the thing.
- [46:31]
Ben Carlson
Well, higher rates are, is killing housing, obviously. So I hope you're right, Ben. I hope rates come down.
- [46:42]
Michael Batnick
Floor and decor. All right, your bottom fishing.
- [46:46]
Ben Carlson
How about this? I was listening to Matt Bellamy and he had a podcast on vertical, vertical streaming. Because everybody holds their phone like this. And even though it's a minor inconvenience to do this, it's an inconvenience. Right? This is the natural. So Netflix is getting in on it. Like all these companies are spending big bucks to compete because also like Reels and TikTok, this is how, this is how people watch it. They said this on the pod. I had Claude confirm and make a chart. Reels alone. Meta's Reels is doing more revenue now. They just. This is a new product. Reels is doing more revenue than Netflix.
- [47:29]
Michael Batnick
Jeez, Just Reels. This is why the concentration argument about the big tech companies is false. Flat for me. You always talk about the business lines of Apple. Apple does more revenue in AirPods than it does. You know, you always talk about that. Like if you break down inside these companies for Instagram and you said just reels and then YouTube for Google and all YouTube TV and all these things, like those are individual businesses of themselves. This Is that's. That's pretty crazy. The funny thing is is that's obviously not a good way to watch something vertically. It's way better to watch it horizontally. But people don't care. It's convenience, right? It's not the best. I watch something.
- [48:10]
Ben Carlson
No, what I did for the first time, we had a four day week weekend, as did, I'm guessing, most or all of the country. I don't know why. We were off on Friday and the weather sucked. The sun finally came out on Monday afternoon, but it was in complete washout here. I took the boys to see the Mando and Grogu. I sat in the seventh row of the IMAX theater.
- [48:37]
Michael Batnick
People liked the TV show, right? I watched one episode. I'm like, I'm not gonna watch Star wars show. Sorry.
- [48:40]
Ben Carlson
But you watched the first season. It was good. Yeah, I think people into it. But sitting up front in ibacks wasn't as bad as I thought it was. It was, it was an experience.
- [48:48]
Michael Batnick
Your neck straight up.
- [48:49]
Ben Carlson
No, no, I. I was afraid of that. No, it was. It was not bad. The movie was. The movie was so. It did good business. I think it did 160 million globally. Not terrible. And it was, it was totally watchable. Kids loved it. Matt Bellany had a stat like, I think it was like 70% of all tickets were sold before 5pm it was like heavy. A heavy kids audience. Now I don't watch Mando, so I don't know if this is an extension of the show. I'm guessing it is. It just was like, why? You know, like. It was just.
- [49:23]
Michael Batnick
That's what I was going to say. Why do we need this?
- [49:25]
Ben Carlson
Yeah, it was. The movie was like fine. It was watchable. I didn't fall asleep. Actually I did once, but it just didn't move the plot forward. Like, this is the best they got. It's been seven years, Jon Favreau. It's been seven years since we've had a Star wars movie and this was it. It was just like. It just felt like Marvel did this shit and got it out of the system. Like, it's over. We're not doing these movies anymore, but I guess we're still doing them. It was kind of depressing.
- [49:50]
Michael Batnick
Disney's gonna squeeze the last bit of that toothpaste tube for as long as they can.
- [49:55]
Ben Carlson
Yes, they are. Ben. Nobody's buying dad books. Ben.
- [50:00]
Michael Batnick
What is that? Dad books. Like World War II biographies.
- [50:05]
Ben Carlson
Chernow's most recent biography of Mark Twain, which was published in time for Father's Day 2025 has sold 119,000 hardcover copies to date. Ulysses, which I read in 2017, sold.
- [50:18]
Michael Batnick
I heard that one too.
- [50:20]
Ben Carlson
Speaking of dad books.
- [50:22]
Michael Batnick
So wait, they need him. That's because these biographies are too long. No one has time to read 900 pages on someone's third cousin.
- [50:28]
Ben Carlson
Sorry, nobody.
- [50:29]
Michael Batnick
Too much.
- [50:32]
Ben Carlson
I always struggle. I'm not a big gift giver. I'm not. I'm a bad gift giver. I'm not a big gift giver. But I love, you know, I love giving gifts. I just don't know how to do it. Great.
- [50:40]
Michael Batnick
As an anti birthday guy, I'm obviously not good at it.
- [50:43]
Ben Carlson
Okay. So in a period of. Of being unlocked from this brick on Instagram. Speaking of dad books, I bought my dad a book. And this is reals, right? Like this is, this is reals monetization. I bought my dad a book where it's like the first time you did this, like, like that. I don't know that. I would love to know when he's not here one day, hopefully far into the future, and he'll. He'll be able to fill it out and give it to me.
- [51:12]
Michael Batnick
All these interview parents, essentially. Right.
- [51:14]
Ben Carlson
Yeah. So it's like that, but it's just done for you. My dad just has to fill it out. So I'm excited.
- [51:19]
Michael Batnick
Yeah. It. A lot of the stuff you just literally never asked before.
- [51:22]
Ben Carlson
Yeah.
- [51:23]
Michael Batnick
And good for your kids too.
- [51:24]
Ben Carlson
And things that are like, you know, uncomfortable that you probably would regret not asking, not having asked before, you know, when it's too late.
- [51:31]
Michael Batnick
Yes. You know, I had an uncomfortable. My conversation with my dad about six months ago. I said, give me all your stuff. My dad's gonna be 80 next year. I said, give me all your stuff, everything. I need to know where your accounts are. I need to know your passwords, I need to know your insurance. I need to know mortgage stuff. I need everything. Put it in one place for me. If something happens to you. I need that. I'm, you know, I don't want to have to like go digging and looking for stuff.
- [51:52]
Ben Carlson
Did he do it?
- [51:53]
Michael Batnick
He did it. And he's an old school guy. He. He handed to me handwritten on a piece of paper. Not. Not. I went home. I keep giving my dad crap on the show. I went home last week and we're. We're a big card playing family. We love playing cards. My kids love playing cards. So we're playing cards. We like listening to music and playing cards, having a beer. And my dad comes out with a Sheet of paper with stuff written on it. And he said, alexa, play Beatles Hard Day's Night. He wrote out his playlist and he's. After every song is over, he tell Alexa to play the next song. I said, dad, can I show you how to create a playlist? He said, no, no, I don't want to do. I'm just going to. I have my playlist here. I'm going to. All right. So every song, he'd have to tell Alexa what to play.
- [52:35]
Ben Carlson
My uncle is cut from the same cloth. He still uses. And I think it's a joke at this point, but like he would do it even if it wasn't a joke. He uses Week at a Glance, which is the physical calendar. It's like a pocket sized calendar.
- [52:53]
Michael Batnick
Oh, yes, right.
- [52:54]
Ben Carlson
It's always in his pocket.
- [52:55]
Michael Batnick
Right.
- [52:55]
Ben Carlson
That's how he. And he has an iPhone, but he literally uses Week at a Glance.
- [53:00]
Michael Batnick
That's funny.
- [53:01]
Ben Carlson
And I know he. He used to print out his portfolio every single day. And you know, old. Some people just stuck in their ways.
- [53:09]
Michael Batnick
There you go.
- [53:10]
Ben Carlson
That's right, Ben.
- [53:11]
Michael Batnick
All right.
- [53:11]
Ben Carlson
I wanted to ask you about this. So this article is not for me, but it's for you. The ice cold civil war between Diet Coke and Coke Zero drinkers. So I'm not a huge Diet Coke drinker. I try not to drink a ton of soda, but I drink it more than I would. I probably have three cans a month. Ish. Ebbs and flows. Sometimes I drink it. Some of those I don't. I've never had Coke Zero.
- [53:35]
Michael Batnick
Oh my gosh. I used to be a Diet Coke Diet Pepsi drinker. I go back and forth. Coke Zero and Pepsi Zero are so much better than Diet Coke.
- [53:44]
Ben Carlson
Diet Pepsi, in what way?
- [53:46]
Michael Batnick
The flavor, it tastes close to the regular versions. It's so much better. I can't. It's hard to explain. So I can see why the growth is happening in those zero drinks. It tastes a lot better.
- [53:59]
Ben Carlson
So Diet Coke sales increased by just not 1.3% in the first nine months of 2025. Coke Zero grew by 4.8 over the same time period.
- [54:08]
Michael Batnick
I'm a big zero guy. I love it. That's all I drink now. This is zero stuff.
- [54:12]
Ben Carlson
I'll try it.
- [54:13]
Michael Batnick
It's good.
- [54:13]
Ben Carlson
You've. My interest is peaked. All right. Retach retired. I don't know if I'm saying that right, but that's the new. The new hot shit from Eli Lilly Phase 3 obesity trial just came in, just came out, and the results are genuinely insane. 28.3% body weight loss on 12 milligrams over 80 weeks. I don't know how much. 12 milligrams is 70 pounds on average. 70 pounds. Man. People are heavy. 45% of patients had 30% weight loss. This is bariatric surgery territory.
- [54:44]
Michael Batnick
Unreal. We've solved weight loss. What does this mean for the health of this country? We've literally. Doctors should be handing this out to every patient who has a BMI over X or like the, the savings on heart disease. And it's unbelievable.
- [55:01]
Ben Carlson
So yeah, I just said, yeah, like yeah, they should do it. I literally know nothing about medicine. I'm the last person that should be giving medical advice. I have. I am like a hypochondriac about death because my mom died young. I think about death a lot and I just think that I'm going to die young, which is not the greatest feeling in the world. So I did a blood test. There's a company called Function Health that I found through somebody substack that I, that I like. And I said, you know what, this is probably overdue for me. So I got like 96 different blood tests and I signed up for like the cancer, the pre cancer screening, the heart stuff. And it's not cheap. It's like it was like 14 or 1500 bucks. Certainly cheaper than dying or there's no amount of money I wouldn't pay to know that I'm either whatever, on the right track or not or if I need to course correct. I hate giving blood. Not a fan. It was 12 vials. Not fun.
- [56:01]
Michael Batnick
Do you get squeamish about it?
- [56:03]
Ben Carlson
Not really. I just don't like it. But it was over fairly quickly anyhow, so I got the results. And my biological age. Ben, would you like to take a guess? 40, 30.8.
- [56:19]
Michael Batnick
Okay.
- [56:20]
Ben Carlson
Now my, my biological back age is 75.
- [56:23]
Michael Batnick
True.
- [56:24]
Ben Carlson
But 30.8 made me feel pretty, pretty good. There was like, there was four things that were like on the upper range of borderline, like borderline out of out of range. And it was like, so this is like.
- [56:36]
Michael Batnick
Okay.
- [56:37]
Ben Carlson
And it was like diet stuff, stuff that you control but. But I shouldn't spike the football just yet. In fact, I probably shouldn't even be mentioning this because I haven't gotten the results for like the pre cancer stuff, which is the stuff that is especially like prevalent to my family.
- [56:48]
Michael Batnick
And do you have to do this like once a year now?
- [56:50]
Ben Carlson
That's a good question. That I don't know.
- [56:53]
Michael Batnick
Okay. So if you take your internal clock Versus your hairline. Average it out. You're right at where you should be. Right.
- [57:01]
Ben Carlson
That was a. That was a positive surprise. I feel pretty good about that. All right. Recommendations. Ben, I took your advice and I listened to the Harrison Ford podcast, which, speaking of genetics, his mother was Jewish. I had no idea. One of us. Great pod. You know what kind of annoys me? Not kind of. It annoys me. For whatever reason, on Spotify, there was no video for this. And it's not. There's some. Are they on Netflix?
- [57:26]
Michael Batnick
Oh, maybe. I don't know. That's a good question. I don't know.
- [57:28]
Ben Carlson
I saw. I saw. There's. There's a video version on YouTube.
- [57:31]
Michael Batnick
Okay.
- [57:33]
Ben Carlson
So I don't know. What a dude.
- [57:35]
Michael Batnick
It's great, right? So after listening to the podcast, I thought, you know what? I watched the first season of Shrinking. It was a show I liked. I didn't love. I need it as a background show. And I realized maybe I already made this observation. Bill Lawrence is the Taylor Sheridan of comedies. So he's got. He's got Shrinking, Bad Monkey, Rooster, Ted Lasso. He did the Scrubs remake.
- [57:55]
Ben Carlson
All these shows, which was Bad Monkey,
- [57:57]
Michael Batnick
the Vince Vaughn one.
- [57:59]
Ben Carlson
Oh, I didn't watch that.
- [58:00]
Michael Batnick
No, none of them are great. They're all good, though.
- [58:02]
Ben Carlson
Yeah.
- [58:03]
Michael Batnick
Like, we. There's no comedies anymore, so it's nice to just have. It's a background show. You don't have to, like, pay attention to every scene. So I put it in the background while I'm doing stuff at night. Emails and catching up on stuff.
- [58:15]
Ben Carlson
It is a good background show. Oh, Obsession, which is a hardcore Michael movie. I haven't seen it yet. You might have heard about this. Ben, have you heard about this yet?
- [58:25]
Michael Batnick
No.
- [58:25]
Ben Carlson
It's one of those indie horror movies. It's on fire.
- [58:29]
Michael Batnick
Okay.
- [58:30]
Ben Carlson
I think it passed 100 million at the box, Officer. It's going to. Movies are movies. What? You have seen it.
- [58:36]
Michael Batnick
I know. I saw a trailer for it. I'm not gonna. I don't watch horror movies. You know that.
- [58:39]
Ben Carlson
I know you don't. Movies are having a moment, so much so that one of the stocks that I've owned for a lot, for a long time in Michael years, is. Is imax. There was reports that IMAX might be getting some offers.
- [58:57]
Michael Batnick
We got a lot of congratulations. Are you gonna sell it? Are you gonna. Wait.
- [58:59]
Ben Carlson
I'm not selling it.
- [59:00]
Michael Batnick
Wait for the bidding war. Okay. I actually took your recommendation for a movie. My wife and I watched Remarkably Bright Creatures this weekend on Netflix.
- [59:07]
Ben Carlson
That's a Ben Carlson movie.
- [59:09]
Michael Batnick
It's so nice to have just a sweet movie. That's the best way I can describe it. It was sweet. It had no ulterior motives, no cynicism. Just like a nice movie. Like, and it was kind of surprising because it was a lot of ways. I feel like I got a little like, whoa. A little choked up. Maybe Sally Field still has it. Like, I haven't seen her in something in forever. She still got it. And I love Bill Pullman, son. I love him. He's. He was in Top Gun Maverick. He was in the show with Brie Larson on Apple. I think he's going to be a great character actor. He's. Yeah, he looks different. Everything he does, he's like Sally Field, like, still has it.
- [59:43]
Ben Carlson
Yeah. It's just, it's just a nice, it's just a nice movie.
- [59:45]
Michael Batnick
Just plus that's a nice movie. Like, didn't have any, like, yeah. Any other agendas besides just being a nice sweet movie? I really liked it. It was pretty good one for Netflix.
- [59:55]
Ben Carlson
Really good for Netflix. Yeah. All right. I believe that's it. Sun is shining. That's good.
- [60:03]
Michael Batnick
Sky hasn't been falling for a while. As far as the markets go, someone said that I'm like the dad when I say like whenever we do get a correction, I'm going to, I'm going to walk out like when after it rains and said, ah, we need that. That's going to be after a correction.
- [60:15]
Ben Carlson
We just came out of a correction. But I agree, we do need one. I'm with you, Ben.
- [60:19]
Michael Batnick
Nine percent is nothing. All right, animal spirits@the compoundnews.com personally. Most personal responses. See you next time. Game.
- [60:44]
Ben Carlson
Some Follow the noise. Bloomberg follows the money. Whether it's the funds fueling AI or crypto's trillion dollar swings, there's a money side to every story. Get the money side of the story. Subscribe now@bloomberg.com.