A Key Market Signal (EP.395)

Summary

Animal Spirits Podcast - Episode 395: "A Key Market Signal"

Hosts: Michael Batnik and Ben Carlson
Release Date: January 15, 2025

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In this episode of the Animal Spirits Podcast, hosts Michael Batnik and Ben Carlson delve into a variety of pressing topics ranging from the devastating wildfires on the West Coast and their implications for the insurance industry, to the current behavior of the stock market influenced by rising interest rates. Additionally, they explore social trends affecting younger generations and engage with listener interactions about movie recommendations and personal experiences.

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1. Wildfires on the West Coast and the Insurance Crisis

Timestamp: [03:06 - 08:04]

The episode opens with a discussion on the unprecedented wildfires ravaging the West Coast, described as potentially the "costliest wildfire disaster in American history" by UCLA climate scientists. Michael highlights the profound impact on homeowners, emphasizing that for many middle-class Americans, their home is not just a place of residence but also their primary financial asset. He reflects:

Michael Batnik [04:13]: "For many middle class people, a house is not only like by far and away their biggest financial asset. For some people, it's their only financial asset."

The conversation underscores the dire situation where insurance companies face immense pressure. Due to constraints like California's Prop 103, which requires government approval for premium hikes, many insurers are pulling out of high-risk areas, leaving homeowners either uninsured or facing exorbitant rates. Ben expresses uncertainty about potential solutions, contemplating whether government intervention is inevitable.

Ben Carlson [07:37]: "I have no idea."

The hosts also touch upon the secondary effects of the wildfires, such as the housing shortage exacerbated by displaced residents seeking rentals, driving up prices and creating further economic strain.

2. Stock Market Behavior Amid Rising Interest Rates

Timestamp: [09:04 - 16:23]

Ben leads a segment on recent stock market trends, noting that stocks have been experiencing a healthy correction driven mainly by rising interest rates. He succinctly states:

Ben Carlson [09:24]: "The economy is too strong. Could there be a better reason for stocks to fall?"

Michael concurs, agreeing that higher rates are a logical response to a robust economy and questioning the necessity of further rate hikes unless they severely restrict economic activity.

The discussion transitions to global interest rate trends, with references to a Bloomberg chart illustrating rising 10-year yields worldwide. This global perspective suggests that the increase in rates is not isolated to the U.S. and may reflect broader economic adjustments rather than localized policies.

Ben shares his personal investment moves, mentioning his foray into zero-coupon bonds as a strategic play in the current interest rate environment, while Michael humorously recounts recent investment anecdotes, including an ill-timed recommendation on quantum computing stocks that faced significant declines.

3. Social Trends and the Rise of Loneliness in Youth

Timestamp: [16:34 - 38:10]

Shifting focus to societal changes, the hosts discuss Derek Thompson’s piece, "The Antisocial Century," which examines the decline in social interactions among Americans, particularly younger generations. Key statistics highlighted include:

• A 30% decline in U.S. adults having dinner or drinks with friends on any given night over the past two decades.
• A 29% increase in solo dining over the past two years.
• A surge in the number of teenagers reporting loneliness, with the percentage of 12th graders going out with friends dropping from 80% in 1980 to 50-60% today.

Michael emphasizes the importance of social interactions during youth for emotional development, advocating for traditional experiences like college to foster necessary social skills.

Michael Batnik [36:13]: "The socializing aspect of college is the most important part of it. And that's why I think college is still very important for young people."

Ben concurs, acknowledging the complexity of balancing technological connectivity with genuine social engagement. They reflect on personal measures to instill gratitude and prevent entitlement in their children, such as involving them in charitable activities.

Ben Carlson [49:16]: "We're lucky that we're able to do this. You do the best you can."

4. Listener Interactions: Movie Recommendations and Personal Stories

Timestamp: [38:32 - 61:49]

The hosts engage with listener emails, sharing their thoughts on various movie recommendations. They discuss titles like Red Rooms, Woman of the Hour, and Kneecap, offering critiques and humorous exchanges about the subjective nature of movie preferences.

Additionally, personal anecdotes enrich the conversation. Michael recounts a memorable VIP tour of the Empire State Building facilitated by a listener’s connection, highlighting the rewarding experience shared with guest Bill Sweet.

Michael Batnik [50:31]: "When we walked out on the observation deck, Bill and I both kind of like. Like, it was kind of breathtaking."

Ben shares his struggles with sports betting, providing a candid look into the risks associated with gambling and the emotional toll of unexpected losses.

5. Miscellaneous Discussions: Language, Media, and Cultural Reflections

Timestamp: [54:17 - 60:53]

The conversation briefly touches on linguistic curiosities, such as the phrase "dollars to donuts," exploring its origins and common usage. The hosts also reminisce about the cultural phenomenon of the Jerry Springer Show, discussing its portrayal of human behavior and its place in media history.

Michael expresses his disdain for modern social media’s impact on human interaction, lamenting the shift from communal activities to online engagements.

Michael Batnik [38:57]: "I think it's been a horrible, horrible thing for us."

6. Concluding Thoughts and Wrap-Up

Timestamp: [61:10 - End]

As the episode nears its conclusion, Michael and Ben reflect on their personal lives, including upcoming nuptials and shared interests in movies and television shows. They encourage listener engagement, inviting reviews and feedback to foster a sense of community.

Ben Carlson [61:50]: "Michael and Ben, my fiance and I absolutely adore you both."

The hosts humorously joke about podcast-related experiences and future content ideas, maintaining the episode’s engaging and personable tone.

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Notable Quotes:

• Michael Batnik [04:13]: "For many middle class people, a house is not only like by far and away their biggest financial asset. For some people, it's their only financial asset."

• Ben Carlson [09:24]: "The economy is too strong. Could there be a better reason for stocks to fall?"

• Michael Batnik [36:13]: "The socializing aspect of college is the most important part of it. And that's why I think college is still very important for young people."

• Michael Batnik [38:57]: "I think it's been a horrible, horrible thing for us."

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Conclusion:

Episode 395 of Animal Spirits Podcast offers a comprehensive exploration of current economic challenges, market dynamics, and significant social trends impacting society today. Through insightful dialogue, personal anecdotes, and engaging listener interactions, Michael Batnik and Ben Carlson provide valuable perspectives for investors and individuals navigating these complex times.

For more insights and discussions, subscribe to the Animal Spirits Podcast and join the conversation every Wednesday morning.

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Disclosures:
All opinions expressed by Michael and Ben are solely their own and do not reflect the opinions of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions.

For disclosures, visit Ritholtz Wealth Management Podcast Disclosures.

Transcript

[Michael Batnik]

Today's Animal Spirits is brought to you by our friends at Y Charts. Y Charts has a brand new resource deck called debunking financial myths that is launching soon. This is a big part of what we've done over the years. I feel like. Yeah, right, yes, sell in Maine, go away, don't time the market. People always say, like, wait for the dust to clear. You can't invest now. All these things.

[Ben Carlson]

America is going broke.

[Michael Batnik]

That's true. So they have this. This is for a good tool for advisors that to like cause clients ask these questions. Right. Well, what about this? What about that? And this is kind of a chart. This is kind of a chart book that can help you as an advisor, talk to your clients, dispel some of those financial myths.

[Ben Carlson]

Hey, what about this xyz? Oh, I'm glad you asked. Boom.

[Michael Batnik]

I mean a lot of them are really animal related too, right? Bulls and bears, dead cat bounce, canary in the coal mine. What else? I'm sure there's more, but a lot of animal related ones.

[Ben Carlson]

Alligator jaws. You know when you see the charts of the line diverging.

[Michael Batnik]

Oh yeah, yeah. Very good. So if you want to check this out, go to Y Charts. Tell Animal spirits sent you when you sign up for that first subscription. 20% off Whitecharts.com to learn more. Today's Animal Spirits is brought to you by fabric. Michael, as I reach middle age, one of the strange thing is that you start getting morbid thoughts.

[Ben Carlson]

Yeah. Oh, you just started.

[Michael Batnik]

Well, yeah, I guess so. Seeing your parents age and seeing their friends get sick or die, life, death and taxes. Correct. And I think maybe is that one of the reasons that people don't spend a lot of time planning for things like life insurance because they don't want to think about that kind of thing. Estate planning, life insurance, they don't want to think about that stuff. But would you rather just not have your family be covered? Right. And not be okay if something, God forbid, something should happen to you?

[Ben Carlson]

Can I admit something to you right here, right now, in person? So I'm covered on life insurance. I did that pretty soon after the kid's born.

[Michael Batnik]

Okay.

[Ben Carlson]

Nothing with the estate.

[Michael Batnik]

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[Ben Carlson]

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.

[Michael Batnik]

Not reflect the opinion of Ritholtz Wealth Management.

[Ben Carlson]

This podcast is for informational purposes only.

[Michael Batnik]

And should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain.

[Ben Carlson]

Positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Want to start the show by talking about the devastation on the West Coast. This has to be the most, the most awful experience that one can have in life outside of losing a loved one is losing your home.

[Michael Batnik]

Yeah, I can't even imagine what it's been like to live there. We have an office in la, so we have people on the ground who live there and they've been sharing their experience. We've talked to clients, we've had. We know people who have lost their homes. And I don't know where you start to pick up the mess. And the devastation is so big here. I don't know how you start over in some of these places. When you see the pictures, it looks like a nuclear bomb went off in some of them with the houses just all completely gone. And I wouldn't know where to begin. You're right. The home is. This is one of the things we talk about, like housing as an investment and the return you're going to get on and all these things. But like the psychic income you have from a home, it's your life. Yeah, it is. Everything is tied into your home.

[Ben Carlson]

So, yeah, they say this has the potential to be, at least collectively, the costliest wildfire disaster in American history, said climate scientists from ucla.

[Michael Batnik]

The Wall Street Journal had this piece that kind of got into the home thing and they talked about how so many people there, their whole entire not only life is in their home, but their financial assets, they were saying that they interviewed all these people and this one Guy says he's 63 years old, he says it was our retirement, it was our investment, it was our equity, it was our everything. And he was basically saying like this, this was our nest egg. And they looked at, they said the average home, the typical home in the Palisades, which is the place they got it the worst, is like $3.4 million because a lot of Hollywood people, they said Tom Hanks and Ben Affleck have a place there. But there's also all these middle class homeowners who are completely screwed. And if you, I've looked at these numbers before. If you look at the stock market, right, it's something like 10% of the people hold 9% of the stocks. Right. It's concentrated in the hands of few. But if you look at real estate, it's more like it's only like 14% in the top 1% and then the bottom 90% is like 55%. So the middle class has a way higher concentration in homes than the wealthy. It's much different makeup than the stock market. For many middle class people, a house is not only like by far and away their biggest financial assets. For some people, it's their only financial asset. And then it goes away. I can't imagine, I mean, think it's, it's seeing your stock portfolio lit on fire and not knowing what the outcome is going to be that is a scary proposition, especially since it's roof over your head.

[Ben Carlson]

Yeah.

[Michael Batnik]

So I don't know if you read a lot of these pieces about the insurance industry there.

[Ben Carlson]

I didn't. So bring me up to speed.

[Michael Batnik]

So it feels like if you started from scratch and tried to make up some of the rules that they have in California in terms of how this stuff works, these laws and rules would never get passed today. But it's one of those things, like we do it this way because it's always been done this way. So obviously insurance is a big issue that you and I have been talking about for well over a year now, I guess because it seems like every six months, unfortunately we have one of these natural disasters and they seem to be getting worse. And insurance is a big, it's a big topic now because some people did not have fire insurance, unfortunately. But they also said that in 1988. So this is from Noah Smith and I read this a lot of different places. There was a Prop 103 which said that if insurers want to raise their premiums, they have to get approval by the government first. So, like, insurance commissioners would have to say, yes, it's okay for you to raise your prices in what elected officials ever going to say, oh, sure, go ahead and raise prices. So what happened? They didn't raise premiums enough. So a lot of the insurers said, we're out of here if you're not. If we're not, if the risk reward is going to be so skewed that we're not being paid enough for this risk, we're not going to insure anymore. And I guess there was state insurance that you could get on, but it was much higher priced, obviously. And so what happened is a lot of people just don't have insurance either, making this obviously even harder to stomach. Right. So. And I don't know what the answer to this is because again, we've asked, like, what is the. The answer going to be for people in California or Florida if they have these natural disasters? The government, if is going to have to step in eventually, whether people like it or not. Don't you think that's the only solution, even though it isn't a great solution?

[Ben Carlson]

I have no idea.

[Michael Batnik]

Yeah. And you don't want to worry about, like, the financial aspects of this kind of thing, but that is a worry for a lot of people. And the other thing was, the Wall Street Journal article touched on was the people who are displaced now, they're trying to find rental. Rentals. Right. Because where do they live? And so now the. It's going to make the housing situation even worse there because the supply is so low, because people are fighting over rentals now. And so those rates are being jacked up. It's just an awful situation all around.

[Ben Carlson]

Yeah. Yeah. I can't really, truly, I. You can't. You can't imagine what that's like.

[Michael Batnik]

And when you talk to people, even if they weren't personally, they didn't, you know, saying, hey, my house is fine. You hear they had friends or colleagues or peers who were impacted. And it just the. You can hear the way they explain it. Just the. The terror. I can't imagine looking at the wind report and wondering. I saw a video of a guy who was on his roof saying, we thought we were gonna be fine. And then all of a sudden the winds shifted and now we're worried and we're trying to get out of our house. And it's just, ugh, it's. What an awful feeling.

[Ben Carlson]

The, the ugliest part of the Internet is just people politicizing tragedies, like, immediately.

[Michael Batnik]

Yes. It Is, it's very sickening and I, it's just unfortunately one of those things that's probably only going to get worse.

[Ben Carlson]

Yeah. Yeah. I, I don't know. I'm at a. Lost words. I'm not really sure what to say because I don't, I don't know, like about the insurance situation and what the, what the problems are, what causes, how do we fix this, what are we doing for it? It's just, you know, obviously not something that I'm keyed into, but. Yeah, it's just, it's devastating. It's. It's really, really, really sad. All right, Anything else to say on this?

[Michael Batnik]

No, just thinking about the people out there and it's, it's just I, I can't even imagine what an awful situation that is.

[Ben Carlson]

Yeah. All right, let's talk about the stock market. So we round tripped the gains from the election. I think this is as good a reason to sell as there ever could be. I am extremely happy with the reason why stocks are behaving the way they're behaving at the basic healthy correction. Very healthy. The keto diet correction.

[Michael Batnik]

Wait, so what is the reason it's selling off? Because I don't. Is there a reason?

[Ben Carlson]

Yeah, I think it's pretty simple.

[Michael Batnik]

Rates.

[Ben Carlson]

The economy is not slowing down. Rates are, as a result, and as a result of some other inputs, rates are going up. And so the fear is that there will, there are less reasons for the Fed to cut. And so that's it. And so stocks are falling because of that. The economy is too strong. Could there be a better reason for stocks to fall?

[Michael Batnik]

Yeah, that's pretty good.

[Ben Carlson]

Right. So you know, we had back to back 20% years and I am, usually you're, you're much more likely to say this than I am, but I, I will bend the knee to you this time. Stocks were just looking for a reason to sell. Right. You say that sometimes.

[Michael Batnik]

That's true. Right. You had, you already had really great gains heading into the election.

[Ben Carlson]

Yeah.

[Michael Batnik]

And then you had an election pop too. You're right. I'm sure people said, you know what? This, this is, this is pretty good.

[Ben Carlson]

So I've, I've, I've been talking about Apple a lot for the past couple of weeks. Just like a proxy for the 2024 market.

[Michael Batnik]

Like you and Mark Zuckerberg both hating on Apple a lot.

[Ben Carlson]

Apple did not have a good year and the stock went up almost 30%. Why? Because, you know, AI and hopes and whatever and Apple had a very quick 10% correction. Now I'm not picking on Apple specifically. I don't ever, ever want to see anybody lose money. But just as a, as a proxy for this market. And the way that I view what just happened to Apple, it's like they just blew the foam off the, off the beer. Right? Just one of these.

[Michael Batnik]

Do you do that? You know, you know, you know what the grossest one was? Always if you take the oil on your, like your nose and then you wipe it on the. Have you seen that trick?

[Ben Carlson]

What the.

[Michael Batnik]

Is that the grossest thing you've ever. I had a. In college people used to do this, okay, you, if you have a lot of foam on your beer, you touch your finger to your face cuz you have oils on your face and then you put it on the top of the foam and the foam evaporates.

[Ben Carlson]

That's cool.

[Michael Batnik]

I had a friend who always do this and I'd go that's disgusting. You're putting face oil into your beer. You've never seen that trick?

[Ben Carlson]

Weird. No. Okay, the more you know. So yeah. Now listen, if, if the ten year continues to rise and up and up and up, that will definitely not be good for stocks. I would probably take the other side of that. It does seem very one sided consensus on where the dollar is going on, where rates are going.

[Michael Batnik]

Don't you think that at this juncture, not always the cure for high rates are high rates. It's kind of like the cure for high commodity prices or high commodity prices. Don't you think the cure for high rates is going to be high rates and the fact that they're eventually going to. Either they're going to slow something down or the economy is going to be so strong that it's not going to matter very often, very much. So it seems like both outcomes are pretty good unless rates get high enough where they really cause people to retrench. And I don't think we're quite there yet.

[Ben Carlson]

Yeah, I agree.

[Michael Batnik]

So Matthew Klein had a piece on like why are yields rising? And he said you don't have to look very far. It's just people were too pessimistic on economic growth and now that trade is unwinding and I think that's pretty fair and that people have been very pessimistic for the last two and a half, three years or only pessimism.

[Ben Carlson]

I don't know if I buy that. I bought that when Warren Pies put it out there. Like the first part of the move was just the unwind. But it keeps going, it keeps Moving, the move keeps moving. Like how much unwinding is there to be done?

[Michael Batnik]

So it kind of gets back to the point of what should rates be given the state of the economy. And if you look at, I don't know, a 1990s, 2000s kind of thing, if the 10 years at 4 to 5%, shouldn't these other rates be mortgage rates maybe should be 6 or 7%. If real GDP growth is going to be 3, 3 and a half percent, maybe they should be this high and maybe this is the market realizing this even if it feels painful to us because we got way used to lower borrowing rates for a long time.

[Ben Carlson]

So Torson Slack has a post a chart on the 10 year yield before and after the first Fed cut and he looks at the average of all cutting cycles and today and it's just, it's unusual because normally the Fed isn't easing with an economy this strong.

[Michael Batnik]

Right. The other thing is this, it just happened to line up perfectly with when the Fed started cutting. So like if you, if you're a person who makes nice looking charts, this is just like chart kid Matt has, you know, right when the Fed started cutting, rates started going up.

[Ben Carlson]

Yeah.

[Michael Batnik]

It's almost like it was like a perfect handoff.

[Ben Carlson]

What's interesting though is this chart is from John authors at Bloomberg showing global 10 year yields all across the world. And it's not just in the US like our rates are a little bit higher than around the world but their strength in 10 year government bonds all over the world, which is just, which is interesting.

[Michael Batnik]

Although if you look at the 10 year though the trend is up, but look at how many up, down, up, down. It seems like every time this happens we again we try to shift the narrative. My whole thinking is at some point people are going to look back and go gosh, those 5% yields on treasuries were so juicy. What were we thinking? That is going to be a, that is going to be a hindsight bias conversation at some point. I don't know when.

[Ben Carlson]

All right, I'll say it. I bought zero coupon bonds this week. First time.

[Michael Batnik]

Zero coupon bond.

[Ben Carlson]

Yeah.

[Michael Batnik]

Okay. Like 0z the ETF.

[Ben Carlson]

Yeah. It could be early.

[Michael Batnik]

Okay, so you're, you're, that's a mega duration play all the way.

[Ben Carlson]

And listen, this is like my fun gambling account, my Moderna account, which, that was fun. Ben goes, did you sell last week? I said nope, taxes.

[Michael Batnik]

I was in New York and you said I got like a 20% pop. I think I'm going to sell and we kind of talked about it, and then it, what, fell 20%?

[Ben Carlson]

Well, I was going to sell, and then I had that listener in the back of my head, hey, you don't sell 20% gains, you idiot. Hold on.

[Michael Batnik]

We'll talk about that later. I got it in here.

[Ben Carlson]

But wait. But this is the great part about investing in a brokerage account. You're either taking gains, you're taking tax losses. You can't lose.

[Michael Batnik]

Okay, so your point about rates rising around the globe. This is kind of like the inflation thing, where you try to look at it in isolation of the US Economy, but this is a global phenomenon. And maybe, Maybe this is just the way things are now. Like you. It. The decoupling doesn't happen as much for these things like inflation and rates.

[Ben Carlson]

Well, so this next chart, this is again from the same Bloomberg article we're looking at. Since the September jumbo cut rate cut, hopes have evaporated.

[Michael Batnik]

That's a 50 basis points called jumbo.

[Ben Carlson]

It's a jumbo cut. You don't know.

[Michael Batnik]

I feel like we need a different name for that. Jumbo, to me, is like 100 basis points. 50 is like a big cut. Jumbo. That's a. That's a big adjective.

[Ben Carlson]

While we're on the topic of rewriting the rules of the English language, juror number two, there was a line that J.K. simmons said. It's a line you don't hear every day, and I have no idea what it means. I've heard it before. He said he. He's like, confident about a wager. About as confident as I was on the Chargers. We'll talk about that later. And he said, from dollars to donuts.

[Michael Batnik]

Yeah, I don't know what that one means either.

[Ben Carlson]

But you've heard it before, right?

[Michael Batnik]

Oh, I've heard it plenty of times.

[Ben Carlson]

Dollars to donuts.

[Michael Batnik]

Yeah, I don't know what that means either. That can't be a Shakespeare one because. Did they have donuts back then?

[Ben Carlson]

So I was. I was thinking about, like, origins of, like, phrases, you know, like, where 90%.

[Michael Batnik]

Of them are Shakespeare.

[Ben Carlson]

Oh, really?

[Michael Batnik]

Look this up. Look up, like, Shakespeare phrases and saying. Okay, phrases that emanated from Shakespeare. It's a lot of them.

[Ben Carlson]

Dallas donuts means something that is certain. The phrase is an American idiom that originated in the middle 1800s. The idea behind the shorthand phrase Dallas donuts is a sentiment that the speaker is so confident that he is about to. That he is right about something, he will put forth his dollars against the listener's donuts it still doesn't make sense. It still doesn't make sense. But just imagine the first person to say something and then it catches on and it goes viral and then you start.

[Michael Batnik]

It was like the memes of the day back then. Right?

[Ben Carlson]

Imagine I was the first person said. No, you weren't the first. Come on.

[Michael Batnik]

That's like saying, I started this meme and everyone's going, no, you didn't.

[Ben Carlson]

Yeah, but somebody had to be the first person to say dollars to donuts.

[Michael Batnik]

That's true. I'm sure a lot of it came from the written word and that's how it spread. It had to be writers. Right? Okay, what's the other side of this? Oh, the sheriff. Households reporting is harder to obtain credit than one year ago stopping.

[Ben Carlson]

So yeah, so we've got two charts from Torsten Stocks. So we talk about like the rates going higher as being restrictive on the economy. Right. Higher borrowing costs. However, the share of households reporting it is harder to obtain credit than one year ago has been going down. Meaning access to credit has been good.

[Michael Batnik]

Since we're on the Torsten Slack thing, I've got a take here and I feel like everything that every negative worry about the economy for the past two and a half years has been a nitpick. This has been one of the strongest economies we've ever seen. So look at this other one. He shows a record low share of countries expected to be in recession in 2025 and 2026. So this is the share of countries with positive and negative growth going back to 1980. And look at this. We basically, they're forecasting 2025 to have 99% of countries around the globe with positive growth. And if you look historically, it probably hovers around 80% average or so that are positive. This is one of the strongest global economies we have seen in the past 40 or 50 years. And everyone hates it. All right, so everything that every negative piece about the economy. Well, what about higher mortgage rates and what about that? They're all nitpicks at this point.

[Ben Carlson]

I love that idea. With the exception that everyone hates it. I think you're very. You're too much Twitter brain right now. Not everybody hates it. That's not even close to being true. But you are right that all of the arguments against the economy are right. They're nitpicking.

[Michael Batnik]

More people hate the economy right now than should hate it.

[Ben Carlson]

Fair.

[Michael Batnik]

Okay. So he also shows this household debt to asset ratio at a 50 year low. Debt to asset for ratio for households and a part of this is because assets have risen so much, probably. But debt is also. It's kind of fun.

[Ben Carlson]

Fiat assets.

[Michael Batnik]

True. I'm just saying this is what we do is especially in finance, we find stuff to worry about. But it's all been nitpicks at this point. It's all like, yeah, that was an amazing movie. Like Pulp Fiction is the greatest movie ever. But what about Bruce Willis girlfriend? Right. You're looking for the bad part.

[Ben Carlson]

Yeah, that's a really good point. Very astute observation, Ben. Very well done. All right. Blake Millard had a tweet that, you know, this is catnip for me. I just. I love this stuff. I'm a sucker for it. What can I say? First five days a key market signal. The last 49 first five days that were up were followed by full year gains on 41 of those 49 occasions, an 84% hit rate. The average return is up 14% for those years. The numbers fall off dramatically when the first five days are down, coming in negative about half the time and averaging less than 1% returns for the year. Ben, I know you hate this, so how about it?

[Michael Batnik]

I don't know. I actually don't really hate it.

[Ben Carlson]

It is pretty interesting, right?

[Michael Batnik]

It kind of. I'm sure you could do the same thing like the first month of the year or. Yes, it's. It's very short term in nature, but I don't know, maybe you're setting the tone somehow and. I don't know. I guess I'll take it.

[Ben Carlson]

Well, there. There is a chart. I think. I think Nicholas did this. But I could be wrong. I could be mistaken. Is it mistaken? Yeah, mistaken. I said mistaking. Mistaken. The market is most likely to top in either January or December. Did you know that?

[Michael Batnik]

Yes, that's the one. I've heard. Nicholas, that. That kind of is mind blowing that it just happens right away or it happens after a big year or whatever.

[Ben Carlson]

So this corroborates the data that. That Blake is sharing?

[Michael Batnik]

Yeah, that's why it kind of makes sense to me. Okay. Howard Marks says he is on bubble watch. He wrote a one for Oaktree. No shade at the legendary investor, but I think he's been on bubble watch for a while. Is that fair to say? He's probably been on bubble watch for like five years.

[Ben Carlson]

I think that's being generous. And we're big fans of Howard Marks.

[Michael Batnik]

Okay. But this was an interesting point based on our conversation from last week. We've had the mega tech, mega cap conversation for a while. He looked at the top 20s and P500 companies at the beginning of 2000. And then he looked at them at the beginning of 2024. So there's six of the top 20 are still in there. Ones that have dropped out would be IBM, Oracle, Verizon, Pfizer, Coca Cola, Proctor and Gamble. It is crazy how many of these, like blue chip names, General Electric, were, were in there back then. He said importantly, of today's Magnificent Seven, only Microsoft was in the top 2020 four years ago. And so the, the biggest names of.

[Ben Carlson]

Today are that this is likely to be. That there's likely to be turnover again or.

[Michael Batnik]

Yes, I think that's, that's the point, he said. And in bubbles, investors treat their leading companies and pay for their stocks as though the firms are sure to remain leaders for decades. Some do and some don't. But change seems to be more the rule than persistence. And last week you said, like, listen, I don't think these companies are going to change. And this is, to me, this is like the big intellectual debate going on right now that, that my grand Rapid's hedge could see both sides of like.

[Ben Carlson]

I so disgusted with you. Take a side.

[Michael Batnik]

Remember, my side was I pick the index fund.

[Ben Carlson]

That's all right.

[Michael Batnik]

That's a side.

[Ben Carlson]

This is an opinion show. We're here to have fun.

[Michael Batnik]

Because this is okay. If you want my opinion. Yes, there's, there's going to be. At least two of the mag seven are going to drop out in the next 10 years and you're, everyone's going to go, of course they did. Of course they did. Like I, for me, it's always been Facebook. I feel like Facebook is the one that.

[Ben Carlson]

No, I know why.

[Michael Batnik]

Okay.

[Ben Carlson]

No, that's the one to me, because you're, you're thinking, you're thinking with your boomer hat on. You're thinking about like Facebook. Facebook and Meta is much bigger than Facebook. Facebook is enormous. But Instagram and WhatsApp are also monster.

[Michael Batnik]

I know, but my point is that maybe what if social media is, is fleeting and a new thing comes along? That's, that's why I think they'd be the one that's biggest at risk.

[Ben Carlson]

Okay?

[Michael Batnik]

And I've said that for five or seven years and I've been wrong.

[Ben Carlson]

My, my. If I had to pick one, it would be Apple. I know. It's a very, very, very wide moat, very thick, very difficult to penetrate. It's like a rhino's hide. But it's, that was a good phrase right there. I don't know why I said that.

[Michael Batnik]

No, I agree.

[Ben Carlson]

It's hardware. It's. It's freaking. It's this.

[Michael Batnik]

It's so ingrained in your lives, though. But.

[Ben Carlson]

I know to your point, but, but can't there be. Can't there be a better piece of technology?

[Michael Batnik]

No, but you, yeah, you could. But the thing is, you could say Apple is not in the top five anymore in a decade. And that doesn't mean that necessarily that the company did terribly. It's. It could just be more mature and it's not seeing crazy growth rates anymore. I. I could buy that. It doesn't have to crash and burn.

[Ben Carlson]

It's not growing. It hasn't grown for years.

[Michael Batnik]

Yeah, the ski goggles are the first thing to me, like all these companies have had a failure. Think about how many times Amazon is. Remember Amazon did a phone that totally did nothing and crashed and burned. It's like whatever, the ski goggle thing from Apple, that didn't work.

[Ben Carlson]

Now, I guess, you know, there's a lot of counterarguments to what I just said. Like just the scale of Apple, though, it's so extraordinary. Think about how big a business the AirPods are, right? Like, AirPods is a standalone business, is an enormous business.

[Michael Batnik]

You know, I started finally buying cheaper. I'm sick of losing them or them not connecting. Or I started buying the cheap $20 ones on Amazon. I'm not buying any more AirPods.

[Ben Carlson]

Is that what's in your right now?

[Michael Batnik]

No, these are still AirPods. Once these are gone, that's it.

[Ben Carlson]

I feel like I like, mentally budget $500 a year for AirPods.

[Michael Batnik]

That's what I do, too. So I looked up, I think ramp capital, tweeted out like, hey, what are some cheaper versions of AirPods? And I looked at some of the recommendations and I bought these, like sound Core something for like 20 bucks. And guess what? They work just fine.

[Ben Carlson]

Really. Okay. All right. You know what, Apple, I'm in on, I'm in on the, the. What are they called?

[Michael Batnik]

I'll send you them Sound Core. I don't know, Soundcore.

[Ben Carlson]

Okay.

[Michael Batnik]

Okay. So last week it was just perfect Chef's Kiss timing. We had an email from a listener who has. Who as a college professor, he's DM'd me a bunch of times. And he said, listen, I'm one of the ones who got Nvidia early. And he says he's lucky. But he also, yeah, really nice guy. And he said, listen, I also bought these quantum computing stocks, which didn't we.

[Ben Carlson]

Talk about this Last week on the show.

[Michael Batnik]

Yes. So the timing of it is perfect. So he emailed us and he said, what do I do? I bought these at like 90 cents in a dollar. So we got in them early and the ones he bought were Rigetti and what's the other one? D Wave Quantum. I don't know. These companies, These companies got as high as like, looks like 10 bucks and almost 20. And the day after we were at that thing and you and I said, we don't know, but is it really going to be the next Nvidia? Hard to say. The day after we did that, Jensen Wang from Nvidia said, if you kind of said 15 years for very useful quantum computers, that'd probably be on the early side. If you said 30, it's probably on the late side. But if you pick 20, I think a whole bunch of us would believe it. Basically saying we're 20 years out on quantum computing. Sorry.

[Ben Carlson]

Stocks got cut in half on the.

[Michael Batnik]

And these companies since last Tuesday are down 55 and 60% like that. It's just kind of crazy that we got that email and a day later these things got massacred.

[Ben Carlson]

So somebody emailed us with a really good point. It's like, listen, if you're trying to think through selling big winners, the answer is come up with a plan. Say I'm going to sell X percent a year or X percent a quarter or a month, and you just stick to it. And this way you'll sell some when they're high, you'll sell some when they're low. And I think that's really good advice when you're thinking about, hey, I've owned Microsoft for 25 years, right? I have these gigantic gains and it's a relatively stable company. It's not going to go down 50% in a day. The question about want to sell these stocks is a completely different question altogether because these stocks, just by their very nature, if you're trying to get like 100 bagger and you're in these small volatile companies, I don't know what the rules are. Like, I don't know what a good rule of thumb is for trimming. For trimming or taking winners. Because by definition, unless you're the best trader of all time, you're going to have to take massive drawdowns. You don't get 100 bagger without 70% drawdown. So I'm not sure that there's great universal advice for what to do when you catch one of these.

[Michael Batnik]

I think if you're really going for a 10 bagger or 100 bagger. You probably have to make a VC portfolio where you're going to buy 10, 15, 20 of them, and 90% of them are going to do nothing or lose money. A couple of them might do. Well, I think that's.

[Ben Carlson]

Yeah.

[Michael Batnik]

Well, we've gone for a hundred bagger and a concentrated portfolio. Good luck.

[Ben Carlson]

I think we heard from somebody in the Nvidia story, or maybe it was in the story itself. Like, their strategy was to do just what you said.

[Michael Batnik]

Right.

[Ben Carlson]

And you just got to hold on.

[Michael Batnik]

Yeah, I couldn't do this strategy, but Godspeed to anyone who can. Okay, this is interesting. The Target A fund. This is from Jeffrey Patak from MorningStar. In the three years ending 1130 24, the average dollar invested in thematic funds and ETFs lost 7% per year. Now, most of that was ark, so ex. Ark. It's almost a 6% loss. Over that same span, the average dollar invested in target date 2050 funds gained 6.9%.

[Ben Carlson]

Nice.

[Michael Batnik]

Dull, crushed. Exciting is what he says. And this is one of those things that's. That you would have predicted but is still, like, hard to fathom because thematic funds, I'm sure many of them outperformed the Target Date Fund, but the investors in Target Date funds did much better because they just stuck it out. This is the thing we see, we've seen so many times in history. This is the case, and people still don't believe it.

[Ben Carlson]

Well, I think that, you know, human nature, you just think that, like, oh, I'll get out, I'll ride the wave, and I'll get off the train before it crashes.

[Michael Batnik]

Right. So, like, me buying T bills would probably outperform you buying your coupon bonds, probably.

[Ben Carlson]

This is the Tortoise and the Hare. You're the. You're the. You're the tortoise. All right, so Derek Thompson got the COVID story for the Atlantic, and it's called the Antisocial Century. Did you read this, Ben?

[Michael Batnik]

I did. It's a very long piece. And I read the whole thing. What are they gonna call it when magazines completely go away? Are they still gonna call it a cover story? And do you think in the future people are gonna go, why do they call it a cover story? The COVID of what? Like, newspapers and magazines, like, our kids, they don't know what this stuff is. Magazines cover story is going to be one of those things where people go, why is it called a cover story? There's no cover to what?

[Ben Carlson]

Yeah, I don't know. And it's a stretch. I think magazines will always be a thing.

[Michael Batnik]

Oh, I don't know man. Really? Everything's gonna be digital in the future. I'm like the last holdout here for hard physical magazines.

[Ben Carlson]

I think in our lifetimes there will always be magazines, albeit they're in secular decline, obviously. I just don't think they're gonna disappear forever entirely.

[Michael Batnik]

No, I think there's gonna be a time. So in the next 50 years, you think magazines won't completely go away?

[Ben Carlson]

I'm not lasting another 50 years.

[Michael Batnik]

Okay, so you are middle aged.

[Ben Carlson]

I saw a tweet yesterday. Don't be a menace. Do you remember don't be a menace.

[Michael Batnik]

Oh yeah.

[Ben Carlson]

So don't be menace. I was a bit young with this when I was too young to see this. When I saw it, it came out. So I was 11 years old.

[Michael Batnik]

I had a friend who. This was like his favorite movie. Like he watched it all the time.

[Ben Carlson]

Yeah, me, I. I was that kid. So I was 11 when this came out. Wildly inappropriate for an 11 year old. I would say this is probably like, you know, you probably should have been like closer to 14.

[Michael Batnik]

It was a spoof of a lot of the gangster movies in the 1990s anyway.

[Ben Carlson]

So I was 11 when this came out. And yeah, this movie came out 29 years ago.

[Michael Batnik]

It was a Waynes Brothers movie 29 years ago. Right. I just still remember the part where he tops out with a nuclear bomb.

[Ben Carlson]

Out of his mouth. Do we have.

[Michael Batnik]

Okay, so back to Derek's story. So he says it's the anti social century. A few stats and figures. This one's interesting. 74% of all restaurant traffic came from off premise customers in 2023. That is takeout and delivery. Up from 61% before COVID saying people aren't going into restaurants as much. It's like taking out go eating at home. He also said adults spent in 202299 minutes at home on Enigma day more than compared to 2003. So we're spending a little over an hour and a half more at home than we did in the past. And he goes to all these stats. We're watching more tv.

[Ben Carlson]

Just go through all these movies.

[Michael Batnik]

Okay. What else do you want?

[Ben Carlson]

Well, what, you did the first one.

[Michael Batnik]

Yeah.

[Ben Carlson]

All right. The share of US adults having dinner or drinks with friends on any given night has declined by more than 30% in the past 20 years.

[Michael Batnik]

That's a lot. Solo dining has increased by 29% in the past two years. The number one reason is the need for more Me time television.

[Ben Carlson]

So in 1970, just 6% of sixth graders had a TV set in their bedroom. And in 1999, that proportionate grew into 77%.

[Michael Batnik]

As a parent, my wife and I have already talked about this. My daughter's asked, can I have a TV in my bedroom?

[Ben Carlson]

My answer is no.

[Michael Batnik]

No, no. Not in the bedroom.

[Ben Carlson]

My answer is no.

[Michael Batnik]

It's funny because, well, they're gonna have iPads, so it's not gonna matter. But not in the bedroom, right? You have to at least be biased. You're not going to go watch tv. Did I ever tv?

[Ben Carlson]

I feel I didn't. So I feel fairly strongly about this. Although, let's be honest, I don't really care, but I kind of care. I did not grow up with a TV in my bedroom.

[Michael Batnik]

I think maybe in high school I got one, but I think it was more for video games. I didn't actually watch TV in there.

[Ben Carlson]

You know, I don't know why I'm so judgmental about this. Like, what's the big deal? I guess. But I don't know, I just think.

[Michael Batnik]

That I like TV being a communal thing. Like, we make our kids, like, no, we're watching a movie together tonight. We're all doing. So anyway, the point of Derek's post is just that, like, especially the one that gets to me is like the less social teens, the percentage of 12th graders going out with friends two or more times a week has gone from 80% or so in 1980 to 50 or 60% now. So the whole loneliness thing, and he looks at the other side of it and he did a podcast on this too, which I think worth a listen. Saying like, we are more connected than ever and there's more ways to talk to people. I remember, I did, I've mentioned this before. I did a summer in Europe for school. We had this program for school that would send us over to Vienna for two months. And I told my wife about this a couple weeks ago. Like, I maybe called my parents once a week and sent like one email. Other than that, like, I was off the grid to them. They had no idea where I was, what I was doing. And now if you went to Europe, if you sent your, you know, 20 year old to Europe, you'd be texting them all the time, you'd be calling them, you'd be, you know, you'd be in constant contact. So that piece of it is, there's way more contact these days. But I think this whole loneliness epidemic is way, way, way more important for young people. This is a terrible thing for young people. I think once you get older in middle age, yeah, sure, it can mess with your mood a little bit. I don't mind being as alone in middle age. When you're young, you need this. This is why I think college is still so important. And the people who poo poo college and say, no, we're going to have AI robots teaching our kids they won't need to go to college. The socializing aspect of college is the most important part of it. And that's why I think college is still very important for young people. It forces you to interact with way more people and socialize more. Because living in a dorm room is not a great living situation.

[Ben Carlson]

Yeah. So he has a chart in here showing the change in average minutes spent at home compared with 2003. And of course this increased, you know, 4x in the pandemic, but it hasn't really given a lot of it back. So Derek wrote that modern technology is always open window to the outside world makes recharging much harder, leaving many people chronically depleted. A walking battery that is always stuck in the red zone. In a healthy world, people who spend lots of time alone would feel that ancient biological cue. I'm alone and sad. I should make some plans. But we live in a sideways world where easy home entertainment, oversharing online, and stunted social skills spark a strangely popular response. I'm alone, anxious and exhausted. Thank God my plans were canceled.

[Michael Batnik]

I get that. And think about when you go out to hang out with people and then they are on their phone while you're hanging out. So it's like even the hangout time is not as much one on one anymore.

[Ben Carlson]

I'm guilty of that, unfortunately. Cause it's just like habit.

[Michael Batnik]

Everyone is. And this is why the 1990s really were better. I saw a piece last week saying like the 90s weren't as great as you think they were. And they went through all these statistics and stuff.

[Ben Carlson]

But like, come on.

[Michael Batnik]

My. My retort, that was. No, the 90s were better because as someone who lived through both of those time periods, I can tell you the 90s really were better because it just.

[Ben Carlson]

Filthy menace.

[Michael Batnik]

It just wasn't as exhausting as it is. Being online all the time is exhausting. I think we are gonna. As much as. As great as it's been, we're gonna look back someday and say social media was bad for humanity on net. Like it's, it's been. It's just been a. I think it's been a horrible Horrible thing for us.

[Ben Carlson]

Oh, my God. I have no doubt. Yeah. I. I don't even know if that's controversial now. It is what it is that it is. Right? There's.

[Michael Batnik]

Yeah. So there's no going back.

[Ben Carlson]

And it's definitely. Listen, it's definitely not all bad. Not. I'm not saying that. I don't think Derek's saying that. There's obviously amazing aspects of it, connecting to others. You know, there's a lot of good, but there's a lot of disgusting bad stuff. I got. I got stuck on the. For your tab over the weekend. My. My kids were at the Nick game and I just, like, fell into it and it was just like. I just looked up after 45 minutes. My eyes were burning. Like, what did I just do?

[Michael Batnik]

You feel gross about yourself, right? You can't. The algorithms are going to take us over. Here's my one take on this financially, about people spending more time at home. This is going. This is just going to. So the remote work thing and people wanting to spend more time at home, you know, having takeout as opposed to going to restaurants. When I going back to the college thing, my dorm was this. How many. I don't know how many square feet. It was 200. My dorm was awful. And so I. You never wanted to be in it, but that's the point of college is being out and about.

[Ben Carlson]

Right.

[Michael Batnik]

But I think for people wanting to spend more time at home, this is going to put a bigger premium on housing prices because people are going to want to spend more time at home. They're going to be working at home.

[Ben Carlson]

They're going to be an office in their home.

[Michael Batnik]

Yes. So this. This is one of the reasons rooms. Yes. So this is the reason why there is a premium on housing because people are going to want bigger, nicer homes now.

[Ben Carlson]

Okay. You know the meme. The market will regulate itself and then the market. Right.

[Michael Batnik]

Yeah.

[Ben Carlson]

So on. On Polymarket, there is a market. Will Palisades wildfire spread to Santa Monica by Sunday? And Ben Ifrtz, quote, tweeted and said, in all seriousness, this should be 100% illegal. That's not big government telling people what they should or shouldn't do with their money. That's saying you shouldn't be incentivized to burn down Santa Monica to dig yourself out of your gambling debt. I mean, come the on. Of course, this is. Right.

[Michael Batnik]

That is awful that they even allow that thing.

[Ben Carlson]

Of course, this should not be a. This. You should not be able to bet on something like this.

[Michael Batnik]

Yes.

[Ben Carlson]

That you could just take a blowtorch to Santa Monica.

[Michael Batnik]

Yeah, that's pretty bad. But this is what people want. Give us everything and let it happen.

[Ben Carlson]

Speaking of gambling, somebody sent this to us. So FanDuel, FanDuel's parent company is a publicly traded stock. I think it's Australian. Is it Australian? Can't remember where. It's. Where they're, where they're held.

[Michael Batnik]

I didn't know that.

[Ben Carlson]

It's called flutter. So. Listen to this, listen to this. Flutter announces update on short term US sports results impact following our Q3 earnings report, continued strong US player momentum has been offset by a period of very unfavorable US Sports results across the remainder of November and in December, primarily on NFL parlay and same gay parlay outcomes. This season has been the most customer friendly since the launch of online sports betting with the highest rate of favorites winning in nearly 20 years. How about that?

[Michael Batnik]

Ah, so people are actually winning in gambling this season.

[Ben Carlson]

Yeah. So everybody had a great season except for me.

[Michael Batnik]

Ben, how many units are you down?

[Ben Carlson]

I was hanging in there. I was hanging in there losing my standard three to five cents on every bet, you know, fluctuating. And I got annihilated. I was so confident that the Chargers were going to win this weekend and it was, I had no, it wasn't even about the Chargers, but I follow football pretty closely and the Texans have been horrendous all season. Their offensive line was dog shit all season long. C.J. stroud was on the run. They're, they're short manned and so yeah, I got hosed. I got, I took a beating.

[Michael Batnik]

And then so now you double down to make it back and then, you.

[Ben Carlson]

Know, I might have tripled down during halftime and then I, and then I follow chased my losses and I was really felt pretty good about the Buccaneers. And then Baker fumble the handoff and so yeah, it was a rough weekend. It was a rough weekend. But hey, that's gambling. Hey, here's another thing. Here's another thing. Tell me in what world this makes sense. There's no other industry that operates this way and I'm sure there's a reason, but maybe there's not. Head coach interview schedule for Lions defensive coordinator Aaron Glenn Thursday Jets Friday AM Saints Friday PM Raiders Saturday AM Jaguars Saturday PM Bears he's still employed. He has a game next week. What other industry operates this way? Isn't that so bizarre?

[Michael Batnik]

You're saying people don't interview for jobs when they still have a job so publicly.

[Ben Carlson]

Hey boss, Sorry I'm Going to be out in the next two days. I know we've got a big meeting next week, but I'm just seeing what else is out there.

[Michael Batnik]

So. I have not placed one bet at all this whole season. My whole thing. Now you're the thematic funds and I'm target day funds. I placed three bets at the end of last season, the day of the super bowl on who would win the super bowl this season. And my bets were on the Baltimore Ravens, the Buffalo Bills, and the Kansas City Chiefs. I got.

[Ben Carlson]

I don't know, plus 1,000 for bills, chiefs and who?

[Michael Batnik]

Bills, Chiefs and Ravens.

[Ben Carlson]

Bills, Chiefs and Ravens. So not the Lions.

[Michael Batnik]

I'm not going to bet on my own team. No. That's like a double whammy.

[Ben Carlson]

Okay.

[Michael Batnik]

You don't bet on your own team.

[Ben Carlson]

So am I going to bet this weekend? I think, unfortunately, we all know the answer to that.

[Michael Batnik]

So that was in my parlay. You betting more and.

[Ben Carlson]

But now, now I'm all shook. My confidence is completely rattled. I feel like whatever it is, I'm gonna lose. But, hey, that's life, right? You win some, you lose some. You win some, you lose more.

[Michael Batnik]

Survey of the week from Michael McDonald of Bloomberg. Wait, Michael McDonough?

[Ben Carlson]

Did he call him Michael McDonald?

[Michael Batnik]

Yeah, he's the yacht rock guy.

[Ben Carlson]

Right, right.

[Michael Batnik]

Yeah, McDonough. He says this is still the most striking chart in economics and politics. The complete flip in one year. Inflation expectations among Democrats versus Republican after the election. So they just updated January 25th data. So Democrats shoots up and now think inflation is going to be higher. Republicans shoots way lower and now thinks inflation is going to be. It's kind of funny. Republican inflation estimates are at zero. I guess the good thing is that the independent in the middle is actually pretty. It's pretty much an average of these two. But the way I look at this is it's kind of like the vibe shift after Christmas. Leading up to Christmas, you listen to Christmas music and you're in the spirit and you have all the decorations, and then the day after Christmas, it's like, okay, we can't listen to Christmas music anymore. Take the decorations down, it's over. Like, it's still snowing out, still beautiful in Michigan. But I can't have Christmas songs on anymore. It's that same vibe shift that you get. And I. I think you have to just use the independent line now. You can't use the Republican Democrat views about the economy anymore. They're useless. Yeah, you can't even call them really a contrarian indicator because it's not even contrarian.

[Ben Carlson]

It's, it's, it's not an indicator. It's. Who did you vote for?

[Michael Batnik]

Yes, right.

[Ben Carlson]

That's it now. But I, I do believe that there is some signal in this survey. So Kevin Gordon tweeted, as of December, the net percentage of small businesses expecting the economy to improve jumped to its highest since 2002. The two month change has only been seen one other time. So a massive, massive increase in optimism from small business.

[Michael Batnik]

Yeah, but look at the last time it happened.

[Ben Carlson]

When was that?

[Michael Batnik]

2016 on the election. This is also a political chart. It's the same thing. Republicans own small businesses, I think is what it's saying.

[Ben Carlson]

Okay, well can't this be like influential if people are optimistic they're going to invest?

[Michael Batnik]

You would hope. Yeah.

[Ben Carlson]

I mean, that's not a stretch. That's a pretty direct path from A to B. I'm optimistic about the future of my business, therefore I'm going to invest in my business.

[Michael Batnik]

I think we've gotten into a world where you just have to throw out what most people say and just watch what they do. Because it's not like companies haven't been investing for the last two years.

[Ben Carlson]

I know, but this is a small business. This is, this is Main Street.

[Michael Batnik]

I just, again, I, I'd like to see if the investment follows. We'll see if it, if it follows. I don't, I don't know that it, that it does. Maybe I'll be wrong. I think you have to watch what people do now, what they say.

[Ben Carlson]

All right. There was a great tweet. That is a real face blower, Ben. So A24, the independent movie company, okay, was able to make 16 movies in 2024 with the same budget as Red One. Now I had never saw it. I haven't seen Red One. Is that the Amazon movie?

[Michael Batnik]

That's the Rock one. Dump. Don't waste your time.

[Ben Carlson]

But did Amazon make this movie?

[Michael Batnik]

They either made it or bought it. Yeah, somehow it's an Amazon movie.

[Ben Carlson]

So $50 million for Dwayne Johnson, another 15 for Captain America. What's his name? Drawing blood.

[Michael Batnik]

Evans.

[Ben Carlson]

Chris Evans. 185 million on the rest of the movie. So A24 did Civil War, Queer Love, Lies Bleeding. That was a great movie. Baby girl can't read that. Y2K. Maxine. I saw the TV glow. Heretic the Brutalist, Sing Sing and a bunch of others.

[Michael Batnik]

So people always say independent movies are dead now. They still exist within a 24.

[Ben Carlson]

They're not dead. What do you. Who Says that they're not dead at all. They're very much alive.

[Michael Batnik]

You haven't heard people, people be moaning that for years that like independent movies are gone.

[Ben Carlson]

No, A24 and Neon are on fire.

[Michael Batnik]

That's what I'm saying.

[Ben Carlson]

We don't have, we don't have as many of them maybe, but I don't.

[Michael Batnik]

Think I've seen any of these movies. Oh, Love Lies Bleeding.

[Ben Carlson]

I've seen a lot of these.

[Michael Batnik]

Weirdest ending to a movie of the year.

[Ben Carlson]

Maybe Love Lies Bleeding. Oh, yeah. Okay.

[Michael Batnik]

I wouldn't see Heretic just because I like Hugh Grant.

[Ben Carlson]

I like. I mean, yeah, I like the movie.

[Michael Batnik]

Good question from a listener. Ben's comments about getting used to consumption in the hedonic treadmill are spot on. We took our three kids to Germany last year. Kudos to you. We plan to return, just my wife and I in 2025. But the kids had such a good time. They're all wanting to go back with us. I'm not sure I'll be able to disappoint them. I'm worried this is just the beginning of spoiling them. Any thoughts on how you guys keep your kids expectations low enough will also give them great experiences? I look at this as the difference between kids being spoiled and entitled. I think everyone, everyone spoils their children in some ways. I think spoiling your kids is, is actually okay. Not all the time. Sometimes spoiling your kids is okay. You don't want to raise entitled kids who just, just assume that they get this. I had some friends like this over the years that came from pretty wealthy families who were a little entitled. And I had other friends who came from wealthy families who were pretty level headed and were probably spoiled but didn't act like they deserved it. That's the difference. I think you don't want kids who feel like they should deserve this type of lifestyle. How's that?

[Ben Carlson]

Yeah. So how you keep your kids expectations low enough? Hmm. That's a tough balance to strike.

[Michael Batnik]

I think the best you have to try to keep them grateful for what they have.

[Ben Carlson]

Right.

[Michael Batnik]

So we constantly try to remind our kids of people who are, who are in worse positions than them and people that we should be helping. And I show my kids some of like the charities that we give to and like this is in the last, like, you know, they still, they're starting to understand money. And so I think that's the kind of thing is like getting them grateful for what they do have.

[Ben Carlson]

Yeah, I mean I think the answer is pretty straightforward. I don't know how if it's, like, easy, but you just. I talk about it to Ben's point, Right?

[Michael Batnik]

Yeah. You have to be. Yeah.

[Ben Carlson]

We're lucky that we're able to do this. A lot of people can't. You do the best you can. You try and. I don't know. I don't know. Yeah.

[Michael Batnik]

So a couple weeks ago, I mentioned that I wanted to go to the Empire State Building when I came to New York, and Dennis, a listener of the show, reached out and said, hey, I got the hookup. Let me know if you want to go. And you. And I didn't drop the ball, but our research analyst Sean, did and didn't get back to Dennis in time. And so I emailed him, I think, the day of and said, hey, I still want to go to the Empire State Building. And he made it happen, like, last minute for us. You couldn't go. You had to go back on Long island because you had family obligations to attend to. Credit to you. So I grabbed Bill Sweet. And we got the VIP tour of the Empire State Building. Skip the lines. And one of the cooler things that I've ever seen. When we walked out on the observation deck, Bill and I both kind of like. Like, it was kind of breathtaking. Like, I couldn't believe the view. And it was totally worth it. One of the best tourist experiences I've had in New York City. Just an amazing, amazing experience to have.

[Ben Carlson]

Surprised your hat didn't blow off.

[Michael Batnik]

It was very windy up there. That's a skull cap. It stayed on pretty, pretty tight. So anyway, thanks to Dennis for being the hook up there. It was an awesome, awesome experience. It was really fun and highly recommended.

[Ben Carlson]

Okay. Yeah. Looks great. I've never done that before. Probably should.

[Michael Batnik]

You should do it for sure. All right.

[Ben Carlson]

Okay. One of the best emails we've ever gotten.

[Michael Batnik]

Yep.

[Ben Carlson]

Michael and Ben, my fiance and I absolutely adore you both. He has been a listener since 2018, and I have been since I met him in 2020, and we started doing pod walks around the esplanade. Esplanade. What's an esplanade?

[Michael Batnik]

Kind of like a big community space. Shops and. Yeah.

[Ben Carlson]

In. In Boston. Love Boston. It might sound corny, but it's part of the nerdy reason we fell in love. Bonding over your pod. In our discourse on media and financial markets, we're now getting married later this year.

[Michael Batnik]

Animal Spirits brings the people together. I made the joke that we should be invited to the reception where we give a live podcast.

[Ben Carlson]

During the reception, I'm sure, their guests would. Recommendations. Ben, what are you watching?

[Michael Batnik]

Recommendations. I watched the Den of Thieves after it was on the Rewatchable because I'd never seen that before.

[Ben Carlson]

Awesome movie.

[Michael Batnik]

2018. Really good heist movie. It's on HBO Max right now. My only nitpick, if we're doing. I'm getting nitpicked at.

[Ben Carlson]

You can't nitpick that movie. I mean, it's a ridiculous movie.

[Michael Batnik]

Gerard Butler character.

[Ben Carlson]

It's like nitpicking Jurassic Park.

[Michael Batnik]

No, I don't nitpick the heist. I love the over the top heists and I think that part of it. But Gerard Butler's cop character was so over the top. Like he goes to his ex wife's dates and stuff, and he's so over the top that you don't even root for the cops. You root for the bad guys in this movie.

[Ben Carlson]

Okay, I don't remember the plot that well, but I do remember having a heck of a good time. A rip, Warren. Good time.

[Michael Batnik]

Okay, so I've been. I've been catching up on the agency lately, and I've been watching a lot of spy shows in the past year or so, and I have a game show idea from all my spy shows. I don't know if you're caught up on the Agency at all.

[Ben Carlson]

I'm a few episodes behind.

[Michael Batnik]

Okay.

[Ben Carlson]

Does it tail off?

[Michael Batnik]

There's two. There's like two episodes in the middle that kind of. But then you get back to six and seven and it starts getting really good again. So there's a couple of filler episodes, but then it takes off again. But this show, there's a lot of tailing. Like, right, I'm tailing this person to see where they're going, or they're tailing me and people are trying to lose a tail. That could be a game show.

[Ben Carlson]

How so?

[Michael Batnik]

You know, someone tries to tail you through New York City or Chicago or la, and you have to try to lose the tail. Like happened to this building. Right.

[Ben Carlson]

This is a stretch. This is a stretch.

[Michael Batnik]

Ben, you tell me that wouldn't be fun to do on a. Like, you've seen how people go into those safe rooms or whatever or the mystery rooms for something to do. Like if you were on a bachelor party and they said, what are we doing today? Laser tag, paintball? No, we're all gonna get tailed through the city and try to lose the tail. That'd be fun. Come on.

[Ben Carlson]

Well, what if you speed up?

[Michael Batnik]

They have to pick the idea.

[Ben Carlson]

Yeah. What if you speed away and you hit somebody. I don't think you've thought this there. I'm. Nitpick that entire thing.

[Michael Batnik]

No, you're on. No, you're not driving a tail like they're. They're tailing you walking through somewhere, not in your.

[Ben Carlson]

That sounds even worse. All right, what else?

[Michael Batnik]

Okay, Landman. I love the part where Billy Bob gives his soliloquy about oil prices and he says, the perfect price of oil. You remember this line? So he says, you want. This is for the oil producers. You want oil to be in the $60 to $90 range. Right. He says, anything over that, gas prices are too high and it starts bleeding into the economy and it's not good. And he said, the perfect price of oil is $78 a barrel. Do you know what oil is today? $78, as I'm looking at it on my WI chart screen, $78 a barrel today is the perfect price of oil according to Billy Bob from Landman.

[Ben Carlson]

Are you all.

[Michael Batnik]

Can't get any better than this?

[Ben Carlson]

Are you all the way caught up?

[Michael Batnik]

No, I'm probably on episode five or so.

[Ben Carlson]

Okay, no offense. You're moving very slowly through that show.

[Michael Batnik]

I am. We've been busy lately with sports and such. Yeah, it's a good show. The stuff with the wife. Sometimes a little cringe.

[Ben Carlson]

Yeah.

[Michael Batnik]

But again, this is like nitpicking the economy. See, I'm the nitpick guy now.

[Ben Carlson]

Yeah. Okay. Few things. Listener email. Two movies. I watched the first one and I politely said it wasn't for me. I just didn't really get it. The movie was called Red Rooms. And then. And then he said, all right, try the next one. That might be more your speed. And the next one was Woman of the Hour. Anna Kendrick starred and directed it. And it was okay. And I was like. And he emailed me again. He's like, what did you think?

[Michael Batnik]

I gave you that one.

[Ben Carlson]

Woman of the Hour.

[Michael Batnik]

Yeah, that's the game show one with a serial killer.

[Ben Carlson]

Yeah, it was fine. It was like a B minus, C plus. It was.

[Michael Batnik]

Yeah, it was okay. Better idea than a movie.

[Ben Carlson]

It was fine. It was whatever. And then he's like, all right, last one. If you don't like this, I prom double triple table pounder. The movie was Kneecap. Which sec. That's. Somebody else had recommended that movie as well. So Kneecap is on Netflix. It stars. Well, stars. He's a supporting actor. Michael Fassbender. And it's about.

[Michael Batnik]

And this is a fast bench into this, too. I love him, man.

[Ben Carlson]

So listen, I'M sorry. This was news to me. I'm a bit embarrassed to admit this, but hey, I learned something new. Why am I embarrassed? Irish is a language.

[Michael Batnik]

You mean like they have their own language there?

[Ben Carlson]

So I'm like, google. I'm like, what the hell? So the premise of the movie is like the English want them speaking English and they're trying to keep the heritage alive. So I googled like Irish language. So apparently it's Gaelic. You've heard of that? I've heard of that before. Right, right. But I didn't realize that that was Irish and it's like a real language because I was like, in the beginning of the movie, I was like, is this like a made up language? Like, what are these? What are they speaking here?

[Michael Batnik]

Oh, like how many people actually still speak that?

[Ben Carlson]

Yeah. So anyway, the movie was fine. I didn't not like it. I wouldn't recommend it. It was, it was okay. It was fine. And then I was thinking like, shit, am I an asshole? Am I incapable of taking recommendations? That would be pot calling the kettle black. Or maybe that's. It would be complete hypocrisy considering that I give recommendations every week. Can I give and not take? And then I thank God that's not the case. Because I was thinking, I was like, hey, wait a minute, I've taken a million recommendations that I love. So I was going through the list of my head of recommendations that I like, but I got worried for a second that I'm incapable of taking a recommendation. It's not true. I genuinely happen to think that these three movies were just not for me.

[Michael Batnik]

It's all subjective. Movies are very subjective. You can't get mad at someone for not liking a movie. Just like you can't get mad at someone for not liking a meal.

[Ben Carlson]

Yeah. So I sent this guy, I think a very, very polite response. Listen. And I said, I'm not mad at you. Shoot or shoot. Like, I give plenty. Right. Because it's okay. Like we have to wear. I didn't agree on the first movie. No big deal.

[Michael Batnik]

Kneecaps on my list too. I'll watch it. I might like it more than you did.

[Ben Carlson]

You might like it. I didn't dislike it. It's just, you know, whatever. It's fine. Okay, here's what I did like. Oh, just one more thing on Linus, which is a. Well, I keep going back to this always irks me. I might have said this before. On this podcast, there's a scene where she just. She just walks into the water with her Sneakers on for no reason. She could have just avoided the water. Is there anything worse than stepping in a puddle of water and getting your socks wet?

[Michael Batnik]

Socks wet in your house too, Right, in your house. Well, the kids bring in snow from outside and then you're in your socks and you step in water.

[Ben Carlson]

Yeah, there's few things are worse than a wet sock. And nobody would ever step in water. Fully engulf their shoe in water outside of a movie. It just never happens in real life.

[Michael Batnik]

Yeah, that's a good point.

[Ben Carlson]

But something you see on TV and movies all the time. All right, so Jerry Springer, I assume you were a Jerry Springer guy.

[Michael Batnik]

Definitely. In high school, we used to go in one of the classrooms. We'd.

[Ben Carlson]

Was it in Chicago?

[Michael Batnik]

Huh?

[Ben Carlson]

Was it Chicago? Yeah, it was Chicago. I just watched the doc.

[Michael Batnik]

We would watch. We would sneak into a classroom and eat our lunches and watch Jerry Spinner at lunchtime.

[Ben Carlson]

So for the younger listeners, the Jerry Springer show was a circus. It was basically, they would bring in these people and one of them was cheating on the other with the horse or just like wild shit. Right? Like really over the top type stuff. And I. There was. I felt very vindicated because there was like a big argument back in the day, like, it's got to be staged, right? Like, these can't be real. It has to be fake people. They were real people. They were real people. So there's a documentary on Netflix. It's only two episodes. So they made a great point that they basically said it was like the Coliseum. And remember a year or two ago, I was like, why do I like horror movies? And then somebody recommended the hardcore history podcast about the history of Coliseum. And if that existed today, would people still watch it? Yeah, they probably would. It's just like a primal instinct. The Jerry Springer show was the Coliseum. It was like watching a train wreck. And so the whole thing about the doc is that, yes, these were real people, but obviously they were fully exploited. And the producers basically treated them like caged animals, got them all riled up, had them prepare and prep and practice for how it was going to go down and. And then they would raise the gates and the animals would run out and hit each other. So it was real people, but they were fully coerced into the powder keg.

[Michael Batnik]

The funny thing is that when the show first started, it was relatively serious. It didn't really go off the rails until later in the show. Not serious. But it wasn't quite so crazy at the beginning, so.

[Ben Carlson]

But it was truly like a cultural.

[Michael Batnik]

Oh, yeah.

[Ben Carlson]

A part of the culture.

[Michael Batnik]

Steve, the guy who's his bodyguard, got his own show.

[Ben Carlson]

Steve Wilkes. Yeah. He had a spinoff.

[Michael Batnik]

Yeah.

[Ben Carlson]

So it's only two episodes. Man, it was dark. Pretty dark.

[Michael Batnik]

Yeah.

[Ben Carlson]

And then the message at the end of the show that he would end it with take care of yourself and each other. It was a bunch of animals fighting and flinging poo at each other for. For 30 minutes. And then at the end of the show, he would sit down, seriously. And talking to the camera and. And it would take.

[Michael Batnik]

What did we learn today?

[Ben Carlson]

And each other. Yeah.

[Michael Batnik]

He used to be, like, the mayor of Cincinnati or something.

[Ben Carlson]

It was so sick. Yeah.

[Michael Batnik]

All right, we'll take a look anyway.

[Ben Carlson]

All right, Ben, we're back in the swing of things. You back in your routine?

[Michael Batnik]

Yes, I am. Yeah, I was thrown off. I went from Christmas break right into New York last week, and now I'm back. Cool, calm, and collected.

[Ben Carlson]

Okay. Shaving the beard.

[Michael Batnik]

It's a new year. It's a new me.

[Ben Carlson]

Okay.

[Michael Batnik]

Animal Spirits podcast. No.

[Ben Carlson]

Nope.

[Michael Batnik]

Dang it. Animalspearce@the compoundnews.com. i thought I had that fixed. We appreciate all the emails, all the feedback. Give us a review if you want. That'd be great.

[Ben Carlson]

Oh, yeah.

[Michael Batnik]

Subscribe to the Compound. See you next.