How Much is $1 Trillion? (EP. 469)

Summary

Animal Spirits Podcast – "How Much is $1 Trillion?" (Episode 469)

Date: June 17, 2026
Hosts: Michael Batnick & Ben Carlson

---

Episode Overview

In this episode, Michael and Ben dissect the jaw-dropping $1 trillion valuation thrown around in markets after the SpaceX IPO, using it as a springboard to discuss bubbles, market cycles, AI hype, diversification, and the realities of wealth creation. The conversation touches on investor psychology, market history, economic resilience, and how narratives about technology, value, and human behavior both shape and follow the markets. The hosts also tackle market thematics, home prices, the practical impact of AI, and round out with their usual engaging banter and some cultural recommendations.

---

Major Discussion Points & Insights

1. The Unsatisfying Modern Market Cycle

• [02:09] Michael opens with the thought that since the Great Financial Crisis, markets haven’t delivered Hollywood endings—no cacophonous crash, no euphoric landing, just a series of events we “moved on” from, even with major catalysts like COVID and speculative IPOs like SpaceX.
  • Quote: Michael Batnick [03:00]:
    “The unsatisfying conclusion is we get a washout at some point, but it’s not an end-of-the-world crash and the world moves on. Because AI is a life-changing technology and that’s probably a buying opportunity.”
• [03:23] Ben agrees, noting that investors’ desire for "definitive" conclusions is rarely satisfied and human behavior (fear & greed) is eternally constant in markets.

2. Is This Really a Bubble? Or Just More Human Nature?

• [04:20] Michael and Ben challenge doom-and-gloom predictions, underlining that cycles, not cataclysms, are "normal." They reference market history—like dividend yields in the 1950s—and warn against overrelying on historical analogies (like the 1929 “shoeshine boy” anecdote).
  • Quote: Ben Carlson [06:09]:
    “We have to at least be open-minded to the idea that maybe this isn’t the dot-com bubble again, even though it’s so easy to go there…”
  • Quote: Michael Batnick [08:15]:
    “People have tried to call [the tech bubble] for so, so long that anyone who does 'call it' is going to be lucky because they timed it right and they’ve been calling it for 12 years.”

3. SpaceX IPO and 'Explainable Lunacy'

• [10:00] The extraordinary SpaceX IPO is dissected:
  • Record-setting $85B in volume, "within spitting distance" of Amazon’s market cap.
  • Most participants chasing fast gains, not value.
  • Elon Musk’s projection of $1T in revenue by 2030 is viewed with skepticism.
  • Quote: Ben Carlson [11:04]:
    “What’s going on in SpaceX is explainable lunacy… No one buying today is thinking ‘Is SpaceX worth more than Amazon?’ Who gives a shit? They’re trying to make 20% in 24 hours – and guess what, they did.”

4. Taking Profits & Market Leadership Dispersion

• [12:07 – 16:21]
  • How should typical investors “take profits”? Is Wall Street’s focus on calling tops or warning signs even relevant to most people?
  • Market is seeing healthy dispersion—AI vs. software—rather than risky concentration.
  • Value is outperforming growth (thanks partly to “memory”/chip stocks), flipping past narratives.
  • Quote: Michael Batnick [14:46]:
    “The market is picking winners and losers. Yeah, that’s good.”

5. Global Perspective & Emerging Markets

• [17:42 – 20:06]
  • EM equities are up 26% YTD, driven by earnings—Korea & Taiwan have overtaken China in the EM index.
  • The power of diversification: you never know where winners will come from.
  • Quote: Michael Batnick [19:18]:
    “This is the beauty of diversification… if you cast a wide enough net, you get these winners and they’re unexpected.”

6. Market Intelligence & Speed

• [20:59 – 23:48]
  • Markets rapidly absorb shocks (geopolitical, oil, inflation)—the hosts argue that markets function as a kind of collective AI, getting “smarter” with each cycle.
  • Any eventual AI-driven market selloff would likely be swift and severe—but recovery is also faster.
  • Quote: Michael Batnick [22:50]:
    “There’s less panic for headline events… if there ever is this AI blow up, it’s going to happen in the blink of an eye.”

7. The Enduring Cycle: Bull, Bear, Repeat

• [23:28]
  • There will be another bear market, possibly lasting years—a “lost decade”—but such cycles are the norm.

8. Thematic ETF Mania & Retail Speculation

• [24:13 – 27:47]
  • Thematic ETF inflows are surging again, themed on AI, space, nuclear, echoing the “ARKmania” of 2020-21.
  • Leveraged SpaceX ETFs record eye-watering activity.
  • ARK is still a major SpaceX holder, but badly lagged (down 30% over 5 years vs. QQQ’s +124%) due to missing the AI wave.
  • “Mini-bubbles” can be self-contained within asset classes.
  • Quote: Ben Carlson [28:49]:
    “The thing is, if you had seen these numbers from Ark, you’d go, oh well, tech blew up, right? …No. We had the biggest technological innovation of this century and they missed it.”

9. Still so Much Skepticism Out There

• [29:06 – 30:54]
  • Even after big runs, fear and skepticism return instantly on any pullback—resulting in “one foot out the door” behavior by investors.

10. Agentic Trading & The AI Investing Experience

• [30:54 – 32:43]
  • Robinhood’s “agentic” AI trading promises investors custom AI-driven strategies.
  • Hosts warn of the human temptation to constantly tinker with strategies, making true “hands-off” AI investing elusive.
  • Quote: Michael Batnick [32:31]:
    “People are going to be constantly tinkering and changing their own rules. The whole point of a back test is… you don’t go and change it every time it doesn’t work.”

11. Market Leadership, Economic Strength, and the Consumer

• [33:44 – 36:18]
  • The US consumer remains the “strong shoulders the economy stands on,” according to Capital One’s CEO – even as company stock stays in a drawdown.
  • Hosts note CEO optimism has persisted through COVID, inflation shocks, and more.

12. Rapidly Changing Narratives (CPI/Inflation, Housing, Wealth Creation)

• [36:33 – 41:03]
  • Inflation and homeownership: rising home prices and low fixed mortgage rates are a key source of consumer resilience.
  • Quote: Michael Batnick [38:01]:
    “I’m borrowing for free for my house at 3% on a real basis right now. It’s kind of insane when you think about it that way.”

13. Wealth, Inequality, and the Scale of $1 Trillion

• [59:47 – 63:30]
  • The mind-bending scale of $1 trillion, and how even $1 billion is “basically the same” as $1 million on this scale (in seconds, pennies, or stacks of bills).
  • The SpaceX IPO not only made Elon Musk richer, but created over 4,400 new millionaires according to the NYT.
  • Quote: Ben Carlson [62:18]:
    “A lot of people benefited in life-changing ways and I think this should be celebrated, not torn down.”
  • Hosts are realistic that wealth inequality is not a problem with easy fixes: “Wealth inequality is never getting solved.”

---

Notable Quotes & Moments

• [03:00] Michael Batnick: “The unsatisfying conclusion is we get a washout at some point, but it’s not an end-of-the-world crash and the world moves on. Because AI is a life-changing technology and that’s probably a buying opportunity.”
• [06:09] Ben Carlson: “We have to at least be open-minded to the idea that maybe this isn’t the dot-com bubble again, even though it’s so easy to go there…”
• [11:04] Ben Carlson: “What’s going on in SpaceX is explainable lunacy… No one buying today is thinking ‘Is SpaceX worth more than Amazon?’ Who gives a shit? They’re trying to make 20% in 24 hours – and guess what, they did.”
• [14:46] Michael Batnick: “The market is picking winners and losers. Yeah, that’s good.”
• [19:18] Michael Batnick: “This is the beauty of diversification…if you cast a wide enough net, you get these winners and they’re unexpected.”
• [22:50] Michael Batnick: “There’s less panic for headline events…if there ever is this AI blow up, it’s going to happen in the blink of an eye.”
• [32:31] Michael Batnick: “People are going to be constantly tinkering and changing their own rules. The whole point of a back test is… you don’t go and change it every time it doesn’t work.”
• [38:01] Michael Batnick: “I’m borrowing for free for my house at 3% on a real basis right now. It’s kind of insane when you think about it that way.”

---

Timestamps for Key Segments

• [02:09]–[04:20]: “Unsatisfying conclusions” and human desire for definitive market outcomes.
• [06:09]–[08:15]: Human nature and the futility of constantly calling market tops.
• [10:00]–[13:03]: The SpaceX IPO: context, hype, trading, investor motivations.
• [14:00]–[17:23]: Taking profits, market rotation, AI vs. software, value vs. growth.
• [17:42]–[20:06]: Emerging markets, changing index weights, the case for diversification.
• [20:59]–[23:48]: Oil markets, instant absorption of “bad news”, the possibility of a rapid AI blow-up.
• [24:13]–[27:47]: Thematic ETF mania, ARK fund underperformance, the “mini-bubble” effect.
• [30:54]–[32:43]: Robinhood’s "agentic", AI-powered trading—potential benefits and human pitfalls.
• [36:33]–[41:03]: Resilient consumer, CPI and inflation, homeowners with low-rate mortgages.
• [59:47]–[63:30]: What does $1 trillion really mean? Wealth creation, distribution, and ongoing inequality debate.

---

The Tone and Style

Michael and Ben balance market skepticism with pragmatism in their trademark conversational and self-deprecating tone. They weave in historical anecdotes, pop culture, inside jokes (“are you a horse person?”), and real listener questions. The exchanges are personable and candid—never preachy, often poking fun at themselves and at punditry in general.

---

Other Memorable Bits

• [27:55] The huge drawdown in ARKK despite tech’s comeback (and the lessons learned from missing the AI wave).
• [41:00]–[47:29] Fun, emotionally charged Knicks championship postmortem, blending sports fandom with investing parallels (predicting winners, learning from being wrong, savoring rare triumphs).
• [54:47] Listeners write in with both optimistic and doomer perspectives on AI’s employment impact. The hosts and cited economists mostly expect AI to complement rather than wholesale replace jobs.
• [56:39]–[57:41] Brief discussion of under-known retirement tax rules—the 'rule of 55'—and the mess of US retirement accounts.
• [63:44]–[67:59] Show-and-tell: Michael and Ben’s media recommendations highlight Apple TV’s strong run, classic 90s films, and airplane movies.

---

Conclusion

The episode wraps with cultural recommendations and an extended reflection on what it means for both individuals and society when extraordinary market events (like the SpaceX IPO) create such concentrated and widespread new wealth. Michael and Ben stay true to Animal Spirits’ ethos: markets are rarely simple, narratives always evolve, and nobody knows anything for sure. Stay curious, stay diversified, and keep your expectations unsatisfyingly realistic.

---

Contact:
Questions/comments: [e-mail]

---

This summary skips all advertisements, music, and non-content segments as instructed.

Transcript

[Michael Batnick]

Today's episode is sponsored by WisdomTree. You've probably heard the comparisons between quantum computing and the early days of AI. Big potential, lots of uncertainty in technology that could fundamentally change how industries operate. But here's something that caught our attention. The U.S. government recently invested in several quantum focused companies, adding momentum to this emerging technology. For investors interested in this space, WisdomTree offers WisdomTree Quantum Computing Fund ticker WQTM, which provides a pure play exposure to companies that it believes are driving innovation across the quantum ecosystem. Click the link in the Show Notes to learn more. Before investing, carefully consider a fund's investment objectives, risks, charges and expenses, along with other information contained in the Prospectus available at wisdomtree.com investments. Read it carefully.

[Ben Carlson]

Today's show is sponsored by YCharts. One of the promises of AI is that it should help advisors save time, but for most, AI has just become another tab to manage. That's why YCharts built Y, an AI assistant designed to work directly inside the platform. Instead of searching for answers and then figuring out how to implement the next steps, Advisor can use WHY to help build proposals, analyze portfolios, compare investments, prepare for client meetings, and create client ready materials. For example, you can upload a prospect's brokerage statement and ask why to analyze the holdings, identify opportunities, build supporting visuals and generate a proposal draft all within the same workflow. Thousands of advisors already trust you bring the expertise why? Helps turn ideas into action. Click the link in the show notes to learn more and get 20% off your initial Y charts. Professional subscription to Take WHY for a spin. That's for new customers only.

[Podcast Host/Intro Voice]

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 are solely their own opinion and do not reflect the opinion of Rithol's Wealth Management Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Gritholz Wealth Management may maintain positions in the securities discussed in this podcast.

[Michael Batnick]

Welcome to Animal Spirits with Michael and Ben. Michael, I want to talk about unsatisfying conclusions because I think since the great financial crisis, a lot of people have wanted a satisfying conclusion to the market, right? They want something to be definitive. We haven't had that 2020. 2022 was a bear market. It wasn't a definitive bear market. Right? It was. It was just. It happened. We moved on. Covid was a crash. It wasn't definitive. We moved on. Everything has happened since since the Great financial crisis we moved on from. So I think, I think when the SpaceX IPO people wanted to there to be a definitive this is it. They wanted to see like a 500% pop or whatever, like a dot com IPO or a crash. And I know that the stock took off and it's taking off a little more today, but we're not getting anything definitive. And so I'm just, I'm just throwing out the, the potential for an unsatisfying conclusion to the whole AI thing. Right. Some people want this to be a bubble like the dot com thing that crashes. Right. Other people want it to be this life changing thing that's going to take economic growth to 14% per year or something. The unsatisfying conclusion is we get a washout at some point, but it's not an end of the world crash and the world moves on. Because AI is a life changing technology and that's probably a buying opportunity.

[Ben Carlson]

Thoughts from your lips to God's ears. That would be.

[Michael Batnick]

And no one's satisfied with that conclusion.

[Ben Carlson]

Unlike the end of Road to Perdition. I don't know why I just thought of that movie as an unsatisfying conclusion.

[Michael Batnick]

Boy, that was, you know, that part of that movie was filmed on the coast in Lake Michigan.

[Ben Carlson]

Okay. Yeah, that would be fantastic. No bubble, no crash. I think, I think most reasonable people would like to avoid both of those outcomes.

[Michael Batnick]

But I still think like this is going to lead, there's going to be a washout at some point. There's probably going to be a bear market from this. But I don't necessarily think that that means it has to be this like life altering crash. Maybe. But I'm just, I'm throwing that potential out there for people who it would, let's say we had a 25 to 30% bear market and the world didn't fall apart and it was a great buying opportunity and the market recovered in a year and a half or two and all the people who are screaming bubble would go, man, really? That was it.

[Ben Carlson]

Ben, I think two weeks ago you said something to the effects of this has to end badly. And I said I was going to take the other side of that next week.

[Michael Batnick]

Sure.

[Ben Carlson]

I never did that because you know, whatever. We forgot everything that we know about investing, the history of investing and some of the immutable laws of stock market driven by fear and greed and human behavior. And that's the part of it that has never changed and will never change. Doesn't matter if you're talking about 1923, 1946. I mean, whatever, we were human beings 100 years ago, we'll be human beings 500 years from now. And so every thing in the back of our brain wants to go to the place that this has to end in a bubble. It just has to. But maybe it doesn't, maybe it doesn't like that, that, that stock market stat that we discuss all the time from Peter Bernstein where he spoke about in, in when he came into the, the business. I think in the 1950s there was a whole generation of investors that was obviously still scarred from the stock market crash in 1929 and forever and ever. Stocks had a higher dividend yield than the coupon that you would receive on bonds because stocks were riskier and nobody thought about price appreciation or total return. It was what is a stock going to pay you? What is a bond going to pay you? It was an apples to apples comparison.

[Michael Batnick]

Right. Stock dividends were much higher because they had to compete with bonds in the past.

[Ben Carlson]

Correct. And then it changed where yields on stocks went below the interest rate on bonds. And these old timers were telling young Peter Bernstein, listen kid, we've seen this movie before. Anytime they get close, stocks are too expensive, they crash. And it's been 75 years and we haven't looked back. And so things do and can change and nothing is forever and ever. And I know that's like a specific thing versus a human behavior thing, but I think you have to at least be open minded to the idea that maybe this isn't the dot com bubble again, even though it's so easy to go there and you can't rule it out. I mean certainly we'll talk about the SpaceX IPO. There are, there are similarities, more than, more than one or two.

[Michael Batnick]

Here's, here's my thinking on this. We think of a, we think of this thing, this in a range of outcomes because how could you possibly be certain? But my point is you don't need to call the top. Okay, so the New York Times had this piece this week. Mega IPO frenzy could be a harbinger of stock market bubble. Okay, Meb Faber's show this week. He had Jim Grant. AI is one of the greatest bubbles of all time. Jim Chanos was on a video yesterday. This is bigger than the dot com bubble. And to be fair, there's more context involved in these headlines. Of course Jim Chanos was talking about the capex side of things. But if you talk about Jim Grant and Ray Dalio and Jim Chanos, their job is, is to call the top on these things, that is their livelihood, essentially. This is what they do. You the royal. You the royal. We don't have to call these like this. You don't have to be a pundit, you don't have to be a hedge fund manager. You don't have to call the top. I looked at this, I wrote a piece in 2017 about how financial market the financial media has been calling stuff for a while now. Look at all these headlines I put in here. From August 5, 19th, 2017, when will the tech bubble burst? May 2016 is the tech bubble bursting? September 2015 is Silicon Valley in another tech bubble? People have tried to call this for so, so long that anyone who does quote, unquote, call it is going to be lucky because they timed it right and they've been calling it for 12 years. That's it. You don't have to call it.

[Ben Carlson]

Ben, the. Remember the show Silicon Valley?

[Michael Batnick]

It was early.

[Ben Carlson]

Do you know when that debuted?

[Michael Batnick]

Was it 2014 maybe?

[Ben Carlson]

That's exactly right.

[Michael Batnick]

Oh, nailed it.

[Ben Carlson]

2014. If ever, if ever there were a they ring the bell at the top. It was a freaking show about Silicon Valley. After Silicon Valley had a pretty damn good run. There was an article in the Journal over the weekend by Spencer Jacob who, who I think does great work. He said the headline was assigned to the market top. Tell us your shoeshine boy story. So they're, they're soliciting reader emails. I was outside of Starbucks on the morning of the IPO of SpaceX and the guy next to me was at a table with his wife and kid and he said, oh, I got 75 shares. He got 75 shares of SpaceX. He wanted 250 shares. And my point is there are no more shoeshine boy stories. It's over. Everybody knows everything. Everybody likes to talk about that Joseph Kennedy story back in 1929.

[Michael Batnick]

There's too many anecdotes now.

[Ben Carlson]

What's that?

[Michael Batnick]

There's too many anecdotes now.

[Ben Carlson]

Everybody knows everything. And you might hear from a friend or a family member and think, oh wow, by the time they're asking about it. And yeah, that's probably fair, but you don't know what anecdote they came across or who spoke to them. Like there's just so many different ways to get information. Everybody knows anything. There are no more shoeshine boy indicators now.

[Michael Batnick]

No one knew anything. Back then when Joseph Kennedy was Investing in the 20s, no one knew anything and no one invested in the stock market.

[Ben Carlson]

Nobody knew. So if you want to point to the space. So if you're saying, like, guys, are you drunk? All right, if you want to point to the SpaceX IPO as your mental signal to reduce your AI concentration in your own portfolio, fine, fine. I'm not going to say that this is not a potential point in time that we can look back on as the top. Maybe we will, maybe we won't. But what's going on in SpaceX is explainable lunacy. So the IPO was on Friday. It ended up doing $85 billion in volume, according to Eric Baltunas, Easily a record for an IPO and in the top 10 all time for any stock on any day. As of this morning, the company is basically within spitting distance of having the same market cap as Amazon. Now, as we discussed last week, and I'm not saying this makes sense at all, I'm just trying to explain the mechanics of how this even happens. There are just not a lot of shares out there. And so nobody who's buying today for the most part, is thinking about, is SpaceX worth more than Amazon? Who gives a shit? They're trying to make 20% in 24 hours and guess what? They did.

[Michael Batnick]

Right.

[Ben Carlson]

So there's all sorts of disconnects and narratives and I get it. And yeah, the SpaceX thing is crazy.

[Michael Batnick]

Yeah. With that much money moving, it's kind of easy to push around the price right now.

[Ben Carlson]

Right?

[Michael Batnick]

Easy. Ish. For a company this big, obviously.

[Ben Carlson]

Yeah. So, like, there was a stat that yesterday, SpaceX added the most market cap ever of any company of any day ever, outside of Nvidia, which definitely makes you take, I don't know, take stock of what's going on, but it's not. It's not. It's sort of apples to oranges a little bit. Elon did say yesterday on Twitter or on X that SpaceX could get to a trillion dollars in revenue by 2030. I feel like there's some. I don't know, I'm not a lawyer, but isn't that like a material statement? Whatever.

[Michael Batnick]

Are you kidding me? There's no security laws anymore. That was the past. Doc Brown Rhodes. Where we're going, we don't need roads. There's no SEC anymore. All right, let's look at the other side of this. Taking profits. I got a call last week from someone at Marketplace saying, hey, we've got a bunch of normal investors. And we saw this headline on Bloomberg from Bank of America. It said, b of A warns it's time to take profits as red flags multiply. And this isn't from some, like Perma Bear. This is. Savita is very good. She's great at what she does. She's very well respected. She's talking about how there's some bear market signposts and there's a lot of red flags. And this guy from Marketplace said, okay, what does it mean to take profits for a normal investor? What does that actually mean? Right, so they sell their stocks that. Do they sell them all? Do they sell a little bit? Then what do they do with it? Do they sit in cash? Do they put it in other investments? Like, like what does it mean to take profits? And I thought that was a perfectly legitimate question.

[Ben Carlson]

It is. My read of this is very simple. If you are one of those fortunate investors that had the foresight, whatever, credit where credit is due, I don't care. It doesn't matter. If you made money in a lot of these memory names or the semi names or the AI adjacent names and you're up 800%, does it make sense to maybe take your money off the table? Yeah, it doesn't make Sense to sell 25, whatever it is. Yeah, it probably does. You know what sort of bothers me, and I'm not accusing Savita and her team of doing this because I agree, I'm a huge fan of their work. But for the, for the general person on the Internet, the, the average pundit who is telling people to take profits or like, you know, sort of scolding them or whatever, hey, did you make money? If you've been, if you've been bearish the whole way up, who cares what you say? You have no right to tell anybody what to do about their portfolio. But do I think take profits if you've been in these names is probably prudent advice? Not probably. Yeah, I do. Of course I do.

[Michael Batnick]

Right, that. So what she's saying, and the big one that people took was she said the spread between the top performers and the bottom performers in tech rivals the dot com bubble. So there's dispersion. Now that's the Wall street jargon term for this. There's dispersion between the top and bottom performers. And she's saying, listen, this happened in the tech bubble. This is actually bad. So it's funny because for years we worried about concentration. Now we're worried about the opposite of concentration. I personally. Now this is n equals 1 for the sample size. Right? That's one of my problems with this analysis. My thing, I personally think this is a great thing that we're seeing some dispersion in stock prices. And it's not just the Mag 7 anymore we talked about last week. The Mag 7 is underperforming. And the fact that these memory names and these other companies are coming up, I think that's a good thing. Isn't that what you want to see in a bull market?

[Ben Carlson]

The market is picking winners and losers. Yeah, that's good.

[Michael Batnick]

I think that's just.

[Ben Carlson]

I think the degree to this dispersion. Yeah. I'm not dismissing this only in the sense that right now it really is AI and everything else. Now, I'm not saying that AI is the only thing that's winning, because it's not. But if you look at the top performing names year to date, it is, for the most part, all AI adjacent.

[Michael Batnick]

Yes. It's funny how the goalposts move from this. AI is going to be a problem because they're going to put all this money in and nothing's going to work. And now it's like AI is the only thing that's working. So I feel like the goalposts have moved it. It's funny, too, because this year value is beating growth. So the Vanguard Value Index, just before we.

[Ben Carlson]

I'm sorry, before we move this. Move away from this, I think a very easy way to. If you were going to dismiss this chart and provide more context, that might make you feel less nervous. What this is showing is AI versus software. That's all this is showing.

[Michael Batnick]

Yeah.

[Ben Carlson]

Because AI is at the top. This is showing the top quintile. In the bottom, it's AI and it's software. So it's Micron versus Salesforce. That's all this chart is showing. Well, no, that's all this chart is showing. It's the top quintile versus the bottom quintile. And in the top is all the AI names.

[Michael Batnick]

Yeah. AI is creating losers and winners. So that's what I think.

[Ben Carlson]

But again, sorry, the losers are software.

[Michael Batnick]

Right.

[Ben Carlson]

It's software versus AI. That's the entirety of this chart.

[Michael Batnick]

Right. That's why it doesn't worry me that much. And it's funny. I think it's good to see it broadening out. And it's not just the hyperscalers that are winning, even if this is all one big AI trade. So it's funny because value is whipping growth this year. I can't remember who showed me this, but Vanguard value, which is VTV, is beating Vanguard Growth VUG by, I think, 7 or 8% this year. Now people go, wait a minute. That's because of the Memory stocks because they're so cheap. But I guess I'm just sick of people trying to do the yeah, buts. But caveat's this. So what? These stocks are still cheap on their earnings value. So it makes them value stocks. What do you want? First it was value stocks stink because they have no fundamentals. Now it's no, no, no, no. These stocks have fundamentals, but it's all because of AI. People keep changing the narrative.

[Ben Carlson]

Yes, what do you want? I think the reality is that Micron is the biggest weight in this index. I think it's like 5%. The second biggest is like 2. So yes, it's fair that micron 4%.

[Michael Batnick]

It's 4%.

[Ben Carlson]

Okay, but to your point, to your point, guess what? The S&P493 are outperforming the Max 7 by a lot.

[Michael Batnick]

Right?

[Ben Carlson]

So it's not just. Yeah, the story is changing. It's not just the hyperscalers. There's more.

[Michael Batnick]

This is a global thing. Obviously MEB at the Idea Farm had these slides from Schroders, which is really good. They had this whole global investment deck. It was like 100 slides. I thought it was really good. So it says 2026. Equity gains are all about earnings. EM. Equities are up 26% year to date. This is through the end of May. And it's showing the earnings, the income and the valuations. Like what in the. In that. Remember last year when international performers like, well, that's because the dollar. And this year, look at the earnings for emerging markets. It's kind of crazy. It's just dwarfing everything else, obviously. And they have all these charts that show the earnings for emerging markets are just blowing everything out of the water. Even for the U.S. even for Japan, even for all these other. In China. This is a crazy one to me.

[Ben Carlson]

Wait, Ben, you know what's funny about that? Because back to your point about people making excuses or whatever, like, oh, if LeBron wasn't on the Cavs, they wouldn't win. If Jalen wasn't. Well, yeah, but that's what happens. So if, if SK Hynix and Samsung weren't an em. The fundamentals will play way different. But they are. What do you. What does that even mean? If this wasn't. Then that they are. It is. It is.

[Michael Batnick]

Right? And the whole point was emerging markets are just left for dead because they don't have a tech sector now they do. And you're like, well, that's part of the anti. This, this one kind of shocked me. So in 2021, not that long ago, China was almost 40% of the EM index. Korea and Taiwan were 12 to 15%. Korea and Taiwan are now bigger than China. China has essentially got cut in half in the index, and Korea and Taiwan have picked up the slack. This, to me is the beauty of diversification, that you don't know where these winners are going to come from in any of these. In value stocks in emerging markets in the US Any of this stuff. This is the beauty of. You talked about Peter Bernstein before. He said something along the lines of, and I'm paraphrasing, diversification. Yes, it's a risk management strategy, but it's also an aggressive strategy because sometimes you don't know where those big winners are going to come from. That's the point. If you cast a wide enough net, you get these winners and they're unexpected. Often no one expected this to happen. No one. No one was saying emerging markets, that's the big winner of AI. No one said that when ChatGPT came out. The question is, okay, fine, you're worried this is all one big trade, right? It's just one big, huge pot. Everything's in this pot. What do you do if you're worried about it?

[Ben Carlson]

So last week we were talking about some of the low volatility stocks that are very underweight tech. Jason Zweig wrote a piece about this in the Journal, and he quoted Yuri and Timur asking about this question, like, if you want to reduce your exposure to the one big trade, which is fair. Yurian Timur from Fidelity said European stocks may not shoot the lights out, but if The S&P 500 goes down, they will probably go down less because there's less price buildup that would get undone. They can be a port in the storm. So outside of asml, the Dutch semiconductor equipment company, they are severely, severely underweight tech.

[Michael Batnick]

They are. It's a backhanded compliment at Europe.

[Ben Carlson]

It's an old economy stock market.

[Michael Batnick]

Right. And that's diversification. That Europe could be the one that. Because Europe had a good year last year and they're having a kind of a not as good of a year this year. But you're right. That makes sense to me. Find those places where it's hard to find them places now. But if you're worried, that's it. All right. I want to talk about oil because markets were right again. And I think this has been a big theme this entire decade that we've been talking about. Oil is back down to $80 a gallon or $80 a barrel. Because it sounds like for the 56th time we have a deal with Iran. This time it's going to stick. This is the real deal this time. And oil crashed again and it's back down to 80. And the energy analysts were ripping their hair out for weeks saying the Strait of Hormuz is closed. This is disrupting the supply chain in significant ways. Oil should be $150 a barrel, 1 75, $200 a barrel. It never got close to there. And I'm sure if you're an energy analyst, I'm sure it was really hard because you're looking at all of the correct metrics and going, the markets don't make sense. Why are they not following these metrics? These metrics show oil prices should be higher. And the market said, we know this is not going to last very long, so we're not going to go to those levels. What's the point? And the markets were right again about oil. It's pretty impressive that markets are now, markets are like their own form of AI. The intelligence for, the intelligence for markets are growing over time. Think about how many things we've looked past this decade where the markets were right in the end that they never would have looked past in the, in the previous, I don't know, 20 years ago or something.

[Ben Carlson]

So is this saying the same thing? Because you've been saying this for a while and I think, I think you've been right. If the average investor is getting smarter, is that the same thing is saying the market is getting smarter? Is the average investor impacting the market?

[Michael Batnick]

Yes. Bingo.

[Ben Carlson]

Hmm.

[Michael Batnick]

There's less panic for headline events than there was in the past because markets move so much quicker and they just, it just digests them faster. And I think it's something you really have to consider about how markets function now and that if there ever is this AI blow up, it's going to happen in the blink of an eye. We're going to get, I think if there is like an AI whatever, it's going to be like down 20, 25% in like three weeks. I really think the market's market's going to say, all right, you know what, let's just take our medicine, rip the band aid off, do it now. That's what's going to happen.

[Ben Carlson]

I, I will. You could, there's nothing you could say to remove me off of this fact that at some point, and this is not a prediction or a hot take or whatever, we will have a four year bear market like it's it's not just going to be up, up only for the rest of our entire lives.

[Michael Batnick]

Like, yeah, there will be a financial crisis at some point. The millennial generation will cause some sort of financial crisis.

[Ben Carlson]

There, there will be, I don't know if you know, lost decade, who knows? But there will be a multi year bear market. The fact that I even have to like say this as if I'm going out on a limb tells you all you need to know about where we are. This is a bull market. It's a long bull market.

[Michael Batnick]

We haven't had a recession, we haven't had a financial crisis.

[Advertisement Voice]

Yeah.

[Ben Carlson]

Allow me to be so brave as to suggest that there will be bear market again.

[Michael Batnick]

Right, listen, we're due for a pullback. Yeah, of course. We're always due for a pullback.

[Ben Carlson]

All right, so let's talk about what SpaceX is doing to the market. Todd Sohn has a chart showing the rolling 65 day sum of money into thematic ETFs, and of course, Cathie Wood and the ark complex in 2020, the Arcmania. We might never see anything like that again. Maybe we will, maybe we won't. But it's.

[Michael Batnick]

That's amazing.

[Ben Carlson]

It's a monster outlier.

[Michael Batnick]

Especially when you consider the flows into everything these past few years. The fact that the Arc whatever mania dwarfs that is pretty impressive.

[Ben Carlson]

Yeah. So anyway, it's back and Todd says, you know, it's space or nuclear. Another theme, whatever it is, the, the thematic theme is absolutely surging. So

[Michael Batnick]

we keep talking about 50% drawdown from those highs.

[Ben Carlson]

Yeah, we'll get that in a second. We keep talking about all of the potential distractions and things that want to like bump you off the horse. Right. If you think about this bull market as you're riding a buck and bronco, it's really hard to stay on because there's been so many reasons to sell along the way, whether you've been on

[Michael Batnick]

a horse in your life.

[Ben Carlson]

I've never been on a horse.

[Michael Batnick]

No offense. I can't see you being a horse person.

[Ben Carlson]

I've never been on a horse.

[Michael Batnick]

Okay. Not up in your cabin up north. There's no horse.

[Ben Carlson]

There's horses, but we did a horse

[Michael Batnick]

thing a couple, couple years ago with the kids just to ride around a big field and streams and it's kind of fun.

[Ben Carlson]

So one of the, one of the, the buck and bronco features of this market is. Oh my God, it's a bubble. Look at all this ridiculous behavior.

[Michael Batnick]

Right, Right.

[Ben Carlson]

All the degens you have to tune Them out, they're never leaving. So I say that because that was

[Michael Batnick]

a mini bubble in 2021. It really was.

[Ben Carlson]

Yeah, but, and then, but they never,

[Michael Batnick]

but it was, it was self contained.

[Ben Carlson]

They never left. Right, so the SpaceX on the launch day, I think it might have been the next day, I don't know. Levered there's, there's a, there's, there's leverage shares for SpaceX both long and short. And the levered long on 615. All right, so that was, that was yesterday. On Monday the levered long traded $282 million worth of shares. And the leverage short. I don't know who is doing this. $219 million worth of shares. By far, by far, by far the largest one day volume of trading.

[Michael Batnick]

So these levered ETFs for SpaceX are going to have $5 billion in the blink of an eye. Yeah, right. They're going to have so much money roll in.

[Ben Carlson]

All right, so Ark. SpaceX is the, she owns $325 million worth of SpaceX in, in Arkk alone. I believe she owns them in all the other vehicles as well. But this is the biggest position. I don't know, I don't know if, I don't know how this works. I don't know if she got them at the IPO price. I don't know if she bought them at the Open at 150 or 160 or whatever traded. I, I just don't know what their cost.

[Michael Batnick]

You don't think that they got some sort of allocation to the product?

[Ben Carlson]

No idea.

[Michael Batnick]

Okay.

[Ben Carlson]

I don't know if ETFs get an allocation. I don't know how it works like that.

[Michael Batnick]

They can.

[Ben Carlson]

Yes, they can. Okay. Over the last five years, Ark is in a 30% drawdown. I'm sorry, not drawdown. Over the last five years, Ark has returned. Arkk has returned negative 30%. The QS are up 124%.

[Michael Batnick]

Okay. Actually these stories are all saying that yes, Ark bought SpaceX shares on the IPO. So maybe they didn't have the private shares.

[Ben Carlson]

The level of underperformance now, it's been much better in recent years. So you know, this is skewed way lower by the results of 2021, where all those Covid bubble names like DocuSign

[Michael Batnick]

and TDOC and whatever, they've had a little bit of a comeback, but it's done much better. But the fact that funded this bad in this environment would be shocking to people who were so into this for the Innovation story.

[Ben Carlson]

So I hate, I hate, I hate like blaming whatever, because there's plenty of. Of blame to the extent that there's blame at all to go around. If you piled into Ark in 2021, hopefully that was a learning experience. I'm sure it was. I think if there's any blame on Kathy Wood and obviously she's doing the best she can. She's not, you know, she's trying to, she's trying to get it right. Missing the AI, you know, for, for an innovation fund. Missing. Missing the AI trade. Is she.

[Michael Batnick]

She set some very unreasonable expectations.

[Ben Carlson]

Yeah, that was tough.

[Michael Batnick]

You're right. The thing is, if you would have seen these numbers from Ark, you would have gone, oh, well, tech blew up. Right. That, that's what happened. Tech finally blew up and that's why ARK is down so much. You wouldn't say no. Tech. We had the biggest technological innovation of this century and they missed it. That's the surprising part.

[Ben Carlson]

That's really hard. One of the, one of the features of this bull run is that every time, really every time the market falls a little fear comes back so fast. It comes back so fast. Like people get beared up so fast, which is wonderful because that's, you know, that's fuel. Like there is still a lot of disbelief. We were talking to Encore yesterday. Encore Crawford for a talk your book episode. And in conversations that she's having, I would agree with you. Like, it's more when is this going to end? Not what should I buy.

[Michael Batnick]

Yeah, yeah, you're right.

[Ben Carlson]

So Jason Gefort from Sentiment Trader tweeted, man, tiny option traders really got spooked last week. One of the highest proportions of hedging activity in 25 years and the market barely fell. But to the point that we made that we opened the show with or, or spoke about with Savita taking profits. That caused a pretty fast sell off Micron. I don't know how much it fell from its high and whatever. It's only a three day sell off. Did it fall 18%, 20%? I don't know. But anytime there's a little dip, people just have one foot out the door.

[Michael Batnick]

Yeah. Which like you said, the bigger the gain, the quicker the trigger on these things. Right. I mean, there have to be a number of people who've just set stop losses. Right. I'm up 500%, I'm going to set a stop loss 20% lower or 10% lower or whatever it is.

[Ben Carlson]

Well, people that have, people that have rode the gains of Micron and Sandisk and Western Dig and all these names. I give him a lot of credit. Like, it's right.

[Michael Batnick]

Micron was down 20% in like three days.

[Ben Carlson]

Was it okay? And again, I know I've said this on the show now five times, but I'm going to keep saying it because it's. It did happen. Micron fell 30% in like three weeks in March after a blowout earnings number. And we just like all of these declines, we just pretend they never happened.

[Michael Batnick]

So your. Your idea about people changing their minds really quickly? I think that is going to be one of the problems with this new AI trading. So Robinhood put out a tweet this week. Agentic trading is live for all customers. Connect any AI agent through the Robinhood MCP server fund, a dedicated Agentic account. Let it research, trade, and rebalance on your terms. So I watched the. They had a little video that showed how it works, and I watched it and it looked pretty cool. It was like, pick 10 stocks that are somehow related to the biggest private companies. And then, oh, if the Stock is down 10%, sell it. Or it's like a rebalancing and it's showing these prompts putting in there. And what happens is you set the rules for AI, but then you have to sign off on it too. Right. It doesn't. I think it can do it automatically for you, but a lot of times there is checks and balances, so AI is not just running rampant. And I think this is very cool. It just, you know, at the end of the day, this kind of just takes back testing to the next level. It's not really like something brand new. Back testing has existed forever. Formulaic trading has existed forever. Am I interrupting something?

[Ben Carlson]

Sorry.

[Michael Batnick]

Actually talking to Knicks fans. Okay. But I think the problem with this, it's really cool. I'm sure there's gonna be a lot of people who can make their own rules up, and it's going to be very helpful for them. But I think people are going to be constantly tinkering and changing their own rules. And the whole point of a back test is, in the back test, you don't go and change it every time it doesn't work. You stick with it no matter what.

[Ben Carlson]

So true. So, so, so true.

[Michael Batnick]

So I just, I think that's going to be hard for people to, like, fingers off the keyboard. I'm not changing something. Even if it's not working right now, that's going to happen all the time. That's what's going to happen with this.

[Ben Carlson]

Yeah.

[Michael Batnick]

Is the changes are going to be constant.

[Ben Carlson]

Yeah.

[Michael Batnick]

And AI is going to go, oh, great idea. Really. All right. You used to buy small cap growth stocks, now you don't want anymore. Good. Good for you.

[Ben Carlson]

The market is open. Let's see what SpaceX is up to. Oh my God. $212 a share. So it's going to pass Amazon and market cap maybe today Again, the numbers are sort of phony baloney but you know, this is,

[Michael Batnick]

this is, I guess if, if, if it ends up having a huge pop and then it just comes back down to earth a little bit and settles in where it was, the ipo. It's like was this, was the small float really worth it? I'm not saying it's going to happen if worth it for the company. I don't know.

[Ben Carlson]

Well, I think part of the reason why they did this this way is because know the deal details in front of me. There are escalations and triggers about if the shares are up X percent, then they are allowed to unlock more shares and sell help to it. So.

[Michael Batnick]

Right.

[Ben Carlson]

I mean that's the whole like, that's that, you know, that that's part of the reason why people are, you're gaming the system so that you can dump more liquidity on us.

[Michael Batnick]

But yeah, you, but people are buying it so you can't, you know, I, I don't know. It is what it is right now.

[Ben Carlson]

It is retail eyes wide open everybody. You know, they've been very transparent. You might not like it, but they've, they've laid out the rules. All right Ben, Last week I spoke about how incredibly the resilient, incredibly resilient the economy has, has been. And I started, I started I think with, with tariffs. Like I didn't even go back to, to Covid. Right. But Jonathan Gray had a quote that I pulled from the transcript and he, he, he actually said the exact same thing. He went back a little bit further. So Covid, of course, and that was, you know, the government helped us get through that and part of the reason, I guess why the consumer is still to a certain extent spending. But there was the Russia Ukraine invasion which impacted us. I guess just gas prices got through that.

[Michael Batnick]

Gas prices went up, oil prices went up, inflation went up even more because

[Ben Carlson]

of that the Silicon Valley bank shock that was contained. But there's just been, there's just been

[Michael Batnick]

so much separation day, all that. Yeah.

[Ben Carlson]

So I know we do this a lot what I'm about to do and I'm going to keep doing it until it, until it no longer, until it's no longer the truth because it bears repeating. Because it is the truth. Capital One CEO, I would say if we didn't read any news and all we did was just really look at the data that we see in the economy and the data that we see on our portfolio, we have a really quite positive view. I think the consumer is really the strong shoulders the economy stands on. Unemployment continues to be very strong. Now I promise as soon as this turns, as soon as the CEOs of these gigantic financial companies that serve everyone, not talking about Amex, talking about Capital One, as soon as they start to say that the consumer is weakening, that spending is pulling back, I promise I'm not cherry picking, I will share it. But the economy continues to push through.

[Michael Batnick]

It is interesting that this company is still in a 23% drawdown. The CEO's not trying to blame inflation or gas prices for the reason their stock price is down. They're still saying no, things are looking good still.

[Ben Carlson]

It wasn't too long ago, Ben, that

[Michael Batnick]

we were company did go crazy. What did the, the stock went crazy and so it's in a 20% drawdown. But it went, it was up a lot. So.

[Ben Carlson]

Last week, last week we got CPI data. Man, the market is moving so fast. So we had the, you know what, let's not forget because you know, we've bounced since. But Friday, two Fridays ago was the worst day of the year by far. Small cap techs fell 6%. And then the next week we got CPI data on Wednesday.

[Michael Batnick]

Yeah, okay, not great, Bob.

[Ben Carlson]

And the market opened down, rallied intraday and got slammed into the close. I think it fell 1%. And this was after three consecutive days of selling. And I said to chart Kid Matt and Sean, I was in the office with them when the. I think the S And P was down 1% that day, maybe more. I said guys, imagine if inflation came in hotter than expected because it was actually like I said, inflation numbers came out at 8:30. The market popped, it was not as bad as we feared and then nothing but selling for the rest of the afternoon and close on the lows of the day. And I said to them, what if inflation was hot today? And we all looked at each other, said, ooh, would the S and P have been down 3%? The narrow. My point is that was that was a week ago and we're up, we're 4% higher than we were there. The narratives change so fast.

[Michael Batnick]

So here's the thing. It's so inflation went from 2.4% in February to 4.2% by the end of May. And I think this, it is surprising to me that the market didn't freak out. But I think this is another case of the market going, all right, just like oil markets. We're not going to freak out because we know that this is oil prices. Hopefully this will come back down and not completely reverse itself. But it is kind of crazy. I was thinking about this, we talked about this for years after mortgage rates went from sub 3% to 8% and now have settled in at 6 for a long, long time. Like, what is the reason for the consumer being so strong? One of the big reasons is because 35% of all household budgets is spending on your housing. Okay? It's the biggest part of everyone's household budget in aggregate. And so many people locked in not only low interest rates, but low, more low home prices, right? So they locked in a low monthly stipend for their housing, Right? That's what gave them all this disposable income for years and years and years. Because it's like you're giving yourself a raise every year that you're not paying more in housing. Now you took that raise off the table. You bought a new house, right? You traded in for a new mortgage payment. But think, think about this. I was thinking about this. The inflation rate at 4.2%, that's. I'm borrowing for free for my house at 3% on a real basis right now. It's kind of insane when you think about it that way. That it. That's still. We talked about this for a long time, I think. But I'm just, It's coming back to me like, oh, yes, of course. And there's been people who have traded up, like you, right, who went from three to five or six or whatever and moved on. And there aren't nearly as many people with 3% mortgages. But that was a, that's a big piece of this huge. It can't be overstated.

[Ben Carlson]

If everybody, if everybody who's locked in at 3 was, was, was at 5.5%, it. 100%, 1 million percent would impact consumer spending.

[Michael Batnick]

Think about it. If you think about it, if you had to, right. Size your mortgage payment for the current, current housing prices right now, right? So I'm saying, how many people couldn't afford their own house? A lot of them. I did have an inflation moment. And I said, I said, when inflation hit 9% in 2022, people like you and me, we don't get to complain about inflation. There are people who are hurting for inflation. Don't get the point. This is not a complaint. This is just an eye opener. Filled up my boat for the first time this week and it was a lot. Way more than I have ever done before. Right. I'm not a boat guy, but I'm like, what did I pay last year? Oh, it's way more money. And I asked the girl, you know, they have the people who come and fill your tank up for you. She said that there've been a lot of complaints. I'm like, how have people been dealing with. Because if, you know, I have a pontoon, I don't know, a 30 gallon tank or something, and it cost me 220 bucks or something to fill up. It was a lot. But there's enormous boats, right, that take I don't know how many gallons to fill up. And she said, yeah, there's been a lot of people complaining. It's like, I think gas prices for boats went up even more than regular gas.

[Ben Carlson]

And not slowing down, spending one iota.

[Michael Batnick]

No. Yeah, right. Is that gonna change my behavior? Absolutely not. Kid's got a tube. All right, we better. Might as well mention your outfit. And then I think we're have a moratorium on Knicks conversations for the next month. Is that fair?

[Ben Carlson]

I promise I will not say anything until next season.

[Michael Batnick]

I give you credit. Listen, you had a once in a lifetime experience. You were at the game in San Antonio, right? Which had to be awesome. I told my kids, with 10 minutes left in the game, the spurs are still up by 12. I said, the Knicks are going to win this game. Either the spurs are going to win by 10 or the Knicks are going to win a close one. And that's how it went. So you got to celebrate the championship in San Antonio, which is probably a good thing because New York, New York may have burned down to the ground if it happened in the city. Correct.

[Ben Carlson]

So let me just, let me just say a few things. And of course I could speak for 19 hours about the wrong we just went on. This is not a next podcast. I know most people don't give a shit, so I will, I will spare you. You know, we talk about being wrong all the time in the market, just like all the time. That's just the nature of predicting anything. It doesn't matter if you're trying to predict what the box office is going to do or the weather or the stock market or sports. We're always wrong at predicting. Or the dot plots. I was the number one. And I was the number one. This team will Never win with Jalen Brunson and Karl Anthony Towns. And I'm only talking about from the defensive point of view. Jalen at the top, Karl underneath. I never thought that we could win with them on defense. And I am the, the biggest Jaylen fan. I, I was never. Now I didn't know how good he was, but as soon as he got here, as soon as he got here, I never thought that we could not win a championship with him. He is that guy. And watching him every night for the last four years, I'm not surprised. I know the rest of the world might be, but I think Knicks fans knew that he was that guy. So I've ne. Like I wanted to trade Carl for, for Giannis recently. I've never been. And, and now there was a. There something happened in this defense. I don't, I don't know what happened. Something changed. And I've never, ever, ever been more happy obviously to be more wrong. I'm just feeling the streak of gratefulness that I'm feeling is continued. Winning is really hard. Like winning a championship is really hard. And eating shit for so many years. Like I went through. I was on NBA Reference the other day.

[Michael Batnick]

But I will give you credit because there's a lot of bandwagon. Knicks fans, obviously you took me to a Charlotte game like two seasons ago and it was a meaningless regular season game. And like you're an actual fan. You're not one of these fair weather people who just jumped on the bandwagon. So I'll give you credit there.

[Ben Carlson]

I never stopped. Like, I never stopped through when, when it started with Don Chaney after Van Gundy left through Derek Fisher and Fizdale and Hornacek and Dan Tony and Isaiah Thomas and Larry Brown. And I'm sure I'm missing a coach or two. Kurt Rambis, Herb Williams. Oh my God, I never stopped. And it was so bad. Like it was so, so, so dark. So to be eating this fruit tastes really sweet. And I'm happy for this team and the players and the organization and the fans and I don't listen the bandwagon fans, whatever. Like it's cool. It's unites the city.

[Michael Batnick]

I just, I don't know, I don't. I think New York was by far the better story for the win. Like it was so cool to see for me not having any, any carry. Whoever won New York is by far the better story.

[Ben Carlson]

I'm not one of those like, oh, they're not a real fan. I mean it's great. It's the more the merrier. Like, the more the merrier. And what Jalen did. So since he came to the Knicks four years ago, this is where he ranks in the playoffs. Second in wins, second in points per game, first and 30 point games, first in 35 point games, first and 40 point games. I can't believe that, um, I never thought that anybody would be. Would replace Eli as my favorite athlete of all time, but Jalen did.

[Michael Batnick]

He's a very likable guy. Doesn't seem to have ego or talk to the refs all the time. Yes, I like that.

[Ben Carlson]

I'm almost done. I'm almost done.

[Michael Batnick]

Okay.

[Ben Carlson]

But I think, I think for real sports fans that understand how much of your life, your time, your energy, your emotions, you give to your team, like it's very special to win because it's just, it's nothing but misery, right? There's only one team that wins every year. And most years you're not close, but some years you're close. There's just, it's nothing but misery. Punctuated hopefully by a few brief moments of euphoria, which I am currently living through. So I'm, I'm happy for the city. It's obviously been like some pretty dark years for, for Manhattan, obviously. I, I hate some of the stuff that has happened with spurs fans getting beat up and, and burning the buses and it's really shitty that this happens. Listen, Manhattan is a gigantic city. There's millions of people there. These, there's. There's assholes everywhere. And I hate that this happens. So that makes me sad. I'm exhausted. I'm happy it's over. Like game five was weirdly in San Antonio. And by the way, the, the San Antonio spans were. Fans were great for the most part. Although when you said to me, like, were you interrupting something? So my friend was texting me that a father and son, like a father got hurt really bad, like brain bleeding on the riverwalk. I think I might be done going to traveling for the Knicks. It's just like not worth it. I don't want to get. I had a close call, which I won't really share, but no fault of my own.

[Michael Batnick]

Yeah, you probably gotta feel a little nervous wearing the enemy's colors in, you

[Ben Carlson]

know, and next year, like the target, you know, people don't like New York to begin with, so I think I might be. I think I might be good there. Anyway, anyway, the whole thing, the whole, the whole. It's been two months. It's so exhausting, just so exhausting mentally and Emotionally, I can't. I can't even imagine what it's like

[Michael Batnick]

to be an actual player or coach

[Ben Carlson]

a player or their family. So, anyway, I'll leave it.

[Michael Batnick]

Here.

[Ben Carlson]

I am. I'm taking Robin and the boys to the parade on Thursday. And, man, it's been. It's been special. And. And actually, I will end it here. Here. I really do appreciate all the emails and all the texts, and I know it's not easy to root for a New York sports team. Any team that's not your own, especially one from New York. You know, we're obnoxious, we're loud, but people that reached out and there was like an outpouring, like, so. So, so many texts and emails.

[Michael Batnick]

And I thought it was a likable team.

[Ben Carlson]

I feel. I. I felt. I. I feel the love. So thank you. Thank you, everybody.

[Michael Batnick]

Yeah, and every fan base has annoying fans like no one. Everyone has people like that. They're everywhere. And if anyone does, you're exhausted. But if anyone deserves a vacation, it's your wife, not you.

[Ben Carlson]

She's been something else.

[Michael Batnick]

All right, so Nicole had an idea for us. She said, hey, the last time the Nick's one is 1973. Correct. I guess they called the top in the market. Cause there was a big bear market after that. She said, let's do an inflation thing for this. And it's funny, they put it in Nyx colors for me. I had Claude Wembedana do this for me. My little assistant, Claude. So this is prices they do nominal and real. Okay? So inflation is up six times since 1973, which is kind of crazy to think about. That's just compounding, right? It's three, three and a half percent. Homes are up 15 times in that time. New cars are up 12 times. The cost of college is up 24 times. Health insurance is up 50 times, and groceries are up four times. It's kind of crazy. Groceries that actually are the only big thing that has grown less than the rate of inflation since the 1970s, I guess. I guess I should add, Claude, new wages, too.

[Ben Carlson]

I wonder. I wonder what. What the tickets were back then.

[Michael Batnick]

Oh, That's a good $5, probably $10. It had to be really, really low because no one care about the NBA as much either.

[Ben Carlson]

I actually have my finals tickets from 1999, but I didn't bring them out. He sent me a picture of a playoff game. Oh, okay. Round one. Yeah, I was like, what? Round one? Section 119. Row D. Oh, it was row D's back then. So fourth row, it was. Where's the price? $96 in 2004.

[Michael Batnick]

Okay, here's interesting. So wages, according to Claude. So inflation's up six times since 1973. Wages are up eight times. But as we said, prices. Filed a stuff's up even more. All right, are we good with the Knicks?

[Ben Carlson]

I'm good.

[Michael Batnick]

Okay. Nice outfit, by the way. My son loves the chains. My son has a Michigan chain, a Lions chain. That's the thing. Oh, you have the championship chain.

[Ben Carlson]

I mean, I bought this for the kids. Obviously I'm not a jersey guy. I've never worn really jerseys. But I bought two finalist jerseys. I bought Josh and Jalen.

[Michael Batnick]

Yeah, you look like turtle from Entourage right now.

[Ben Carlson]

And by the way, these hats are ridiculous. Like, I feel like the biggest asshole wearing this. I'm never wearing this again. This is gonna the shelf. But like my head just.12 gallon.

[Michael Batnick]

That's a 12 gallon hat. It's huge. I wore it. I look like an idiot.

[Ben Carlson]

My head doesn't fit in this head. It looks so silly.

[Michael Batnick]

That is a. That is a heat head. All right, let's talk about the politics of AI. So Anthropic last week said the US Government, citing national security authorities, has issued an export control directive, suspend all access to Fable 5 and Mythos 5 by any foreign national, whether inside or outside the United States. So they Anthropic is starting to get regulated. Now here's the thing. Whatever happens, whatever kind of regulation politicians put on AI, it's not going to be good. Probably. I don't think politicians understand this. Whatever kind of regulation they do, it's not going to be helpful. But these AI companies deserve it because all they've been spouting off is about how crazy bad things are going to get. And we can't even release this because the damage it could do. And we. Dario said on a few podcasts, like, hey, listen, we need regulation. And they asked him, what should it be? I don't know. It's up to the government officials. Like the fact that they've not self regulated it all in many ways. Like, they deserve whatever's coming to them. Like, they'll complain about it, but whatever happens, if you've been saying we're gonna destroy 50% of white collar jobs and like, this could ruin the world because of biological weapons or something. Like, you don't get to complain about whatever the government does because the government is not going to probably have the best regulations they're going to like. But so what this, they've made their bed Right now they have to lay in it.

[Ben Carlson]

Let's talk about AI's impact on. On the economy and the job market. So this is a pretty, this is a pretty depressing email, but I'll share it anyway. Somebody said the conversation on jobs has been binary. AI will add jobs or AI will take jobs. That's. That's not the way this is working out. Every company I am working for is hiring developers and other staff to implement AI. They are hiring me to guide them. The goal is to be leaner, not have to hire and to replace jobs eventually. They are worried that their competition is going to be leaner because they are using more AI. They are worried AI might take their entire business. So they want to be the ones using AI to take the industry over. There is a rush to implement in the boardrooms. The conversation with everyone is about how many people can we replace? We are going to see growth of jobs and then they will be dramatically gone. I think Ben might be right in that the next recession could be when it happens. I think my job has the same problem. I have a window. I have to maximize my income. This will go away. AI will take my job. Frankly, I use AI to do my entire job now. I am just better at it. The most. Eek.

[Michael Batnick]

I don't believe this. Sorry. I don't believe these doomer takes good. I don't believe them. Maybe, maybe in some tech firms. Yes. I don't. I don't think this is the whole economy. I'm sorry, I don't believe it.

[Ben Carlson]

Okay.

[Michael Batnick]

That's not how the world works.

[Ben Carlson]

I think I'm with you. The Journal did a long post, the future of work in AI. And they asked economists will AI. They asked them three questions. Will AI lead to net job losses or job growth across the economy? And it looks like most answered no change, which is a cop out. I don't know how you could answer no change 5 answer net loss 2 answer net growth. And they asked, based on what we are seeing now, is AI a technology more likely to replace workers or complement them? It was overwhelmingly compliment. It looks like it was about 2 to 1. And then lastly, how much will AI change the way companies hire and develop talent over the next five years? Major impact and some impact. We're about neck and neck and minimal impact. Who had Justin Wolfers with a hot take? Minimal impact. Okay, I pulled two quotes that I thought were very interesting. David Deming. David is the dean at Harvard College and professor at Harvard University. He said that depends on their outside option. I guess in Terms of like job switching. Telephone switchboard operators were immediately displaced by mechanical switching technology. That job essentially disappeared overnight. But the young women who would have become telephone operators became stenographers, administrative assistants and waitresses instead. This shows the importance of flexibility in education and training. This is the coup de grace. I could have just skipped to this quote. People are the ultimate general purpose technology.

[Michael Batnick]

I like it.

[Ben Carlson]

That's a good quote. One more from Joshua Ganz. He's a professor at University of Toronto's Rotman School of Management. He said they'll be re employed in other things. It is only when technological change takes out an industry in a particular region and people don't move that we see major technological unemployment and wage reductions.

[Michael Batnick]

Right, so that's like factories going overseas.

[Ben Carlson]

Correct.

[Michael Batnick]

This is the fun part about these type of innovative cycles though is that just no one knows. It's. Everyone is guessing and extrapolating and making expectations and yes, no one knows.

[Ben Carlson]

That's right. Ben, we got a decent report on the residential real estate market. It's been a while. Existing home sales in the US accelerate to their fastest pace of the year in May, with contract closings rising to an annualized rate of 4.17 million. The median sales price of an existing home climbed 1.3% from a year ago to 429,000. All right, here's one of the takeaways I have from this. So look at this. Median sale price from Redfin shows lines by year. We're at all time highs. I am starting to get bullish on residential real estate stocks. It might be early, this might be, this might age horribly.

[Michael Batnick]

Well, they've been bouncing considerably.

[Ben Carlson]

Right.

[Michael Batnick]

The last month or so.

[Ben Carlson]

So there's been, yeah, there's been a balance. So it could be a dead cat balance. And I might just be, you know, giving the stock market in the short term too much credit. But my, my thesis is this. I think that even though home affordability quantitatively hasn't changed, it's still horrific. I think there is mortgage rates have

[Michael Batnick]

gone up this year.

[Ben Carlson]

I think there is a realization that, and it's been gradual, it's been like a multi year process that. Okay, this is just what houses cost now.

[Michael Batnick]

Yeah. Here's the thing though. Look at the next chart I just put in here that shows us existing home sales. And you can see that minor, minor upturn. Yeah, it's, it's, it's, it's still way, way low. And it's good that it's beating expectations. But let's be honest. This is still far below average and far below where you'd think things should be given the amount of young people in the economy.

[Ben Carlson]

Well, that's the thing. We haven't. I mean, the demographic part of it there is still. This is the largest cohort in the nation in terms of age. And they need to buy a house.

[Michael Batnick]

True. All right, real quickly, you talked last week about the rule of 55. The Wall Street Journal had an article this week, the retirement tax break, that most people overlook. And they talk about the rule of 55, how you can, if you leave your employer the year you turn 55 or older, you can pull money from a 401 with penalty free.

[Ben Carlson]

Did they quote?

[Michael Batnick]

And I said no one knows about this? And they said in a recent Wall Street Journal personal finance quiz, more than 80% of readers got a question wrong about the earliest age you can make penalty free 401k withdrawals. So, yeah, no one knows about this. Which. The retirement system is so jacked up in this country because we have so many different accounts. We have IRAs, Roth IRAs, 401s, Roth 401s, 529s, HSAs, SEP IRAs, Solo 401s. It's too much. And some people get more ability to put money in than others. So there should just be one big pot of money. Everyone has the same limit and it accounts for everything. Your 529, your HSA, your retirement, it's all one bucket. That's what it should be. Is that gonna happen? No.

[Ben Carlson]

No. All right, Ben, I wanna play something for the audience. I love this. We're in the studio. You were in the studio reading some. You were doing some promotion for the book, for your book. Risk, reward. That's what you did.

[Michael Batnick]

And a compound media team helped me make some social media clips that were promoting the book.

[Ben Carlson]

And we got some bloopers that I thought were just adorable. So I want to play them. I love this.

[Podcast Host/Intro Voice]

This would be a funny social of just Ben's outtakes.

[Michael Batnick]

Take the financial media one out of that. I don't piss people off. Take two. The stock market, it's volatile. It's a roller coaster. Shut up,

[Advertisement Voice]

Ben.

[Michael Batnick]

Freeze. Take three. I go into these details even more with my new book, Risk and Reward. Out now, wherever you find your books.

[Podcast Host/Intro Voice]

No, out now, everywhere.

[Ben Carlson]

Just say available where books are sold.

[Michael Batnick]

I detail all this and more in my new book, Risk and Reward. Out now. Wherever you find your books. I was gonna do the thing. Don't do out now. Just say in my name, book okay. No. Yes.

[Podcast Host/Intro Voice]

They say out now, everywhere.

[Michael Batnick]

Oh, there we go. I detail this and more in my new book, Risk and Reward. It's available now. Anywhere you find books. I can't. All right, more on this and more and more and more on this. More on this in my new book, Risk and Reward, available now. Tons more charts. Nope. Way more charts in my book, Risk and Reward, available now. All right. If you read this book, you can earn more, spend more, save more. That's a wrap. That was like Inception.

[Ben Carlson]

My brain was like just a knots. All right, that was awesome.

[Michael Batnick]

You know, good job by the Campo team.

[Ben Carlson]

It's really hard. I did some of that the other day. For something that we're recording, it's really hard.

[Michael Batnick]

It's harder to think.

[Ben Carlson]

It's so. It's awkward. It's. It's difficult.

[Michael Batnick]

That's why it's funny. When you hear a podcast, it's. It's been so edited in many ways, and the ums and ahs are taken out. And you don't realize that no one talks as clean as people can be made. Made to sound. Right?

[Ben Carlson]

Even this podcast, that's true. We're not that good. All right. Elon is the first trillionaire chart can made. A chart showing Larry Page. The combined net worth of Larry Page, Jeff Bezos, Mark Zuckerberg, Jensen Wang, Warren Buffett, and Rob Walton is that of Elon Musk and the Wall Street Journal. Bless them. They did this great post where Ben Cohen and Andrew Malika said, picture a line with $1 million on the left and a trillion dollars on the right. Where would you place 1 billion? And credit to me, I was, uh, I was better than most, but still not even close. So it's basically all the way to the left. One million dollars and a billion dollars compared to a trillion dollars are basically the same thing. So here's some context. And I know you, you, you. You scoff at this, Ben, but we need it.

[Michael Batnick]

If we stack dollar bills, it goes to the moon.

[Ben Carlson]

Here we go. All right. A million seconds ago was about two weeks ago. A billion seconds ago was in 1994, when Pulp Fiction was about to open in theaters. A trillion seconds was back in the ice age. Here's one more. A billion pennies. A billion pennies takes you from New York to Cape Canaveral in Florida.

[Michael Batnick]

Okay?

[Ben Carlson]

A trillion pennies takes you to the moon and back twice. So moon back, moon back. That's a trillion pennies.

[Michael Batnick]

So Elon Musk, he can afford a house.

[Ben Carlson]

So people, politicians in particular, are very Upset.

[Michael Batnick]

And the good news is the discourse around this is very reasonable on both sides.

[Ben Carlson]

So I will try and offer a reasonable take. Poverty is horrendous. And I think most reasonable people, if there was a way to snap your fingers and make the world a more fair place with less horrific hunger and problems, of course everybody would like to do that. And so you vilify the politicians, vilify somebody with this amount of wealth, it's beyond the pale. Who needs this much wealth? Let's redistribute it, let's tax him, let's whatever, whatever, whatever. Of course, I understand the sentiment behind that. I don't agree with it economically. I don't think it's that simple. But I understand where it's coming from. It is mostly coming from a decent place. The part that is never discussed is that SpaceX, the IPO, it created so much wealth. Yes. The most of it went to the creator. That's the way the system works. A lot of it went to the investors for taking the risk. That's the way the system works. It created 4,400 millionaires, according to the New York Times. And I don't know a better way to lift as many boats as possible other than the capitalist system that we have. And are there maybe things that we can do? You know, I don't know. That's not for me to figure out. But a lot of people, a lot of people benefited in life changing ways and I think this should be celebrated, not torn down.

[Michael Batnick]

Well, we're never going to solve this one, I don't think. Wealth inequality is never getting solved and we're never going to. It seems like we just can't tax rich people more. So I think this is just something people are going to argue about forever.

[Ben Carlson]

I think that's probably right. Okay, let's talk about some recommendations.

[Michael Batnick]

All right. I have one for you. Have you watched Widow's Bay on Apple?

[Ben Carlson]

Yes.

[Michael Batnick]

Okay, so if you watch the first episode, this is Matthew Rise, who you said not a great actor in the Claire Danes one on Netflix. I love this guy. I loved the Americans. I think it's one of the most unheralded shows of this century. I loved it. I love that guy. And I watched the first episode and I'm like, what is this show? It's like kind of mysterious, but it's also kind of lighthearted. Then it takes a turn and it gets dark and it's kind of. I guess it's Stephen King, would you say? Ish?

[Ben Carlson]

Yeah. Oh, yeah, yeah. That's Right, that's right. Yep.

[Michael Batnick]

It's kind of a Stephen King ish show. And usually. We talked about it. I'm not a horror person. Not usually my thing. I really like this show. My wife, she's like you. She can't look like if there's a. She knows there's a jump scare coming. She looks away and says, tell me what's happening. She's like, you. For me. Like I said, it does nothing for me. So I just watch like, oh, it's a scary clown or whatever. It's a crazy old lady with long fingernails. But I really am enjoying this show and I'm surprised that I am. Thoughts for you because you watch horror all the time. So is it too much for you?

[Ben Carlson]

Too much? No, this is. To me, this is. I understand it's a horror genre, but this is not a scary show. I don't think it's not.

[Michael Batnick]

It's not like it's like a suspenseful show.

[Ben Carlson]

Yes, there's some, there's some scares, but I wouldn't say, you know, it's like, it's like light hearted. It's like it's. It's comedy horror, for lack of a better.

[Michael Batnick]

Yes, it does have some light hearted parts. Like again, I think the first episode of the show, you'd never expect where it's gonna go. The next four or five, we're halfway

[Ben Carlson]

through it or so I, I know I said this about a lot of the shows that I enjoy. I really don't need a season two of this. I think they already agreed to one.

[Michael Batnick]

Okay, I agree, right. It seems like a one, but get it all out there.

[Ben Carlson]

But yeah, no, I'm enjoying it. And an apple, man. Apple is. Apple has found their groove. I'm watching Cape Fear with.

[Michael Batnick]

I didn't know if I wanted to watch it just because I've seen the movie. I'm like, do I really need it? I don't know.

[Ben Carlson]

It's good.

[Michael Batnick]

Okay.

[Ben Carlson]

It's ridiculous. It's Amy Adams, Patrick Wilson and Javier Berdem, executive produced by Spielberg and Scorsese, who famously swapped movies. There was the Cape Fear for Schindler's Le Swap, which, man, the alternate scenario of that is bizarre to think about.

[Michael Batnick]

I guess my whole thinking is I have a hard time watching movies where things, bad things just keep happening.

[Ben Carlson]

Oh, this is ominous. Yeah, this is pretty dark. So maybe not for you, but you know, I revel in the darkness. I watched on the flight. Is this thing on? So I watched the first 15 minutes, fell asleep, probably missed 40 minutes of it, which is. I don't think I've ever done this before. And I just watched the rest of it and I don't know if I could comment on a movie in which I missed a 40 minute chunk, but I'll fill.

[Michael Batnick]

You took itself way too seriously. That's the problem for a movie about a comedian. Took itself way too seriously.

[Ben Carlson]

It definitely wasn't a comedy at all.

[Michael Batnick]

But how can you have a show about a stand up comedian that's not funny?

[Ben Carlson]

Well, you know, I'm a sucker for movies about divorce, so I. I thought it was okay.

[Michael Batnick]

Okay. I.

[Ben Carlson]

It's an airplane movie at best.

[Michael Batnick]

Yeah. I think that's where I watch it. All right. I rewatched a classic that I haven't seen in a long time. And this is a movie that could never be made today in a million years because no one would believe it. It's called Dave with Kevin Klein, where he is a lookalike with the president and then the president gets sick and he becomes the president. And I haven't seen it in forever. It's one of my favorite. I think the 90s has. The 90s is just the best in terms of White House stuff. Right.

[Ben Carlson]

Was that Sigourney Weaver?

[Michael Batnick]

So it's Kevin, the cast. I couldn't believe how good the cast was. I forgot about it. Kevin Klein, Sigourney Weaver, Frank Langella, Ving Rhames, Ben Kingsley, Charles Grodin, Laura Linney, Bonnie Hunt.

[Ben Carlson]

Whoa.

[Michael Batnick]

It was just like a murderer's row of, oh, my gosh, that person and that person and that person. And it's such a sweet look at like the White House and politics that could never be made today because you'd go, no, that. But you could make that movie in the 90s because politics were different. And I just. I don't know what it is. That. That and the American President is like neck and neck for the best presidential movies ever made. And they're both made in the 90s.

[Ben Carlson]

Air Force.

[Michael Batnick]

Both of them. Get off my plane. Anyway, I can't remember what's on Amazon or something, but I love that movie. Aged perfectly and horribly. All right, congrats to you. Thanks for coming on the show today looking like a guy from the Bronx. Is that fair to say?

[Ben Carlson]

Yeah, I feel completely. I mean, yes. I'm wearing this outfit ironically. I understand. I look like a complete buffoon.

[Michael Batnick]

No, you have to. You have to buy all the championship stuff. You're keeping everyone in business right now. Your next gear purchases, your disposable income.

[Ben Carlson]

All right. Animal spirits at the compound news.com Personal emails, personal responses we'll see you next time.

[Advertisement Voice]

The right window treatments change everything. Your sleep, your privacy, the way every room looks and feels. @blinds.com we've spent 30 years making making it surprisingly simple to get exactly what your home needs. We've covered over 25 million windows and have 50,000 five star reviews to prove we deliver. Whether you DIY it or want a pro to handle everything from measure to install, we have you covered. Real design professionals, free samples, zero pressure right now. Get up to 50% off with minimum purchase plus get a free professional [e-mail] rules and restrictions apply.