Never Pay Off Your Mortgage (EP. 436)

Summary

Animal Spirits Podcast – Never Pay Off Your Mortgage (EP. 436)

Date: October 29, 2025
Hosts: Michael Batnick & Ben Carlson
Podcast: Animal Spirits by The Compound

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Main Theme:

This episode explores the evolving fortunes of markets in 2025, debates bubbles and market breadth, scrutinizes the AI capex boom, and takes a hotly debated stance on personal finance: the wisdom (or folly) of paying off a low-rate mortgage. The hosts also touch on economic trends, labor disruptions due to AI, inflation’s impact on consumer behavior, and recent shifts in private assets and credit ratings, all while keeping the tone lively and self-reflective.

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Key Discussion Points & Insights

1. Market Rollercoaster: From Losses to Major Gains

• Review of Historic Swings | 01:55–06:34
  • S&P 500 in April was down 15% but rebounded to +18%; NASDAQ went from -19% to +23%; similar reversals in Russell 2000, EFA, and emerging markets.
  • Quote (Ben): “Staying the course worked again.” (02:48)
• Market Drift & Breadth
  • Discussion of "breadth thrust" signals, historic six-month returns, and the importance of recognizing when market indicators turn positive.
  • Quote (Michael): “This is the technical analysis that I'm a fan of because this is quantitatively measuring human behavior.” (04:03)

2. Market Bubbles: How Do We Know?

• Defining a Bubble | 09:54–16:58
  • The hosts debate what constitutes a bubble: Is it an 80% drop with a multi-decade recovery? Or something less?
  • Comparison of historic crashes (dot-com, 2008 financials, Japanese stocks).
  • Quote (Michael): “To me, a bubble is an 80% decline with no recovery.” (14:15)
  • Quote (Ben): “Bubbles can and will happen. And this probably... This is probably a bubble.” (12:26)
• Human Behavior & Skepticism
  • Media and individual reluctance to call bubbles, fear of looking “oblivious.”

3. Active vs. Passive Investing & Market Leadership

• Stock Picking and Indexing | 06:40–09:36
  • Fewer stocks are beating the index; echoes of late '90s narrow leadership.
  • Quote (Ben): “More active managers should outperform in a given year than do.” (08:17)
• Survivorship Bias & Opportunity
  • There’s alpha when cycles create deep drawdowns—if you don’t simply "buy and hold forever."

4. AI Capex Boom: Bubble or Paradigm Shift?

• Capex Explosion in Mag 7 | 26:04–31:43
  • Review of Kai Wu’s research showing heavy AI/buildout spending is reminiscent of railroads & dot-com eras, but Mag 7 firms exhibit extraordinary returns on invested capital.
  • Depreciation-adjusted capex stands out for data centers versus old-economy infrastructure.
  • Quote (Michael): “These are literally the best companies that we've ever seen ever.” (28:08)
• Risks & “Capex Bubble” Hedge
  • Even if fundamentals like sales grow (e.g., telecom post-2000), contracting multiples can flatten returns.
  • Current multiples not as “insane” as 2000, yet overbuilding risk stands.

5. AI’s Impact on Jobs and Economic Growth

• Layoffs & Labor Market Tightening | 18:45–20:58
  • AI cited as a justification for layoffs, but some firms will swing too far and need to rehire; cycles of overreaction expected.
  • Quote (Ben): “AI is going to disrupt many jobs and many of them we don't even know right now.” (19:52)
• AI and GDP Growth
  • Recap of Andrej Karpathy interview: AI will increase automation but likely won’t supercharge GDP or break from 2% long-term trend.
  • Quote (Ben, quoting Karpathy): “AI isn’t going to supercharge GDP growth. It’ll just keep us on the same trajectory.” (34:53)
  • Skepticism from Michael: “I don’t really... I don’t believe him. We already have self-driving cars, the robots are coming...” (34:54)

6. Inflation, Consumer Spending, and Behavioral Change

• Eating Out vs. Eating In | 22:04–23:56
  • Americans now spend more eating out than at home despite higher costs; convenience trumps cost resistance.
  • Inflation hasn't fundamentally changed consumer behavior (yet), but a deep recession might.
  • Quote (Ben): “I don’t think we have the ability to change our behavior as consumers. I just don’t think we have it in us.” (23:09)

7. Tariffs and Economic Policy

• Tariff Impacts | 24:12–25:35
  • Most costs fall on businesses and small firms, not directly on consumers as once thought.
  • Tariff rollbacks expected as likely recessionary stimulus tool.

8. Crypto Integration on Wall Street

• Institutional Adoption | 38:34–41:33
  • JP Morgan and Morgan Stanley are easing access to crypto, but prior cycles’ leverage is a cautionary tale.
  • Quote (Michael): “Vanguard is coming to—there’s some whispers that Vanguard’s going to allow it on the platform. We’ll see.” (40:12)
• Speculative Manias & Company Transformations
  • “ETHZilla” and MicroStrategy updates underscore the risks of firms repositioning as crypto proxies.

9. Housing: Mortgage Rates, Prices, and Activity

• Frozen Housing Market | 41:33–43:51
  • Despite mortgage rates dropping from 8% to 6%, homebuyer activity hasn’t spiked.
  • Small price drops (“correction for ants,” down 3–6% in some cities) don’t move the needle.
  • Quote (Ben): “I honestly think we need lower housing prices. I think that's the thing that's going to be more meaningful than lower mortgage rates.” (42:34)

10. Private Assets in Retirement Accounts

• 401ks & Private Credit | 43:51–48:18
  • Asset managers aggressively push private credit into 401ks, but actual investor demand—at least among regular folks and independent advisors—is tepid.
  • Quote (Michael): “I think that part of the good thing about them coming into this sacred world… is more transparency and it's going to bring down fees.” (47:31)

11. Risk in Private Credit & Insurer Holdings

• Explosive Growth in Privately Rated Bonds | 49:05–53:53
  • Explains the risk of insurance companies' exposure to private credit classified as “investment grade” but not rated by major agencies; regulatory and systemic risks are flagged by IMF and FT articles.
  • Quote (Michael): “There’s smoke here. Now, I’m not saying there’s a fire, but this definitely makes you go like, wait a minute.” (51:54)

12. Personal Finance: The Mortgage Payoff Debate

• Hot Topic: Should You Ever Pay Off a 2.6% Mortgage? | 61:45–64:59
  • Viral tweet sparks back and forth:
    • Ben: “This is black or white. This is an insane decision… The inflation rate is 3% right now. You can get 4% in Treasuries. ... Never pay off. Never.” (63:07)
    • Michael: “It’s not insane. It is a bad mathematical financial decision. But the psychological hurdle or benefit sometimes... (can be worth it for some people).” (63:16 / 63:39)
  • Behavioral finance versus math; respect for psychological comfort.

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Notable Quotes & Memorable Moments

• On rapid market recoveries:
  “It's a good thing that Liberation Day, the deliberate disruption, happened in the stock market.” – Michael (06:01)
• On the AI capex bubble:
  “It is a capex bubble.” – Michael, agreeing after reviewing Kai Wu’s charts (26:58–27:08)
• On active management:
  “If they just bought and held... they’d have a better chance of outperforming than they currently do.” – Ben (08:18)
• On AI and economic impact:
  “This is going to be the dominant economic story of the next couple of years. This is going to be all we talk about, unfortunately.” – Michael (20:41)
• On consumer inflation psychology:
  "Who’s like, yeah, salad with grilled chicken cost 24. And I’m cool with it." – Michael (21:14)
• On ETF speculation and risk:
  “55% of leveraged ETFs that have launched have closed already. Of the couple hundred that have launched, 17% have lost 98% of their value.” – Ben (17:06)
• Home stretch on horror movies:
  “Horror is polarizing. You either love it or you hate it.” – Michael (57:09)
• On coupon and credit card ‘games’:
  “For people who do this, go down this rabbit hole for them. It’s more the game within the game than it is like...it'll probably be $500.” – Ben (61:24)

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Timestamps for Key Segments

• [01:55] – Market drawdown & comeback stats
• [06:34] – Breadth and narrow leadership, stock picking
• [09:54] – Market bubbles: definitions and debate
• [18:45] – AI, layoffs & future of work
• [22:04] – Inflation, $20 lunches, consumer habits
• [24:12] – Tariffs and their real impact
• [26:04] – AI Capex: Is this the new tech bubble?
• [34:53] – AI and GDP growth: Karpathy interview discussion
• [38:34] – Crypto on Wall Street / institutional products
• [41:33] – Housing market: rates, activity, prices
• [43:51] – Private credit in 401ks, demand skepticism
• [49:05] – Private credit ratings and insurance risk
• [61:45] – The “never pay off your mortgage” debate

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Tone & Language

Conversation is informal, humorous, and occasionally self-deprecating, yet firmly grounded in data analysis and historical context. The hosts frequently challenge each other, switch positions for debate, and weave in references from both finance and pop culture.

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For First-Time Listeners

You’ll walk away with perspective on how wild 2025’s markets have been, the nuance in defining financial “bubbles,” evolving risks in AI and private credit, and why personal finance isn’t always just about the numbers. Plus, you’ll hear a lively defense of why you (almost) never want to pay off a sub-3% mortgage early—even if the math isn't the only thing that matters.

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For more, check out the full Animal Spirits catalogue.

Transcript

[Michael Batnik]

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[Michael Batnik]

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[Ben Carlson]

Whether you're looking to add investment grade bonds or municipal bonds to your portfolio, Invesco's fixed income strategies are designed to help find the stability you may need. Visit Invesco.com to learn more about their comprehensive fixed income solutions and how they can help strengthen your portfolio's foundation. Invesco let's Rethink Possibility welcome to Animal Spirits, a show about markets, life and invest. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing and watching.

[Michael Batnik]

All opinions expressed by Michael and Ben are solely their own opinion and do.

[Ben Carlson]

Not reflect the opinion of Ritholtz Wealth Management.

[Michael Batnik]

This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.

[Ben Carlson]

Welcome to Animal Spirits with Michael and Ben. Michael, one of my all time favorite stock charts. I think JP Morgan is the first one that did this. It shows the annual stock market returns along with the intra year drawdown to get there and it typically shows even when there's gains there is a drawdown on the way there. This year is a perfect encapsulation of that. This isn't just the drawdown, this is the year to date returns. As of April 8, 2025 the S&P was down 15%. Nasdaq was down 19, Russell 2000 was down 20. This is year to date Returns okay. Efo is down 4 and the emerging markets were down 8. Holy.

[Michael Batnik]

Now the S Nikes.

[Ben Carlson]

Now the S and p is up 18, NASDAQ up 23, Russell up 14, EFA up 28. And emerging markets are up almost 35%.

[Michael Batnik]

The Russell was down 21 and now it's up 14. Yeah, I mean, the NASDAQ's the biggest one. Down 19 now up 23. Unbelievable. Really. Huh?

[Ben Carlson]

Wow. Staying the course worked again.

[Michael Batnik]

It usually does 60% of the time.

[Ben Carlson]

Usually. That's a good caveat.

[Michael Batnik]

Usually it works every time.

[Ben Carlson]

But I think if your default is staying the course works and then one time it blows up in your face or three times over the course of your career, it blows up in your face, I think that's okay. And then you still stay the course. Right?

[Michael Batnik]

Yeah. We talk a lot on the show about like these D tricky stats that are in internal market indicators. Like, and you know, I'm a sucker for these. Whenever there's a washout and sentiment is, is in the toilet. And then you get this, I guess in this case, this wide bread thrust.

[Ben Carlson]

You know, it's funny because a lot of these indicators were flashing green coming out of the April downturn.

[Michael Batnik]

Yeah.

[Ben Carlson]

And we were like, are we sure we believe most people? Are we sure we can believe these.

[Michael Batnik]

Hang on, I'm a. I, I think. Go back to the tape.

[Ben Carlson]

No, no, you were a believer. I'm saying a lot of people were skeptical. Like, okay, sure. That was then.

[Michael Batnik]

Yeah.

[Ben Carlson]

This is a new environment now. There's a lot of people saying that.

[Michael Batnik]

Yes, that's true. Because we, oh, we haven't even seen the impact of the tariffs. And you're going to say that was the bottom. Yeah, no, that was, that was fair. But we, we don't often, in fact, I think we usually don't revisit these data points. So the AT Cycles fan brought it back up. Reminder. The, the breadth bus was triggered back on April 24. Six months have passed since the signal and the S P500 has gained 24. Makes it the fourth best in history. And if you look at this, from 1950 to today, six months and one year later, green 100 of the time. Now I'm eyeballing it. There's, I don't know, 15 times. And what this is measuring, I don't know the exact quantitative metrics. It's really not that important. It's when you've got a significant washout, whether it's measured by percentage of stocks under the X moving, whatever it is, it's a quantitative metric. And then when that condition exists and there's no more sellers and everybody says, oh, back in the boat. Usually that back in the boat moment happens for a very, for a reason. That's matters. And this is just, this is the technical analysis that I'm a fan of because this is quantitatively measuring human behavior.

[Ben Carlson]

So if we had the washout and you didn't get this big thrust of buyers coming in, then it would have been like, okay, this is something to continue to worry about.

[Michael Batnik]

Yeah, yeah, for sure. Rob Anderson, who does great work at Net Divis Research posted Tex 66% gain off the April low was the best six month return for the sector outside of 1983, 1999 and 2000. Look at this. So he, he has a chart that shows six month rate of change, three year rate of change and ten year rate of change and yeah, six month. Wow. Just.

[Ben Carlson]

I mean that's like the gain we saw off of the 2009 bottom over this. I'm gonna.

[Michael Batnik]

This amount of time, you know, it is a good.

[Ben Carlson]

Crazy.

[Michael Batnik]

It's a good thing. Hmm. I'm thinking of this as I'm about to say it. Ah, let it fly. It's a good thing that liberation.

[Ben Carlson]

You can argue with yourself.

[Michael Batnik]

Yeah, I'm thinking about it. It's a good thing that Liberation Day, the deliberate disruption happened in the stock market.

[Ben Carlson]

Oh, we talked about this at the time. Like is it possible that that kept us from. But obviously it hasn't though.

[Michael Batnik]

But who's to say? Well, I was about to argue with myself because who's to say in an alternate universe where this didn't happen, it could have just been a slow steady grind higher. It didn't have to be an explosive move. Who know? Who knows? But it is. It is possible that absent that, no hiccups whatsoever, that the Nasdaq is up 40% year to date and now we're really talking about above, like oh shit, yeah, right.

[Ben Carlson]

We just, we just kind of pushed it back for like three or four months and then it kept going.

[Michael Batnik]

Ben, you had chart kid make this very good looking chart that shows the number of companies in the index that outperform on a calendar year basis. And the immediate thing? Well, two things stand out. Number one, the number of stocks beating the market. The last two years almost off the charts low. We saw this in 98 and 99 with narrow leadership and of course all the money's being sucked up by the hyperscalers. But when I see this chart I sort of go like I think be careful what you wish for. For people that are wishing that it was more stocks and a rally broadening out. And because the most stocks that outperform the index happen in crappy markets.

[Ben Carlson]

We've spoken 2022, look at. It was almost 300 stocks.

[Michael Batnik]

Look at 2001, 346, you want that? Great. 346 stocks outperformed the index in the.

[Ben Carlson]

Mid 2000s when the bull market really took off. 2013, 14, 15 was a bad year. 16 and 17, a decent number of stocks took off that wasn't that bad. But here's the thing I took out of this, this. I thought the number would be way lower because you hear lower than 152.

[Michael Batnik]

How much lower could it be?

[Ben Carlson]

I'm saying the average, the average is roughly half of all. So call it 45% or so of stocks outperform in a given year. I thought the number would be lower because if you look over the long term number is, is tiny. Right? So I guess here's, here's my biggest takeaway. More actively managed, more active managers should outperform in a given year than do.

[Michael Batnik]

True.

[Ben Carlson]

But here's the thing. If they just bought and hold their. If they just bought 150 stocks at the beginning of the year, how many ever they they hold and held and didn't make a single trade over the course of the year, they would have a better chance of outperforming than they currently do.

[Michael Batnik]

Two things, gross of fees. Managers track record is way better than what is reported. Number two is, and I've said this a million times, the best and bender study is real. It is in the data and it rightly makes a case for index funds. And also it overstates it a little bit because it is acting as if people buy the IPO and hold forever. And it's ignoring the fact that, listen, sometimes there are opportunities to buy and sell stocks at different points in the cycle. So a stock can fall 80% and be a dog shit company, go to zero. A stock could be down 80% to be up 400% the next year and provide potential opportunities for alpha. So both things can be true, right?

[Ben Carlson]

You could have bought peloton and held it until the beginning of 2021 and made a ton of money and sold before it crashed.

[Michael Batnik]

Right?

[Ben Carlson]

You made money. And that's a. Here's my thing though, and this is not groundbreaking. I think picking the stock pickers that outperform is way harder than picking the. The stocks that outperform. That's my Takeaway here?

[Michael Batnik]

Well, I mean, I guess it depends if you're trying to pick a stock picker that could. If you're. If you're doing it every January 1st. Yeah. I mean, that's impossible.

[Ben Carlson]

How many stock pickers have we had in the last 20 years that you can point to that you know that person's going down in legendary status? They used to have those all the time. They don't happen anymore. Really?

[Michael Batnik]

Yeah. Too hard.

[Ben Carlson]

It's more. It's more thematic than anything.

[Michael Batnik]

It's too hard. Okay. This has been the rallying cry of people who don't want to believe that stocks might be in a bubble. It's like a warm security blanket. Well, it can't be a. It can't be a bubble if everybody thinks it's a bubble. It just can't be. Oh, really? Why not? So I listened to. By the way, we were Ben and I stumbled a little bit on the ad read, and I joked, reading is hard. Reading is hard. I listened to Aaron Sorkin's. Nope. Andrew Ross Sorkin's 1929, which I really appreciate that he read that. I can't believe. I can't imagine how difficult that is.

[Ben Carlson]

It's a very long book, too. And he's a good reader. Here's the thing. So my publisher asked if I would like to read my book. And at first I said, no, I don't want to. But then I thought, wait, I probably should read my own book. But it's going to be so hard. I'm not a. I. I'll. I'll trip up a million times.

[Michael Batnik]

I can't read out loud for too long because there's something in my face. My. My gland. I just. I produce excess saliva. I can't do it. I can't even read books to my kids. There are more than 30 minutes.

[Ben Carlson]

There's certain words that always trip me up and I can't get whatever they are. I can't say them correctly.

[Michael Batnik]

So anyway, in. In Sorkin's book, which was tremendous, phenomenal, kudos to him, there were people that said, wait a minute. The Fed has to raise rates. This is crazy. How are you allowing this speculation to continue? It's going to end badly. Okay. That was in 1929, when we knew very little about the securities market. Modest proposal tweeted. I'm begging people to go back and read the contemporaneous reporting of the housing market from the spring of 05 to mid 06. It was meticulously documented by the mainstream press. How insane consumer behavior was and how prices subsequently began rapidly declining. So people are like pretending that there.

[Ben Carlson]

Was, there was like Time magazine cover stories about people going nuts to their houses.

[Michael Batnik]

Yeah. And you don't, you don't think in the late 90s that people had any inkling that things were a little bit of a mess?

[Ben Carlson]

I mean, there's plenty of people.

[Michael Batnik]

Yeah.

[Ben Carlson]

The thing is like, you could, you could say the 90s, the overwhelming number of people were on one side of the boat saying like, oh, this is great. Things are going to be great forever. But there was plenty of other contrarians were saying, no, no, no.

[Michael Batnik]

Yeah. So, so anyway, if you're using this as like blinders to say that, oh, it can't. Listen, everybody knows it's bubble. Can't be a bubble. Not true. And I'm not saying it's a bubble, so don't mishear me, but I'm just saying that argument to me is hogwash. It falls on deaf ears. It's not credible.

[Ben Carlson]

And the other thing is I think you get into this rut where you go, well, listen, in 2022, everyone said we're going to have a recession. Everyone. 100% chance didn't happen. So this time is the same. Yes. Guess what? Bubbles can and will happen. And this probably. I. You say? I don't. Can't say yet. Let's, let's be honest. This is probably a bubble.

[Michael Batnik]

Then why do you want stocks?

[Ben Carlson]

Because. Why, why would you sell stocks in a bubble? I'm George Sorosing this. No, that's why I'm diversified.

[Michael Batnik]

Yeah, good point. No, but here's, here's the other thing about like, oh, people are talking so much about the B word. Yeah. Because nobody wants to look like an asshole. Anybody who talks in front of a mic, ourself included with this guy just throwing at the Grand Rapids hedge 10 seconds ago. I don't want people to. Nobody wants that feeling that you complete. How could you be so oblivious? How could you guys not know Nvidia at 4 trillion. How could you not know that o this made up this company that had, that had nothing at 20 billion. How could you have missed it? Right? Nobody wants egg on their face. And so people are being extra precautious or extra cautious about not looking like an A hole.

[Ben Carlson]

Yes, that's what everyone has to say. Like this is a bubble, but I'm going to keep riding it right as the melt up happens.

[Michael Batnik]

No, it's a bubble, but it's totally justified.

[Ben Carlson]

So speaking of the 1929 book someone on Twitter asked us, watching you and Michael talk about the trillions of inflows in index funds came from. What about credit? We were asking like, where's the money coming from?

[Michael Batnik]

Okay, part of the story are people.

[Ben Carlson]

Buying on a margin. And he said yes. I've been reading 1929 as well.

[Michael Batnik]

Yeah.

[Ben Carlson]

If you look at the. This is from your Danny research I pulled. If you look at margin debt versus the stock market, it's going up in a straight line just like the market. And you go, oh my gosh, yes, people are borrowing tons of money. However, if you look at margin debt as a percentage of the stock market, it's actually dropping. You see this one, the second chart? This is the one that always.

[Michael Batnik]

Yeah, yeah, great stuff, great stuff.

[Ben Carlson]

The margin. So it's not. People aren't going nuts. And they, they did.

[Michael Batnik]

People aren't. People aren't going nuts. And I guess just to, just to broken arrow this belabor the point. To me, a bubble is an 80% decline with no recovery. That's the, that's the aftermath of a bubble.

[Ben Carlson]

No, not no recovery.

[Michael Batnik]

Find a modest recovery. A 15 year, a 20 year recovery.

[Ben Carlson]

Okay. And that's what happened to tech stocks after the dot com bubble. It took them, I think it took the NASDAQ 13 years to recover. It was an 80% wash.

[Michael Batnik]

Okay. And it took, and it took stocks from.

[Ben Carlson]

80% is a big line. I think 50 is okay enough for me to call a bubble.

[Michael Batnik]

No way. No way, dude.

[Ben Carlson]

What are you talking about?

[Michael Batnik]

These stocks fell 50 in 2022.

[Ben Carlson]

Japanese.

[Michael Batnik]

Amazon, dude. Amazon, Amazon, Amazon, Google, Meta and Nvidia. Amazon and Google fell 50. Meta and video fall 75%. Yeah, 75. 75.

[Ben Carlson]

They didn't have the second part of your thing though. They recovered immediately. Almost falling 50 years.

[Michael Batnik]

50% proves nothing. Pull up a chart of Amazon and Apple. Look at many 50% declines they've had. That proves nothing. Listen, I think the Recovery is apart 1929 to 1954. That is a bubble. A bubble that burst and took.

[Ben Carlson]

Listen, Japanese stocks fell 60% and they didn't fall 80.

[Michael Batnik]

Fine. And it took them 90 years.

[Ben Carlson]

That's what I'm saying.

[Michael Batnik]

It's the second part.

[Ben Carlson]

This is like 2022. The washout happened. Yes, but those stocks recovered very quickly.

[Michael Batnik]

Cisco, it took 25 years to recover. The financial saying a lot of the financials took 15 years to recover after. So if Nvidia falls and takes 15 years to recover, then it would have shown to be a bubble. But if it falls 50% and then it captures and then it bounces. 30%. What? That's not a bubble.

[Ben Carlson]

That's the weird part.

[Michael Batnik]

That's an overpriced stock that happens all the time. And a bubble, sorry. Thinking about like this. So the, the scary part of this bubbles bursting, there has to be an element of a complete loss of faith in the system. And that shows itself in credit and the lack thereof. People unwilling to loan money. That is what is so dangerous about the debt. And the debt that we're talking about is that when, that, when the faith of that of lenders goes away, then you get some nasty. But the equity, get the equity getting, getting falling 40%. That tells you nothing.

[Ben Carlson]

No, the, the only way this is a true bubble is if AI is, is like, for it takes like 10 or 15 years for it to actually come to fruition. Because you could say this, my grand hedge here is, this is a Capex bubble. Okay. But the thing is, even if there's a washout in the stock prices, the, the amount of capex that they're putting into this, it's going to work eventually. It sounds like. Let, let's say it's on a five to seven year lag at the worst, then these stocks are still going to be, it's not, they're not going to languish forever.

[Michael Batnik]

Yeah, capex bubble. That's fair. That sounds right. It definitely feels like there's, there's definitely some shit. What's this? 5x ETFs.

[Ben Carlson]

Okay. Business Insider did a story on this and they interviewed someone from Morningstar, can't remember who said so. They're talking about the five times ETFs. 55% of leverage ETFs that have launched have closed already. Of the couple hundred that have launched, 17% have lost or 98% of their value. So sometimes these things are okay. Most of the time they're completely horrible for you, which makes sense. And I don't think most people are getting into five time leverage ETFs thinking that like they have anyone to blame it themselves if something goes wrong.

[Michael Batnik]

Yeah, I, and I. Yeah. But I think at this point, if you don't know, shame on you. I think people know.

[Ben Carlson]

Yes. And they, but they just. The people who use them love them. I'm sure. Yeah.

[Michael Batnik]

Good.

[Ben Carlson]

Which is. Okay.

[Michael Batnik]

All right. A chart from Augur Infinity shows soft data versus hard data and it shows that the soft data is rolling over again pretty dramatically. I don't really want to spend more than 10 seconds on this because I'm Just happy that we, we, we sort of. This went away for about 12 months. We haven't spoken about it. Maybe it's back, maybe it's not.

[Ben Carlson]

But I'm of the, I'm still of the opinion that vibes are broken forever and sentiment readings are nearly impossible to take any signal from the noise.

[Michael Batnik]

Okay, well then what do you say about the recovery? Was that broken too?

[Ben Carlson]

Look, just look at the swings in these things. People, the mood swings are manic.

[Michael Batnik]

They, they don't matter on the downside, when people say that they're depressed, don't worry about it.

[Ben Carlson]

But look at how quickly people went crazy in euphoric in January 2025. Then it crashed immediately. I think that the swings are way too wide.

[Michael Batnik]

Something happened, something happened around there to make people feel upset.

[Ben Carlson]

Okay, here's the new story of the week, I think from the economy. This is from the Wall Street Journal. More big companies bet they can still grow without hiring. And I found this. And they talked about how JP Morgan said they don't need as many people. Goldman Sachs sent a memo. Walmart. There was a story about Amazon yesterday getting rid of a bunch of white collar employees. The Airbnb CEO says this. It's just kind of funny to me. Whenever you're in these cycles, it feels like they are going to last forever. And I pulled up a story from 2021. 4.3 million workers are missing. Where did they go? Many economists expect the labor shortage to last years. And some think it could be permanent. Okay, that was four years ago. Economists think this labor shortage could be permanent. Now it's, we don't need labor anymore. We're done with them. I just, I just want to. There's going to be overreactions here. And here's. I tweeted this out this morning. Here's something I believe. I think three things can be true. One, AI is going to disrupt many jobs and many of them we don't even know right now. Two, companies are going to use AI as an excuse to lay off staff that they're going to lay off anyway. It's a, it's a great scapegoat. Who do you blame for AI technology? Like, who do you yell at? Right, sorry, AI. And three, I think there's going to be many companies that take this way too far and realize, oh shit, we did not mean to let go of that many people. We need to bring them back. There's going to be stories in the years ahead of rehiring because I didn't do what they thought it was going to do.

[Michael Batnik]

Yeah.

[Ben Carlson]

How's that?

[Michael Batnik]

Yeah, I agree. Good takes.

[Ben Carlson]

I think that's the, that's the cycle we're on here. It's going to like, there's no way you can pinpoint the exact number of people that AI is going to help. Excuse me, Help replace. Right. It's, it's impo. There's going to be tons of back and forth on this.

[Michael Batnik]

Yeah.

[Ben Carlson]

In tech companies that over hired, listen, a lot of places over hired in 2021, 2022 and 2023.

[Michael Batnik]

Yeah.

[Ben Carlson]

Because people were worried that they couldn't hire anyone. Right. There was all those job openings and now I think it's like, this is the other side of that. Like, let's get rid of them. Just blame it on AI.

[Michael Batnik]

This is going to be, this is going to be the dominant economic story of the next couple of years. This is going to be all we talk about, unfortunately.

[Ben Carlson]

Yes. And when there is a recession, people are going to worry, well, are they not going to rehire me coming out of the recession? Am I never going to get rehired? Because AI, like, these are going to be the stories we're talking about for years and years.

[Michael Batnik]

Yeah.

[Ben Carlson]

All right, this is interesting. I feel like you talk about with inflation, like the price of restaurant orders. Right. Saying like, remember we talked like, what are the things about inflation that really still get you? And you said paying 20 for a salad or something.

[Michael Batnik]

People, people don't get over that. They're still not over it. Who, who, who's like, yeah, salad with grilled chicken cost 24. And I'm cool with it.

[Ben Carlson]

The thing is, I think no one is cool with it, but everyone's still just like, ah, whatever. So this, what are you gonna do?

[Michael Batnik]

Not eat?

[Ben Carlson]

What do you mean? So this is, this is a story for. Well, you could brown bag it. This is a story from Market Watch. Why are we normalizing.

[Michael Batnik]

Have you been to the grocery store, Benjamin?

[Ben Carlson]

Why are we normalizing twenty dollar lunches? So this is from a survey, so take it for its worth. But it says Americans are spending $108 each week on their Monday through Friday lunches. That's up from $88 a year ago. Obviously that, like take these with a grant. But that number doesn't sound shocking to me. If you go out to eat every single day and you spend a hundred dollars in a week, that number probably would have been shocking 10 years ago. Today it's not shocking at all.

[Michael Batnik]

Well, it depends what you eat. I mean, Chipotle is 12.50 in New York City.

[Ben Carlson]

That's, that's your bellwethers Chipotle.

[Michael Batnik]

I mean that's not, that's not bad. It used to be 14, I think 1250.

[Ben Carlson]

So look, so look at this next chart here. I pulled this from the US Department of something I can't remember. And it shows us food expenditures and it shows food away from home, eating out, obviously, and food at home. And you can see in the past 10 years or so, food away from home has taken the lead. They used to be right on the same trend line. Food away from home is skyrocketed over food at home and is now almost.

[Michael Batnik]

That food away from home used to be underpriced.

[Ben Carlson]

Oh no. I'm saying people have just changed their habits so much that we. Everyone complains about the price of stuff, but we still, it's. You still would rather pay for convenience.

[Michael Batnik]

Oh wait a minute.

[Ben Carlson]

Than change your hat.

[Michael Batnik]

This doesn't show like the price of food at home versus the price of. This shows how much people are spending at home.

[Ben Carlson]

How much people are spending. So people are spending and obviously you could say a lot of that is the price. But people are obviously willing to pay higher prices to eat away from home because of the convenience. It's. You complain about it, but then you. What do you. People don't change their behavior.

[Michael Batnik]

Right.

[Ben Carlson]

I think that's what we've learned about inflation.

[Michael Batnik]

Yeah.

[Ben Carlson]

And that's why I think the next recession is going to be so fascinating because are people actually going to change their behavior in slow spending or are they just going to borrow a bunch of money? Because I don't think we have the ability to change our behavior as consumers. I just don't think we have it in us. That's where I've fallen on this. We're going to spend the certain amount of money regardless. Hey, cars are 50 grand. I don't care. I'll take out an 84 month loan. Same, same, same monthly payment.

[Michael Batnik]

It depends. I mean what you're saying sounds crazy, but it's not that crazy because you're right. People don't change. It depends on the depth and the duration. Listen, if there is, God forbid, a recession in the last seven years and it's painful, yet people are going to change their behavior. If it's a two year relatively mild recession where unemployment goes to 6%, then probably you're not going to see much.

[Ben Carlson]

That would be my base case is that if we get a led capex recession, hey, mark Zuckerberg spent $400 billion too much. It's going to lead to a slowdown. To me, that's a mild recession. Yeah, right.

[Michael Batnik]

All right, chart from Goldman. Tariff effects seen so far implied that US consumers will eventually absorb 55% of the tariff costs. All right, that's a projection for right now. It's 37%. Businesses are eating 51% of tariffs. I am not an economist, but I feel like the argument against tariffs were pretty cut and dried. It's like this. And this is a tax on consumers. Like, this is not. This is a thing. And were we all wrong? Like, is it not a thing? How is it. I'm sort of over the. Just wait. It'll show up in the data type of thing. I mean, it's been five months and. Yeah, no, it's not, it's not, not there. It's 30 some. We're, we're bearing 37% of the brunt. But it hasn't seemed to really made a make a big dent. Now listen, are there businesses across the country that are getting destroyed? Yes.

[Ben Carlson]

I think it sounds like small business pockets brunt of this, but as opposed to consumers.

[Michael Batnik]

Yeah. So maybe it's just not showing up in giant American earnings.

[Ben Carlson]

We didn't, we didn't get $4,000 iPhones like people thought. Yeah, right. I, I, I trained my kids how to build an iPhone in the backyard in our factory and that was a waste of time. So here's the thing. In the next recession, if we get one in the next couple years, guess what? Tariffs gone. That's the stimulus. That's one of the pieces of. Right.

[Michael Batnik]

Tariffs. Yeah. Take it away. The tariffs is like, is like when your kids graduate from, from nursery school. Not nursery school. What the hell do you do? What's pre nursery Daycare?

[Ben Carlson]

Yeah, yeah. Yes.

[Michael Batnik]

Like, boom. An extra dollar. A few dollars in my pocket.

[Ben Carlson]

Oh my gosh. I had three kids in daycare for two years. Stimulus. It was huge stimulus to the Carlson household. But yeah, you're right. I don't you think the next recession, the terror. All right, hey, guess what? We're taking off the tariffs. Or do you think they're going to be too, like, entrenched at that point? I don't know. I don't know. All right.

[Michael Batnik]

Kai Wu is in my estimation the one of the best research reporters out there. He's not a reporter, but research writers. He's an investor.

[Ben Carlson]

I make. Can I make an analogy here?

[Michael Batnik]

Sure.

[Ben Carlson]

Kai Wu is the millennial. Michael Maubison.

[Michael Batnik]

Yeah. That's great. Well done. Nailed it. Okay, so, so Kai is one of those people and it's a very short list, I would say. It's like, it's Kai and semblance symbolist for me where it's like paper out. I read it. He has a way of turning the story inside out and creating charts that you just don't see anywhere else. So he wrote a piece called.

[Ben Carlson]

Oh, wait a minute, hang on. You read this whole piece? I did too. You didn't come away thinking, okay, this is a bubble. When you look at all these charts, a capex bubble. There's no way you could read this piece and not come away thinking, yeah, this is a capex bubble. Come on, what are we doing here?

[Michael Batnik]

It's different, Ben. It's different this time. No, it is a capex bubble. Yeah, they're spending, they're spending, they're spending a lot of money. It is capex bubble.

[Ben Carlson]

That's a great grander but hedge though, right? Capex bubble.

[Michael Batnik]

Yeah. No, it's not a price bubble. What? No, it's. All right, so he looked at the capex as a percentage of GDP for railroads, Internet and AI. And this has been done before. But what Kai did that is so interesting is he depreciation adjusted it. So these data centers, they go like they, they need constant maintenance. They depreciate. It's, it's hardware.

[Ben Carlson]

Right. You put the railroad tracks down, they're there for a long time.

[Michael Batnik]

Right, right, exactly. So when you depreciation adjust it, you get one of these that make it a cringe face for people that are, that are listening. Yeah, no, it's, it's high, it's a lot. And, and the, the thing, the thing. So he did point out, which I love, that these companies, the Mag 7 are so much better than everything else. And I know, we all know that nobody's disagreeing with that. That's why, that's why Nvidia is 4 trillion and Apple's 4 trillion.

[Ben Carlson]

These are literally the best companies that we've ever seen ever.

[Michael Batnik]

So. All right, so he, but he breaks it down like this return on invested capital, which is like the metric of metrics, right? How much money do you make per incremental dollar of spending on all of your investments within the business? That's it. That's it. And the Mag 7 are at 22.5%. I don't think there's ever been anything like this in the history of, of business at this.

[Ben Carlson]

It was all capital intensive before.

[Michael Batnik]

The S and P is at the s and P 493 is at 6% return on equity 30 versus 13. Free cash flow margin 16 versus 9. Now Kai says again, justified. These were incredible. Asset light, high margin, wide modes, all the things.

[Ben Carlson]

But now before we get to this, so he says, since 2015, the MAG7 is up 25.2 7.5% per year, creating over $23 trillion of wealth for their shareholders.

[Michael Batnik]

Unreal.

[Ben Carlson]

Guess what? The fundamentals worked pretty good.

[Michael Batnik]

Yeah, but, but now they are transitioning from asset light to asset heavy. And Kai looked at the history of these asset heavy versus asset light companies across time within every sector.

[Ben Carlson]

Right now they're investing in data centers. And these are real physical things, not just software.

[Michael Batnik]

Right. And, and companies that spend a ton do not perform nearly as well as their counterparts. And he did of course use one comparison to 2000 as. You gotta do it. He showed is this Cisco or something else? What is this? Are these telecom stocks? Let's call it telecom stocks. So the thing is they did grow. The promise was there, the fundamental growth. So their sales increased at the peak from 2000. 1030% over the next 20. Over the next 20 years, 1030% sales growth. The problem is the multiples contracted 85% because the multiples were so insane that you got a total return of 16% over that 20 year period with obviously a dramatic fall in between.

[Ben Carlson]

I don't remember the exact numbers, but Microsoft and Ballmer took over. He took over in like 2000 and Gates got out right at the right time and the earnings growth for Microsoft was like massive, I think 10%. And the stock got crushed his whole tenure. Now because of where it started.

[Michael Batnik]

Now the, the companies today do not have nearly the same insane multiples. Okay. Nvidia trading at whatever it is, I don't know if it's 35 times forward, it's not insane. Okay. Now if the multiple goes down to 26. Yeah, you're gonna feel it. But you're jumping out of the third story of a wind of a, of a building instead of the tenth story. Like, like these stocks were back in the day.

[Ben Carlson]

Yeah. So just some broken angles. You'll be fine.

[Michael Batnik]

That's it.

[Ben Carlson]

Just the thing is he, he puts the quotes in here from Zuckerberg and Larry Page about like were willing to go bankrupt rather than lose this race. What do these tech CEOs care if it's a bubble, if they're trying to create AGI or whatever? Like what do they, what, why would they care?

[Michael Batnik]

So what, I guess what's, what's Different. And I wasn't around during 2000. I don't know what the CEOs were saying, but they're being very clear about what they're going to do, what their plans are. And investors are saying, we're riding with you.

[Ben Carlson]

Right. And how long? That's the thing. Now the question for investors saying, how long?

[Michael Batnik]

And we get, we're getting an earnings call, we're getting. We get them all reporting this week. I'm sure at some point, maybe it's this one, maybe it's five years now, who knows? At some point investors will say, buddy, you've been saying this for nine quarters, show me the damn cash flow.

[Ben Carlson]

All right, so good segue here. So did you listen to this part? I think this is the podcast of the year so far. I listened to this. I gotta be honest, I'd never heard of this guy before. I listened to it, but it's. So Dwarkesh is the podcast. Did you listen to any of us? Did you put it in ChatGPT at least?

[Michael Batnik]

No.

[Ben Carlson]

Okay. It's a two and a half hour podcast all about AI and this Andre Karpathy. Karpathy, I don't know how to say his name. He was one of the founders of OpenAI. He led Tesla's AI division. Now he does some other educational AI thing. I've got to be honest, I didn't understand 65% of what he was saying. But the stuff I did understand kind of blew my mind. And it was, it was fascinating. I listen, I gobbled this thing, thing up in a two and a half hour podcast in one day. Here's a few of the things I pulled out here. Okay, now this is really good. So his whole point is AI isn't going to supercharge GDP growth. It'll just keep us on the same trajectory. He's like, he's like, listen, just like the Internet and email and all these things that came about in automation kept this long term, 2% trend line. That's what, that's what AI is going to do. It's just going to keep us, it's, it's, it's a step of that automation in the same direction. So he's like, it's not this leap forward, this huge leap higher, it's just going to keep us on the same trajectory. Now without AI, maybe that trajectory flattens out, but with it, that's his expectation. He said, listen, I can't predict the future, but that's my sense. So he says, with AI, we're going to see the Exact same thing. It's just more automation. It allows us to write different kinds of programs that we couldn't before. But AI is still fundamentally a program. It's a new kind of computer and a new kind of computing system. But it has all these problems. It's going to diffuse over time and it's still going to add up to the same exponential. We're going to have the same exponential that's going to go extreme vertical. It's going to be very foreign to live in that kind of environment. He also, he was like pouring some cold water on this, but also saying, like, this is going to be amazing. It's just not going to happen. As the way. And the way that he explained LLMs AI was really interesting. He said, we would love to be able to create an AI that's like an animal, like a zebra comes out of the womb or a horse and it can walk immediately because. And he's like, we can't recreate that. And LLM is like a ghost is how he explained it. Like that's how they view it when they're trying to like build these things. And he says AGI, which he thinks is like a decade away, which is, which is kind of funny. People were kind of like, oh, really, a decade away? That seems way too long. It's like you're creating like some people say God in a box, like, oh no, we have to wait 10 years for it. But he's, he says some, he put, put a little cold water on that too. He said some people feel like this assumption, we have God in a box and now it can do everything and it just won't look like that it's going to be able to do some of the things it's going to fail at. Some of the things it's going to be gradually put into society and we'll end up with the same pattern. That is my prediction. This assumption of suddenly having a completely intelligent, fully flexible, fully general human in a box and we can dispense it at arbitrary problems in society. I don't think that we will have this discrete change. I think we'll arrive at the same kind of gradual diffusion across the industry now. So this stuff all sounds like he's pouring cold water, right? But he's, he's still saying like, the stuff that's going to happen is going to be amazing. It's just not like it's not world changing like people think it's going to be this total step up in. Everything is completely different. He says we're on the same trajectory. Thoughts? You got to listen to this. It was it.

[Michael Batnik]

I don't really.

[Ben Carlson]

Well done.

[Michael Batnik]

I don't believe him. We, we already have self driving cars, the robots are coming. The world is going to change. Now if you're looking at a line of GDP growth and saying, did the world change? I don't know, I, I would suspect that you're going to see something, but maybe you don't.

[Ben Carlson]

That's the thing. The Internet did not change the trajectory of gdp.

[Michael Batnik]

Okay, so may. So, yeah, may maybe, maybe, maybe so. But I think that, I think that this is going to have radical transformations for our daily life, for the way that we do a lot of things. I, by the way, I would say, I would assume that he would say that too.

[Ben Carlson]

Yes.

[Michael Batnik]

Okay.

[Ben Carlson]

Yes. I just thought that it was a very balanced. It was one of the more balanced looks I've heard from a guy again, I'd never heard of before. I listened to this podcast, so take that for what you will. But I thought it was just the way that he explained how AI works and he's like, listen, we're just, we're pulling this stuff from the Internet. It's not like, it's not magic, right? The inner, the information where it's, you know, garbage in, garbage out. In a lot of ways it's, it's amazing that we can do some of these things. But he just said like, people need to temper their expectations a little bit and it's still going to be amazing. And that's why again, I think like we could see the, some sort of washout and it be a wonderful buying.

[Michael Batnik]

Opportunity because Silicon Valley Hedge, like, what do you, what do you call. How do you describe what he was just saying?

[Ben Carlson]

I. Yes. I think sometimes in Silicon Valley the, the euphoria and the can you imagine what the future is going to be like? Gets a little too ahead of itself. And so I think that you're right. That was a little bit of like just everyone pump your brakes just a little bit. Well, he wasn't saying.

[Michael Batnik]

Certainly you could say like, hey, listen, private investors maybe don't give this unproven company with no revenue an $8 billion market cap. Like, sure, yeah, I would agree.

[Ben Carlson]

So anyway, it's worth your time to listen. All right. Speaking of AI, so stitch fix, I'm still a, a client of. I don't think anyone else is because the stock, gosh, it crashed like 90%. I'm so glad I, I bought this thing in the meme stock mania after the CEO was on Patrick's podcast. And I. I don't know, I made some money in it, and then she quit. And that was enough for me. Like, okay, the CEO quit. It was her vision. I'm out. And then the stock crashed, like, 90. It's a typical meme stock, but I still use it. So once every two months, they send me a box of clothing or shoes or jackets.

[Michael Batnik]

Do you. Do they. Do they, like, recycle the brands or, like, are you familiar with the brands that they use?

[Ben Carlson]

A lot of them have been newer brands to me. And I'll say, I'll write a note, hey. And probably it is AI at this point, but I'll write a note, say, hey, I'd love a new jacket. I'd love some new joggers. It's fall. I want a hooded sweatshirt. And then I pick and choose what I want, and then I send back the rest. And it's gotten me a lot of new clothing I never would have got before.

[Michael Batnik]

Wait, do you not shop on Instagram?

[Ben Carlson]

Not really, no. I don't go to Instagram that much. For whatever reason, I probably should. It's probably better for me than Twitter, but anyway, they have this new AI thing in Stitch fix where you upload a picture of your face and a picture of your body, and then it allows you to see what clothes would look like on you. So I uploaded the pictures of what they put of me in here.

[Michael Batnik]

Are these both fake or is the one on the left you?

[Ben Carlson]

No, they're actually not me. Come on, I've got a better build than that. It looks like I skipped leg day.

[Michael Batnik]

And the one on the left. The one on the left does look like you. I mean, the one on the right looks like you, too, but it kind of.

[Ben Carlson]

Well, again, I uploaded a picture of my actual body, so they had something to go off of. The one on the right is obviously not me, but. Yeah, you're right. The one on the left, it kind of looks like me.

[Michael Batnik]

I mean, dude, it looks just like you. Ray Ban has this feature, too, where you can. You can, like. They hold the camera up to your face and you could, like, put the glasses on and you can look around.

[Ben Carlson]

It's pretty cool, right? So anyway, it's. I thought it was kind of. I did this in 10 seconds.

[Michael Batnik]

Yeah, I don't know.

[Ben Carlson]

It took.

[Michael Batnik]

I don't know if this will change the gdp, but I thought it's pretty cool. All right. JP Morgan plans to allow institutional clients to use their holdings of Bitcoin and ether as collateral for loans by the end of the year in a significant of Wall Street's crypto integration. That's a report from, from, from Bloomberg.

[Ben Carlson]

This is the stuff that got crypto in trouble a few years ago. Right. Obviously the borrowing against.

[Michael Batnik]

Hold on, that was, that was investors borrowing against and loaning and all that sort of stuff. I think that this is, I think that this is maybe less for like that cowboy and maybe more for like less insane margin.

[Ben Carlson]

Yeah, look, a portfolio marginal, typical one. But yeah, that's what I'm saying. That's a step in the right direction versus the cowboy stuff.

[Michael Batnik]

This surprised me in the story. Morgan Stanley plans to allow customers on its E Trade retail platform to access popular cryptocurrencies beginning in the first half of next year. They're still not. If you're a Morgan Stanley client on E Trade, you can't buy crypto.

[Ben Carlson]

I gotta be honest, I didn't know E Trade still existed.

[Michael Batnik]

Yeah, Morgan bought it.

[Ben Carlson]

Well, but I, I didn't know they still even. I thought they just kind of consumed it. I didn't know that people actually still used it. So it's just Morgan Stanley customers, obviously. That is a little surprising.

[Michael Batnik]

Well, I guess. No, I, I don't, I don't know. I honestly don't know what the, the, what they're talking about because I think if you are an E Trade customer, technically you are a Morgan Stanley customer because they own the product. But I don't know exactly what they're referring to, how they break it down. But anyway, Vanguard is coming to. There's some whispers that Vanguard's gonna allow it on the platform. We'll see. All right.

[Ben Carlson]

On the, on the, and an ETF or no?

[Michael Batnik]

In the etf, I believe.

[Ben Carlson]

No, no. And are they gonna do a Vanguard etf?

[Michael Batnik]

Oh hell, I mean I would be shocked.

[Ben Carlson]

No.

[Michael Batnik]

You know what? No. All right. On the crazy side of things, Punk9059 tweeted. Remember we spoke about this company a couple of months ago, Ethzilla, and we said that this is crazy if you think, and I don't know if Eth Zillow is this company, but they were companies that are like reinventing themselves as crypto treasury companies where they're trying to like transform a non existing or shitty business into these treasury companies. And that was going to work. Well, obviously it's not working. Look at this chart of, of Ethzilla shot up to like a hundred bucks on the announcement. Now it's down to 20 bucks. But the trouble is that they sold $40 million worth of ETH to fund stock buybacks. So yeah, it's not working. I, I have a, an update on MicroStrategy that I asked Char Kit to do a couple of weeks ago but haven't got around to sharing the show. We'll do it next week. Let's just say that micro, it's, the.

[Ben Carlson]

Stock is basically flat on the year. It's interesting.

[Michael Batnik]

Flat of the year. So I think, I think, I mean, I don't, I think this was a spac prior to. So I don't know, I don't know what it was like in the beginning of the year.

[Ben Carlson]

No, I'm talking about MicroStrategy. Oh. So Bitcoin's up 25 or something and MicroStrategy is up 2.

[Michael Batnik]

But if you look at MicroStrategy divided by, by BTC, it is at multi year lows. So the spread is, it's not, it's not working. And I'm, I'm curious to listen to their earnings call and see what he has to say. All right. We are not seeing a pickup in activity in the real estate market. Residential real estate. Neil daughter said despite the decline in mortgage rates, we've yet to see a pickup in purchase demand. Mortgage purchase applications slid 3%.

[Ben Carlson]

See Neil Dutt is on Team Ben Carlson. Like last week I said, because if you think about it, mortgage rates topped out at 8. Now they're back down to 6 and you're still not seeing a huge uptick in activity. I think it's got to be lower.

[Michael Batnik]

I, I think that this reverses. Like. Yes, I think, I think that you are right. Clearly it's not, it's not showing in the data that lower rates are having an impact yet. So I don't know if it takes rates breaking 6%. I don't know if there's a psychological number there, but I do suspect that if rates go down a little bit more that you're going to see.

[Ben Carlson]

I think, I honestly think we need, I think we need lower housing prices. I think that's the thing that's going to be more meaningful than lower mortgage rates. Maybe I'm wrong. Lance Lambert had this thing where he looked at housing markets where the home prices are falling and he said among the 300 largest metro area housing markets, 105 markets saw home prices fall year over year between September 2024 and 2025. To me this is a correction for ants. So the biggest, the worst one is Punta Gorda, Florida, which my grandparents used to live there actually. Nice little Area, Englewood Beach. Very nice. Yeah. So there's. There's two housing markets, both in Florida where they're double digits. It is 12 and 10%. But you look at these other places, you're seeing home prices fall 3%, 4%, 5%, 6%.

[Michael Batnik]

That's nothing. Especially if you zoom out.

[Ben Carlson]

It's. It's nothing compared to the gain. So how about this? What if more activity. One of the reasons that we're not in activity is because the price point is being held up. What if more activity actually led to a housing price decline? If there was more activity, then you'd see the true price of these that people are willing to buy at. And it's lower.

[Michael Batnik]

Could be.

[Ben Carlson]

What if more housing activity didn't lead to higher prices, but lower?

[Michael Batnik]

Could be.

[Ben Carlson]

Is that too, Galaxy brain? I think that's possible. That it's the price thing. People are hung up by the prices.

[Michael Batnik]

I. I don't know. That sounds too cute, but maybe. Maybe. All right, let's talk about private markets. Ben. We spoke with Sonali Basak last week from I Capital. Had a very good, clean, spirited debate about what's going on in, in private markets. One of the stories that we didn't really get to was an article from the Journal. Wall street is pushing private assets into 401ks. We asked whether anyone wants them.

[Ben Carlson]

I hear this a lot from people when, when we talk about private investments on any of our stuff, a lot of, a lot of advisors will say, none of my clients are asking for this.

[Michael Batnik]

Yeah, I've said this. I've told the story multiple times. When we were at Future Proof last year in Colorado, I was hosting a talk and I said, show of hands, like, how many people are asking, being asked about private marks from their clients? And everyone looked around and not a hand went up. Now, and I said, like, is a private market? Are we being gaslit by these asset managers now? The answer is no, because the flows are there. Blackstone reported record flows. It's not. Not happening. I just think that it's coming more from the wires than the independents.

[Ben Carlson]

That makes sense. And I think the independents that do have people who want it. It's the ultra high net worth.

[Michael Batnik]

Yeah.

[Ben Carlson]

It's people with. Call it 20 million and above or it's, it's, it's much higher level.

[Michael Batnik]

Yeah. So it's definitely, again, it's definitely not nothing. But I think that the asset managers are maybe overestimating demand from the RAs. We'll see. But anyway, to this, to this survey, nearly 40% of respondents reported never having heard of private credit funds. That actually sounds low. Like, who's heard of private credit funds like what normal people have?

[Ben Carlson]

Yeah, that's true. Yes. If, if I asked my mom and dad or my in laws, like, how many of them would know what private credit fund is not? No, probably not.

[Michael Batnik]

Yeah, they would say, what are you talking about? All right, so 45% of respondents said, I am satisfied and have enough offerings. Another 45% said, I am satisfied but would like more mutual fund offerings and ETFs. And then 10% said I am dissatisfied with my 401k options.

[Ben Carlson]

And while I'm surprised that number is not higher because there are a lot of crappy 401k plans out there.

[Michael Batnik]

I haven't spent as much time here in that side of the business as I used to, but we used to see a lot of shockingly shitty options. It's like throw a Target Date fund in there. Or why is this Target Date Fund 115 basis points? What's happening here?

[Ben Carlson]

Yeah, I guess that a lot of that stuff has been run out, but there are still these tiny 401k plans that aren't that great.

[Michael Batnik]

But anyway, whether or not people are asking for it, it's coming. All right, so here's.

[Ben Carlson]

Yeah, but. But if people don't ask for it, it's coming how? Who buys it? Is there only way in that's target.

[Michael Batnik]

The back door through targeted funds. Yeah.

[Ben Carlson]

I think the adoption is going to be slower than you think.

[Michael Batnik]

Why are you putting dollars in my mouth? I didn't say anything about the adoption.

[Ben Carlson]

I feel like you've been relatively paper bullish on this.

[Michael Batnik]

Oh, I think it's. I'm bullish. It's coming.

[Ben Carlson]

But I'm saying if the consumer pushes back and the RIA pushes back, you need an end investor.

[Michael Batnik]

I don't, I don't.

[Ben Carlson]

Just because it's offered doesn't mean it's going to be.

[Michael Batnik]

Oh, yeah, hold on. I'm not, I don't know that I'm super bullish on demand, but I think that if it gets its way into target Date funds, then boom, game over. I don't think that you're going to have like individual investors be like, oh, where's my private credit? I don't see my private credit in this lineup. Like, I don't think that's going to.

[Ben Carlson]

Right. I, I wonder what that looks like. I guess it's, it's. If it's a 10% allocation and the fees are really high, it's not going to push the, the total fees.

[Michael Batnik]

I think, I think that part of the good thing about them coming into this sacred world that nobody wants them to be in. And I'll say, like, I don't think that they need to be there, but they are. And it's not my decision. I think more transparency is better and it's going to bring down fees.

[Ben Carlson]

Yeah, I agree.

[Michael Batnik]

If it works, fees are going to.

[Ben Carlson]

Come down and it's gonna be, it's gonna bring out much more transparency with the underlying companies as well. Like you said, there was the two bankruptcies and private credit and everyone was talking about them. You would have never heard of these companies otherwise. Like, there's gonna be more demand for information about these companies that they're investing in as well.

[Michael Batnik]

Yeah, hopefully. So listen, do I want it? No. But I am I hemming and hawing and saying that people aren't gonna be able to retire because they were fed 10% of private credit in their 401k? Come on.

[Ben Carlson]

All right, so, yeah, but the thing is baby boomers. So I guess to counter myself, I'm doing a. I'm pulling a Michael right now. I'm arguing myself. Baby boomers who are retiring who want to de risk a little bit, their private credit is the easiest sale of any private asset class bar none. It's way easier to sell than private equity, venture capital, infrastructure, whatever, hedge funds, because it's just yield. And it's like a fixed. You just say, hey, listen, it's a bond fund that you can't get out of, but the yield is 10%. You think retiring baby boomers aren't going to sign up for that? Like that. That's the kind of thing that maybe that's the end user. That's, that's where the biggest bang for your buck is. Of course, put 20% of my portfolio in that. 20% in liquid bond funds, 60 in stocks. I'm good. Yeah, that's going to be a thing.

[Michael Batnik]

Yeah. Okay. So I've been. I don't know if harsh is too strong a word, but I've, I've called out the FT and other journalists that so desperately want there to be multiple cockroaches because it's juicy, it's salacious, and listen, I'm not. I mean, I get it. However, I want to call out a report, an article. What's up with Private Credit Ratings by Toby Nangle from the ft. This is, this is great work. And reading this article definitely makes you go, wait a minute. So there is A thing that's happening in the private asset world where a lot of these giants are buying up insurance companies who are buying a hell of a lot of private credit. And you talk about the circular dealing that you see in with, with open AI and all that sort of stuff, you're seeing a lot of that here. Now I don't know that asset manager X is buying insurance company Y and insurance company Y is eating the private credits from asset manager X. I would imagine that there's some sort of Chinese wall there. I, this is not my universe. So I don't know, but I would imagine that's a faux pas. Okay. Anyway, insurance companies are buying a lot of private credit, especially in the US and Canada. Now private credit is not all bad. There's a lot of different types of private credit. There's direct lending, which, which is I think the thing that most people are talking about. But there's commercial real estate lending, there are residential mortgages, there's asset backed finance, there's infrastructure. So it's not like all, all, all direct lending. Okay, but this is the part. So from the article, as the IMF wrote in last week's Global Financial Stability Report, most insurers exposure to private credit is classified as investment grade. But investment grade according to who? Now these insurance companies, even if they're owned by these asset managers, so highly regulated as they need to be. So investment grade according to who? Mostly it turns out, not according to Moody's, S and P or Fitch. So check this chart out. The number of securities that Moody's, S and P and Fitch collectively rated stayed pretty much flat between 2020 and 2023. But the total number of privately rated securities ballooned over that period. And it was the little guys that scooped up this business. Now you might say, Michael, who gives a shit about the big three? Like what do they do to protect investors in 2006? All right, fair. Fair, I suppose. Okay, back to the imf. I'm sorry, back to, back to the ftse. Okay, this part is from the imf. So insurers search for private credit exposure classified as investment grade has changed the rating landscape of the United States. Misclassification of below investment grade instruments into the investment grade bucket may result in default losses significantly exceeding those those expected during an economic shock leading to the erosion of insurers capital and potentially causing liquidity gaps because of insufficient cash flow from the defaulted entities. Now if there is like a, a systemic risk, a holy type of risk where there's like a liquidity drain and like selling that of illiquid stuff that can't be sold. I would say that maybe this is the part to keep. To keep your eye on. This is like a little. This. This definitely. There's smoke here. Now, I'm not saying there's a fire, but this definitely makes you go like, wait a minute.

[Ben Carlson]

How about this? A lot of people are concerned about the circular nature of much of what's going on in the world right now, Right? All the technology companies.

[Michael Batnik]

I'll hold your bag. Let me. Your bag. I'll give it back to you.

[Ben Carlson]

All the. All the private equity managers and private credit managers are investing in these things. And. But to me, I think that's actually the right way to do it, instead of going on an island and being doing these things by yourself. If everyone is involved and it's a systemic risk, guess what, Someone's getting bailed out. I said this on TCAF the other day. That's what's gonna happen if these things all get big enough and they're all part of it. No one is gonna let this stuff all go down. Yeah, they're all too big. They'll shore each other up. Yeah, if there's one. Right?

[Michael Batnik]

Yeah. Top me off. I'll get you on the next one. All right. But here, here's. Here's. Here's the last one. And this is. Look at this. Look at this chart from the fda. Seriously, credit to them. This is a great report. So they break it down. Obviously, not every insurance company has the same allocation. So they show the top 10 holders of private letter rated bonds. So Global Atlantic, the insurer, 100% owned by private equity group KKR, leads the pack with a quarter of its $100 billion portfolio carrying private letter ratings. MassMutual holds more than 50 billion other insurers like New York Life. Now, New York Life is not owned by one of these companies. New York Life had a measly 6.7% of their bond book privately rated. This is good reporting.

[Ben Carlson]

Okay. Good stuff. I just think the biggest firms have realized if we're all in this together, just like the tech firms, like, if one goes, we all go, and we'll be fine. I think that's actually the right way. It sounds like a systemic risk, and it probably is, but I think it's actually good business.

[Michael Batnik]

Okay.

[Ben Carlson]

I think it makes sense.

[Michael Batnik]

So we had a great question, and I apologize because I forgot to really give this too much thought, but it was this. If you were on a deserted island, which three earnings calls would you want to hear to help Gauge how the US economy slash stock market was performing.

[Ben Carlson]

Wait, yours would be Visa, MasterCard, American Express. You love the credit card company.

[Michael Batnik]

I mean. Well, yeah, they do tell you about the consumer now. Okay, this is a really good question. And I would say like, I can nitpick and say like, well, tell me where, like, are you talking about, like, in a normal time, in a period of like, distress, what would I want to look to for like a leading indicator things getting better.

[Ben Carlson]

So if you want to get. Can I do mine first? Sure. If you want to get really broad and have everything covered, I would say J.P. morgan for the finance side of things. Walmart for the consumer. Apple for high end consumer.

[Michael Batnik]

Yeah, not bad. That's a good list.

[Ben Carlson]

So for the, the boring list.

[Michael Batnik]

Well, it should be for, for finances, I would have said bank of America because they serve more of a Main Street. I mean, they serve everyone. JP Morgan has a little bit of a higher clientele, but splitting hairs. I also would have said Amazon as opposed to Walmart because they, they touch more of the economy. And then the third. Hmm.

[Ben Carlson]

You got to pick one of your credit card companies. That's your favorite.

[Michael Batnik]

Well, I already got a Financial.

[Ben Carlson]

Bank of America.

[Michael Batnik]

I already got a Financial. Yeah, I mean, Delta. No, no, no. So you know what's interesting about Delta? I was thinking about this. This is not a deep and this is not a hot take. It's just so obvious. One of the reasons why people are able to travel more with their families and Delta is doing what it's doing. I want, I would love to know what percentage of family vacation flights are paid for with reward points. So we just booked our flights to Disney and they were whatever they cost, couple thousand dollars. Guess what? Paying with points is obviously a meaningful decision for almost every family that decides whether or not to take a trip. It's a huge amount of money.

[Ben Carlson]

It does make it easier. Yeah, I, I have three kids. We're buying five tickets every time we fly. It's expensive. Yeah, I agree.

[Michael Batnik]

All right, so what's the third company? Yeah, I don't know. I guess. I guess. Well, Apple's. No, Apple's like not really representative of the economy. Oh, but it is for the stocker. Stock market. Oclo. Nah, we're good, Tony.

[Ben Carlson]

All right. A bunch of people sent us this. There's a YouGov study about horror movies saying horror movies have the small share of people who collectively like or love it as well as the largest share of people who like or hate it. So dis. Hate or dislike it. So I think the, the chart just shows that people. You either love horror movies or you hate them. It's a very extreme. Everything else is kind of more down the middle.

[Michael Batnik]

Well, yeah, no, but nobody's like, yeah, I could take it or leave it. What do you mean? Horror is polarizing. You either love it or you hate it.

[Ben Carlson]

Yeah. So a lot of people said, this is Ben and Michael. So that, that actually does make sense to me.

[Michael Batnik]

But most people that don't like horror, like, don't like it because it's too scary. The fact that you don't like it because it doesn't do anything, you don't feel anything. That's kind of psycho. You're kind of nuts.

[Ben Carlson]

You know, this happens in my life sometimes. I feel like. I blame investing, like the whole point of it. Everyone has been telling you to take your emotions. My wife always says, like, why don't you show more emotion about this? Like, show more enthusiasm or. And I, I'm just like a. I'm always. Yeah, I don't know. I think that's the same thing with horror movies. It doesn't. The emotions, I've. I've stamped them out.

[Michael Batnik]

I was thinking about back to my horror movie.

[Ben Carlson]

I'm the Tin man, basically.

[Michael Batnik]

Yeah, you are back to my horror movie list. So Kobe is turning nine in February. I can't believe my dad took me to see in the Mouth of Madness when I was nine years old. That is so insane. Kobe watches.

[Ben Carlson]

Never heard of this movie.

[Michael Batnik]

He only watches, like how to train your dragon and whatever. Like in the mouth of Madness. Dad, what are you insane?

[Ben Carlson]

I think so. I think you're gonna take George to see Hyrule Boy someday. He. He got into Beetlejuice this week because after. For some reason that came up after Tremors and boy, did he love Beetlejuice. He already is watching the second one, which just came out a couple years ago, which was not very good. So he's gonna be big time into. He can't wait to watch horror movies.

[Michael Batnik]

There's a scene in the Mouth of Madness where Sam Neill is dreaming and he's on the couch and he looks over and there's like a guy with a monster looking face, I don't know, a dilapidated face. And like he wakes up out of the dream and it's scary. Like that dream sequence is scary. He snaps out of it, he's sweating and then he looks over again and the guy's there again. And it was a dream within a dream. Could you. I was nine.

[Ben Carlson]

Anyway, back then too.

[Michael Batnik]

No, I'm fine. It's totally fine. Don't. No big deal. All right. Last. Last week, we were talking about, like, car repossessions and maybe making a little bit light of it. Like, if you zoom out to 2019, it's where we were.

[Ben Carlson]

Yeah.

[Michael Batnik]

I want to take the other side of that. I mean, giving up your car, like, you're having your car repossessed. That's the last thing that you stop paying.

[Ben Carlson]

Yeah, I agree. So it's. It's increased quite a bit, but we're back to 2019 levels there again, too, which. Which was high historically, but who can't?

[Michael Batnik]

But it's still. It's still pretty elevated. And compared to a couple years ago, like, it's just. And also, if you think about. All right, I know we throw around numbers a lot, and it's like they lose context because they're so big. 1.73 million cars that people had to let go.

[Ben Carlson]

How many cars are on the road?

[Michael Batnik]

Doesn't matter. I'm zooming in.

[Ben Carlson]

Oh, you're zooming in. Okay.

[Michael Batnik]

No, I'm just saying that I just. That's. That's crazy.

[Ben Carlson]

So there's 300 million registered cars. So that's, what, point 4% of the total.

[Michael Batnik]

I'm just zooming in. I'm just saying, like, on a human level, that's insane.

[Ben Carlson]

I agree.

[Michael Batnik]

All right, Ben. This guy. This guy said, like, ben, you think you're good with credit card rewards? Hold my beer. Okay. Tell me if Ben could do better than this. My family just grew with our second baby. Last month, they traded in a RAV4 prime for a used 2023 Honda Odyssey.

[Ben Carlson]

Good choice.

[Michael Batnik]

After trading, it cost 22k. I paid 5k using my Robinhood card for 3%, cash back and finance the rest. You with them so far?

[Ben Carlson]

All right. Yeah.

[Michael Batnik]

Here's the twist. I open a regular auto loan at 5.29% APR. I'm opening a Wells Fargo reflect car with 0% APR for 21 months at a 5% fee. For balance transfer, I will pay off the auto loan. I'll pay the minimum each month while putting what I would have paid toward the car loan into Marcus CDs. Around 4%. I'll close them before the 21 month period, then pay off the balance. Are all parted to another 0% offer. This is like this Zach Galifianak is even without a car purchase. All right, whatever. How much money is this person saving? Is there any juice here?

[Ben Carlson]

Probably not a lot, but honestly, for people who do this, go down this rabbit hole for them. It's more the game within the game than it is like, because it'll probably like, I don't know, with the interest that they're making over 21 months in the interest are saving, it'll probably be $500.

[Michael Batnik]

All right, well guess what, that's a personality type. My uncle was a huge coupon guy.

[Ben Carlson]

I can't throw shade. I would have done something like this.

[Michael Batnik]

Would physically take coupons. I'm sure he still does to the grocery store. And he was definitely called this guy. He was with this guy at the grocery store. Like everybody knew him. And so it should. It's a personality type. So that helps explain this tweet that went viral over the weekend. Somebody tweeted the only good mortgage is a paid off one. Our biggest monthly expense is gone. And they showed and I'm sure that they knew that this is going to kick the hornet's nest. The rate was 2.625%. Now objectively, this is a bad or this is a subpar financial decision. Objectively, I mean if nothing else, there's a spread between what you get in risk free bonds versus 2.625%. However. And people got all up in arms. It's like guys, we know he knows, he understands what he's doing. He understands that there are better uses of money. But it doesn't matter because there are people who are debt averse for regardless of the interest rate. And can't you understand their point of view? Even if you disagree with it, this person feels good about not carrying a mortgage, not about having his biggest monthly expense gone. And I'm sure he's fine otherwise. I'm sure he's got plenty of assets. So this is not a, this is not a financial decision. It's a personal finance decision.

[Ben Carlson]

Listen, I am of the opinion that there is no black and white in personal finance. There's only gray. This is black or white. This is a, this is an insane decision.

[Michael Batnik]

No, it's not insane.

[Ben Carlson]

It's. The inflation rate is 3% right now. You can get 4% in treasuries. I don't care how you feel about debt. This is a insane decision.

[Michael Batnik]

That's not. It's not. No, it's not insane. It's not insane. It is a, it is a bad mathematical financial decision. But the psychological hurdle or benefit, sometimes.

[Ben Carlson]

You have to take the behavioral stuff out of it. No, no, listen, we all are in tune with behavioral psychology now. It's a big thing. Sometimes you have to take it out of the equation. Sometimes it's not worth the behavioral psychology and you have to just eat your feelings.

[Michael Batnik]

All right, how about this? How about this? Let's say that it's. His mortgage is $3,000 a month. Okay. And this person. So you're saying, well, the spread between.

[Ben Carlson]

What'S safer, having your mortgage paid off or having 200 grand in the bank.

[Michael Batnik]

No, no, listen.

[Ben Carlson]

What's. Which one safer?

[Michael Batnik]

Hold on that. But no, now you're talking extremes. If you're saying you're. The mortgage payment is $36,000 a year, and you're saying that you could capture the spread between 2.625 and 3.751% on $36,000. Who gives a. It's, it's, it's effectively $0 for this person now.

[Ben Carlson]

But what's more. But you're. He's putting all of his money in this illiquid asset. What's safer, I'm saying having that liquid cash or an illiquid asset.

[Michael Batnik]

Oh, I get it. But I'm, I'm sure that this person has their finances in order and there are other liquid assets.

[Ben Carlson]

Yeah. And it's still a bad.

[Michael Batnik]

Listen, that's rifle for the general investor. For the average person. Somebody said to you, hey, listen, I've got this 2.625% mortgage, and I know it's a good rate, but I just don't like paying the monthly rate. I'd rather pay it off all else equal for everybody. You say, no, no, no, don't, don't, don't do that. Don't do that, don't do that. Like, just don't do that.

[Ben Carlson]

100% of the time. Never paid off. Never.

[Michael Batnik]

But for somebody who's whose handle is Barbell Financial, I'm sure they're making the right decision for them.

[Ben Carlson]

And it's still a wrong decision.

[Michael Batnik]

Okay, that's where I fall. All right. Last week on Netflix's earnings report, they said that the quote. So engagement remains healthy. We achieved record share of TV time in Q3 in both the U.S. and the U.K. yes, sure, that is factually true. But if you look at the share of US streaming time, Netflix is getting smoked by YouTube. There's no other way to put it.

[Ben Carlson]

Honestly, we asked this before. When's the last time Netflix had a good show? A good show, Hard to come up.

[Michael Batnik]

When you say good, do you mean like a HBO type good?

[Ben Carlson]

I mean they had adolescence this year. People pointed to. I didn't care for it as much as Other people, but they haven't had like a show this in the last, I'd say two years that it's been like, whoa, this is a water cooler show. They haven't had anything, have they ever.

[Michael Batnik]

I mean, House of Cards was.

[Ben Carlson]

But squid game.

[Michael Batnik]

That's true, that's true, that's true. Okay. You know, so this morning my puppy woke up at five o' clock and. Which she never does, but she was pawing at the door. So I let her out and went downstairs on the couch and I couldn't. I, I was, I was up. So I turned on Netflix and I see this number one movie and I had never heard of it. And the COVID is an actor that I like. The sh. The movie is called House of Dynamite. House of Dynamite. So I, I Google it. Whoa. Catherine Bigelow. Catherine bigelow did locker zero dark, 30 point break. I said, holy. First of all, when did that drop? That drop? Yesterday.

[Ben Carlson]

Friday, I think. Yeah.

[Michael Batnik]

Oh, Friday. Okay. Anyway, a lot of fun, you know. Did you watch it?

[Ben Carlson]

Okay, I didn't watch it yet. All right, you're into it.

[Michael Batnik]

So it is, it is a, A missile movie. Like missiles are in the air and Holy. What's happening? And it's good. Didn't finish it, but. But it's good anyway. Yeah.

[Ben Carlson]

Never heard the ending sucks.

[Michael Batnik]

You heard the ending sucks?

[Ben Carlson]

Yeah.

[Michael Batnik]

Why would you hear the. How would you hear that? Why would you hear that? Why would you ruin it for me and the listeners?

[Ben Carlson]

Maybe I'm, I'm lowering expectations for the. Maybe the ending will be better than you think.

[Michael Batnik]

Wait a minute. How do you hear it sucks? You read spoilers. What's wrong with you? I raw dog everything.

[Ben Carlson]

I just saw a bunch of people say, hey, watch House. Dynamite ending sucks.

[Michael Batnik]

Okay. All right, thank you.

[Ben Carlson]

I saw multiple people say that. That's all.

[Michael Batnik]

So this is a big deal, a big, big deal in the world of streaming. Taylor Sheridan of Yellowstone Lioness. What else did he do? The Billy Bob 1.

[Ben Carlson]

Landman, Tulsa King Landman, Mayor of Kingston.

[Michael Batnik]

So the biggest, the biggest TV show creator in the world is leaving Paramount. Now this is a weird story because his deal with the studio, the movie deal is up at the end of this year, but his TV deal goes through 2028.

[Ben Carlson]

You know, he did Sicario too. He should go back to movies.

[Michael Batnik]

And he did Wind River, I think, with Jeremy Runner. That was going, but he's. But his deal with paramount, the, the TV studios through 2028. And me, you and Josh are talking about this and you guys have, have the right take credit to David Ellison for selling all the way at the top. I mean, by 2028, how much more juice is this guy going to have left?

[Ben Carlson]

Right? He. He's got to run out of ideas eventually.

[Michael Batnik]

So anyway, you want to. And NBC Universal gave him. Probably gave him a giant bag of money. So I think that they're paying a.

[Ben Carlson]

50X CAPE ratio for terrible Sheridan right now.

[Michael Batnik]

Yeah, big mistake.

[Ben Carlson]

All right. When did Halloween decorations become a thing? Because when I was growing up, they were sure there were some decorations, but the Wall Street Journal has this thing. Pumpkinscapers are making a killing as fervor for the season reaches new heights. Families are paying north of $1,000 to create Instagram perfect tableaus for portraits in front yards. I feel like the Halloween decorations have gone crazy. And I have a take. I think it's all millennials. I think this is a millennial thing. I don't. There was some people who would decorate for Halloween, but now it's. It's. It's a cr. It's almost like Christmas levels.

[Michael Batnik]

Do you do it? You don't do it, do you?

[Ben Carlson]

No. I mean, we have a couple of pumpkins. We carved pumpkins last night. I did pretty good last night. We had a whole toolkit of pumpkins. I'm like Billy the Butcher here pulling stuff out.

[Michael Batnik]

I'm a horrible carver. Horrible.

[Ben Carlson]

It's hard. My hands. I had like carpal tunnel today, but we did. What's the number before Christmas?

[Michael Batnik]

We did Jack Skellington.

[Ben Carlson]

Yeah, it was very hard. Took forever. Looks good, though.

[Michael Batnik]

Good for you.

[Ben Carlson]

Kids are happy.

[Michael Batnik]

All right, so I got a lot of emails.

[Ben Carlson]

Wait, are you a Halloween decorator?

[Michael Batnik]

Robin always, always gets the same stuff. Like a bale of hay and some pumpkins and we.

[Ben Carlson]

But not like the giant skeletons and the blow up inflatables.

[Michael Batnik]

We're not weirdos. No offense to anybody that does that. Actually, you know what? I'll take that back. No, I gotta take it back. How about that? I actually. Actually I appreciate. I think it's odd, but I do appreciate the people that do it because my kids love it.

[Ben Carlson]

So if you do too. But it's never going to be our house.

[Michael Batnik]

If you are entertaining the community. You're not weird. You're a good citizen. Good for you. Okay. Oh, I got a lot of emails about my extenders. So apparently my thing was all up. Verizon came in here and I was like, not paying attention to when they were here. I think I was doing a podcast or whatever I was doing. I was on a call. Who knows? And so we got. They, they, they. They came with Eros. Okay, that wasn't working. Then I bought the Verizon extenders, and that definitely didn't work. And the whole reason why I had Geek Squad come the other day, my Eros weren't plugged in. Can you believe it? That's.

[Ben Carlson]

Is that on you or on them?

[Michael Batnik]

So Verizon labeled. All right, so there was a Verizon 2.4G network, a Verizon 5G network, and a Verizon 4. Turns out the Verizon 4 was just the name that the Verizon dude gave to the Eero network. He labeled it Verizon 4. And I wasn't paying attention. I didn't. I don't know. So I'm like, why did he label it Eero? So I knew that it wasn't a Verizon network. Everything should be on the eero. Except now I thought I. I thought I had three networks. Anyway, we're good. I just have to plug it in and connect everything to the Verizon 4, which is not Verizon.

[Ben Carlson]

That sounds like it's 90% on you. Very frustrating.

[Michael Batnik]

Probably was. All right. Okay. All right. I listened to American Prometheus. I didn't much care for Oppenheimer, the movie. And I think it was.

[Ben Carlson]

I loved it.

[Michael Batnik]

It was too long.

[Ben Carlson]

I read the book after I saw the movie.

[Michael Batnik]

Sorry, you read the book after you. Oh, me too. So I think it was. It was a combination of hand up. It was too long for me, and I might have taken more edibles than was appropriate. Okay. Three hour movie edibles. You're an idiot. My bad.

[Ben Carlson]

Yeah, you got to. You got to really turn the crank up on Oppenheimer. Why would you get edible for Oppenheimer?

[Michael Batnik]

Because somebody said, do you want an edible? And I said, yes. Simple as that. I was planning on. It just happened, Ben. All right, so the. The book was amazing. Not to be that guy, but the book was great. And it made me think about Dan Wang's breakneck analogy of data, of. Of engineers versus lawyers. The fact that Oppenheimer's life, he was ostracized and vilified and tormented and destroyed about him having ties or political affiliations or friends within the Communist party is mental, right? Like he should have been the most celebrated or. And I know people have mixed feelings, obviously, understandably, but he was. And he wasn't vilified because, like, he created the. The bomb. It was like he was leaking information, allegedly. Which I. I think I don't think he was. And if this was, you know, in China, he would have been a hero.

[Ben Carlson]

The sad thing is, is that he was a scientist and he was building real things. And today he would work on Silicon Valley and work in software. Yeah, right. Which is kind of sad when you think about it. Like, that's. You go to where the money is, and I understand that decision, but there aren't enough people who are building things in the physical world anymore.

[Michael Batnik]

So I.

[Ben Carlson]

That's the whole point of the Dan Wang book.

[Michael Batnik]

I did rewatch Oppenheimer and it took me two and a half sittings because it is so long. And I naturally enjoyed it much better the second time.

[Ben Carlson]

Okay. I think Emily Blunt. I think Emily Blunt is fantastic in.

[Michael Batnik]

That movie too, but she has such a small role. So Kitty Oppenheimer was a big, big, big character in the book. Obviously, it's his wife, and she was. By the way, they liked. They like to drink. Wow.

[Ben Carlson]

Yes. People. But I think there was just nothing else to do. So people just drank.

[Michael Batnik]

All they did was drink martinis.

[Ben Carlson]

Maybe that's. So maybe the whole thing about young people not drinking as much today is not as much about being health conscious and such, because let's be honest, this whole country is not very health conscious. Maybe it's just there's more to do now. And back in the day, like, what else were you going to do besides drinking? Yeah, right. Okay. We started watching Nobody wants this Season two. That's the Adam Brody, Kristen. What's her name, Kristen Bell show.

[Michael Batnik]

Robin watches it without me, but it's cute.

[Ben Carlson]

It's not as good as the first season, like the first, but is still having a romantic comedy in my life that, like, I love the Jonah guy from Veep that's in it. The tall dude.

[Michael Batnik]

I did catch the one scene in the first. In the first season where that one of them is texting about how annoying the brother is or how dumb or whatever. And it's like through the carplay.

[Ben Carlson]

Yes, it reads back. Yes, it's the. The first season was better than the second season. But it's, It's. It's an entertaining turn your mind off show that you can laugh about occasionally. And there's a succession reunion, too. What's Kendall's friend's name? The.

[Michael Batnik]

Oh, I know that guy. Yeah, okay.

[Ben Carlson]

He's in it. And. And Willa is in it, too. So anyway, not a bad show.

[Michael Batnik]

We need another succession.

[Ben Carlson]

That's never happening. It's like saying, we need another apple. There's not gonna be another succession. Come on, Succession. Like show. Okay.

[Michael Batnik]

No, just like. Just like a great show that everybody's all in on.

[Ben Carlson]

I think, like, 2. 2 million people watched every week. Was it nice?

[Michael Batnik]

I know, but our audience was all in on it.

[Ben Carlson]

True. All right, Animalspirits at thecompoundnews. Com. Thanks, everyone, for listening. Emailing. What else we got? Anything to plug? All right, see you next time.