So Bearish It's Bullish (EP.409)

Summary

Animal Spirits Podcast: So Bearish It's Bullish (EP.409) - Detailed Summary

Release Date: April 23, 2025

Hosts: Michael Batnick and Ben Carlson
Podcast Description: Animal Spirits is a show about markets, life, and investing. Join Michael Batnick and Ben Carlson as they talk about what they're reading, writing, listening to, and watching. New episodes are released every Wednesday morning.

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I. Opening Banter and YCharts Promotion [00:00 - 02:20]

The episode kicks off with a lighthearted exchange between Michael and Ben about their screen time and usage of YCharts, a financial data platform. Michael humorously admits to excessive screen time, while Ben downplays his own, stating, "First thing I check in the day" is YCharts. This segment serves as a brief promotional spot for YCharts, emphasizing its utility in navigating market noise.

Notable Quote:
Ben Carlson: “[...] YCharts created a brand new deck Tariffs through the long term lens is packed with charts showing how markets have actually responded to past events and why short term noise really tells a story.” (00:31)

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II. Economic Outlook: Tariffs and Political Influence [05:06 - 23:24]

The hosts delve into the current economic turmoil, centering on tariff policies and political maneuvers. Ben discusses a Wall Street Journal report about Trump advisors pushing for a tariff pause in Scott Besson and Howard Lutnick's absence, highlighting concerns about the stability of the American economic empire.

Key Discussions:

• Tariff Pauses and Political Strategy: Ben explains how senior advisors influenced Trump's decision to pause tariffs without Navaro's consent, aiming to calm markets.
• Power Transition Concerns: Ben expresses worries about the transition of power as older presidents like Biden and Trump face age-related challenges, stating, "Baby boomers are going to have a very hard time relinquishing their power." (05:30)
• Recession Fears: A New York Times excerpt reveals Trump's private anxieties about triggering a Great Depression-like event, which paradoxically makes Ben bullish, believing that such fears indicate proactive measures to prevent economic meltdown.

Notable Quotes:
Michael Batnik: “I am hard rejecting the idea that this is the end of an empire. [...] This is not the end of an empire. Stop it.” (03:18)
Ben Carlson: “So Trump is laying the groundwork to blame Powell for any downturn.” (23:24)

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III. Stock Market Dynamics and Asset Performance [14:00 - 35:00]

The conversation shifts to the stock market's recent performance, highlighting significant downturns and contrasting them with asset classes like gold and Bitcoin.

Key Discussions:

• Market Declines: Michael notes a 16% drop in the S&P from its highs, with Nasdaq 100 down nearly 20% and Russell 2000 down 25% (28:17).
• Asset Resilience: Despite stock declines, gold has surged 42% over the past year, Bitcoin up 36%, and main indices show varied performances.
• Leveraged ETFs: A record influx of $6.6 billion into leveraged long ETFs indicates heightened speculative activity, with Ben questioning whether retail investors or institutions are the primary sellers (34:12).
• Investor Sentiment: Michael and Ben discuss contrasting investor behaviors, where some buy the dip aggressively while institutional players may be selling, raising questions about who absorbs the market pain.

Notable Quotes:
Ben Carlson: “Everyone's buying the dip.” (34:21)
Michael Batnik: “The stock market will be... the S and P was down more than 16%.” (28:17)

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IV. Private Equity and High Yield Bonds [35:00 - 50:00]

The hosts explore the state of private equity and high yield bond markets, assessing their resilience amidst economic uncertainty.

Key Discussions:

• Private Equity Challenges: Wall Street Journal's report on private equity facing a "Perfect Storm," with firms struggling to return money to investors due to high levels of unrealized value, complicating fundraising efforts (46:23).
• Private Credit Shift: Ben observes a decline in high yield bond ETFs like HYG and JNK, suggesting advisors are pivoting towards private credit as a diversification strategy, even in potential recessions.
• Wealth Management Channel: Michael emphasizes the importance of the wealth management channel for private equity firms like Blackstone, asserting confidence in their long-term prospects despite current sell-offs (46:49).

Notable Quotes:
Michael Batnik: “I am, I am unwavered.” (46:23)
Ben Carlson: “I think that the sell off is justified.” (46:49)

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V. Consumer Behavior and Small Business Impact [10:00 - 14:00]

Ben and Michael analyze consumer spending patterns and their implications for small businesses in the face of tariff-induced economic pressures.

Key Discussions:

• Elasticity of Spending: Amex's report indicates consistent spending levels despite macroeconomic uncertainties, challenging the notion of a significant wealth effect (14:55).
• Small Business Vulnerability: Ben references Ryan Peterson’s thread forecast, warning that thousands to millions of small businesses could go bankrupt if tariff policies persist, potentially benefiting Chinese manufacturers.
• Supply Chain Concerns: Discussions about collapsing container volumes and the potential for empty shelves highlight the tangible impacts of economic policies on everyday life.

Notable Quotes:
Ben Carlson: “It's going to be a bloodbath and then a collapse in trucking.” (09:32)
Michael Batnik: “As long as people have their jobs, it doesn't matter how worried they are.” (18:12)

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VI. Housing Market and Future Trends [16:00 - 23:24]

The conversation turns to the housing market, with insights from Amex's earnings and Zillow's forecasts.

Key Discussions:

• Housing Market Predictions: Zillow forecasts a modest 1.7% drop in housing prices over the next year, classifying it as a "full-blown bear" market, which Michael and Ben find reasonable given current mortgage rates.
• Demographic Pressures: Ben speculates that younger generations, particularly Gen Z and young millennials, may face prolonged challenges in homeownership due to elevated prices and demographic shifts.
• Strategic Home Buying: The hosts advise older millennials to purchase homes earlier to avoid future competition, hinting at strategic asset accumulation amidst market uncertainties.

Notable Quotes:
Ben Carlson: “By then, there's going to be too much competition.” (42:29)
Michael Batnik: “Tariffs are a tax, they're negative sum.” (22:46)

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VII. Bitcoin and Gold as Market Indicators [30:00 - 40:00]

Michael and Ben explore the contrasting movements of Bitcoin and gold, interpreting them as indicators of broader market sentiments.

Key Discussions:

• Bitcoin's Surge: Bitcoin's recent climb to $90,000 is analyzed, with Ben citing Ben Eiford's theory that Bitcoin is decoupling from the Nasdaq and aligning more with gold as a hedge against a collapsing dollar.
• Gold's Stability: Despite rising bond yields and a falling dollar, gold remains resilient, suggesting investors are seeking safe havens amid economic instability.
• Market Speculation: Michael muses whether Bitcoin is front-running a potential market rebound, indicating a possible liquidity flight or chaos hedge.

Notable Quotes:
Ben Carlson: “Bitcoin is NASDAQ denominated in a basket of global currencies, not USD and USD is collapsing.” (32:07)
Michael Batnik: “Bitcoin is absolutely flying. It's at 90,500.” (40:07)

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VIII. Entertainment Segment: Movie Reviews and Personal Anecdotes [50:00 - 61:00]

Transitioning from economics to entertainment, the hosts share their thoughts on recent movies and personal experiences with film-going.

Key Discussions:

• IMAX Performance: Michael shares his bullish stance on IMAX after a successful box office weekend, highlighting strong ticket sales for Ryan Coogler's "Sinners" (51:39).
• Movie Critiques: Reviews of "Sinners" and "Warfare" are discussed, with honest opinions on their quality and market reception.
• Television and Streaming: The hosts touch upon shows like "Friends and Neighbors" on Apple and "The Last of Us," expressing mixed feelings about their performances and storylines.

Notable Quotes:
Michael Batnik: “I want to get back into reading, but I opened it up to read it, and the first page...” (61:37)
Ben Carlson: “I like putting, I'm setting a reminder to myself.” (43:04)

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IX. Conclusion: Bearish or Bullish Sentiments [62:00 - End]

In wrapping up, Michael and Ben reflect on their market outlook amidst the discussed economic challenges.

Key Discussions:

• Dual Sentiments: Ben encapsulates the episode's theme by stating, “bearish. It's bullish. That's what I'll leave you with. Why? That's me looking at glasses half full.” (63:49)
• Market Uncertainty: Both hosts acknowledge the complexity of the current market environment, balancing cautious optimism with realistic concerns.

Notable Quotes:
Ben Carlson: “Bearish. It's bullish.” (63:49)
Michael Batnik: “I just don't want to give those vibes. I'd rather be embarrassed and being like, all right, things got worse than I thought they would.” (62:59)

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Overall Insights:

• Navigating Economic Turbulence: The episode provides a nuanced view of current economic policies, especially tariff implementations, and their multifaceted impacts on markets and small businesses.
• Asset Diversification: Emphasizing the importance of diversifying portfolios, Michael and Ben discuss shifting trends towards private equity and private credit as traditional assets like high yield bonds decline.
• Investor Behavior: The contrasting behaviors between retail and institutional investors highlight differing strategies in response to market volatility.
• Market Indicators: Bitcoin's decoupling from traditional stock indices and gold's steady performance serve as barometers for investor sentiment amidst economic uncertainties.
• Balanced Outlook: While acknowledging potential downtrends, the hosts maintain a balanced perspective, viewing bearish signs as potential bullish opportunities for strategic investment.

Final Thought:
Despite the prevailing economic challenges and market fluctuations, Michael and Ben encourage listeners to adopt a balanced and informed approach, recognizing both risks and opportunities inherent in the current financial landscape.

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For more insights and discussions on markets, life, and investing, subscribe to Animal Spirits Podcast and join Michael Batnik and Ben Carlson every Wednesday morning.

Transcript

[Michael Batnik]

Today's show is brought to you by Y charts. Ben, Last week I mentioned that my screen time has been elevated in a significant way and breakout confirmed this week was even higher than last week. I'm not going to tell you how many hours they spend on my phone because it's embarrassing at this point. But if I had this listen for.

[Ben Carlson]

Me, like my portfolio, I don't look at the time, so it didn't happen.

[Michael Batnik]

Okay. If I had that same feature on my screen, it would say you spent seven hours last week on Y charts. Probably more, actually. Probably way more. Who am I kidding?

[Ben Carlson]

First thing I check in the day. So everything's in the headlines these days and we've talked about that. You and Josh talked about this last week on what are your thoughts about. Ignoring the noise is basically impossible, right? It sounds like good advice, but it's ignoring the noise. Yeah. Just tune it out. The thing in your pocket that's constantly alerting you. So YCharts created a brand new deck Tariffs through the long term lens is packed with charts showing how markets have actually responded to past events and why short term noise really tells a story. I like this, this line from them in their. In their deck, corrections are loud, recoveries are quiet.

[Michael Batnik]

Oh, that's great.

[Ben Carlson]

That's well said. Right?

[Michael Batnik]

All right, listen, we know that volatility is part of the ride, is it not, Ben?

[Ben Carlson]

It is regardless of the reason. Right.

[Michael Batnik]

So stay invested. Historically been a been a winner.

[Ben Carlson]

Yeah. And I think for especially for advisors, the big thing is context in concert with a plan. So that's the kind of thing where you need to have confidence. Click the link in the show notes, download the deck for free. Tons of good charts, tons of good headings and then get 20% off your initial Y charts. Professional subscription when you start Y charts free trial through Animal Spirits. When you mention us. Everything's in the show notes. Check it out. Ycharts.com welcome to Animal Spirits, a show about markets, life and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. 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. Welcome to Animal Spirits with Michael and Ben.

[Michael Batnik]

Is that a twinkle in your eye?

[Ben Carlson]

A twinkle in my eye? I doubt it. It's possible. I'm just happy to see you.

[Michael Batnik]

You look like you're feeling better.

[Ben Carlson]

When have I been feeling bad? I'm just. I'm doing.

[Michael Batnik]

I don't like. I don't like seeing you like this. The last couple of weeks, you've been despondent.

[Ben Carlson]

Despondent? I don't think I've been despondent. Listen, I've had a bad year, let's put it that way. Maybe my personal life is bleeding into my market views. How's that? I just want to talk about the ridiculousness of the current environment. Okay. I just want to just for a minute, take a step back. So I listened to the compound and friends with you and Josh and Warren pies. And the first 10 minutes of the show is you guys talking about the potential end of the American economic empire and the end of American exceptionalism. And then there's this transition and it's like, okay, let's talk about earning season. I just love the going from, listen, this might be the end of the empire to all right, what's on deck for earnings?

[Michael Batnik]

No, but hold on, hold on, hold on. More context is necessary.

[Ben Carlson]

No, I know. It's just. I just think it's funny how we have to compartmentalize like that in the. Like, you have to.

[Michael Batnik]

But hold on. To be very clear, I am hard rejecting the idea that this is the end of an empire. Like, could not emphasize that hard enough. Completely reject that idea. Things are crazy right now, not minimizing it. This is not the end of an empire. Stop it.

[Ben Carlson]

Okay? Someone asked me yesterday, okay, let's say the dollar does lose its global currency reserve status.

[Michael Batnik]

Yeah. To who? To one.

[Ben Carlson]

That was my question. Is in to fill the void. So, all right, let's start out with some hysterical stuff and then bring it back to some levity. Can we do that?

[Michael Batnik]

Sure.

[Ben Carlson]

Like, I want to start off with some worrying stuff, some of the craz craziness again, and then get back to levity. So this story from the Wall Street Journal, you know, it's. It's funny. The. My one takeaway from reading a lot of these stories and we're going to get into this.

[Michael Batnik]

Is my neck getting old? Am I getting old, man, neck.

[Ben Carlson]

I don't know how you. How you get rid of that.

[Michael Batnik]

Is it coming for me? I mean, obviously it is eventually.

[Ben Carlson]

It doesn't look too bad yet. You're still. You're still pretty good. Okay, so this.

[Michael Batnik]

Sorry, sorry, One. One more interruption. Did he see George Clooney with the hair?

[Ben Carlson]

I. I hope it's for. It's got to be for a role. Right.

[Michael Batnik]

Okay. What in the world?

[Ben Carlson]

He looked like a. He looked like a Sharpie marker.

[Michael Batnik]

Yeah, you know what? You're right. That can't be a choice. All right, back to you, Ben. Let's, let's get nuts. Let's get hysterical.

[Ben Carlson]

And my cat. See, I got the little skunk spot right there. My kids keep giving me crap because I'm going, I got some grays and I'm never going to diet. I'm going to be at Silver Fox someday. I'm just going to let it go. Deal.

[Michael Batnik]

You're going to be like Elvira. Remember her?

[Ben Carlson]

Oh, yeah. That was a good song, by the way. Remember that song?

[Michael Batnik]

Nope. Don't know what you're talking about. Back to the show. Let's go.

[Ben Carlson]

All right, from the Wall Street Journal. Trump advisors took advantage of Navarro's absence to push for tariff pause. So this is from the Wal Journal last week and they talk about how that tariff pause ever came. So they said Navaro was scheduled for a meeting. And then when he was scheduled for a meeting, Scott Besson and Howard Lutnick made their move. According to multiple people familiar with the intervention, they rushed to the Oval Office to see Trump and propose a pause on the tariffs without Navaro there to agree to push back.

[Michael Batnik]

I have a question, though, on this reporting. How did, how did this get leaked to them? Like, how do we know this accurate?

[Ben Carlson]

Because obviously, do you think the Wall Street Journal would print this if they didn't have a good source?

[Michael Batnik]

No, I'm just saying, like, how did they get. Who leaked?

[Ben Carlson]

Obviously, someone saw this and wants the world to know. So here's the thing. So they say the two men convinced Trump of the strategy to pause some of the tariffs and announce it immediately to calm the markets. They stayed until he tapped out the truth social post, which surprised Navarro, according to one person, one of the people familiar with the episode. And then they immediately went out the cameras outside the White House to make a public announcement. Now, maybe this is a little embellished, right? And maybe it's not completely true, but obviously someone in the White House wants the people of the world to know that this is happening. Here's my main takeaway from this. Because obviously when Biden was in office, towards the end, he completely was gone, right? He was losing it. He was too old. Trump is on the verge. I think he's 78 or 79. This is a take grandpa's keys away situation. My biggest takeaway from this. Baby boomers are going to have A very hard time relinquishing their power.

[Michael Batnik]

Oh, yeah, thanks.

[Ben Carlson]

How's that? I just think this is going to be a very awkward transition. It's going to be a very awkward transition. But I'm serious, the last two presidents we had obviously were too over their skis. When you read a story like this, that doesn't inspire a lot of confidence. Okay, one more for the New York Times. Mr. Trump has privately fretted about the prospect of a Great Depression scale event and happening on his watch, a scenario he shorthands in conversations as 1929. But the events of the last few weeks have so alarmed some of Mr. Trump's closest advisors, including Scott Besant, that Mr. Trump himself seems to absorb how close they came to a financial meltdown. I don't know if this is supposed to make me feel better or worse that they're actually considering that this stuff could happen. I know you keep saying, well, listen, they can't let this happen. And I feel like this kind of talk is so bearish, it makes me bullish because we can't possibly let this happen.

[Michael Batnik]

I mean, that's where. That's where I'm at and that's where I've been and maybe I'm not even.

[Ben Carlson]

But we keep going. And I keep coming back to your thing saying that, like, listen, it's a binary thing and one group is going to feel really dumb and one group is going to feel really smart, depending on what happens with deals and back offs.

[Michael Batnik]

How about this? If, if the worst comes to pass, I won't feel dumb for being wrong and watching him intentionally nuke the economy. So what's the thinking? Like, oh, he told you he was going to do it. Why didn't you listen? He's a liar. Like, why would. Ok, he's told you that he's going to nuke the economy. Sorry, I don't believe him.

[Ben Carlson]

No one would think that's the baseline scenario of the president is going to try to crash the economy.

[Michael Batnik]

Yeah, I think this is him. I think this is him negotiating. Now. It's ridiculous and chaotic and I hate it, but I think this is him negotiating.

[Ben Carlson]

So that's where I've fallen. Like, it sounds so bearish. You have to be bullish. Now here's the thing. In the meantime, if we don't get stuff figured out, he could actually cause not a financial crisis, but it definitely slow down. So Ryan, all the supply chain people, I thought I was done following them after Covid, but apparently not. So Ryan Peterson started a thread and it says thousands and then millions of American small businesses including many iconic brands will go bankrupt this year if tariff policies in China. And he goes through this whole thing and then at the end he says and when they die, it may actually be the final victory for Chinese manufacturer as they scoop up brands that took decades to build through blood, sweat and tears of some of the most creative and entrepreneurial people in the world. American brand builders are the second to none in the worldwide. Thoughts?

[Michael Batnik]

I don't think it's gonna happen.

[Ben Carlson]

Okay. I.

[Michael Batnik]

Because so Torsten Slok said, like if the tariffs stay in place, 90% chance of recession. Excuse me, if the tariffs stay in place, 145% chance of a recession.

[Ben Carlson]

True.

[Michael Batnik]

No, they are not going to stay in place. And forgive me for speaking so confidently about something that I have no insight into and no control over. I just don't believe it.

[Ben Carlson]

So I mean the public backlash is going to be insane. And so here's another one from Craig Fuller, who's another freight supply chain guy. He said many truckers I've spoken with don't realize how quickly container volumes have collapsed. Starting in May, port freight out of California will almost be eliminated. It's going to be a bloodbath and then a collapse in trucking. And so I do think like people keep thinking, well it's just the stock market. People can handle a down stock market. But I don't think people do realize how much pain could be exhibited on. I think the stock market would actually do better than small businesses in this scenario. I think we're setting up for a scenario where if something doesn't happen in the next month or two by back to school shopping, we're going to start seeing empty shelves like that. That's a real possibility.

[Michael Batnik]

If to me the more interesting question is not what do the tariffs look like or what are the negotiations, where do they end up landing? It's how much damage is being done between now and then.

[Ben Carlson]

That's what I'm saying. And part of that could be like you could, you could, you could legitimately start seeing a supply chain that just totally tenses up and empty shelves because companies completely can't plan their inventory out.

[Michael Batnik]

I think we spoke about, we pointed out some of this stuff two weeks ago. Social media, very nasty place in general. But it's pretty depressing scrolling through some people's comments about like small business activity and how they're gonna go under and just the inhumanity in the comments section. People, well, why are they buying from China? Why aren't they buying. It's like, people are just ruthless. People are such assholes on the Internet. And it's just. It's weird because it's not. I mean, obviously it's not this way in real life. It's like road rage, right? I was walking through New York City. I took my kids to, like, a slime museum. And New York City is not representative of literally any other place. So I'm not saying that this translates or it's meaningful at all, but just an observation. It is weird to see or to live in this environment as we are very close to the. The noise, and then, like, just see millions of people on the street shopping, spending, you know, like, right.

[Ben Carlson]

You need. You feel like you need to be wearing one of those. Those, like the boards on the front and back and like, ringing a bell, being like, hey. But it could. It again, it could get to the point where people never even realize. So Matthew Klein has a little levity here. He says, like, take a deep breath on the overshoot. He said, despite the apparent best efforts of policy makers in both countries, trade between the US And China is likely to persist. So he's saying that, like, there will probably be trade with third countries which will reroute the goods through Mexico, Singapore, and Vietnam. He said this would have little to no impact on the size of China's overall trade surplus nor on the size of the aggregate US Trade deficit. So he said, like, the stuff that the White House is trying to do, if people. If corporations just rerouted through another country to, like, avoid the tariffs, that could help. It's gonna just cost some more and it's gonna be another step. But he said the good news is that should reduce the impact on prices and shortages. Relative to a literalist interpretation, the bad news is that those aiming for a conscious uncoupling of the two world's largest economies will probably only succeed in making existing transactions marginally more inconvenient. So that's like the. Okay, take a deep breath here. Corporations will figure this out again. And back to your point, the small businesses probably won't be able to. That's the hard part. Big corporations, they'll be fine.

[Michael Batnik]

The stock. Stock market will be. Again, I'm making this up. I don't. Can't see the future relatively fine. Like, even if the stock market falls 35%, you know, bad. We've been there before.

[Ben Carlson]

Corporations will figure this out.

[Michael Batnik]

Yeah, they'll be fine. But, yeah, there will be people that like, what do. What do you do when your margins are. You know, 15% and like you just don't have the resources to reroute and you go to business.

[Ben Carlson]

Yeah. So he also says like zooming out. He's saying that the decline in the dollar in the context of a larger uptrend is like, it's not that bad. And the uptick in bond yields. He said, yeah, it's alarming in light of falling stock prices, but not large. Giving the change in inflation outlook. And he's basically saying a lot of this unwind that we've seen could be positioning. And I kind of agree with that, that we have to see the follow through now. The dollar keeps falling. So if we keep seeing the dollar falling and rates rising, then you have to. But I do think some of this market movement, the hey, people are just taking money and getting out of the US Like I think we have to see some follow through before we assume this is going to be a trend that persists. If it does keep happening, then yes, I do agree. Hit the panic button.

[Michael Batnik]

Yeah. Oh yeah. If this persists for another five months, my tune will change for sure. Like obviously I'm not going to, you know.

[Ben Carlson]

Yeah. So yeah, you're right. The torson slok one about. What did he call it? Like a tariff induced something. I can't remember.

[Michael Batnik]

Let me skip ahead just for a minute. So we had it's earnings season. I love earning season. I really do.

[Ben Carlson]

See, that was it. See that was the transition again.

[Michael Batnik]

What's that?

[Ben Carlson]

You just did it again.

[Michael Batnik]

What'd I do?

[Ben Carlson]

Transitioning from the end of the world into earnings season.

[Michael Batnik]

Well, it's relevant, so.

[Ben Carlson]

But is it, Is it though? I think it's all useless.

[Michael Batnik]

No, no, no.

[Ben Carlson]

I don't think these earnings reports are helpful at all.

[Michael Batnik]

Listen for a sec. All right, Interesting nugget coming. First helpful nugget on deck.

[Ben Carlson]

Okay, here's.

[Michael Batnik]

This is the interesting one. Amex, obviously an affluent customer base. Millennials and gen Z are 35% of spending. Corporate spend up 14% year over year. Interesting, huh? We're not 35%. We're not, we're not babies anymore. The millennials have grown up entering prime.

[Ben Carlson]

Working, prime earning years. Right.

[Michael Batnik]

Okay, this is the, this is the, the thing that I thought was interesting. They said while it's still very early in the second quarter, through the first week and a half in April, overall spending levels have remained consistent with what we saw in the first quarter in both goods and services and T and E across all customers segments.

[Ben Carlson]

Because there hasn't been an impact on the economy yet.

[Michael Batnik]

Yes, but this does. And I know it's very, very early.

[Ben Carlson]

You're saying this goes against sentiment, Basically.

[Michael Batnik]

It's interesting, especially in context of the wealth shock that Josh and I have been talking a lot about, that people pull back their spending. They also said while the level of macroeconomic uncertainty has increased, the activity that we saw across our customer base is consistent with and in many cases better than what we saw in 2024.

[Ben Carlson]

I think the wealth effect is overstated because people kept spending in 2022. I keep coming back to that. The stock market crashed and no one stopped spending. I think the wealth effect has been vastly overstated.

[Michael Batnik]

I kind of. Yeah, it's complicated. But I think. I agree.

[Ben Carlson]

Or I think people are. At least, I think people are pooh, poohing. The stock market crash as. Listen, the stock market crashed in 2020, came back, it was fine. The stock market crashed in 2022, came back, it was fine. Stock market crash in 2025 is going to come back. It's going to labor.

[Michael Batnik]

If you have your job, you're going to keep spending.

[Ben Carlson]

Yeah.

[Michael Batnik]

Regardless of what your portfolio. Something like. All right, so two other things they spoke about delinquency rate that you could throw out.

[Ben Carlson]

Right.

[Michael Batnik]

Like delinquency rate. It's way too early to look at that. Who cares? We haven't seen any sort of slowdown there. There was a question about, like, pull forward right now. And I've been speaking about, like, it's like, is this like an Apple upgrade cycle? Because people just like got in front of this.

[Ben Carlson]

You know, I tried to do this this week. I called my dealership and I said, hey, I'm 18 months into my lease and I saw you're offering employee pricing for Ford. Run some numbers for me. The numbers didn't work very good because they said, well, we're not doing it for leases. Like the commercial said, we're giving employee pricing to everyone except people in the leases who already have a lease. So it is. So. All right.

[Michael Batnik]

Question about. A question about.

[Ben Carlson]

I tried.

[Michael Batnik]

They said, look, we, we haven't really. We really haven't seen any pull forward at all. I think when you look at the entire first quarter, there's really been no pull forward at all. We see a little bit in small business, a little bit in wholesale pull forward, but you're talking a couple points here. Not, not anything significant. The other two points I'll make and then I'll get to the revenue. One is that one thing that has been, that has not been associated with our card Member spending has either been what's happened with the stock market or what's happened with consumer confidence. Interesting. Our card members say may say they don't have any confidence in the economy, but they still continue to spend.

[Ben Carlson]

Right. It's what we do.

[Michael Batnik]

So. All right, let's get back to the hellscape. No, but in all seriousness, as long as people have their jobs, it doesn't matter how worried they are. I mean, it does it. That's not. Doesn't matter is overstating it. Watch what they do, not what they say.

[Ben Carlson]

Yeah, and I think it's also not only people losing their jobs. If you see someone else at your company losing their job and you keep yours, that's gonna impact you too. Like, there's the old study that the people who live in the same block as those who win the lottery have a higher chance of, like, overspending and going bankrupt and going into debt. Like, I think seeing what happens to your neighbors and your peers, that impacts you too. It's not just the people who lose their jobs. So you always talk about how your. One of your favorite movies, to quote, is awesome. There's Wayne's World. Wayne's World. So my. My favorite Mike Myers one is Austin Powers. My friends and I, I think, came out when I was a sophomore in high school. It was like 1997ish. So my friends and I.

[Michael Batnik]

What's your favorite quote from. From Austin Powers?

[Ben Carlson]

I can't even. But I put a meme in here.

[Michael Batnik]

Like, to live dangerously.

[Ben Carlson]

I did an. I did a meme in here. Well, who throws a shoe? Honestly? Really hurt. So there's the part where he's driving the. What do you even call this thing?

[Michael Batnik]

Bulldozer.

[Ben Carlson]

Yeah, he's driving the steamroller.

[Michael Batnik]

Steamroller, yeah.

[Ben Carlson]

And there's the cop saying, no, wait, where's the meme?

[Michael Batnik]

I don't see it.

[Ben Carlson]

Oh, it's right up below the Torsten Slack thing. So Austin Powers in the video, he's saying, get out of the way. Cause the steamroller is going super duper slow. And the cops saying, no. Then he ends up rolling him over. And that, to me, is the recession coming for tariff policies. If the tariff policies would just step out of the way, I think we could be okay. But. So Neil Dutta on CNBC yesterday said, we're jumping into recession. He said, I think we're already in the worst case.

[Michael Batnik]

Giddy at this picture.

[Ben Carlson]

He does. He looks way too happy. He says, they really did them dirty here. He says, I think we're already in the worst case scenario for the economy. I think we're jumping into a recession. And he's basically saying like, this is happening quickly. And again, this is not like a doomer kind of guy. He's been one of the more constructive people in the economy throughout this entire decade. And so he's saying like it's happening. And I wonder if the consumer thing would be, to take the jumping analogy, if it just falls off a cliff, if it really happens. Or is it possible that it's like a business led. I know consumers make up 70% of the economy. Is it possible the other 30% could bring us into a recession?

[Michael Batnik]

It's going to be a small business recession if the tariffs don't get lifted or adjusted.

[Ben Carlson]

Is it also possible that the headlines of this recession could feel worse than the actual recession itself is? Like, from if you just look at the economic data, like if GDP slows one and a half percent.

[Michael Batnik]

Oh, it feels awful because it's so dumb.

[Ben Carlson]

Well, you're right.

[Michael Batnik]

Like the reason for the recession being caused by economically illiterate thinking is the part that really makes it hard to digest.

[Ben Carlson]

Yes. I also, sometimes I feel bad saying, well, it's just going to be a mild recession because a mild recession to the whole economy could still be a really bad depression, like for certain businesses or people. That's. I almost feels like it's too flippant to, to say, all right, one of the things that we've heard from pushback from people that have emailed us and a bunch of people have asked this, like, hey, how come you guys never address the fact that other countries already have tariffs on us? Right. Isn't this just so Alison Schrager.

[Michael Batnik]

So these are the poorest countries that have notes that have very little source of tax revenue.

[Ben Carlson]

So Alison Schrager had a good answer to this and she wrote about this, and I think it's worth answering because again, a lot of people are asking. So she says it's true, Trump is right that there are other countries, especially in the eu, Africa, that have done this. But she said the unintuitive thing about trade is that when you erect a barrier, you are the one who suffers, not the country that's shut out. Europe is an economic basket case because of these barriers. India's economic development has never taken off the way it should have, largely due to its protectionist history. Retaliation only hurts the country that fights back. So she's saying, sure, these other countries have had some tariffs on us, but it's to their Detriment.

[Michael Batnik]

Yeah, they were.

[Ben Carlson]

Yes. And that's the point. So I actually think a lot of people have said, well, why doesn't Congress just do its job and step in and bring back their power? Because they used to have the power to set tariffs. That's what happened in the 30s. I guess Hoover, Derek Thompson did a whole history thing on this. Hoover might get a bad rap because it was Congress that enacted the Smoot Hawley tariffs back in the 30s and Hoover just had to go along because Congress was the one who had the power. And then they took it away from Congress and gave it to the President. A lot of people are saying, hey, listen, we need to. Congress needs to take its role for tariffs back. And in the long term, I think that would be a very good thing. In the short term, I think if it got to that point, it would probably be a very bad thing because that would mean things have gotten way out of control.

[Michael Batnik]

Tariffs are a tax, they're negative sum.

[Ben Carlson]

Yeah, yeah, I don't think that's even up for debate anymore.

[Michael Batnik]

Yeah, Tariffs are not a political or a partisan issue. They're, they're bad.

[Ben Carlson]

Yes. Again, it's almost like every generation has to figure it out itself.

[Michael Batnik]

If, if they were targeted, if it was rolled out in a more cohesive manner, I think we could have digested it just fine. Right. Like we would have. The market would have wobbled, whatever. But it's not just about the market. It's like people's. People planning. The small businesses would be able to figure it out.

[Ben Carlson]

All right, so Fed Wo says Trump is laying the groundwork to blame Powell for any downturn. Of course, the analogy I made on this is my son was going to pour himself a bowl of cereal. He's getting pretty self sufficient about feeding himself, but he always spills the milk. And then he kind of spills the milk and looks at me and is like, hey, you're going to clean this up. And finally, hey, dude, no, you clean it up. It's your mess.

[Michael Batnik]

Trump tweeted. With these costs trending so nicely downward, just what I predicted they would do. There can be almost no inflation, but there can be a slowing of the economy. Unless Mr. Too Late, a major loser lowers interest rates. Now, I'm sorry, this is beneath the office of the President, like tweeting, calling the Fed chair a major loser, whatever, But Warren Pozza's talking about this with Josh and I. The overnight rate should not be four and a half percent. Like they should be cutting. And I understand that Powell is probably not thrilled to do anything that might even look a little bit political. And he's certainly not looking to get bullied by the President. But Trump's not entirely wrong in terms of where rates should be. They should be lower.

[Ben Carlson]

Yes. And the Fed's in a tough spot because they're thinking about the tariffs being inflationary. But I agree with you that the risk to disinflation and deflation is way higher inflation. Even if, like we could get a scenario where for three months or so it looks like stagflation when we get the initial price rise from tariffs. But I still think deflation is by far the bigger risk here.

[Michael Batnik]

So we spoke last week though, the one year look at inflation expectations skyrocketed. So it's weird to be cutting in that sort of scenario. But they're probably going to be. Probably might be short lived. This is counterintuitive. I was listening to somebody on Dark's podcast talking about, I think they're a toy company. He said, what if the tariffs are so bad that they put businesses out of business and they have to just sell all inventory and just dump it.

[Ben Carlson]

On the market prices. Right.

[Michael Batnik]

And paradoxically that would lower prices.

[Ben Carlson]

Yeah. And the thing about Powell too is that he's not been perfect, but I think he's Trump's best appointee. He's made by far. People forget Powell is actually conservative. And so timoros wrote, by Trump's account, Powell worked to help Biden during his term and is now unwilling to provide the same support in his own second term agenda. Does he not remember the fact that Powell raised rates from 0 to 5% and literally said he wanted to put people out of jobs? Powell is not doing. Powell is not a political person. He will do what he thinks is right. Sometimes that's not always right, but I think Powell is going to get some satisfaction being the one who comes in.

[Michael Batnik]

And saves the day though, in terms of cutting rates.

[Ben Carlson]

Like just saying, like, this is not my fault, people, I'll come in and help you.

[Michael Batnik]

He's honest. He's not gonna say that. He doesn't like that.

[Ben Carlson]

No, but he's thinking that.

[Michael Batnik]

Oh yeah.

[Ben Carlson]

Don't you. To him, he's gotta be thinking like, why are we doing this? You ruining my soft landing. What are you doing? I had it. I bet he wishes he just retired. All right, moving on to the stock market this year feels like every other day or week we get a. The worst blank since. So this is from the Wall Street Journal. Dow headed for the worst April since 1930. 2. I don't know if you can really make anything out of like the worst month since.

[Michael Batnik]

What do you mean? Headed for like, are they like extrapolating, like if this continues.

[Ben Carlson]

Well, no, it's down. So I looked. The S and p is down 8% this month. So I think it's saying if that.

[Michael Batnik]

Held right, that would be the worst since 1932. No way.

[Ben Carlson]

Yeah, but the worst. April. So part of this is just the month we're talking about. Right. So but 8% down month is not great. But it's not like it's completely out.

[Michael Batnik]

Of the realm of, you know, the market's pretty smart. If you like look at how individual companies behaving. Look at Delta for example. The stock, was that an all time high? Yeah, stock hit an all time high, I believe in January. Oh my God. In January was at 70 bucks. Four months later it went to as low as under 35.

[Ben Carlson]

Wow.

[Michael Batnik]

So like.

[Ben Carlson]

Oh yeah, look at that. That chart is straight down.

[Michael Batnik]

The economy is going to slow. Airline travel is, is slowing. Amex mentioned that at their call. And so this is the thing. It's like, oh, I should probably avoid airline stocks. Well, they crashed in two seconds.

[Ben Carlson]

40% drawdown. And it was, it was 50. Holy smokes.

[Michael Batnik]

And again it went from an all time high. Like the market moves so quickly and digest these things.

[Ben Carlson]

Yeah. Which is going to happen the other way out too. So as of the close on Monday, recording this Tuesday morning, the S and P was down more than 16%, the NASDAQ 100 was down almost 20 and the Russell 2000 was down 25%. The thing is, if you.

[Michael Batnik]

Hold on, are you talking year to date or from the highs?

[Ben Carlson]

This is from the highs. If you zoom out a little bit, this is over the last year. It's kind of crazy. So Gold is up 42%, crushing everything. Bitcoin is still up 36% over a one year period. IFA is up 10%. The aggregate US AG is up 6% over the past year. The only thing that's down is the Russell 2000, which is down 4% over a year. Now obviously you say, of course, Ben, in 2024 stocks were up 20%. Everything was good. My whole point is this is still relatively mild.

[Michael Batnik]

Yes, it is.

[Ben Carlson]

The pain has not been felt yet. So I don't know if this is since 1932. This is, that's my thinking.

[Michael Batnik]

Because you're exactly right. We were up. I keep saying this 20 plus percent back to back years and we're down. I mean all Right. We're back to where we were in 2024.

[Ben Carlson]

Yeah, we're just working off some of that. So the question is relatively mild, but is that.

[Michael Batnik]

Is that bullish or bearish?

[Ben Carlson]

Ask me a year. It's got to be one of them.

[Michael Batnik]

Lisa Bromics tweeted, the S and P is underperforming the MSCI All Country World Index, World X US Index by the most in 32 years. Wild.

[Ben Carlson]

So this is on a monthly. The monthly performance spread. It's. Wow. This is another one of those. We always wondered what the catalyst would be for international stocks.

[Michael Batnik]

It's so bizarre that it was like the Make America Great Again president.

[Ben Carlson]

Yes. Has made international stocks great again. But this is the whole asset allocation quilt that I always lean on, that you can never guess what the top performer is going to be. Who could have possibly foreseen something like this happening?

[Michael Batnik]

That Trump would be bearish for America.

[Ben Carlson]

Yes. And I.

[Michael Batnik]

So I even, even listen. Half the country didn't vote for him. But I think even. And I think even that group of people would say, I didn't expect him to tank the stock market. Like, no.

[Ben Carlson]

There was a story in the New Yorker yesterday. They were interviewing anonymously Wall street people and how they've turned on him. And they're kind of like, I really did think we were going to get him from the first term. Like, not exactly the same performance, but that sort of thing. Like.

[Michael Batnik]

And if you're getting mad right now, listening to us, and you're like, what are you talking about? I knew he was going to crash the stock market. No, you didn't.

[Ben Carlson]

Yeah.

[Michael Batnik]

You're lying to yourself.

[Ben Carlson]

Yeah. No one thought this.

[Michael Batnik]

I don't know if this is worse. And we're bullish. We are on the fence today, Ben. Firmly on the fence. All right. So the flight out of dollars.

[Ben Carlson]

I'm so bearish. I'm bullish.

[Michael Batnik]

The flight out of dollars. Interest rates high, stocks down, international stocks up, gold flying as losing faith in the dollar. But also for the first time really ever. And it's two days. Whatever. It's actually. It's a week. Bitcoin is actually decoupling.

[Ben Carlson]

Yes.

[Michael Batnik]

Like, look at bitcoin over the last five days compared to the market. I think I have a chart in here. It's even more pronounced now. So. All right. This was as of yesterday. It's even more pronounced now. Bitcoin up 5%. Nasdaq 100, down 5%. Gold also up 5%. The dollar down 1%. So Bitcoin is about at $90,000 this morning. So is bitcoin following the gold story in terms of people losing confidence and it's just a, maybe a chaos hedge or is bitcoin the first to recover because it's like a flight to liquidity and the market's about to rip.

[Ben Carlson]

So I thought this was a really interesting theory by Ben Eiford. I don't know if this is true, he says, because Joe Weisenthal had a tweet that showed bitcoin and the Nasdaq 100 have decoupled because for a while it was risk on risk. Often that bitcoin followed tech stocks essentially and now it's decoupled. And Ben Eiford says Bitcoin is NASDAQ denominated in a basket of global currencies, not USD and USD is collapsing. So he's saying it's a dollar thing.

[Michael Batnik]

So he's saying that it's the gold story.

[Ben Carlson]

Yes, because if this is a global asset and the dollar is going down, then yeah, bitcoin. So it is having some gold tendencies, which is maybe the first time this has ever happened for bitcoin.

[Michael Batnik]

Yes, it is.

[Ben Carlson]

It's a short term thing, so we don't know.

[Michael Batnik]

But no, but it's pronounced. It's interesting because historically bitcoin would be, with the way the market's behaving, bitcoin would be at 60,000 or lower.

[Ben Carlson]

Right.

[Michael Batnik]

Or maybe, maybe it's front running. The bounce that's going to come in in the market. I hope, I hope so. I hope that's the case.

[Ben Carlson]

Getting back to the market, a little more levity. Like I looked at the AG this year, it's so people are worried about rates screaming higher. Right. And TLT I know has come in, but the ag, the Barclays AG or Bloomberg AG or whatever is up one and a half percent this year. So most of that is probably yield, I guess at this point. But it's not like bonds are getting crushed in this environment. Even though yields have been going higher for the last month or so in the grand scheme of things, like things are still okay.

[Michael Batnik]

I think when people are saying that like the bonds aren't working as a hedge, they're, they're zooming in way too much. Because on a day to day basis there has been days where, where stocks and bonds got crushed together. But to your point, zoom a little bit out and it's not that bad.

[Ben Carlson]

Yes. And back to the fence sitting thing. Is this a good thing or a bad thing? It could always get worse. But hey, it's actually not as bad as you think. We don't know. This is what makes it hard.

[Michael Batnik]

Yeah. Good chart from Adam Parker. Median gross margin X Financials and real estate through the end of March 2025 45% near an all time high. Companies are going to be just fine.

[Ben Carlson]

Companies have a margin of safety. Corporations are gonna be fine.

[Michael Batnik]

That's right.

[Ben Carlson]

Large corporations, small businesses are going to get, unfortunately, I mean, I'm sure there's going to be a handful of small businesses who are going to be like the forest gump boat, the shrimp boat that are going to be fine. Like through all the wreckage. They're the ones who. There's going to be some places that'll do fine.

[Michael Batnik]

Now when I say do fine, I mean like they're going to come out of this fine. They might get crushed. If margins go from 45% down to 38, like the stocks will get destroyed.

[Ben Carlson]

Yeah, but it's not like going out of business. They have a margin of safety. I continue to believe that corporations will figure this out eventually.

[Michael Batnik]

All right, so this is going to either look really smart or really dumb. Record influx into leveraged Long ETFs $6.6 billion last week.

[Ben Carlson]

Whoa. Everyone's buying the dip.

[Michael Batnik]

We'll see.

[Ben Carlson]

It's, it's worked. That's the thing, people. Every time the stock market has fallen like this, it's worked. So I, I understand it. Some people look at this and go, oh man, they're going to get killed. Would it be, Would you rather. I don't think so. Would you rather see people fleeing them? I don't know. These are also degenerate gamblers. Right?

[Michael Batnik]

It's also, I think it's also like hedge funds. It's $6.6 billion. It's not just, it's not just degens. All right. Belchunas has the safety dance index, which is gold treasuries and low volume stocks showing one of the highest readings in April. First, first real sign of nerves in ETFs flows.

[Ben Carlson]

Okay, that makes sense.

[Michael Batnik]

I also think like it's, this is very hard because it's like on the one hand people are freaking out. On the other hand, like, you know, we're barely, I mean, we're 20% off the highs and we're still up so much. It could go down. It could go so much lower. People are really, people are really worried. And like I, I always think that.

[Ben Carlson]

You know, the, the, some people are really worried. How's that?

[Michael Batnik]

Investors are really worried. Who said this was It. Oh my God. I'm drawing a blank on his name. Come on, you old idiot. Bill Miller. He was asked like, what do you worry about? And his answer is, maybe too cute. But I, I, I ascribe to it. Ascribe to it, subscribe to it. I like it. He said, like, really nothing. Because the market does all the worrying for me.

[Ben Carlson]

Right.

[Michael Batnik]

The market doesn't underreact. Although I guess you could say it was underreacting in February and March. But in general, I let the market do the worrying for me.

[Ben Carlson]

What else can you do, right? So Yao Finance has one that's showing it's not just the leverage. Long ETFs. This is retail purchases of US listed stocks and ETFs. And this is from Vander Tract. And it took off this month tons. And right when the market started falling a ton more people started to buy the dip. And the buying has increased like way higher than it was for the previous 12 months. So my question is, who's selling? So it has to be all institutional selling with the big money.

[Michael Batnik]

Yeah.

[Ben Carlson]

I think it's because retail's buying institutions are selling.

[Michael Batnik]

I think it's hedge funds.

[Ben Carlson]

Well, or the big huge endowments, foundations, like all the big huge pools of capital. They're the ones selling. So who's going to look like the idiot? The people stepping into the pain to buy or the big behemoths who are selling.

[Michael Batnik]

It's called the risk premium because you have to stomach the pain. It's not called the sell and you'll feel better. And then you got back in at lower prices. Premium. It doesn't work that way.

[Ben Carlson]

I know markets are moving faster than ever, but this whole ordeal really has been going on for a month now.

[Michael Batnik]

This last week was weird for me because my kids were, my kids were off and I worked. So it was just, it was a long week. I feel like time was weird last week for me.

[Ben Carlson]

Well, that was me on spring break too. Yes, it's.

[Michael Batnik]

I feel like our last podcast was like a year ago.

[Ben Carlson]

A lot has happened.

[Michael Batnik]

If you sell now, when, when do you buy back? You know what would Suck if like 2022 was not fun. Particularly because of all the bear market rallies. Somebody emailed us about how hard it is to call the bottom. And it's true. Especially when in a real bear market. Because look at like we've made this chart before in the dot com bubble. All the false hope that just gets crushed.

[Ben Carlson]

Tons of dead cat bounces. Couldn't you see this year setting up like that?

[Michael Batnik]

Though, sure, why not?

[Ben Carlson]

Where we get five periods of false hope, like, oh, yes, it's over, and then the market rolls over again and then it comes back. I can. That wouldn't shock me.

[Michael Batnik]

That stuff wears you out.

[Ben Carlson]

Yeah, I could. I could certainly see that. And a lot of people would say, good. The stock market has been way too easy for people. You deserve this risk premium.

[Michael Batnik]

Yeah, right.

[Ben Carlson]

You deserve a little bit of rough seas for a while.

[Michael Batnik]

That part, in a vacuum, I, I don't disagree with. I get that sentiment. And I, I'm fine with me now, not to be, not to be too blase about it, because it's coming. The stock market sells. Don't happen in a vacuum. But we have been spoiled, let's be honest.

[Ben Carlson]

Yeah, right.

[Michael Batnik]

Like we don't deserve 20% returns every year just because we get out of bed. All right, so highest share of mortgage refinance rejection since the start of the series in 2013.

[Ben Carlson]

All right, can I give you the counter take on why this is not bad news?

[Michael Batnik]

Sure.

[Ben Carlson]

Who are the people who are refinancing right now from a 3% mortgage to a 7% mortgage? People who are in very dire financial straits. So this, the fact that this is increasing and this is not my Logan Mohr Shami was putting out truth on this saying like this. This isn't as worrisome as it seems because the people who are refinancing now are in pain already.

[Michael Batnik]

Okay. I'm glad you gave Logan credit because no offense, that seems a little bit too clever for you.

[Ben Carlson]

Hey, I paid into the housing market. All right, so this is from fast company. Zillow turns full blown housing market bear. Just look at its new forecast. And so I read this headline, I go, ooh, this is interesting. Let's see how spicy it is. They project housing prices over the next year will fall 1.7%. That's where we're at for full blown Bear. For housing, a 1.7% drop.

[Michael Batnik]

Come on.

[Ben Carlson]

I actually do think that, like a 2 to 3% correction in housing is not out of the realm of possibilities. With supply increasing and in mortgage rates staying at 7%, that to me seems reasonable.

[Michael Batnik]

Bitcoin is absolutely flying. It's at 90,500. And I just don't buy that you could have that in an environment in like a mega risk off environment.

[Ben Carlson]

I think that makes sense to me. Like, it just all of a sudden changed. Right. So you're saying bitcoin is going to lead us out of this thing? Potentially.

[Michael Batnik]

I don't know. I think so. Let's see. Let's see what happens next week or tomorrow.

[Ben Carlson]

So my thing that I've talked about for redoing your house too has been just if you want to do something, you can afford to do it. Don't wait. Because inflation. I actually think this is the kind of period, if we do go into an economic slowdown that people are going to be hunkering down and like, you could actually find better deals in like 12 to 18 months to. For housing renovations. You know what we'll setting up period.

[Michael Batnik]

In an economic slowdown. $18 coffees. So Robin told me that actually one of my kids told me that mommy was listening to me in the car. I think she was on Instagram maybe. Hopefully she was parked. I think that's where.

[Ben Carlson]

That's where my mother follows animal spirits, is she watches the little clips Nicole makes for us for Instagram.

[Michael Batnik]

Okay. My mother in law, too. So anyway, I said to Robin, oh, yeah, you were listening to my podcast? And she said, no, I was watching it real. I said, which one? And she said, the doordash one. She's like, how much do you think my doordash coffee costs? And I was like, what do you mean? She goes, when you go on vacation or vacation when you go on a work trip, like on the weekend when I'm with the kids, I eat doordash Starbucks. How much do you think it costs? And I said, don't tell me. She's like. She goes, it's like $13 to $15. And I said, are you kidding me? You're spending 15 bucks on a medium iced coffee. And she goes, don't go away.

[Ben Carlson]

She kind of got you there. What are you supposed to do? Right? My kids actually love going to Starbucks because they get the little cake pops. My wife makes them go with her. She gets the cake box. All right, I have a housing take for the year 2047. Okay, so bookmark this one. Come back to me in like 20 some years. Okay. I have. So I've been thinking about this a lot since we were in Florida. And I'm thinking, like, gosh, I'm in my mid-40s already. Like, I'm not. It's not that far to think about. Like, the kids are out of the house and, you know, empty nesters. And I think that the old Gen Z young millennials are going to be screwed their whole lives because the older.

[Michael Batnik]

Stop it.

[Ben Carlson]

No, no, no, Listen, listen. Of. Of stuff being expensive. Like, when I came into the housing market, you and I did housing was Way cheaper. And demographics and a lot of other things have made it more expensive. So I feel like the people who are on the, on the losing end of that are going to constantly be experiencing higher priced things because of us.

[Michael Batnik]

And so are you setting yourself up for complaining in 30 years or for the.

[Ben Carlson]

No, no, no, no, no. I'm trying to get ahead of this trend. I'm trying to, I'm trying to be forward thinking, rejected. So here's what you do, because I think the transition from. And I don't know where millennials are going to retire someday or millennials going to just become their parents and retire in Florida or are they going to go somewhere else?

[Michael Batnik]

Of course I'm going to Florida, dude. I'm eating cottage cheese with pineapples in it. I am going throughout.

[Ben Carlson]

So here's, here's the plan. You don't wait until you're 65 to buy that house in Florida. By then, there's going to be too much competition. All the other millennials are going to be flocking, too. You buy your house in Florida at age 55, you get ahead of the trend. Yeah, okay. I'm giving advice to older millennials. You get ahead of the trend so you don't have to fight with people for the house. And then it's going to be way cheaper and there's going to be less competition. So I'm, Yeah, I'm, I like putting, I'm setting a reminder to myself.

[Michael Batnik]

Ben, we're going to talk about.

[Ben Carlson]

Oh, wait, so you're going to retire on the ocean side, I'll be on the Gulf side, and then we'll come see each other every other week or something.

[Michael Batnik]

I don't think I'm a retirement guy.

[Ben Carlson]

I'm not either. I'm gonna have to do something.

[Michael Batnik]

Now, I've said this before. Human beings are very bad at predicting how they're gonna feel in the future. But I just don't think. I don't think permanent retirement is for me.

[Ben Carlson]

I'm gonna be given personal finance lessons down at the community center.

[Michael Batnik]

Yeah, yeah, right.

[Ben Carlson]

Or the local community college is gonna be simulated.

[Michael Batnik]

I agree. Speaking of middle age and life things, your Friends and Neighbors, which is a new show on Apple with Jon Hamm. He plays a hedge fund guy that loses his job and he lives in this really vapid neighborhood. I guess it's like Connecticut or whatever. Looks like Connecticut to me, where everybody's just got all the money in the world and they have nothing to talk about except, you know, their money and their. This and their whatever. And there's. There's a scene where there's a lot of monologue going on of John.

[Ben Carlson]

He does a lot of. He does a lot of voiceover. He's very good in the show.

[Michael Batnik]

So there's one scene, I think it's in the third episode, Ben. So not a small.

[Ben Carlson]

I'm. One episode in, where he.

[Michael Batnik]

He talks about, like, the. The nature of. Of life and getting older and one of the. I forget exactly what he said, but it was like, when you get to a certain age and you're like, this is it. This is my life now. Like, and I've. And it's a little bit depressing, and I've. I've had that feeling.

[Ben Carlson]

That's why people have a midlife crisis.

[Michael Batnik]

Yeah. It's like, all right, so I've, like, this is. This is it for the next 40 years until I die. Now, our kids are still young, so it's like, you know, still fun, but, like, I don't know what that point is. It's, you know, when your kids are teenagers, maybe 30. I have no idea. But it felt like a very human reaction and something that I've thought about recently. Not in a dire, depressed way, but, yeah, this is it. It's my life.

[Ben Carlson]

I keep having thoughts of what happens when my kids leave the house. And I still have a long time, but my daughter is. Is going on the other side of the hill, like, down toward. Like, I. I keep thinking of that, like, how when the chaos is gone, what is it going to be like when that. What's going to fill that vacuum? I liked the part in that show where he kind of. They bring us up to speed and his whole life and career, and he talks about how I bought a house and we were broke again, and then I bought another house, we're broke again. But he's like. But we had leverage, so that's like an asset. I liked how they explained that. That was interesting. All right, let's talk about a Perfect Storm headline. This is from the Wall Street Journal. Private equity world engulfed by Perfect Storm. All right, now they show this chart of all the private equity companies. You've been a private equity bull. How are you feeling on that thesis?

[Michael Batnik]

Unperturbed.

[Ben Carlson]

You're not wavering at all? Because I think I would be.

[Michael Batnik]

No, I'm not. In fact, I think I want to add to my positions in Blackstone. I think that the sell off is justified. So I'm not saying, oh, who's selling the stocks here? No, I get it. I was listening to the conference call. $270 billion in the wealth management channel. Record growth in Q1. It's just not slowing down.

[Ben Carlson]

So was that for Blackstone?

[Michael Batnik]

Yeah, the next five to 10 years for this asset class. I am, I am unwavered.

[Ben Carlson]

If they don't get the Wealth Management Channel, then they are screwed.

[Michael Batnik]

No, but they need the Wealth Management.

[Ben Carlson]

Are you sure?

[Michael Batnik]

Yes, I listened to the conference call.

[Ben Carlson]

All right, so the longer that this is from the Wall Street Journal, the longer the deal logjam lasts, the harder it will be for firms to hand money back to clients such as pensions and endowments. The amount of unrealized value the funds owe to their investors has hit record levels, according to an analysis by Moody's. That makes it tough, much tougher to raise new funds. So your point is, like, these endowments and foundations are going to go. No way. We're not putting into fund four if you don't give us back money from fund three.

[Michael Batnik]

Enter the Wealth Channel. I mean, this is not rocket science. We know exactly why they're doing what they're doing. The institutional investors say, no, wait, wait, we're full. We're not taking anymore. They said, all right.

[Ben Carlson]

Does that make the Wealth Channel bag holders, though, in some way?

[Michael Batnik]

I'm not commenting on whether or not the results for the end investors are going to be good. I'm talking about. I think Blackstone will be just fine. Now, again, the selling is justified. I'm not saying that people are dumb for selling, but I believe that the earnings per share is going up and to the right.

[Ben Carlson]

So I'm just. Do you think that advisors will be leaning on private assets as a diversification trend?

[Michael Batnik]

Yes.

[Ben Carlson]

Even throughout. Even if we go into like a recession?

[Michael Batnik]

Yes. More so.

[Ben Carlson]

Okay, it's possible. I was thinking about this. So we've been having a lot of private credit conversations on our Tucker book episodes. And we talked to Shiloh Bates from Flat Rock yesterday and we were talking about how a lot of private credit is taking from high yield. And so I decided to look at this and I looked at the high yield, the two biggest high yield bond ETFs. So that's HYG and JNK. And you can see that their assets have slowly but surely been falling and haven't really gone anywhere for a very long time. Whereas if you look at like tlt and if the treasury assets, they've still been shooting higher, even in a bond bear market.

[Michael Batnik]

Great poll, Ben. This is exactly emblematic of the conversations that we've been having.

[Ben Carlson]

Right. This is, this is private equity, like, high yield is going to get pushed to the side and go, wait, wait, wait. Why would we not. Let's get rid of the marks. We'll get a little bit extra yield. I completely understand why advisors are doing this.

[Michael Batnik]

Like, yeah, wait a minute. I could, like, buy all these shitty energy companies and get marked daily and have stock like volatility, or I'd give money to Blackstone to make a loan to this company and they'll pay me every month or every quarter interest. And if there's some sort of hiccup, I'll get 80 cents on the dollar, whatever, 70 cents on the dollar, whatever it is, and I don't have to see the market on a daily basis. Yeah, that sounds better. I'll do that.

[Ben Carlson]

I do wonder if I still. I agree with you that private equity is still coming hard for the wealth management channel in the 60, 20, 20 portfolio, that that's probably going to be the future for a lot of advisors. I just wonder if we do have a prolonged slowdown period and the advisors finally wake up to the liquidity factor and like, wait, I can't rebalance into this or out of this. I can't. I can't take money from. Is that going to, like, slow them a little to be like, whoa, this is a little more challenging than I expected?

[Michael Batnik]

Yes and no. Yes, but also no. The amount of advisors that are going are not going to be deterred by that. Some will. Okay. Netflix reported they said we're paying close attention clearly to the consumer sentiment and where the broader economy is moving. But based on what we're seeing by actually operating the business right now, there's nothing really significant to note. So what are we looking at? Primary metrics and indicators would be our retention that's stable and strong. We haven't seen any significant changes in plan mix.

[Ben Carlson]

Well, let me ask you a question. When's the last time Netflix had a good show? Feels like it's been a long time because I. Did anyone even watch Squid Game season two? We didn't just kind of. The reviews were so bad, we just decided not to watch it. I love season one.

[Michael Batnik]

I saw the first two episodes. I'm okay with this. That's a good question.

[Ben Carlson]

I can't remember the last time there was a good show on Netflix.

[Michael Batnik]

I'm sure. Yeah, good point.

[Ben Carlson]

Does it even matter? No, I guess not. Like, Apple has way higher quality, better shows than Netflix, but it doesn't matter because people are just used to Netflix.

[Michael Batnik]

All right, last one. Imax this past weekend. I own imax. This past weekend, the beginning of eight consecutive films for IMAX titles kicked off with Ryan Coogler, Sinners. It drove a $14 million overall box office weekend for IMAX with 9.1 million coming from sinners in North America, indexing at 20%. Just the eighth title in IMAX's history to reach the 20% benchmark.

[Ben Carlson]

How's this stock doing for you since you've owned it? Okay.

[Michael Batnik]

Yeah. I'm very bullish on the company. I think it's going much higher and I could be wrong, but I hope I'm right.

[Ben Carlson]

How much are IMAX tickets going to be costs in a new world? $30 a piece.

[Michael Batnik]

Yeah. Worth it. Somebody sent us. Somebody spent $145,000 on a mudroom. Did you see that in the Wall Street Journal? We got a few emails about that.

[Ben Carlson]

Yes. It's a mud room with a spot to clean their dog in. And yeah, it's ridiculous.

[Michael Batnik]

So, all right. I saw. I did see Sinners in the theater.

[Ben Carlson]

It's a vampire movie.

[Michael Batnik]

So. All right. Sinners is a very important movie.

[Ben Carlson]

Cause the. Getting great reviews.

[Michael Batnik]

Phenomenal reviews. Like, over the top. Phenomenal. I think it's like 98% on Rotten Tomatoes.

[Ben Carlson]

Are you in line with those reviews?

[Michael Batnik]

I'll tell you. So it's very important because it is an original film. It's not based on ip, it's not based on ip.

[Ben Carlson]

Isn't it weird how that that stands out these days when you have something like this?

[Michael Batnik]

And we need more of these movies desperately. If you look at the slate for 25 and 26, it's nothing but sequels. It's like, enough already. Sonic 19, you know what I mean? Like, enough. Can we have some, like, original movies? So Michael B. Jordan plays a set of twins. It's in the 1930s in the South.

[Ben Carlson]

And that's interesting that he was able to pull that off because I feel like the same person playing a twin sometimes doesn't work.

[Michael Batnik]

He was good.

[Ben Carlson]

Okay.

[Michael Batnik]

So objectively, it was a very good movie, by the way, highest box office for an original opening in like a decade. So a very important movie in that sense. We need more of these. And hopefully this convinces the studios to take more chances on things like this.

[Ben Carlson]

Good.

[Michael Batnik]

So it was two hours and 15 minutes. And there's a lot of things to love about the movie. Like, it was original. There was great scenes, great sets, all that sort of stuff. For me, it was like a little bit too long.

[Ben Carlson]

So I AM like, in two hours.

[Michael Batnik]

It was two hours and 15 minutes. So, yes, it was a. It was an excellent movie that I didn't love. I enjoyed it. I had a good time. It was not a 98 for me. But besides the point, because I'm thrilled that he got to cook, because he got.

[Ben Carlson]

You always say this. Is it a theater movie?

[Michael Batnik]

Oh, yeah, yeah. So I love that.

[Ben Carlson]

Have you ever seen a movie in the theater that's not a theater movie?

[Michael Batnik]

Yeah. Yeah. I love that they let him do this, even if I didn't love it as much as everybody else did. But I did like it objectively. Great movie. Just not necessarily. Not for me, but not a 98 for me. All right. I also saw Warfare in the theaters.

[Ben Carlson]

Okay.

[Michael Batnik]

Holy moly. So that is a theater movie times 100. That's Alex Karp, the guy that did Civil War.

[Ben Carlson]

Oh, okay.

[Michael Batnik]

He also wrote. I was Googling this. He also wrote the beach.

[Ben Carlson]

One.

[Michael Batnik]

The book.

[Ben Carlson]

Oh, okay. Oh, the guy from Shogun's in this. I like that guy. He looks like a more put together Seth Rogen.

[Michael Batnik]

Yeah. Warfare is a 90 minute call of Duty scene. Like, there's no fat. It's a dozen guys wherever they are and they go to war and there's just. It's just a fight scene. It's a 90 minute fight scene. Brutal. Not rewatchable. We'll never see that movie again.

[Ben Carlson]

I could see that. It's kind of like I tried to put Saving Private Ryan on a couple years ago again. And I'm like, I can't watch this again.

[Michael Batnik]

No. But this is even more so. Like, this was hard.

[Ben Carlson]

Good movie week for you.

[Michael Batnik]

Very good movie week for me. It's been a while. I can't remember the last time I was at the theater.

[Ben Carlson]

Let's talk about the Last of Us. So this is spoiler free. Cause there are some spoilers. But after the first episode, it was kind of a dud, I thought. And I said, I think I'm shorting this show. And you said, just, okay, let's see. And the second episode was awesome. It was very good.

[Michael Batnik]

It was like a series finale type show.

[Ben Carlson]

So after watching the second episode and what happened and which I'm not going to spoil, I think I'm shorting the show still. What happened makes me not want to watch the show going forward. And I know it happened in the video game and all the video game people said, no, no, no, no, no. Stick with it. It's.

[Michael Batnik]

Haven't the writers, like, earned your faith at this point?

[Ben Carlson]

I don't know. We'll see if they can. What happened? My wife and I both said, why'd they do that? I know it's in the. But why?

[Michael Batnik]

It was such a good episode.

[Ben Carlson]

It was very good. But I'm putting a paper short. And listen, I'll be willing to cover that short if they prove it to me. But as of now, I got a paper short on this show. Hopefully I'm wrong.

[Michael Batnik]

You're gonna get run over.

[Ben Carlson]

Okay, someone I think Sean had sent us in the slack a preview for the movie the order. It's on Hulu. Never heard of this. And it was Jude Law and Nicholas Hoult. He's the guy in the menu. He's been in a bunch of stuff. He was in the X Men movies, some of the newer ones. And it's a based on a true story and it's one of these ones that you're like how did I never hear about this before? It's in early 80s. It's got bank robberies, it's got heists of cash, you know, the big Brinks trucks. It's got an Aryan nation brotherhood who's trying to start a war with the government. And it's got an FBI agent played by Jude Law. It's one of those movies that gets a premium for me because it's based on a true story. It's one of those ones afterwards I looked it up and I can't believe I've never heard of this. I thought it was very well done and it felt a little bit like true detective, like kind of gritty like that. It's on Hulu and six nine, borderline seven for me.

[Michael Batnik]

Was it like release on Hulu or.

[Ben Carlson]

Was it a. I don't, I'm not sure. It just showed up and I'd never heard it before but it was better than I. And I'm glad that they made it into a movie and not a show because they could have strung out the story and tried to make it into a six episode miniseries but I'm glad they didn't and made it into a movie instead.

[Michael Batnik]

Oh wow. It did $877,000 at its opening weekend.

[Ben Carlson]

Nailed it.

[Michael Batnik]

It was released in October 2020.

[Ben Carlson]

Movie that probably should have gone straight to streaming but it was way better than I thought it was. And again, true story premium for me.

[Michael Batnik]

All right, I'll watch it.

[Ben Carlson]

All right. Going through the historical sports movies are still with my daughter this week. We did remember the Titans and Rudy and a lot of these movies I haven't, I haven't seen in probably 15 or 20 years. You know, you'd see the pieces of them on TBS and tnt, but straight through. And I had just two thoughts on both movies. One, I forgot how bad Ryan Gosling gets cooked as a cornerback. He gets just beat all the time as a cornerback.

[Michael Batnik]

What's that movie?

[Ben Carlson]

I can't remember. But you never would have watched that movie and go, that guy's gonna be one of the biggest movie stars in the world someday. No, never. No. And then Rudy. Maybe I knew this at the time, but I guess I didn't realize. And some of the stuff is when you're younger, you don't. You don't notice the cheesiness as much. Right. Who's.

[Michael Batnik]

Who's a wild man now?

[Ben Carlson]

But I really forgot how much of a loser Rudy is. Boy, is he a loser. Like, just, you know, the guy was a loser, and I kind of just forgot that.

[Michael Batnik]

Did you cry? I always cry at the movie.

[Ben Carlson]

Oh, for Rudy? No, I never cried in Rudy.

[Michael Batnik]

Never.

[Ben Carlson]

I mean, goosebumps, maybe. I don't think I ever cried for.

[Michael Batnik]

Rudy now when he got the sack.

[Ben Carlson]

Yeah, goosebumps, all right.

[Michael Batnik]

I cried.

[Ben Carlson]

You've also heard Joe Montana's interviews later talking about. Because Joe Montana was the quarterback when the actual Rudy was there, and he's like. He kind of, like, shrugs him off a little bit, like, yeah, this guy kind of was a loser. Anyway, I think Rudy might be.

[Michael Batnik]

Might be my favorite sports movie ever.

[Ben Carlson]

Really? Okay. It is really good when he does the speech. That's really good. Okay, I got one more.

[Michael Batnik]

Wait, what speech? Like your 100 and nothing.

[Ben Carlson]

The Newt Rockne one, you know? Yeah. So Noah Wylie was on the Watch with Chris Ryan and Ian Greenwald talking about the show, and I highly recommend it. I didn't realize how much he was involved in the show as a writer and executive producer. He was like a. He was very heavily involved with the story, and he talked about how they wanted to get it right with the doctors and nurses, and he talked about some of the doctors they use, and he talked about some of the books because the show deals a lot with death. And he gave a book recommendation called the Four Things that Matter Most by Ira Bo Bio. And it's a book by a doctor who had been in the ER and been a doctor for, like, 35 years. And he talked about how he had to deal with death, like, his whole life as a doctor and how he helped patients through that. And I kind of wish I would have read it before my brother died, but reading after now I think Is actually kind of. When your mom died, did you get any books from people? Did you do any of that? Sort of. Or did you not even do that?

[Michael Batnik]

I did not. But when we were in Brooklyn, So this was 2015, I read when Breath Becomes Air.

[Ben Carlson]

Okay.

[Michael Batnik]

And Robin walked into our bedroom, and I was, like, just bawling. And she goes, what the hell are you doing? She didn't see the book because I put the book down. But if you are looking for a good cry, When Breath Becomes Air is incredible. Speaking of. Hold on one second. You mentioned that Rudy is a corny movie. I'm gonna say something very corny. I love reading and I have been in a deep book bear market. Here's the corny thing. Reading is like oxygen for the brain. And I forgot. I think my. I think I'm going brain dead from lack of oxygen.

[Ben Carlson]

Well, I do it. I read at least for 15 or 20 minutes every night because that's my way of, like, decompressing and get out of the screens and out of everything. I love to fall into a book.

[Michael Batnik]

I took my kids to the library and I saw this book and I rented it. It is called the Last Action Heroes. Take a look at this. Okay, so it's the stories of the rise of Stallone and Schwarzenegger and Van Damme and Bruce Willis and Seagal and Chuck. What's that?

[Ben Carlson]

Looks like an older book.

[Michael Batnik]

No, it's new.

[Ben Carlson]

Oh, okay.

[Michael Batnik]

So I opened it up to read it anyway. Point is, I want to get back into reading, but I opened it up to read it, and the first page. Okay. You know, there's like the little. Whatever. If you wage war, do it energetically and with severity. Napoleon Bonaparte.

[Ben Carlson]

Okay.

[Michael Batnik]

All right. The second line. I'm going to hit you with somebody. Rights. You're going to beg for a left. Chuck Norris.

[Ben Carlson]

I kind of love how they put Chuck Norris in with those other people, too.

[Michael Batnik]

He does.

[Ben Carlson]

He.

[Michael Batnik]

He certainly belongs.

[Ben Carlson]

You think so?

[Michael Batnik]

Yeah, absolutely.

[Ben Carlson]

What iconic movie does Chuck Norris have? He was in the same era, but what iconic movie he has Walker, Texas Ranger.

[Michael Batnik]

My stepdad used to love that show. Hours and hours and hours. No, he was in. He did have one big movie, I believe camera was called.

[Ben Carlson]

Okay.

[Michael Batnik]

No, he's not on the level of plus.

[Ben Carlson]

Chuck Norris could eat soup with a fork.

[Michael Batnik]

Exactly. All right.

[Ben Carlson]

Stock market's up today. That's something.

[Michael Batnik]

We'll take it.

[Ben Carlson]

All right. I hate being so negative, but I feel like we're not.

[Michael Batnik]

You're being very undoed.

[Ben Carlson]

But I also feel like we're just telling it like it is. And when it's not negative anymore, we won't stay negative.

[Michael Batnik]

Here's the other thing. I've been thinking a lot about how I've been talking about this current environment. I'm never going to be the guy that's like, panic, right? I just don't want to. I just don't want to give those vibes. I'd rather be embarrassed and being like, all right, things got worse than I thought they would. Like, I'm not looking for, like a victory lap, calling the top or anything like that. I don't think it's helpful for anyone. There's enough of that out there. You're not going to get it from me.

[Ben Carlson]

I agree. And the weird thing is is that the people doing the scare tactics now have shifted. It's almost like the Zero Hedge crowd kind of is like slinking away because it's like, this is what they wanted, but not in this way. Right? Like, they wanted this stuff to all deflate, but not from one of their own. Like, I feel like Trump is kind of a Zero Hedge kind of guy in a way. So it's almost like they. They're like, wait a minute, we did this. This wasn't supposed to be us. This was supposed to be someone else who did this.

[Michael Batnik]

Weird times. Weird times.

[Ben Carlson]

2000S have been, if nothing else, very interesting and exciting to follow. Financial markets. We started a podcast at the right time, my friend. Never a dull moment.

[Michael Batnik]

All right.

[Ben Carlson]

So bearish. It's bullish. That's what I'll leave you with. Why? That's me looking at glasses half full.

[Michael Batnik]

Okay. Animal spirits@the compoundnews.com personal emails, personal responses. Thank you for tuning in. We'll see you next week.