The Most Confusing Rally of All Time (EP.410)

Summary

Animal Spirits Podcast – Episode 410: The Most Confusing Rally of All Time

Release Date: April 30, 2025

Hosts: Michael Batnick and Ben Carlson
Produced by: The Compound

---

1. Introduction and Chicago Office Announcement (00:53 - 02:20)

Michael Batnick and Ben Carlson kick off the episode by announcing the opening of Ritholtz Wealth Management's new Chicago headquarters at the Salt Shed. They express excitement about the new space and hint at upcoming events, including a "compound and friends" gathering with Kunal Kapoor, CEO of Morningstar, scheduled for June 3rd at 6 PM. The hosts emphasize their intent to engage more with the Chicago community, addressing listener requests for events catering to specific interests like Barrett's fans.

Notable Quote:

Michael Batnick (02:00): “And someone asked for the Barrett's fans. Someone said, I might not be able to make it to this one. And I said, well, now that we have this Chicago office, we're going to be doing more stuff there.”

---

2. The Enigmatic Stock Market Rally (02:38 - 05:39)

The conversation shifts to the current stock market rally, which both hosts find perplexing given the prevailing economic uncertainties such as tariffs and political instability. Ben Carlson points out that despite the NASDAQ reaching new highs, the S&P 500 remains nearly flat, down only 1.5% for the month. He expresses skepticism about the sustainability of this rally, questioning whether it aligns with earnings sentiment and valuation trends.

Notable Quote:

Ben Carlson (03:10): “The stock market is now back to where it was post Liberation Day. In fact, the NASDAQ is even higher. And is the S and P higher? Let's just say it's right around there. So it's close.”

Michael Batnick (04:14): “The market rarely makes sense.”

---

3. Historical Context: Comparing to COVID-19 Rally (04:30 - 05:39)

Michael Batnick draws parallels between the current market behavior and the market surge during the early stages of the COVID-19 pandemic. He notes that unlike the previous rally, this time the government isn't deploying massive fiscal measures ("the government is not coming to the rescue"), adding uncertainty to the market's ability to sustain its highs.

Notable Quote:

Michael Batnick (04:30): “And I think that's the comparison that people are trying to make here that, oh, the stock market's forward looking, everything's going to be okay.”

---

4. Technical Indicators and Market Psychology (07:32 - 10:32)

Ben introduces the concept of a "Zweig Breadth Thrust" (ZBT), a technical indicator signaling a market bottom when there's a rapid shift from panic selling to buying within a short timeframe. He cites Ryan Dietrich's research showing that historically, such patterns have led to significant market gains over the next 6 to 12 months, with a 100% success rate in his data set.

Notable Quote:

Ben Carlson (07:32): “Ryan Dietrich has a chart showing all of these instances. And the market was higher 100% of the time, both six and 12 months later.”

Michael raises the point that markets today move faster, potentially challenging the applicability of historical indicators.

Notable Quote:

Michael Batnick (10:32): “My devil's advocate here would be just that markets move faster than ever.”

---

5. Economic Indicators and Potential Recession (10:58 - 21:58)

The hosts delve into the likelihood of an impending recession, examining signals like layoffs, declining demand in sectors like airlines (e.g., UPS laying off 20,000 workers), and weakening consumer sentiment. They discuss the disconnect between Wall Street's resilience and Main Street's struggles, highlighting how decreasing import volumes and empty shelves may signal broader economic downturns.

Ben emphasizes that hedge funds are reducing their exposure, possibly due to risk limits rather than fundamental shifts, suggesting a cautious outlook.

Notable Quote:

Ben Carlson (15:24): “Because people want to figure out who's the dumb money here? Is there dumb money or is this just completely different time horizons?”

An email from a small business owner underscores the tangible impacts of tariffs and economic uncertainty, predicting a recession as businesses cut costs and lay off workers.

Notable Quote:

Ben Carlson (28:12): “Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.”

---

6. Tariffs and Their Impact on Businesses and Consumers (22:28 - 34:22)

Michael Batnick highlights a Wall Street Journal report where major retailers like Walmart, Target, and Home Depot warn about the negative effects of tariffs, including disrupted supply chains and higher prices. Amazon's initiative to transparently display tariff-induced costs alongside product prices is praised as a positive step to prevent companies from hidden price hikes.

Ben Carlson discusses the immediate impacts, such as empty shelves for products like baby strollers, toys, and infant furniture imported from China, potentially leading to consumer frustration and altered purchasing behaviors.

Notable Quote:

Michael Batnick (22:28): “And guess what else it's going to do... that's going to help with the political pressure.”

Ben Carlson (34:22): “Well, I don't see how an aggregation of these actions won't cause a recession.”

---

7. Investor Behavior: Retail vs. Hedge Funds (15:54 - 27:43)

Drawing from a Wall Street Journal article, Michael and Ben explore the shift in investor behavior where hedge funds have sold over a trillion dollars more shares than they've purchased this year, while individual investors continue to net purchase around $50 billion monthly. This divergence raises questions about the confidence of institutional investors versus retail participants.

Michael suggests that hedge funds may be constrained by risk limits rather than reacting to fundamental changes, indicating a nuanced landscape of investor strategies.

Notable Quote:

Michael Batnick (30:14): “Because rich people always have their jobs. But in general, so long as people have their jobs, they will keep spending money.”

---

8. Surveys and Wealth Inequality Insights (44:06 - 47:23)

The hosts discuss recent surveys highlighting perceptions of historical events and shifts in family size preferences. Notably, a Gallup survey reveals an unexpected rise in the ideal number of children for families, contrasting with the increasing median age of first-time homebuyers.

They also touch upon wealth inequality, citing data that the top 0.1% of households now own 50% of the stock market, while the bottom 50% own just 1%. The concentration of wealth among billionaires is underscored, with implications for societal and economic dynamics.

Notable Quote:

Ben Carlson (46:58): “The bottom 50% is 2,000 billionaires. That's crazy.”

---

9. The Rise of AI and Its Impact on Jobs (38:48 - 43:56)

Michael and Ben discuss the rapid integration of AI technologies, particularly ChatGPT, in everyday applications. They explore how AI is transforming industries by enhancing efficiency but also posing challenges to traditional roles, such as financial analysts. The conversation highlights both the transformative potential and the disruptive threats posed by AI advancements.

Notable Quote:

Ben Carlson (40:09): “It's amazing. And to think that it's going to be everywhere in everything in not a long period of time, it's remarkable.”

---

10. Personal Anecdotes and Lighthearted Segments (52:17 - 60:37)

The hosts share personal stories, including experiences at conferences, movie preferences, and the evolving dynamics of engaging with media and technology. They reflect on societal changes, such as younger generations' attitudes towards work-life balance and the integration of technology like AI in daily life.

Michael recounts attending a conference in Columbus where he delivered a speech on his new book, "Risk and Reward," highlighting the typical interactions with engaged audience members.

Notable Quote:

Michael Batnick (57:58): “Having kids totally helped shape me in that way of not concerning myself with that stuff as much anymore.”

---

11. Upcoming Events and Closing Remarks (60:37 - End)

Concluding the episode, Michael and Ben reiterate their upcoming events in Chicago, encouraging listeners to join them at the Morningstar conference on June 25th at Navy Pier. They also promote their Exhibit A newsletter, offering subscribers timely charts and analysis.

Notable Quote:

Ben Carlson (60:12): “What if the lows that we put in two weeks ago, good for a little while, maybe not, but I don't know.”

---

Conclusion

In this episode of Animal Spirits, Michael Batnick and Ben Carlson navigate the complexities of a baffling stock market rally amidst economic uncertainties. Through a blend of technical analysis, economic indicators, and personal insights, they provide listeners with a comprehensive understanding of current market dynamics and potential future scenarios. The discussion underscores the importance of nuanced perspectives in times of volatility and the interplay between market psychology and tangible economic factors.

For those interested in the intricate dance between Wall Street resilience and Main Street vulnerabilities, as well as the broader implications of tariffs and AI advancements, this episode offers valuable insights and thought-provoking discussions.

---

Links and Resources:

• Exhibit A Newsletter: exhibitA4advice.com – Topical charts and analysis delivered every Thursday morning.
• Upcoming Events:
  • Compound and Friends with Kunal Kapoor – June 3rd, 6 PM
  • Morningstar Conference – June 25th, Chicago Navy Pier
• Innovator ETFs: innovatoretfs.com – Learn about Buffer ETFs and more.

---

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

Transcript

[Michael Batnick]

Today's Animal Spirits is sponsored by Innovator ETFs. We have had Innovator ETF founder Bruce Bond on the show a number of times. On Talk youk Book, people are worried about tariffs and political uncertainty and market volatility. And Innovator ETF pioneered the Buffer ETF. I guess it was back in 2018. We talked to him right away, I think. And so these ETFs allow you to better define your upside and your downside.

[Ben Carlson]

One of the best calls of our career. We knew it right away, right when we saw it, that this was going to be a hit. A big category.

[Michael Batnick]

Yeah. So they have buffered levels from like 9% losses to all the way to 100% covering everything. BlackRock says $650 billion outcome oriented ETF space is their projection. Visit innovatoretfs.com to learn more.

[Ben Carlson]

Brought to you by CBOE the Exchange for the World Stage.

[Michael Batnick]

Welcome to Animal Spirits, a show about markets, life and invest. Join Michael Batnick and Ben Carlson as.

[Ben Carlson]

They talk about what they're reading, writing and watching. All opinions expressed by Michael and Ben.

[Michael Batnick]

Are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management.

[Ben Carlson]

This podcast is for informational purposes only.

[Michael Batnick]

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

[Ben Carlson]

Positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. We are coming to Chicago, Tuesday, June 3, 6:00. Ritholtz Wealth Management is opening up a new Chicago headquarters at the Salt Shed. Very cool. Very excited about that space. And Josh and I are doing a compound and friends with Kunal Kapoor, CEO of Morningstar. We're going to be at the chop shop again. That's Tuesday, June 3rd at 6pm who knows who you are linking show notes for tickets. I was gonna say Ben will be there. Ben, a little teaser. Ben might hop on. We might do something a little extra for the crowd.

[Michael Batnick]

And someone asked for the Barrett's fans. Someone said, I might not be able to make it to this one. And I said, well, now that we have this Chicago office, we're going to be doing more stuff there.

[Ben Carlson]

We're gonna be leaning in.

[Michael Batnick]

Yeah. So great spot.

[Ben Carlson]

One of the best cities in the world as far as I'm concerned.

[Michael Batnick]

And we're going into summer, which is the best time to go.

[Ben Carlson]

All right, Ben. The past couple of weeks we've been switching around the doc a little bit. Not like every show, but what I mean for the audience is Ben And I have a Google Doc. And we've got. I don't know how many categories we're up to at this point. Gotta be a baker's dozen plus, right?

[Michael Batnick]

Yes.

[Ben Carlson]

And usually it's static, but a couple of weeks back, we put tariffs up front. Today we're going to put the stock market back up front. Usually we don't do that, but these are crazy times. They call for crazy measures in the, in the Google Doc. All right, here we go. The stock market is now back to where it was post Liberation Day. In fact, the NASDAQ is even higher. And is the S and P higher? Let's just say it's right around there. So it's close.

[Michael Batnick]

Wait, so I looked at this. The, the S and P at the worst, closing was down 11.2% this month just on a monthly basis. And now it's down one and a half percent as of the close on Monday. We're recording this before the market opens Tuesday.

[Ben Carlson]

This bounce doesn't make sense to me. I mean, I kind of. So I've been relatively. I don't know if bullish is the right word, but like, calmed down. And I think, I think the sell off made sense. I think perhaps was it overdone in some areas in the short term, maybe in some areas that made more sense to me than this bounce does. I'm having a hard time figuring out why the balance was so strong. Like to say that the stock market is in the same place and that there's going to be no impact to earnings sentiment valuations on a go forward basis sounds insane to me. And I am. Usually I'm wrong. The market is the right type of guy. Right. I'm not the type of person who thinks that 100 men could beat up one gorilla. The market is right. I'm wrong if I disagree with the market. But in this case, I don't think I'm wrong. This doesn't make sense to me.

[Michael Batnick]

That's a lot of guys, though. A hundred people. Is it too easy to say that this is like Covid? Because I put the Jim Cramer thing in here and this was the thing going around back then. And the heading was the Dow's best week since 1938. And then on the bottom it says breaking. More than 16 million Americans have lost jobs in three weeks. And the stock market was taking off in April 2020. The stock market saw over the Valley. Is it just too easy to say, oh, it's just doing that again?

[Ben Carlson]

I hate that comparison? Are you making that comparison or are you saying?

[Michael Batnick]

No, I'm saying like that. I think that's the comparison that people are trying to make here that, oh, the stock market's forward looking, everything's going to be okay. I'm with you on this one where I was the one, I think, in Covid who said we're going to get new highs again this year because of all the bazooka that Powell was throwing at the market. But the difference this time is the government is not coming to the rescue. And I guess the hope of the stock market is just okay, he's going to cave. He's going to cave, he's going to backtrack, and that's the hope. The question is how much damage has already been done or will be done in the next, I don't know, three, six 12 months.

[Ben Carlson]

It's not a matter of caving. The tariffs aren't disappearing.

[Michael Batnick]

I get you've been. And you keep saying that if Main street were publicly traded it would be down like 30 to 40%. And I, I tend to agree with you there. And I guess you could say like the Russell 2000 being done more is kind of a, an example of that. But I agree. The interesting part of this is just that the stock market rarely makes sense.

[Ben Carlson]

Is that that's, I mean, that is a. No offense, that is ludicrous.

[Michael Batnick]

What's the other explanation?

[Ben Carlson]

And we're trying to, we're talking it through.

[Michael Batnick]

Just people keep, I think. Is it just people keep buying. We're going to talk about that in a little bit.

[Ben Carlson]

Here's a potential explanation. Perhaps if we were to be more granular. Take a scalpel out and really look at what's going on in the market. Because not everything's.

[Michael Batnick]

I'm sorry, I hate that word.

[Ben Carlson]

Granular?

[Michael Batnick]

Yes.

[Ben Carlson]

Granular, yes. Why?

[Michael Batnick]

Never liked it. I feel like it's a word finance people use to sound smart. No offense.

[Ben Carlson]

You can't accuse me of trying to sound smart.

[Michael Batnick]

Fair. All right.

[Ben Carlson]

But if we were.

[Michael Batnick]

If you use that word, though, you do like, you're kind of of like, ah, I sound smarter, don't I?

[Ben Carlson]

The, the word that I hate is grok. When people say I couldn't grock it or I, I'm still trying to gr. Just say, understand what, what are you, a robot?

[Michael Batnick]

But I feel like if you're a finance person and you say granular or robust is a good one. If you say those words, you just orthogonal.

[Ben Carlson]

I don't know what that means.

[Michael Batnick]

I wouldn't be able to use that one in a sentence.

[Ben Carlson]

Either there's people that use Delta in conversation. That's a. That's a punch in the nose, metaphorically.

[Michael Batnick]

All right, sorry. What do you want to get more granular about?

[Ben Carlson]

If you were to look at different areas of the market? Because it's. Well, I'm talking about the indexes and you would say, all right, well, this stock is down a lot more than the market. Look at like the casinos. That makes sense. Traffic to Vegas is falling off cliff. Look at the airlines destroyed. That makes sense. And then you look at other areas that are holding up. Netflix. Well, that makes sense. Crowdstrike. That makes sense. So maybe the market isn't so stupid. Maybe the areas that are going to be impacted by the market are getting. By the tariffs are getting walloped and the areas that are going to be less in the eye of the tariff storm are holding it better.

[Michael Batnick]

Okay, get into some stats here because I feel like if you just took all the tariff stuff away and you looked at just the way the market is reacting. Okay, this seems like the market is deciding to look past this for now.

[Ben Carlson]

Yes. Yes, it is. All right, so there was a zweig breadth thrust last week. That was a mouthful. A breadth, a ZBT breadth th thrust. And what that means, it's when the 10 day exponential moving average of New York Stock Exchange advances minus declines or advances and declines, I'm sorry, moves from below 0.4 to above 0.615 within 10 trading days. So in English, what that means is stocks go from really oversold, right, like washout, to really overboard in 10 days.

[Michael Batnick]

So a huge reversal.

[Ben Carlson]

And what you're measuring is panic selling to panic buying. And when panic selling to panic buying happens in a short period of time, historically, quantitatively, that has been the bottom. So Ryan Dietrich has a chart showing all of these instances. And the market was higher 100% of the time, both six and 12 months later. And it looks like, I don't know, what is there like close to 20 on this list. Ryan also says he has two more data points all saying the same thing. To say this one more time, what we've seen the past two weeks isn't what you see in bear market rallies. More than 70% advancers on the New York Stock Exchange six times over the past 10 days. Never lower six and 12 months later for the S&P 500. And then finally the S&P 500, also from Ryan, the S&P 500 is up at least 1.5% for three days in a row. This is not stuff you see in bear market rallies or short covering rallies, you see this before. Times of strong performance higher 10 out of 10 times and a year later up 21.6% on average. Now I love these data points because this is capturing psychology of the market, right? It's capturing what happens when the crowd goes from oh my God, get me out to oh my God, get me back in. And Ryan charts us out and 100% hit rate doesn't mean that this can't be the time where that it fails. I guess what I would say is like there will be an impact on earnings, surely? No. And you would think that sentiment valuations should get compressed. We shouldn't be trading at 21 times earnings the same way we were before all of this happened. There should be some sort of impairment now. I guess maybe a counterpoint is like, all right, I mean, this is ridiculous. I'm grasping at straws. I'm just throwing shit against the wall. While the s and P500 is down 5% year to date, that's still, I don't know, 900. I'm making this up. $800 billion in market cap wiped out. Whatever the number is, it's still like not nothing.

[Michael Batnick]

My devil's advocate here would be just that markets move faster than ever. When trying to put these, these moves in the context of past moves, that'd be my only pushback that, well, what if this is different? I guess the other thing would be maybe the stock market is saying, you know what? I'm sick of all the sentiment readings saying we're going to go into recession. It doesn't happen. Show me a recession this time. If we get a recession and earnings do slow considerably, then I'll fall to bed. But show me first.

[Ben Carlson]

Nah, it doesn't work like that.

[Michael Batnick]

Too cute.

[Ben Carlson]

It doesn't work like that.

[Michael Batnick]

But you're right. If we get a recession, the stock market is going to. It's gonna test the lows again. It has to.

[Ben Carlson]

You would think so. All right, let's talk about this. One of the things that we were saying during the heat of the sell off was easiest thing in the world to selling, right? You're scared, you want to make yourself feel better. You want the pain to stop. Easiest thing in the world is to sell. Hardest thing when it comes to investing is getting back in once you've panic sold. Now what do you do? I'm not trying to be cute. Like, seriously, imagine if you sold two weeks ago, what do you do now? Because we're having this conversation academically just for Fun, but for the person that's like, I can't believe, I can't believe that rally.

[Michael Batnick]

That means at this point, that's why it's so hard. Because you can't psychologically admit defeat. You can't buy back in.

[Ben Carlson]

If you sold two weeks ago, you getting back in today? No way.

[Michael Batnick]

Okay, so what if this is a massive dead cat bounce? That's the idea. So chart kid Matt did this one for us and he looked at it in a dot com bubble, which is not the perfect description, but I think the action is worth considering because I think you could make the case that this year could just be big rallies, big falls, big rallies, big falls, and we go nowhere kind of deal.

[Ben Carlson]

I would take that.

[Michael Batnick]

So he looked at the market rallies of at least 5% during the dot com bubbling. Shaded them here and there's what, seven or eight of them?

[Ben Carlson]

There's 10. It says that right in the header.

[Michael Batnick]

Can't fool me.

[Ben Carlson]

So this is, this comes from exhibit A. This is our chart of the week. So if you are a subscriber to exhibit A, this will hit your inbox. Is it Thursday, I think? Yeah, Thursday. Every Thursday morning. It's a topical, timely chart that you could use to show to clients. Exhibit A4advice.com, seven day free trial. But the point is, wait.

[Michael Batnick]

And we heard some feedback from advisors who were using these charts saying, I love the chart. I also want a description. So we're going to be providing some commentary as well.

[Ben Carlson]

Yeah. The point is with these bear market rallies and now that we're predicting them, it's that in heightened uncertainty, you can't let yourself get too high or too low because this is possible. And imagine if you got all balled up every time you thought you were out of the woods and then, holy shit, I can't believe I fell for it again. That like whipsaw seesaw back and forth is dangerous psychologically.

[Michael Batnick]

I looked at this, I looked at this last week and it was 15 trading days that we'd been through, through April 24, and in four days we were down 12%. Then we had that big 10% update. Then over the next seven trading days, the market fell 6%. Then over the next three days it was up 6%. It felt like four months and 15 trading days. Those are the kind of. And that's why this is now. The calm before whatever comes next. I guess like the market is kind of chilling out and taking a breath and then.

[Ben Carlson]

Well, also the VIX is not. The Vix is below 25. So do you think that the next bout of volatility is going to also come from announcements out of the White House or is it to come from economic data?

[Michael Batnick]

I think once we first hear the. I think it could be a bad earnings report. I guess that's going to be a while on it.

[Ben Carlson]

Well, here's, here's an example. So UPS just reported, I think they're laying off 20,000 workers, citing declining demand. The stock is flat pre market, but the stock has been obliterated. I mean, absolutely destroyed and no bounce whatsoever.

[Michael Batnick]

So we could go from a period of, remember the inflation report was the most important economic data point. I think we're going to go back to labor markets where the unemployment rate every month is going to be really important to pay attention to. And if that sees a huge tick up, I think you could see a massive sell off. How's that? Yeah, I think that could be. So the Wall Street Journal has done a really good job of talking about investor behavior. And I love it because they're pairing anecdotes, our favorite with the. Interviewing the people on the street or whatever, with actual data. So they said so because last week we asked, well, who's selling? If retail's buying, who's selling? So far this year, hedge funds have sold over a trillion dollars more shares than they have purchased, even as individuals have made $50 billion a month in net stock purchases. Little interruption, according to JP Morgan. So hedge funds are getting out. Now is this the idea where. Because people want to figure out who's the dumb money here? Is there dumb money or is this just completely different time horizons?

[Ben Carlson]

Yeah, that's it. I think a lot of the degrossing from the hedge funds was just like these companies have, have risk limits. And so they're not making like fundamental buy, sell.

[Michael Batnick]

They're not like it's a trend following stuff. Right?

[Ben Carlson]

Yeah. This is just like, okay, our risk limits triggered. Boom. Oh, Besson is speaking. He reminds me of, he reminds me of Will Ferrell in snl. What character was he playing where he had like, kind of like the smushed face? He was like the scientist.

[Michael Batnick]

The Harry Carey one. All right, so another good one though. They talk about how the YOLO traders are still here and they interviewed a few people.

[Ben Carlson]

Yes, yes, that one.

[Michael Batnick]

Yeah, Harry Carey. Okay, Harry Carey. Not a scientist, but he played a scientist. Okay, so they interviewed some of these people who are just saying, listen, I could see the building burning, but I'm running in. And so they said they interviewed this one guy who Says it's a screaming buying opportunity. And this is they're talking about when the stock market really got crushed here. He keeps 90% of his seven figure portfolio in the cryptocurrency and related stocks such as Bitcoin Buyer strategy. I'm running straight into it, he says. 37 year old marketing director said he wouldn't mind if that the price of Bitcoin sank 6% in a day. He says that's what I'm after. Making decades of returns in weeks from month. I truly think volatility is where fortunes are made.

[Ben Carlson]

Not untrue. Now this easier said than done, but not untrue.

[Michael Batnick]

Yeah, so this, this one made me want to crawl out of my skin. This guy Patrick Weiland, who is a content creator and day trader said the kids these days say no risk, no rari. And then they say that rari is slang for Ferrari.

[Ben Carlson]

I don't believe the kids are saying that.

[Michael Batnick]

This is one of those things that the things you say on the Internet don't translate into real life. Remember on Curb when Larry David said no one says lol in real life. Or actually, you know, like some things don't translate. And again, if I said no risk, no rari, I think I'd have to crawl out of my own skin Anyway.

[Ben Carlson]

So they're actually there are no risk, no rari posters. Should I buy one for you?

[Michael Batnick]

It sounds awesome. So he says you have to be aggressive when you have such big swings in the markets. Hard to be risk averse. Now there's two camps of looking at these kind of statements. One camp goes, just wait. Oh, just wait. These people, when their comeuppance comes, they're going to get slaughtered. But what would you rather have them do? Rush for the exits? I think that for years it's been beaten into people's heads when there's volatility, it's a good thing to buy. When stock prices are down, that's when you make your money. So you could quibble with the vehicles they're using because these people are using levered ETFs and they're trading very speculative stocks.

[Ben Carlson]

But who would quibble about what kids are doing with their money? Isn't this what kids are supposed to do with their money? Aren't they supposed to take risk and learn?

[Michael Batnick]

Well, these are, these aren't kids. These are 37 year olds. And you know, these are.

[Ben Carlson]

Sounds like kids to me.

[Michael Batnick]

So. But I think on the, on, on the net this is a positive development. People have learned. Now you could say, listen Just wait until there's a lost decade. These people are going to be sorry. But who has a good experience during a lost decade? Who likes that period, right? Who is that good for?

[Ben Carlson]

Oh, what was that saying that one of the. An old person said either to us at her inbox or on the Internet. Damn it.

[Michael Batnick]

This is a weekly occurrence now. You trying to pull something from that middle aged brain of yours?

[Ben Carlson]

Oh, man, it is just not happening for me, Ben. Oh. Oh, Buttercup. Buckle up, buttercup.

[Michael Batnick]

Okay. That's right.

[Ben Carlson]

Where did that come from?

[Michael Batnick]

I don't know. Isn't it just a saying?

[Ben Carlson]

Okay, I feel like there was somebody that actually said that, but I.

[Michael Batnick]

The. The thing of, like, yeah, buckle up, buttercup.

[Ben Carlson]

Oh, yeah. Asshole. Yeah, what are you gonna do in it?

[Michael Batnick]

Old people tsk, tsking. You, like, just. You just wait, like, yeah, what are.

[Ben Carlson]

You gonna do in the last decade?

[Michael Batnick]

Yeah, so that's. I would rather have this than people who are cowering and scared. I wrote a blog post about this saying. If you look at us, UBS did a study of millennials in, like, 2014, and their risk aversion was so high, they wanted nothing to do with the stock market.

[Ben Carlson]

Duncan's getting out of the game. He just said, don't look a gift horse in the mouth.

[Michael Batnick]

You've always been great with your sayings. But millennials in the 2010s following the Great Recession because they lost money or their parents lost money, they wanted nothing to do with risk, and now it's all anyone wants. And so which one would I rather have? People who were in the fetal position and wanting nothing to do with the stock market, or people who are rushing into the, you know, building while it's burning. I'd rather have people who are taking advantage of volatility, even if they get slap on the wrist every once in a while.

[Ben Carlson]

This idea that, like, people need to do this or investors need to. It's, hello. Which investors? There are like 1400 different pockets of the. Of personality types and time horizons. And if you are looking for confirming evidence or evidence that you want to fade or whatever, like, you could find it anywhere.

[Michael Batnick]

Yeah, I agree. All right, here's one from the compound. Duncan, put this out. I asked for this one. Almost 4,000 votes. Is this a dead cat bounce? 58% say yes, 42% say no.

[Ben Carlson]

What is. Is there a definition of a dead cat bounce? Like a quantitative definition?

[Michael Batnick]

I think it's one of those, you know it when you see it kind of deals. I don't think there is A.

[Ben Carlson]

Let me ask you this. What if that. What if we just saw the lows for six months and we retest them in the fall? Then this is not a dead cat bounce, right? Because to me, a dead cat bounce rolls over pretty quickly.

[Michael Batnick]

I would agree with that. It's got to be within.

[Ben Carlson]

All right, well then. Well, then in that case, yeah. I don't know. I would say. I would say the lows that we put in two weeks ago, good for a little while, maybe not, but I don't know.

[Michael Batnick]

It's just weird how quickly it happens now. I think that's what messes with people.

[Ben Carlson]

I just think that was. That was a pretty quick panic.

[Michael Batnick]

That was a gnarly bear market in a really short amount of time.

[Ben Carlson]

Oh, just busting balls. But. But seriously, that was only a 19ish percent decline. Is that not a bear market? Give me a break. I mean, sir, the textbooks will say no, honestly, because they have to draw the line somewhere.

[Michael Batnick]

I'll give it to him.

[Ben Carlson]

All right, this is like. This is like Bill Simmons always, like, getting annoyed about how Karl Malone is always in the record books, and he'll draw the line at, like, a random stat, like a PR of like, 43 to, like, cut Karl Malone off from all the things. How about this? What if. What if. What if we, the people change the definition of a bear market to 19%? We get three more bear markets in there.

[Michael Batnick]

No, it'd be like five. I looked at this since it's happening five times.

[Ben Carlson]

All right, this is citizen's arrest. Bear markets are down 19%.

[Michael Batnick]

Stamped it. Boom, bang the gavel. All right, let's move into tariffs. I think this is good news. This is from Jake Sherman. He says Amazon will start displaying how much of an item's cost is derived from tariffs right next to the product's total listed price. I think this is a good thing because my worry here is that companies raise prices from tariffs. And some of them just when the tariffs, if and when they go off, just kind of keep them on, keep them higher, and take the margin. So I think restaurants should be doing tariff surcharges. Car dealerships should be doing tariff surcharges.

[Ben Carlson]

Oh, I like it. Wait, because. Because they could take away the surcharge.

[Michael Batnick]

Yes, because if we don't make it a surcharge. So that's. I think this is good news. I hope all companies do this. And guess what else it's going to do.

[Ben Carlson]

Wait, wait. Was that a Ben Carlson take, or did you lift that from somebody else?

[Michael Batnick]

Hey, man, this is organic. I'm getting granular.

[Ben Carlson]

That's a good take.

[Michael Batnick]

So I saw this story and I thought, yes, because I'm worried about companies that are going to keep prices higher. This happened, number one, commodity prices shot up during the Ukraine, Russia, war. Yeah.

[Ben Carlson]

The home builders, they said, we're taking it to margin.

[Michael Batnick]

Yeah. So I hope, I hope. And this will also keep the political pressure on tariffs to be like, listen, I can see this on my receipt. There's going to be so many viral receipts of tariff surcharges in the months ahead. I think that's going to help with the political pressure.

[Ben Carlson]

I love it. Ben. That's a, that's a hall of fame take. Right?

[Michael Batnick]

So a lot of people are saying, well, why did Trump have another shift where he kind of sort of backpedaled? He's backpedals. It's kind of like, I don't know, two steps forward and one step back, or maybe vice versa. But I think this did it. So the CEOs of the nation. This is from Axios. Of the three of the nation's biggest retailers, Walmart, Target, and Home Depot privately warned him that his tariff policy could disrupt supply chains, raise prices and lead to empty shelves. I think they kind of scared him. I think they showed him some of the China data that, like, these ships are starting to be empty. And I think they said, listen, man, this is not going to be good. Consumers are going to be pissed. And it might still already happen, but. So this is from the Wall Street Journal. The port of Los Angeles, one of America's biggest gateways for imports from China, executive director told port officials Thursday to expect a 35% drop in import volumes in two weeks, as essentially all shipments out of China for major retailers and manufacturers have ceased. Bookings out of China fell 60% in the past week. So here's my question. It sounds like we're going to get some empty shelves. What is the economic impact of that? Is it more that people are angry because people could change their habits and say, well, that one's not there, so I'm going to buy this one. Or I can't get this now, so I'll wait and I'll buy something else. Like, is the anger going to be bigger than the actual economic impact of this?

[Ben Carlson]

Yeah, I think so. Because when you say empty shelves, it's not like the whole store is gonna be empty. Like, what's gonna. What's not. What are people not gonna be able to buy?

[Michael Batnick]

Right. There's gonna be some things. Well, here's one we talked about this a little bit. We had Derek Thompson on the show and he talked about this. But the Wall Street Journal dug into it today. Around 95% of imported strollers come from China, along with 3/4 of toys and infant furniture such as cribs. So they'll go through here and show like almost everything you need to buy for your baby if you have a baby coming, toys, cribs, strollers. That comes from China. There are going to be some really pissed off parents in the months ahead if they can't get this stuff or it's really, really expensive.

[Ben Carlson]

Yeah.

[Michael Batnick]

Would you have known what percentage of this thing's come from China had we not gone through this?

[Ben Carlson]

No. So, yeah, baby stroller is obviously a critical piece of gear for parents of young children.

[Michael Batnick]

Is there a single baby stroller that is easy to fold? Like, why don't they say, why don't they have a big, make it red or like the button or the thing you pull is never widely known or easy. I, I don't know how many strollers we have.

[Ben Carlson]

We had, I had a good one, I had a good word where you just picked it right up from the seat, you went and the whole thing just collapsed.

[Michael Batnick]

I, I feel like they were called, they were never easy to fold up and then undo.

[Ben Carlson]

All right. Anyway, not to, so not to minimize the impact of, of strollers and how important they are, but for the stock market point of view.

[Michael Batnick]

So what that's, that's my saying to, to your, to your point earlier about Main street being worse off than Wall Street. We're going to get another one of those things where again, I think we could see a scenario where the unemployment rate is rising, the stock market is going up.

[Ben Carlson]

Why does Google, why does Google care about strollers now? Extreme example, but Google just reported last week and revenue up 10%. Search up, everything up double digits, $90 billion in revenue.

[Michael Batnick]

And if those companies do have tariffs on whatever their chips and such semiconductors, they have big margins to eat a little bit of it right now.

[Ben Carlson]

I know the knock on effects like tariffs are bad, it's a tax and so there'll be less money in the system. Right. But I'm just trying to understand why some things might be looking past the tariffs, why some companies and why some investors.

[Michael Batnick]

Oh, I agree. This is going to be worse for Main street than Wall Street, I think is the way I'm thinking about this.

[Ben Carlson]

Yeah. So I definitely, like, I don't think anybody's saying like, all right, we're good, we Made it. We haven't even. So the difference between now and I haven't. I haven't. You could fact check me on this, but all of the other periods, all of the other breadth thrusts, I'm guessing came after the economic damage.

[Michael Batnick]

Right. We haven't even seen it yet.

[Ben Carlson]

So that's why this is just. That's why I take that, that data with a grain of salt, even though I'm a fan of it, is because we don't know how bad this is going to get. Now. Maybe, maybe the market is right. I mean, I guess that should probably be the default position, is that we're wrong and the market is right. And so the market is looking past it and we'll find out if it's right or wrong.

[Michael Batnick]

Think about how bad sentiment is now, and we haven't even felt the impact. Like, how bad does sentiment get? If people do start getting laid off in big numbers and the economy really does start slowing and prices are higher, how bad does sentiment go then?

[Ben Carlson]

Yeah, now I will say not investment advice. If you were panicking two weeks ago and you were really, really close to pulling the trigger and you were losing sleep over your portfolio, what a gift this is to be able to downshift.

[Michael Batnick]

Yeah. If you want to take some risk off the table.

[Ben Carlson]

Yeah.

[Michael Batnick]

And again, we're not big fans of extremes, but hey, I'm 80, 20. I'm going to go to 60, 40.

[Ben Carlson]

Great.

[Michael Batnick]

I don't see that as a huge problem.

[Ben Carlson]

No, do it.

[Michael Batnick]

All right. What's the email here?

[Ben Carlson]

Hey, guys, I wanted to give you a dispatch from a small business. I run manufacturing for a small business that exports products to China and other countries. China was about 20% of last year's sales. After the election, we started talking about tariffs immediately. No one imagined that tariffs would be anything near what Trump announced on his on Liberation Day. We were already slowing down due to uncertainty, but on April 3, it was like a bomb went off. We have about a quarter of our hourly workforce on layoff and are looking at further cuts. To me, this is like seeing a recession happen in real time. We, we've laid people off, stopped ordering ingredients and packaging. We have import products sitting in China that we may have to destroy. Cut capital spend, save cash, etc. This happening small businesses everywhere. And I don't see how an aggregation of these actions won't cause a recession.

[Michael Batnick]

Yeah, we've gotten a handful of emails like this from different businesses being like, we have no idea what to do. We're paralyzed. And so, yeah, what do you do when you're in that situation, you try to cut costs and survive and lay people off. That's why it's possible we could see a really bad employment report in the coming months. And that's what wakes people up. All right, from Colin Roche here. I think the idea that a lot of people have and why some people still back this idea is, listen, we need to fix the system. I think there's a big difference between fixing the system versus fixing some stuff on the edges that's not perfect in this country. So Cullen Roche says our broken monetary system leads to number one worldwide in wealth, number one in total GDP, number one in GDP growth in the G7, number one in global corporate profits, and number one in GDP per capita in the G20. Obviously some people don't care about relative rankings. I personally do. And I think, listen, like, there's certainly areas we can improve on as a country, but saying we need to blow up the whole system is just, it's an economically illiterate argument that has no basis in reality.

[Ben Carlson]

It's like going to the finals and then trading your best player. Sorry, we keep using an analogy, but.

[Michael Batnick]

Who would ever do that? Yeah.

[Ben Carlson]

All right, so back to the, the shipping stuff and the shelves and all that. Tracy Alloway had a blog post showing that this is the weakest quarter since 2015 and the 10th weakest on record overall for shipping quarters. And six of the worst happened during the financial crisis.

[Michael Batnick]

Just the amount of goods being shipped.

[Ben Carlson]

Yeah.

[Michael Batnick]

Okay.

[Ben Carlson]

Wow.

[Michael Batnick]

It's not going to get better. Right? Here's the thing people keep waiting for like the hard versus soft data. And the Federal Reserve had a new research report on this. So they said we show what consumers have been saying differs from what they have been doing during the post pandemic period. Consumers say they feel worse, but through the end of 2024 they're buying more, not just spending more than they did in 2019. And they say this disconnect is. Is hard to figure out. Kind of like the, the actual economic data. So that's the question people keep waiting for. Is, is is it going to eventually catch up? So this is Neil Dud. It's probable that much of the recent upside surprises and hard data reflect pulling forward activity in anticipation of the tariffs. Consumers pulled forward auto sales and consumption on household durables as an example. Firms likely pulled forward some orders too. That likely gives a veneer of strength and recent high frequency data flow. So he's saying you can't use the data we're seeing now as yeah.

[Ben Carlson]

Not to fade nail data. And I only listen to a few calls. So I don't want to speak for like every company. But I heard only very marginally was there a pull forward consumption. Most of the companies said they weren't seeing it. Maybe a little bit on the margin in auto. Sure.

[Michael Batnick]

Okay. So this, this is from anecdotes from Torsten Slack that he pulled from calls. And this is Southwest Airlines CEO said, I don't care if you called a recession or not. In this industry. That's a recession. Chipotle.

[Ben Carlson]

Sorry. Yeah. Airlines are in a recession.

[Michael Batnick]

Fact already. Are you sure?

[Ben Carlson]

Yes, I am sure. All right, well just look because we see the hard data, we see the number of flights coming into the United States. Look at the stock prices. Airlines are in a recession.

[Michael Batnick]

Okay. All right. Torsten Slack lays out the voluntary trade reset recession.

[Ben Carlson]

Wait, do you want to read any other anecdotes or. That's it.

[Michael Batnick]

Chipotle CEO said saving money because of concerns around the economy was the overwhelming reason consumers reducing the frequency of restaurant visits.

[Ben Carlson]

Yeah, I would say a $15 burrito bowl is probably the first thing to go.

[Michael Batnick]

I know you were going to say that.

[Ben Carlson]

Seriously.

[Michael Batnick]

Yeah. Which is funny that that usually in a recession you see prices stabilize or fall. But this, this is the, this is the nightmare scenario for people is what if we're going to have to raise prices as the consumer's pulling back.

[Ben Carlson]

Yeah, right.

[Michael Batnick]

Obviously that's the Pepsi CEO said same.

[Ben Carlson]

Store sales at Chipotle were down, only nominally, like very, very little amount down.

[Michael Batnick]

Yeah, I think a lot of this is CEOs getting ahead of as they should. They're setting expectations.

[Ben Carlson]

As they should.

[Michael Batnick]

So Torsten Slack lays out, listen, the container ship stuff is going to be messed up for 40 days. Then the trucking industry is going to be messed up. Then we're going to get empty shelves. And he says by the summer of 2025, we could have a recession. This is very, very quick. This is the thing that when you look at the stock market, you go, is it really that obvious? I mean, that'd be a very, very fast recession.

[Ben Carlson]

Yeah, well, it could be. It could be. It could be over before it started.

[Michael Batnick]

Yeah.

[Ben Carlson]

So what if there are empty shelves or pockets of empty shelves? I don't want to keep saying there's empty shelves. What if there are things that are in short supply and that by the time we start to see the short supply, I don't know if it's five weeks from now or whatever, but by the time that happens we already have deals. It's like, don't worry, they're coming. And in that case, the market should probably look past it, past a temporary hit to earnings.

[Michael Batnick]

Possibly. Yeah, like maybe that's the thing. Like, does an economic slowdown force his hand to go, all right, you're done. We can't keep doing this. You've caused an economic slowdown. Get out of here. You know, we're done with this.

[Ben Carlson]

Here's, here's Capital One earnings call. And Capital One serves the everyday consumer. They said the US Consumer remains a source of strength in the economy. That's true for almost any metric that we look at. The unemployment rate is low and stable. Job creation remains healthy. Real wages are growing. Consumer debt service burdens remain stable near pre pandemic levels. In our card portfolio, we're seeing improving delinquency rates and lower delinquency entries and payment rates are improving on a year over year basis. Moving forward, on the whole, I'd say the US consumer is in good shape now, now, now. And that could obviously change. But coming into this, not bad. All right, there was a, there was an interesting article in the Journal talking about retail sales and what's going on there. So spending by the top 5% of customers grew about 3%. This is for last month. Spend about the top 5% of customers grew About 3%, suggesting that big declines in their stock portfolios haven't made them skittish about making purchases. Thoughts? Too soon to tell.

[Michael Batnick]

I think economic volatility is going to matter more than market volatility. How's that?

[Ben Carlson]

This is a circular argument because it's all part and parcel of the same story. But so long as people have their jobs. Well, I don't know if that's true because rich people always have their jobs. But in general, so long as people have their jobs, they will keep spending money, very obviously.

[Michael Batnick]

So here's what I've been thinking about. So someone, this meme was flying around Twitter and it was this. And I hate dunking on young people because again, if I was young, and I was so dumb when I was young too, if I had social media at my fingertips, I would have done so much. I would have said and done so much dumb stuff. So I'm just glad it never was part of my life as a young person. But this. She's crying, she's got a tear come down her eye. And she says when I tell my mom a 9 to 5, the rest of my life would make me depressed. And she tells me to get used to it. That's how life is. And all these young people are saying I can't stand a 9 to 5. And people are dunking on it saying oh my gosh, these people don't know how lucky they are. And also like we need a recession. And my whole thing is we are very, very out of practice for what an actual recession is. Because I keep using the stat that we've had two months of recession in the past 15 years and that two months we had so much government fiscal spending that people were made whole immediately. The unemployment insurance went up. Right. People got checks. That was not an actual recession. Even though the unemployment rate went up. Right. We haven't experienced an actual recession in a decade and a half. So even if unemployment rate goes from 4% to 6 or 7% and it's a mild recession, but companies are pulling back.

[Ben Carlson]

I wonder what the dot com recession felt like because the GFC was such an extreme.

[Michael Batnick]

It was relatively mild.

[Ben Carlson]

The GFC was such an extreme.

[Michael Batnick]

Yes.

[Ben Carlson]

I was working at an upscale ish Italian restaurant and there was people there on the weekend, but during the week it was dead.

[Michael Batnick]

Oh yeah, there was a lot of stuff like that where I just remember the whole constant drumbeat of you are lucky to even have a job. Why would you try to get a raise? Why would you try to get a job somewhere else in this economy? Like that drum beat. You do not hear that anymore. And that's the thing I think people are out of practice on. And this is everyone, people who've experienced it or not. Like what, what does a recession feel like for your business? Slowing down the prospects like the growth in your business and the like. There are just knock on effects that I feel like people are just so out of practice on.

[Ben Carlson]

And how, yeah, how about the worry about like forget about getting a raise, keeping your job, paying your bills.

[Michael Batnick]

Yes.

[Ben Carlson]

And the longer that goes on, where it starts to impact like you know, real life. Forget about the stock market. Yeah. We haven't had that in a while.

[Michael Batnick]

Just. Yes, just that's what I'm thinking is everyone is out of practice for this.

[Ben Carlson]

And what by the way, this, this is not you calling for a recession that people need to slap on the wrist.

[Michael Batnick]

No, I hate people that say that I do not want a recession because I know it's bad.

[Ben Carlson]

Yeah. Why do we need one? We need a recession. Yeah. Why? I'm just saying so that, so that people can go through the misery that you went through.

[Michael Batnick]

Yes. I'm just saying if it happens, I think it's going to be fascinating to watch what the reaction is from people that haven't experienced one in a while. Like do we get an overreaction where the sentiment readings and people's feelings about the economy are way worse than the actual recession itself? You're going to look at it and go, oh, GDP fell 2%. That was a recession and people are freaking out. That's the scenario I could see happening.

[Ben Carlson]

Yeah.

[Michael Batnick]

All right, this is interesting from the Atlantic. There's this story from the Atlantic saying that the 2000 and tens, it was cheap Ubers and doordash that were subsidized by VC companies and now it's AI. So they say like through the end of May, OpenAI offers college students two months of free access to ChatGPT plus, which is $20 a month. I pay for that one now. Do you chatgpt?

[Ben Carlson]

I don't plus okay, wait, why, why do you need to pay for Offers.

[Michael Batnick]

You more bandwidth and the ability to like do more queries and I don't know. They talk me into it.

[Ben Carlson]

Okay.

[Michael Batnick]

They also said all these other ones, Google and Perplexity and they're all offering college students freer discounted versions of chatbots and they say some young people are already hooked. In their OpenAI's recent report on college students ChatGPT adoption, most popular category of non education or career related usage was relationship advice. Imagine going to an AI bot and saying, help me with my relationship. In conversations with several young users, I heard about people who are using AI for color matching cosmetics, generating customized grocery lists based on budget and dietary preferences, creating personalized audio meditations and half marathon training routines, and seeking advice on their plant care.

[Ben Carlson]

Amazing.

[Michael Batnick]

It's. It's pretty cool, isn't it? Like if you think about, I've been.

[Ben Carlson]

I've been using it more and more in the quarter app and it really is like nothing short of magic.

[Michael Batnick]

It is.

[Ben Carlson]

And to think that it's going to be everywhere in everything in not a long period of time, it's. It's remarkable.

[Michael Batnick]

It's going to be one of these pieces of technology where I feel like it's kind of like Google just kind of slid in there and people are sort of using it, not really realizing how amazing this is. I think it's going to be like that where people just kind of take for granted like how cool this really is. I've been using it way more too. Anytime I have a question now I go to ChatGPT instead of instead of Google and the answer is almost always are perfect. The Very first time.

[Ben Carlson]

It's amazing. I mean, you know who's in trouble? The analyst community. Maybe not today, but like the youngish crew crop of analysts. There's just going to be far, far, far fewer jobs in the very near term. There's be way, way less hiring. You could do so much more analyst jobs.

[Michael Batnick]

Are you talking about financial analysts maybe?

[Ben Carlson]

No, 100%. All right, 100%. This thing Josh and I are talking tonight on, what are your thoughts about an experiment that Adam Parker went through? And it's, it's game over.

[Michael Batnick]

I mean, obviously it's going to make people more efficient.

[Ben Carlson]

You're going to be able to do so much more with less people.

[Michael Batnick]

Yeah. But I also feel like at a certain point there's the baseline where everyone has the same stuff. Like your, your AI chatbot for your company is not going to like set you apart when everything and everyone has that right. That's just going to bring up forever.

[Ben Carlson]

Yeah. I'm not saying that.

[Michael Batnick]

I still think it's going to create other jobs too that we're not even thinking of right now.

[Ben Carlson]

Yes. I say I agree. All right, this is a chart, not a great one from Lance Lambert. It's the median age of first time US homebuyers. And it was range bound as you would imagine, from the early 90s all the way through the pandemic. And as housing became completely unaffordable, the median age has shot up from 32, 33 pre pandemic up to 38 today. Not great.

[Michael Batnick]

At what point does this become like the political issue? Because obviously inflation was the political issue in the last election, which is kind of funny because then we got a guy who did tariffs because I think the problem is 65. The homeownership rate in the country is 65%. Most people are happy with the situation as it is.

[Ben Carlson]

Well, I think that the average 38 year old doesn't have a lot of influence in this country.

[Michael Batnick]

That's what I'm saying. At what point does this become such a big problem that it finally becomes a federal government issue that like we need to make it easier to build more homes. I just feel like it's surprising that this isn't a huge issue yet. Yeah, I guess to your point, the young people just don't have a lot of power at the moment.

[Ben Carlson]

All right, Ben, last week or maybe two weeks ago, we were talking about what advisors would do with illiquid assets.

[Michael Batnick]

Right.

[Ben Carlson]

And on the Blackstone call, Jonathan Gray said, while it's still early in the second Quarter overall access across private wealth, we have not seen a pullback in sales. We raised $11 billion in the channel in the first quarter, up nearly 40% year over year, 40 to the highest level in nearly three years. BCRED again on the way. That's private credit with almost $4 billion raised on the back of outstanding performance.

[Michael Batnick]

Here's one of the things about private assets, even if they do run into a little hiccup and performance is bad or something, it takes so long for the actual end clients to see it because the marks take so long to happen. It's not the kind of thing where all of a sudden one day you go, oh my gosh, look at this. It's a very slow, slow burn.

[Ben Carlson]

Right.

[Michael Batnick]

So I, maybe I, yeah, maybe I'm saying I agree with you.

[Ben Carlson]

It's not slowing down, at least according to Blackstone.

[Michael Batnick]

And if anything else, that the idea of illiquid assets that don't mark themselves during volatile markets for some people is going to be seen as a positive.

[Ben Carlson]

Yeah.

[Michael Batnick]

Okay, Surveys of the week. I think I got two here. This is from YouGov. Americans are likely to have favorably use of castles and chivalry, but not the Crusades or Inquisition. And they ask people, how do you feel about the Black Plague? And 9% of people say very or somewhat favorable. And this is just gets to our point of the surveys. How many people are actually like answering these correctly? How many people actually understand what they're.

[Ben Carlson]

I think that's just like, click, give me the $15.

[Michael Batnick]

Yes. All right, here's another one from John burns survey of U.S. adults. What is the ideal number of children for a family to have? And two children peaked out in 2011 has been falling. Three children or more has been rising now. So now that zero, one or two kids is almost the same as three or more kids.

[Ben Carlson]

How do you explain that? I mean, given how old the median home buyer is, given how expensive everything is, how do you explain this? This is a myth buster, not a myth buster. What is this? What do we call this, Ben? This is a plot twister.

[Michael Batnick]

So this is. This says it's a Gallup survey of adult 18 +. So I would need to break down by age. So I wonder if older adults are saying, I want more kids, I want more grandkids, or I don't know what. But this shocks me because how many people do you know that actually have three or more kids?

[Ben Carlson]

You beside.

[Michael Batnick]

Yeah, me.

[Ben Carlson]

Right. No, I know.

[Michael Batnick]

And guess what? We had twins. We didn't plan it.

[Ben Carlson]

Yeah, most have to Kobe today was on the iPad. And he said, hey, Siri. And he calls her Siri. He says, hey, Siri, tell mommy I love her. So it said, oh, text mommy I love her. So it opened up the text to mommy and it wrote, I love her. And then it said, no, no, Colby, you have to tell it. You have to say, I love you. Tell Siri. Tell mommy I love you. So he deleted the her, wrote you with the heart. Adorable.

[Michael Batnick]

I'm on the road right now, and for the first time, my daughter from her iPad is texting me. So it's like, hey, good morning. And she's doing the emojis. And it's just so weird to see your kids grow up to the point where they're now texting and she's texting her little friends and. Yeah, it's so weird. All right, this is from the Wall Street Journal. They say the 19 richest households saw 1 trillion dollar wealth increase in 2024, a rise that exceeds the size of Switzerland's economy. They're showing that this is the top 00,0001. Right. These huge is now almost 2% of the total, which is kind of insane. And they show the number of billionaires has jumped from almost a little less than 1400 in 2021 to nearly 2000 now. Share of household wealth by the 0.1% has gone from 8 and a half percent in 1990 to 13.8% today. Here's a stat that I figured out this week that is very. Probably should have gone more viral than it did, because I think it's a Great. The top 1% owns 50% of the stock market. The bottom 50% owns 1% of the stock market.

[Ben Carlson]

Wow.

[Michael Batnick]

That's kind of crazy. Right? So here's the thing. A lot of people now, you have.

[Ben Carlson]

To point out the pie is expanding. Yes, it's not great, but the pie is getting bigger.

[Michael Batnick]

Yeah.

[Ben Carlson]

The bottom 50% is 2,000 billionaires. That's crazy. In the U.S. so some people look.

[Michael Batnick]

At these numbers and go, just wait until the torches and pitchforks come out. Right? It's going to happen. There's going to be a revolution. I say there's never going to be a wealth inequality revolution in this country because we just love rich people so much.

[Ben Carlson]

Does white lotus count as a revolution?

[Michael Batnick]

Think about all the. I was thinking about this, the Jon Hamm, your friends and neighbors show. You could greenlight any show about rich people right now that paints them in kind of a derogatory light. And people would watch it.

[Ben Carlson]

Where are you on that show.

[Michael Batnick]

I really like it.

[Ben Carlson]

What episode are you up to date?

[Michael Batnick]

I watched the first three, I believe.

[Ben Carlson]

Okay. I think four is where it starts to go a little bit sideways for me. It's a fun show, but, yeah, it's not a leap, but that's fine.

[Michael Batnick]

I enjoy it, but I just. I love the idea of these very rich people. And someone told me it's supposed to be Westchester, I think.

[Ben Carlson]

Yeah.

[Michael Batnick]

And.

[Ben Carlson]

Or maybe Connecticut. I don't know. Same thing.

[Michael Batnick]

But just this idea that you pointed this out last week that, like, this is what my life is going to be. And so I.

[Ben Carlson]

Did you hear that. That speech, by the way?

[Michael Batnick]

Yes.

[Ben Carlson]

Did that hit A little bit.

[Michael Batnick]

Was good. It. But the whole thinking of just like, even for really, really rich people with these gigantic houses and all this wealth and all this stuff, it's kind of like, oh, really? This is our life.

[Ben Carlson]

It is. Yeah. I think everyone. Everyone, like, they get there and. Yeah. And we have great lives and those rich people have. In terms of, like, luxury, they have everything. And it's like, all right, so I go on three vacations a year. I drive a nice car. Like, what else? That's it.

[Michael Batnick]

So remember you told me that you listened to the Neil Brennan Blocks podcast and caught up? And so I had. I was supposed to fly down to Ohio for the speech I'm giving, or I was giving. So I'm down here right now. And my flight got. Got delayed, so I was gonna miss my flight and I didn't want. So I just drove here instead. And so I put on a bunch of pocket and I caught up on a bunch of the Neil Brennan Blocks podcast with all these celebrities, David Letterman and Nick Kroll.

[Ben Carlson]

How good was the Letterman one?

[Michael Batnick]

Very good. But here's a constant theme among all these. I listen to, like, five of them. All these rich and successful people talked about how they're in therapy, how they practice meditation, how some of them are going on ayahuasca because it helps them get grounded. And I just think, like, they get to these levels of success and realize, like, it's not what I thought it would be. It's really this. I'm not. I'm still not happy. What is wrong with me? I need to try these other things and then they'll ground me. And they're. They're just. For some people, there's never going to be that thing that's going to satisfy you.

[Ben Carlson]

One of the things that I'm most grateful for in life is, like, discovering that I don't remember where, when, or how or why? It first occurred to me that monetary success and material success is not an answer. Because there is. If it were, you wouldn't have all of this overwhelming evidence of people with everything that are absolutely not happy, miserable right now. I think everybody would agree, okay, fine. I'd rather have more than less. And I'm not saying that I would rather have less than more, but just that if I was never the type of person that said to myself, if I get this, then I will be happy.

[Michael Batnick]

Right. I mean, I had those thoughts when I was younger that if I can just make this much money, then I'll be happy. And then the goalposts are constantly moving. So once you. I think once you get that and the light bulb goes off there, then you go, okay, this is like this for everyone.

[Ben Carlson]

Yes.

[Michael Batnick]

And it's not gonna do it for me. It's. I need. And having kids totally helped shape me in that way of not. Not concerning myself with that stuff as much anymore. Not caring.

[Ben Carlson]

And how about this? At the ultimate top, their insecurities could not be more on display. Think about all the billionaires that are tweeting and embarrassing themselves because they want the likes. They want people to like, hey, man, like, yeah, you were a dork in high school, but you're a pretty cool guy now.

[Michael Batnick]

Right?

[Ben Carlson]

Like, they can't fill that hole. That empty hole. They might have billions of dollars, but they still need public adoration because they were dorks in high school.

[Michael Batnick]

Yes. It's both sad and also kind of uplifting that, like, oh, okay. No one has it figured out.

[Ben Carlson]

Yeah. All right, so, Ben, these. These travel charts that we mentioned earlier, fewer Europeans traveling to the U.S. look at that chart. So, yeah, airlines are in a recession, Las Vegas, tourism declining. Type of stuff that you see in not great economies right now. Perhaps, perhaps. Perhaps this is just the excess of all of the people were drunk for the last three years, going on vacations all the time. So maybe that's what this is instead of, like, a bigger picture thing. I don't know.

[Michael Batnick]

But it's slowing very fast in a lot of places. That's the thing.

[Ben Carlson]

Yeah. Oh, one more, one more. Speaking of travel, one more Chicago announcement. Ben And I, on June 25th, back in Chicago, we're gonna be at the Morningstar conference, which I'm told is at the Chicago Navy Pier. I've never been there.

[Michael Batnick]

Oh, can't wait. We're gonna. We're gonna have a fun time at Navy Pier.

[Ben Carlson]

What are we gonna do there?

[Michael Batnick]

There's a Ferris wheel. There's rides.

[Ben Carlson]

Oh, what did you show me? The. There's like a simulator.

[Michael Batnick]

Yes. Chicago. I can't remember the name of it. We did it, though. It's really cool. One of those things like the Disney ride where they lift you up and you have the big, huge screen and they bleed at you and I'm all in. It's really fun.

[Ben Carlson]

I'm all in. All right, so June 25th.

[Michael Batnick]

Yeah, it's going to be fun. That's a great big conference. I had a conference anecdote. So I gave this speech in Columbus to all these.

[Ben Carlson]

Are these the type of people you see at conferences?

[Michael Batnick]

Oh, yeah, definitely. But this is a good one. So I have one person. So I gave a speech and it was a bigger conference than I thought. So it's. All the FPA societies of Ohio got together. I don't know, three or four hundred people. Pretty big. At a pretty big ballroom. And this is. I want to give some applause to this guy. At every conference, it's always a guy. There's always one guy in the front row when you're giving a speech who is constantly nodding his head and, like, looking at people like, yeah, yeah, you know, he's. And he's always in the front row. Very front, very center. And guess what? That guy.

[Ben Carlson]

Usually bald. Usually bald.

[Michael Batnick]

Yeah, he. But he's. He's. He's. And he's writing stuff down and he's nodding his head.

[Ben Carlson]

What was your speech about?

[Michael Batnick]

Risk and Reward, which is the name of my new book. I finally decided on a name.

[Ben Carlson]

Okay.

[Michael Batnick]

So I gave a speech about risk and reward and how to think about managing behavior and volatile times and all this stuff. So it was fun. Good group down here.

[Ben Carlson]

Any other conference anecdotes or just that? Just the head nodding guy.

[Michael Batnick]

Just that I love the head nod guy. He gives me confidence as I'm giving my speech.

[Ben Carlson]

Yeah, that's huge.

[Michael Batnick]

And then there's always. When you make a joke, there's always one person who laughs a little louder than everyone else. That also gives you. Because occasionally there's a joke that falls flat.

[Ben Carlson]

All right. Oh, I meant to talk about this A few weeks ago, I listened to Eli Roth was on the Town, Matt Bellany's podcast, and he is raising money for his movie company on Republic. If you want to check it out, go to republic.com horrorsection.

[Michael Batnick]

You should be an investor because you already give them some money.

[Ben Carlson]

You know what? I should give this guy some money. So he raised $2.7 million. There's 1560 investors.

[Michael Batnick]

What do you get for it?

[Ben Carlson]

The valuation is $55 million, and there's different. So if you invest 100 bucks, you get access to the investor newsletter, a digital stock certificate, an investor town hall with Eli Roth, and entry into a raffle for announcing.

[Michael Batnick]

It's like being Green Bay packers owner.

[Ben Carlson]

Yeah. If you invest $666, you get a signed stock certificate. Pretty cool. You get an invitation to meet and greet with Eli Roth. And Eli Roth has some big hits. Cabin Fever. I saw it in the theater. Hostel. Also saw in the theater.

[Michael Batnick]

I actually saw cabin fever.

[Ben Carlson]

Hostile 2, part 2. Too much. Too much gore. Thanksgiving. I quite enjoyed. Eli Roth is a legend. He was the bear Jew in Inglourious Basterds. He shows that the box office for Freddy Krueger, $590 million, Ghostface Scream, $911 million, Halloween, $855 million, and Jason, $755 million. So I think it's cool. You get. You could be an investor in the movie company and, you know, own a piece of it. So I like it.

[Michael Batnick]

You and a bunch of other nerds. All right.

[Ben Carlson]

Yeah, it's fun. Lucas Shaw tweeted. Not tweeted. Lucas Shaw wrote a blog post on Bloomberg. Blog post on Bloomberg article on Bloomberg. Yellowstone is one of the most valuable franchises in Hollywood. Its shows have generated $2.9 billion in sales and $700 million in profits. That's wild.

[Michael Batnick]

Geez.

[Ben Carlson]

Audiences have spent more than $450 million buying DVDs and downloads, and they're cooking up three more series of worlds, I guess so. This is nuts. The shows 1883 and 1923 cost almost $20 million an episode.

[Michael Batnick]

I guess that makes sense because the sets are so old and big and.

[Ben Carlson]

Sprawling, and So I finished 1923, and it was interesting because there were seven episodes, and the last episode was like two and a half hours or something.

[Michael Batnick]

It was a bizarre ending. Correct?

[Ben Carlson]

Bizarre in what sense? I liked it.

[Michael Batnick]

I thought it really limped to the finish line. I mean, spoiler alert, she dies. She just. She died?

[Ben Carlson]

Yeah.

[Michael Batnick]

Really?

[Ben Carlson]

Yeah. I thought it was, like, good, not great, but it was. I enjoyed it.

[Michael Batnick]

I thought the ending was very perplexing. All right. You always talk about going to the movies by yourself and how you like that experience, and I just. I've never done that. I don't know why. I just. If I'm gonna watch a movie alone, I prefer to do it at home. Here's what I like to do, though, especially if I'm traveling by myself. At a conference or something like this. I now. And I never would have done this when I was younger. I love going to the bar and having dinner and drinking by myself. That is a great experience. Right.

[Ben Carlson]

With your AirPods in.

[Michael Batnick]

I don't. I will sometimes bring my Kindle, sometimes just be on my phone, sometimes watching games.

[Ben Carlson]

Either way, it's great. It's great.

[Michael Batnick]

I probably didn't have enough self esteem as a young person. Like, if I was 24, I would not have wanted to sit at the bar by myself. Now I'm more than happy to do that. Like, I have an uncle who goes, he'll go to the bar, bring a book and drink like two or three pints and like that. He. That's one of the things he does. That's a good experience. All right. I don't have a lot of recommendations this week. Just one. I told you. I listened to a bunch of the Neil Brennan podcasts and so I finally went and watched. It was based on his Netflix special called Blocks. And I finally watched that and it was very good. It's funny. He even says, like, why do my stand up routines have to be so gimmicky? Because three mics. He had three different mics and each of them was a different type of comedy or story. And Blocks is this different thing of things in his life that like, mess him up. I just thought it was really, really well done. He's. He's probably one of the most intelligent, deep thinking comedians there is.

[Ben Carlson]

Yeah, right.

[Michael Batnick]

Like you can tell that guy is just very, very intelligent.

[Ben Carlson]

Yeah. Duncan says that he invested $666 for the bloody certificate. But hold on. Duncan, get on here. Duncan, you're not a horror fan and you hate gore and blood.

[Michael Batnick]

I mean, yeah, I like Eli Rotha.

[Ben Carlson]

Okay, who doesn't?

[Michael Batnick]

Wait, are you serious that you did it? Yeah. I thought he was being sarcastic. I'm in. No, I'm in.

[Ben Carlson]

No. Artist. Supporting artists. I'd love to see it.

[Michael Batnick]

Yeah.

[Ben Carlson]

Duncan, did you see Sinners?

[Michael Batnick]

No.

[Ben Carlson]

Okay.

[Michael Batnick]

Would I like it?

[Ben Carlson]

No. Okay, well, it's a film. You're a film guy. But there's also a little bit of blood. Not super gory, I think. I actually think you would enjoy it. I think you would enjoy it.

[Michael Batnick]

Maybe I'll watch.

[Ben Carlson]

So I saw. Yeah, I have no recommendations either. I have an UN recommendation, if you will. So I saw the Wolfman in the theater with my friend Brad. And what year was this? The Wolfman is 2010. And we still joke about it as being the absolute worst movie either of us have ever seen in the theaters. Actually, that's not true.

[Michael Batnick]

Is that Benicio del Toro?

[Ben Carlson]

Yeah, I think Major League. Was it Major League 3. Major League 3 was the worst movie I ever saw in the theaters. This was second. So the Wolfman was with Benicio del Toro and Anthony Hopkins, and they end up. They're both wolf men and they end up fighting each other at the end. It's absurd. Just horrendous. Oh, and a young guy. Emily Blunt. I forgot about that. All right, so, yeah, worst movie I've ever seen.

[Michael Batnick]

Don't find it appealing that the idea of that movie even.

[Ben Carlson]

Worst movie.

[Michael Batnick]

Teen Wolf. That's a good wolf movie.

[Ben Carlson]

That's a good wolf movie. All right, so anyway, so I saw Wolf man, two words. It came out on. It was on. I think it was on Peacock. So I fired up. Why not? Absolute dog shit. Like not even, not even close to anything remotely resembling a movie. I don't understand. Just pure trash. And you know my threshold for pure trash. My appetite.

[Michael Batnick]

I would have thought you'd have liked that one.

[Ben Carlson]

Yeah. No, not good. All right. We made another week.

[Michael Batnick]

All right. I, I, I feel like we're. It's the clock ticking down until economic reality. But maybe, maybe everyone's wrong. Everyone's been wrong in the past.

[Ben Carlson]

Listen, I, I, how about this? That I'm not. I, I, I pledge to you, the listener. That will not be my beat. I am not going to spend the next four months saying, just wait, we'll take a week.

[Michael Batnick]

The economic data comes out monthly in most cases, so we're going to start seeing an impact by, I'd say May data. I think that's like the right May or June. That's going to be the tell.

[Ben Carlson]

I would think so. All right, Come see us in Chicago, June 3rd. Ben will be there. The whole RWM crew is coming out. We'll have a great crowd at the chop shop. I'm told the venue is sick.

[Michael Batnick]

We'll drink some alerts, Old styles.

[Ben Carlson]

I will drink. You know what? I will drink some Alort. I will do one.

[Michael Batnick]

Nasty.

[Ben Carlson]

I will do one. All right. Animal spirits@the compoundnews.com. thank you for listening. We'll see you next week.