Animal Spirits Podcast: The Nothing Ever Happens Market (EP. 418) Summary

Release Date: June 25, 2025
Hosts: Michael Batnik and Ben Carlson

1. Market Amnesia and Investor Behavior

Michael Batnik opens the discussion by introducing the concept of "market amnesia," suggesting that this decade is characterized by investors forgetting significant market events quickly. He references an article by Mike Bird from The Economist and a study dating back to 1988 involving researchers from MIT and Larry Summers. The study analyzed over five decades of world-changing events such as Pearl Harbor, the Cuban Missile Crisis, and the Chernobyl meltdown, concluding that these events had a surprisingly muted impact on stock market volatility. Notably, "several of the biggest one-day falls identified by the authors occurred on days without an obvious news-related spark" (05:00).

Ben Carlson agrees but adds that the current market environment, driven by strong long-term earnings growth, plays a significant role. He remarks, "if we were in a different market environment with slow or no growth... it would be different" (05:35). Michael concurs, emphasizing that "earnings are up like 250%" over a 10–15 year period (06:00), underscoring that fundamental growth metrics outweigh short-term geopolitical disruptions.

2. Workforce Reduction in White-Collar Jobs

The conversation shifts to workforce trends, citing a Wall Street Journal report indicating a 3.5% reduction in white-collar employees among U.S. public companies over the past three years. Additionally, one in five companies in the S&P 500 has decreased its employee count over the last decade (09:00).

Michael offers a nuanced perspective, suggesting that "these stories are huge overreactions because your base was overstaffed from May 2022 to May 2025" (10:00). He points out that while some unemployment metrics for recent college graduates appear concerning, historical data shows that current rates are "at or below average going back to the 1950s" (10:30).

Ben counters by asserting, "I don't think it is going to reverse and I think a lot of people are in for real pain now" (12:01), highlighting concerns that ongoing reductions may lead to broader economic repercussions despite contrary data.

3. Side Hustles and Employment Trends

Ben references a Wall Street Journal headline about the rise of side hustles, suggesting it indicates a necessity-driven trend rather than a passion pursuit (12:31). Michael counters by analyzing data showing that multiple job holders remain a small percentage of total employment and that side hustles have been a consistent part of the labor market, albeit not as dramatically as recent headlines suggest (13:00).

4. AI's Impact on the Job Market

The hosts delve into the transformative effects of AI on employment. Michael shares a New York Times story about radiologists, initially predicted to be outpaced by AI within five years. Contrary to predictions, AI has instead "helped them" by serving as a "second set of eyes," thereby increasing demand for radiologists (26:00). Ben categorizes AI's impact into three areas:

1. Displacement: Certain industries and roles may become obsolete.
2. Augmentation: AI tools enhance existing roles, increasing productivity.
3. Creation: New jobs and industries emerge that are currently unforeseeable.

Michael emphasizes the complexity of this transition, noting that "most people will pay attention to the first one and get really mad about it" (28:00). They discuss the necessity of ethical oversight in AI development to ensure it benefits humanity.

5. Foreign Ownership of U.S. Stocks

Michael highlights a trend towards increased foreign ownership of the U.S. stock market, reporting that ownership has grown from approximately 6% in the mid-90s to nearly 20% in 2025 (16:00). He speculates that if the U.S. comprises about two-thirds of the global stock market, foreign ownership could potentially be even higher. Ben supports this by citing market concentration trends globally, revealing that countries like the UK and Japan have significant portions of their stock markets concentrated in a few large companies (17:30).

6. Alternative Investments and Private Markets

The discussion transitions to alternative investments, focusing on private markets. Ben references a Fidelity report on custom models with alternative assets, noting the early stages of a significant trend towards these investments. However, they caution about the high dispersion in private equity returns, where "the bottom quartile for venture and real estate are negative returns" (46:14). Michael suggests that private credit stands out due to its lower dispersion and higher predictability, making it more attractive for advisors and investors (47:00).

7. Stablecoins and Crypto Adoption

The hosts explore the implications of the "genius act," which regulates stablecoins by mandating a 1:1 reserve backing with USD (33:15). Ben posits that this regulation could be bullish for the U.S. dollar and Treasury bills, as stablecoin issuers may invest their reserves in these securities. Michael adds that legitimacy granted to stablecoins could spur greater adoption among individuals and corporations, potentially challenging traditional payment systems like Visa and MasterCard (34:00).

Ben mentions a noteworthy tweet from Weisenthal highlighting Circle's impressive daily returns since its IPO, indicating strong market performance despite volatility (35:55).

8. Personal Anecdotes: Car Maintenance Challenges

Shifting gears, Ben shares a personal story about the high costs and complexities of modern car maintenance. He recounts his experience with a malfunctioning Jeep EV, detailing how electronic components can drastically increase repair costs (e.g., a $2,800 sink replacement versus a negotiated $2,400 with a friend) (38:00). Michael echoes frustrations about the increasing reliance on electronics and sensors in vehicles, which not only raise maintenance expenses but also contribute to the prolonged lifespan and higher value of used cars (22:05).

9. Movie and Show Recommendations

In the lighter segments, Michael and Ben exchange opinions on recent films and television shows. They discuss:

• "28 Years Later": A rewatch by Ben, praising Jon Bernthal's performance as the standout element.
• "Stick": An Apple series featuring Owen Wilson, described as "light and breezy" with "a little bit of heart" (59:00).
• "Plane": Discussed critically by Michael, labeling it as a "high-quality piece of garbage" despite Hollywood star Gerard Butler's involvement (60:00).

They also touch upon upcoming movies and the nostalgia of rewatching older films, demonstrating the personal side of their conversations beyond financial topics.

Notable Quotes

• Michael Batnik: "I think this sort of market amnesia is a good thing. If you're a successful long-term investor, you almost need this." (04:50)
• Ben Carlson: "I think investors have become better behaved because it's like listening we've been fooled a million times on these headlines." (06:00)
• Ben Carlson: "Most people will pay attention to the first one [AI displacement] and get really mad about it." (28:00)
• Michael Batnik: "Everything's a V. V-shaped rallies are still here in everything." (15:12)
• Ben Carlson: "The average new vehicle loses $4,680 in value every year." (20:57)
• Michael Batnik: "I want someone behind the wheel who's gonna be like, look out for like humanity and all this." (25:11)

Conclusion

In this episode of Animal Spirits, Michael Batnik and Ben Carlson explore the phenomenon of market amnesia, the implications of reducing white-collar jobs, the evolving landscape of side hustles, and the transformative impact of AI on the job market. They delve into the increasing foreign ownership of U.S. stocks and the dynamics of alternative investments, particularly private credit. The hosts also discuss the regulatory developments surrounding stablecoins and their potential to reshape financial transactions. Interspersed with personal anecdotes and lighter conversations about movies and shows, the episode provides a comprehensive analysis of current market trends and future projections, offering valuable insights for both seasoned investors and newcomers alike.

For more insights and detailed discussions, tune into the full episode of Animal Spirits.