The Tariff Tantrum (EP.403)

Summary

Animal Spirits Podcast Summary: "The Tariff Tantrum" (EP.403)
Host: Michael Batnik & Ben Carlson
Release Date: March 12, 2025

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1. Market Correction and Comparison to 2020

Overview:
Michael Batnik and Ben Carlson delve into the recent significant downturn in the stock market, analyzing its implications and comparing it to previous market behaviors, particularly the 2020 correction triggered by the COVID-19 pandemic.

Key Points:

• Current Market Downturn:
  The S&P 500 fell by 9%, Nasdaq 100 by nearly 13%, and Russell 2000 by almost 17%, signaling a bear market. Michael interprets this as a "glass half full" scenario, viewing the correction as part of a secular bull market rather than an impending recession.

• Comparison to 2020:
  Ben Carlson draws parallels between the current correction and the rapid decline seen in February 2020. Both instances exhibited swift market drops over a short period, suggesting a pattern in how corrections unfold during high valuation periods.

Notable Quotes:

• Michael Batnik [01:59]: “I view this as a correction in a secular bull market. A healthy reintroduction of respect for risk.”
• Ben Carlson [04:04]: “If this looks like the initial falling off of the cliff there, like the Wile E. Coyote in midair...”

2. Bonds, Diversification, and Market Sentiment

Overview:
The discussion shifts to the performance of bonds amidst the market correction, highlighting their role in diversification and as a hedge against stock market volatility.

Key Points:

• Bonds' Strong Performance:
  Bonds, particularly the Aggregate Bond Index (AG), had their best day relative to the S&P 500 in 25 years, with a spread of approximately 3.5%. This resurgence underscores bonds' importance in diversified portfolios.

• Diversification Benefits:
  Ben emphasizes that bonds are a crucial hedge, especially after a disappointing 2022, reaffirming their value in mitigating losses during equity downturns.

Notable Quotes:

• Michael Batnik [05:54]: “Bonds are giving you diversification.”
• Ben Carlson [05:04]: “... bonds do well and international stocks do well, financial advisors are going to be celebrating...”

3. Recession Predictions and Political Influences

Overview:
The hosts explore the mounting speculation about a potential recession, influenced by political uncertainties and policy changes under the Trump administration.

Key Points:

• Political Uncertainty:
  Michael attributes the nervousness in the markets to political sentiments, particularly the impact of tariffs and Trump's economic policies, which diverge from previous administrations.

• Recession Speculation:
  Multiple sources, including the Financial Times and Wall Street Journal, forecast a potential recession, linking it to tariff-induced uncertainty and reduced consumer confidence.

• Government's Stance:
  Trump’s unexpected acknowledgment of a possible recession contradicts his typical projections of a booming economy, adding to market uncertainty.

Notable Quotes:

• Ben Carlson [08:11]: “This is the reason always feels unique. It always happens."
• Michael Batnik [09:02]: “He didn't want Biden's economy... he can say, starting from now, this is my economy.”

4. Retail vs. Professional Investors Performance

Overview:
The conversation highlights the stark contrast between retail investors and professional money managers, especially in the current market environment.

Key Points:

• Performance Gap:
  Over the past 15 years, a significant majority (85-90%) of professional funds have underperformed their benchmarks, whereas retail investors, particularly those concentrated in growth stocks, have outperformed.

• Historical Anomaly:
  This period is viewed as anomalous, benefiting retail investors who sought high-growth, well-known companies, a strategy not consistently effective across different market cycles.

Notable Quotes:

• Ben Carlson [20:50]: “85 to 90% of professional money managers underperform their benchmark.”
• Michael Batnik [22:00]: “It's the benefit of private markets... not going to change.”

5. Labor Market Dynamics and Economic Perceptions

Overview:
Addressing listener feedback, the hosts discuss the evolving labor market, emphasizing the shift in power dynamics between employers and employees and its broader economic implications.

Key Points:

• Shifting Labor Power:
  Ben explains that the labor market has transitioned from being employee-driven to employer-controlled, citing challenges faced by recent graduates and increased layoffs in various sectors.

• Economic Indicators vs. Personal Experiences:
  A listener's email highlights a disconnect between positive economic data and the grim reality experienced by job seekers, prompting a discussion on how personal anecdotes can differ from macroeconomic trends.

• Consumer Confidence:
  With consumer confidence waning, there's an expected slowdown in spending, reaffirming concerns about a potential recession.

Notable Quotes:

• Ben Carlson [24:51]: “The labor market is not the control anymore and the company is back in control.”
• Michael Batnik [22:37]: “How tight is the economy and this person experienced to the stock market? That’s a big question.”

6. Artificial Intelligence (AI) and Future Economic Impacts

Overview:
The hosts speculate on the role of AI in shaping future economic landscapes, contemplating its dual potential to drive growth or exacerbate economic downturns.

Key Points:

• AI as a Game-Changer:
  Discussions revolve around experts predicting the advent of Artificial General Intelligence (AGI) and its transformative effects on the labor market and economic structures.

• Potential Risks:
  Michael and Ben consider scenarios where AI could either fail to deliver anticipated benefits, leading to economic stagnation, or drastically disrupt employment, contributing to recessions.

Notable Quotes:

• Ben Carlson [37:18]: “There’s a good chance that when we look back at this era, AI will have been the thing that matters.”
• Michael Batnik [38:04]: “A downturn because AI is so effective that it’s really impacting the labor market and putting people out of work.”

7. Government’s Strategic Bitcoin Reserve and Crypto Discussion

Overview:
Ben Carlson covers recent developments regarding the U.S. government's establishment of a Bitcoin reserve, sparking debates about the role of cryptocurrencies in national strategy.

Key Points:

• Executive Order on Bitcoin Reserve:
  President Trump signed an order to create a strategic Bitcoin reserve using government-owned Bitcoin from asset forfeitures, aiming to establish a "digital Fort Knox" without taxpayer costs.

• Criticism and Skepticism:
  The initiative is met with ridicule from the hosts, viewing it as a symbolic gesture lacking substantive action. Cliff Asness criticizes the move as misguided and competitive against the U.S. dollar’s dominance.

• Crypto Market Timing:
  Ben shares his own cautious engagement with crypto trading, contrasting with the hosts’ overall skepticism about government intervention in the crypto space.

Notable Quotes:

• Ben Carlson [40:42]: “Cliff Asness actually wrote... the new crypto Fort Knox is as dumb as it sounds.”
• Michael Batnik [42:13]: “I don’t see it that way. It’s the bag.”

8. Private Equity vs. Public Markets Performance

Overview:
The hosts analyze the contrasting performance between private equity markets and their public counterparts, emphasizing the stability and benefits of private market investments.

Key Points:

• Private Equity Stability:
  While public markets are experiencing significant declines, private equity valuations remain flat, offering a buffer against public volatility.

• Public Market Slaughter:
  Companies like KKR, Blackstone, Carlisle, Apollo, Aries, and Brookfield are facing severe market valuations drops, whereas their private market marks are unaffected, highlighting the resilience of private investments.

Notable Quotes:

• Michael Batnik [43:44]: “But it shows private market marks just straight flat.”
• Ben Carlson [44:18]: “What really sells it is the plus 0%.”

9. Personal Reflections and Emotional Insights

Overview:
Towards the end of the episode, Michael and Ben share personal anecdotes and reflections, providing a human touch to their financial discussions.

Key Points:

• Personal Loss and Support:
  Ben recounts attending his brother’s funeral, emphasizing the importance of community and support during difficult times. This segment highlights the emotional resilience required in both personal and financial spheres.

• Podcast Recommendations and Personal Growth:
  Michael discusses his newfound appreciation for podcasts like Neil Brennan’s "Blocks," which delve into personal struggles and emotional growth, illustrating the intersection of personal well-being and professional life.

Notable Quotes:

• Ben Carlson [53:07]: “The only way to make it through life is the ability to have difficult conversations.”
• Michael Batnik [54:02]: “It's such a great reminder of how great we have it.”

10. Final Thoughts and Predictions

Overview:
In their closing remarks, Michael and Ben offer predictions about future market movements and express their anticipation for upcoming events.

Key Points:

• Market Predictions:
  The hosts predict that the market will inevitably experience sharp drops ("face-rippers") during corrections but remain hopeful for eventual stabilization.

• Upcoming Events:
  Ben mentions their upcoming live session at Future Proof Citywide in Miami, expressing excitement about engaging with the community despite ongoing market volatility.

Notable Quotes:

• Ben Carlson [55:28]: “We are going to have one face ripper along the way.”
• Michael Batnik [62:22]: “If it’s a 10% correction scares you that bad and you're 90% in equities, dial it back to 80 or 70. But don't go all in or all out.”

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Conclusion

In "The Tariff Tantrum," Michael Batnik and Ben Carlson provide a comprehensive analysis of the current market correction, drawing historical parallels and exploring the multifaceted impacts of political decisions, labor market shifts, and emerging technologies like AI. They emphasize the importance of diversification, caution against panic selling, and highlight the resilience of private equity markets. Personal reflections add depth to their financial discourse, underscoring the human element inherent in economic conversations. The episode serves as a valuable resource for investors seeking to navigate turbulent markets with informed perspectives and balanced strategies.

Transcript

[Michael Batnik]

Today's show is brought to you by our sponsors. At Betterment, imagining a better future is the first step.

[Ben Carlson]

Investing in that future with Betterment Advisor Solutions is the next. Whether you're launching your own practice, looking to streamline client onboarding, or just searching for efficient ways to scale your firm, Betterment is here to help.

[Michael Batnik]

They automate to make tax optimization simpler. They provide support to make administrative tasks easier.

[Ben Carlson]

At Betterment, they are building innovative technology all for anyone who's ever said, I think I can do better so so grow your RIA your way with Betterment Advisor Solutions.

[Michael Batnik]

Learn [e-mail] advisors. Investing involves risk performance not guaranteed.

[Ben Carlson]

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.

[Michael Batnik]

Are solely their own opinion and do.

[Ben Carlson]

Not reflect the opinion of Ritholtz Wealth Management.

[Michael Batnik]

This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Gritholz Wealth Management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. This is going to be a healthy show, a long show. We've got how many pages in the dot? 38. Not quite a record, but I would say approaching 2020 highs maybe.

[Ben Carlson]

The higher the Vix, the higher the clicks. And then for us, what is it? I'm trying to think of a phrase here, but in a correction, the Google Doc just grows and grows.

[Michael Batnik]

It's a great phrase, right? Yeah.

[Ben Carlson]

All right, question for you. So this is through the close on Monday. The S and P was down 9%. We're doing this right before the open on Tuesday. Nasdaq 100 down almost 13%. Russell 2000 down 17% almost. In a bear market, is this a better short term outcome than just taking off to boomtown? Because that's what everyone thought was going to happen. I think this is actually a better scenario.

[Michael Batnik]

Yeah. To me this is. I'm so glad you asked. To me, this is. This is a glass half full pullback, a glass half full slowdown, if you will. This I think people forget the stock market was up 20 plus percent in 2023, up 20 plus percent in 2024. Sky high expectations coming into 2025. And I think it feels people are really nervous and I think a lot of that is due to political feelings. I'm not super duper nervous that it's not because I'm cavalier about the risks. I understand that the economy is slowing down. I See that the stock market is getting bludgeoned. Certain areas more so than others. But I almost always view the reintroduction of risk as a good thing. Now, if this spirals into a deep recession, I will eat my words. That's not, I don't want a deep recession at all. But I, I, I view this. And we'll get into all the details. I view this. And again, my forecasts are just as bad as everybody else's. So I take this with a grain of salt. I'm not like dying on this hill. But for now, I think that this is a correction in a secular bull market. A healthy reintroduction of respect for risk. And I think we're gonna get through this. I think we're gonna be okay.

[Ben Carlson]

It's weird that I was more worried when people were talking about taking off, like to the moon. That worried me more than this.

[Michael Batnik]

Agreed.

[Ben Carlson]

Yeah, I didn't, I didn't want to see that. So I'm not a big fan of this line. Looks like that line. But I was talking to chart kid Matt yesterday and I slacked.

[Michael Batnik]

I have a minor bone to pick with you because chart Kit said Ben asked me for this chart. And I said, why? This isn't, this isn't a Ben Carlson chart.

[Ben Carlson]

It's not. So let me. So I just said, you know, the speed of this correction, this correction is happening fast. We hit a new all time high. February 19th, I believe was the last one. And that is we topped out of the COVID in 2020, in February 20th, I believe so that the timing of it is very similar. And then since then, straight down, it's, I think there's been one update.

[Michael Batnik]

The calendar time me. You say Covid was a February peak. This is a February peak.

[Ben Carlson]

Two months also. It happened fast. And I just said, I wonder if, if this looks like the initial falling off of the cliff there, the, you know, Wile E. Coyote in midair suspended. And so he said, I was actually just doing this. And again, this, you're right. This is not a Ben Carlson chart at all. Because I don't think you could. Because the one people that comes to.

[Michael Batnik]

Fruition, I'm going to hold you personally responsible.

[Ben Carlson]

No, the whole reason I wanted to do this was to see how quickly this correction is and also put it into context of this is nothing. So yeah, for minor flesh, for people.

[Michael Batnik]

That are listening and not watching, Ben had chart kid overlay the 2020 plunge versus where we are today. And I don't like it.

[Ben Carlson]

Okay, that's fair. And I Thought I'd get some pushback from you on this. And I just put it on here to show. This is a very quick correction, just like that one was. But this is again, just a minor. This is like a. You have cuticle on your finger. That's all this is. This is not severing the finger or cutting off your arm.

[Michael Batnik]

Speaking of severing the finger, we'll get to this later. The Pit. What a. That's a gruesome show, huh?

[Ben Carlson]

They get into it. Yes. I have to look away. You have to look away when you watch a horror movie. I have to look away when I see gory stuff for a hospital. That's why I could never be a doctor. I could never work in the medical profession because I'm. I'd get too squeamish. I'd be the one, the intern who puked on the first day, and everyone would be calling me Puke Face or whatever that be my nickname.

[Michael Batnik]

I'm. I'm a look away, too. Not too squish for me. There's some silver linings to this correction. Bonds are giving you diversification. Finally, yesterday, according to Mike Sardi, Bonds, the AG had the best day versus the S&P 500 in 25 years, which is nuts. And that's. That has more to do with the decline in the S and P than it does with the return in bonds. But nevertheless, massive spread. I think it was like three and a half percent.

[Ben Carlson]

Yeah. Because year to date. So bonds are up. I don't know. So if you look at the AG, it's up 3% year to date or something. It's not a huge number, but two months into the year, that's a pretty big return for bonds. So if you add the price appreciation with the yield you already started with, it's shaping up to be a pretty decent year in bonds. And yes, bonds are a hedge. Again, if you gave up on bonds because 2022 was a bad year for them as a diversifier, now they're coming back.

[Michael Batnik]

You know, one of the reasons why we love the stock market so much is because we're just like chasing our tail, trying to figure out what's going to happen next. And we're always wrong. And there are people. One of the phrases that is common in the investing world is, I've seen this movie before and I know how it goes or how it ends. And no, you don't. So, for example, had you thought that Trump 2.0 or the second Trump term was going to look similar to the first Trump term in terms of policy. His, his obsession with the stock market as a scoreboard, you would have been 100% wrong, as most people were.

[Ben Carlson]

A lot of people did say that. Well, if we look at the tariffs from the first time around or we look at his. Yes, a lot of people said that.

[Michael Batnik]

Tom Lee put out a few charts comparing Trump 1.0 versus 2.0 looks at the S and P and the Russell. And he did a bunch of other.

[Ben Carlson]

Charts and, and everyone stole this chart from him. I think, I think he was the first one. But I've seen a version of this chart a million times now because it's a really good chart.

[Michael Batnik]

Yeah. I don't know who came first. This is not. It's an easy chart to.

[Ben Carlson]

Doesn't matter, but it just shows. Yeah. The first time versus now. And it's complete. Complete divergence, obviously.

[Michael Batnik]

Yeah.

[Ben Carlson]

Good. Good chart. All right, so what are we calling this? The Trump dump? Tariff tantrum. What sounds good?

[Michael Batnik]

I like the Trump dump.

[Ben Carlson]

Trump dump. Okay. I also like. So to your point about the folly of forecasting, Sam Rowe, every year, friend of the show, does this thing where at the end of the year, heading into the new year, he looks at all of Wall Street's targets for the S and P. And he did them from all the firms and they were all very clustered at say 10 to 12, 8 to 12% gain. Like just Steady Eddie. And maybe we still get there, but it is just kind of funny. I'm sure all of these targets are going to be ratcheted down immediately. Right. Like they're gonna throw these out the window and say, I'm sorry, they gotta.

[Michael Batnik]

Come down so we could bring em back up.

[Ben Carlson]

Yeah. So the recession calls are back. You said everyone's getting nervous. I found a few headlines. This is from the Financial Times. The US Economy is heading for a recession. This is from Politico. Trump won't rule out a recession in 2025. And Wall Street Journal, Wall street fears Trump will wreck the soft landing. And obviously all these articles kind of talk about the same stuff. Tariffs and uncertainty and austerity and all these things.

[Michael Batnik]

You know, I'm surprised that. So Trump was talking to Maria Barto Romo and he said he, he's not ruling out the possibility of recession. That kind of shocked me. I would have thought that he would be like, there's not going to be recession. Like, just given everything the way that he speaks, you would think no recession, beautiful booming economy. Economy. And I don't know if it's like credit to him. But he's. I would not have predicted him not ruling out a recession.

[Ben Carlson]

We've certainly never seen anything like this before where usually there's a transition period where the one presidential term ends and the other one begins and whatever. It takes a while for things to take shape. This one, it was like an immediate. This is it. We're slice. We're moving on and then things. But you're right that, that. Can I, can I offer a theory? So the economy has been doing fine. Some people don't like it. The economic data was pretty good. I think he did not want Biden's economy and I think he is actually okay with a slowdown or even a recession. So he can say, starting from now, this is my economy.

[Michael Batnik]

He's saying that that's not a theory. They're saying that. They're, they're literally saying that.

[Ben Carlson]

But I can't believe that he wants a recession to do that. That's the thing that is crazy to me.

[Michael Batnik]

I don't think that he wants a recession.

[Ben Carlson]

I think it kind of does at this point.

[Michael Batnik]

I think, I think that he has to talk about the recession because of the market's reaction. Like, if the market was not reacting so negatively to his new policies, he wouldn't be saying, yeah, we're gearing up for a transition period. He has to explain it. But I think that he's expl. Like he's very much trying to create a new economy. That's not, that's not a theory. He's. They're saying that. Besson's saying that. Ludnick saying that they're. The three of them are saying that.

[Ben Carlson]

Yeah, but I feel like they're kind of backfilling in. I feel like if they are.

[Michael Batnik]

They're reacting to the headlines because they have to.

[Ben Carlson]

Yeah, yeah. Price is driving the narrative.

[Michael Batnik]

Yeah, big time.

[Ben Carlson]

If the economy would have reacted positively like I'm sure they wanted it to.

[Michael Batnik]

Right Then he would have said, look what we're doing. We're creating billions and trillions of zillionaires.

[Ben Carlson]

So our inboxes have been full for, I don't know, at least the last two years, probably the last five years from people saying, I, I have been owning these things that are going up a lot. Tell me when to sell. Like, help me. I don't want to sell because I think it could keep going up and maybe it turns into a 10 bagger. But I've got huge gains. What do I do? And this is the kind of thing where we've Always said we can't offer you advice on this. Like we can't tell you the best time to sell because if we tell you, fine, you need to diversify. If you're that worried about it and the stock keeps going up, then you say that's bad advice. Yeah, right. But the thing about those that why you don't ever try to time it is because you just never know when it's going to happen. So I just pulled up a few growth stocks through yesterday. Tesla was down 54% from the highs in a hurry. Robinhood was down 45%. Nvidia was down almost 30%. Coinbase was down almost 50%. DraftKings was down over 30%. I mean these things happened immediately and some of these stocks are probably still up over the last couple of years. But this is why you can't, you just can't time these things ever well and so fast.

[Michael Batnik]

They are the epitome of stairs up, elevator down. They don't. They go down when they, when it breaks, it breaks so fast. And a lot of people probably feel like it's too late to sell. And listen, if I, if I owned whatever pick a Coinbase down 48, I probably wouldn't sell. It's like, I'm gonna sell now. I missed it. You missed your window. Okay, so it's not. It's not. And it's not to say that like it can't go a lot lower, but this is the psychology of investing in a silver lining. And again, I never like to see people lose money. Is that for younger people, especially that that are new to the market, that have seen nothing but gains. You can't learn what risk and losing money feels like in a textbook. You have to experience it. And we all have. And we all eventually do.

[Ben Carlson]

Yes. That's the Fred Schwed line. Right. There are certain things that can only be right lived.

[Michael Batnik]

Right.

[Ben Carlson]

Yeah. So microstrategy, which I guess is now just strategy. Sorry, I'm gonna always call it MicroStrategy was down 16% yesterday. The two times levered one was down 33% yesterday. That's MSTX. I looked at this thing and obviously the volatility is killing it. Since basically the end of this December, the 2 times MicroStrategy ETF is down 89%.

[Michael Batnik]

Yeah, this thing will never make a new high.

[Ben Carlson]

So obviously the volatility. This is why the levered ones on single stocks are even worse for you than the index ones. The index ones, I think you get a decent. It's not Perfect. You get it. Okay. On these, remember we had the guy who emailed us or DMed us and said we talked about it like three months ago. Remember he put all of his parents retirement assets into microstrategy and then the levered and anyway, all right, I think the international stuff is, is feeling real. HSBC is on my corner now. This is again from friend of the show, Sam Rowe. Is he going to be in Miami with US corner?

[Michael Batnik]

It's. Yeah, you act like you've been like you planted this flag like two years ago.

[Ben Carlson]

I think I was early on the international thing here. I'm just putting it out there. Someone said give us receipts and I said is Europe a buy like 5 months ago, actual blog post I wrote.

[Michael Batnik]

Okay, so you planted your flag, you wrote a blog post.

[Ben Carlson]

Ok, all right, so this is from hsbc. Prior to the US elections, we assumed a Trump victory would reinforce US exceptionalism. Today we are upgrading Europe. It's funny, it says ex UK for some reason to overweight from underweight Europe, the UK to overweight, from underweight and downgrading the US to neutral. What we underestimated was how the US's wavering support for NATO and Ukraine would trigger a watershed moment for the Eurozone with Germany expected to also follow through with sizable fiscal stimulus. It is important to stress that we are not turning negative in US equities, but tactically we see better opportunities elsewhere from now. No one would have ever predicted that six weeks ago, two or three months ago, never. And I think it's again could be another head fake. I think that this is the first time the catalyst actually kind of makes sense. And the funny thing is if, let's say Germany goes on a fiscal spending binge and they bring all the other European Union countries with them and their stock markets do outperform, you're going to have people say, well, it's all fake.

[Michael Batnik]

Yeah, yeah. Oh, I don't. I thought you were going to say, I think US investors will not care if you.

[Ben Carlson]

It would have to go for a long time probably for U.S. investors.

[Michael Batnik]

Yeah, like I'm making this up. If, if international stocks are up 12% this year and the US is down 8%, I don't think all of a sudden there's gonna be like a tidal wave. I could be wrong, but I think for the average US investor it's going to take more than 12 months after 15 years of sucking wind, you know what I mean?

[Ben Carlson]

Okay, look at the numbers from Luke Kawa from Sherwood. He shows fund flows into the biggest US listed European Equity etf, which is Vanguard, have taken off pretty good. They're the highest they've been since 2000. 18ish. Yeah, so there is some money flowing there, but you're right cause you'll be able to look at a five or ten year chart. No matter how, if this goes on for two years, you'd still be looking at a ten year chart and go, well, so what? The US killed international capacity.

[Michael Batnik]

If you zoom out, there's been a million of these head fakes or international performance along the way. Whether or not this one sticks, we'll see. But certainly I would agree with you, out of all of the bounces, this one looks the most sustainable. And it's not just the stocks, it's the dollar falling too.

[Ben Carlson]

So yes, it'll be a double whammy.

[Michael Batnik]

The Zuccardi tweeted chart. The Euro had the best week against the dollar since 2009. That was last weekend. The weakness in the dollar, strength in the euro continues.

[Ben Carlson]

So hopefully you people got your European vacations in while they were cheap because they're not going to be cheap anymore. Maybe. So I was looking up yesterday, this is kind of a, a different mood than we're in right now. But it was the 16 year anniversary of the bottom in March of 2009 and since then, even with the minor little hiccup we've had recently, the S and P is up over a thousand percent, 16.3% per year. Bridgewater actually looked at this and they said out of any 15 year period to be invested in equities dating back to 1970, the one we've just lived through was the best. 2010 to 2024 was the. And I think they looked at real returns above cash. Okay, this is why I think these corrections are going to happen so quickly in the future. I don't think we're going to be in a world where we ever have these slow, drawn out corrections anymore. I think the combination of higher valuations and the fire hose of information means when these corrections happen, they don't wait around, they're just going to happen in this in a split second. Basically.

[Michael Batnik]

Last week on the show we said, are we going to be in a correction next week? And I think I said probably not. I don't remember what I said, but that happened fast. Right? We also said last week, I think I asked you, are we going to have a new, are we going to hit a new all time high last year? Is the S and P going to hit a new all time high this Year, what do we say?

[Ben Carlson]

Last week we said if the tariffs come off then yes, we'll hit all time highs.

[Michael Batnik]

I again, here's the thing though, if.

[Ben Carlson]

You I don't have the exact stats in front of me, but this is directionally right. In years in which the The S&P 500 has finished up double digits over the past hundred years, half of all years have have had a double digit correction along the way to hitting those double digit gains. So this is the reason always feels unique. And it's like in the moment you think, well, this has never happened before but the downturn itself, it always happens.

[Michael Batnik]

So I will offer up a Grand Rapids hedge. I do think that they're going that there will be an all time high in the S&P 500 later this year. But if it doesn't happen and the market is down, let's say that we get continued volatility. We get a pause here. The market's down 8, 9%, 11%. God forbid. Again, I'm not trying to be cavalry about risks, so please don't misunderstand me, but if you just zoom out and say, all right, here's the deal, we just had a 15 year run that has no comparison in US history. We're coming off a back to back 20% plus year. Like rewind back to 20, 23 and somebody said, hey, we're gonna give you plus 20 plus 25, minus 11. Do you take it? Yeah, you take it. You know what I mean?

[Ben Carlson]

Right.

[Michael Batnik]

So I know it never feels good to lose money, but I think perspective here is really, really important.

[Ben Carlson]

And if the S and P is down like you said, 5 to 10% this year, let's say it's just a minor correction in total and bonds do well and international stocks do well, financial advisors are going to be celebrating the streets. Yeah, right. At least the ones who didn't completely give up on diversification and investors who've had a diversified stance. For them it'll finally feel like vindication.

[Michael Batnik]

I think the reason this feels worse for people that are feeling horrible, it's the political stuff. It's like the person that I didn't vote for, the person that I think was going to tank the economy, is tanking the economy and it's going to get so much worse.

[Ben Carlson]

Alternatively, the person I voted for who said he was going to bring the economy to new heights, now he's actually actively tanking the economy, it seems like. So it's almost like both sides could be feeling a little buyer's remorse. I don't know. So if 2023, remember Derek Thompson put us on the spot. Is there going to be a recession this year? I think if you said this year that'd be too quick. But in the next three years are we going to have a recession? I think it's higher than the economy. Like the economists that say 40% of the time. I would put it at like 65%.

[Michael Batnik]

Maybe I listen again, who knows? We're just as bad at making predictions. Everybody else, I think the camp that.

[Ben Carlson]

I put in a probability on it.

[Michael Batnik]

The camp that I'm in right now and we'll get to this in a little bit, I think it's, it's a slowdown, not a recession. Maybe we're splitting hairs here but.

[Ben Carlson]

Oh wait, Duncan did a, did a poll. Will we see new all time highs this year? The compound people, what do you think? People said yes or no.

[Michael Batnik]

When did the poll go up?

[Ben Carlson]

17 hours ago. Okay, so like right after the market.

[Michael Batnik]

Closed, I would say 23% said yes, 52%.

[Ben Carlson]

So people are still feeling a little. All right. People need more slaps on the wrist. We need like a 15% plunge here at least.

[Michael Batnik]

Okay. All right. Yeah, that's not great.

[Ben Carlson]

Not enough pain yet.

[Michael Batnik]

No. You know what? We've got smart investors. We've got smart, smart.

[Ben Carlson]

This is, I think this. Well it's true, but I think this kind of dovetails nicely with what we've been saying about needing to get a slap on the wrist. So the S and P does their annual Spiva. Did any professional funds outperform?

[Michael Batnik]

Hang on, that's not the S and P. It's S and P global.

[Ben Carlson]

Yeah, sorry. What's the difference?

[Michael Batnik]

Well when you say the S and P, it's like this is not.

[Ben Carlson]

Oh, sorry. Standard and poor is the company. Yes. So they look at, you know, all these different kind of funds, all domestic funds, large cap, small cap, all these different US funds and over 10 and 15 year periods, it's basically like 85 to 90% of professional money managers underperform their benchmark. This is not just the S and P. This is the mid cap 400. It's a small cap 600. It's all these different and it's a very high number. Did retail outperform the pro professional investors by the most in history in this period? Because if you think about all the retail investors who just bought a handful of growth stocks or a handful of big the biggest companies and I know exactly what they do and so I'm going to buy them. It Feels like this has got to be the widest spread in history between professional money managers and retail investors.

[Michael Batnik]

Yeah, no doubt.

[Ben Carlson]

Right, like this. But will this ever happen again? Well, like. Well, we look back at this as an anomaly. Like can you remember that period in the late 2010s and early 2020s when you could literally just buy the biggest, best companies in the world and outperform everyone? Like, is that going to be an anomaly?

[Michael Batnik]

I don't know. I don't know. That's over. I mean it's certainly taking a pause but. But yeah, this is a unique. This is a unique period in time where all you had to do. I'm using all. I know it was hard because I certainly didn't do it, but all you had to do is buy the biggest companies.

[Ben Carlson]

Yes. And the companies that you know and used. Right, right. It's the total Peter lynch strategy of him going to mall and buying legs pantyhose that his wife liked.

[Michael Batnik]

Yeah. All right, so let's talk about the economy because I feel like for the last 20 minutes we've been talking about like pretty high level stuff, like people's interpretation of the economy, how people feel.

[Ben Carlson]

Stock market's reaction and the stock market does not always predict the economy. Put that out there.

[Michael Batnik]

We got an email that I want to read. I graduated in college in December with an accounting degree, passed level one of the CFA and have been looking for a job in the world of finance. It has been rough to say the least. It feels like job postings are few and far between for entry level positions. I am not alone in this. Several friends of mine a few years older than me have been laid off in the past few months. Several engineers and a couple working in finance. All have been the result of broader cuts at their companies and not individual performance. They also have been struggling to find new jobs. On top of this, in a class I had full of different business majors, accounting, finance, marketing, etc. Of the 55 students in the class, only nine had jobs lined up post graduation. My professor said that was the lowest he had seen in years. My dad works at a windows manufacturing company and they just have to lay off 40% of their workers because their orders are slowing down big time. Their competitors are doing the same. They've been hiring to fill up positions at the office. A few engineers and marketing personnel, all entry level. Compared to the last time he hired these positions, he was receiving four times as many applications and many applicants who are way overqualified. This is why the economic data is absolutely mind Boggling to me. My situation in those around me does not inspire confidence whatsoever. But the data tells me that I'm absolutely wrong. My takeaways that companies don't want to take on new hires are cutting the newest hires. And the people who do have some form of experience are okay taking jobs they are overqualified for. Maybe this is just a product of where I live and not a broader theme. Maybe it's short term uncertainty. I just see my situation in those around me and it gives reason to worry.

[Ben Carlson]

So I think this is a really good take on how the labor market has evolved. Because even when people thought there was going to be a slowdown in 2022, the labor market was so hot coming out of the pandemic that companies did not want to fire people because it was so hard to hire them in the first place. Because people, it was, if you change jobs, you made more money. I continue to believe that was the hottest labor market we will ever see in our lifetime. Yeah, I don't see how it's ever equaled. And if you change jobs, you got like a 20% or 15% raise or whatever it was. The, the wage growth for changing jobs was insane. And so. So even though companies kept saying we think a recession is coming, they wouldn't lay people off because they were worried, what if we have to just hire them back? And now the labor market dynamic has shifted where the labor is not a control anymore and the company is back in control. And I think that's probably why you're seeing this. And even though this is anecdotal, I'm sure that there's a lot of other anecdotes that are just like this.

[Michael Batnik]

Correct. So the question is like, what do you do with this? What does it mean? How tight is the economy and this person experienced to the stock market? Right. That's a big question. Main street versus Wall Street. A couple of weeks months ago, you were talking about consumer spending and you were like, I just don't like what slows this down. I just don't see people spend changing their spending. Well, here's what slows it down. A potential recession. So this chart is from the conference board via the Washington Post. The percentage of consumers who believe there will be fewer jobs in six months is at the highest level since 2013. And this is definitely going to change people's spending habits. There is a slowdown in the economy. The labor market is cooling off. So again, don't miss on this. I am not naive to the risks that the economy is facing. I'm, I guess through the lens of the stock market, I'm only saying that 15, whatever we end up getting, listen, if it's, I don't want a 30 decline. It's not the end of the world. That's, that's the lens of the stock market, lens of the economy. I'm, I'm viewing this as a slowdown more than a recession. So nfi based small business optimism falls to a four month low. Here's a quote from Sam Brown. Uncertainty is high and rising on Main street and for many reasons. How future developments are resolved will shape the economy's future. Confidence that the economy will continue to grow is fading. Chamath tweeted. I really don't like to like mention individual names but in a negative tone, but I can't help it with this one. He said, long Main street, short Wall street, the spread trade of our lifetime has started and I just don't know what he's talking about. I mean, I think I know what he's doing. I think he thinks we're all really stupid. Can be.

[Ben Carlson]

That makes no sense though in a, in a slowing labor market.

[Michael Batnik]

It makes no sense. So okay, how's this for long Main street, short Wall Street. Americans fall behind on car payments. The percentage of borrowers at least 60 days late on their car payment is at the highest. Record. Highest on record. This is the subprime 60 plus delinquency index.

[Ben Carlson]

People got to start buying sedans.

[Michael Batnik]

We got.

[Ben Carlson]

Wait, wait, I got I. Before we miss it, I want to go back to the person who wrote in that email. I'm going to offer them some personal advice. They got an accounting degree, but they're going for the cfa. If you want to get a job, get your cpa. You will get a job in the accounting field.

[Michael Batnik]

Yeah, great advice.

[Ben Carlson]

Great. There is a lack of accountants right now. Maybe you don't want to do that with your life, but if you really just want a job, become a cpa. Honestly, that's what my dad told me when I couldn't find a job out of college and I basically told him to screw off because otherwise I wasn't going to be a cpa.

[Michael Batnik]

But all right, so getting back to stress in the market. So last night Delta adjusted their outlook for the first quarter in the securities filing. The outlook has been impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty driving softness in domestic demand. The stock was down 50 in the after hours. The market just opened. It's only down 5%.

[Ben Carlson]

But here's so it's down 30% from the highs.

[Michael Batnik]

Yeah. But here's, here's a quote that I highlighted. So. So Ed Bastian was on CNBC. He's the CEO of Delta. And Phil LaBeau said, Do you get the feeling that we potentially are heading towards a recession? And he said, I don't feel it. As you just said, we're growing 4%, not 8%. If it was a recession, we'd be down 10. Right. So again, things are slowing down and the market is going to react to that very quickly, as it already does has and is. But there's a big difference between growing 4 to 8% and contracting.

[Ben Carlson]

Right. And it also could mean there's going to be places in the economy when we have normalization like this or a slowdown that are going to feel like they're in a recession, even if the whole economy itself isn't technically in one. Right. And I still do think that housing could be the savior here. If rates plunge very quickly and mortgage rates fall, I think housing could be the shock absorber.

[Michael Batnik]

Ben, one thing that we didn't talk about, which I, I guess I keep. I keep, like, dropping hints like, don't, don't freak out. Don't do something that you're going to regret. If you are, like, really nervous now and you're afraid the market's gonna go lower, which very well may. And then you're gonna get even more together to go even lower, which it may, and you're having those feelings of, I just, I just want to feel better, I want to feel safe. I want to go to cash. Please don't. This again, please don't. This is not a comment on where the market is going. The market may go lower, it may go higher, it may not go lower. But the problem with getting out, and we've said this a million times, but it always bears repeating a correction. It's so easy to sell. Right. It provides instant relief. But getting back in is so hard because either one or two things is going to happen. Either the market is going to go lower, confirming your suspicions that the market is going to go lower and you're going to feel great that you got out. Ah, I avoided 4% downside, I avoided 10% downside.

[Ben Carlson]

Right.

[Michael Batnik]

It's going to reinforce that you were right and you're going to wait for it to go lower, or you're going to wait for the dust to settle lol before you get back in. That's one scenario. And then you're not going to get back in. Lower, let's be honest. Or worse, I guess if I don't, this is worse or better. You sell near the bottom, at the bottom. Whatever market gets high, goes higher. Are you gonna get back in? The market doesn't bottom on. On good news. It's not like you're. It's not like the good news is gonna come and then you're gonna get the old, okay, great. Like the market doesn't wait for you. The market bottoms on bad news, not good news. It doesn't let you back in. So please, if you have to, because you. You're legitimately having trouble sleeping at night, fine. You're taking too much risk and dial it back. But do not go to cash. Do not.

[Ben Carlson]

Right? If it's a. If a 10% correction scares you that bad and you're 90% in equities, dial it back to 80 or 70. But don't. Don't go all in or all out. That is just cash becomes so seductive to your point that it's just this gateway drug to constant market timing. And it's just. It's a bad, like over rebalancing. I don't even mind over rebalancing occasionally, even though you could make a. You probably should be leaning into the pain when stocks are falling, but I'm okay with that as long as you're not just going to the extremes of all in or all out. That's the bad. That's the bad part. Joe Weisenthal tweeted virtually every comment in today's ISM Manufacturing report is about uncertainty or hesitancy in doing business on account of tariffs. And he highlighted a bunch of them. Do you think a lot of this? Because it feels like a lot of the 2022 recession stuff for CEOs, it's not like they were necessarily predicting recessions, although some of them certainly were. It's kind of like they were saying, throw us a bone here. Help us out, right? We don't want to go into recession. We don't want to lay people off. And I think that's what a lot of these surveys now, and the CEOs coming out saying the slowdown is coming. They're signaling to politicians like, hey, if you don't want this thing to turn into recession, do something, please. That's kind of what it feels like.

[Michael Batnik]

I know you're really going to short corporate America. How much?

[Ben Carlson]

Not for long.

[Michael Batnik]

Like, how much evidence do you need that they're really good at figuring it out and navigating challenges?

[Ben Carlson]

Do you know what I really like, though, about the stock market. And I feel like the stock market is the least political place on earth now because everywhere else you go, there's on social media and on the news, there's spin or there's, you know, platitudes and there's lies and you can, whatever, there's confirmation bias. But the market does not care about politics or messaging or spin. If the market doesn't like your policies or what you're saying, it's not going to give you the benefit of the doubt. The market's going to react first and then ask questions later.

[Michael Batnik]

It's such a great point. It's just pure fear and greed. And that's. Some of that, obviously, is politics, like, bleeding into it. But. But you're 100% right. It's, it's.

[Ben Carlson]

You can't. You can't lie to the stock market.

[Michael Batnik]

Right.

[Ben Carlson]

You can't say, this is a great policy. Just wait. The stock market. No, show us first.

[Michael Batnik]

How's this for a spin? I saw somebody tweet this. Yeah. The Dow is plunging. This is happening because we have a precedent with the balls to undo a globalist economic agenda that's decimated American wages and quality of life. This is the pain that comes from real change. It's much easier to just pass the buck.

[Ben Carlson]

Sure. Guess what? The stock market doesn't care about your feelings. We do have to add some context to GDP now from last week. We said GDP now fell off a cliff. It looked like it. Like the economy is really, really slowing. Matthew Klein wrote a really good piece on this thing, on the overshoot. And honestly, the funny thing about where we are in the information age today is 30 years ago, we never would have had GDP now tell us GDP is going to slow, but we also wouldn't have had the substack really smart econ guy who knows everything about how it's constructed. How did he actually.

[Michael Batnik]

How did he figure this out?

[Ben Carlson]

So he says, while a lot could happen between now and the end of March, I would be extremely surprised if the current GDP now correction for 2025 Q1, turns out to be accurate by the time the official growth numbers are published at the end of April. And he said, Basically, Americans imported $28.7 billion worth of gold bars in January. That is up from a monthly average of less than 1 billion. And so raw gold, raw gold imports are also up. So it's saying this big import of gold, which I don't really understand why there was all this. Maybe just because gold's at an all time high. There was this massive importing of gold bars and I don't even know what that means, but he figured it out that this dynamic changed, like the import export balance that, that throws off the calculation of GDP now. I guess even Josh said the GDP now guy who created it said, yeah, this, this was a problem, so that's going to be reversed. So the economy looked like it was falling off of a cliff from that. And technically it's not really. So thank you to the wonks. I actually put the. So I get the, I get the overshoot into my email inbox because it's a substack. And then they have the Gemini thing for AI and it says, would you like us to summarize this email? I said, sure. And they say Klein suggests the model misses subtracting gold imports leading to an overstated goods trade deficit and a projected economic downturn. Good job, Gemini. The thing is, I don't have any loyalty to any of these AI programs or models. And I, I feel like people keep. Well, this is the best one and that's the best one. Aren't they all kind of the same?

[Michael Batnik]

No.

[Ben Carlson]

You don't think so?

[Michael Batnik]

No, I don't think so. I, I've noticed Gemini kind of stinks. Look how it gives you one sentence.

[Ben Carlson]

Well, that's what it said. It was a summary.

[Michael Batnik]

Yeah, but it's not.

[Ben Carlson]

No. So there was another one, but I just put that one. I don't know, I just. What, what are you just partial to ChatGPT?

[Michael Batnik]

I like ChatGPT.

[Ben Carlson]

Okay. I probably use that one the most, but I don't. Anyway, I gotta be honest, I haven't.

[Michael Batnik]

Even tried the others, but I've, I've used Gemini because it's in my Google and I've, I. ChatGPT is where I started.

[Ben Carlson]

Okay, so we've talked a lot over the years about the huge inheritance money that's coming. It's. I've heard estimates anywhere from like $50 trillion or $100 trillion in the next 20 to 30 years. I hate to rate on parades, but it's not going to really happen for a lot of people until they're way older. So this is from JP Morgan Guide to Retirements, which just came out the other day. It came out this week. They looked at today. If you're 65, the probability of living to a specific age or beyond. And they say if you're a non smoker in excellent health, there is a 43% chance, at least one. If you're a married couple at Least one of you is going to live to 95. 73% chance someone's going to live till 90. And even if you're not in excellent health, because obviously not everyone is, there's a, you know, almost a 20% chance someone's going to live to 95. 44% chance one of them is going to live to 90. The millennials who are waiting on their parents to die to give them their assets, which we've talked about, there's some people who, that's their retirement plan at the back of their head. Right.

[Michael Batnik]

I hope their parents live forever.

[Ben Carlson]

But you're not, you're not going to receive the money when you really need it. Now maybe some will need it if they don't save for retirement, but you're going to get it when you're like 60. 65. Yeah. Woohoo. Yeah. It's not like you're going in. Yes. And so maybe that's why we need more.

[Michael Batnik]

But I also do think that the, the wealth transfer will occur during the lifetime of these people, you know, a.

[Ben Carlson]

Lot of them and yeah, some of you.

[Michael Batnik]

And also these, these millennials that are waiting for their parents to die, they're getting everything paid for, probably, right.

[Ben Carlson]

Camp and family vacations and down payments. All right, so we've talked a lot about the economic uncertainty and the short term slowdown. I feel like everything that we're talking about right now is definitely short term in nature and it's not necessarily like this is for sure going to change the long term.

[Michael Batnik]

Well, that's the thing. Like if we zoom out, how many events have there been over the last 15 years like this? Not exactly like this, but events that scare the market and we laugh about it a year later. Right. Maybe this is different. Maybe this tanks the economy and changes the trajectory of, of the AI explosion. And I just, I just don't think it's going to. And I could be wrong, obviously.

[Ben Carlson]

So as Recline at the New York Times had this podcast and he transcribes it too. And he said there's so much else going on in the world right now to cover. I do think there's a good chance that when we look back at this era of human history, AI will have been the thing that matters. And so he says, for the last couple of months, I've had this strange experience. Person after person from artificial intelligence labs, from government has been coming to me saying it's really about to happen, we're going to get artificial general intelligence. And he kind of goes through what this all means for the labor market. And again, it's all speculation, but I do wonder. I still think AI is going to be the thing. So if we have a really bad downturn this decade, it's probably going to be because AI doesn't come through like people think it's going to.

[Michael Batnik]

I, I think it might be the opposite. I think maybe what if, like, what if we have the, the downturn because AI is so effective that it's like really impacting the labor market and putting people out of work?

[Ben Carlson]

Well, that would be the, the crazy thing is if we get a recession and people are lose jobs and then AI hits big time and then a lot of these people don't get hired back.

[Michael Batnik]

Right, Exactly. That. That's the nightmare scenario.

[Ben Carlson]

Well, that's.

[Michael Batnik]

By the way, that scenario is not like that hard to imagine either.

[Ben Carlson]

No, not really. That corporations would use the excuse of laying people off and just filling their positions with AI. But I think if we get a big bust or a big boom the rest of this decade, AI is the thing.

[Michael Batnik]

Yeah, I agree. I agree. All right, so we got the crypto reserve. Let me read a tweet from the crypto czar, David Sacks. Just a few minutes ago, President Trump signed an executive order to establish a strategic Bitcoin reserve. The reserve will be capitalized with Bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings. This mean it will not cost taxpayers a dime. It is estimated that the US government owns about 200,000 Bitcoin. However, there has never been a complete audit. The executive order directs a full accounting of the federal government's digital asset holdings. The US Will not sell any Bitcoin deposit into the reserve. It will be kept as a store of value. The reserve is like a digital Fort Knox for the character currency often called digital gold. Premature sales of Bitcoin have already cost US taxpayers over $17 billion in lost value. Now the federal government will have a strategy to maximize the value of its holdings. The Secretaries of Treasury and Commerce are authorized to develop budget neutral strategies for acquiring additional Bitcoin, provided that these strategies have no incremental cost American taxpayers. In addition, the executive order establishes a U.S. digital asset stockpile consisting of digital assets other than Bitcoin forfeited in criminal or civil proceedings. The government will not acquire additional assets for the stockpile beyond those obtained through forfeiture proceedings. The purpose of the stockpile is. I'm almost done. The purpose of the stockpile is responsible for. Is responsible Stewardship of the government's digital assets on the Treasury, Treasury Department. All caps, promises made, promises kept. Are you kidding me? Hey, the biggest nothing burger ever. They didn't do anything.

[Ben Carlson]

We did get. We got mad last week using taxpayer funds to buy. So at least they're not doing that.

[Michael Batnik]

Listen, some. I own a lot of bitcoin. I loved seeing it dump on this news. This is such promises made, promises kept. You didn't do anything. You're keeping the bitcoin that you have now. Listen, I'm not like completely minimizing it. I understand like this the symbolic important nature of like establishing it's a, it's a crypto reserve, but it's. What a hilarious spin.

[Ben Carlson]

Yes. So Cliff Asness actually wrote a.

[Michael Batnik]

Taking a victory lap for not selling the bitcoin that we forfeited. That we, that we got from. From Silk Road and wherever else we got it from.

[Ben Carlson]

Yeah, yeah. They're just not selling it. So Cliff as not. Not a big fan of crypto. Usually he's a quant guy. He says the new crypto Fort Knox is as dumb as it sounds. And he wrote a whole piece on this and he. This is I think the best point of like why we shouldn't have been buying. And I'm glad again I'm glad that we didn't just buy. He said finally and perhaps most obviously, even if crypto is a viable long term competitor to the US dollar, why on earth would we be promoting this direct competitor to ours being, to our being the world's reserve currency? Something that conveys upon the United States exorbitant privilege like we shouldn't be trying to compete with the dollar. It's one of the biggest benefits and advantages that we have over the rest of the world.

[Michael Batnik]

I don't understand how proponents of bitcoin as an alternative to the dollar is not anti America. Am I, am I missing something? Why would you want anything to compete with the dollar other than because you want to get rich personally?

[Ben Carlson]

Well, that's it. It's the bag.

[Michael Batnik]

I mean that's it. Give me a break. Don't. There's no spin zone in which, in which competition for the dollar benefits our country.

[Ben Carlson]

Yeah, and we've seen that like the reason that stablecoins work so well is because it gives people in other countries access to the dollar. Right. That's why stablecoins are so popular.

[Michael Batnik]

Again, I'm not anti crypto. I just, I don't see it that way.

[Ben Carlson]

We own it. By the way, I was, I, I dipped the toe. I put some really low limit orders in when crypto started crashing.

[Michael Batnik]

Did they get filled?

[Ben Carlson]

Some of them got filled. One of them almost last night I put it in for like 77. And I got close. But yeah, because I was sitting on a big cash pile. Mr. Market Timer Guy here. And we say don't do. This is my brokerage account. I'm. Okay. Market timing in crypto. Okay.

[Michael Batnik]

Okay, that's fair enough.

[Ben Carlson]

All right. Rocket is buying Redfin. What is your take on this?

[Michael Batnik]

Makes sense to me. TechCrunch reports that the new combined entity essentially pulls the two companies respective strengths in home search services and financing, bringing everything together under one virtual roof. It's a. It's an all stock deal for $1.7 billion. Redfin's market cap at the peak was almost 10 billion.

[Ben Carlson]

But it was a meme stock. I mean, this thing went crazy.

[Michael Batnik]

What is Redfin? Is it just shitty Zillow?

[Ben Carlson]

Well, I wonder if this is Rocket just trying to compete with Zillow. But I love Redfin. Has amazing research. Like their weekly pieces on the. It is amazing. And it sounds like the CEO is going to continue to keep. To stay on, at least for a while. So. Yeah, I don't know.

[Michael Batnik]

Not being a. I shouldn't say shitty Zillow. I don't know anything about it. I would just say it's like second tier Zillow.

[Ben Carlson]

Yeah. I really like Redfino. They have great research and I hope they keep putting it out.

[Michael Batnik]

Okay. There was an article in the FT by Robin Wigglesworth and it's a great chart showing private market marks of the private equity companies, two of which I own.

[Ben Carlson]

You viewing this as a buying opportunity? Yeah, I think they're not getting slaughtered, but they're down pretty good.

[Michael Batnik]

They're getting. They're getting hit pretty hard, I think some of them.

[Ben Carlson]

Which ones? Remind me which ones you own.

[Michael Batnik]

I own Blackstone and Blue Owl.

[Ben Carlson]

Okay.

[Michael Batnik]

But it's funny because it shows kkr, Blackstone, Carlisle, Apollo, Aries and Brookfield and the stocks are getting slaughtered and then it shows private market marks just straight flat. I know people get really upset, like this drive Cliff. This drives Cliff nuts. And I understand exactly why. But this is like the benefit of private markets.

[Ben Carlson]

This is why people do it. Right.

[Michael Batnik]

And I know it's not the whole reason, and I know it's like a charade, but like, sorry, this is one of the benefits of not market to market. It is what it is. It's not going to change.

[Ben Carlson]

I had a tweet that went a little viral the other day. I'm going to throw it in here right now and see if you laugh or not. I mean, this is not necessarily my best work, but this is, this is. Okay. All right. I'm putting it right underneath the chart here. What do you think? You know what really sells it is the plus 0%. Right?

[Michael Batnik]

That was good.

[Ben Carlson]

That was.

[Michael Batnik]

You're right. So the tweet is current drawdowns, S&P 500, the NASDAQ, the Russell. And then private credit is plus 0%. You're right. That was very good.

[Ben Carlson]

I did it.

[Michael Batnik]

That was very good.

[Ben Carlson]

Oh. So the way back machine. Usually we look at our old charts, but Josh sent us this piece in the New York Times that was like 30 charts for how Covid changed the world. And I pulled a couple out and I still think the craziest, maybe the craziest chart of all for this decade is oil prices that went negative and then Russia invaded Ukraine and went crazy. And then it's still just kind of normalized. I think it's back to $66 a barrel. Almost where Billy Bob says the perfect price is. Did he say the perfect price is 67?

[Michael Batnik]

I forget.

[Ben Carlson]

70. And this one I'd never seen before. Alcohol sales in the pandemic. I had never seen this before. Went absolutely bananas.

[Michael Batnik]

I think I was drinking every night. Oh yeah, that for like eight months. Maybe even. Yes, maybe even two years. Who's to say?

[Ben Carlson]

I do remember you telling me, like I'm. What are you doing now? I'm pouring myself a drink. It was like 6 o'clock at night or something. But I, I didn't realize it was.

[Michael Batnik]

Like being at a hotel every night.

[Ben Carlson]

It's on the pre pandemic trend now, but it, it went up massively through like 20, 21, 2022. I never see. Did you see any of these charts that stood out to you? I mean, there's a lot of good ones in here.

[Michael Batnik]

I haven't looked at them yet.

[Ben Carlson]

Okay. That's all I got.

[Michael Batnik]

All right. You know, I'm not, I'm not usually a self help guy. In fact, some of the self help nonsense that eat people up, that people eat up makes me a little angry, but it's not really fair because I do know that there are people that take a lot of comfort in the self help stuff. I know that it helps people get through some hard times.

[Ben Carlson]

So I do wonder though, how much because there's so much of it all coming out all the time. Like, I just wonder what Percentage of people it actually helps. And what percentage of people just consume and consume and consume because it makes them feel better, but it doesn't actually change their behavior?

[Michael Batnik]

Yeah, I don't know. I guess the reason why I have like a, even a little bit of a soft spot is I remember Tony Robbins book Awaken the Giant Within. Like, my mom had it on her, on her nightstand. And when my parents got divorced, you know, a long time ago, like, I just remember that book being there. And so maybe that's why I kind of have a little bit of a soft spot for it. But I think it's mostly even if it does help people. But anyway, I say all that to say that this tweet I liked, somebody tweeted blue w mist I'm 37. Instead of regretting that I can't wake up age 18 again, I pretend to myself that I'm 90 and I've woken up at age 37 and then I get to magically, wonderfully have the next 50 years again.

[Ben Carlson]

That's good perspective. I like perspective.

[Michael Batnik]

Right.

[Ben Carlson]

Yes. So I was driving. I don't know where I was, but you know, when you drive through kind of a rural area and there's that one house that has just a million things strewn about the lawn. There's like cars on cement. You know, there's stuff everywhere.

[Michael Batnik]

It's like a house from like 40 years ago. Like, it doesn't belong in modern civilization.

[Ben Carlson]

And so I saw this Pontiac transportation minivan. Look at a picture of this. You remember these things. And the one that I saw was red with a gray. I just, I. So I went down a little rabbit hole of 1990s minivans. And I can't believe how ugly some of the cars were that we used to drive in. They were just remember like the Astro vans. And look at this thing.

[Michael Batnik]

It was just the Buick Aztec. Or was it the Aztec? Was that the ugliest car? That was like around 2000. It was like.

[Ben Carlson]

Oh yeah, that was Walter White drove and Breaking Bad. Yeah, that was pretty bad. But the 90s, just the minivans were.

[Michael Batnik]

The Plymouth, there was like a weird like box shaped little car. Was it a Plymouth or a Chrysler? I can't remember.

[Ben Carlson]

Oh, yeah, there's some bad. Yeah.

[Michael Batnik]

Ben, we're, as we've said a bunch. We're not, we're not spring chickens anymore. I was, I just saw an Instagram reel where it was a couple of dudes and they were doing a reel of. Did you know the president of the Boston Bruins? This former Hockey player Cam Neely was in was seabass and Dumb and Dumber and their minds were blown. Like, how do you know that?

[Ben Carlson]

And like, oh, like they didn't know.

[Michael Batnik]

Well, because we all knew it. Everyone who was 8 years old.

[Ben Carlson]

That's what I'm saying. Yes.

[Michael Batnik]

Like it was a big thing at the time.

[Ben Carlson]

That guy over there is Sea Bass. I still contend that's the. On Wayne's World deal. A couple weeks ago, Kyle Brandt said Wayne's World is the most quotable movie all time.

[Michael Batnik]

It's Dumb and Dumber.

[Ben Carlson]

Absolutely false. Dumb and Dumber is the most quotable movie in history. All right, this was a good one from a YouTube comment. I bet most of you wouldn't think of this as a top recession proof job, but it's definitely up there. A casino dealer. My mom has been working in a casino for 20 to 30 years. And no matter the economy, people always find a way to gamble.

[Michael Batnik]

Yeah.

[Ben Carlson]

I do wonder if that will be put to the test though, of the. The DraftKings and fan. Because DraftKings is already down a lot. The stock. I wonder if that will be put to test in the next actual recession.

[Michael Batnik]

Yeah, I think so.

[Ben Carlson]

The fanduels and I think so. But it is funny to think the casinos might be a little different than that.

[Michael Batnik]

This is a great email. I don't really. I don't know that I have a great response to this, but I thought it was. I thought it was cute. Inspired by Ben's great take on eggs being a great cheap source of protein, I wanted to challenge you guys to come up with top 10 bank for your buck. Way to feed a family. I mean, I know you're going to say Little Caesars.

[Ben Carlson]

Oh, that's. I was going to say. I was thinking eggs, bananas, Little Caesars and pasta.

[Michael Batnik]

Jimmy John's. Oh, wow. You have eggs. Bananas. You can't feed a family of bomb bananas. I guess you could do breakfast. Bananas. Bananas for breakfast.

[Ben Carlson]

Bananas are so cheap. Yeah, every time. I just got three pounds of bananas yesterday for like a dollar fifty.

[Michael Batnik]

What are you, a gorilla? Three pounds. How much is that?

[Ben Carlson]

Me and my son and my kids, we all love bananas.

[Michael Batnik]

How much is it? Three pounds.

[Ben Carlson]

But the thing is, it's like two big banana. The thing is I get a lot because every once in a while, you know one or two of them is going to be bad. You're going to throw them out, but who cares because they're so cheap. So I just buy extra.

[Michael Batnik]

You don't throw out the bad bananas. You Make a smoothie out of it. Come on.

[Ben Carlson]

Well, my wife does that. She freezes them. And they make banana bread, too. My kids love banana bread, so we do a lot of that. Okay, I'll think about that. Okay, story time. I guess we can talk about this. So you came to visit me this weekend. For reasons that are uninteresting, we put off my brother's funeral service. He didn't want a regular funeral, so we put it off and had it this weekend. And so, I don't know, it was maybe a month after he died or so. And I was kind of excited for the beginning, and then I dreaded it as it was approaching, because I knew I was going to see all the people I know in my life that, like, mean something to me and to him. And it was definitely an extreme day. So I appreciated you coming for sure. And it was funny how many friends and family afterwards came up and said, so I talked to Michael, and I felt like I knew him already. Everyone already felt like they knew you, which was funny. So you did a good job fitting in and literally meeting everyone in my family. But, yeah, I mean, the most profound thing was the fact that we'd set it up for this. He didn't want a regular funeral. So we just had what we thought was gonna be an open house for, like, in a big event hall. And we did it for three hours. Cause we figured people would come and go.

[Michael Batnik]

He.

[Ben Carlson]

And, like, everyone just stayed.

[Michael Batnik]

Everyone came and nobody left.

[Ben Carlson]

It was, I don't know, 300, 350 people, standing room only. So that part of it was like. I don't even think he had the realization of what a profound impact he had on people, you know, so that part was cool. It was. But just seeing the looks on people's faces, that was the worst. Yeah, my uncles, my aunts, cousins, his. His friends. And so that part was just. It was all like, I. That was awful.

[Michael Batnik]

I, like, you know, what's the most contagious thing in the world? Tears.

[Ben Carlson]

Yes. And there was the end.

[Michael Batnik]

If somebody comes up to you with tears, you're not gonna be like. You're not gonna, like, laugh.

[Ben Carlson]

That's what happened to me. Like, in his friends seeing me for the first time, they were feeling bad for me, I was feeling bad for them. And so, yeah, there was a lot of tears shed. But it was, you know, it was great to see the impact he had. It was still. It was just a very, very hard day. And I just been thinking a lot, and I don't know if this is true for you because I think one of the things that I've always thought was like a very positive about you is like, you. I think Tim Ferriss said this once and this is getting back to that self help stuff. He said the only way to make it through life is the ability to have difficult conversations. And I feel like whenever we partner up on something, I'm the good cop and you're the bad cop. You don't mind having difficult conversations with people. You actually flourish in those moments.

[Michael Batnik]

But only in business. Well, not in my personal life.

[Ben Carlson]

Well, maybe that's part of it, but I'm like that in all aspects of life. I don't like having difficult conversations. That's just.

[Michael Batnik]

Yeah, you climbed out of your car instead of honking.

[Ben Carlson]

Right. But I feel like I've had so many conversations with friends and family members that I never thought I would have in the past month or so that, like, I feel like nothing can. I feel like I have this armor on now. Like, I don't. There's nothing that can make me not willing to have a conversation with someone about something because you hear other people opening up and it's just like there's so many of it that I told you I'm totally desensitized now, maybe for right or wrong. It just, it totally has taken a layer of something off of me. So I think that. And I think that's going to be good and bad in certain ways. But anyway, it was.

[Michael Batnik]

You did great. Your speaking was incredible.

[Ben Carlson]

Yeah, it was. I put a lot of work and thought into that, so I was glad people liked it. But I just, Yeah, I wanted to get a good sense of him and I tried to make it more upbeat and positive because I didn't want to just sit there and cry the whole time. So my son told me that I can't, I can't weep up there. So I did what I could.

[Michael Batnik]

Did George have fun with me?

[Ben Carlson]

George had fun with you? Yes. They. I told you my kids were very excited to meet you because they've heard so much about you and they see you on YouTube and George goes, so he's bald. Right. And that was, that was the. But there was a few people who said, I've only heard Michael. I've never seen him, because they don't watch the YouTube or whatever. They, you know, they've. And so they didn't. They were trying to pick you out. And some people were way off. Right. Cause there was a few. I have a few people who are like New Yorkers or that were there. And so anyway. Yes, but, but it is like the, the one of the best parts about this that you never want to go through a situation like this, but you just, it makes you realize how much like love and support you have from people and that is like the thing you don't want ever to have to feel that. But knowing it's there is wonderful.

[Michael Batnik]

Yeah. So I'm an emotional person, as you know. I like to feel the feelings. And I've been on a lot of airplanes over the past couple of weeks, so I've had time to get into some things. And for the first time in my life, I've been binging a podcast. Thanks to you. I'm a huge fan of Neil Brennan's comedy. I love his Netflix specials.

[Ben Carlson]

Three Mics I think is an all timer comedy special.

[Michael Batnik]

It's incredible. And so he has a podcast called Blocks, which was one of his Netflix specials, where the blocks are things like anxiety and doubt and depression, all these sort of whatever, whatever you feel.

[Ben Carlson]

He's a very deep guy.

[Michael Batnik]

Yeah, whatever we all feel in our daily lives that inhibit growth and whatever.

[Ben Carlson]

Right.

[Michael Batnik]

So he has a podcast where he interviews friends, comedians, actors. And for the first time in my life, I binged a podcast. I, I didn't listen to all of them because there's over 100 episodes, but I think I listened to like 10.

[Ben Carlson]

Just pick out the best guests basically. Right.

[Michael Batnik]

So I, I started from the most recent one, Billy Macy, William H. And just work my way backwards. And then also like, then I skipped around that I went to the beginning, but one of the. So I can't recommend it highly enough because not a typical interview. Oh, tell me about this time that you got this job. Who else almost got the job? What, you know, what's it, it's, it goes deep and you get to see that like all of these people are people and to hear them talk about just life. Like I, I just, I enjoyed the. Out of it. But I also noticed that I really enjoy and I think especially because laughter, tears are contagious and so is laughter. Like when you're listening to a podcast and it's emotional and, and especially when it's funny. Like you want to see people, you want to laugh with them. And so I understood for the first time why people watch us. And you can now watch us on Spotify, by the way. But what, But I was upset because the first interview with, with, with Letterman, there's no video. And so it didn't really hit me until I was like oh, man, I wish this disappoint. They wish you could watch it.

[Ben Carlson]

So are you watching the Spot. The Spotify one while it's on? Is that how you did it?

[Michael Batnik]

Well, I'm not. I'm not, like, sitting down. You have it there, but I was on. I was on the airplane, and so. And if it's in the car, you know, just to glance over. So I very much enjoy. Not that I'm going to ever sit down and watch a podcast on my couch, although I know a lot of people do. But I get it. Like, it's. It's a much richer experience if you didn't listen to.

[Ben Carlson]

I like the Jerry O'Connell one, actually.

[Michael Batnik]

Okay, I skipped over that one. I like Jerry. A funny guy. All right, so, Ben, I. I want to give you credit. The Pit is my favorite Ben Carlson recommendation. I love Pittsburgh. I've only been there once, but had a great time there. Wonderful city. It's such a good show. It's. It's so. It's just so high quality. I don't like the squeamish parts. As we mentioned earlier. At the top of the show, I look away, but, my God, is it good?

[Ben Carlson]

So here's my take, and this may be a little hyperbole, but they have the Oscars for movies and they have the Emmys for tv. I feel like every year this sounds like a Bill Simmons take in a way, but every year they should have a heavyweight belt. And the heavyweight belt goes to the person who is the best actor or actress that year. Like, the best performance of anything. So it could be a movie, a TV show, it could be snl, any of this stuff. And I feel like Noah Wiley, as a doctor on that show right now is the best performance on anything right now. It's incredible. He is so good and believable, and again, I think it's because he was on er. But, yeah, it's very good.

[Michael Batnik]

You know, one of the things about the show that I really like is, like, I have a pretty good life, and I think I'm very aware. I wake up every day thinking about how lucky I am to be where I am, given my shitty background and whatever. But this is such, like, a great reminder of, like, how great we have it. The. The. The people. Both the stories and the people in the emergency room that are like, obviously happens all day across the country and across the world. Right. Like, these are real stories.

[Ben Carlson]

Yes.

[Michael Batnik]

And the doctors that have to deal with this trauma on a daily basis. I get. I. It's. You cannot Begin to imagine what those people, what those hero, like real heroes do.

[Ben Carlson]

It really makes you appreciate doctors and nurses and anyone in the healthcare professional a lot more, doesn't it? Like, can you, can you imagine if every day you had to deal with that much?

[Michael Batnik]

No.

[Ben Carlson]

Oh, my God. Yes. I have a friend whose wife is an ER doctor and I thought about it like, oh, my gosh, I can't. It's obviously not always that hectic, but there are obviously times when it is very hectic like that and you're constantly going from one trauma to the next and I can't even imagine the amount of stress that puts you under. And I talk to people who say, like, listen. Because I've had a lot of doctors reach out actually because of my brother and say, like, listen, we, because we do this all the time, we have to like, separate our thoughts and feelings. But every once in a while we have these feelings that creep in and that's when it's hardest.

[Michael Batnik]

They show that on the show.

[Ben Carlson]

Yes.

[Michael Batnik]

My God is good. Lastly, I finished paradise on Hulu and I enjoyed the hell out of it. I wasn't looking forward to season two, but now I am.

[Ben Carlson]

Did you like it more? I think I liked it too. I think season two could be a bear market. It happens a lot, but I don't know. We'll see.

[Michael Batnik]

I have faith in the creator. The guy that did this is us.

[Ben Carlson]

Yeah, it's very old. It was better than I thought it would be. Once when they make the reveal of what's going on in the first episode, I kind of thought like, oh, really?

[Michael Batnik]

Well, because you're like, is this going to be super cheesy?

[Ben Carlson]

Yes, that's what I thought. And it was pretty well done. So I watched a Michael movie this weekend on hbo. I watched Heretic with Hugh Grant.

[Michael Batnik]

Yeah, I don't think you liked it.

[Ben Carlson]

Nah, I didn't like it. It wasn't for me. Just it's kind of like I knew it was coming and what's happening. That kind of movie just doesn't. It doesn't like. I knew, I knew what was going to happen because it's one of those like, hey, idiot, get out of the house.

[Michael Batnik]

I thought the end was. Was really dumb. Like it totally fell apart. But I enjoyed the first 80% of it. You didn't enjoy it at all?

[Ben Carlson]

I mean, it was a good performance by him. Yeah, but just not my thing. It's okay. No big deal. I want to end with two things. One, I want to make the prediction that we make during every correction, which is that at some point when you have such a big, like, you have so many big down days, we're down 3%. Yesterday, the NASDAQ was down 4%. We're going to get a face ripper one of these days. That's obvious, right? In corrections, even if the correction still goes down, you get one big face ripper along the way.

[Michael Batnik]

Always.

[Ben Carlson]

And then two. We're going to be in Miami next week, which I'm really excited about. I can't wait to be in the sun. And we're going to be at future proof citywide.

[Michael Batnik]

I really hope the market stabilizes for many reasons. I don't, don't like seeing the market go lower. I also really don't want to be like, having a good time. And you know, I do remember Josh.

[Ben Carlson]

Was saying this the other day in our firm call that it was like September 2022, which is like the height of the inflation. That was when we had the first city future proof in California. And yeah, I don't know. I kind of like having a little more excitement in the air about it. You're right. It's more fun when it's just laid back. But I kind of like people having people a little on edge thinking about this stuff.

[Michael Batnik]

Really. But I just, I don't want to be like. Because it's, it's. We have a good time there. We do, you know, And I don't want to be having a good time when like the world is. Or the market is imploding.

[Ben Carlson]

Okay, so you want to see, you want to see a rally?

[Michael Batnik]

I just want to say, could we just not. We just chill out, stop the selling for a second.

[Ben Carlson]

I didn't look what's. So the market is open. It's 10:00 Eastern or so S&P is.

[Michael Batnik]

Down 30 basis points.

[Ben Carlson]

Okay.

[Michael Batnik]

Yeah, not great. But I don't know if this is good or bad. Like, the selling is very orderly. You're not seeing like it is. Nicholas was talking to Josh about this and like, you don't want to see the VIX grind higher. Like, you want to see a VIX spike to, like, really get a flush. Like a, a higher grind is like, just indicative of like, uncertainty. And, and it's just, it's not good. You haven't seen. But on the, on the flip side, you haven't seen, like, the credit market react.

[Ben Carlson]

That's when you really start worrying about a recession when the spreads finally blow out.

[Michael Batnik]

Right. So we'll see where this goes. We'll see where this goes. We'll see you next week.

[Ben Carlson]

I don't know what time we're doing a live. Well, we're doing a live Animal Spirits at Future Proof.

[Michael Batnik]

So if you're just going to do it, we just could do a regular show.

[Ben Carlson]

I think we do. Especially if there's a question going on. I think it'll be plenty to talk about.

[Michael Batnik]

Yeah, we thought.

[Ben Carlson]

I was trying to do something different, but I think we're going to have to do just a regular. Here's what's going on because it's going to be crazy time.

[Michael Batnik]

All right. Well, market drives narrative. All right. Animal Spirits at the compound News. Thank you for listening. Everybody. Stay safe, stay sober. Don't overreact. We'll see you next time.