Animal Spirits Podcast: "Wait, Are We in a Recession???" (EP. 440)

Date: November 26, 2025
Hosts: Michael Batnick (A) & Ben Carlson (B)

Overview:

In this Thanksgiving-week episode, Michael and Ben reflect on market volatility, recession risk, inflation angst, and shifting investor psychology at the tail end of 2025. Ben checks in live from Disney, interspersing economic analysis with anecdotes about theme parks, the K-shaped economy, and American optimism. The duo unpacks recent market fireworks, media narratives, bubble fears, bond markets, AI, real estate, private credit, and the state of consumers—peppering the discussion with notable stats, data, and pop culture recommendations.

Key Themes & Discussion Points

1. Recent Market Volatility & The Nvidia Flash Reversal

[03:11 – 10:59]

• Nvidia's "Blowout" Earnings and the Market Selloff

  • Michael recounts Nvidia's stellar earnings -> after hours surge -> opening gap up -> then an abrupt intraday reversal pulling the entire S&P 500 down:

    "Even if you had the news ahead of time, you couldn't necessarily profit from it… you only know what's priced in after the fact." – Michael [04:01]

  • Ben references a tweet summarizing the confusion:

    "There wasn’t a single negative headline… nothing that explains a selloff of this scale. Sometimes the easiest explanation is people are sitting on huge gains and just decided, this is a great excuse to take some profits." – Ben reading Bull Theory Tweet [05:12]

  • Discussion of computer-driven trading/algo impact – but Michael notes market behavior isn't just algos.

• Lack of Follow Through and the "Gnarly Rug Pull"

  • Michael:

    "That type of move... is rare. When the S&P 500 opens 1.5% higher only to close 1.5% lower… It doesn’t happen. That’s not a good thing." [06:38]

  • Yet, the next day saw robust buying (444 S&P 500 stocks up), reinforcing just how uncertain and humbling current markets are.

• Bubble/Crisis Anxiety vs. "Melt Up" Fears

  • Ben: "A lot of investors don’t want to get into a melt up bubble situation... I think the fact that we keep having these little slaps on the wrist I think is a good thing." [07:57]
  • Credit markets (high yield) aren’t blinking—JNK up 7% YTD.

• Peak-to-Trough Drawdown History and Sentiment for 2026

  • The average intra-year S&P drawdown is -16%. Ben asks if 2026 will be better or worse; Michael leans “worse,” echoing market-wide nervousness:

    "Consensus is the markets are rightly on edge... I'm not cavalier about risk." – Michael [10:02]

2. Bubble Talk, Contrarian Calls, and Market Internals

[10:59 – 14:19]

• Acknowledgement that everyone sees a potential bubble, yet corrections have been contained and rooted in fundamentals, not mania.

  • Michael: "You shouldn't be rooting for [melt-ups]. That’s not healthy. Slow and steady wins the race." [10:31]

• No euphoria à la late-‘90s tech bubble, with the Nasdaq 100 five-year rolling gains well below dotcom era excesses.

  • "1990s level of euphoria is probably never coming back because there’s so many outlets for contrarianism today." – Ben [14:19]

• Media negativity discussed—bad news sells, drives narratives, and shapes collective mood:

  • "If the people weren’t clicking and reading articles with a negative bias, we wouldn’t be getting them." – Michael [15:40]

3. Fed Policy, the Unclear Economy, and the Recession Question

[16:06 – 20:12]

• Debate about how monetary policy fits recent history:

  • Ben notes this is rare—rate cuts accompanying stresses, not hikes.
  • Michael flags a concerning labor stat:

    “Private sector employment has declined in each of the last five months outside of healthcare and hospitality—never happened in 35 years outside a recession." [17:06]

• Perceptions versus reality:

  • Net worth for Americans under 35 at record highs in 2022, but the gap between "vibes" and data diverges.
  • Social media and granular economic data amplify grievance, bias, and polarization.
  • Michael on the K-shaped economy discourse:

    "There are people with assets and people without. My point is I don’t like how it is causing such toxic political outcomes… the way the narrative is being framed... is tearing apart the fabric of our society. That’s the part that I reject.” [19:38]

4. Inflation: The Lingering, Uniquely Painful Problem

[21:19 – 25:07]

• Persistent inflation over five years is wearing down the middle class.

  • Costs for goods/services are 25% above 2020, and many “thought some of these prices were really going to go back.”
  • Ben’s take: “Want to know why I think this has been so painful? Because we didn’t have a recession, as weird as that sounds."
  • Michael: "High prices are the bane of all of our existence... When you shove 15 years of price gains into a short window... it takes so long to get used to it." [23:09]

• Discussion of how inflation typically resets only in a downturn, and collective sticker-shock is amplifying angst even as rate of inflation moderates.

5. AI and Market Winners: OpenAI, Nvidia, Google, Rotating Narratives

[25:16 – 28:55]

• Noting Google’s sudden resurgence on the back of Gemini AI and positive buzz (e.g., Salesforce CEO’s viral tweet):

  • “Holy shit. I’ve used ChatGPT every day for 3 years. Just spent 2 hours on Gemini 3… the leap is insane… it feels like the world just changed.” – Marc Benioff tweet read by Ben [26:14]

• Michael shares his personal Google trading saga, illustrating how media-driven narratives can sway even seasoned investors.

• The AI “musical chairs” between winners—first OpenAI, then Nvidia, Microsoft, Oracle, and now Google—reflects how storylines shift with each innovation/spike.

• Both agree: The best way to play AI? Don’t try to pick the winner—“Nasdaq 100 is your picks and shovels ETF.” [28:50]

6. Crypto and Bitcoin: Narrative Cracks, Price Action Contradiction

[29:29 – 36:19]

• Deep dive into Bitcoin and broader crypto’s steep 2025 correction—without clear catalyst.

  • Despite supposed macro tailwinds (ETF adoption, favorable politics), Bitcoin sold off sharply.
  • Ben: "You literally have someone in the White House pumping crypto… and it still crashed. I’m… very surprised." [34:00]

• Discussion of persistent narrative whiplash in crypto—digital gold thesis, Ponzi accusations, ETF effects—and why it “feels stronger” than any other asset class.

• Michael and Ben admit to trimming previous Bitcoin holdings; Ben tentatively stepped back in on the dip, Michael is waiting for more pain before buying.

• Highlight: Ease of moving crypto between platforms (Robinhood to Fidelity) is now shockingly good, though daily transaction limits apply.

7. Real Estate: Narratives vs. Data

[36:27 – 39:08]

• Tease of an upcoming interview with Logan Mohtashami, who pushes back on surveyed home buying narratives and the "apocalypse" among young buyers.

  • Claims median homebuyers' age data may be flawed due to non-response from younger people.
  • Despite scary headlines (“more sellers than buyers”), housing prices keep rising, and mortgage debt relative to GDP and housing value is at multi-decade lows.

• Ben: “If you’d told someone in 2008 that 20 years later, mortgage debt as a % of GDP would be at a low… people would have thought this must be nirvana. It’s the greatest housing market ever. What happened?”

8. Private Credit & Equity: Opportunities, Worries, & Institutional Grumbling

[39:53 – 44:12]

• Shift of credit risk outside the banking system seen as a post-2008 positive, not a threat, as any blow-up would hit PE investors, not taxpayers.

  • Michael: "If some of the loans go bad… then the equity holders of Blackstone will get hit. Very simple." [41:19]

• Institutions are now worried about private equity’s “mass market” embrace (i.e., retail money crowding in), possibly eroding their returns.

  • Ben: “The wealth channel is going to bring your fees down. So even if gross returns are lower, net might be similar.”

9. Consumer Resilience, Disney, and the Limits of Anecdote

[46:53 – 52:22]

• Ben checks in from Disney—“There’s no recession here.”

• Discussion: Given persistent crowds at airports/theme parks, do anecdotes still matter for reading the economy?

  • “Would we know if there was a recession just by living? Would we see it at the airport, at restaurants? I don’t know.” – Michael [47:46]

• The rise of “Disney adult” culture fascinates Ben—a lighthearted look at America finding joy amid uncertainty, and a reminder that both “lines” of the K-shaped economy seem to be enjoying life at Disney (just some with paid line-cutting privileges).

• Ben’s closing note: “As a species, we’re hustlers… people are going to figure this out. We’ve always figured this out.” [52:18]

Timestamps for Notable Quotes & Segments

| Topic | Speaker | Quote / Key Insight | Timestamp | |-----------------------------|-------------|-------------------------------------------------------------------------------------------------------|-----------------| | Market reversal & Nvidia | Michael | "Even if you had the news ahead of time, you couldn't necessarily profit from it…" | 04:01 | | Market’s “gnarliest rug pull” | Michael | "That type of move... is rare… when the S&P 500 opens 1.5% higher only to close 1.5% lower." | 06:38 | | Bubble fears & melt up | Michael | "Melt ups are bad. Nobody should want that… Slow and steady wins the race." | 10:31 | | Media negativity | Michael | "If the people weren’t clicking and reading articles with a negative bias, we wouldn’t be getting them." | 15:40 | | K-shaped economy divisions | Michael | "I don’t like how it is causing such toxic political outcomes… it’s tearing apart the fabric of our society." | 19:38 | | Inflation’s pain | Michael | "High prices are the bane of all of our existence… it takes so long for the RAB to go through the python…" | 23:09 | | Google AI resurgence | Ben (via Benioff) | "Holy shit. I've used ChatGPT every day for 3 years… spent 2 hours on Gemini 3… the leap is insane." | 26:14 | | Crypto/Pricing contradiction| Ben | "You literally have someone in the White House pumping crypto… and it still crashed." | 34:00 | | Real estate loan risk | Michael | "If some of the loans go bad… then the equity holders of Blackstone will get hit. Very simple." | 41:19 | | On Disney as economic indicator | Ben | "There's no recession here. And I wonder, do anecdotes even matter anymore? Because it's so packed here." | 47:09 |

Lighthearted/Personal Moments

• Multiple “Disney adult” observational stories and line-cutting as a metaphor for the K-shaped economy.
• Discussion on air fryers vs. ovens as a minor home technology revolution.
• Michael considering a Lexus after "getting bullied" by listeners.
• Ben’s optimism about American hustle, based on an Uber driver/private chef’s multitasking.

Recommendations & Closing Thoughts

[55:44 – 63:26]

• TV & Film:

  • The Beast in Me (Netflix, Claire Danes/Matthew Rhys) – strong acting, compelling drama.
  • Eddie Murphy documentary (“fantastic”, "he could still turn it on if he wanted to") and classic stand-up Raw.
  • Wind River and other Taylor Sheridan films praised over his TV work.
  • Landman, recent Rewatchables episodes (The Truman Show, Weird Science).
  • Marty Scorsese docuseries on Apple TV (“movie person’s delight”).

• Daily living:

  • Michael touts Tommy John undershirts (now 50% off) for sweaty travelers.
  • Ben and Michael sing the praises of air fryers and ponder why we don’t have oven-sized models.

Tone & Style:

• Breezy but data-driven; analytical with a hefty dose of humility and humor.
• Candid about predictions, personal investing errors, and the psychological toll of modern markets.
• Sprinkled with pop culture, consumer anecdotes, and irreverent asides.

Notable Takeaways & Flow:

• Markets remain jumpy and humbling, even in the absence of clear headlines.
• Bubble talk is everywhere, yet true speculative euphoria is lacking.
• Inflation is still the great pain point; everyone feels it, even as rates normalize.
• There’s a widening gap between economic data and personal/political perceptions.
• The best AI play is probably the broad index, not winners’ roulette.
• Crypto’s volatility and market narrative are uniquely visceral.
• The consumer is more resilient than the headlines suggest.
• Amidst it all, Americans are still queuing for Disney rides, innovating new side hustles, buying air fryers—and hustling forward.

For more recommendations, stats, charts, or recap of this episode, check out Animal Spirits at The Compound.