Batnick and Carlson provide a necessary reality check by reframing the current market as a return to historical equilibrium rather than a speculative bubble. Their focus on broad market participation offers a grounded perspective that effectively cuts through the noise of AI-driven hysteria.
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Say Bubble One More Time. I Dare You! | Animal Spirits 474
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Welcome to Animal Spirits with Michael and Ben. All right, Michael. The S&P 500 as of this recording is down about 2% from the all-time highs.
>> That's obviously nothing. You can't call that anything. That's that's it happened.
>> But there are a ton of stocks that are like having a blood bath right now.
We've talked a lot about stocks that have been going up, all the semiconductors, and I guess some of those have come in, but there there's a huge blood bath right now.
>> Can I ask you Yes.
>> 5% pullback, 10% correction, 20% bare market.
>> Yes. Do we want to give the 2% a name?
>> Hiccup.
>> Uh, stubbed toe. It's like when you stub your toe. Is that fair?
>> Yeah. Stinks for a second.
>> So, I want I want you to go bottom fishing with me here. Oracle is more than 60% off the highs. I put in the crypto here, too, because those are that the counts as tech. Ethereum is 60% off the highs. Bitcom is 50% off the highs.
Uh, Netflix 50% off the highs. We're going to talk about them a little bit later. SpaceX is already 40% off the highs. That was really quick. Intel is 30% off the highs. If you did the whole semiconductor memory space, DRAM is down 33%.
So, this is like the agony and ecstasy of picking stocks, obviously, that you can have this happen while the market is really still doing fine.
>> Mhm.
>> You're you're a value investor right now in the tech space. Where are you looking?
>> Well, I own Netflix. We'll talk more about it. Um, I bought more People are p people are pouring dirt on Netflix's grave.
>> I bought more Netflix yesterday. We could talk more about that later. Uh which am I botting fishing for? I think there's a lot of opportunities.
>> I I guess it's it's really really interesting that in a innovation boom that this still happens that the this is this has to be the biggest during a boom or a bubble or whatever you want to call it. Maybe we can't call it a bubble anymore.
uh the range of outcomes for the winners and losers has to be never been wider than this for for the the space that's winning >> inside the stock market.
There is a violent separation. You know the phrase money goes to where it's treated best. I feel like that is like the theme of 2026. If it's not working, it's getting destroyed. And if it's working, it's working really, really well. Now, we saw a lot of the air come out of the overly crowded memory trade, which I thought I think is fantastic.
>> Yeah, definitely needed to happen.
>> You need this. I am nothing is nothing is better in my opinion than an awesome uptrend and letting some of the air out of overenthusiasm.
Never like to see people lose money. Say that every time I say a comment like this. But you need the wall of worry to emerge for stocks to ultimately go higher. And the wall is definitely back.
And the bubble talk. I know we're going to talk about bubbles later because we've been talking about bubbles a lot lately on this podcast.
Can we maybe put a pin in the bubble talk given that these names just had a 35% draw down in two weeks? All right, listen to the the I think the crazier part about it is that so much other stuff is doing well. So, I took the Russell 2000, Russell 3000, which is the total stock market, call it like VTI essentially. It's 2600 names now. We can't even get to 3,000. We used to be a country, you know. We used to be 3,000 stocks on the Russell 3000.
>> The Russell 3000 is 3,000 stocks.
>> Uh, it's like 2500 now because of the the to the whole it's smaller.
>> Are we sure about that? It's the Russell 1000 and the Russell 2000 combined.
>> 1 plus 2,000. I downloaded the Russell 3000 and they gave me 2600 names. Um 66% I put I always put this in a call like once a week to see like what's going on in the stock market. 66% of stocks are positive yearto date in the US stock market. Median return is 12.6%.
That's pretty good.
>> Yeah.
>> Two-thirds of stocks right are positive.
That that's a pretty good year. I'm just saying it's really surprising that a lot of these name brand companies are getting slaughtered while this is happening to all the rest of the stock market.
>> Mhm.
It's interesting.
>> That is interesting.
>> We got We have to mention the banging in the background. Uh Michael, >> I hear that >> is single-handedly keeping mudrooms open for America and getting another new mudroom. Do you >> It's It's mudroom 2.0. It's running back.
>> Now, I have a question. Did Did you use the same construction people that did your first mudroom for the second mudroom?
>> Nope.
>> No. Oh, you weren't happy with it?
>> M not really. Um, when you walk into my house, there is a set of stairs about six stairs going up and there's like a little tiny nook area to the left. So, if the four of us walk into the house, we have to do a single file. It's a very small area. And so, what happens, anybody who's listening with kids knows that the [ __ ] piles up. the bags, the uh tennis rackets, sneakers, whatever it is. It's it's so I need a butter room.
So, I'm cutting, you know, I was do this later in the show. I'll do it now.
You know, my uh that I'm on like a a kindness streak. Trying to be trying to be a little bit nicer. Trying to breathe when I get upset and not yell.
>> Okay.
>> Right.
>> When you have kids, it's that's impossible. It really is. I know that there are people out there who don't yell at their kids, but um >> those people are like have no emotion or something.
>> Yeah, I'm not talking about my kids. I they they get no they get no they get no grace.
>> I'm talking about strangers because you never know. You know, people life is hard and you never know what people are going through.
>> Okay.
>> So, giving strangers a little grace.
However, >> Ben, I live in a culde-sac.
Not a lot of traffic here. Okay.
A dumpster went into my driveway and not two hours later, the town inspector comes through.
>> Holy cow.
>> Has an iPad and takes a picture of my house.
>> Does that mean that someone called them on you?
>> Yes.
>> Whoa.
>> And I think I know who it is. Ben, now >> I feel like these people deserve no grace. I kind of want to knock on their door. Here's here's how I know.
>> Here's how I know. I I suspect there is a house in my block where I parked on my side of the street across from their driveway and they put a post-it note on my windshield asking me not to park there.
These are the type of people that call the town on you. Could you imagine calling the town on your neighbor for not having permits? And now it's not like I'm doing a ton of demolition. I mean this noise not notwithstanding this is this is going to be this is a quick project in and out is this is this a couple who is of retirement age and they have nothing better to do with their time.
>> What do you think?
>> Okay.
>> Yeah. But still why why cause trouble for people for no reason at all?
>> Nothing to do. This is why you don't retire because otherwise you just get in other people's business all the time.
>> Um anyway, back to the stock market.
>> Congrats on your new mud room.
>> Thank you.
>> Here's the thing. One more thing on this. We when we were growing up, we did not have nearly as much stuff as kids have today. People did not have the lockers and the mudrooms and the spaces for kids, like cubby holes for kids.
That stuff didn't exist when we were growing up.
>> You know why? When we were growing up, >> we didn't have stuff.
>> We didn't have water bottles. What is this [ __ ] How many water bottles do you have in your house? Kids can't go anywhere without a a metal water bottle these days. Our football coach when I was in middle school used to not let us have water as punishment. That guy would be like [ __ ] and feathered on the internet today.
>> Yeah, that's that's probably good that we don't have those type of [ __ ] in the in our >> true. All right, where we going next?
>> Um All right, so anyway, the deleveraging we've been talking a lot about the the source of um Yeah, people are people are having fun here. People are going nuts in Korea. The 30-day Cosby volatility surges to its highest ever, ever, ever. Including the.com bust and the great financial crisis.
>> That's nuts.
>> There there was some data floating around around the number of South Koreans that got margin called or liquidated or whatever.
>> There's levels to this, Ben.
>> I love I love seeing this because it's we're a more mature market in a lot of ways. And so the behaviors that we see here, yes, still happen, but they get amplified in other places that are that are kind of coming up in the stock market world. I I love to see this stuff. I don't know why. It's everyone has to pay their tuition to the market gods at some point.
>> It's fantastic.
>> I'm sure there I'm sure there are people who got fantastically rich off South Korean stocks, but there are probably some people who bet on the right socks and still got their faces just blown off.
Love to see it. How how bad is South Korea doing? So the EWY is a South Korea ETF. It's down 26%.
So people with leverage are have been they're down 75% or something right now.
Good for them. All right.
>> This is this is such a typically Ben Carlson tweet. Go ahead.
>> All right. I want to make the case. Last week you were trying to pigeon hole a bunch of stories that had had no bearing on the market at all. You're talking like IBM and you were you were trying to make stories happen.
>> You know what you said? You said about IBM this thing h this sort of thing happens all the time.
>> Yeah.
>> Do you know that a company with a $300 billion market cap falling 25% in a single day?
>> I don't think that's ever happened.
>> Yeah, but we have bigger companies now.
So you can't say that because the company the size is bigger than that.
>> So that's inflation adjustation adjusted or something.
>> All right. So inflation adjusted and say yeah probably during the GFC it happened like four times.
>> Okay. So >> you you just you you want to rewind 10 seconds.
Does the IBM I'm trying to pigeon hole stories? Yeah.$300 billion dollar software company falling 25% in the day is a market moving story. But back to you, Mr. Bor.
>> You just talked about the fact that you're trying to be nicer. I don't believe you.
>> Not to you. You're not a stranger.
>> All right. Uh well, you just said you're going to go after this episode, you're going to go yell at your neighbors. Uh >> I'm not going to yell at my neighbors, but they're pushing me.
>> All right. So, this is the most normal e I think we've gone through a period of normalization where this has been one of the most abnormal decades we've se we've ever seen. I think that's pretty fair to say. I think we're back to almost a normalization point because GDP growth is 2 to 3% right now. Inflation 3.5% which is right on the 100year average 3.5%. The 10-year is yielding 4.5%.
Okay. The US stock market is up 11% 6 months into the year. Some people would say no, no, no, that's a full year, but actually I would say the average up year is up 21%. Mhm.
>> So, this is like the most normal.
>> Take a snapshot the picture of this right now. Right. In the World Cup, they do this with a square. I don't know why they do this.
>> What do they do that with? Oh, with the cards.
>> When they do VR, like we're going to go for the replay. They draw they draw a picture of a TV.
>> What is VR?
>> You didn't watch the World Cup. Never mind. I'm not going to explain it to you.
>> So, Donnie, you're out of your element.
>> This is Yeah, you're like a child that wanders into the middle of a movie.
Everything is average right now.
Everything is kind of normal marketwise.
>> Now, when you tweet, >> is that a fair take?
>> When you tweet this, are you like giggling like you're just trolling the internet?
>> No, because this is facts. I'm saying the people who think this is the craziest thing ever and that this is normal. This is a normal market environment >> in some ways.
>> Through the prism of milk toast, if you are a snapshot investor, which I don't know, I happen to look at a screen during the day. I'm crazy like that.
Then yes, this is a normal market year.
>> If you look just at the averages of the economy and the markets, this is a normal year.
>> Yeah. If you if you if you uh fell asleep in January, you know, Chris keeps texting me pictures of his vacation. I'm not Instagram. Why does he do this? I feel like I feel like I'm being a kagon and I love him and I'm happy that he's happy, but I don't do this to him.
This is my partner, Chris. He treats me and Josh like where his personal Instagram?
Well, >> remember back in the day that you people you'd get back from vacation and you do like the slideshow for people of all your pictures and no one cared then either.
>> You're right. Um, all right. Great story in the Wall Street Journal.
>> Anyway, uh, normal year.
>> Okay, you don't believe me? It's pretty normal year. We We had a 9% correction.
>> I know where you're I know where you're coming from, but this is a very exciting year. When I hear normal, I think boring. I think average, standard, typical. Uh, it doesn't feel like that to me, but I hear what I hear where you're coming from.
>> All right. Everyday investors are over the Mag Seven and into new AI darlings.
This is your whole thing about money going to where it is treated best.
This is interesting. So, they show net flows by individual investors this month and a ton of retail money went into SpaceX. A lot. And I guess it's all gotten slaughtered at this point.
So, do you think most of this sale has been people being like, "Okay, I was banking on a huge pop." It didn't really happen, but they're showing these names and I don't know, half of these names I've never heard of. And I and it's still some mag seven, but it's it's not the names that you'd expect to see.
>> What is And DAS?
>> I don't know. Someone's going to tell us in the comments that we're idiots because we don't know all the stocks.
>> Yeah.
>> Uh it's interesting though. We talked about buying the the dip. Oracle down 60% has seen a huge inflow of retail investors trying to like trying to catch that falling knife. Okay, I think they put these types of stories in here just for me. Davis Cantrell, a college student based near Atlanta, has been investing for roughly 2 years and closely following the biggest AI players over that period. Listen, the 19-year-old recently trimmed his Microsoft holdings. I'm looking for aggressive, more high-risisk growth stocks, he said. I just don't see Microsoft and Nvidia fitting into that category anymore.
>> Neither do I. I totally agree with him.
Yeah, this guy's got it figured out at 19. Yeah, >> I didn't know what the stock market was at 19 years old. I barely I I really didn't.
>> Um >> I just I think I think it's hilarious that they asked a 19-year-old what he thinks of this market.
>> And I think it's awesome that we read that quote and we're like, "Hey, credit to Davis."
>> It sounds like this was AI. I don't know.
>> Davis, uh no, that's a real guy.
>> All right, Citadel. I just want to say the the $300 million into SpaceX.
I'm going to guess that half of that money is out. Or maybe that's a lot.
Let's say a third of the money has sold.
>> I it it had to be fast money.
>> Yeah. So, right. Yeah.
>> It is interesting though. This makes sense. Citadel Securities had another report. Uh they said, "Has retail started selling equities?" No. The retail remains the strongest structural buyer of US equities.
>> Unbelievable.
>> We have not seen a single net sell day on our retail cash equities platform in July. Second strongest month for retail buying since January 2020. the strongest July in our data set. So people are still going in.
>> I love that this is still happening.
>> That retail that the everyday investor is still buying the dip, still making money.
>> And I hear buckle up bucker buckle but buckle up buttercup [ __ ] in the back of my head. Just wait. Yeah, okay, fine.
Just wait. But you've been saying that for a long time. Matter of fact, the buckle buckle up buttercup. Was that an email to us or quote or a story? I can't remember. That was four years ago. How long have these uh just mean-spirited kermagins been mocking retail, >> right? Just >> five years, 10 years, just just wait, they say as they sit in cash while uh every day everyday no nothing investors get rich.
>> This is interesting though. They show the leveraged ETF assets under management and it shows the total and if you show they show semiconductors.
So the total is 198 billion.
Semiconductors are already one4 one quarter of that which is absolutely insane because they were basically nothing before. So that the growth was just so semis is 53 billion tech x semis is 76 billion the other ones are 70. So this these leverage ETFs it's all technology.
That's pretty insane how quickly this new category can form, right? It's like building a brand new town in a week or something. I did a talking wealth episode that's coming out next week I believe with James Ciphford our friend at Bloomberg. Have you ever heard of a company called Corgi >> ish?
>> It's a new people mention it.
>> It's a new ETF company.
>> Another one that that is like put bringing they're acquiring all the new ETFs, right?
>> No, they're they're filing for hundreds.
They're just spraying and praying. So, they're bringing like a VC style playbook to the ETF land, >> which is super interesting.
>> ETFs are ETFs are having a moment.
>> The number of launches is is insane. Um, but so we've been we've been talking about this a lot. $200 billion when you amplify that for the amount of actual exposure, it's about half a trillion.
And that's why you're seeing these wild girrations in these uh memory names.
>> Yeah. when you get so your whole thing about IBM being kind of like oh that doesn't happen very often that's going to happen way more in the future now because of these single stock ETFs and leverage ETFs fair >> probably >> all right more of a blood bath I can't believe that Nike lost its moat so Nike is down 75% from the highs I think it's at the same price it was at 2014 and I'm my my like number one rule of thumb for stock picking never invest in fads like Pelaton was a fad I I sniff that one out pretty like every every exercise workout thing is a fad. When's the last time you used your Pelaton? 5 years ago.
>> Four years ago.
>> No, no, no. Uh three years ago.
>> Okay. I can't believe mine I bought it in April of 2020. It's still working. I used it last night. Still going strong.
I'm still >> I did do I did do a Pelaton exercise class 5 weeks ago. Not to break.
>> Okay. Good job. But it seemed like Nike looks like a lot of these other fads.
So, Lululemon is down 80%. Under Armour is down 84%. Gap is down 62%. It's funny. Gap still never recovered its price from the dot bubble.
>> And it never will come back few times. I I think I think Nike might be toast. And when I say toast, Nike is still um my number one brand and there's not even anything close. Like whenever I buy any sports attire, I I don't buy Adidas.
I don't I mean I buy, but whatever.
>> It is for me too. Nike is still my number one brand. That maybe that's why I'm so shocked by this. It's It seems like it's done, >> but >> based on the stock market, >> but um I mean the numbers suck.
>> Like the numbers are not good. Uh >> you know, I'm a big gaps get filled guy and there was a big juicy gap up at 52 that I think probably will get filled, but I don't know. Is so Nike's at $43.
Is the stock ever going to trade at $90 ever again? I don't know. I don't think so. I don't I don't think that in two or three years from now we're going to be talking about an amazing >> Put the stock price aside. I don't think we're going to be talking about how Nike regained its mojo.
>> There there are all these brands from our youth that just don't really exist anymore. MTV was a huge brand we grew up with. Sports Illustrated, >> the biggest it feels like Nike is going to be put in that dust bin for and it's I can't believe it. I really This really does shock me.
>> Well, does it's not going away. Nike will be Nike will be around for the rest of eternity. But >> but the stock market is telling and maybe this is like the buy signal of a lifetime, but it's it seems like it's like, okay, this company is they're not what they were used to and it's not not going to be again.
>> The fundamentals of Nike's business sucks. It's not doing well, >> right? Yeah, they kind of blew it. All right, this is kind of cool. Someone sent us this uh Zuk Data on Twitter. I think he must be an AI guy. Oh, he works at data analyst at Black Works. Uh, he says, "Are you hearing the word bubble everywhere these days? I counted every mention of bubble across hundreds of episodes from two of my favorite investing podcasts. Can you spot the trend?" So, he pulled up animal spirits and uh, the compounded friends and looked at how often that how often we say the word bubble and he did some graphs in here and there was not much mentioned at all 2022 to 2025ish.
And now to start this year, massive.
He's doing an 8week rolling mean. I wonder how he did this. Um, showing that the bubble talk for this show has skyrocketed this year.
>> But you know what? Credit to us. We are a reflection of the market commentary that's floating around.
We are for the most we're pushing back on the narrative.
>> Yeah, we're a concurrent indicator though. We're not like a leading indicator, >> right? We're talking about what's going what everyone else is talking about.
>> We talk about what's happening. But I think I think it is interesting and notable. And I want to I want to clarify one one thing about this. When I'm saying my opinion is that this is not a stock market bubble in general, right? Like I don't think the S&P 500 is going to fall 70%.
I can only talk about the stock market.
I have no idea what's actually happening with the supply chain bottlenecks and uh there's no compute. Like how what what do I know about lithography and this and that? I know I know nothing. I know as much as you do. Nothing.
>> Yeah. But the thing is even the people who do know that stuff, they're not good at predicting what's going to happen in the market either.
>> Well, that's true. I'm just saying all I'm just saying to the audience like I don't I I know our audience is not counting on us to tell them that Micron is overestimating demand. Like we we can't do that.
>> But I don't see a bubble in the stock market. And if people say, "Well, um, uh, the earnings aren't sustainable, and that's where the bubble is."
Hey, dude, the market agrees. The market is saying the earnings aren't sustainable. You think this is like a a great insight, >> right? That's why these that's why these companies are trading like 12 times forward earnings.
>> So, this chart from Peter Callahan at Goldman Charter, the forward PE multiple gap between semis and the S&P 500 is at the lowest levels of this AI era. So the market agrees. It is not contrarian to say these earnings aren't sustainable.
It's not that's not uh going out on a limb. Literally that is consensus, >> right? So if the market was was valuing these things at 50 times forward earnings, you' go, okay, this is crazy.
They're they think these earnings are going to continue or continue to grow or whatever, but then that's not what the market is saying, >> right? So uh Duality Research has this great chart that we've shared before.
It's the distribution of forward PE ratios. So he shows the percentage of S&P 500 companies as well as the percentage of the overall market cap that trade in various buckets. So for example, Alex says that more than 300 names, 61% or 40% of the total market cap trade for a forward P that's under 20 times.
So, this is the if you've been a if you've been a portfolio manager who has railed against overpriced tech stocks for years, this better be your year.
>> This is like this is when you pound the table on the stock pickers market.
>> I would hope so.
>> Right. Because I'm sure there are people who have said for years to their clients, listen, we can't invest in this. Everyone's invested into this overconentration, overvaluation, all this stuff. This has to be your year.
Has to.
He has he also shows a forward P break broken broken down by sectors and just look at this basically everything is going down into the right for the most part everything is compressing with the exception of I don't know industrials are hanging high I suppose and real estate but everything for the most part forward Ps are coming in this charts >> this is like the opposite of what happens in a bubble >> these charts make it if you just showed me these charts and didn't tell me what was going on in the market I just six months ago say oh the market's rolling Yeah, >> not the market is up double digits this year. I'd say, "Oh, the market's probably down 12%."
>> And this is happening with the backdrop of all-time high earnings and margins and acceleration. Like, this is not a bubble. Stop it. It might turn into one.
That's not what this is.
Yeah, I I tend to agree that it it the the hard thing to square is there's bubble-l like behavior in places like South Korea and retail investors, but that >> that will that's all that's never going away.
>> I think that I think that's the new normal.
>> If we have a fiveyear bare market coinciding with a recession where people just lose it all, >> yeah, they'll stop speculating. But absent that, >> if we have a financial crisis that like the stock market falls 40%. The Reddit crowd is going to be shorting stocks.
>> Maybe >> you don't think that's going to happen or do you think they're just going to keep piling in and like they're going to go where the momentum is?
>> I think >> you also I don't want to say what I was about to say. Keep going.
>> All right, let's move on from the bubble talk. We can't say it enough. I'm gonna say it like five more times just to up our ranking on this guy's data. Bubble, bubble, bubble, bubble. Um, all right. I I was thinking about this in relation to my normal economic environment and I I know you think I'm trolling. I'm just I'm just putting out with the data set.
Why don't we have recessions anymore?
It feels like now a lot of people I put this question out there and I looked at the the National Bureau of Economic Research has it the data going back to 1857. So looked at all these 20-year blocks of how many recessions did we have and pretty much for a hundred years we averaged four to five recessions every 20 years. And since the 70s, early 80s, that has completely it's flipped.
The recessions are shorter in months and we have they're they're fewer in magnitude. We don't have recessions anymore. Now, some people say, well, the reason we have recessions this decade is because fiscal deficits and government spending and monetary policy. And I would say if that stuff stopped us from having recessions anymore, it's worth it.
And I know that's obviously not the only reason that we don't have recessions anymore. You couldn't you couldn't possibly say no that has no impact. Of course it does. Policy makers have figured out how to manage the economy better. And that's a wonderful thing. We don't have recessions anymore as much as we used to.
>> You know how uh Bill Simmons will sometimes say how does like uh I don't know how many MVPs LeBron has, but let's just say how does LeBron only have three MVPs, right?
>> And it's like well zoom in. Let's let's actually look at it year by year and say like which year was he robbed and then let's assess it that way. So to answer your question, I want to do something similar.
>> Oh, 2022 for sure. That should have been a recession. Should have been >> totally should have been a recession.
>> But so so zoom in the 2010 postGFC decade. Obviously, we were coming out of the worst recession since the Great Depression, right? So, consumers, balance sheets, governments, corporations, everybody was healing and it probably took 3 to 5 years after that at least.
>> Yeah. But 2011, everyone and their brother said double dip recession.
Europe, the European debt crisis, this is going to drag us into another recession. Like that everyone was saying that 2011 that was Yeah. But we were to me like that was still post GFC that gets lumped in with post GFC that was not that far removed. There was >> Yeah, you're right. That would be like 1937 after the Great Depression kind of thing, >> right? Same thing. And then the um mobile cloud hyperscaler mag uh uh what was Scott Galloway's book? The the four horsemen. Like the tech giants dragged us out. And when I say us, I mean the stock market and making people rich with it. The tech giants dragged us out of that.
>> Yeah. Well, I think technology is definitely one of the reasons that we don't have as many recessions anymore.
>> The economy is more efficient than it used to be.
>> The the technology stocks have turned have turned the United States of America into the stock market and the stock market fuels everything. So then we had a slowdown, pandemic, obviously fiscal stimulus that stopped the recession, 2022, inflation, interest rates. We genuinely would have had a recession if it if it were not for AI. If Chad GBT did not come onto the scene, >> I don't believe that.
>> I 100% believe that >> that saved the stock market, but there wasn't enough spending then to stop a recession. No way.
>> The stock market save the stock market saved the economy. I 100% believe that.
>> No, it was really the wealth effect.
People had locked in low interest rates.
They repaired their balance sheets.
That's why we didn't have a recession.
There was not enough spending on Chad GBT to cause a non-recession then. No way.
>> That's that's a huge part of it. But the stock market rebounding because the Chad GBT caused the stock market to rebound.
>> If there was no rebound in the stock market, we would be in a way different place today than we were in 2020.
>> Here's the point. It's always something now. And a lot of it is policy. Like I think we've just the one thing the economy is bigger and more mature than it was. Like we were emerging market back in the 19th century. So of course there was more booms and busts. We were more of an industrial economy. So it was like plant and equipment and depreciation and right like that inventory and all this stuff. And now it's a service- based economy. So that's that's a big part of it too. We just we we're more diversified. We're more dynamic. But policy makers and some people hate this. Some people want the doomers want a recession.
>> I don't even want to give those people any oxygen. When you say some people, it's like yeah, it's a few pundits and like less than 1% of the population wants everything to blow up. These are morons that don't deserve our air time.
>> I kind of thought we got rid of these people, but so I got tagged on this tweet a million times. So this guy on Twitter says, "If we divide the S&P 500 by the Fed's balance, the line is basically flat since 2008."
>> I do too. So many people said, "Hey, can you please address this?" And someone said, "Hey, this this seems like a blog post to me. What this guy what this guy is saying seems true." And I can't believe people still believe this. I just thought I'd address it really quick.
>> Fine. Tweet.
>> The guy stopped the chart in 2024. And if you if you go forward from 2024, the the correlation goes away. So the Fed the Fed's balance sheet has actually contracted since 2024.
>> Stop. Stop. So the Fed's balance sheet has literally contracted since 2024.
2023 it contracted too and the stock market is booming. I don't I don't I think people forget that the Fed literally tried to put us in a recession in 2022 by taking from 0 to 5%.
>> Still obsessed with the Fed's balance sheet and for why the stock market isn't where you think it should be. You're an angry person and things are not going well and I'm sorry.
>> Yes, >> I don't want right except for So here's another reason why things remain strong.
This is from Torson Slack. Unemployment has been below the Fed's 4.5% neuro estimate for a record tying period. 57 months in a row, the unemployment rate has been under 5%. And if you take away that COVID period, which was kind of this fake thing because people lost their jobs, yes, but they were being paid sometimes more from unemployment insurance, like we've had below 5% unemployment for almost a decade essentially, right? Take away the COVID period, which kind of doesn't count.
That's one of the reasons things have remained so strong.
>> Let me ask you this.
>> People have jobs and they're going to spend if they have a job.
>> Over the next 30 years, will this trend remain in place of fewer recessions?
>> Yes. We're looking at like and they're not going to be economic I mean, sure, there's going to be a credit cycle eventually, but it's going to be more exogenous shocks. It's not going to be like >> we're not saying no recessions.
Obviously, there will be recessions. The business cycle exists.
>> Uh immutable force of nature. Um, but >> no, but but if you're using the playbook from the previous >> 80 years, you're gonna be wrong in the future. You just are. It's a totally different environment now.
>> Um, all right. More QE assets swap. Get get out of here. Uh, >> all right. Uh, let's talk about technology world. Okay, this is from the Washington Post. A bunch of people were posting this on social media. I thought it was interesting. I it has to be very weird to work in the technology industry right now because you're seeing certain people get like not just life-changing amounts of money, but like certain individuals are getting like by a sports team amounts of money.
It's like it's insane. And other people are every day going into work going, "Oh my gosh, when am I going to get because the tech industry is not going to they're going to be the first ones.
They're the first line of def they're the first line of defense like right they're in the what do they call it in in like Braveheart? like the people the first line, you know, like that. Those guys are probably going to get killed.
They're going to get rolled over by that big log thing that rolls really fast, you know, and all the arrows. The tech CEOs are not going to have any like sympathy for their employees. They're if they can replace their job with AI, they're going to. So, it has to be a very weird place to work. Like, you could get a life-changing amount of money or you could have a job tomorrow.
So, the Washington Post did this thing.
I don't have I don't have uh I have very few people in my life that work in this world.
>> Yeah. I'm just saying. So they they interviewed a bunch of these people. It has to be. So they said at tech companies, leaders obsessed with winning the AI race have tasked their work forces of coders, lawyers, and HR professionals with becoming the front line of the transformation. They're being measured by how quickly they can automate their own jobs while watching their colleagues get pushed out in success successive waves of layoffs. Uh so they said 800,000 tech workers been laid off since 2022. Now, again, a lot of that is overhiring, whatever. So, they they posted this one thing about there's this 31-year-old tech startup worker in San Francisco. Didn't want to say her name. She said that her um engineering manager husband told her a few months ago that he needed to focus all his energy on becoming AI native and requested that she take on almost all parenting responsibilities for the couple's preschool age daughter. She complied. and she talks about how this is like surreal and it's weird and and they have a combined income of like a half a million dollars. So, they're doing pretty good, but they're saying they can't get a house. And it's funny to me that a lot of people on the internet were up in arms about this like, "Oh, this guy said he's not, you know, he's going to focus all his energy on his job." Pre990s, this was just life.
I'm sorry, but are you kidding me?
Dystopia?
We're talking about a 31-year-old couple with a 2-year-old where one of the spouses is working hard.
>> I I >> Oh my god. life.
>> This is a sign of progress in many ways though that that this is the way that people think now cuz again >> she described her experience as surreal.
>> He better get some uh shares out of this or something though from OpenAI. But also, I think what if this guy is really secretly taking naps under his desk cuz he's tired from having a toddler?
>> I'm throwing that out there.
>> Can I say one thing?
>> Are we getting got is this like manufactured by the internet? Is this a three-hour interview that was put together in a way that the author editors knew it would go viral? I'm pretty sure that's what happened.
>> That's part of it.
>> No, that's the whole thing.
>> That's the whole thing. There's no way that this is real, that this person is despondent. I I would hope, and maybe I'm maybe I'm naive and kidding myself.
I hope that this person read this article and thought this is not what I said. I really hope that's what's happening here because I don't want to live in a world where a 31-year-old making half a million dollars with a 2-year-old is despondent because her husband has to work hard.
>> I just Yeah, you're right. Again, the Mad Men era, the even like the era that our parents grew up in, like this the one parent working a lot, not being around was just normal. That's why they called like they had there's a whole latch key generation. That was a whole thing. Like your parents are working a lot. Some parents are working multiple jobs. You come home and you let yourself in and you watch TV and make yourself a TV dinner or something.
That that was just life before. Maybe a sign of progress. Again, I I just think if you live in the Bay Area or you you are a tech worker, your life is very weird right now. It has to be.
>> Yes.
>> It has to be a very weird place to work and live.
>> Yes. Um chart from A16Z. Share of US household with paid AI subscriptions. We've made this point a bunch.
>> It's hilariously low.
>> We're not the ones that like thought of it, but it's it's at zero. It's 2%. I mean, it's, you know, it's up it's up from zero. So, it's up a lot.
>> So, households be this number this number is going to be 10% 20% 30%. I don't know where it stops.
>> Isn't it just going to be like most people will have a paid license through their employer and they're the individuals will mostly use the free service >> unless they unless they really make the free one so bad that you have to pay to get like Don't you think most people are never going to pay?
>> I don't know. I I don't I don't I have no idea what people how people are going to use AI. I I I don't know.
>> Well, it'll be a Netflix bundle. You get Netflix, Hulu, and Open A.
>> But when we're like the thesis that I'm using in my brain, which I could be way off. I have no idea. Um when we're talking about like will the will the demand continue to be there in 27 and 28? Like I think I think people are being so shortsighted.
>> There's a massive runway. You're right.
>> We're just starting and I think the stock market breaks our brains a little bit >> because we saw the the news last week about this new moonshot AI company in China, another open- source model that further amplified or exacerbated the the the memory stock selloff. Oh, it's cheap. I think we're just every time this happens a stock market, we just lose sight of the bigger picture, which is that this is just starting.
>> I think so. We got a good email about this. Some guy wrote us a really long email saying he's he's on the front line of this and I said last week the AI doomers are wrong to this point.
Obviously I don't know what the future holds. He says I think we have at least another 12 to 18 months of jobs netting out to something not ugly. I fear however once all these governance process and integration steps get commoditized we'll see some pain which basically means like get over the hurdles get through the red tape. I don't subscribe to the idea that AI will create tons of new jobs we never thought of because we'll just point even better AI and robotics and 3D printing at those two. I do think the same technology will invent different offsets and offer a better quality of life in the long run.
Uh I I still subscribe to the idea that like just no one knows how this is going to work out like like right now there is no disruption like widescale disruption.
>> Well, I'm glad you said that because last week you were pretty emphatic like the doomers are wrong. It's not we're not seeing the data and it's just way too early.
>> It is. But I I think the doomers will always be wrong. I think that the the tech leaders that say like 50% of all entry- level white collar jobs, like come on. I just I don't believe that.
>> I understand. We will we will we will continue to draw conclusions that are way too early.
>> Yes.
>> You and I over the next couple months and years. But like this is going to take years to play out.
>> Yes. I I still think my favorite take on this was the guy who said like AI is going to keep us on the same trajectory we've been on. I I still kind of think that's probably the baseline I'm thinking of. would love it. Um, all right. Uh, this made me happy.
StubHub right in the face. I shared my story years and years ago. Um, several stories about how upset I was with StubHub shenanigans where I allegedly listed my same set of tickets seven times. They charged me thousands of dollars because I couldn't deliver the tickets. Like, um, just a garbage organization. And it turns out that um here's a headline. Let's see. CBC ran a story. Um StubHub's marketplace for fans is run by a mass scalper. SEC filings reveal CEO Eric Baker runs a side company that resells millions in tickets on StubHub.
So this guy's basically running a hedge fund providing like short-term financing and and cornering the marketplace. An estimated 70 to 80% of all tickets on global resale sites are controlled by mass scalpers uh according to a >> so wait is this this is it will this guy say no I'm like citadel I'm providing the liquidity here is that what he would is that his defense would be >> I don't know I don't know I don't know if they >> it's al isn't it also the thing that these like these these tickets go on sale and they're pic they're picked up by the bots and the like it's all it all does seem very it doesn't seem very efficient the way they do things obviously >> yeah fans >> who do you who would you use instead of a subup now SeatGeek or some other I know there's a million of them.
>> Uh Tickpick.
>> Okay.
>> I think they're the cleanest of the bunch as far as as far as I could tell.
Um this is unbelievable. The NFL suspended Cardinals personnel executive Ryan Gold after he placed a $25 wager, parlaying the result of the team's first five draft picks. Uh he was paid out $732,000 in winnings. Is this uh the boner of the year award? What a dumbass.
Are you kidding me?
>> Wow. Okay. You You didn't think you were going to get caught?
>> What a payout. I mean, yes, obvious.
How one of your friends put the bed in, man. How did I wonder how he got caught?
>> Like, he did he literally put it in himself?
>> I'm assuming it was a friend. I don't know. But either way, um All right. And other uh truly unbelievable news. Here's a headline.
Trump. Oh, Truth Social to sell Wall Street firms the fastest access to Trump's post. This is not a political podcast. We often don't talk about what's going on in in the White House cuz I don't care. Um, but this is a market story. Uh, so I'm going to talk about it. All right. Trump Media and Technology Group has unveiled a paid for licensed data feed that will give banks and trading firms the fastest access to posts from influential truth social accounts such as President Donald Trump's whose posts often move global markets the product called Truth API will deliver posts from the 10 most influential accounts to customers at a significantly faster pace than a regular push notification on the truth social platform. A spokesperson said, "This is absolutely mental that the president of the United States is selling his tweets faster, that the market moving tweets. How who is happy about this? If you think this is good, you're an idiot."
So I guess all the people that worry about the government debt and all these other crises, I guess this would be my bigger worry is that everything is such a financial market now that it it finds its way into the our biggest politicians and that they say listen >> president.
>> Yeah. The the level of grift is um it's not good for faith in our markets obviously.
>> Yeah. No, this is insane behavior. don't like it one bit.
>> No, this is not pushing the country. So, you know, I I I re I I think I mentioned this before. I didn't finish it, but I rewatched the movie Dave about the 1990s when when Kevin Klein looks like the president, the real president has a stroke. They bring him in. Uh it was just such a simpler time. And I know that politicians were bad back then, too, but you you couldn't you literally couldn't make a movie like that today cuz everyone would go, "What?" Like the the funny thing is though, he ran on a platform of full employment. And I wanted to be like, Dave, if you run on a platform of full employment, it's going to be high inflation. People are going to hate it. Right. Anyway, all right.
Boomers were supposed to downsize.
They're buying bigger homes instead.
Story from the Wall Street Journal.
Wealthy older Americans are ripping up the traditional script for aging. So the script is you have to buy a home because it's your biggest and best investment.
And then when you retire, you downsize.
and then young people will move into those homes because boomers don't need bigger houses anymore. And they say, especially for wealthy people who have a lot of money. That's just not the case.
Uh, eight of the clients for Maril Lynch Financial Advisor uh this year retired.
Every single one of them upsized. Only one client has downsized in the past year. This guy, this financial advisor says the historic retirement play of sell your home and buy a smaller one just isn't happening. Um, they say the new demand for even bigger properties is another way boomers dominate the housing market. They account for 42% of home buyers, the largest share of any generation. They're often cash buyers, giving them an advantage over younger purchase. Now, they they they ask these people, "Why are you buying a bigger home?" And one woman's like, "Listen, we have all these grandchildren and we want a bigger home. We" And so, it's like, you can't get mad at these people for doing what's in their best interest or what they want to do, obviously. But this seems like a script that was something people thought would happen.
And for a lot of people, it's like, "No, I have a lot of wealth. I'm going to buy." And they interview this couple that went from like a 2500T house to a 5,000t house. And again, this is just wealthy individuals. Here's something from Kyla Scanland. She wrote this in the um New York Times. Empty nesters now own about 28% of large homes in the US.
Millennials with children own about 16%.
So, there is something where the baby boomers are holding on to their big houses. They're not. They saying, "No, no, we like this. We're happy where we are." And again, you can't fault them for this, but this was a big thing that like, no, no, no, this is the next step.
This is supposed to happen.
>> Yeah.
I this is supposed to make me mad. I Right. Like this is >> obviously does make some people mad.
>> Yeah. I think listen this is not an awesome situation, but who are you getting mad at? Like I think these >> people acting in their own self-interest. Like they're >> Yeah.
>> Well, >> they want bigger houses for their to have their families over and Yeah. This is uh >> this is what it I made the point last week that the middle class rising out of the World War II is an economic anomaly.
It's never happening again. And Kyle put in her piece that the post-war generation is the only American cohort ever handed a starter home ecosystem by federal policy where the government literally said, "We're going to back all the loans. We're going to help the builders. We're going to build the suburbs. We're going to build houses that Americans can afford and we're going to give them low mortgages." And you know, it's the only time the federal government has actually said like, "We're we're doing this." and they the only reason they could do it is because there was so much goodwill coming out of the war >> that they had to do it. Like you couldn't have that type of federal program today. No one would agree to it even though obviously it seems like it would make sense for young people. Um so my question is and Allison Trager had a piece about how like the stock market for younger people is starting to take over as like housing as your biggest investment because housing just doesn't keep up with the stock market.
because of this. What if just this new idea takes hold for young for enough young people that okay fine the stock we've been talking about this the stock market is just the thing it's not the house anymore uh pure research says one in four adults younger than 40 say buying a home is a good investment one in four older generations it's way higher I don't think we've thought through what if this is the new script for people like the new narrative >> I don't believe this people need houses to live >> I know but what if enough young people say I can't af it doesn't make sense for me to spend 55% of my budget on a home when I could rent and spend 35% and put the rest in the stock market.
>> Well, they have two options. Why don't actually I think they have one option in this case. Move.
>> And I hate that sounds very callous because >> but a lot of people don't want to do that. That's not happening.
>> Um the other option is what is the other option? you if you like there's no a lot of suburbs don't have rental homes >> and if you are having a family you can't live >> in a 650 foot apartment >> and the funny thing is so someone sent us this story um >> now hold on hold on one other thing here a lot of the population obviously not all but a lot of the population is getting help from their parents like that is that is what's happening when people >> mad at the baby boomers like People with the baby boomers with money are in a lot of instances helping their kids. You're right. Down paying >> and a lot and a lot of baby boomers a lot of baby boomers have a lot of money.
And it sucks for people who don't have a parent with money obviously, >> right? Okay. I was I was born into a family where my parents aren't rich.
What do I do now?
>> Yeah, that sucks.
>> Yeah. But to your point about moving, so someone sent us this story. The top 20 metros with the largest share of millennial homeowners. Number one, Grand Rapids, Michigan at nearly 70%. We've had a lot of people. We have a lot of friends. It used to be like if you if you lived in West Michigan, it's because you grew up in West Michigan. We have a lot of friends now with young kids who just moved here from other states and we're kind of like, what what's your tie to West Michigan? Nothing. We just moved here for jobs. We moved here because it was a good place to raise a family. So, there are people who've just and it it's it's a very affordable place compared to the coasts. Obviously, housing is a little more expensive, but I think you're right that unfortunately might have to be the case. But I I still think I think you're poo pooing this idea of the stock market overtaking the housing market in terms of like this is your biggest investment.
>> No, I don't think we've thought through what happens if that is >> takes young people too.
>> I'm not saying that. What I'm saying is I don't think people are going to say to their spouses, to each other, we're not going to buy a house because we want to invest in the stock market. I think home ownership has become obviously unaffordable and young people have been crowded out and therefore have been putting their money into the stock market. That's obviously what's been happening. But people as they age and have families need more space.
>> Yeah. But I I do think it could just be the house comes later, stocks earlier, house later.
>> That is what that that is what's happening.
>> Yeah. Okay. Um so every time, >> by the way, also this this is this is like a borderline national emergency for people that are impacted by this. And it's not like 10,000.
>> Yes. But the reason it's not a national emergency is because the people who own homes have gotten fabulously wealthy from it. And the home ownership rate is 65% in this country. So it's not a national emergency because it's it's a minority of people unfortunately, right?
>> And I feel for them. Every time something's happened to your house and you tell someone about it, of course, the first thing they say is the joy of home ownership. I've had many joys of home ownership in the last month. So this is the people who think that house is like always a great investment. This is just in the last month for my house.
Uh garage door wouldn't open. And we had to get a whole new set of wheels and tracks. And in our h our home we bought brand new. We built the house when my kids were born in the same month. We my wife had twins and the next month we moved into a new house. I don't know how we did it. Uh so our house is 9 years old. So the great thing about having a new house is like there's the upkeep and maintenance right away is nothing.
That's that's a wonderful thing about having a new house. Like there's nothing like oh no this went out but now stuff is starting to go out. The garage doors went out. Uh we had moles in the garden bed. They had all they make these little tracks, you know, the moles, little jerks. Had to have some guy come. I said, "How do how do you how do you kill them? How do you get rid of them?" He said, "We stuff carbonoxide down the hole." Oh, wow. Anyway, um our house is white, so we had to have a whole house washed, right? They come spray this stuff and then they wash the house. Uh the light fixture in my house, you know, I have a a farmhouse, whatever, modern farmhouse. They have those lights that kind of hang over like this, you know?
They look great. I love them. But my kids play basketball and the balls are constantly hitting these lights. So the light is like hanging like this now and new light fixtures. Um dryer went out, washer went out. Had to get a new washer and dryer. Okay. And while they did it, hey, why don't we come clean the dryer vents, too? This is all in the last month for my house. By the way, got a new washer and dryer last week. And they got it installed yesterday. It was very fast.
I have no more sticker shock for prices that are too high. Like, oh my gosh, I can't believe how high that price is. My new sticker shock is when something is actually not as high as I thought it would be.
>> And the cost of a washer and dryer.
>> We bought it.
>> We bought Well, we bought a new one, new set for our house on the lake four years ago. And the price hasn't changed in four years for And I think last when we bought maybe it was a supply shock thing, but I couldn't believe that the prices weren't higher than they are.
>> How much was the washer dryer >> for for both the set? They're each $1,000, I guess, a piece. 2,000 for the total.
>> Not bad. That's what we paid four years ago. I couldn't believe it. I thought it would be way higher. Anyway, the joys of home ownership.
All right, let's talk about Netflix.
Jake, our friend at Economic, who used to actually blog at Economic. Don't do it anymore. This is almost hard to believe. Disney spent $129 billion acquiring Marvel, Star Wars, Pixar, ESPN, and Fox. 182 billion in today's dollars. Throw in all their legacy assets, and the entire company's market cap is $169 billion. Man, >> if they could do a Doc Brown Delorean back in time, would they not do Disney Plus if they could, Knowing what they know now, would they not do Disney Plus?
>> Oh, yeah. I think they do a lot of things differently. But yes, but >> we we we said this over we said this at the time that streaming is a really bad business model. All these companies were losing hundreds of millions of dollars.
Peacock, Paramount, Disney, uh HBO chasing Netflix. Netflix was a coyote that ran over the cliff and then ran back and everybody and now it seems like Netflix ran over their own cliff and hit the ground as well.
>> Netflix and Disney are both in a 50% draw down from the highs right now. And Netflix is obviously they're the obvious winner of streaming. They're the best technology platform. They don't have the best stuff for sure.
>> They won.
>> But they won and they're still down 50.
And the thing is I think a lot of people assume like okay fine they don't get the Warner Brothers deal. I think that'll help the stock. It hasn't. It hasn't really changed it. And is it is this just are people just realizing yes, this is just a crappy business? It's kind of hard to believe.
>> So Netflix's operating income is up into the right. In 2022, Disney had $12 billion and Netflix was six. So Disney was 2x. Netflix is about to pass Disney's operating income, which is wild because they don't have the parks >> and the parks are are wildly profitable.
streaming. Streaming is not a bad business for Netflix. So Netflix is growing at 12 to 13%. Now their growth is slowing down. Their their margins are 30%. So their margins look nothing like these media companies. But the problem is for Netflix and I own the stock. It's it's not a small position for me and I bought more of it. The problem is that Netflix is still in the content business and it's still a hamster wheel business and their their daily average views is not really growing anymore. I mean, it's growing one and a half, two percent. So, it's really it's just really hard.
>> So, people are saying like, "Yeah, it's it's it's not a it's not the growth story it once was."
>> Uh I I gotta be honest. I dipped I dipped a Michael Batnik big toe in Netflix as well, even though I keep uh >> so my my average cost is like 90 bucks.
The stock is 67. I've said this many times. It's true. I'm I'm I've been really good at taking losses fast.
Probably to a fault. In fact, not probably way definitely to a fault. I don't have a lot of like double- digit losses. double like uh even 10% losses um which cuts both ways. I'm really bad at holding on to stocks, right?
>> But the history of Netflix would tell you this is so I looked at >> I I don't I don't buy that though. So anyway, Netflix is is a stock that I'm down 30% or 27%. But I don't buy that history says anything. History says nothing. History says that it has declined and come back.
>> So this would So yes, so since it went public, it's had a 60% draw down, 75%, 56, 82, 76, and now 50. So, it's had these massive, massive draw downs and it still >> tells you nothing going forward.
>> But this is what makes stock picking so hard because you look at that and you go, "Oh man, every one of those times I should have bought and then this time you go, yeah, but now this time is different because it's actually a media company and the growth is slowing. It's not a growth play like it was before."
This is what makes it hard.
>> Correct. So right now Netflix is trading at a market multiple which is kind of hard to believe because it is a premium brand still growing with awesome margins. So if you look at the financial profile it doesn't look anything like >> and remember >> traditional media.
>> The reason people the reason these other companies wanted to get into streaming because they said we want the same PE Netflix has >> correct >> but it went the other way and said Netflix is now coming down to them.
>> Yeah. Um anyway, uh I am as a as a somebody with a vested interest, but even if I didn't, I'm just very curious to see how the market values Netflix on a go forward basis. Um because right now, obviously to say it's pessimistic is an understatement. I thought this is very interesting. We've been talking about the season 1 to season 2 drop off and I thought Ted Sarandos made an excellent point. So they were they spoke about this on the call. Um he said we are not seeing any material change in our second viewing in our second season viewing compared to season one. Our second seasons are performing well within our bands of expectation. Very often we see drop off from season one to season two. It's very common in the industry. It's even more so with us because we launch our shows so big. Our global reach, our discovery mechanism releasing all at once. This enables us to find a very large audience early. Our shows tend to start really big while most other places their shows start pretty small and occasionally grow from there. I think that's very valid. Think about White Lotus season 1. Like nobody I mean obviously it's a brand new show.
It took a while to discover it. That makes sense.
>> And Succession as well. Like it takes a while for these names to find traction.
Yellowstone didn't hit it big until like season 3 I don't think.
>> And that didn't really happen because of the pandemic, right? So I thought as I'm reading I'm like I [ __ ] excuse but I was no I think it's I think it's valid.
Um all right let's talk about the Odyssey.
>> I think he's he's the reason that you also have kind of faith I I have faith in him as an as a leader.
>> Yeah >> right.
>> Yeah I do. I do. I do. Um I think that and by the way this is an example where like I'm not staring at the screen saying like the market is wrong. Why are you selling you idiots? I totally understand the story and what's happening. I totally understand it. I I don't think the like so I'm not pounding the table that Netflix will all of a sudden like get rated higher, but I think that >> based out based out of all those companies I mentioned at the start of this show like where would you buy blood in the streets? Netflix is the one to me that makes the most sense.
>> Netflix is the only company that I understand right so like as an investment I'm going to hang around. I couldn't tell you the first thing about Intel or SpaceX. Like are there trades in there? like we're doing both first level thinking and second level thinking.
>> Boom. All right.
>> Two and a half times thinking.
>> I'm uh I'm really upset. I saw it last night. I'm really annoyed that I didn't see it in in the in IMAX, but it sold out through August.
>> It doesn't matter in New York City.
>> Does it really matter?
>> Yeah. Yes.
>> Come on. The people would like you have to see it in IMAX because you can see the Come on. It's a movie.
>> You have such a you have you have you have weak I'm trying to be nice. You have you have a bad attitude here.
>> I think that the IMX people the IMX people need to settle I mean you're wearing an IMX hat, but the IMX people need to settle down just a little bit.
Like fine, make more IMX theaters then.
>> IMAX is my biggest position.
>> Okay.
>> What do you mean make more? It's expensive. Hold on. So there there was a sidebyside video of >> We used to watch movies on a tube TV.
Come on. I get it's better, but like can't be that much better.
>> All right. Um, let's just move on. So, uh, The Odyssey did $124 million domestic. Um, defying this from Variety.
Defying expectations set up the Rita Spectacle for a long, long journey in theaters. The ticket sales are notable as Nolan >> Wait, did it really defy expectations? I thought the expectations for this were massive.
No. These ticket sales are notable as Nolan's biggest debut since 2012's The Dark Knight Rises, as well as the third largest opening of the year following Toy Story and Super Mario. They're also impressive, not just because The Odyssey is a three-hour long movie, but because it's rated R, which limits who can buy tickets. So, look at this domestic box office openings for movies directed by Christopher Nolan.
biggest since Dark Knight Rises, which so in between there we've got Interstellar, Dunk Kirk, Ten, and Oppenheimer.
>> He really is the He really is the guy right now, isn't he? He's like He's the >> significantly significantly bigger than Oppenheimer. So, this is from IMAX.
Second biggest domestic weekend ever.
Um, >> it still blows my mind that Oppenheimer was as big as it was.
>> That might be one of his greatest accomplishments.
Christopher Nolans, the >> Oppenheimer. If you if you just explained that movie, it's unbelievable how big it was.
>> Yeah, it was massive.
>> It's kind of I mean kind of a boring movie in a lot of ways.
>> He's he's >> for regular people.
>> He's the only one >> to use it to to put my Dan Ives hat on.
>> Um Nolan is the godfather of IMAX.
He's the only one that can do what he's doing right now. So, IMAX had 24% of tickets. 45% of tickets were were premium format.
Uh, highest pre-sales ever with $50 million.
All right. So, anyway, needless to say, movies are back. Adam Aaron, this chairman and CEO of AMC on the call said, "In AMC's entire 160 year history, there has never been a quarter like this one.
Domestic box office hit 2.99 billion, the highest second quarter in seven years, fifth best quarter in the past 50 years. Obviously, there's an inflationary component in here and premium tickets. The overall domestic box office was up 10.7% year-over-year.
Six different films had $75 million opening weekends or more. And we've still got um a bunch on the docket.
We've got Doomsday, Avengers, we have Spider-Man, we have Dune 3, we have Resident Evil.
There's the Tom Cruz movie Digger that I think is going to be big. And I've made a lot of bad calls. I mean, too many to count on this show. Um, but this was one of the good ones that I had been. So, I was reminded of this by Sean Russo, who said, "Michael, you made a hell of a call." And I thought I would take a second to go back in time because Ben, you said, "Let's revisit this conversation." So, we're going to Let's talk the box office. 2025 was only 350 million below uh the previous year for a kind of underwhelming year. That's not so bad.
>> Really? I thought people said this was like a banner year for the for movies.
>> No, it wasn't.
>> We had Avatar, we had Zootopia, we had >> think so. Sinners and one battle after another. Like there was a lot of movies people talked about.
>> No, it was it was it wasn't. But I'm telling you it was it was down $350 million.
>> Secular decline. I'm totally selling your theory that 2026 will be higher.
Every year is going to be lower from now on. This is it, man. It's over.
>> 2026 will be higher than 2025.
>> No way. Sorry, man. It's done. Movies are done. I don't think you you've realized this yet. They're done.
Unless they double the ticket prices like as a thing it's just it's slow sec it's it's not cyclical it's secular >> I have more experience than you do on this topic >> that you're blind you have blinders on cuz you go to the all the time >> how do I that dude the opposite you have no idea because you have never been to the movies I go frequently so the >> numbers you look >> people would rather watch a movie at home than go to the theater it's true it's easy >> of course of course that's Of course that's true. Um, and that is already reflected in the revenue. That's not go that's not going to happen in 2026.
That's been happening, right? 2026 is not the year that people decide to watch movies at home. That's been happening for the last decade.
>> It's just slowly but surely eating away.
So, it's going to continue to get worse.
>> So, I tell you a story about how I took Robin to see The Handmaidaid and you're like, "What's The Handmaidaid?" By the way, The Handmaidaid did $400 million in box office.
>> I still can't believe that. That movie was That movie stunk out loud.
>> All right, I'm I'm almost done patting myself on the back. Last one. I'm not an idiot in the box office. I understand numbers have been down every single year. I'm just saying I think 2026 is the year that it comes out. One of the reasons why it was as bad as it was is because some of the movies that were supposed to come out in 2025 didn't. The Michael Jackson movie, for example, is probably going to do decent. That that was punted to 2026.
>> No, though any of those bio biographies about musicians now, they're dead money.
No one cares. I don't think the I think the Michael Jackson one is going to make money.
>> All right. Um, if you're hanging your hat on Michael Jackson biopic for 2026, I'm going to be the winner here on this bet. We'll check back in in a year.
>> Okay, I was wrong about Michael Jackson.
Can I Can I defend my >> Michael Jackson? No, they don't have to defend you. Michael Jackson did a billion dollars in boxes. By the way, honestly, I didn't realize that you were going to look bad in this clip. It was just about making me look good. But someone I'm wrong all the time. This just happened to be one of the times that I was right. Can I caveat your take that movies are back though? Because >> why why does it have to be caveed?
>> Well, because big I got the numbers here from my friend Claude. He has a little beret on. So, um, if you inflation adjust the numbers from 2014 to 2019, every year it was essentially $15 billion in box office. Okay, inflation inflation adjusted this year so far is $5.3 billion. So, let's say it stays on the same course and we double the first 6 months to the last 6 months. So you'd be looking at $10 billion in ticket sales versus 15 billion pre- pandemic.
You're still 30% below prepandemic levels on an inflation adjusted basis.
>> Talk about moving the goalposts. I said >> I'm saying big movies are back. All movies not back.
>> I said 2026 would be higher than 2025 and you're saying it's still below pre prepandemic levels.
>> I mean I of course it is. I'm not saying we're all the way back.
>> Okay. So So we get 5.3 right now. Last year it was $9 billion. So, it's it's it's on course, but it's basically on course to be the same. You're not quite there yet. I know Dune and uh the Avengers are probably going to help.
>> Numbers numbers are up 11% year-over-year.
>> Okay, >> movies are back. This is great. We We celebrate this.
>> I think it's a little bit of recency, but it's not back to I I was saying prepandemic levels is never coming back.
That's true. Okay. I was wrong that it's it's going to go down every year. You're right. I was wrong about that.
Um, anyway, >> but it's not pre- pandemic numbers are that's gone. That's toast.
>> You can watch I'm you can watch the Odyssey at home and have a terrible time.
>> I will be seeing the Odyssey in the theater, >> but I will see it in a regular theater, not the IMAX. I will definitely be seeing the Odyssey. My kids are going to camp next week. I'm going to see the Odyssey. I can't wait.
>> Okay. Could you please see it on a big screen? Just go. Just please see it on a big bigger than normal screen.
>> Our iMac uh seats are not comfortable. I would rather be in one of the recliners if I'm going to sit in a movie for 3 hours.
>> Um, anyhow, congratulations to Christopher Nolan and movie fans across the globe. What an what an unbelievable movie.
>> He really is the man. Even I didn't care for Tenant at all. And it had in the that's his lowest number by far. It just didn't work for me, but he still took a swing. So, I just I appreciate him as a movie maker. Um, okay. Ben, we've been talking about GLP1 land a lot on the show in the recent weeks. KFC is closing 207 US restaurants. I'm sorry. They closed 207 restaurants between January 2025 and March 31st. That wipes out roughly 5%. That's a lot of its domestic locations.
>> I don't know what's going on overseas, but they added 2,971 internationally. Chick-fil-A's probably eating their lunch too, don't you think?
>> Like that, those kind of things.
>> Uh, also UTS, OTOS, UTS, this the potato chip company. Is it UOTS or UTS?
>> I have no idea.
>> Well, they they are going private. The stock is down 70% and they were just bought for uh nice little premium. So, whoever owns or oots the stock, credit to you. Nice.
>> I've never I've never heard of these chips. Is this a New York thing?
>> Maybe maybe it's an East Coast thing. I don't know.
>> Okay, I got a story for I think I told him briefly, but I got to tell the whole story. So, my daughter plays in a summer league basketball tour uh league. So, I'm walking into in the parking lot and there's two guys in the parking lot, me and another dad. And he's probably 100 yards away from me and he puts his hand in the air and he goes, "There he is."
Very loudly at me and I'm looking at him.
>> Did you think Did you think it was a fan?
>> I I No, I thought it was another parent.
And I kind of squinted and I'm like, "I don't know this guy." Then then I thought, "Maybe he's a fan." And he got closer and he realized he didn't know me and he goes kind of looked both ways and just was like, "Okay." And just kept walking. Just nothing. He He thought he he thought I was someone else.
>> He didn't acknowledge it.
>> No, didn't acknowledge. Just kind of looked at me, kind of looked side to side, and then kept walking.
>> That's weird.
>> Yeah, he he should I was He should have said something. All right, let's do recommendations. All right, speaking of I watched some movies. I went to the movie theater this week. I took my kids to see Monsters and Minions last week.
Minions and Monsters.
Uh, it seems like the people who make those movies have to be on some sort of drugs the way that they do the plots, but they're they're entertaining and I've laughed like five times. My kid, my daughter Kate loves The Minions. She's seen every one of the movies like six times.
>> You should take your you should take your kids to Universal Studios. It's really good.
>> I'm sure they would like it. And it was only 90 minutes. That was the best part.
And I barely only dozed off once. Uh, my wife and I watched Obsession. And I I the only thing I knew about this movie is a guy makes a wish that a girl loves him. That was in the trailer. That's all I knew. And I know this movie got huge, supremely high hype. And I And I So my expectations were probably like, I got I better rain it in cuz the hype is so high.
>> And I I You loved it, right?
>> I loved it. It was so good. And it's not really my I don't know how you even describe this movie. A thriller, a suspense movie. Not really hor. I don't It's hard to even like pigeon hole it, but >> you know what? You know what? There's There's some movies that are so good that expectations can't ruin it. like um Hail Mary and The Odyssey. There are just movies where it's like I'm just going to tell you flat out you're going to love this movie and I'm not cuz sometimes I'm care like I don't want to raise the bar too high and then you're disappointed. If you don't like this movie, you're an idiot.
>> But here's here's why this is so impressive to me. So I know this is like a young filmmaker.
The movie just felt really high quality with a bunch of people I've never seen act in a movie before. I've never I didn't know any There was one guy who was Conan O'Brien's right-hand man. He was in it for like five minutes. What's his name? And >> I didn't even know who you're talking about.
>> Uh the dad in the record store, they worked.
>> Oh, >> but he was the only actor in the whole movie I knew. I knew none of these actors and I thought they were I thought the two leads were both really really good.
>> I thought she was way better than he was, but he was good too. The So the the lead actress, she is she has a big role.
She got a big role as a result of this.
I'm happy I'm happy you liked it. How how great was that movie?
>> I really my my wife loved it too. It just it was just really really well done and there was so many things like oh I just love the choice and it just it just felt like a high quality movie. I can't explain it. Like you could make that movie be very lowbudget, low quality, and be like, h, h, okay, it's kind of interesting, but not great. But it was just a really good, well done movie.
>> And that kid, Curry Barker, who directed it, I think he's like 23, >> right? Yeah. It was just, there was a lot of very creative choices. I really liked it. Uh, okay. So, you mentioned Rewatchables is your favorite podcast.
They did She's the One last week. They actually did Hitch this week, which is kind of hilarious because my my daughter and I are in a romcom binge and we just watched Hitch, which just that's got to be one of the funniest romcoms of this this century.
>> I haven't seen either of these.
>> Okay, I I can So, the Ed Burns I'm a huge Ed Burn I thought I was the only Ed Burns fan there is. He's made all these movies. He makes It's about him and his family in Long Island. That's why you probably could like it. I don't know where in because there's all these different places in Long Island, but um I I've always really enjoyed his movie.
They're not great movies. They're just they're just well done and they're always about family and I so I've always really appreciated them. I couldn't I didn't realize that there was like an Ed Burns fan club out there because I'm a member and obviously the watchable is too so I enjoyed it. And finally, I have a book recommendation. Uh how to get rich in American history by Joseph Moore. This guy actually sent me a note when I my book came out and I I didn't know who he was and he was on Meb's podcast last week but I listened to it and this is the most unique finance book I've read in years.
>> Oh wow.
>> How to get rich. It's it's a history of the financial advice people have gotten over the years and it's really >> I love that idea.
>> It's really really well done and it's like this stuff that you and his whole point at the beginning is like you don't realize how good we have it today and how he said there's never been a better time to get ahead than today. And he talked about how like in the 19th century and 18th century like preivil war days there were so many different currencies no one thought about saving money. It was you got the money and you spent it immediately because that currency might be gone in a month.
>> Yeah.
>> It's just it's it's really it's a really fascinating book and it was he's he's a history professor and it was just and he talked about how he decided to try every to form of getting rich that's ever been invented and he talks about how he got rich being a broke college professor.
It's really really good. I love this.
>> All right. I will I will certainly listen. I love this. It's very very cool idea.
>> What do you got? Just the Odyssey. Um, so I watched the second half of the World Cup finals, Argentina versus Spain.
>> Okay. You picked like the worst game to watch.
>> I had a great time.
>> Okay.
>> I thought it was absolutely riveting and I feel like a total schmuck because I missed the entire thing and it turns out >> there so many there were so many good games.
>> It turns out I'm a fan.
>> Yeah.
>> I I loved it. I was I was glued to the screen. I thought it was I thought it was excellent. And the fact that you say it was a terrible game. And I know like I guess by all accounts it wasn't a great wasn't a great game, but uh I loved it. Will I watch the next one? I'm not sure. But I genuinely felt like an idiot. Like I listened to uh uh Simmons and Chris Ryan and some other guy, the soccer guy, and they were recapping and I I really did feel like a schmuck.
>> It was fun.
>> I missed the whole thing.
>> Great sport. I liked it.
>> One final thing. Um, I was at Fanatics Fest last week and I was in line for quite a while. I bought a NYX poster and had them all sign it. Jayen and OG weren't there, so I have to find them, track them down at some other point. So, I had some time waiting in line, sitting down. Anyway, I say that to say that I I binge watched uh season two of The Agency, and I thought season one started out awesome and then it petered off for me.
I didn't really like I thought it would I thought it was like the horse meme, the horse to donkey meme. So, I was sort of iffy on season two and I I watched the first two and I thought sort of was going to turn it down and then somebody told me to pick it back up. So fantastic. I thought it was so good. It was so much better than season one. I thought >> this is a very underrated It's funny.
started season 2 last night and one of the very first scenes in the show is Michael Fbender, Jeffrey Wright, uh Richard Gear, and the guy who plays McNoli on the wire all sitting there having a drink and a cigar. I'm like, "Oh my gosh, look at the firepower in that room right now."
>> Jeffrey Wright is so good in that show.
The whole cast is great. But >> so the thing I like about it is a lot of these spy shows, it's like a season, this is the whole story, then the next season go to a new story, but it's it's a continuation of the story from the first season.
>> It was excellent. Truly, truly excellent.
>> I can't wait. I'm one episode in. It's a very underrated show.
>> All right. Uh, that's about it.
>> Yep.
>> Okay. Animal Spirits of the Compoundnews.com. Personal emails, personal responses. Thank you.
>> I answered a bunch of emails this week.
I know you don't think I I I uh, you know, fulfill my quota, but I did a lot of answering emails this week.
>> Okay.
>> You shamed me into it.
>> Thank you for your service. Uh, we'll see you next time.
Heat.
Heat.
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