Today's animal spirits is brought to you by our friends at Ycharts.
Big news coming up.
Our daily on COO, Nick Majorly of dollars in data fame.
Also has his new book,
a newish book, just keep buying.
That's not a new book. Sorry.
I said newish, newish.
This year, maybe last year.
Ycharts will be discussing their scenario tool with a big emphasis on how it helps
streamline financial planning process with Nick on May 24th at 1230 Eastern.
I just pulled up the scenario analysis tool this morning just to try it out again.
It's been a while since I used it.
$5,000 initial investment I put in the S&P 500.
So that's PY 1998.
$500 a month after that.
Okay.
What do you end up with April 2023?
$5,098, $500 a month from there on until April 2023.
What do you end up with?
Total investments is like $157,000.
I got, yeah, $685,000.
You're pretty close. It was like right around $600,000.
The funny thing is, by March 2009, you had contributed $72,000 out of savings.
Your market value was $50,000.
So you're under water after more than a decade.
And now you're...
That's why you should just keep buying.
Come what may?
That's right. So that's the thing.
People don't realize like a bad market is a good market for savers.
Anyway, we'll have a link in our show notes to sign up for this webinar with Nick.
And if you want to try out white charts for the first time, you know, we tried it out before.
Tell them annual spirits and you get 20% off that initial subscription.
Welcome to Animal Spirits, a show about markets, life, and investing.
Join Michael Bannick and Ben Carlson as they talk about what they're reading, writing, and watching.
All opinions expressed by Michael and Ben are solely their own opinion
and do not reflect the opinion of RedHolt's wealth management.
This podcast is for informational purposes only and should not be relied upon for any investment decisions.
Clients of RedHolt's wealth management may maintain positions in the securities discussed in this podcast.
Welcome to Animal Spirits with Michael and Ben.
In the intro, Ben mentioned Nick's new book, which it's not new, but it reminded me of something.
This week, I was on a phone call.
Actually, it was...
I'm sorry, it was... was it Friday?
Last Friday.
Speaking of time, dilation.
I'm getting...
I'm losing track of time.
Okay, so on Friday, Ben, I was on a phone call...
It's been a late catching up with you.
Seriously, I was on a...
Okay, I was on a Zoom call on Friday and the guy goes,
how was the weekend?
And I repeated the question.
I said, how was my weekend?
He goes, yep.
And I took half a second.
I was like, it's good.
Thank you.
Now...
I get older.
I'm assuming he meant, how was your week, right?
But I repeated the question.
And he confirmed that was, in fact, the question that he asked.
So I was a bit taken back.
That's actually...
Maybe that's a move.
And if you talk to somebody on Friday,
somebody other weekend was.
See what sort of response you get.
Oh, yeah.
Okay.
Maybe he's just like one of those hustle bros who...
You know, he uses his weekend in like four hour increments.
Right?
He slows time down.
I'm hustling.
Look at this jug.
Yeah.
We were on a call yesterday and you opened up your water jug.
And it was like the most aggressive open I've ever seen in my life.
I mean...
How so?
Well, it did...
Yeah.
That's aggressive for a call right next to a microphone.
So Robin got this from me.
I'm back on a diet.
I sent her a video.
I actually been, you were with me, I sent her a video.
It's not too flattering.
There was a little bit of belly hanging out.
I said, all right.
All right.
So she got this.
I took said video.
You took that video.
I took that video.
It wasn't that bad.
All right.
Do you want to talk about an hour or save it for like the forehead?
What happened to your head?
What?
Oh, I went on to my head.
This actually, it looks a lot worse than it is.
So for people that are listening, I've got like two red dots on my head.
It looks like someone took a staple at your forehead.
Yeah, a little bit of a scab.
So bald people, when you put on a hat, you lose your peripheral vision.
And I was boating on Saturday.
This is not a good story, but I was boating on since you asked.
I was boating on Saturday.
And on a boat, there's like a little rack up top with some places, some holders to put
the fishing rod in, you know?
And I stepped up and I got whacked in the head.
I whacked myself in the head because I couldn't see it with my brim.
It wasn't bad.
I mean, it was a bit of a ding, but could have been much worse.
Okay.
Sorry.
Not me, but my youngest daughter, Kate, was just running down a hill, like six foot hill
running.
And you don't have no control over your body, just flail.
She ran faster than her body could carry her.
That's scary.
I've had that before.
I started doing it in slow motion.
And she landed on her face.
And her face was the fulcrum for a somersault, her whole body and just on her face.
So her whole side of her face was just a sidewalk rash.
Oh no.
Like a Harvey Dent.
A little bit.
She's good.
She's tough.
She did just say, why didn't you catch me?
So really just hit me in the dad, you know?
But it wasn't like an anyway.
Speaking of road rash, regional banks, did you see this chart here?
Boom.
Good transition there, right?
Yep.
All right.
Mike Bostock tweeted this.
And this shows bank failures by year.
And you can see all these little banks in 2008, 2009, 2010.
And he has them.
I don't know how he created this chart.
I love his graphics.
They're really good.
The bubbles.
I wish I could create something like this.
Washington Mutual is the biggest circle in 2008.
And then it shows the ones from this year, Signature Bank, Silicon Valley Bank, First
Republic Bank.
All pretty similar size to that.
And I don't know.
This is just one of those, a picture speaks a thousand words kind of things.
Pretty good.
Here's another one from the New York Times.
It kind of shows a similar thing just in bar chart form.
Circles are better.
But basically just showing that like these three banks, this is a huge.
So the three banks held a total of 532 billion in assets.
That's more than the 526 billion when adjusted for inflation that helped by the 25 banks
that collapsed in 2008 at the height of a global financial crisis.
Saying that like this is, this was a kind of a big deal that these big banks failed.
But I guess it's almost surprising that there hasn't been more carnage from this.
Well, okay, a few things.
Yes, maybe the assets size were the same, but there's a lot of other things that mattered
here.
I don't think this is exactly Apple's apples.
The banks back in 2008 were much different.
Way more leverage.
And everybody was pretty much screwed.
And everybody was on the same boat of shit.
Whereas this time it really is centered on either a concentrated deposit base or geography,
which I guess is saying the same thing.
And the failure of these banks was like the what got wiped out was the equity and ostensibly
most of the bondholders.
Right?
It wasn't like, I guess what I'm saying.
Yeah, I'm not minimizing it.
This is not 2008, even though the assets might be the same size.
You could also say that these regional banks are not going to take down, are not potentially
going to take down the global financial system.
But I think this smoothness of this transition or this, how this has been handled probably
doesn't happen about 2008.
I think the fact that 2008 happened made it easier to save the banks this time around
where it could have been a lot messier had that not happened.
So I pulled up the S&P regional banking ETF, KRE.
The inception of this ETF is like 2006 and I did total returns.
So this is including dividends because most of the bank returns come from dividends in
a lot of ways.
It's up 17% in total going back to whenever it came out in 2006.
The S&P is up 355% since then.
The AG is up 68% in that time.
This thing has basically gone nowhere for close to two decades.
So this is true and indisputable.
But this is sort of like that best and vendor stuff that we were talking about.
You know what I mean?
Where it's like, yes, obviously KRE, bitch, by the way, I bought on Thursday, fully disclosed.
Really?
What's your timeline on that?
Time horizon.
It's 12 hours?
Short.
No, I'm going to give it a week.
This is short.
Well, we'll say.
I don't know.
We'll say.
I jumped out of the airplane without a parachute type of deal.
You know what I mean?
You should wait until you get your dividend at least.
So here's the thing about a catch-a-go falling knife.
I'm, well, I guess I am guilty of this.
I've tried to catch a falling knife a lot of times.
But I think there's a difference between buying a stock that's in a 60% drawdown where it's
just a melting ice cube and it's been going lower for the better part of 18 months or
whatever the case may be versus buying an ETF that got of regional banks like a cut in
half in like three weeks.
You know what I mean?
So anyway, what I'm saying is I'm more apt to buy panic than I am a stock that's just
in a 70% drawdown and it is and you know, probably will never recover.
Does that make sense?
That's fair.
Even though you literally tried to do that twice with Facebook and Netflix successfully.
I might add.
But to your point about what?
Oh wait, hold on.
Hang on.
The Netflix buy was not, I did not buy that on the way down.
I bought it after it had already bounced.
And the Facebook was, that was a special situation.
You had somebody on TV crying about how wrong he was and it just felt like, it just felt
like peak pessimism.
So special situation, Ben.
Okay.
It is, a lot of those tech stocks have had huge bounces like so Shopify for instance,
was down 85% from the highs.
It's up 85% this year.
It's still down 60% from the all-time highs.
So these, the falling knife thing depends on the timing always.
But you point about the best money.
Yeah.
I think you can probably get 2007.
So what did it lose and what did it lose in the GFC?
85% crisis.
But the point is you can have a sector like this that goes nowhere and the stock market
can still do fine.
That's my big takeaway here is that it doesn't, you can have these, you could pick the wrong
sector and be screwed, but you could have that sector be part of what you're investing
in and you're still going to be okay.
I mean, I think most of that is probably in the Russell 2000s of Hose S&P but still.
So Ben, from 2010 for example, through most of 2018, KRE and SPY or the S&P 500, both
gave you the same returns.
They were 170% over the same time period.
Now of course there's been a gigantic divergence to say the least since then.
But my point is as you well know, starting and the start date and the end date, you know,
is everything.
Tell you in any argument on the markets.
So my whole thing you mentioned, of course, obviously this is not 2008.
It would be silly to make that comparison even though some people do.
Even if everything works out fine with a banking crisis and it kind of seems like it will.
I mean, maybe the effects down the line are contraction and credit or whatever, which
is what the Fed wants.
Even if it works out fine, raising rates twice while these big regional banks are failing
is still dumb in my eyes.
Like for the Fed, the fact that they're still doing it is like it's an unnecessary risk
to take when they could have just said we're going to pause for a little bit to see how
this shakes out and then maybe we'll raise a few months from now.
I just think it's like an irresponsible risk to take while these banks are failing.
I just don't understand it.
All right.
Here's a counterpoint.
And I'm not, I'm going to say these words.
I don't necessarily believe them, but just I'm going to give you the other side.
So what if the Fed is thinking these regional banks that are failing, we can backstop them
like that, right?
But if we pause now and we still think that the risk of inflation is to the upside and
we pause now before we want to and inflation ramps up again, that is a much bigger, greater
risk than whatever potential contagion can happen from these banks failing.
I mean, what else could they be thinking?
Like they understand that banks, they understand that banks are failing.
I think part of it is they don't want to go back on their word and they don't want to
look like, for some reason, I feel like they're, they drew this line in the sand and they
think that like they have to follow it and they don't want to be going back on their
word, which is bizarre.
Perhaps I'm giving them too much credit, but I genuinely believe that, well, could it
also be that they don't mind, they don't mind having a mini banking crisis that slows
credit and slows the economy, which could slow inflation.
Yeah, I think it's a dangerous game to play to me though.
I mostly believe that they're doing this because they think it's the right thing, not because
they're worried about credibility.
Okay, most people do not agree with them.
A Gallup poll released Tuesday shows 36% of US adults say they have a great deal or fair
amount of confidence in Jerome Powell.
And that's the lowest of anyone.
You can see this chart here.
It was highest for Alan Greenspan in 2001, which is kind of funny.
It was almost 80%.
Powell has a lowest approval rating.
What percentage of adults in America do you think know who Jerome Powell is?
If they were, I mean, it's got to be a small amount, right?
Like if you ask your wife, who is Jerome Powell?
There's no way she'd have a clue, right?
My wife's here.
I think it's a fair percentage.
10% of the population knows who he is.
Maybe.
No, no.
I think that's high.
How would one out of 10 people know who Jerome Powell is?
How many people were going to finance industry?
I don't know.
A couple of 10 million?
I don't know.
What is it?
I don't know.
It's got to be a larger number though.
All right.
The one thing they're doing obviously though is they are giving savers a free pass here
it seems like.
This is for a...
Well, how about this?
That's such a great point.
We spent the last 10 years, not you and I, but people spent the last 10 years saying
the Fettest Punishing Savers.
You don't hear the saying that the Fettest...
What would be the opposite of punishing?
Rewarding?
The Fettest Rewarding Savers.
They're punishing the bond mark.
You don't hear that.
You don't hear that.
Julian Clemocho, sorry if I pronounced your name wrong.
For the first time in history, investment grade corporate bonds yield less than three
month tea bills.
Wait, what?
That's cow.
Investment, investment grade corporate bonds yield less than three month tea bills.
Look at this chart.
So the spread historically has probably averaged three to 4% for corporate bonds.
I was going to say I don't get it.
This just has to be...
This is just the yield curve.
I'm not minimizing this is insane.
But this is not Treasury's yield curve.
This is corporate bonds.
No, I understand.
But the corporate bonds followed the yield curve as well.
I would do they?
But corporate bonds should have a spread to Treasuries.
No, I understand.
In Treasuries, Treasuries should have a spread to tea bill.
So this is like a double inversion.
Yes.
My point is...
Double secret probation.
This is double inversion.
My point is that these US investment grade bonds have a higher duration, a longer duration
than three months.
Significantly so, right?
And because the yield curve is so inverted and things are so wacky.
But yeah, it's insane.
So the bond market still does not agree with the Fed at all.
Like at all.
The 10 years still at 3.5, which in the three months right now is 5.2.
Hey, wait a minute.
I haven't really thought about the corporate bond yield curve.
But I would just assume, and I'm...
Please feel free to inbox us.
I would just assume that corporate bond yields actually do not follow the Treasury yield curve.
In other words, there's no inversion in corporate bond yields, right?
You're not gonna...
There's no way.
Yeah, that's true.
You don't really see that up.
I don't know what it is.
Yeah, you're right.
There's no way.
Yeah.
Yeah, I know it doesn't follow it because spread...
No, because spreads blow out.
There should be a spread, but then spreads blow out.
I'm not talking about spread.
I'm not...
I'm not talking...
Yeah, I've never seen a corporate bond yield curve before.
Right.
Can that invert?
No, because the corporate corporations are not gonna increase what they're paying on
short-term paper, like the Fed is.
They're not that dumb.
They would never do that.
No, but what if investors demand it?
I'm not saying that they would issue it that way.
The reason that the Treasury yield curve is so inverted is not because investors are demanding
higher deposit rates.
It's because the Fed is jacking up short-term rates to try to stop inflation.
All right, we have gotten a ton of questions over the years about why diversify internationally.
Why own foreign stocks when US stocks are obviously the only game in town and they outperformed
for a long time now?
AQR wrote a good piece on this.
Did you read this at all or not?
I did not.
International diversification.
Still not crazy after all these years from Cliff Asness and a couple of his colleagues
at AQR.
It was really well done.
So they showed basically since 1990, go back that far and the US has outperformed so much
that if you own international stocks, it doesn't seem to make any sense.
You and I think have shown it was pretty much international indices from MSES started in
1970.
So it was like 1970 to 2012 or so.
They're basically break even.
And then from 2013 on, that's when it looks silly to own international stocks.
Here's from AQR.
Since 1990, the vast majority of the US is up performance versus the MSCI-IFA of a whopping
4.6% per year.
So that's a lot, obviously, with due to changes in valuations.
In 1990, US valuations were about half of EVA, which had a lot to do with Japan at the
time, obviously.
Japanese valuations were so high.
At the end of 2022, there were 1.5 times EVA.
Once you control for this tripling of relative valuations, the 4.6% return advantage falls
to 1.2%.
I'm sorry.
That doesn't, I don't know if that makes sense to me.
Look at this chart.
Look at the chart.
That's like take Durant, Clay, and Steph off that Warriors team and they barely beat the
Cavs.
Okay.
So here's the conclusion.
International diversification is still worth it.
Even if it hasn't delivered, most of the upper performance in this period reflects richening
relative valuations, hardly a reason for raising or even retaining US overlays today.
If anything, historically wide relative valuations point the other way.
Well, I grew with a conclusion.
This is, I love this quote.
This is the kind of thing I wish I would have written.
A diversified portfolio that you hold today might look completely sensible.
Tomorrow it'll look full of mistakes.
I think we, you and I might take for granted the fact that like diversification is so obviously,
I'm going to use a phrase for relaunch.
I don't know what else to call it.
The sensible approach to investing.
It's a risk management strategy.
Do you think that most people, do you think that a lot of people would agree with that
statement that diversification is prudent?
I think people, I mean, everyone knows the whole you don't put your eggs in one basket.
That's a pretty well known phrase, but I don't think people, I think people have varying degrees
of their definition of diversification.
Well, because you and I would say that the S&P 500 is one basket.
Other people might argue that it's 500, it's 500 of the largest companies in the United
States.
Right.
I looked at it last week too.
Apple and Microsoft now make up almost 14% of the total index, which is nuts.
The top 10 stocks in the S&P make up 29% of the index, which is the highest it's been
since probably the 60s or 70s.
Kind of crazy to think.
And I do think you'd be fine if you owned the whole US stock market and could handle
it, but I think that owning other strategies, other types of investments, other geographies
just can help you if you have bad luck and you happen to catch the crappy period for
the US at the worst possible time.
That's the whole thing for diversification for me.
We're also talking about diversification through the lens of returns.
But what about the psychological impact of going all in on one investment?
Now, diversification is not easy either because if you're diversified and you own global stocks,
you're like, what the hell am I doing?
So it's all that trade offs.
The Brian Portnite quote, I think he said this is like, it means always having to say
you're sorry about something.
But it's you're damned if you do and damn if you don't kind of thing.
Yeah.
All right.
Remember the day of Portnite ETF?
Vanneck Social Sentiment ETF ticker buzz.
Emory, a KACMAC?
Did I say that right?
On Twitter.
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Can you explain what it means?
I'm not quite sure that I get it.
It's blunt.
It's not very precise.
They're trying to...
Let me think.
No, like...
Okay, I'm googling a blunt tool.
Think about it.
A blunt tool is a hammer.
Yeah, they're using a hammer to try to hit a pin.
Exactly.
That's what you do with the hammer.
I don't think that phrase makes sense.
I think it's the opposite.
A blunt tool can get the job done.
Not if you're trying to do something that requires precision and a little bit of a care, right?
They're just haphazardly raising rates to five and a half percent and hoping nothing breaks.
All I'm saying...
You'll never hear me say interest rates are a blunt tool.
Okay.
All right.
I'm going to hold it.
I think we need to hold it better.
I just...
I just accepted it into your...
You're going to say it in like five minutes and not realize it.
Here's another one.
I think this is good from New York Times.
Average hourly earnings climbed 4.4 percent in the year through April.
That compared to 4.3 percent in previous months and more than was expected.
Powell says, you know, the labor market is still tight.
But look at this chart.
We've talked about this before.
Wage growth in green has been lower than the consumer price index since inflation took off in 2021.
And now these two numbers are converging.
Isn't this a good thing?
Inflation is falling and wages are ticking back up a little bit.
What's wrong with that?
If, let's say wages go above inflation, if that's possible, that hasn't happened yet in this whole time.
Isn't that a good thing?
Should we celebrating that?
Real wage gains?
Yes.
Yes.
Right?
I think this would be a good thing.
You're doing a lot of...
A lot of defense on the Fed today.
I'm just pointing this out.
It's a shoe on the other foot.
I'm not telling you.
I don't...
You're defending the Fed a lot today.
I'm just saying, I'm not saying everything I've done is bad and they've been in a pretty precarious situation.
Because people have asked us and we've mentioned this, isn't the way to fight fiscal policy like this just to raise taxes.
And no politician in the right mind is going to raise taxes to fight inflation.
So the Fed is...
That's the blunt tool thing.
They're the only ones...
They're the only game in town now that are trying to stop this.
No politician is trying to stop inflation.
Politicians would probably make it worse.
So I do give the Fed credit because they're the only ones who are even trying to do something.
Even though the tools that they have don't work as well as they would like.
It doesn't feel like I'm defending the Fed.
What it feels like is...
This is not an easy job to...
It's not.
My whole thing is, it feels like they're not even trying for a soft landing.
Why don't they just chill out a little bit and let things see what happens.
Let things settle a little bit.
It's like when you get a new pizza and it looks so delicious and you know if you take a bite
you're going to burn the top of your mouth.
You just know it.
And every time you still take that bite because what if it doesn't and it still burns your
mouth, just let it cool off for 10 minutes.
See what happens.
They don't burn the top of your mouth.
I feel like the Fed is way too quick to burn the top of their mouth every time in both directions.
I think they're done.
What is...
I hope so.
They should be.
So, target rate probably is for June.
All right, 88% say 500 to 525.
All right, here's a question for you.
Since you use this way more than I do the probabilities, how do they calculate that?
It's like Fed Fund's futures.
Okay.
So, who controls those?
Who's trading Fed Fund's futures?
Traders.
I can't tell you how it's calculated but...
Okay.
You don't want to see how the sausage is made.
I'm just asking how the sausage is made here.
Can't tell you.
I mean, you're a big Fed guy.
So, you should know.
How about this?
The world doesn't have to lie.
See, we've reversed roles.
Iowa used to be the Fed guy, the Fed apologist.
You're the Fed apologist now.
All right, here we go.
The probability of a rate hike is calculated by adding the probabilities of all target rate levels above or below the current target rate probabilities of possible Fed Fund's target rates are based on Fed Fund's futures contract prices, assuming that rate hikes or cuts are uniformly...
Okay, so there it is.
Do I need to keep going?
Man, good enough.
I didn't really care.
I was just curious if you know.
Well, I think I did.
Sir.
All right.
So, they spoke at the meeting about, I think Powell said, something along the lines of he does not expect a recession.
And I think Yellen said something similar.
So, from the Atlanta Fed, on May 4th, the GDP now model now cast a real GDP growth into Q2, 2023 is 2.7%.
See, this is my point.
Maybe everything the Fed's doing, it's useless and doesn't matter.
We don't have a counterfactual, but if the Fed will stop at 3% or 4%, maybe we would just be in the same situation and it just wouldn't be as expensive for people to borrow or they wouldn't be getting as high yields on a T-bills.
We don't know.
If they stop to 3%, we just don't know.
Here's another one.
San Francisco Fed.
Approximately...
And I think...
I know we've spoken about this so much that maybe it's gone from over communicated to under communicated.
San Francisco Fed, approximately $500 billion of excess savings remaining in the aggregate economy.
Should the recent pace of drawdowns persist, excess savings would likely continue to support household spending, at least into Q4.
I don't know, man.
I don't know if any session's coming.
I think we're spending that savings down to the bone.
There's no way people are hanging on to that excess savings.
Right?
Yeah, no, no way.
Here's another one.
The ISM Spring 2023 semi-annual economic forecast finds that amid continuing uncertainties, purchasing and supply executives in the US, manufacturing and services sector still expect growth in production capacity, revenues and employment.
Okay.
However...
2025 recession is still on the table.
However, the Small Business Index...
US Small Business Optimism fell to the lowest since April 2013.
Okay.
I don't see how this...
Okay.
Counterpoint to my previous points.
I don't see how this doesn't show up in the data eventually.
Now, this is like the vibes thing.
Like, don't worry about how people feel, worry about like the hard data versus the soft data.
But if...
If...
If...
If...
If you see...
Small businesses are so pessimistic on the economy.
This is going to change their habits and impact the economy.
No, how does it not?
Haven't we been saying that for over a year though?
Didn't we say last year?
Like, we could talk ourselves into recession last year and it didn't happen?
Yes.
I...
So I don't know.
The thing everyone else...
The thing the really gloomy people would say is, listen, the Fed operates on...
Their monetary policy operates on a lag.
Just wait...
That's a fact.
That's a fact.
It's going to happen.
And also, every time there's not a recession today, there could be one in the future.
That's also a fact.
Like, duh.
Something could happen in the future is not happening today.
Things are still pretty good.
That's where I stand.
Things are still pretty darn good in the economy as they stand today.
Could they get worse in the future?
Yes, they could always get worse.
Uh...
We also talk about a recession like yes, no, right?
In black or white as if there's not 50 shades of gray.
Is it red there?
Never saw that movie or read the book.
Remember that?
Yeah, I read the first book.
I'm not proud of it.
I kind of wanted to see what all the hell it was about.
And, uh...
Who was a mistake?
How about this?
Will there ever be a bubble in a book again?
By the way, I'm picturing what Duncan and John are going to do to 50 shades of gray here
for their Photoshop.
And, uh...
Will there ever be another, uh, DaVinci code or...?
Oh, yeah.
How are you?
Yeah.
Yeah, of course there will.
Yeah.
That takes the nation, the globe, by storm.
People don't read books anymore.
I think it's a great thing.
I'm not sure if you're going to go by storm.
People don't read books anymore.
I think it's easier for books to do that than movies these days even.
No.
I don't think...
You don't think there's going to be some sort of...
Top Gun.
Hunger Games, sort of thing that...
All right.
I don't know.
Do people read anymore?
I got a book recommendation for today.
I haven't been watching many movies because movies stink all...
All the movies stink these days, so I've been reading more.
Okay.
Uh, all right, so getting back to the shades of gray.
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I was talking to Betty Marks about this.
She's asking me about buying a house.
It's going to be like, I'm like, dude, you don't buy a house for the short term.
That's not what this is.
I think you're underestimating the cost involved, the headache.
I would say seven years minimum should be your starting point.
Right?
I mean, again, life gets in the way it happens, but that should be where you, where you,
because it's true.
This number brought you low in terms of cost to move.
Yeah, I don't know.
I don't know what the number is in terms of how many years, but you should buy a house with no intention of moving.
Right?
It's not realistic to think that the first house that you buy, you're going to stay in forever,
but you should buy the house with no intention to get out of it anytime soon.
Right.
Michael McDonald from Bloomberg tweeted, the AI revolution is unmistakably under way as evidenced by the significant increase in AI related mentions during earnings calls and company transcripts.
I mean, look at this.
It was basically, it went from effectively zero to all the way up.
Which companies haven't said anything?
Like that'd be interesting to me.
Like Apple probably hasn't said anything yet.
I'd love to hear some of the big companies that haven't said it yet.
So they asked, so biting their time.
I did listen to Apple.
They asked Tim Cook about AI and he was pretty vague, pretty non-committal with his comments, but I had, I don't know if it epiphanies the right word, but a realization and I could be way out of bounds here.
But here in Tim Cook, talk about Apple and how they're bettering the world and all this sort of things that struck me as nonsense.
Like he's like the bad guy from Jurassic World.
The latest Jurassic World.
Apple has not made your life better.
It has Apple Watch iPhone.
It has totally made your life better.
Love it.
But no, I'm saying like do you think that the bad guy in Jurassic World was modeled after Tim Cook because he looks exactly like it.
They do kind of look.
They have the same mannerisms.
I agree.
Okay.
Apple Q2 revenues.
By the way, I was talking, it seems so long ago, on the campaign and friends, I was saying that like the same thing.
I was saying that like the stock market looked really kind of shaky going into Apple's earnings calls.
I don't know.
I know you're not a stock market guy, Ben, but just take my word for it and look kind of shaky.
And I think I said something.
I'm not a stock market guy.
I'm just not, I'm not a chart guy.
How's that?
I said something to the effect of I don't think or my, what I intended to say was I don't think that Apple can necessarily save.
I don't think that Apple Beanie will like be a boon to the market, but I think if Apple misses, it could definitely like take the market down 5% in a hurry.
And I was 100% wrong because on the day after Apple reported, the S&P on Friday had like was up 2%.
So thank you, App.
Thank you to Apple.
All right.
So Q2 revenues, not quite at a record, but right there.
Who made this chart?
I can't remember this from transcript to somebody else category revenue.
I don't understand Ben how they are doing almost $7 billion a quarter with just the iPad alone.
That blows, that absolutely blows my mind.
The iPad is a $7 billion quarter.
Because every parent buys one for their kid now.
So when they go out to eat, they can have a meal in peace.
That's how it works.
It's going to iPad, scram.
It's unbelievable.
What else did they say?
So I think somebody was, I think I saw it tweet like, this is two consecutive quarters of Apple revenue being down year over year.
I don't know if it's exactly right, but it was something like that.
And the implication was in fact, the person explicitly said that Apple is no longer a growth company.
They are kicking butt and taking names in emerging markets.
There was a lot of talk on the call about India.
If you're the biggest company in the world, isn't hard to be a growth company, just by definition,
like your past the growth stage, you're more mature.
Yeah, that stands for reason with the $2.6 trillion market cap.
Anyway, Apple is still killing it.
All right, Coinbase.
The most impressive company in history.
We've might have said this before, but it just is.
I don't have any experience with the Dutch trading firm or whatever.
So South Sea, all that stuff.
Ben and I did it recorded a listener mail back episode with Fidelity Digital Assets.
That's coming out on Monday.
And in the intro, Ben, you and I were talking about Coinbase and how in the earnings call,
Brian Armstrong was talking about people are unhappy with the current financial system
and they're making it faster and cheaper.
And then I told you the story about trying to buy USDC with a near 4% commission.
Consumer trading volume was $20 billion.
I'm sorry, $20 billion in the most recent quarter.
Institutional trading was $124 billion.
So there were six times as much volume from institutional traders as there were from retail.
Okay.
Transaction revenue, Ben, for consumers was $350 billion.
I'm sorry, million versus $22 million for institutions.
So institutions trade six times as much volume.
But consumers pay 15 times.
Is my math right?
I don't know.
Between 15 and 20 times what institutions pay.
This has always been my bear case for Coinbase.
It's just fees coming down.
That's, I mean, maybe they're the only game in town now and that holds that off.
But that's been my, since they became public, I thought that the fees coming down is the problem with them.
Oh, wait, here's a quote.
On the consumer side, we had an increase, we had increased our spread in the second quarter.
So I guess they're like, I kind of, I kind of assumed that a commission was static, which,
I don't know why I assumed that, but it sounds like a flexus based on whatever they want to do.
All right.
Here's a crypto thing for you.
48% of US adults say they're concerned about their money at banks, including 19% who are very concerned.
29% who are mildly concerned.
30% are not worried at all, or 20% are not worried at all, 30% are not too worried.
So 50% or so are worried about banks.
This is an interesting one.
This is from Apollo.
Less than 1% of bank accounts have a balance higher than 250k.
So more people are worried than should be worried.
How's that sound?
That's exactly right.
And I would follow that up with all of those people that are extremely worried or very worried.
How many of them have moved their money?
Right.
Or will.
Yeah.
Exactly.
So in the Wall Street Journal, the age when you stop feeling young, okay?
A lot of people have commented lately how it's really funny to see in real time Michael realize that he's reached middle age.
And if you slowly hit that realization.
The early 40s, specifically 42 is when the average American starts noticing physical signs of aging,
including achy joints and gray hair, according to a September poll conducted on behalf of found away management company.
I turned 42 in three months.
And I feel great, but I do occasionally feel like I have some sort of like.
Tender, I guess, or something like after lifting weights, I'll have like a sore joint for like a month.
And then I'll just kind of go away.
But that's happened two or three times to me where I'll just be really sore.
In certain spots, knees or elbows or stuff.
It's funny.
I mentioned this yesterday.
I was tying my sneakers on the couch.
And I felt something in my knee.
Pop is too strong a word, but I don't know what's between nothing and pop felt something.
And then I was like, what was that?
And it doesn't hurt anymore, but it bothered me for the rest of the day.
Tying my sneakers.
It happens.
Did you see this thread from Airbnb?
About their new that's one that's the one I try to listen to the Airbnb call every quarter.
So that's that's tonight.
I'm going to listen.
Brian Chesky tweeted, you told us what you don't like about Airbnb.
Here are 50 things we're doing about it.
It was a tweet thread of 50 things that they're changing.
For example, you said checkout instructions can be a surprise when you get to your Airbnb.
Now all checkout instructions can be viewed on the listings page before you book.
And again, there's 50 of these things.
Yeah, I like it.
They seem very consumer friendly.
Beyond the guy next to us in Florida who yelled at us for being too loud at the pool.
He's not an Airbnb fan.
Oh, I got something.
Okay.
Two things from Texas.
On the way to the airport or from the Uber driver had a live rear view mirror, which I
feel like I've seen before.
I think I want to get that.
What do you mean a live rear view?
Like on the screen?
The rear view mirror is video of behind you.
So instead of looking to your rear view mirror to see what's behind you, like with a mirror,
there's a camera, I guess, that goes in the back of your car.
I don't know if it's a wireless connection where you can literally see the cars behind
you in your rear mirror.
So my new, my new Jeep Wrangler does not have the like side alerts where there's, where
there's like a light comes on.
So instead of looking up, you're looking down.
What?
So instead of looking up in the rear view mirror, you're just looking down to the screen.
No, the screen appears on your rear view mirror.
Oh, okay.
Instead of it being a mirror, somehow it's a camera to the cars behind you.
It's a view of the cars behind you.
What happens in a speed situation where someone loops in a video of a different background
and someone's really coming up behind you?
I'm just saying.
Ben, I don't know if you saw this speech and I can't even remember if it was from Allison
Levine or Eric Maddox, but I'm thinking it was Allison Levine just given the nature of
the quote, talking about like how a lot of people are, or maybe it was Jason Carp.
I don't even know if it was, I don't remember who said this quote.
Forgive me.
But they're talking about why so many people with money are not happy.
And the quote was this, I think it was Jason Carp actually.
He said, I got to the top of the mountain and there was nothing to say.
Yes.
And boom, there it is.
For people that are chasing money that thinks that money is going to somehow change how they
feel about, I don't know, their happiness situation.
So, Jason Carp was a hedge fund manager investor who became a, who started his own health
food company.
And it was interesting because he talking about how he doesn't like all the processed
foods, you know, like seats naturally.
And he's talking about like how much of a, a demi it is that we have this, this obesity
in this country, and then someone asked him at the end, what, well, what does your diet
look like?
Do you eat fully healthy and natural all the time?
And he says, well, I have like the 85-15 rule.
85% of the time I eat clean and 15% of the time I eat burgers and fries and pizza and
stuff because I don't think he said, I basically think you go crazy if you live at the extremes
like that.
And I, I, I subscribed to that notion as well where you need to have a little bit of balance
in there.
All right.
Recommendations, Ben, somebody recommended this to me.
It's a show called the juror on Amazon Prime and it's got a great premise.
Do you know about the show?
No.
So there's a jury.
There are so many shows right now.
There's, you've got a judge, you've got the defendant, you've got some prosecutors and
you've got a jury.
Every body on the show is an actor except for one dude who doesn't know that it's, it's
rigged.
Oh, it's a reality show.
It's a great premise and apparently like things go nuts.
But here's a problem.
It's on Amazon Prime on this service called like freebie and there's commercials and I
can't watch it.
Also, the juror was not a bad movie.
Alex Baldwin and Demi Moore.
Was that a John Grisham?
I think so.
I never saw that one.
Not bad.
Okay.
I was listening to the town podcast with, I don't remember who was with.
I think it might have been, I don't remember who was with.
And I learned that the Meg 2 is coming out.
Are you kidding me?
So many people tag us on Twitter for this.
I also learned that the first one did over $500 million in global box office.
See, you're part of the problem.
You're the reason we can't have nice movies anymore.
I'm not going to see the Meg 2.
Yeah, you will.
I also think the reason we don't have, if you watch a show like Succession, I think
you just realized that people have decided, why would I write one single movie anymore
when I can write 10 episodes of a TV show that could be four or five seasons?
I think all the good writers that used to write good movies are now writing TV shows.
That's the only it has to be.
So I caught a little bit of ghost.
What year did ghost the movie come out?
For younger listeners, this is Patrick Swayze, Demi Moore and Whoopi Goldberg.
In the 70s?
80s, 90.
Okay.
So I don't know when I saw this.
I was young.
I was maybe like six or seven or eight.
I don't know if I was probably six.
That's probably too young.
Let's say that I was eight or nine.
And I think this movie taught me about death, like in a real way.
You know what I mean?
Like, I don't exactly remember how I felt when I watched it.
But if you haven't seen this movie, what an incredible movie.
Holy moly.
It really is.
I mean, Whoopi Goldberg is so good at that movie.
Yeah.
Okay.
I am very excited for the Confident, the Guy Ritchie movie, which doesn't really seem
like a Guy Ritchie type of movie.
It's Jake Gyllenhaal in the Army.
And I saw a commercial like it said, come with the digital access.
Today, on May 9th, this movie came out in the theaters two weeks ago.
I actually almost saw it instead of Evil Dead, but I saw Evil Dead.
And I was reminded of bootlegs.
Remember bootlegs?
Mm hmm.
So I was walking through Times Square in like 2004, maybe, and bought a bootleg copy
of Gaffa-ka.
We went and watched it.
And it was a guy literally videotaped it.
Halle Berry.
Yep.
And Robert Downey Jr.
Yeah, that was the thing.
And a guy literally videotaped it.
And it was pretty good camera work, except when you'd see someone walk in front of them.
And in the row.
In 2000, what year was it?
I'm going to guess like 2007, 2008.
I was working at a restaurant.
And I did that for about two years.
Full time, no big deal.
And the, there was a guy that would come with bootleg DVDs.
And I remember very, very vividly seeing no country for old men on bootleg.
And there will be blood on bootleg.
That's what we had to do before streamers existed.
So this is, this is what we had to do back in there.
But it was always like, it was always like a roulette wheel to figure out, you know,
you popped it in and like, was it some dude holding a camera?
But 50, 50, sometimes it was like legit, like just a great copy, which was thrilling.
Like, that was thrilling to be able to see those movies at home for like five bucks.
Yeah, the quality is always so bad.
Never did it.
No, I'm saying I got a bunch of good ones.
It was, I had a guy.
All right.
There's, I heard, or so I don't know, commercial, whatever, there's a movie coming out called
Blackberry, which is literally about Blackberry, like research and emotion.
And I don't know how I feel about this.
What's going on?
I don't know.
I never had one.
So I think I'll skip this one.
I have another nostalgia here.
So there, there was the run of TV shows about like the WeWork TV show, the Uber TV show.
On record, it's saying it's too much.
So now is Air going to kick off a run of these type of movies?
I'd rather have to be a movie than a TV show.
We've been catching up on TV.
I've been out of town and doing stuff.
So I've been watching much and all the movies, these days stink.
No good movies.
There's just no good movies anymore.
In the theater or what?
Yeah.
When's the last time a good new release came out?
Well, Evil Dad, Scream.
I watched Scream a little bit of a ceremony.
Barbarian.
I've been reading more.
So Amazon Kindle finally got me.
I have the Kindle where it has the ads on it and you open it up.
And forever, it recommended me this book called Tomorrow and Tomorrow and Tomorrow by Gabrielle
Zevin.
And I think it's been a really good bestseller.
It finally got me a warmie down.
I read it and it's great.
It's about three friends who start a video game company and it goes from like when they're
young to when they're older and all these things that happen in between.
And it talks about how they develop these video games and it's not like anything I read
usually, but I really liked it.
True story?
Very good book.
No, not a true story.
I'm only fiction these days.
Send us an email.
Anilspiritspod.gmail.com.
Michael will come back next week with a heel up head.
I think Logan's sick.
All right.
Great.
Good luck.
You have the worst luck with that.
All right.
Anilspiritspod.
At the Gmail.
See you next week.
Bye bye.
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