Today's animal spirits is brought to you by our friends at Ycharts.
One more reminder, register for Ycharts webinar discussing
scenario tools with a big emphasis on how it works as treatment life, the financial planning process
with our COO. Nick Majuli, May 24th, May 24th, 1230 pm Eastern. Be there, sign up on our website.
Wait, this comes out on May 24th. So, same day. If you're a morning listener and you want to
learn about the scenario tools, we have a lot of early morning listeners. All right, one more
thing from Ycharts, I pulled it up comp tables this year. S&P 500, number of stocks up in the S&P
out of 504 names. Well, it's 500 names. Don't do this. There's 504 names because different share
classes. All right, there's 500 stocks. There's 500 companies. Technically 504 share classes.
It's 500 companies. All right, how many are up? Well, I was told 5, so I'm going to go to 5.
270 are up because everyone says it's only... I told there's just five companies. 234 are down.
150 stocks this year, up 10% or more. 99 down 10% are worse. Not as bad as people make it out to be
saying it's only these stocks, right? They have it. Just saying. If you want to check out the comp
tables, scenario analysis, all that stuff, check out the webinar. The day this is releasing,
ycharts.com. Tell them animal spirits sent you 20% off your initial subscriptions.
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 Redholz wealth
management. This podcast is for informational purposes only and should not be relied upon for
any investment decisions. Clients of Redholz wealth management may maintain positions in the
securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. We're
going to start with a little bit of housekeeping. Redholz wealth management is coming to Austin.
We finally have an office there. I've been there a million times. Was it a million or was it
909? No, we've been there a bunch. Lovely. Are you going on the trip, Ben? No. Okay. You and I've
been traveling too much. Yeah, I'm probably not going, but I might. I might. But if you want to
talk to us about learning about what we actually do for a living, helping people manage their money,
if you want to talk to us about potentially joining us as an advisor, if you are in the Austin area,
you can email us info at redholzwealth.com. All right, that's plug number one. We've got two
plugs. Second plug, Ben, you want to take this one? Which one? Well, this is really good. This is
more of an announcement than a plug. Yeah, it's an announcement. Okay. First of all, we are doing
this podcast together again. We do this once in a month. Seems like we get together now.
And we are at the wealth management edge slash inside ETF slash wealth sack slash is that it?
Is there another slash? I think you nailed it. It's a big conference in for Lauderdale, Florida,
Hollywood, Florida, technically. Hollywood. And we thought there wasn't a better time to break
it out than in Florida. We have the new animal spirits, tropical brothers. Look at that animal
spirits. It says it right on the sleeve there. We have the new whale design. How exciting is this?
I mean, we have like the little wooden looking buttons here. It's fabulous. The tropical
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You can get it at tropical brothers. If you go to tropical brothers.com, it's tropical bros.com.
Under collaborations, it says nadlight, like USA and animal spirits.
Wait, USA? Like the USA?
There's like a USA, Ra Ra Olympics kind of thing. So you go into collaborations this
there. If not, we're going to have, I'm going to share it on social media.
We're going to look at a plaster this time. The blogs, but it's animal spirits, Hawaiian shirts.
Here's the best part. Besides looking really cool and being comfortable in the summer,
10% of all sales, which would have gone to us, but not to brag. We're forgoing all sales here.
It's going to no kid hungry, which we've helped out in the past.
Nokidhungry.org. So 10% of all sales will go to them.
So feel good, look good, do good.
According to their latest estimates, 9 million children live food insecure.
Do not get enough food to live a healthy life. No kid hungry, which we've worked for for a few
years. They've always been great to work with. Very happy with that relationship. We're giving
10% of all proceeds to them to help children in need who need some more food. So again,
tropical bros.com. Look for collaborations, animal spirits. This is the hottest shirt of the summer.
I'm sorry. You have to have one of these for summer break. It's comfortable, it's breathable,
and it looks just fantastic. The colors, we're walking around a conference and we have people
in business casual. We have the women are in dresses, the men are in suit coats in business casual,
and they look at us. And we're in shorts and a Hawaiian shirt, and everyone's just,
look at these guys. These guys have it all figured out, right?
I think so too. All right, Ben, we're in Florida, and I've got a few bones to pick.
Maybe observations. Actually, no bones. That's not true. Oh, I have one bone.
You won't believe what I saw before you got to the conference this morning. So there's an exhibit
hall back there. And you know, behind the exhibitors, there's like a banner, right with their company,
yeah, late name, whatever. I saw a dude steaming. I swear to God with a steamer.
I would have told him listen, dude, they don't work. And I went up to him and he goes, and I
said, he's closing the banner. I said something. He goes, does this do anything?
And I said, thank you. Funny you shouldn't mention that. We just, you know, I've got, we have a podcast
and I, uh, he doesn't know who we are, which is totally cool. Fair. And I said, listen, I want to
clarify. Steemers will not get out of bed wrinkle. So yeah, if you, if you crumble, uh, if you crumble
a suit coat and you put into your, into your briefcase, we've got lines out the ass. No,
steamers not going to do you need an iron, but for just a t-shirt to just get a quick wrinkle out,
steamers are, are sufficient. But if you're traveling somewhere, you're going to have wrinkles.
I agree. Steemers are not ideal for travelers. I agree. Yes. Okay. So my other conference observation,
most finance conferences are dominated by men. It's, there's not a lot of diversity in this
industry. I think it's getting better, but it's notoriously but not very diverse. I would say
15% of all attendees at any finance conference are bald. Right. One out of seven and a half or so.
It's pretty close. There's a lot of balds at finance conferences.
What's a bald? Do you mean like a me bald or like a, like a dude who's balding? Both. Yeah.
Yeah, I think that's fair. Okay. All right. Wait, whoa, I got two more things. Two more things.
This happened to me two times in a row. So it's not a coincidence. Fill me one, shame on me.
Twice can't get pulled again. Last night, I went to the Miami Heat game. Actually, let's talk about
that. Not real alone alone. See, I would like Duncan to do a poll to see what's weirder. Going to
movies alone or going to a professional sports game alone. Oh, definitely a sports game, for sure.
I mean, so it's just like, because going to a sports game is a social event. Now, here's a few
things that I will around you like are within groups and you're just by yourself. Here's a few
things I will say. Um, I grew up hating the Heat Organization still do because Pat Riley.
But I respect the shit out of this team so much that I actually bet on, I did a parlay, I told you,
I took the nuggets and the Heat to make the finals plus 7.90, no big deal, not to break.
Uh, I didn't think that he were actually going to beat the Celtics, but they were like plus
450 or whatever. It made no sense. Yeah, it's made no sense. So two things. We had a podcast
with Vermeets Aide, which was amazing. And Vermeets whole deal is spend extravagantly
on things that are important to you. And cut back mercilessly on the things that aren't.
Right. So, also podcast come out Saturday with him, uh, YouTube on Monday.
We talked about his new Netflix show and it was a fantastic conversation.
All right. So I am a lifelong gigantic basketball fan.
Probably the first thing that I ever remember like my early memories are like the next.
So you're, you're setting me up to tell me you spent a lot of money in this.
I can, I can see, I can see where this is going.
So, all right. So I spent a lot of men in this ticket and I'll review it. And I felt,
I felt no qualms about spending this money because this is what, what this is what money is for.
Like literally I will never forget going to game three where the heat destroyed the Celtics.
Can I guess? Sure. So you want to know where I sat?
You sent me a picture.
Okay. So that, so that was my second ticket and here's where the bone that I have to pick is.
So, but it was, it was in the lower bowl.
Why do you have two tickets?
I'll explain in a second. What do you think I spent?
Play off game, home game for my.
Eastern Conference Finals.
950.
Okay. Not quite that much. So my first ticket was like
470, 600 with taxes. So it's like 600 bucks.
So I'm getting ready to go to the game and it's like five o'clock and my ticket's still not delivered.
So I call up StubHub who you know I, how I feel about StubHub with their 30% fees or whatever it is.
And I said my ticket hasn't been delivered. What's going on?
And they're like, oh, the seller didn't deliver the ticket. We were just about to email you.
Or something. I'm like, the game starts in three hours.
What do you mean you were just about to email me?
Like I ordered my ticket like this morning.
I don't know. Was it on May? Should I call them sooner? But in any event.
So now there's no decency. It's that I wanted for the same price.
So you had better seat?
No, I didn't. I had a slightly worse seat and it ended up costing me like $740.
Oh, so you had to plan more because they mess up the first one.
So I called them and I explained the situation.
And I said, listen, I don't think I'll be unreasonable.
I just want you to credit me the difference between my worst seat
and the better seat that I would have had because you guys just never let me know that the ticket was.
And they laughed in your face?
No, the customer service guy was very nice. He said, let me check with my team.
He said, what if I can give you, he's like, there's no way they're going to give you the refund.
Obviously. I get it.
What about if we just give you like a coupon, like a $140 voucher?
And I said, that would be great. Thank you. What do you think they did?
Sorry, sir. We can't help you. It's not our policy. I'm like, you know what?
Okay. Okay. I will never use stuff up again.
I don't understand why it's so bad, the whole everything, the whole ticketing process.
Well, how come someone hasn't come in to figure it out and make it a better?
So there's another service. I think it's called, let me see if I'm doing this right,
Tech Pick. Yeah. So yeah, it's Tech Pick. I'm done with Stop Hub. It was just annoyed me.
All right. Let's talk markets. Wait, one last thing.
Okay. You got a lot to talk about. Sorry, last thing. So last night I went to dinner.
I yourself. By myself. This is before after the game.
Before. And they included a 20% gratuity.
That's a great scene in Sarah and forgetting Sarah Marshall, where Jonah Hill is the host.
And Jason Segal goes to, we have one guy by himself sitting for dinner.
And Sarah and Russell Brantter eating. Yeah.
I love that movie. So they put a 20% gratuity. And I guess, I don't even know what I was thinking,
but I tipped on top of it because I was just wasn't really paying attention.
But then you and I got a fantastic Miami vice.
When in Rome at the bar, and it was again, 20% gratuity, I'm thinking like,
why are they doing that? So I've seen, they include 20% gratuity, which by the way,
I don't know probably 20% tell you, but no, they do that if it's like a party of 10.
Yeah, true. I party of one.
I do think unfortunately, like, I've been, since the pandemic started and you feel for people
what they're working and doing stuff and making, keeping the world moving,
my tipping has definitely increased a lot. Like the pandemic made me realize, like,
these people are that are in our food service, preparing it and moving, like, I've been tipping
better. But I feel like the, the tipping thing is getting to a point where they're really making
people mad now. Like they pushed it a little too far almost that there's, there's a lot of
people getting angry with like the constant distance.
I spent my entire adolescent life in the service industry.
Bospoi, waiter, valet parker,
cabana boy, caddy, one time, was not for me. So I'm a tipper, but yeah, there's, there's a,
there's a time and a place and a way to do it. Yeah, I can't see asking you for golf tips.
No offense. No, but you should have seen me cabana boy. I was, that was, I was special. I was elite.
Speaking of elite, last thing that I'll move past this, Robin goes, he's like, you know,
I heard you talking about how you're a great grocery food shopper.
And I was like, how? Because she doesn't listen to the podcast. She goes, I saw it on, on Instagram,
she goes, let me just tell you something and tell you a listen to something. You never get what I
asked you to get. I'm like, okay, if I shoot 96%, I forget blueberries one time, I, I maintain I
am an elite grocery shopper. Okay. So she called you on it. She called me on it, but the, I am, I just
done. That's fair. If you had to describe the financial market, macro news cycle in 2023,
what are some adjectives that will come to mind? Adjectives. Not like it's not good.
Just the general mood sentiment. Sour. Right. On edge. Boring.
How about great for the stock market? Ooh, how about great? How about?
NASDAQ 100 this year. But that's facts. I'm, I'm talking, you're on to my mood.
We're talking about mood. The vibes of not, the vibes have not felt great this year. Again,
it's a continuation of last year. NASDAQ 100 this year, up 27% year today. That much?
S&P 500 up 10% year to date. Does it feel that like that? I think the Russell 2000 is not up as much.
It's the vibes don't match the returns. And obviously some people would say, well,
last year the NASDAQ was down 30, whatever percent that was down 20, whatever percent still.
They're nowhere close to matching the fact that this has been a pretty great year,
five months in in the stock market. Right? Yes. But what happens when this happens and that
happens in the recession is coming and the Fed and I get team bot. I totally get team
but I have no problem with team but. I'm not going to touch that one.
I have a problem when- Can I get a severe die-coke?
Here's my one problem with this conference. There's no coke zeros.
I'm not sure my die-coke with you. Do you want some?
No coke zero. You can have it now. I'm sure my germs with you.
So I would say that the vibes have still been way off compared to the market and the market is
saying we don't care. We're climbing the wall of worry again, whatever it is. But I think a lot
of people would be shocked at how well the stock market is doing this year. Right? Okay.
Here's a bone to pick with you. We had it out in Slack this morning and you know what the best
performing stock in the S&P this year is when I was looking at my little company- Yeah, Facebook.
NVIDIA. I thought it was- Facebook's probably- It's mostly tech stocks though. Tech stocks are
doing phenomenally. What is the Fed don't interest rates this year? Raise them a lot.
They're higher. Yeah. Tech stocks are up and rates are up. Yes.
How does this possible? Because I was told the only tech stocks can go up if the rates go down.
The only- No, that's not what you were told. I moved the go-post. Last year I was told-
That's not what you were told. Rates went up so tech stocks went down.
That doesn't- No, it doesn't. This is not- The inverse doesn't have to be true.
See, this is where you're wrong. Techs- I'm saying I don't believe this,
but this is- I feel like a lot of people thought last year that, okay, we have an
inverse correlation and that's what's going to happen. Yeah, that's what happened. There was a
historic- There was an interest rate shock and tech stocks which were reliant on hopes and high
multiples got destroyed. This is not narrative. This is fact got destroyed by that. Did they not?
And I'm not saying that rates didn't have something to do with that. They obviously did.
And then inflation made those cash flows less valuable, future cash flows. So they got destroyed.
My point is a lot of people did think, okay, tech stocks were only a rate story. And that's it.
And that was not the case, obviously. If rates are higher and tech stocks are higher this,
your tech stocks are way higher. But we're talking about different things. So part of the run-up to
tech stocks was obviously a low rate story. Not all of it because they're earnings. Like obviously,
Apple, Google, they exceeded lofty expectations just fundamentally. They did. They straight up-
That's my point. It was not all a rate story. I think some people were saying that it was all
low rates. It's not one tech stock. There's the sofas and carvanas of the world.
But anyway, my point is those stocks got killed because interest rates went up as quickly as they
did primarily. I'm not saying the other reason, primarily. And now, how could they be up when
rates are still high? Well, it's simple. Number one, they got oversold. I know it's like in
Lamex U. But Facebook was down 70% plus percent. But more importantly, it's fundamentals. These
companies and their management teams got the memo very, very quickly or pretty down quickly in the
first quarter of 2022. Was that one? No, in the first quarter of 2021,
things started to, that's when all of these companies crash. When Dijk is down 80%,
what do you think? And after earning. How much less would Facebook have gone down if they didn't
make the switch to metaverse to meta? A lot less. Right? A lot less. But I have a point to this.
That the CEO of Uber, Dara was, I think the first major company to come out and tell
it's different now. Wall Street has certain expectations. And they all cut their losses
and move to efficiency. So I think that is the reason why we've had so much great success for
these companies. And of course, within video specifically, that's all AI. But I think the
Google's all- Maybe I'm arguing with this, but DK, is what I'm saying, Fair? Yes, it is. But I'm
also just saying, I think there were certain people who thought like, oh, this is easy. I
haven't figured it out. It's rates. That's it. And that's not it. That wasn't. It was it. It was.
Well, rates plus speculation plus huge gains. All right. Carl Icahn, did you read this FT story
about him? Lost some money. I actually spent some time in this last week. Okay. Carl Icahn
made a bet that the market would crash and it cost him $9 billion over six years. How much money
did he manage if he lost $9 billion? It's like all his. But how much was he worth?
So did you see the who did the Hindenburg? Did the report on how you pay it?
Yeah. And I'm it's pretty rough. Yeah. But but I remember, I remember
in 2015 when I was a young whipper snapper, Carl Icahn was on CNBC calling H.I.G. and J.K.
Hattercke. I remember that. Remember he had the cartoon of
I shares Larry Fink driving a bus over a cliff. Yeah. And so I wrote a blog post very respectfully.
I wasn't like dunking on Carl Icahn by any stretch of the imagination. I would never do that.
And I do remember a particular comment. But anyway, that's not the point. The point is that
Carl Icahn, credit to him, came out and said that he's. He at least admitted it. He said like,
I've always told people there's nobody who can pick the market on a short-term basis. Maybe I made
the mistake of not adhering to my own advice. He also said, but he also said, and this is,
I mean, this is just this is a layup. If you're a fun man, you're not performing.
I obviously believe the market was in for great trouble, but the Fed injected trillions of dollars
into the market to fight COVID. And the old saying is don't fight the Fed. So he did blame
the Fed a little bit, which I feel like you just kind of even if you're admitting to mistake,
you have to blame the Fed because that's what you do if you're in a perform. Yeah. Right? Anyway,
my point of the stock market being up this year is just that most of the time the stock
market goes up. A lot of people, I feel like a lot of people in their brains can't come to this
conclusion though, because everything always has to be bad. And if you bet against the stock market
for six years in a row, guess what? Probability says you're probably going to be wrong because
the stock market goes up most of the time, even though sometimes it goes down. People are, so I saw
I just flated. I didn't read it all. So my green professor plum quote tweeted,
breaking White House says if US defaults, the stock market is expected to decline by more than
45%. I haven't had time. I mean, I have time. I did not see the report. I didn't read it into this.
But so my green said the quote, let it burn quote tweets and comments tell you everything you need
to know. Everyone is comfortably numb to the consequences. Again, I didn't see all the quote
tweets, but I did see this one response that I want to flag because it was pertinent to what
you just said. Don't you believe the market over politicians though? Like the I would trust
listen, just listen, just wait for the the coup de gras. So somebody replied sending the S&P down 45
percent would be more than enough to atone for the sins of 15 years of insane key weans are
takes us back just below pre-pandemic levels. Inflation would probably inflation problem would
evaporate overnight. Yes, it would be an ugly recession, but we return to a real economy.
There's a lot of people, a lot of people that feel that QE is somehow not somehow. I understand
their point of view. They think it's, you know, exacerbating wealth inequality because rich
people only in the world needs to burn. Yeah. But anyway, but they really do. They think that
it's like a moral problem of QE and I don't I don't share this person's point of view,
but I understand where they're coming from, even if I don't agree. I don't. I think 2008 broke
people's brains in 2020. Shatter them into million pieces. And I think some people just,
they assume the world be better if we have like a great depression level resetting. I'm sorry.
That is not better than it's not. No, that well, that I definitely I do not agree that that that
is better. How about a win for the now showed Japan crowd or a loss? I don't even know if it's
a win or a loss, but bespoke tweet. Did you see this Ben? Nope. The Nikkei 225 broke out to a new
multi decade high this week, hitting its highest level since 1990. Wow. That's impressive.
How about that? Here's another one. Greatest bubble of all time.
I think so. As far as my money goes. I think so. Here's another one Ben. The DAX, that's the
German, that's the index in Germany, stock market index in Germany, new all-time highs.
That is one of the most confounding things. That is surprising. Euro stocks, what? What's
this Euro stocks one? Hi, look, new independent recording podcast right now. Look at my shirt.
Look at it. Hi, very cool. Hi, so yeah, there you go. A Walter Bloomberg tweeted Euro stocks
volatility index is at its lowest level since February 2020. Wow. Just wait. I honestly have no,
I don't know anything about the German stock market. I can't tell you why it's doing what it's
doing, but there you have it. All right. So Tony Welch had a great tweet. He said,
I know only a few stocks driving returns narrative sounds scary, but according to empirical research,
there really isn't much to read into four returns when trailing performance has been
concentrated in the top of the market. So he looked at what happens. This is so great.
I've never seen this. I haven't either. So he shows a- I always told that narrowing
leadership is super bearish, which intuitively makes sense. Right. And the returns have been
fine when it's concentrated performance. Walk me through this. So people always say,
if it's just the top stocks leading the way, just wait when those stopped working, watch out below.
And he broke it into lowest concentration versus high-end concentration and showed the,
what is it, the six month returns following that. So prior six months, things were high,
and I think the ensuing six months and what happened. And it's not bad. It's not the end of
the world at all. All right. So this shows large cap stocks six month forward returns by
deciles of the share of market returns explained by the top five companies. So from lowest
concentration to highest concentration. And look at the one from 1926 on it was,
so it's been a little worse lately since 1990, but still pretty darn good.
All right. You ready for. Yeah. There's not much to see here. Huh. Yeah. Hold on. I just will say,
when there is more broad participation returns are better. Yeah. But yeah, it's not the end of
the world just because it's so concentrated. All right. How about some, how about some optimism here?
That was a, a like, moment there. What do you mean from old school?
When he's working on the car? Which part is having it? Oh, yeah. Mike. Yeah. All right. Steve Cohen.
By the way, the reference of somebody just, what better am I on a glass booth for those of you
listening? We're in a podcast. And I just, I just gave, gave away. And if you listen to the
podcast, this is the week that you should check out YouTube at the compound so you can see the
shirts. Yes. You have to see them. They're going to be linked to on our blogs and wealth
common sense and relevant investor. Do you stuff a blog? Barely. Okay. You don't blog much anymore.
I, I, no, you know what? You know what? I'm too busy. You went to podcasting. I have, I have,
I, yeah, I'm fine. Yeah. We were really busy today. Drinks by the pool. That was tough. All right.
Steve Cohen, I'm making a prognostication. We're going up, uh, talking about AI. I'm actually pretty
bullish. He thinks there's a big way of opportunities coming from AI. And he says like, good luck
standing in the way of this freight train. Now, if AI does what everyone now says is going to do,
is that the next bull market or the next bubble or both? It has to be a bubble, right? Yeah, we,
we're not there yet. If it does 50% of what people think it's going to do, then that it's
almost guaranteed to be a bubble, right? Well, and then by definition, it will be a bull market,
right? Which will lead to a bubble. Uh, yeah, we're, we're on T-Caf. We've got somebody this week
who's knows way more about this stuff than we do. I'm excited to talk about it. But, uh, yeah,
it's early. Speaking of people who don't blog anymore. Remember when Jesse Livermore used to blog
at, uh, Philosoft
that was a golden age, financial blogging, I think. Yeah. He, he was a big part of it. Yeah. He,
he had some, he had some real face blowers. Like there was some stuff that I read from him where I
was like, I couldn't believe the quality of the work that he was putting out. And I learned me,
man, I learned a lot more from him than anyone else, but I learned a lot from that guy. So he still
occasionally tweets some numbers and stuff. He, he broke all of this great chart here breaking down
all sorts of different valuation ratios. And you can look at it if you want on the tweet, but his,
he said his investing model for 2020's decade international over domestic value overgrowth,
small, over large. He looked at all these different pea ratios and capes and small and all this stuff.
And it's, it's, it's interesting because that would be pretty much the exact opposite of last
decade. And bay, I mean, this is fundamentally based alone. So it's, it's impossible to gauge where
people put their money, but it kind of makes sense. And it does make sense. And I wouldn't be surprised
if it doesn't pan out. Yeah, it's almost like, is it too easy? Well, did you see Grantham's,
not Grantham's, Monty's, Miyacopa, I give him a lot of credit. I put it in here. Okay. Because,
so GMO as everyone knows has been bearish for. I'm not sure I liked his explanation though.
Honestly, he's, so we talked about this a couple of weeks ago, we said, why was a place like GMO
so wrong about margins having to come back down to her historical averages?
Yeah, we just talked about that. Anyway, honestly, so his answer to the TLDR, but he gave it for me
a copa. And then basically said it was the fiscal deficit. He said it was government spending,
which, and I honestly, I'm not smart enough to say whether or not that's,
but the government spending didn't happen until 2020. That's my problem. No, no, no, no, no,
he said even prior, even prior, he said it was it. I don't know if the numbers are right,
but he I don't know if it was 6% of GDP or 6% of long term average. I,
I didn't look his explanation. I thought missed the technology.
I think it's text. Yeah, I don't think it's that complicated. I think these,
you've never seen companies this big with moats and margins this large, where they could just
create new categories out of thin air. So I think that's the fundamental difference. I'm sure that
there's, I don't want to throw what he said in the garbage, but that I think that's the simplest
explanation. Speaking of moats and margins, okay, so did it there, they had a big profile of
JP Morgan on Wall Street Journal this week talking about how much bigger they're becoming. The bank
has opened branches in 25 new states plus DC since 2018. 40 100 locations in every state in the lower
48 achievement it alone is unlocked. I think it's JP Morgan. Do you? Yes. Added another 93 this
month when about first Republic, 13% of the nation's deposit, 21% of all credit card spending, bigger
share than in each than any other bank investment bankers. This is surprising me bringing more
revenue than all our Wall Street where I was including Goldman and Morgan Stanley.
Look at their, look at their deposits since 2020. Yeah, that's a lot. I mean, part of that is people
holding more cash, but JP Morgan is essentially, I mean, he's like the Treasury Secretary as it is
right now. And they, it feels like they're like part of the government now. They're bulletproof,
correct? Does that mean like something has to go wrong with them? I don't, they seem like they're
another arm of the government, essentially. I mean, they're one of the most important companies in
the world. Obviously. I mean, big back in the States. But what happens if when Jamie Diamond
retires or does he work till he's like Bob Iger until he's like 80 or something? How old is he?
60s? He's, he was younger than when he was running it, he was younger than like,
yeah, he strikes me as like a worker, but I don't know. I don't know. I, I, is that, is this good?
The whole them being this important and big? I don't know. 67 years old. He's not young.
The whole thing about how regional banks are the ones that are serving their local community
strikes me as something that people say that is true. Right? I do genuinely believe that.
I was, do you ever drive by a regional bank in your town and go like, I'm going to bank there?
No, I don't. But you know, it's funny. I was talking to Josh, Josh was mentioned that there's a bank
near us. I was like, huh, you know what? I'm very, here's one of my weaknesses. I'm very
non-insurvent of my surroundings. Fair. So I don't notice things as I'm passing them.
And I somehow noticed like a citizen's bank on the corner, like my street or something.
Why would you use that over JP Morgan? I don't know. They give you better rates or a better
deal on business loans. I can't see it if you're an individual. If you're a company, maybe,
I mean, I've, I have, if you're credit worthy, a bank will loan to you. I mean, I, I have had
accounts over the years at credit unions for loans, car loans and house loans, but then,
and they make you open up a checking account. But all I do is, is move money into there to pay
the mortgage or to pay the car payment. And that's all I use it for. Yeah. I don't use it for anything
else because I just don't know that 3000 banks instead of 7000 or whatever it is, is that bad.
And I don't know, I don't know the ramifications. I just don't know enough to really have a strong
opinion. I don't think it's that big of a deal. But if you really, my hunch, but I don't know.
If you're one of these people who is worried about FTIC, whatever, and for whatever reason,
you're worried about that, GP Morgan is the answer, right? Yeah. This chart is pretty wild from
Y charts. Yes. Okay. So this, I put this as US federal government interest payments now,
and it's good gone parabolic, right? Yeah. You've got to normalize this for something. Otherwise,
people are going to lose their minds. You normalize it for GDP and it's not nearly as bad. But
my whole point is this is why. Is that a trail? What? All right. Is that a trillion? Is it about
that a trillion? Yes. But I mean, it's gone from 500 billion to a trillion like that.
This is my whole thing of why I don't think rates can stay higher for longer.
Because the US can't finance its debt. And even if you compare it to something else like GDP,
and it's not as bad as it was historically, politicians are going to latch onto this and go
see, look at how much more we're spending interest. We cannot keep rates at 5%. I think this becomes
a political issue at some point. Yeah, that's an interesting point. Are they going to cut rates
not to juice the economy, but to make sure that we can roll our debt?
It just seems like eventually that's a political problem. That's all I'm thinking.
Why? Because the deficit will just keep widening and widening.
Yeah. Because you'll say, why are we keeping rates at 5% just to pay all this money to,
I think it's a political issue eventually. Just a thought. From Cali Cox, the S&P 500 has been 10%
or more below its record high for just over a year. The eighth longest streak in history. That's
kind of wild. That is pretty good. Cali says, yes, this bear has sucked, but if you're a long-term
investor, this has been a once in a decade chance to buy consistently low prices. And to our listeners,
I hope you've been taking advantage. You're here, Cali. See, an optimistic person, finally.
I hope you've been taking advantage. Yes. All right. This was a good tweet from James Thorne
talking about the Fed wanting to get back there 2%. They say, we don't follow the inflation,
we follow core PCE, which whatever. Take this out, add this, I don't know. After the 1980s,
we had two recessions in the early 80s. Another one in 1990, core PCE did not reach 2% until 1996.
So inflation at 15% or whatever, in 1981 or 1980, we did not reach core PCE of 2% until
1996, a decade and a half later. Volcker, he said, Volcker claimed victory over inflation was
significantly above 2%. I'm just wondering, at a certain point, won't the Fed kind of claim victory
if prices just sort of stabilized? So, as well as the motor was on Morningstar, the Longview
podcast last week. And he was talking about, listen, it's not inflation itself that's bad,
it's the volatility in prices. So, if you knew inflation was going to be 5% on a stable basis,
you could plan for that. That would be fine. But it's going from 2 to 7 to 3, and then you average
5, that's worse because people don't like all the ups and downs. So, if we get to a stable 3 or 4%,
at that point, as the Fed goodness say, okay, prices are stable even though we're not as low
as we want it to be on inflation rate, then can they claim victory if we don't get back to 2%.
Just can't stop thinking about StubHub.
Okay. You know what else I don't like about StubHub? So, there was a comment section
like, you know, are you happy? Are you not? It was like 140 characters. I'm like typing it,
then it was like, wait, it was like once it... They take your piece of paper or whatever you send
it on and throw it away, your comments. Thanks for that. Right in the trash, right in the cycle bin.
All right. There's a refi boom? Well, there was.
We're like a guy together. Liberty Street economics looked at the refi...
But so they looked at mortgage resonations and how it spiked and came down. The surprising thing to
me though, is refinancing in purchases. Refinancing boom for billions of dollars,
and this isn't a just for inflation. It says balances are nominal dollars. It basically was
the same thing as it was in the early 2000s. I don't think people took enough money out in refinancing.
Guess what? Maybe we don't talk enough about how stimulative the refi boom was.
It was huge. People locked in their biggest monthly payment for a long, long time at a low rate.
But also, how about the cash out refis? So one third of outstanding mortgage balances were
refinancing during the seven quarters of the refinance boom. The additional 17% of workers
outstanding were refreshed through purchases. No, but then I'm saying how much money was pulled
out. Oh, I don't think not as much as you would have assumed for rates being that low.
But out of the 700 billion or whatever it was, was it a quarter of a trillion?
Right there. Home equity extraction. Look at the next chart. It wasn't as high as it was
in the early 2000s. It never even got that high, which is that's pretty surprising
since housing values are obviously upsets then. As a percent.
Okay, 430 billion dollars. Oh, hold on. How much? 430 billion. There you go.
It's a lot of money. It's kind of crazy because when we refinanced, it took forever.
Remember how berry they were? The banks? Yeah. And now it's uh, what's the,
what's the thing that rolls through like in the movies and the movies? Tumbleweed.
A tumbleweed? Yeah. That's the word I was looking for. Midwest? Or like out west? Yeah.
I was thinking, wasn't it like a, what, what was I looking for? I mean, that's the exact
right way. I was going to say something way off. You're still thinking about the stub hub. That's
a problem. All right. Is there, or I buyers, so, so Andreessen has this theory like, there's no
such thing as a bad idea. There's only ideas that are too early or something like that.
I buyers too early are just a horrible idea. So what I'm, what I'm getting at is there's a chart
from Mike Delpreet, Open Door, and I apologize if I'm not saying his name correctly,
Open Door Monthly Purchases. And it peaked in July 2021. And just, you know,
it went from around 6,000 units a month if I'm reading this right to 500. I think,
will this ever work? I think the housing market is as close to being
undistruptible as an industry can be. I agree. How, I don't know how it hasn't been disrupted yet.
If it's not, if it hasn't happened yet, I don't think it's ever going to.
There's too many parties. I think that, and it's too much of a low-
You can, I don't think you can make the housing market more efficient with technology. I don't
think it's possible. The thing that I, the thing, the story that I remember the most about why the
iB buyers weren't working is somebody emailed us that there is a house with a really bad dog in
the backyard that won't stop barking and nobody would touch this house, right? It's on the market
for a year and it's the dog. It's a annoying dog and iB buyers came in and immediately paid
like 30% over ask. Yeah. And then, and then they were stuck with it. This is interesting from Lance
Lambert. Talk about, so we talk about like the economy and how it's not homogenous. There are
local areas of growth and stagnation and recession and whatever. He said, talk about a tale to housing
markets. Most of Connecticut sits at an all-time high while California remains well below the 2022
peak. Don't show this to Duncan. He's just uprooted and lived and connected and looking at houses.
Good thing he's not listening to us. Don't watch Duncan. That is interesting.
Did we, is a recession done? Mention of recession and, recession and earnings calls be falling
no longer in vogue. Can I do a tweet in podcast form? 2021. Recession is imminent. 2022.
We're already in a recession. It's obvious. 2023. Actually, recession is more like a 2024
story. Well, actually, actually, I was watching CNBC this morning, Neil Kashkari was on and he was
saying how he's like, remember last year when we had two consecutive quarters of negative GDP
and everyone thought we were in a session recession? I kind of forgot about that. Do you remember that?
Yes. We pounded the table saying no, we're not in a recession. I'm pretty sure we were on the
right side of history with that. Yes. We pounded the table. It was not a recession.
I also saw a chart of- It would be the first recession in history where no one lost their job
and the unemployment rate went down. Oh, boom. Here it is. Thank you, Sean, for putting this in.
Number of S&P 500 companies citing inflation coming way down. So, Carl Kittaniya tweeted,
Derexex says second quarters of the lowest level of production cost inflation is Q1.
And then he said, probably not a coincidence. So, the number of companies mentioning inflation
on earnings calls has fallen to the lowest level since Q2 2021. So, no recession. We beat inflation.
Is the landing soft? Is the landing soft? I missed this when Powell had his speech two or three weeks ago.
He said something I'm looking for here. Here it is. It is still possible that the case of
avoiding a recession is, in my view, more likely than not having a recession. Yeah,
Marty said that. I think if we do have a recession now, it's going to be all because of the Fed.
If they don't learn to take their foot off the gas pedal or the brake, whichever
analogy I'm looking for here, I think they're going to be the sole cause of it if it happens.
We only have this booth for another 10 minutes. We're going to keep this quick.
Don't need to spend a lot of time here, but who could have seen this coming?
Disney is shutting the Star Wars Star Cruiser Hotel, which costs $2400 a night after 18 months.
I thought it was like $5,000 a night, wasn't it?
Well, they said a cabin should be two gas costs $4,800.
Here's what I'm going to get. What are they going to do with it?
Three gas was $3, $3, $3, $2,200, whatever.
It said the price for a couple of sharing a room works out to $2400 per person for a one-night,
two-day stay. Here's what I said. This premium boutique experience gave us the opportunity to
try new things on a smaller scale of 100 rooms. This is only 100 rooms.
As we prepare for its final voyage, whatever, whatever, whatever. That's it. Didn't last.
You don't go to Disney to sit in your room and experience the room. You go to Disney to
experience the parks. Yes. All right. Disney's... I'm going to save them a lot of money if they
would have just listened to me. Disney's counterpart, Sort of Netflix, said that
5 million multi-active users for its cheaper ad-supported option.
I'm sorry. They said that they have 5 million monthly active users.
25% of new subscribers were signing up for the tier in areas where it's available.
You know what this means? That's interesting.
They make more money on the ad tier. So what's that going to mean? Our subscription,
no ad one, is prices are going to go up. All these places are going to jack up the prices of the
no ad version because they make more money on ads. You know what the other thing is? I am
getting very, very nervous about my cable bundle.
Well, you sure? What it does, you sir.
ESPN is laying the groundwork to sell its channel directly to cable cord cutters
at a subscription service in coming years. Here's the thing. ESPN helps subsidize other
cable providers. They're going to jack up the price on my cable bundle now. I'm screwed.
How much is it? I pay, this is with internet and cable. I think I pay 170 a month.
That doesn't sound like that bad.
With internet, it gets me stars, HBO, Showtime.
Yeah, that's not a lot.
It's a great deal. Yeah.
And 400 channels.
Okay, what would you realistically, I mean, I guess what, you don't pay 250.
I'll keep, yeah. But the thing is, if you, okay, I'm going to, I know a lot of people
change to YouTube TV and Hulu TV. They jack the prices up on those two, plus you have to pay
for internet. So either way, you're screwed. I think the prices, that's what we know,
the prices are going up for content. That's the takeaway.
I think Netflix ruined everything for everyone.
They really did.
Because everyone saw how great their stock was. This is how the stock market affects businesses
in the economy. Everyone was like, oh, shit, we need to get into streaming. Look at them multiple.
Now that drag Disney down with them.
Look at them multiple. And then what everybody thought was like,
green pastures turned out to be like a hell pit.
So everyone followed. It all crashed and burned.
Now the bundles going away.
I don't know, but the bundles not going anywhere, but the prices are going up.
Yeah, the prices are going up.
All right, my car idea. So just to be clear, here was my idea.
People were sending us shit, which by the way, I learned something new.
There's a company called Toro TURO, which is Airbnb. It's Airbnb for cars, and it is sweet.
So I think I'm going to California next month
with Chris, and we are definitely going to use it.
And my...
Do you know about this?
Toro?
Yeah, people send it to us. My rebuttal to you was, you're a bald man who wears Hawaiian
shirts and you're drawing a driver convertible. Welcome to your midlife crisis.
Yeah.
It's here.
No, but wait, but again, just to be clear, here's what I want.
I want a subscription service for cars, not for fancy cars where you can have access to.
I'm talking about the cars that you drive around your neighborhood or whatever.
So there should be tiers. If you want four cars, it's $1,000 a month.
If you want six cars, it's $1,300 a month.
If you want the upper end, it's $1,700 a month, whatever.
You want to pay a single lease fee, but you want to have six cars a year or something.
Exactly.
So I send this to cart dealership guy and he goes, fair did this, went bankrupt.
So there was a company that did this again and it went bankrupt.
So I would say maybe they just didn't execute because that needs a solid idea.
This sounds like a 2020 idea to me.
It would have gotten a very high multiple and it would be down 98% right now from the highs of
it IPO.
All right, recommendations.
I am super, super duper psyched for the Arnold Schwarzenegger.
It's a doc on Netflix.
He might be the most interesting man of all time.
Most accomplished.
I mean, he's got an interesting story.
Yes.
Did you see the trailer?
Yeah, looks good.
Looks amazing.
There's another trailer that I saw that blew my history.
Is he the most accomplished?
No.
Has anyone ever done more impressions of a person ever than Arnold?
Oh, no.
Right?
Okay.
There's a trailer.
It's called the creator and it's about AI.
It's basically, it looks like Terminator 2.
So you're pretty late on recommendations if you're recommending two trailers.
Oh, wait.
And the director did-
It looks good.
It's Denzel's son in it, right?
It looks good.
Is that who it is?
What's it called?
It's called the creator.
Oh, yeah.
Looks good.
I'm so, so, so here for it.
What did I watch on the airplane?
Oh, you want to-
I don't think I watched anything.
Because I'm going to tell- it's all- it's basketball.
I tried two things on the plane.
The Fablemans.
Oof.
Brutal.
Oh, I'm so mad.
So I- so I- when that came out, I was so excited to see it and then it just got-
Steven Spielberg is giving me so much joy in my life.
Yeah.
And it- did you watch it at all?
I'm not going through it.
Cinema, right?
It's a film and- and the parents are Paul Dano and Michelle Lilly-
Amazing.
Amazing.
Yeah.
Great actors and their characters are horrible.
They're annoying.
It's a- like I turned it off after half hour.
I couldn't- couldn't do it.
Here's a recommendation for you.
Silo on Apple TV.
My wife and I knocked out three or four episodes of the weekend.
A bunch of people- you know, Tim Robbins is in it.
A bunch of people you've seen in other movies
and that you- you- like five people in the show you'd go,
this person's in- so here's the premise.
And they give you the premise five minutes into the- into the show.
There is a huge silo that goes down like 140 floors into the earth.
You can only see outside from the top floor.
Say no more.
I'm literally in.
The people who have been living- it's a civilization like a thousand people.
They've been living there for 140 years.
But someone you race, they're history.
They don't know why they're there.
All they know is if they leave the silo, they die of poison.
And people have- that's the premise.
That's my type of show.
It might be a one season show, but it's- yes.
And finally, on Netflix,
I felt kind of weird watching this last night before I flew this morning,
but flight with Denzel.
Great movie.
I forgot about that movie is awesome.
It's a great movie.
Kind of great.
It's a great movie.
John Goodman, Don Cheadle along with Denzel.
It's a great movie.
Here's the thing about Denzel.
I only saw the movie once.
I don't feel like I need to revisit it.
It's worth a rewatch.
I only saw it once too.
Denzel is a guy and a guy who plays himself in every movie,
but you buy the version of himself that he plays in every movie,
even if it's a little different.
I think Denzel is my favorite actor of all time.
I would have to seriously sit down and do a proper comparison,
but I'm pretty sure he's my favorite actor of all time.
So good.
That's all I got.
All right.
Tropical Bros.
In conclusion.
Yes.
TropicalBros.com.
Look for collaborations, animal spirits.
That guy's got a sweet mustache.
That's your next midlife crisis.
Look at that guy.
Can't see him.
All right.
Member, 10% of all proceeds go to No Kid Hungry.
Help kids who are malnourished under eating here.
What else we got?
Austin.
Austin.
And the whole twelfth.com if you want to learn more.
Futureproof.
Check out our show with Remit.
This is a lot of promos.
Got a lot going on here.
But these are the shirts of the summary.
You have to get one.
Yeah. Animal Spirits,
but at $10.com.
Thank you for listening.
We will see you next time.
Bye.
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