Housing Market and Renovation Spending

Welcome to Animal Spirits brought to you by Cullen Capital in DIVP. Most income strategies make you choose between yield and growth. The Cullen enhanced equity income ETF TheIVP doesn't Unlike strategies that write calls on the entire portfolio and cap your upside every month, DIVP strategically covers only twenty to forty percent of the portfolio holdings at any given time Meaning sixtycent to eighty percent of the portfolio retains full upside potential Rather than applying that to a broad index exposure We do it on a concentrated portfolio of high quality, large cap value oriented stocks, value driven, income focused, built for the long term. This is DIVP, and this is how we think about income differently. Today's show is sponsored by YCarts. One thing we're excited about is a new offering from YCarts calledall Communities. It gives advisors a way to follow research insights from voices they already trust directly inside the platform, thousands use for daily investment research and client communication. That means instead of trying to recreate the charts. or analysis after listening to our show as a wide chart subscriber, you can quickly pull it up and work with it inside the platform. It's designed to make following market commentary feel more actionable and integrated into one's daily workflow 're excited to be one of the first communities available, helping advisors bring our charts and our commentary into their day to day Yite charts workflow Click the link in the show notes to check it out. Plus, get twenty percent off Y initial wide chs professional subscription new customers only Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnick 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 Ridhol's Wealth management This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Rrit Holz's Wealth Magement may maintain positions in the securities discussed in this podcast Welcome to Animal Spirits with Mike M Fen following the show for the past two months, you know that Michael is a kind of a mix fan based on his attire Would you say ninety percent of your clothing these days is N related m's got to be closed, right Yeah. Congratulations to you. It's got to feel great. You're a die hard. You're not just like a casual fan. You're a die hard fan So I have a personal finance question. but you're a next season t takeer and have been for how long. I'm almost crying just thinking about the next. It's been So Tking long My dad started taking me to games when I was probably my kids age. aroundround seven or eight And as much as sports can be an absolute waste of time. And it's it's sometimes I'm envious of like Chris who literally has not a care in the world about what's going on, right? It's a giant time commitment s mental's a mental commitment too. You're like, Wh why am I so mad about it It's anguish. Why am I mad about sports.ort sports are constant misery punctuated if you're lucky by a little bit of happiness. Yes. That's what big a sports fan is bonds that it builds between U, parents and children between friends It's like, I say it's all I have. but That's what my dad and I talk about. Yeah, me too. My dad and I it's the same thing. And yes, so Michiganss won two national championships this decade. It's been a long time between those two. and I got to do it with my kids. It made it even sweeter. So here's my question to you're next season ticket holder I want to bring this back to finance. You the greatest thing is you have anticipation, why wait for this series to go. like So this week, you're just on cloud nine all week You don't to worry about the gam. for a little bit, it's great. So you you will get the you guys won't be the home team, right? Either way orrect. Okay, so you'll have game three in New York How much money would someone have to give you to take those tickets from you W would be enough money where you go? No Okay fine I have to take it If someone said Michael, I'm going to pay for your mudroom for your tick glad you ask I'm glad you ask So one of the benefits of being a next season ticket holder is I am able to get S season ticket prices Tickets are a fortune an absolute fortune So for round one, my face value was three hundred and fifty. They don't want to five eighty, then seven hundred fifty and the finals are thirteen fifty If you were to buy off Ticket master, which is like the primary secondary market It is obviously a lot higher than that and secondary market like I do on take pick Forget about it. It's banas So one of the nice things is I now have flexibility So for example We sold game five Now there is no game five for the Calf series right?cause we sweat them But we sold my tickets for I can't remember two thousand two hundred dollars, somethingomet like that and we bought Tickets in the section two hundred We're one hundred. We bought section two hundred Like the second bowl for nine hundred or whatever it was So we got paid thousand we would have gotten paid a thousand dollars. So you can straight up for a nice receip. Yeah. So you're gonna to be sitting my chll, mate No no no no, you're missing it we would have tred down So we would haveid we would have got him we would have gotten him paid thousand dollars to go to the game. Okay, gota. I got youa. All right for the finals I my friend texted me Um We sold our tickets for game four for four thousand four hundred dollars And I said to him wait whoa, whoa, time out What are we doing here And he said, we spoke about this. I't remember speaking about this beforeine So if we are down three, nothing It will be the greatest sale of all time. I'll give them a big fat wet kiss. All right. But as assumeing we're not down through three nothing. now I'm getting a little bit nervous, right? Because we have to buy back in. I'm not missing any gamew for the finals. We have to buy back in. of course. So what would I sell to? There's I guess's your answer. Although I didn't hit the subll button. he did. Okay So I'm not sure I would not have sold. we know you I actually we know your friends amount. thousand four hundred U So I will be traveling. I'm going to I think I'm going to game five, assuming that're not down, you know ing that's not a swe. if're three,'ll probably go So I bought tickets for a San Antonio. might be premature. I thinkan Antonio is going win I'll buy tickets for Oklahoma City if that's the case. In any event, in any event, it's a it's been a long, long time. and, uh feel good It's a great feeling. Wonderful.' greatll. All right, let's talk IPOs. Paul Krasski wrote about IPOs He talked about so it's open AI. Anthropic BaceX. These are going to be massive companies. Each of them probably trillion dollars at least. That's pretty fair to say I'd be shocked if the AI companies weren' a trillion, right Y yeah, yeah. okay. U He says, peopleople aren't focused on the right things. That much new equity supply hitting in a few months creates a math problem. The money has to come from somewhere. Most of it will come from existing holdings Passive funds will be forced buyers once se these names join the indexes, which will happen much faster than usual, gi in exchange. So He's saying like What if this is This is a thing. and there's going to be a lot of stories about this, like, okay This is going mark the. Yeah. this is going to mark the top The funny thing is I'm not worried about where the money will come from People keep worrying about that all decade about like, where's the money going to come from for this? Where's the money the money always just comes from? People have money People have more wealth than ever today The money will be there. 'm not worried about the money And also not I I just don't think it's cute enough to say A headline thing like this will be it. I knows that's usually how it works historically I just don't think I think that's a little too cute Yeah, I agree and Where will the money come from You also have to think about So there's a lot of smoke around the SpaceX S one, which was filed last week The average revenue per user is coming down on Starlink That was the headline You know I love and hate the internet I I hate it because The headlines get all the attention. Nobody reads anything. the most part anymore I love it because there are still people that do the work So Oh Malk Somebody who I only recently discovered and he's been writing about the internet for decades Um That's the Bont broadband banded book that I'm reading So wrote about the RP Chr literally, whichich is first bloggers of have been history. so it's kind of funny you just discovered ye Yeah, I'm a little bit late to that So uh There's a lot about the numbers Right obbviously, like what's going on with with with SpaceX, which is Can I can I read some of the numbers from Maxios real quick? Wh you find So this is from Xios. SpaceX is wildly unprofitable, reporting a four point nine billion dollars net loss on eighteen point seven billion dollars in consolidated revenue for conts twowo hundred companies in the SMB had more revenue last year than SpaceX. This includes Tesla whose sales were five times higher Okay, so that if you look just at the surface level numbers The thing I love about this SpaceX is that The two narratives are so compelling. One of them is going to be This is a wildly over one point eight trillion dollars company. you' kidding me. They don't make any money. And the other one' going to be no dummy. It's because they're going have huge growth in the future and AI and all this stuff like And both of them are going to sound reasonable. They're both going to make sense Yeah, but the evaluation part is always a lazy argument So it's a spectrum, right of Exit liquidity. is you guys are cheap. This is the dumbest shit ever. Yeah, but the valuation always soundutart. That's the thing doesn't No, when you look at the numbers, because you think people that cite valuation sounds smart. No, I'm saying they sound smart. I'm not saying it is smart. No I dont I don't think so. Not mean, not to me, not anymore. We've been doing this a long time. That sounds lazy. T a lotough the valuation is like you can't argue with the numbers. the numbers are the numbers True. I wouldree I would agree with that. I think people you're right the headlines in the average casual investor will gravitate towards The headline numbers, the money losing numbers. There's going to be a lot of r're throwing hands for the. Oh my gosh, you killed me g's me a lot of that. But that's it's the same stuff with the macro people that have no understanding of what's actually happening. They just cite historical numbers. R. Lzy So on a spectrum of, you're right, this is that's not doing the work. Just looking at the numbers at face value is not doing the work So on the spectrum of dumbest ever twoo trillion dollars LLL, which I get, you know, there's a lot of money It's an ag amount of money versus changing the world I'm like closer to changing the world than Now I'm not like I'm probably like You don knowt Im Grand Rapids headad you this a little bit. I'm not all the way there I'm not buying the stock, but we'll talk about it in a second, but on the R P crash, or're getting back to what Om wrote The customer mix explains it maritime terminals. So Starlink is basically broadband and space There are satellites floating in space that are connecting difficult areas, previously difficult areas to connect an the internet. okay? It's a huge global unlock, obviously which makes Wiifi better on planes. That's good enough for me. That's all I want So maritime terminals, which are shipping vessels, oil rigs, They pay between two hundred and fifty and five thousand dollars a month and have no alternative Aviation is even richer. a commercial aircraft terminal. runs twelve thousand five hundred to twenty five thousand dollars per month These customers anchored Starlink's early RPO. Consumer residential is where the growth is now It is the lowest paining tier. And outside North America, increasingly price sensitive A satellite to mobile users via carrier partnerships at a fraction of direct subscription revenue, and the mix explains the slide from ninety nine dollars to sixty six dollars in three years Maritime and aviation grows filvy and pay well Consumer grows fast and pays less each year Thank you personon on the internet. O Malik for looking past just the headlines and giving us the actual story I guess my grand reppetent you would be like, could this also be an Airbnb story where the valuation at IPO is so high, This stock just doesn't do a lot for a while Like I'm sure' there's going to be a massive pop on day one. I'm sure, but if you're like shorting this You're probably not going to be happy But if you're going super suuper long, maybere not happy, what if that's the hedge there? L Airbnb stock has just gone nowhere since it went public because everyone says the valuation is way too high So the same thing snke with Snowflake. If you go public at a hundred times price to sales ratio And if you are buying and holding the stock for three years. Of course, I can't see the future probability, historic probability says That's probably not an awesome idea Might does not one hundred percent Might SpaceX be the one that delivers world change of results Yeah I think most people, most people don't give a shit about three years from now. They care about the next three weeks You theyt want the value CCF calculations on this. Right, right. So how long until how long until all his companies are under one umbrella at all? That's the end game here, right? Well, they are Every except for Tesla. That's what I mean It's going to be all together. Tesl' is going to merge with these companies. It's gonna be one company. that's the end. SpaceX owns XAI. which is Grock And they are I think trying to buy cursor which is not a deal on mus company for the rec Um, but how o, oh, Twitter X. com How long before Tesla gets absorbed toos But here's remx. com just way know Okay that's Twitter to me forever Here is where a lot of the u Srutiny falls It's with the NASC one hundred re jiggering the rules for a fast entry So previously company needed to be I think the term they use was seasoned U whatever that means. I don't think that it was like X. number of days or anything like that. I think it Th three to six month They're going to get into the index in fifteen days And this unlies the the thing that people are excited about because and credit to NASDQ So yes, they changed the rules for fast inclusion, which people are like, oh, this is a bullshit passive exit leail liquidity. Okay But they also protected investors because what they did was so SpaceX is not going to be selling or issuing. a lot of new stock Rsow to the public It is going so a lot of it is not going to be publicly traded. Elon Musk portion, for example is not going to be publicly traded, O or not going to be available He controls it. So what NSDAq did was they said, we've been burned once before. with a similar IPO where there was a lot of insider shares being held We're not going to give you the benefit of the doubt your full one point seven five trillion dollars valuation. What we're going to do is we're going to do a modified Marker tap. which is not unusual. We're going to allow you to have three times your float inside of the index that's what we're capping it there So if they float, I'm making this up. if they float, u thirty billion dollars worth of stock then the index will hold ninety billion. The market cap in the index will be ninety billion It's not going be the full value, right? I think the actual numbers are closer to There's going to be a lot of people this estimated. Oh, the bag holders here are the index. fun people. That there's going to be a lot of that So there will be a lot of There will be a lot of stock that has to be bought inside of the indexes. That is true So if the NA's like one hundred, we're looking at like four to five percent. I mean obviously, it's, you know, it's a r Um so that's a lot of buying And with a float that small The number of buyers is a if you can't see me, I'm holding up my arms, a gigantic circle of buyers, pool of buyers that want the stock And the pool of supply is much smaller So the valuation does not matter in the short term But could you imagine if it goes up to two point nine trillion because the way they financially engineered this? People got to lose their f minds Yes. there' also there's also like weird Ciff Divesting unlocking up of the shares. where insiders can sell, but insiders are not selling at the open This is they are diluting the shareholders. What's interesting is that they're giving a disproportionate amount to retail investors. is numbers are still being finalized, but Anyway, it's cort of it's certainly it' certainly captured Everybody's attention as you would as you would expect to do. It's a big deal. And maybe this will be the first level thinking again. Like this this really will be it, right? I'm waiting for that to happen I don't know. All right, Kai Woo, who was on the compound in friendriendsz with this a couple weeks ago Wit these long, what will you call them? White papers? is that fair enough to say I pulled a little he tught he had an AI disruption paper. And he talked about modes and value traps. I just wanted to pull out one thing here that I thought was interesting, just to show how hard stock picking is So he shows the biggest disruptors of all time. He showed how Netflix disrupted Blockbuster, Amazon disisrupted borders Amazon disrupted Radiohack as well and then Google disrupted Mclatchy, which I didn't get Mclatchy. is that Ecyclopedias? That it is? Yeah was that encycopedia Breric? the owners? I can'tember He's got a great chart here showing the returns of each. and they're both going in opposite directions, right? whereere they theseese other ones are just fall like a, you know Fall a cliff But he also shows the stock prices of these disrupted companies, so blockbusts repters, radiohack and McClatche and It's funny, because as the stock price is dropping, the revenue per share is either holding still or going up still as these things are getting disrupted in that Mcl Mclatche has newspapers says right there in the chart. Yeah that's wild That's what's going to make this stuff so hard about the software companies is like you look at the results right now and you go, compompanies are fine. They're reporting great earnings And then make this could happen. That's what's going to make this so hard and that's why stock picking is difficult becausecause the market is the market is obviously pricing in A The market is saying the terminal value is is radiohock So we So every time you see radiohack, I think that I had a friend in elementary school And I think we were watching mo we coming to America, something like that New Yk And there wass a radio shhack on a corner, right? So on each side each corner, there's a radiohack sign R? Radio shock on one side, radi shock on the other. They show it overhead. And my friend goes. Totally serious Thats really weird. Why are there two radio shacks in the same corner 'cause each sign, you know, didn't get it I don't get it It was a store on the corner. So each corner h at its own sign. Got any U Last week I talked about interest rate concerns, okay? Jhn Arn veryy smart, one of the best maybe the best energy investor of all time. He's on Patrick' O'aghy's pcast recently. Very smart guy He said a flare alarm is going off and everyone is ignoring it. and he shows long term bn,'s like, this is a blueberd chart. of United Kingdom, France, United States, Japan, and all these long term bonds, thirty year bonds are going vertical Right? We talk about that. peopleeople are Very concerned with this All right, I want to talk about that worry, that five alarm fire with this email we got I've been I've noticed that the yield curve is no longer inverted I haven't heard anyone talking about this. It has been observed that recessions occur not when the yield curve inverts, but when it uninverts Looks like that hasn't happened this time. Harvey's recessionary indicator has experienced his first exception. What are your thoughts And this is what I want to point out. When the yield curve was inverted, short term yields were higher than long term yields, peopleeople screaming This is going to be a recession because this indicator' always done that. You and I said wait a minute This is just the Fed jacking up short term rates. It doesn't have to be that we were kind of saying, let's pump the brakes on that a little bit Now what we' seen is a normalization Sort term yields have come down, long term yields have gone back up. That's a normal yield curve. This is normalization This is not a reason to freak out people Okay I'm throwing cold water on this all day long. This is a normal state of affairs. Long term yields should be higher than short term yields when you're accounting risk because there's way more risk and a long term bond then a short term bond in terms of volatility and interest rate changes inflation and Maybe, just maybe, the bond market is saying, I think we're in a higher growth in inflationary environment Let's see at this for warm pies. Another fellow TCAP person S and P five hundred forward sales growth is projected at eighteen percent over the next twenty four months. Historically, this corresponds to twelve point four percent nominal GDP growth six percent anualise, somethingomething to consider as yields in the Fed look for new equilibrium. So he's saying We're probablyg of have higher economic grow And what if what if bond market is just telling us You know what period, the last fifteen years were not normal for interest rates. We're trying to normalize here for higher growth and higher inflation than we had in twenty ten. Thoughts That makes more sense to me than the alarm situation Yeah, totally. I also still think it's weird that every, everyone is ignoring. I know it's just a tweet and he doesn't mean it literally, but I feel like a lot of people are doing the opposite I think there's actually an overwhelming amount of war relative to the potential outcomes about rising rates What I would say though is the part of the worry that I think is valid is It's not the spread between short term and long term, which are which are healthy and normal. It's the speed at which these lines are all accelerating Like I think people worried like, what if this doesn't slow down It doesn't notothing has to happen, okay? because I I'd say it has to slow down. It doesn't Um If The long end keeps going up and we're at I don't know where the line is. six percent, seven percent I'm going to start to get nervous Like I would very much like for this to slow down We' not going to get there. That's not going to happen I don't think' timees stand.oublep, tripleesple, N not going happen. Wed have to be way higher growth. the thing is Here's the problem. H's the psychology behind this though. You can't triple stamp with double stamp come on. Here Here's the psychology behind this though. Everything is happening faster. So when we have these moves, that's what freaks everyone out because people are not used to it. When inflation went from zero to nine. It freaked Dnock happened fast. when oil went from ty dollars a brel, negative thirty seven dollars a barrel.veryone freaked out when mortgage rates from three to eight This is just the markets now. People are going to have to get used to things happening faster. And just because they happen fast It doesn't mean something is breaking. This is just how markets work now You might be right. Okaykay. All right. here's here's the positive side I think there's pros and cons to rising rates because obviously Rising rates are not good for f every. like borrowing, mortgage rates are back near seven percent I don't think that's a thing Okay. positive behind this exxhibit a chart of the week from last week Bond yields are historically linked with higher forward returns. So we're looking at the ten year starting yield. We've talked about this before versus the forward annualized return And guess what? The starting yields a pretty good predictor. of future returns for bonds. So we're getting probably five percent now in high quality bonds That's great. you're right. That's better That's other side of the coin and it's a really shiny side of the coin. Hey, we give a ton of love to Chark and Matt for making and design of these charts as he is has earned Every ounce of praise. that kid is incredible. So is Eric Founding CTO architect of Ehibit A So I just wanted to give Eric some love. He's the guy behind the guy He built the architecture that allows Matt to paint So he's the, uh He made the canvas and Matt is a painter. So here's the potential So let's say you're right that we do have a sustained rise in rates Soed I looked at this. Like what happens if we get a sustained rise in rates? And this is a tenure going back to nineteen fifty And I looked at the total return for the SMPO over that timef frrame versus the drawdown And the total return actually is pretty comforting. Like most of the time stocks are up in these rising rate cycles This is every time the tenure had a sustained rise And what is this o, one more I got I gota go Okay, yeah and that also shows the drawd down. and there was There was a correction in every single one of these of ten percent except for one time and it was nineteen ninety four. Every time this happens. some of these are this yeah, is this supposed to make me feel better? This looks really bad Um But the thing is we're not in a sustained. It's like there's nothing to worry about except for the forty percent declines in stock prices. Well short term hiccup. But the thing is is this really didn't we already have the sustained rise in rates I feel like now we've been range bound forever Right? So the thing is this some of the So you have aust standardising rates like like you said We have to see six or seven percent for that to be another cycle up. We already had one cycle up. Yeah, you're right. So I think we already had it in twenty twenty five. This is all another thing Goldman Sachs median annual SB five hundred total return based on nominal tenure treasur yield And they break it down by zero to two percent, two to three, three to four, all these different ranges, just one percent, all the way up to eight plus And there's no discerning there's nothing to learn here Well, yeah, when you present the data this way. I don't love this chart. I do think that the direction of the speed of the of the of the tenure matters a lot I agree with you. Just knowing where what bucket you fall into doesn't tell you anything But I really do think there's something to to this right. I know we can't do technical analysis on interest rate charts. Is that the thing? Like we can't do that, right No you cant. It's a bl man. if we could cl again. I want to see like every time we've hit five percent That's been a higher range essentially, and they've rates come right back down. People freak out Then we come down, it's happened like five times I just wantan to see a sustain breakout about five percent before I start to worry.al You know, yes, you know the meme where it's the musician who looks like Jennifer Aniston? Is that is that Iggy Popa Cber? Yes. Is who that is? Okay. So it's it's Uh, like The five year're on the way up Yeah is him and the five year on five five percent of the way down is her. rightight Yes So it matters where you're coming and where you're going from. So last week last week we talked about, I just want to talk about oil prices real quick because this in this this whole Ge political situation, because it oils back to nand doing like ninety six dollars a barre I think the high was actually when you and I were at the dinner in Miami for feuture proof Remember people everyone around the dinner table was like a g of telephone was talking about oil prices spiking super duper high. They got like one hundred twenty dollars a barrel. They're up like twenty percent after hours or whatever. rememember that? I think that was the high I remember very well So I think this is another game of really smart people because you listen to all the oil analysts and they're like dollars a barrel. has has to. there's no There's no situation that doesn't happen And then it just didn't happen Did the market get a right on from Jump? I know from the jump. because I've told the story, you know a couple months it would it happen, but we at dinner And me and Dan Ives were Lking on our phones And I said to him Bitcoin's flat S andP iss down like a buck ten or something like that The market didn't really react the way that we thought it would and it continued to underreact. We were like This doesn't make sense. This doesn't make sense. And eventually we're like, okay, this does' make sense. But the market was right immediately Not overreacting. it's wild. Yes. The good lesson is always like the market is usually smarter than Smart people which is hard to wrap her head around usually in the cavey out there We've done this rap a thousand times, but it is usually the facts U I did an awesome This is like random, as we get to invest behavior which is actually shockingly this week This has been one of the most popular M What's that big fat text called? topopics. Jeez, Lou is my brain You know, something about this microphone breaks the brain Invested behavior is one of our most popular, most packed, jam packed categories of the show and nothing here. The Wall Street Journalals got toa profile interviewing traders what they're thinking about right now. That's what they got to do. Anyway, in here I put u Brent Sullivan who has a great substack on a lot of the mechanics of tax treatment for custom indexing and particularly long short strategies, which are becoming a bigger and bigger P part of the addvisor toolkit on talking well, him and I had a great conversation. So if you're an advis And want to check it out. I ot recommend shows a big piece in the Wall Stet Journal on that last week. Bloomberg had a I on tack house harvesting couple of months ago. this is somethingp it took so long. Yeah, it's getting big in the wealth management space and it's going to be something you're going to be hearing about more and more as we talk about it. Okaykay Let's talk about broken sentnimon. So University of Michigan Cumer Sentiment Indx All time lows. Since this index started in nineteen fifty The lowest this has ever Yeah, it's kind of stuid huh o We've been talking about this for a while. I feel like we're maybe we're a broken record here. The Atlantic had this piece. The vibe session is over. the perma session is here, whyy Americans are so unhappy by any lowerry Now, she's trying to get to the bottom of this. likeike why why are sent why is sentiment so low? There's no way you could objectively look at this. Someone on Twitter last week as a young person. I couldn't tell if they were you know, engagement farming or what, but they said Whatas two thousand eight really worse in this economy? And again, that's probably rage baiting and engagement baiting But I think there are some young people who like truly think this is a terrible, terrible economy et to see what an actual bad economy is U So here's here's a quote from this article. People stopp believing that the economy can be good and have lost the willingness to admit that they are doing well pessimism might be harder to fix than an actual downturn. And she goes through like, whyy is this housing costs and inflation and higher cost of living? and all the stuff that you and I have been talking about forever, but this is this boils down to one thing and it's the internet This is just l an inflation We've had inflation in the past and it's the seventies inflation, my God. I did a whole chapter in my book. Yeah, the seventies inflation destroy the country too. in it's worse sentiment now than it was back then Yeah. I mean, inflation we to this but but just say not the internet that. nothing to just say it's the internet is come on.'s not it's not the internet Okay, it's the internet and it's COv and then sprinkle a little inflation on top of that. But that that's it didn't it almost didn't matter what it was I think everything is just amplified these days. and we had no chance Humanity had stood no chance against social media none. We had no chance. whether you wantan to blame COVID or inflation This line permanly after that So the internet wasn't created in twenty. My my point is if bad stuff that happened in the past would have happened in the social media era That's what' have amplified it Okay It didn't matter what it was. It was something bad always does happen social media made everyone's sentiment worse and now sentiment is a broken reading for all of history. It's never coming back Not that's not going to spike in the future, but as a reliable indicator of how people are actually feeling about the economy It's useless You can't use it anymore Well, but for the stock market for sure, and for real life tooip. But it does have political like this is a direct line to the That's what of political's it's political Politics is the thing that it matters for. And that's why we're going have people are like, are politics just going to go back to normal eventually? Like will we not have this like craziness of the extremes No I think it's going to get good. And could you say that Even though it being lower than it wasnt Bottom and eighty and the bottom in two thousand eight Even though that's stupid. Be this this metric is objectively broken, even the way they collect this survey, we've been over this hundred times. I still think it's directionally it's right. Like people The midle of the country is not awesome att the macro level At the micro level, things are fine, and not for everybody. believe me, I'm not suggesting that they are. But I think like the average person feels way better about their situation. and this is always true than how the country is doing. That's a that's like an insight that I just made up.. And my point is because we are just inundated with negativity at all times That whole thing of the country is going to hell is never going to change. That's always going to be something now. Yeah. And also people like us just give this this sortce of stuff too much too much oxygen. potenti But it's obvious it's a thing, obviously U All right US. household ownership of corporate stocks and mutual funds now totals fifty eight trillion dollars, which far exceeds real estate assets totally forty eight trillion dollars. And this is part of the Um, this is like partart of part, you know, one of the key ingredients of the pie of of discontent is all this wealth is in people's faces And if you don't have a piece of It feels really shitty I also think that the what we experienced in the twenty twentyies with simultaneous booms in housing prices in stock prices, we're never going to have that again So people are going to look at that. if they miss the boat and go, o H's the thing though Tw thirds of the country own sts, two thirds of the country own hes Most people have financial assets. I know it's skew. I know it's You're right. It it is funny. A lot of people are like yelling at each other about how bad things are have benefited. and they're yelling about how bad it is for people that don't have part of it. It's like this weird's weird virtue signal Yeah All over all over the internet Jeff Bezos calls for zero income taxes on bottom half of earners. Uh I didn't I didn't read this or listen to the interview did you I listen to CBC in every EBS What are you All right, so T Some attack wers were running wild of this one. Sbody said it's great that Jeff Basis thinks this way because too many people who don't make money becausecause too many people who don't make money think that giving money to the government will solve a lot of their problems. They think these government programs are the answer. and it's clearly not. I would agree with that Jeffzos quote tweeted and said, thank you, the important part is zeroing out Taxes on the bottom half best way to put someone It's best way to putoney someone's poet is to not take it out in the first place bottom half is only three percent of total tax revenue. But it's very meaningful to that person zero it out. My thoughts on this are this is a very, very complicated topic U and there's obviously very strong feelings from coming from every angle here U, I think that it's a really potentially sccary thing and slippery slope to divide the country like that between a think about how bad the class warfare will get if we if the country allows a certain portion of the population. And I'm not talking about people gnicism. I could give a shit about that If it's like the us versus them and you really create like a caste system of haves and have nots, like formally Now, yeah, think it's I think it would be phenomenal, like in a vacuum T not have people pay taxes that don't contribute a damn thing Like in a vacuum in an ideal world, yes, who says no to that Who says no? What type of monster says no to that I think it has real big societal ramifications that people much more thoughtful about this topic, need to spend A long time thinking about Yes. this a couge of mind. And you go, well, I'm in the fifty first percent centile. And I'm having to pay now I moved out of the bottom of. down paining you close? True. Yeah, yeah, yeah. Yeah. So you're right. it's This got to be, this' got to be there got to be a better system. It's not going to happen because we just keep everyone keeps saying taxes have to go higher and all they do is keep going lower. finding different ways to take taxes away from people. So I think we're just going to keep testing onome taxes tax rates we can take down lower and see what happens. That seems to be my only. This is This is a true rabbit hole that I care not to go down You know what? Speaking of that, peoples I went down rabb hole, you didn't speent point minutes onl Right now. Like there's some people there's some people that genuinely go down rabb holes, but I'm going to say ninety percent of people are full of shit Rabb Holdeser., spepeaking Claud This is this is unbelievable So Ben got an email from a famous author And and Tar inbox, I'm like, this is so weird. Who writes this way Like it was just There was a light in there there was I'm not even sure if it was like I thought it was like too cheesy to be AI But P's like this is obviously AI, I'll writepe back whatever So Ben responded and the person responded with what was clearly an AR response. And I said to myself like, you got to be fucking excing for the F bombs You gott to be kidding This is a very well known person who's sold millions of copies of books. And the thing is this is this is how you behave I'm about to see if I'm You freakaking weirdo. you think this is normal behavior? So I Are you a human being? Well since my book was released, I probably get two or three AI emails a day from like people who want to promote the book And I can tell because they they stole the summary from Amazon And it res summarizes the book to me. Hey, you did a good job explaining this. And then it says, wouldould you like to join our PR department help promote your book? And I get two or three of them a day And I can't tell you how quickly I delete an email that I know was written by AI. And I can't believe that successful people. I get it. You want to be more proficient and productive and have an AI agent help you But that is so cringe when I see an AI email from someone. I can't I immediately delete it It's unbelievable. I hope that's just something that happens in the future of people where they go, no, we're not going to give you the light of day. this Like you can sign off using AI somehow like, yes or no this work, but like an actual personal email to someone using AI is no way. Sorry. It's unbelievable. So Google had a big demonstration of their new capabilities. It's called Spark And it's basically like the AI assistant that's' that's coming So Ben Thompson wrote a lot about this And a friend of mine actually was text me yterday he's like, dude, it's here. Like everything that we've been like, waiting for to like They're really like Holy FN crap moment Like that's what this is. I haven't used it yet. so I'm excited to takeake it for a drive, but This is what crypto was supposed to be where it was like I don't mean the promise of a different future per se. I mean, specifically like, oh the The you won't even know that you're using crypto It's just going to be In the background, all the companies are going to start to use it. This is what Google is now going to be pushing and a lot of these hypererscaleers is going be they're just going to be integrating AI more and more. So before you get to the r without us even knowing it And' so funny What are you laughing No we have Dunk Dunk. Dun Dun was trying toess the auth U So Did crypto like miss its moment? is what I wantan to ask. because there was a story last week about Mark Cubans's like I sold Bitcoin. L like, I' done of with this. Like do you think that AI has just sucked all the oxygen out of the room And crypto had its moment to like really get a consumer use case. And people say stablecoins and maybe that will be integrated AI. But crypto never had its thing. It's like, Ohh my gosh, this is the thing And it never happened. Did it miss its moment Its easy to say yes, I don't know enough about what's happening in the cryptocomy to say like, yes, it's forever But the short answer is yes U Shay Belore tweeted, Robinhood's crypto COO is stepping down Uh That's a big signal is their crypto revenue growth slows. This is a a gut punch or at least a jab SEC delays plan allowing for crypto versions of US. stocks So is crypto dead and buried forever? You know, I'm not to say that I have no idea. your name I it. It it missed it like AI has the The thing is, AI is sucking up all of the talent in the world. That's what I'm's pretty thing.emember before it was like everyone's going to work in crypto now. Yeah all thosenics And that's what drives innovation. It's the talent that builds it.. And who is going into crypto now Nobody If you were going if you're of that mind and of that sppirit You're going where the next thing is and it's clearly not crypto 's I'm that's what'm thin Wh. Benedict Evans has his, I think he does it every six months. he updates his presentation. and this one, of course, was on AI This was interesting. We talked this last week. He said everyone's already using this is the title of the presentation. He says Open Air reports nine hundred million plus weekly users. but only five percent of them are paying which is just kind of nuts. So getting back to the the Crypto stuff We were so early was the rallying cry And it's very easy with the AI stuff that we're talking about nonstop This a buble. it's got to be a bubble.ook at the numbers these are unsustainable the spending bu, blah blah. But and also the reality is gettingetting back to like, the earlier conversation of headline talk versus people that actually do the work and contextualize where we are We are on top of the first inning as hard as I is believe. Now The stocks might be in a bubble Right? It might be that we just counted everything. Okay, fine. I don't know, we'll find out. But in terms of AI adoption We really are so early And the use case is obvious once you start using it You talk about the Bezos interview on C NBC. One thing he said, he said I'm taking the other side of the labor disruption. He said he thinks AI is going to make people so much more productive. The productivity is going to go through the roof peopleeople are have more money. he said AI is going to lead to deflation and labor shortages. He said we're going to have more desire for things in the future because of AI and is going to create more businesses and more jobs than ever. he's taking the positive spin on AI. which is actually kind of refreshing to hear Someone last week commented us and said, I'm sick of all the AI doom from you guys And I think we've been pretty fair about it all Do. But Bezo says, no, no, no, it's going to lead to job shortages because people are going to be more productive and richer. Very plausible I hope so I bought a stock Definitely not financial advice People like when Josh and I talk about stocks and what are your thoughts? So muchone ever say this is financial advice. Has anyone ever said that before Oh, this guy As much as part of me would like to never pick stocks again because it's stupid and it's a waste time and I don't make money blah I love it me keeps me young, B I'm And it's great for the content. All right. So whatever, I'm picking stocks again Um, what'd you buy So I bought floor and decor Floren Decor is A lookooks like an incredibly beautiful, perfectly Perfect downowntrend The stock sucks Florn De Cor. Do they one by you?'s I think there's like five hundred store in the compry. I mean, it sounds like a place my mom shops at. So it's u they do they do flooring Obviously and other home improvement stuff, okay So they compete directly with Home Depot and Lo as a matter of fact I think they saw more flooring So how is this even on my radar So Alex Moor, who I follow Wonderful writer substacker. This has been he's been on this beat for a long time and I followed him right into the stock Stocks in a sixty five percent drawdown. So So he gave me financial advice. So any if this doesn't work out That's on him not me So anyway, u You know how we were talking about like how fast things change part of the lessons at least from recent history is that stocks just don't let you in Like by when the story changes like look at Intel or any of these. likeike it's like wait, what just happened Wh is this like a episod? I can't buy now. That's how it works. okay. So I am very confident that at some point in time There will be a changing of the housing cycle and I don't want to miss it. okay? So this is the stock that I'm betting on. And while I sell in three months when I get bored I don't make money, yah, probably. I this is your way to bet on the home renovation boom peopleeople not moving So anyhow, that's a long setup, but I thought this was interesting. So the Wall Street Journal has a piece showing the age of America's homes and Most of the homes are fifty five years old or older A lot of the houses in my town, I'm sure in every town When they sell, there is a lot of work that needs to be done. Floor and decor and all these other housing stocks are in an absolute ice age. This is a great depression. This is a great recession for these housing stocks. The news cannot possibly be any worse unless it just goes on longer than even the market is suggesting, which obviously is happening, right? who knows. All right. I saw a chart from Tours and Slack So we mention all the time And it says higher rates, more renovations loocked in mortgage rates are keeping homeowners in place. and driving a surge in renovation spending See chart below. See chart below This chart is bunk. I actually thought about this. so wait, let me see if I can guess. G. So the reason this is bunked because it's renovations as a percentage of construction spending. Is it because construction spending is falling? Is that why? Yeah, the denominator. Okay. so So Claude decoded this for me And if you look at improvements Uh now this is this is a little bit data the data, but it's it's it's growing like o percent a year? It's barely growing It's barely growing. And if you look at if you look at the comps of all these companies flowing to core, Mohawk U Sherwin Lowe's Home Depot, Williamsonoma restestoration They're all saying the same thing. We know the housing market is an absolute shit show, okay? It is terrible U Whirlpool that sells u dishwashers, whatever Annihilated. there is nothing happening There is nothing happening. so So locked in mortgorates are keeping homeowners a place of driving a surge in renovation spending Yeah, I suppose if you're looking at a denominator as a percentage. Okay, so you what's your thesis here then? you're try to get ahead of this So here's here's so I think this is actually like Not like a one or two year trend. I think this is like a fifteen or twenty year trend because Redfin has the data that shows Tw thirds of all baby boomers have lived in their homes for fifteen years or longer, and something like forty percent have lived in their house for twenty years or more A lot of those houses ' going to need a ton of renovation to meet the standards of young people whore up on HGTV I think that's going to be a big, huge thing for baby boomers who just said, you know what? I don't need I don't need to rem it. I'm fine it We did a renovation twenty years ago. We don't need to renovate again And young people who come in to buy those houses are going to go, nope, we need to gut this, newew this N countertops, new flooring updated bedroom Taining, all that stuff. That's going to be a twenty year trend. But does it is it justust dribs and drabs, or is it like this, you know, that's the that's the Well Higher rates are is killing housing. Oh Obviously. so I h you' wr righten. I hope breaks from Floor and dec Cor, all Your bottom fishing Um How about this? U I was listen to Matt Bellany U and he had a podcast on vertical Vvertical streaming becausecause everybody holds their phone like this And even though it's a minor inconvenience to do this It's an inconvenience, right? This is the natural So Netflix is getting in on it. Like all these companies are spending big bucks too compete because also like Reels and TikTok, this is how this is how people watch it They said this on the pod I claud confirm and make a chart. Reels alone Meta's Reels is doing more revenue. Now they just This is a new product Reels is doing more revenue than Netflix Please just reels This is why the concentration argument about the big tech companies is false flat for me You always talk about the business lines of Apple. Apple does more revenue in AirPods and it, you know, you always talk about that. Like if you break down inside these companies for Instagram and you said just Reels and then YouTube for Google and YouTube T and all these things like those are individual businesses of themselves. This iss that's pretty crazy The funny thing is that's obviously not a good way W. Something vertically, it's way better to watch it Horizontally, but people don't care. It's convenience No I did to watch something. No one ide did for the first time Um, We had a four day week Weekend, as did, I'm guessing most of all the country. I don't know why we werere off on Friday Um, and the weather sucks The sun finally came out on Monday afternoon. But it was a complete wash out here Uh, I took the boys to see The Mand Mando and Grogo I sat in the like seventh row the IMAax Theater people liked the TV show, right? Iember watched epode like, I'm not gonna watch Star show, sor. I was like for season show, right. It was good. Yeah. I think people are into it Um But sitting up front and backs wasn't as bad as I thought it was. It was an an experience.ing your neck straight up? No. no, I was afraid of that. No, it was not bad Um The movie was the movie was so it did good business. I think it did one hundred and sixty million Globally, not terrible Um And it was it was Totally washable. Kids loved it Uh, Matt Belly had a stat like I think it was like seventy percent of all tickets were sold before five PM It was like a heavy a heavy kids audience. Now I don't watch Man though, so I don't know if this is an extion of the show. I'm guessing it is It just was like, why, you know Like it was just, that's what I was going to say. Why do we need this Yeah, it was the movie was like fine. It was watchable. was I didn't fall asleep Asa did once. But it just didn't move the plot forward. L this is the best they got. It's been Seven years John Favrer, it's been seven years since we've had a Stars movie And this was it. It was just like It just felt like like Marvel did this shit and got out of system. like it's over. We're not doing these movies anym But I guess we're still doing them. It was kind of depressing Disney is going to squeeze the last bit of that toothpaste tube for as long as they can Yes, they are, Ben. Nobody is buying dadbooks,en What is that? A dead book's like World War two, biography Curnnaow's most recent biography of Mark Twain U, which was published in Time for Father's Day, twenty twenty five has sold one hundred nineteen thousand. hardcover copies to date Ulysses, which I read in twenty seventeen sold that one in one thousand. Speaking of dad books So they need because these biographies are too long, no one has time to read nine hundred pages on someone's third cousin Sorrybody Too much Um I alwaysways struggle. I'm not a big gift giver.'m I'm a bad gif giver. I'm not a big giftiver but I love, you know, I love giving gifts. I just I don't know how to do it great anti birthday guy, I'm obviously not good at it. Okay So in a period of being unlocked from this brick on Instagram Speaking of dad book I bought my dad a book Um, And this is reals, right? Like this is reals monetization I boughtght my dad a book where it's like the first time you did this, like like shit that I don't know that I would love to know when he's not here one day, hopefully far into the future And and he'll be able to fill it out and give it to me I these things all these things your parents essentially, rightight? Yeah, so it's like that, but it's just done for you. My dad just has to fill it out. So I'm excited A lot of stuff you've literally never asked before And good for your kids too. and things that are like, you know, uncomfortable that you probably would regret not asking, not having asked before you know, when it's too late. Yes. You know, I had an uncomfortable conversation with my dad. About six month ago, I said, Give me all your stuff. My dad's gonna to be eighty next year. I said, Give me all your stuff everything. I need to know where your accounts are. I need to know your passwords. I need to know your insurance, I need to know mortgage stuff. I need everything put it in one place for me If something happens to you, I need that I'm, you know, I don't want to have to like go digging and looking for stuff. Did he do it You did it He's an old school guy. He handed to be handwritten on a piece of paper, not not I went home to bed. I keep giving my dad crap on a show. I went home last week And we're a big card playing family. We love playing cars. My kids love playing cs. so we' play cars. we like listening to music and playing cardars. Hving beer And my dad comes out with a sheet of paper with stuff written on it And he said, Alexa, play Beatles Hard Dayss night He wrote out his playlist And he's afterfter every song was or, he tell Alexa to play the next song. He said, Dad Can I show you how to create a playlist? said no, I don't want to do I'm just going to I have my playlist here. I'm All right, so every song you would have to tell Alexa what to play My uncle is cut from the same cloth He still uses And I think it's a joke at this point, but like you would do it even if it wasn't a joke. He uses weak at a glance which is the physical calendar. pocket size calendar. Oh yes,. It's always in his pocket. That's how he and he has an iPhone. But he literally uses weak at a glance And I know he used to print out his portfolio every single day And you know, old some people just, uh Stuck their way. There you go. That's right, Ben. All right, I wanted to ask you about this. So this article is not for me, but it's for you The ice cold civil war between diet Coke and Coke zero drinkers So I I'm not a huge die cooke drinker. I try not to drink a ton of soda but I drink it more than I would, you know, I probably have threecs a month This Abs and flows es the trick, some of those don Ive never had Co Zera gosh, it's It's I used to be a diet ckeed diet peepsi drinker. I go back and forth Coke Zero and Pepsi Zero are so much better than diet Coke diet Pepsi in what way the flavor. It tastes close to the regular versions. It's so much better. I can't's Hard to explain So I can see why the growth is happening in those zero drinks. It tastes a lot better So diet Coke sales increased by just not one point three percent And the first n months of twenty twenty five, Coke zero grew by four point eight percent on the same time period. I'm a big zero guy. I love it So I drink now is zero stuff. I'll try it G you'. My interest is paked All right retatr retide I't know if I'm saying that right But that's the new shit, the new hot shit from Eli Li Phase three obesity trial just came just came out and the results are genuinely insane twenty eight point three percent body weight los on twelve milligrams over eight weeks on how much twel milligrams seventy pounds on average seeventy pounds Ma'am people are heving forty five percent of patients had thirty percent weight loss bariatric surgery territ We've solved weight loss. What does this mean for the health of this country. we've literally doctors should be handing this out to every patient. who has a BMI over X All right Like the the Savings on heart disease and It's unbelievable So I just said, yeah, like, yeah, they should do it. I literally know nothing about medicine. I'm the last person that should be giving medical advice I have, um I am like a hypochondriac about death Because my mom died young, I think about death a lot and I just think that I'm going to die young, which is not the greatest feeling in the world So I did a blood test. There's a company called Function Health that I found through somebody substack that I I like to say, you know what, this is probably overdue for me So I got like ninety six different blood tests. Um And I signed up like the cancer, the precancer screening, the hard stuff That it's not cheap. It's it was like fourteen or fifteen hundred bucks Um certainly cheaper than than than dying or I there's no amount money I wouldn't pay to know that to know that I'm either whatever, on the right track or not or if I need to course correct I hate giving blood Not a fan. It was twelve vials. Nots fun. Do you get like squeamish about it Not really, I just don't like it. But it was over fairly quickly Anyhow, u So I got the results and my biological age, Ben, would you like to take a guess forty thirty point eight Okay Now my biological back age is seventy five But thirty point eight made me feel pretty pretty good There was like there was four things that were like on the upper range of borderline likeike borderline out of out of range. And it was like this is like okay And there was like diet stuff stuff that you can control But but I shouldn't spike the football just yet In fact, I probably shouldn't even mentioning this because I haven't gotten the results for like the precancer st which is the st that is especially like prevalent to my family And do you have to do this like once a year now your question I don't know So if you take your internal clock versus your hairline, average it out Youre rightite it where you should be That was that was a positive surprise I feel pretty good about that U All right recommendations, Ben. I took your advice and I listened to the Harison Ford podcast, which Bom Speaking of genetics, his mother was Jewish? I have no idea of unit Um Great pod You know what kind of annoys me, notot kind of it annoys me For whatever reason on Spotify, there was no video for this. and it's not There's some Are they on Netflix Oh maybe I don't know that's good question. I don't. I saw there's there's a video version on YouTube. So What a dude. So I after listening to the podcast, I thought, you know what I watched the first season of Shrinking. It was a show I liked I didn't love. I need it as a background show And I realizeed maybe I already made this observation. Bill Lawrence is the Taylor Sheridan of comedies And he's got He's got shrinking Bad monkey Rooer, Ted Lasso He did the scrubs remake whichich watch all these Which was which was Bad mononkey? The Vince Vagh one? Oh I didn't watch that. No, none of them are great. They're all good though Like there's no comedies anymore. so it's nice to have. It's a background show. You don't have to like pay attention to every scene So I put them in the background while I'm doing stuff at night emails and catching up on st Um That is a good background show. H Obsession which is a hardcore Michel movie. haven't seen itet You might have heard this, Ben have you heard about this y It's one of those I indie horror movies. It's on fire I think it p pass a hundred million of the box officeer it's going to movies are mov What you have se it I know I as a trailer for. I'm not gonna I't watch horr movies you know that I know you don' Mvies are having a moment So much so that one of these stocks that I've for lock for A long time in Michael years is u is IMax There was reports that IMAax iss might be getting some some offers. We got a lot of congratulations are you going to sell it? You're wit I'm not telling W wait for the bidding more? Okay I actually took your recommendation for a movie. My wife and I watch remarkably bright creatures this weekend in a Netflix. That's a Ben Clon movie It's so nice to have just a sweet movie That's the best way I can describe it. It was sweet. It had like no ulterior motives. No like cynicism, just like a nice movie like and it was kind of surprising because it was in a lot of ways I I feel like I got a little like, whoa, a little chucked up maybe. Sally Field still has it. likeike I haven't seen her in something in forever. She still got it And I love Bill Pullman's son I love him. He's He was in topop gun Maverick He was in the show with Bre Larsson on Apple I think he's going to be a great character actor. He's He looks different at everything he does. He's like Sally Field like still has it Um, Yeah It's just it's just a n, it's just nice movie. just pluss n that's it's a nice movie. like id't have any like yeah. And he had other agendas besides just being a nice sweet movie I really liked it. It was pretty good one for Netflix. Really good for Netflix, Yeah All right, I believe that's it Sun is shining. That's good. The sky hasn't been falling for a while as far as the markets go. Someone said that I'm like the dad when I say like whenever we do get a correction, I'm going to walk out like after it rains and said, ah, we need that That's been metric correction. We just came out of a correction, but I agree, we do Nland I'm w you bud. nine percent of notough Annal spirits At the compompoundews d. com personally my personal responses. See see you next time.