$1 Million is the Worst Amount of Money (EP. 459)

11:52Ben Carlson:Okay, so this is another situation where I guess AI still matters more. All the AI spend and earnings are still growing and who cares? Yeah. I could buy that.

12:01Michael Batnick:That's it. Alright. Alright, looking at, there's some Schwab. They put out this monthly report. We talk about what are their different cohorts doing. Wait, what's it called?

12:09Ben Carlson:Stacks. Stacks or Stacks?

12:11Michael Batnick:What do I call it? You call it Stacks. I just called it Stacks. I call it Stacks? What is it? I know we've done this before. I can't remember. Who cares? Alright, looking at broader trends among clients. long-term bullish sentiment among members of Gen X, born between 1965 and 1980, fell slightly in March. Negative sentiment in Gen Z, born between 1997 and 2012, declined even more, widening the gap between those groups as Gen Z remained the most bearish and Gen X the most bullish. Millennials and boomers also. Okay. So young people, particularly bearish on the stock market, which makes sense considering the AI economic anxiety.

12:50Michael Batnick:But also, let's be honest, the stocks that these people are likely to buy, all of the fund stocks, they're getting destroyed.

12:58Ben Carlson:Couldn't you also say that the older generations have just lived through more of this stuff and don't freak out as much as the younger generations? I don't know if that's true. I wrote about this in my book. And remember with the death of equity story, an infamous story from Businessweek? They interviewed all these people for the book and the people giving up on stocks after 1970s were mainly young people. Old people held tight and kept buying. Young people were like, all right, I'm done. No way. I've seen what happens. This is a bad decade. I'm out of stocks. I think there's something to that where young people give up easier.

13:32Ben Carlson:Remember millennials said, I'm done with the stock market after 2008. No way I'm going. I saw what happened to my parents and my portfolio. No way.

13:39Michael Batnick:So I have to think more about this, but my knee-jerk reaction would be the young people today and the young people back then are very different, have very different attitudes towards investing. Based on available technology. Number two.

13:51Ben Carlson:Emotions are still emotions, though.

13:52Michael Batnick:That's true. But the older people have a lot more to lose. Right? Like if you have a$1.7 million portfolio versus a I'm just getting started portfolio. Those are different things. But yeah, maybe. I don't know.

14:05Ben Carlson:You know who has a lot to lose? Randy Schilling from Corpus Christi, Texas. Let's talk about my favorite stories.

14:11Michael Batnick:There was a story in the journal. more Americans are breaking into the upper middle class. And for the first decade of Randy's career, he lived in an apartment, worried about paying for vacations. And then in his early thirties, he landed a job at a chemical plant that paid about 15 % more plus bonuses. He bought a house on a golf course in Houston, promotions and pay raises followed. And boom, before he even realized it, he saved more than$3 million for retirement. Randy said, I view myself as an average Joe. I don't have to have a fancy car. I don't have to have the greatest TV. Randy's 58. But when I want something, I go get it.

14:49Michael Batnick:So this is the story. There's a lot of Randys out there.

14:54Ben Carlson:So$3 million in just retirement. People always ask, like, does that money count include home equity? That's always the, this guy is just$3 million in portfolio. That's, that put you in the top 5%. I have a message for Randy. Go buy the TV, Randy. TVs are very cheap. They get cheaper all the time. Go get the biggest TV you can find.

15:11Michael Batnick:So the whole point here. I was in Walmart last week. And, or this week, I should say 65 inch TV. I think I saw for like 300 something dollars.

15:21Ben Carlson:It's amazing. Every year they get cheaper and bigger and better.

15:24Michael Batnick:I am, I am still flabbergasted that there are DVDs, new DVDs, like, uh, five nights at Friday's like, or, or whatever. I mean, whatever's new there's who's buying that. Obviously somebody is.

15:42Ben Carlson:so the technology that still exists that boggles my mind we got a rental car here and couldn't figure out the car play it wouldn't work it just the it kept going in and out so we had to put fm radio on i can't believe fm radio still exists as someone who is exclusively car play in all my vehicles podcasts audiobooks music the fact that fm radio still is and trying to explain fm radio to my kids my go to the next song we can't go to the next song this is it you have to wait for the next song. Why is someone

16:13Michael Batnick:talking? I agree with you. And I guess here's an analogy for that. An analogy might be the wrong word. But oftentimes when I'm driving my wife and we're looking at small stores on the main road, she'll always say, how are these companies still in business? Or how are they making any money? And my answer is, just because there is a store on the side of the road that is open, doesn't mean the person behind it is killing it. right? Like I'm sure most of these businesses are not very, very profitable. And same thing with FM. Like obviously it's a, it's a shell of what it used to be. And it's, you know, ice cube that would probably melt forever.

16:53Ben Carlson:All right, let's get back to the numbers here in this story. So the whole, the whole story here is that more people are moving from the middle class to the upper middle class. So they say, and they say in 2024, 19 % of Americans were considered poor or near poor down from 30 % in 1979. That's an amazing statistic. Pretty good. That's a huge decrease. And they also show adjusted for inflation, the upper income class has gone from$144 ,000 in 1970 to$256 ,000 today, 70 % increase. There's been a 60 % increase in middle class from$66 ,000 to$106 ,000. And even the lower income has seen a 55 % increase.

17:29Ben Carlson:And this is, again, adjusted for inflation. Okay? These numbers are mind-bogglingly good. Don't you think? Yeah. Ridiculously good. And they interviewed a few people, and this is interesting, the people who are now these newly upper middle class, rich, whatever you want to call it. They interviewed one guy who said, instead of worrying about paying for groceries, now he worries about his children not becoming spoiled in a town where some teens drive luxury cars to high school. And I know you and I have talked about this ad nauseum. I don't think it's a mystery anymore why people like this are unhappy.

18:03Ben Carlson:Just because there's more people.

18:04Michael Batnick:Hold on, Randy seems pretty happy.

18:06Ben Carlson:Yeah, Randy's doing okay. But there's always a story about why do these people still feel middle class? Or why do they not feel rich? And when they are by any measure in human history, some of the richest people ever here. It's because last week we talked about how there's these super rich people. And then I think just the fact that there are more luxuries today that exist. Look, I feel like I'm slowly turning into a boomer. We were up to dinner last night. We talked about how the vacations we give our kids are 10 times better than the vacations that we got as kids. Correct. and that's just a sign of progress.

18:40Ben Carlson:So you kind of say, oh, we didn't have that. It's like, but the fact that they do, the next generation now does have that, not everyone does, obviously, is a sign of progress. I think all these numbers are just a sign of progress, and that's why people don't feel as rich as they objectively are. I also think there's a, there's like this thing where once you have a certain number,

19:02Michael Batnick:whether it's income, net worth, retirement assets, I think you think you're supposed to feel different.

19:09Ben Carlson:Yes. And then you just feel the same. Reaching the goal is not as satisfying as trying to get the goal itself.

19:14Michael Batnick:Yeah, so there's just more people with more money that maybe as a society are collectively feeling, huh, this isn't as great as I thought it would. And there's also another side of this. This is like multi-layered. There's too many of these people, so it's become less special. And it's a great thing. I mean, obviously. Think about Randy in his thing saying,

19:36Ben Carlson:I don't drive a fancy car. And then the other guy saying, there's teenagers who drive luxury vehicles. Imagine being a person who saved a ton of money and you drive a Honda and you see a teenager driving Mercedes. You go, what the, are you kidding me?

19:48Michael Batnick:So I think it's less about that. Although that certainly is a part of it. I think it's just like the cost of having money is expensive. Yeah, the goalpost move. You feel like, wait a minute, I've got X amount of dollars and it doesn't feel like that. And I don't feel free. So Majuli wrote over the last year, he wrote a post called the upper middle class trap. Over the last year, I've come to an unsettling realization. The upper middle class is caught in a trap and many of them don't realize it. Homes are smaller, even as prices rise. LendingTree reported that from 2014 to 2024, the average size of new single family homes shrunk by 11%, even as a price per square foot surged by 74%.

20:28Michael Batnick:All of these trends point toward the same thing. People are paying more and getting less. This is what I call the upper middle class trap. Right now, the upper middle class is in a fierce competition for a marginal improvement in lifestyle. They're working more and relaxing less to purchase products and services with clearly declining quality. It's a financial arms race that doesn't make any sense. I think it makes perfect sense, but I get that he's doing that. He's writing.

20:52Ben Carlson:Yes, it's a human nature thing. And honestly, I've come to the realization that people talk about lifestyle creep and goalposts moving. I actually think that's a healthy thing. If you have a good relationship with it.

21:04Michael Batnick:Yeah.

21:05Ben Carlson:But there's a lot of people who don't have a good relationship with it. And to your point, reaching that, that whatever the milestone is that you thought you're going to get the income level, the net worth level, the house size, the car, whatever it is, and you get it and you go, then you get used to it and you go, ah, wow.

21:20Michael Batnick:Okay. And then, and then you're like, wait a minute, there's where all the money go. How come there's not more money in my account than I thought there was. Because, so I also, can we come up with a better phrase than lifestyle creep? Creep is a negative word. Lifestyle creep is a negative phrase. I think it should be celebrated. You're making more money and providing for your family. Now, if you get into trouble and you're over leveraged, that's a different story. That's not lifestyle creep. That's being financially irresponsible. But you're supposed to make more money and spend more money. Like that is, right?

21:49Michael Batnick:Isn't that what it's for? Are you supposed to hoard your money? What's the point of that?

21:55Ben Carlson:And my, my thinking has changed completely on this. I'd say in the last like five years, but I, I was walking around Florida the other day and I saw two old couples leaving dinner. Okay. And the, you know, the, some old people where they, they just sort of, they have the hunch walk.

22:11Michael Batnick:Yeah.

22:11Ben Carlson:And they, they, they like, okay, something's wrong with their back. And the two, two older gentlemen were both heading the hunched walk and the, the women were kind of slowly and they look like they were just in declining health. And I see that. And I think, I don't want to wait till I'm that age to enjoy my money. I texted you. I said, I'm not going to wait. You don't want to be at that stage where you can't enjoy it anymore. And I think that sort of idea too has taken hold of a lot of people. Why am I going to wait? What's the point of having a bigger nest egg later in life when I can't enjoy it as much?

22:44Michael Batnick:Yeah, that's like foundational for my thinking. and my mom died when she was 56 years old. Not that she had any money to spend, but life is short. Enjoy it. All right, we got an email with the subject line, worst amount of wealth. There is a scene in succession. Greg is excited to get$5 million. Tom and Connor proceed to tell him that's the worst amount of money.

23:05Ben Carlson:One of the great scenes in succession history, for sure.

23:08Michael Batnick:Yeah. I love that scene. What's the phrase? Five million is, maybe it's just five million is worse. All right, whatever. Poorest rich guy, tallest dwarf, et cetera. Oh,$5 million is a nightmare. That's what it was. I recently turned 40, and my wife and I crossed$1 million in investable assets. Congratulations. Almost entirely in retirement accounts. And I have to tell you, this might be the single worst level of realistic wealth a normal person can occupy. Let me make my case. Now, this is like half tongue-in-cheek, okay? This person's not like, you know, this person's not an asshole.

23:40Ben Carlson:It's a little hyperbole.

23:41Michael Batnick:Yeah. Small market downturns to raise an entire year of your life. My wife and I were down about 6 % in March. You know what 6 % of$1 million is? My wife's entire teaching salary, gone in a month. This is obviously not true. I mean, right? It's like stock versus flow type of thing. This is not the way to think about your portfolio, but I understand what he's saying. You can't contribute enough in a year to matter. Roth IRA limit this year is$7 ,000. On a$1 million portfolio, that's less than a 1 % contribution. Even when I include my 401k, Y43B, Roth, et cetera, we're still talking about sub 5 % annual contribution.

24:13Michael Batnick:That's a good thing. That's compounding, bro. That means that your portfolio has outstripped your ability or outgained your ability to contribute meaningfully to it. Now - This is the midlife portfolio crisis here. Yeah. These are champagne problems. You still can't retire, not even close. A million dollars sounds like retirement money. It's not retirement money, not even the same zip code as retirement money. The 4 % rule says I could pull 40K a year before taxes. That's nothing. I'm yelling at him, joking, smacking him in the back of the head. It's like, dude, you're 40. What are you talking I've ever retired before.

24:42Michael Batnick:What is this portfolio going to be worth when you're 60? Right. And then lastly, you can't complain to anyone. This is the coolest part. I can't tell my friends. I can't tell my family. The moment the number leaves my mouth, the conversation is over. No one cares. So instead, I'm emailing a podcast at 445 on a Friday that I look like a completely normal person. Anyway, I understand this. We all get what this person's saying. He's not genuinely looking for sympathy. But you're 40. What are you talking about? Yeah,

25:07Ben Carlson:you're not going to spend it yet. And guess his portfolio in 20 to 25 years with a 7 % annual return, come through my Buffett back the head, he's going to be worth like$4,$4.5 million if he just doesn't do anything to his money.

25:18Michael Batnick:He's going to be worth way more. So congrats. Just wait 20 years. Then you'll really be in the nightmare scenario.

25:23Ben Carlson:But you mentioned this. I think there is something to the fact that if your portfolio size is bigger and you see a bigger dollar loss on a smaller percentage decline, that can screw with you. And this is why people slowly but surely get more defensive and conservative in their portfolios over time. Because they don't want to see that anymore. They already won the game. Anyway, that's a fair. Some people are going to go, oh, boo-hoo. But I think that's a fair email.

25:49Michael Batnick:Yeah, listen. All this is fair. We're all people. You're allowed to feel how you feel. It's not like this person's got$19 million and he's complaining, right? This is a very common feeling.

26:02Ben Carlson:Yes, let's focus all of our hate on the super wealthy, the 0.1%. Correct. Those jerks.

26:08Michael Batnick:This is surprising. The Bloomberg, from Cameron Dawson via Daily Trevor, the Bloomberg Economic Surprise Index has jumped higher in recent weeks thanks to data surprising to the upside.

26:21Ben Carlson:I got to be honest. I don't know what this thing measures. It looks good. I don't know what it measures.

26:27Michael Batnick:I believe it measures surprises.

26:31Ben Carlson:I believe it's the name of an old ship.

26:35Michael Batnick:I don't know. I don't know how it's quantified. Right. It's the expectations, obviously. Yeah, like you beat the number or you miss. Yeah. Goes up in good times, down in bad times. Fair enough?

26:47Ben Carlson:Yes. All right, let's get back to oil. CBS News calculated how much it costs to fill up a gas tank of a different size or style of car. So a Toyota RAV4 is like$60 to fill up. Toyota Camry is$50-ish. F150 is almost$150 to fill up. And it probably doesn't matter. for most people. Is that fair? Economically.

27:14Michael Batnick:I don't know. When we start saying most people.

27:16Ben Carlson:No, no, I'm saying again for the economy. I just don't think, if you're in the bottom 20 or 30 or 40%, yeah, this is, it hurts. It's painful. But I guess you see a number like$150 to fill up a car and you go, geez, unbelievable. When I first started driving in the late 90s and gas was like 95 cents a gallon, I would put$5 in my car. It's funny because in my high school brain would be like, I can't fill it up all the way. Too much money. I'll just put five bucks in.

27:44Michael Batnick:Nobody filled their tank up in high school.

27:46Ben Carlson:No, I would put$5 a week in my Honda Accord and it would last me all week. Then I put $5 in the next week. So$150 seems like an insane amount of money. But I think even if you had inflation adjusted it,$150 to fill up a huge truck is probably not that much historically, even though it seems like an outlandish number.

28:02Michael Batnick:It does seem like an outlandish number. Look at Mike Antonelli. Happiest man in the world. Talking a lot about how the people online might be upset, might not be that happy. Look at this guy. He just texted us. Look at that smile. Where is he? I can't tell. Where do you think Michael Antonelli is?

28:22Ben Carlson:Oh, it's got to be Disneyland.

28:25Michael Batnick:Happiest place on earth. Happiest man on earth and the happiest place on earth.

28:29Ben Carlson:Okay, so the Wall Street Journal decided to look at the counter. So their whole thing that everyone's been saying is, listen, inflation-adjusted prices for gas aren't that bad. There's higher fuel efficiency in cars. That's true. Like your Jeep EV, does it still work? The electric part of it?

28:43Michael Batnick:Don't get me started. Okay.

28:45Ben Carlson:My wife asked about getting a hybrid for her next vehicle, and I thought, I don't know.

28:50Michael Batnick:Oh, wait, hold on. Actually, this is an interesting point. So I've got a month left with my car. I almost died on the highway again last week. so robin's robin's audi which is a car that i was 25 000 underwater on for listeners that weren't with us back then um i i took it this morning for an oil change i didn't pay for the prepackaged service where everything is free because i'm already paying an arm and a leg for this piece of shit car 390 plus tax for an oil change and i said hold on that sounds like a lot he goes well lord 390 he said it's a 3.0 engine i said i so what does that even mean so it's more more oil i'm like okay you people are the worst okay take it to a valve next time so anyhow my uh so yeah my jeep did the jeep death wobble thing on the highway the other day so robin robin has the car today and she's taking the boys to basketball and i said don't drive over 60 on the highway because you'll get the death wobble and she looked at me she goes this is what what are we doing here?

29:56Michael Batnick:Uh, anyhow, so I've had multiple people ask me about the Wrangler because it's a great looking car. You've got the, the electric roof, like it's a cool looking car, right? And it's, it's, it's affordable. I think I pay, I don't know how much the new one is, but I pay like 600 something for my car, which is a steal. Right.

30:15Ben Carlson:Jeeps look are one of the coolest looking cars that there is, and they will never go out of style.

30:19Michael Batnick:Here's a problem, Ben. Anytime somebody asked me how I like the car, you know, I, I fly off the handles, but, but I found myself in an awkward position multiple times where, you know, a couple months later, I see them with the car. So here, here's my new move. You just, yeah, it's a car looks great. Uh, it doesn't, doesn't really drive that awesome. And they just leave it at that. They can make their own decision. Right.

30:43Ben Carlson:Yeah. True. So the journal says the biggest difference is yeah, all that stuff is true. like inflation adjusted, energy is a small part of household budgets, but it's the speed of the increase that gets to psychology. And so they said it's gas is a dollar and five cents higher than it was five weeks earlier, which is one of the fastest increases we've had in a long time. And they said that they did a study. Economists have found that round number prices for retail items have salience with consumers. A 2010 Brookings Institute paper found that people were unhappier on days when gasoline rose above$3.50 and$4 a gallon.

31:15Ben Carlson:I do think there is some psychological line in the sand of$4 a gallon,$5 a gallon that could have like some weird consumer sentiment impact, even if it doesn't really hurt household budgets as much as you would think.

31:28Michael Batnick:It's just another thing. It's just another thing that's going up in price.

31:33Ben Carlson:I guess so. But it's the one thing that the prices are everywhere. I think that's the difference. Maybe gas prices don't matter. Is that what you're saying?

31:44Michael Batnick:That's not what I'm saying.

31:46Ben Carlson:Okay. Like what other price should we put on a big billboard like that? So everyone knows what it is all the time. The price is constantly changing. The S &P 500, everybody would be much happier. That would be kind of cool if at the gas station, you saw the Dow and the S &P and the NASDAQ right below gas prices.

32:04Michael Batnick:Here's what should be accompanied by the gas price. If you put$10 ,000 into the S &P 500 in 2010, here's what it would be worth today. And yes, I'm cherry picking. True.

32:15Ben Carlson:Okay. Uh, Torsten Slock says that AI is having no signs of impact on youth unemployment rate.

32:23Michael Batnick:Well, Torsten Slock is wrong. I don't know.

32:26Ben Carlson:He says the bottom line is, listen, the bottom line is there's no sign that AI is increasing unemployment among younger workers. And there's also no sign that young people or recent college graduates are having a harder time finding jobs at the moment, other than demographics. So he should put these charts in here and he shows the unemployment rate 16 years and plus or 2024. And you can see that there's not a lot of movement there outside of like the regular unemployment rate. And then he also shows among college graduates, 22 to 27, it's increased a little for men or it's increased a little for females, but it's fallen for men.

32:56Ben Carlson:And they're kind of at the same place essentially. So you could say this is cherry picking. There's other data that supports this. I think this, this data, I still think the AI impact mixed with the COVID impact that, that stuff we're still dealing with. I think it's still too early to see the AI impact of than labor workers. I kind of agree with him.

33:17Michael Batnick:I just, oh, you agree with him? I agree with him. I just reject this. How many stories are we hearing about young people and the difficulties with getting a job? Maybe unemployment rate doesn't capture the numbers right. I just, I don't buy this. But you're talking about anecdotes. He's talking data. I don't know that the, I'm saying I don't know that unemployment rate is the right data to be looking at.

33:42Ben Carlson:Isn't that the best labor market indicator we have? I don't know.

33:47Michael Batnick:You've been going to war with data lately. What about hiring? What about hiring rates? But doesn't the unemployment rate

33:56Ben Carlson:takes that into account because it's people looking for jobs?

33:59Michael Batnick:I don't know about that. That's the definition of it. Well, if you believe the government data. All right.

34:07Ben Carlson:You're dabbling in conspiracy theories lately. I kind of like it. You know, go for it.

34:13Michael Batnick:I think this is an anti-conspiracy theory. I think this is complete horseshit. Anybody with a brain understands that companies are less eager to hire young people. I don't care what the unemployment rate is today. Now, if he's saying that, so maybe I'm projecting and him saying that AI is not having an impact and it's not going to in the foreseeable future. He's not saying that, but that's how I'm taking it. All right. Well, anyway, what's the point of this chart? It's like, all right, so nothing to worry about, I guess. Like why post this?

34:46Ben Carlson:The point, I think the point is that a lot of people think the impact should be happening now and it's not happening yet.

34:50Michael Batnick:Okay. Well then in that case, fair enough. All right. Here's a chart that blew my face off. David Senra had the founder of DoorDash on the show. I haven't listened to it yet. And there, there's a chart of U.S. food delivery market share by consumer spend percentage. And DoorDash just destroyed Grubhub. I don't know the dynamics or the economics or the incentives or the technology or whatever. It doesn't matter. I don't know. But DoorDash. I don't get it either. DoorDash ate Grubhub's lunch. Get it?

35:24Ben Carlson:So Grubhub went from 70 % of food delivery in 2016 to 10%. That's insane. So this feels like an Uber Eats is just kind of flatline. I actually use both Grubhub and DoorDash. I don't have, because I think I get a credit card deal on one of them and an Amazon deal on another one. So I don't really have, I don't, it doesn't really, it's, it's the same to me. I don't notice a difference when I use one or the other. Maybe it's, maybe DoorDash has done a better job of partnering with restaurants. Like if you order Chipotle, their delivery, they partner with DoorDash or if you go to restaurant. So maybe that's where they've done.

35:58Michael Batnick:Grubhub used to be public. What happened to it?

36:01Ben Carlson:I don't know. So I have a conspiracy theory. I want to run by you. Think speaking of DoorDash. So on vacation, kids have to have a lot of sunscreen. We put sunscreen on my little daughter. She has very fair skin. Like five times yesterday. She still got burned. I think that spray sunscreen is either the door dash of sunscreens or it's a total conspiracy theory and it doesn't work. Because you spray like one bottle in a day essentially. I don't think it works. I think spray sunscreen is a racket. Thoughts? I think it's easier to do because you don't have to like lather up and put it all over the kids and stuff.

36:35Ben Carlson:But it doesn't work. 25 % as well as putting lotion on a kid.

36:42Michael Batnick:So Grubhub burned$7 billion in equity. Sold for$650 million in 2025. Okay. Yeah, it was... Stock fell...

36:55Michael Batnick:The sale to Wonder? Food delivery startup? I don't know. I don't think sunscreen is a...

37:03Ben Carlson:You're a guy who puts a lot of sunscreen on me because you have a bald head. So you don't want to get it. So do you use, would you use spray on your head or do you rub it in?

37:09Michael Batnick:Well, I wear hats.

37:11Ben Carlson:That's true. But I see when we, when we go, go places that are warm, you put a lot of sunscreen in your head for good reason. Oh, you got it. Cause you don't want to. Yeah.

37:18Michael Batnick:Yeah. Sunscreen, sunscreen works. Nice try though.

37:23Ben Carlson:No spray sunscreen, the spray stuff, the spray stuff. I think it's a racket, the spray bottles. Cause it's gone immediately. The other stuff everyone has in their medicine cabinet. a bottle of sunscreen lotion that's like 13 years old. Because that stuff lasts forever. Okay. From the Wall Street Journal, the typical U.S. home is 44 years old and needs tons of work. So they break down the age of America's homes. And they break them down by 14 years or less and then by 10-year increments from there. And something like 30 million homes are 55 years or older, which is kind of insane. There's only 10%, 12 % of homes that are 14 years or less.

38:02Ben Carlson:So obviously we're not building a lot of new homes. and they're just saying in the years ahead, there's going to be a ton of work that's going to, remember the email we got, wasn't it just last week? The person said, I bought a new house and all I did was put a ton of money into it. There's going to be a lot of that in the future, especially as the boomer houses that they've owned for 30 years, turnover and young people realize like, not only is there cosmetic stuff I want to do, but there is structural stuff I need to fix the new water heater, the new AC unit, the new HVAC, whatever.

38:28Michael Batnick:The, the, there's a few homes in my neighborhood that are listed and the floor is like$800 ,000 for a, I don't know, 2 ,600 square foot high ranch. So not the greatest layout, not a super desirable house, but$800 ,000 is about the floor. And these are houses that need a complete gut job. And I just don't know. Like 200 grand of work, probably. Who has the money for that? Now, it just has to be coming from parents. That's it. There's no other explanation. You can't put down$200 ,000 on a 6.5 % mortgage and then also put$150 ,000,$200 ,000 into a house. Nobody has that type of money.

39:09Ben Carlson:So this should be a new type of mortgage. Listen, I need to borrow a million dollars, not$800 ,000, because I need to put money into the house and it's going to increase the value. That'd be a good financial product. But the Wall Street Journal also says that repairs are way higher than they used to be. So you and I have both dealt with this. Structural repair costs grew 14 % in real terms between 2022 and 2024. plumbing jumped 24%. Again, this is after inflation. This is funny because it says, financial advisors traditionally suggest setting aside 1 % of a home's value for annual upkeep. Some say for these older homes, it's more like 2 % to 3%.

39:44Ben Carlson:What percentage of the population actually does this? So that's a percentage of the home values.

39:49Michael Batnick:Well, the same percentage of the population that has a year in cash for a living emergency. I mean, nobody does that. The housing market is in disarray. Home Depot stock, I don't know if disarray is the right word here.

40:03Ben Carlson:It's just in hibernation.

40:05Michael Batnick:No, it's worse. Whatever the worst word is on the planet, what's the worst word on the planet? That's the housing market.

40:17Ben Carlson:I said the word debacle to my kids yesterday. My son always asks me, what does that mean? What does that mean? He's trying to use new words. and his new word this week is nonchalant. And he goes, dad, I don't know where he got it from. He goes, dad, you're very nonchalant. And I said, what do you think nonchalant means? And he said, I don't know, just like, you know, you're nonchalant. You're like, you're kind of cool. And I'm like, oh, really cool. I'm like, okay, I'll take that. Yeah, but I guess I am. But here's the thing. Back to the housing thing. There's$34 trillion in home equity. So if you own a home with a lot of equity, you don't get to complain.

40:52Ben Carlson:The person you mentioned, you buy a house, you have to save the down payment and put the renovation costs in. That person is in a really, really bad situation. If you have a ton of equity in your home because you bought it three plus years ago, three years earlier, then you don't get to complain because you have a ton of equity in your home. You can just pull that equity out to fix the home up.

41:12Michael Batnick:All right. So, Ben, are stocks forward looking? Sometimes. Good answer. So Home Depot seems to be, Home Depot is the stock that, in my opinion, most accurately represents the overall level of housing activity. Would you agree? It's for builders. It's for buyers. It's for owners. It's for everybody. There's housing activity going on. Home Depot stock is, Home Depot, the company is working. Forget about the stock. The company is working, right?

41:45Ben Carlson:Okay. Okay. What is it down right now? I have no idea. Is it down 20 % from the highs?

41:52Michael Batnick:Worse than that. So Home Depot, yeah, eyeballing it looks about right. But let me just math this real quick. Home Depot is down 26 % from its highs. And it is at the lowest level since December 2023. Now, we know why Home Depot stock is getting destroyed. It should be destroyed. The business is not faring very well. Do we not think that housing... Is Home Depot saying that this is going to be a minute? that rates are going to be higher for longer? Or is the market rolling? Rates already have been higher for longer. Yeah, yeah. So anyway, this is not, if you use Home Depot to gauge for future housing activity, maybe you should, maybe you shouldn't.

42:31Michael Batnick:I don't know, but not looking great.

42:33Ben Carlson:Okay, interesting animal spirits factoid. So because we have a lot of people who email us saying flyover states or close elitists. This is in a, there's an Atlantic story talking about people are moving to Midwest now because the Southwest has been or Southeast has got too expensive for some people. So they said one of the first known uses of the term flyover country in print came from a Midwesterner in 1980, issue of Esquire magazine. Thomas McGuane, a native of Michigan, said because we live in a flyover country, we tend to try to figure out what is going on elsewhere by subscribing to magazines.

43:06Ben Carlson:1980. Didn't know that. That's all I got. Keep moving to the Midwest, it says, but I'm sure these are on the edges. All right, you want to do private markets or not? Oh, here's an interesting thing to me. So the Blue Owl was the big story saying that like redemptions for two of their funds were 22%, 41%, which is a massive, massive number. So they kept, they kept them at 5%, which they're, that's in the rules. That's that they're, they're right. But they also said under the 5 % limit, the larger Blue Owl fund will pay out redemptions of 988 million, but it also received 872 million of new investments.

43:46Ben Carlson:So a lot of these stories don't, these aren't in the headlines, these numbers that these funds are still bringing money in. Who is still putting money into these funds right now? Where's the money coming from?

43:54Michael Batnick:So was that, was that, that was in the first quarter? Is that what that report is?

43:58Ben Carlson:Yeah. So you think maybe that's a stale number? Like these people made those, filled the paperwork out before this, all this stuff happened maybe? I would assume that there is approximately, I don't want to say zero dollars going right now, but there's, that has to be stale. Okay, that makes sense to me because, again, it's not like this stuff happens one day you put the money in. There's a lot of paperwork involved, and you have to put a note of interest. Okay, that makes sense. The thing is, all the private credit funds are rightly showing, like talking about loan quality and the fact that default rates historically have been pretty low.

44:33Ben Carlson:But no one cares about that stuff if this much money is rushing out. That doesn't matter at all. In a crisis of confidence, no one cares about the loan book.

44:41Michael Batnick:That's true. That's true. It also doesn't matter because it's like, I don't care what happened. I care what we think is going to happen to the loans. That's right. Yeah.

44:51Ben Carlson:So these funds are also relatively new. There was a big profile about Cliffwater in the Wall Street Journal. And they say, Cliffwater's fund CCLFX, for example, was the only one of its peers to have withstood the COVID market downturn in 2020. And then they put a parenthesis. A footnote noted that no comparable funds operated during the downturn. So this is still such a new asset class for people to invest in. And these fund structures are still so new. And that's one of the reasons I think that we're having all these problems. This is new stuff for people, for investors.

45:22Michael Batnick:You know what's also new stuff, Ben? You and I are going to be doing a podcast in Washington, D.C. next week.

45:29Ben Carlson:That's right. Wednesday, April 15th, tax day, in the capital's country.

45:36Michael Batnick:Nope, the country's capital, Washington, D.C. We'll be talking to Alex Morris of FM Invest. If you're around, come say hi.

45:45Ben Carlson:I can see us doing a nice long walker across. That's a great walkable city to see all the sights. Fantastic. It's the kind of place that the first time you walk around Washington, D.C. and you see the monuments, it is kind of mind-blowing.

45:59Michael Batnick:I walked around D.C. kind of recently. Josh and I were there. This was during the shutdown, actually. It was very bizarre. There was nobody there.

46:06Ben Carlson:It's fun times. All right. I got some travel thoughts.

46:10Michael Batnick:Wait, hold on. Before you get to your travel stuff, I asked Rob, hey, Rob, pull all the animal spirits recordings for 2025 and tell me how many times I say the word ostensibly.

46:26Ben Carlson:How was he able to do this? He pulled the transcripts?

46:29Michael Batnick:Yeah. This might have been your worst take. Remember last week I said one every three episode tops and I'm still taking the under? Yeah. Okay. So Ben tried to roast me for saying the word ostensibly very frequently. How many times do you think I said it in 2025? By the way, this includes all Animal Spirits properties. So we did 100 and something episodes last year.

46:58Ben Carlson:15.

46:59Michael Batnick:Wow, that's backpiling if I've ever seen one. You've set the expectations. Six, buddy.

47:08Ben Carlson:all right i'm gonna have to audit these results and also have them cross-reference the compounded friends six times get out of here uh all right travel what's going on so another i talked about vacations being different the fact that airbnb houses now exist i know that rental houses have always been a thing i don't know when i grew up how my parents would even know how to find a rental house because we we never did it so at our stage in life you and i both have relatively young kids. Having the ability to stay in a house and rent a house, Airbnb, VRBO, whatever the, it's just, it's just so much easier to do.

47:43Ben Carlson:And having that, having a house with kids at this age with laundry and a TV and the ability to relax, it's such a game changer. I can't even overstate how, and it's funny because Airbnb obviously created this brand new thing essentially. and their stock has done nothing since they went public. Absolutely nothing. They have gotten no economic value out of this thing they created.

48:08Michael Batnick:Well, that's not true. New shareholders happened. They created a lot of money in the private markets. True. Right? Because what was, I mean, not to be a dick, but like seriously, what did it go public at? Valuation wise.

48:18Ben Carlson:Yeah, it was a hundred billion. And I think it's, yeah, not too different from that. So there's been a lot of people who have said, listen, the internet came out and since the internet came out, there has been no change in trend line for economic growth. Like the internet created no economic growth whatsoever. It didn't change the trend. Like the internet made us all more efficient in a lot of ways, but it didn't like add to the economic output in meaningful ways. And I almost think that AI in a lot of ways is going to do that at the beginning. But I have a question for you.

48:48Michael Batnick:Is that not a case of like numbers lying? Like, what do you mean? Amazon created no value, no economic value. Like just, I just, nonsense.

49:00Ben Carlson:You're right. Maybe, maybe it changed, but it's like, it didn't increase GDP. Like GDP didn't say meaningful increase. So you're right. Maybe it boxed out and it took value from other places and, and GDP would have been lower absent that. But that, that's a point people have made. Like the internet has, has not created a huge amount of like more economic growth.

49:16Michael Batnick:It didn't change the trend line of GDP growth.

49:19Ben Carlson:Correct. So I think AI, especially at the beginning, maybe everyone thinks like it's going to change everything in the future. I think in the beginning, it's going to be a lot like that. Because think about it. So AI is a great travel agent, right? Someone gave me six, one of our, Adam, who lives in Naples, Florida, one of our advisors, gave me like five restaurants. He said, I said, I just want a place by the water. Give me some options. He gave me like five restaurants. I said, these are our favorites. We had to drive down from Fort Myers to Marco and on the way is Naples. So I put in these five restaurants into chat and I said, give me one that's on the water, good drinks, good for families, but also not too far off the beaten path.

49:54Ben Carlson:And we've been doing this on a daily basis to plan stuff out, AI, which makes people a lot less adventurous, obviously. But what economic value does that create for this society? It just makes our experience a little better. I think AI is going to do a lot of that for people. But AI is an amazing travel agent, is it not? When you have questions about something, how does this work? Where do I go park? How do I find this? It's awesome. All right, one last thing. I have a huge announcement to make. Huge, groundbreaking announcement. after years of research. No, no, come on. After years and years of research, extensive research, okay, I put in the time.

50:35Ben Carlson:I think I had my first Miami Vice 15 years ago, okay? I'm willing to name the best Miami Vice that there is. I've found that I've tried it multiple times. I get excited every time. There's a restaurant called Stiltz at a Marriott property in Marco Island, and they have the best Miami vice. Something they do to their pina colada. It's just creamier. They put little flecks of coconut on the top. So this picture I put in here, it's literally the perfect mix. It's the perfect Miami vice. It can't get better than this.

51:03Michael Batnick:All right. Shout out this place one more time.

51:06Ben Carlson:It's called Stilt in Marcon. A very cool place overlooking the ocean. It's called Stilt because it's raised.

51:11Michael Batnick:You know what else? I feel like maybe it's just the picture that you This looks perfect. The way that the floater seeps into the drink as opposed to just floating on the top and then you spill it out as you walk. Like this does look perfect.

51:25Ben Carlson:You're right. That's a downside of some of them. If the floater's going everywhere, you spill it on yourself. My kids always make fun of me because I take pictures of my drinks and send it to you guys when I'm on vacation. And I go, dad, you're taking another picture of your drink again? Really cool.

51:40Michael Batnick:This is picture perfect. All right. This is, we spoke last week about club soda, seltzer. Somebody said, Michael, there's a big difference between the two. Club soda has added sodium. Seltzer does not. If blood pressure or hypertension is at all on your radar, you're much better off with plain seltzer. Okay? Not to confuse you the issue, but if heartburn or acid reflux is an issue, you're better off with plain water. So I've been taking Nexium every day for about five years. Nexium is to prevent acid reflux. I get serious heartburn when I eat meat. That can't be healthy, right?

52:16Ben Carlson:Does it work? Yes. Does it actually work or not? Tums wouldn't do it for you.

52:20Michael Batnick:If I skip a day, I feel it. Louis C.K. told a joke how he went to the doctor when he was over 40. Nobody cares, but when you're over 40, it's like, whatever. His ankle was hurting. The doctor said, just take eight Advil a day. And he said, eight Advil? It's not bad for my liver. He's like, what would you say if I was an athlete? The doctor said, you're not an athlete. So I guess, you know, you gotta, you gotta,

52:45Ben Carlson:I thought about this more about what do you call it? I think I call it, it's funny because I call, I call it, I don't say soda. I say pop. I remember people in New York when I would order at a restaurant or make fun of me, but I think I call it soda water. I think that's my term for it. Okay. Now that I thought about it more. Ben, I, I, uh, I discovered something about myself. Okay.

53:09Michael Batnick:I don't love... All right, so we're talking about movies now. I don't love the garbage crime genre. And I don't know if I'm giving credit to Chris Ryan and Sean Fentasy for making this turn up. So I watched Crime 101.

53:27Ben Carlson:That's one of the Hemsworth brothers?

53:29Michael Batnick:Yes. It's got a great cast. Chris Hemsworth, Ruffalo, Halle Berry, Nick Nolte. Remember that guy? By the way, Nick Nolte is 85 selecting. Barry Keoghan. Who else is in it? Monica Barbaro.

53:44Ben Carlson:So this is, they have cops, but they also have, this is one last job to get the heist. Is that the idea? Probably.

53:49Michael Batnick:Yeah, yeah. Now, don't get me wrong. So the movie was like, I just didn't, it wasn't that good. It was, I had like, I had a good enough time watching it. I'll watch the next one. Right? I watch these movies. I don't like dislike them. It's just not my favorite genre. and I didn't really realize it fully until I just checked the reviews after I watched. I was like, eh, it was fine, whatever. 89 from the critics, 85 from the audience. And I realized that there's a disconnect. So like Heat is obviously the best version of this type of movie, right?

54:19Ben Carlson:So maybe people overrate these movies? Is that it?

54:21Michael Batnick:I don't know. Yeah, I get, and I do love Heat and I can't wait for the prequel. Oh, it's a prequel and a sequel. So here's what I'll compare it to for me. It's like barbecue food. Now, if I'm in the area of barbecue, I will eat the shit out of it and I will enjoy it, but I don't seek it out. Okay. Like I don't eat, I don't like, I like barbecue food. I just don't eat it at home. It's not my favorite. It's not my favorite genre. So crime 101. Yeah, it was okay.

54:49Ben Carlson:I'm kind of surprised.

54:51Michael Batnick:That I don't love those movies.

54:52Ben Carlson:A movie like Ronin, I think is like one of the perfect types of that movie. I think that's one of the most underrated 90s movies there is. Awesome car chase scenes, good twist at the end. great, you know, European. They have better car chase scenes than we do here. Yeah, I like one of them just fine. I think that's one of the best versions of that. Just fine. Okay, so I think that movie is amazing.

55:11Michael Batnick:All the Gerard Butler movies, like I watch all of them. Not all of them. And, you know, whatever. They're just fine.

55:17Ben Carlson:I think the thing is they've gotten junkier over time because the good stuff has already been done.

55:24Michael Batnick:Yeah, I'm really enjoying Rooster and DTF. I know I keep saying this every show, but are you watching those or no?

55:29Ben Carlson:I'm probably three episodes in for both of them. I I'm enjoying both as well. HBO still got it.

55:35Michael Batnick:So here's great news about DTF. Uh, it's only, it's a mini series. It's like 20. How long are the episodes? Are they, are they even 30 minutes?

55:44Ben Carlson:30 to 40. I'm, I'm a sucker for the mini series too. If I see that it's a mini series and it's six or seven episodes, I will definitely give it a try.

55:52Michael Batnick:Seven episodes out. Yes.

55:55Ben Carlson:And you know, there's going to be finality to it as well. You know, it's going to end. There's not going to be a cliffhanger.

55:59Michael Batnick:And I, I love rooster. there's no bad guy. It's just like a nice show.

56:04Ben Carlson:Yes.

56:04Michael Batnick:Steve Carell.

56:04Ben Carlson:Rain off kind of show.

56:06Michael Batnick:Yeah. Very, very low stakes. I took my kids to see two movies so far this break. We're home. Spring break. Not a lot of people are home, so we're trying to fill the time. Movies is a great solution to that. Hoppers was an awesome kids movie. It's like the Avatar premise. In fact, they explicitly say it in the movie.

56:25Ben Carlson:My kids like that one. I didn't see it with them.

56:28Michael Batnick:Hoppers is great. Good, clean story made sense all right we saw mario in uh in the giant imax yesterday in new york city and the kids loved it it was kobe's favorite movie even better than goat which was like his previous favorite movie it was um i heard shawton and amanda saying this like how they just said it was like yeah just uh creatively bankrupt it was like they're just being haters like they're being like movie snobs how bad could it be it was really tough like there was there because i think there was no plot. And it was just, there were so many different characters. It was just like really confusing.

57:02Michael Batnick:I fell asleep a few times. Whatever. Who cares? It's not for us. It's for the kids. And the kids loved it. Kids don't care. Kids don't care. Kids don't care. Kids have terrible

57:10Ben Carlson:taste in movies.

57:12Michael Batnick:Every kid loved it.

57:13Ben Carlson:Every movie they see is their favorite movie. All right. I haven't been watching much stuff because I'm on vacation, but I did on the way down watch Is This Thing On? It's the Will Arnett movie and Bradley Cooper wrote and directed it. okay it's a movie about will arnett does turns into a stand-up and they they use the comedy seller in it actually which is kind of cool but it's it's bizarre and here's my my one takeaway from the movie bradley cooper needs to chill out he needs to stop taking himself so seriously okay so he decided he because he was the best when he was on wedding crashers and all the comedy in hangover and all the comedy movies he did right he was perfect for those roles then he decided you know i'm i'm graduated from comedies and i'm gonna become a serious filmmaker he's done like some great movies.

57:56Ben Carlson:So I thought Star Wars Born was really interesting until, I still think it was kind of weird the guy peed himself on stage. I don't know. That was a choice. But he wrote and directed this movie. And it's a movie about, it's a sad movie about stand-up comedy. Okay? So it's, what's the wife's name? The one from, I'm blanking. She's from Jurassic Park. I get her and Laura Lanny confused. Laura Dern. Laura Dern. Her and Will Arnett, I'm not giving too much away. I think it's in the previews. Her and Will Arnett get a divorce at the beginning of the movie. And then he, that somehow leads him to do standup.

58:29Ben Carlson:But at one point he walks in and does an open mic at the comedy cellar, which probably is impossible. But the way that they use standup, but the standup is not funny. It's, I'm not, I don't find myself laughing at a movie about standup. And I feel like that doing a movie about standup is almost impossible to do. I thought funny people did it really well. That's probably the only one I can remember, actually did a good job of it. But most, and that Pete Holmes show on HBO was good. Crashing was so good. You can't do a sad movie about stand-up comedy. It doesn't work. So I think Bradley Cooper needs to chill out a little bit.

59:02Ben Carlson:That's my take on this movie.

59:03Michael Batnick:That's great advice.

59:04Ben Carlson:I like you. I mean, a very high quality movie. Great acting. Great cinematography.

59:09Michael Batnick:Whatever. Everyone loved early Bradley Cooper. But then he also did Maestro, the Leonard Bernstein movie. That no one watched, I don't think. It's like, dude, literally nobody cares. Yeah.

59:20Ben Carlson:It was a movie about a guy trying to be a stand-up comic, but it took itself way too seriously. That's where I landed. One more thing. So my love of sports was waning in my mid-30s-ish. It's like, you know what? I've been a huge sportsman my whole life. I can't make myself care as much as I used to. I kind of saw my love of, and especially college sports, just kind of like, eh, whatever. It's becoming more professionalized, and I don't care as much anymore. And then now my kids are getting into it. And so Libby got really into it. Michigan won the national title in football three years ago and got really into it and took her to a game.

59:57Ben Carlson:And it was a fantastic memory for me taking her to a game and them winning it and watching it with the kids and seeing them get excited. And then this year, finally, my son George got really into the basketball team. And I guess it helps that it's the best Michigan basketball team ever. And we went to one of the games and it was so much fun last week. And then we watched the Final Four this weekend. And they won and they got to know all the players. and just viewing it through their eyes, I think has been, it's made my love of sports come back to me. And obviously it helps when your teams are winning.

1:00:25Ben Carlson:We went, I told them like, guys, we just won two national titles in the last three years. Like don't expect this to happen all the time, but it was very special. And my son said I'm nonchalant, but they also get to see the lunatic version of me watching sports, you know, because the game last night was really ugly and Michigan almost blew it like three times. And I'm a complete lunatic. that is during the game. And I'm sure you have this too, where in your kids, you're like, who is this person? Why is this lunatic person acting like this during a sporting event?

1:00:54Michael Batnick:It's the only time in my daily life that I get excited. I think me too. But I mean, like physically, you know. Yes. All right. Ben, on that point, I want to play something. Let me share my screen here. Okay. How much do the officiating change the game? Oh, this guy. I mean, is there fine? I mean, what? I mean, That is how you use this guy.

1:01:20Ben Carlson:Dan Hurley is this guy. I can see that. That's pretty good.

1:01:25Michael Batnick:That's the coach of UConn. I guess what? The calls didn't go their way?

1:01:29Ben Carlson:He's a maniac. He was very against the calls in the first half, and they got all the calls in the second half, so I thought it balanced out pretty good. But that's your job as a coach to complain about the officials. The other cool thing about being, obviously, having your team win it is amazing. So my son was decked out in Michigan, had to tell yesterday. Michigan hat, Michigan shirt, Michigan shorts, and Michigan sandals. Like, way too much. But everywhere we walked around the island, people would say, like, go blue. Because obviously everyone has a win from Michigan on spring break right now.

1:01:55Ben Carlson:So that part of it is really fun. I highly recommend having your team win a championship. Great, great experience.

1:02:03Michael Batnick:I did it twice for the Giants. It's been a minute. It has been a minute. All right. Ben, enjoy the rest of your vacation.

1:02:10Ben Carlson:Give me a market update.

1:02:12Michael Batnick:S &P down 1%. Yeah, we were talking about this on TCAF. Zuccardi had a good chart. Bottoms are messy. Now, I don't know if this is the bottom or not, but like a V-shaped where it's just like you never look back. Like, yeah, that happened last time in 2025 during the tariff tantrum. That's unusual because it's not like if there's been enough damage to individual stocks and there certainly has, it's not like everybody goes back in the pool immediately absent a headline, right? because there's headlines that take you up. Heather, oh no, we're going up, we're going down. So we'll see.

1:02:47Ben Carlson:We'll probably do a correction that has some head fakes. A couple dead cat bounces. I think we're due for that. Will we get it? Eh, probably not.

1:02:55Michael Batnick:Will we get what?

1:02:57Ben Carlson:I feel like getting your expectation of what a correction should be like is probably not what you're going to get.

1:03:03Michael Batnick:Never is. All right, Animal Spirits at the compoundnews.com. Thank you very much for listening. For those of you who are in the DC area, we'll be there. fmininvest.com if you're looking to learn more about the event. Personal emails, personal responses. We'll see you next time.