Boomers vs. Millennials (EP.373)

24:09And I feel like this is going to be, you kind of have like the tail of the tape, like a boxing match, you know, over here. Millennials have a you know, 80 inch reach and boomers, whatever. So they're trying to figure out who had it worse in terms of home buying experience. The boomers in the early 1980s were millennials in Gen Z now. And they look at this affordability index, and it was worse in the early 80s. And they show how many people earned enough to qualify for a mortgage on a median single-family home. And it was way lower in the early 80s. But they said because buyers in the mid-80s had so much more housing supply available, it was a temporary thing.

24:48So homes became more affordable really quickly, and there were more homes for sale. So in the subsequent years after the early 80s, things perked up immediately, basically. Whereas now, millennials are facing unaffordability levels at pretty similar range, but they don't have the housing supply to back them up as well that we were building. Because in the 70s, they built a lot of houses. We haven't built enough houses in the past 10 or 15 years. So that's why we're millennials tip the scales and can complain that, sorry, mom and dad, I know you had an 18 % mortgage for like a year, but I have it worse.

25:25Yeah, it's bad. Really bad. They also show consumer sentiment and they say like now they look at, is it now a good time to buy a home? And they said in 1982, it was 15 % of people. And right now it's 12 % of people. But it's funny, by 1985, 72 % of consumers said it was a good time to buy a home. and mortgage rates then were like 10 to 12%. So it is so much funny how that anchoring and like the relative, so mortgage rates were 18, now they're 12. Now it feels like a great time to buy. Even though if you did the opposite, going from 8 % to 12, you'd say this is the end of the world. Yeah. So maybe that helps us now with mortgage rates getting to 8%.

26:08If they go to five, people are going to go, oh, this is amazing. I'm definitely seeing more Zillow notifications on my phone for homes being listed. Yeah, I get the email ones too. And I'm sure that there's, it seems like there are some that are seeing price declines. You know, the thing I don't get is, so there's a handful of around me, around our house, there's a handful of like new homes that were built in the past two to three years. Modern farmhouse? Probably modern farmhouse. And you can tell that they're custom homes, right? They're not just like the cookie cutter ones, they're custom homes.

26:41And they're built. And then two years later, they're put on the market again. And I know life happens and life gets in the way, but I can't imagine going through the whole process of building a new home and then immediately selling it two years later and all the frictions that you incur along the way. I know sometimes people have to do it for jobs or whatever. That would be painful to me as a finance person to do that because I know how much of that, even if the price went up, how much of it gets eaten up by the cost involved. And for you. And moving instincts. For me, what? It's way higher because you have to hire a lawyer and do a seance and all the weird things that New York makes you do to sell a house.

27:21I don't know what you're talking about. Seance? I don't know. Actually, you know there's a movie called Tarot? I think it's on Netflix. Oh, you pronounced it right this time. Well, in the first five minutes of the movie, somebody says, oh, a tarot card. And they say, actually, it's pronounced Tarot. And actually, speaking of pronunciations, we got an email. Somebody said that like sauna is the only Finnish word in the English language or something like that. It's a Finnish word and it's actually pronounced sauna. See, I've never. See, this is like Audi or Audi to me. Just go the one that sounds better.

28:00Sauna, Audi. Sounds better. Go into those. I say sauna. Sauna. Okay. Did you get one yet? Sauna? Put it in your mudroom.

28:15All right. The other thing people say about the non-refinance thing, like here's why the refinance boom won't happen. Well, everyone who had 3 % or 4 % mortgages, so what if rates go to 6 % or 5 %? They're not going to refi. Mike Sicardi has this one. So 92 % of outstanding mortgages have interest rates below the primary surveyed rate, which is 7 % when he did this or something. But you can see that there's, it's going to be a few, Because there's been, you know, four or five million homes that have transacted every year for the last two or three years. How many of those are getting refied? Because people are lazy and they just don't know.

28:49Half? You don't think a lot more of the people who have bought in recent years are going to, like, that's on their radar big time? Totally. They're just chomping at the bit to refinance. Is it half? More? More. Don't you think? I don't know. Just because rates change so much, I'm sure that's top of mind for a lot of people. And I'm sure their realtors sold them on that when they bought the house. Listen, it's fine. You can refinance in a year anyway. Yeah. I'm sure a lot of those people are worried. All right, Torsen Slack, chart of the week. Share of fixed rate mortgages. 1990, it was 72%, so the other 28 % were adjustable rate.

29:25Today, it's 95 % is fixed rate mortgages. 2000, it was still 75%. So I feel like people kind of learned their lesson with the adjustable rate thing in the 2008 crash. or why would you not lock in a 3 % mortgage? True, but I know a lot of people who were singing the praises of adjustable rate mortgages as rates kept falling. Like, why are you idiots locking these rates in? I can, my rate keeps going down and down and down. So it is kind of surprising people didn't really get into that. But I still think, if you look at the numbers of fixed rate mortgages by country, like a lot of the other countries don't have the ability to do this.

30:05and you know why we have 30 year mortgages, right? This was another artifact of the great depression. And I heard this on a podcast recently. And the guy said that in the great because something like 40 % of all mortgages in the great depression went into default, like people couldn't, couldn't pay them. And back then they were like five year loans. It was, it was a really, you had to put like 50 % down in your house and you got like a five, maybe a 10 year loan. And so what they did in the great depression to help these people stay in their home so you didn't have just a mass exodus of homeowners is extended the terms to 15, 20, 30 years for mortgages.

30:43And that stuck. I still think that was by far your best inflation hedge if you had it, is a fixed rate mortgage in the past four or five years. Yeah. I mean, you're saying that's a controversial opinion. No, I'm not. I'm just, I'm restating a Captain Obvious fact here. I feel like sometimes we take for granted the ability that we, because we have a lot of foreign listeners that will email us and be like, this, I can't believe you guys have this. Yeah. I'm saying appreciate the fact that we have a 30 year fixed rate mortgage here. I appreciate the shit out of it. It's great. I'm showing some gratitude.

31:17Love it. What's Albert's bar? Um, Albert's bar, you know, this is a great hat. This is the type of hat that fits my head. There's no like padding or lining on the front. However, I'll let you, I'll tell you a little secret. Hats that have this for listeners. What is that, Ben? What do you call this thing? The dad loop. So instead of a snapback hat, this thing, this little metal clasp, it's a metal clasp and it's not just on hats. It's on seatbelts. It's on all sorts of things. I don't know how to work it. I got to be honest. I'm sure I could, I'm sure it's not that hard to figure out my brain.

31:56Just, I, it is a little hard and you have to push through. I don't know. I You push them, you lift it up, and it is, yeah, the class, but that's a... I feel like on my first try, it always goes the wrong way, and then I just... Okay. But anyway, you ask, Albert's Bar is a bar in Manhattan. It's a restaurant bar. Josh and I went there with a group of fellows last week, and when I walked out, the owner said to me, I'm a big Michael movie guy. Really? Okay, he's a Michael horror guy. He gave me a pound. I mean, I gave him a pound and he gave me a hat. Okay. Would he like tarot? I only watch the first five minutes.

32:39I fell asleep. Okay. All right. You listened to the Airbnb conference call? I listened to the Airbnb call. And I remember a year ago, Brian Chesky was talking about how they're going to integrate AI into a lot of the stuff that they do. I think maybe the idea is you're going to have an AI travel agent eventually, right? And he talked about, hey, listen, we're still excited about AI. He said, but I think one of the things we've learned over the last, say, 18 months or nearly two years is that it's going to take longer than people think for applications to change. So he said, if I were to think of AI, I'd probably think in about three layers.

33:14So he talks about all these, he's saying, yes, this technology is amazing. It's going to take longer to implement it than most people realize. And I think that they've run into, I don't know if they're running into problems and it's not working as good as they think or what. But I think this is where the AI hiccup comes. the relay race of all the investment into it versus the actual application that people are using it, is that could be the problem is this stuff is not quite ready in a time we want it to be. You know what's also the problem? Look at this chart from Alex Morris. He shows the year-over-year change in room nights for booking holdings and Airbnb, and it's going down.

33:55Okay. Not great. AI could have saved him, I guess. Didn't happen. Did you listen to the Disney call? No, I did not. Do you still own Disney? Yeah, I guess I do. I bought it for my kids to kind of, I guess, prove them a point that even well-known brand companies can be really crappy investments. You lost money to teach them the lesson. Yes. So, yeah, attendance was flat in the first quarter. I'm sorry, in the recent quarter for the theme parks. And that had been one of the strongest areas. So they're getting hit from all angles. I can't tell if this is a good thing or a bad thing for Disney because it was like they had their parks business booming and the streaming business stunk.

34:36Now the movies are finally coming back. They have like the top three movies this year and now their parks are slowing. So is that a good thing for diversification benefits or is it like, eh, can't win? But it's the linear thing that's really hanging over them and just drowning them. What do you mean the linear thing? ABC, ESPN. Oh, okay. Oh, the linear cable. Gotcha. We talked about the fact that the lower income consumer is feeling a little bit of stress. The high income consumer is traveling internationally a bit more. So yeah, they're mentioning what everybody else is. Look at this. So they show the Disney experience, which is really the theme park.

35:11And it's at an all-time high, but the guidance wasn't great. Look at just a reminder of how crazy COVID was. Jeez. Just a complete shutdown. All right, here's a counterpoint. And they're back on trend. Yes. here's a counterpoint to all the moderating consumer things slowing down. Softening. Softening. They got a question about the ad market. And he said, the ad market is actually very healthy right now. We saw overall advertising grow 8 % for the quarter. ESPN was up 17%. Direct-to-consumer streaming was actually up 20%. So it certainly feels very, very positive in that regard. Again, something you don't see when we're about to enter a recession.

35:54Advertising is the first thing to go. That's something companies are willing to cut back on. It's the first thing to go. They have a chart of the operating income for Disney Plus. And it bottomed out in the fourth quarter of 2022 with a billion and a half dollar loss. And look at that. They just turned a profit. Alex Morris has a chart showing the Disney video business annual revenues, and it's showing Disney Plus versus the linear networks. And in 2018, when they first launched this, of course, they were effectively at zero. And the linear networks were at a$20 billion plus run rate. When's the last time you watched a show on Disney Plus?

36:34It's been a long time for me. Probably, I don't know. Did they, not the Mandalorian. There was one after that. Obi-Wan, was that a show? I tried one or two of the Star Wars shows. Garbage, just garbage. But anyway, so next quarter, they're going to flip-flop. Disney Plus will have gobbled up linear networks, which is pretty remarkable. But all these streamers are in such hell. Paramount, Warner Brothers. These stocks are just garbage. To your point, the linear cable, they're all writing down the linear cable businesses. That's the – It's bad. Yeah. It's bad. Okay. The Wall Street Journal had a good one on movies.

37:14Did you see this or not? I did not read this yet. Okay. how going to the movie is changing and they did a bunch of cool charts and they show where would you prefer to watch a movie and they show before the pandemic go back to 2019 and before the pandemic it was close to 60 % preferred in a theater now it's flip-flop 65 % at home versus 35 % in a theater I can't tell if for me it's because of the experience or just the fact that I'm because we used to when I was young we're talking middle school high school college probably I'd go to a movie once every other week probably That was just a thing to do when we, like, maybe it was because we had less to do back then, but we would go to a movie at least once every other week.

37:53Now I feel like it has to be a good excuse to get me out of the, and I think a lot of it is just better speakers, better TVs, HD. I think all that makes it better, a better experience, where it's not that much of a difference to me. Well, how about the fact that you don't have to wait seven months to see a movie after it comes out? That's true. It's way, yeah, it's much quicker to get it. That's it. That's the whole deal. If you wanted to see movie XYZ, you're not going to wait. Literally, it was how long before a movie came to DVD? Yeah, it was a long time. It took forever. Months and months.

38:28So now if you miss movies, so, oh, Apple's, the movie with George Clooney and Brad Pitt is going to be in the theater for a week. How many people are seeing that in the theater? I don't know, 47? Yeah, what's the point? So they looked at the theater revenue, box office revenue till now, like through early August, and then added on the rest of the year going back to 2015. And you can see we're way below. And so 2024 is below 2022 and 2023, even after having some pretty big movies. And so just, this is the new normal, I guess, where it's just, and I'm not sure, do they, this probably isn't even inflation adjusted because I feel like that's part of it.

39:09People don't talk about it enough. is that movie ticket prices are so much higher because you have the IMAX screens and you have the better seats and all that stuff. But if you inflation adjusted this, I bet it's way, way worse even than before the pandemic. But what's the lines on these charts? So there's a dark gray bar and a light gray bar. So the dark one is up till year to date. And then the light gray is from that point on. Okay. So look at 2024. It's not that bad. I don't know. What do you mean? It's not that great either, though. I'm not saying it's that great, but people are talking as if movies are dead, and that's just not true.

39:47There was an article in Puck. They say, given the disastrous early months of the year, it's extraordinary to think that the 2024 box office could catch up with last year's$8.8 billion haul, or at least surpass the$7.4 billion from 2022. It's not that bad, and if it were that bad, Cinemark Holdings, which is one of the publicly traded movie theater chains, wouldn't be doing what it's doing. Look at this next chart. This is the Mag 7, though. It's Inside Out 2 and Deadpool and Wolverine. There's like four big movies this year that are lifting everything else up. Equal weighted is not doing good.

40:19Long Legs did$90 million. That's like one stock that did good. That's like picking one stock. It's not. No, no, no. It's not just Inside Out. There's a lot of movies that are doing very well. Okay. I think it's top heavy. I mean, that's probably always the case. But my point is the theater, the state of the movie theater is not nearly as dire as most people probably think. Okay. And I think part of it is inflation. I think if you inflation adjusted these numbers, it would look a lot worse. Right? Take 25 % off the top of this compared to pre-pandemic levels from inflation, and it looks way, way worse.

40:59But I don't think that's something we don't do. We only inflation adjust certain things and not other things. well you know you i mean you inflation adjust if you're looking at like top box office in the 90s that's all inflation adjusted i feel like sometimes they do sometimes they don't all right a bunch of people said we asked for what's the godfather of this century and a lot of a bunch of people said the departed i still still think i would prefer gladiator over that but not a bad choice i think the the the question was the way that you word it was sort of vague i think if we're getting answers that of the if if the departed kept coming up it's only because they probably thought like, what's the best gangster movie of the 21st century?

41:34True. I said not just gangster. I said just high quality. That's why I picked a gladiator. But I thought that was okay. Somebody emailed us. They got burgers from five guys delivered on DoorDash or Uber Eats. He said it was 60 bucks plus tips. It was called$70. He then made his own ingredients or bought his own ingredients, made it at home,$23. that's a huge difference don't you think five guys burgers are three times as good as the ones you make at home though have you ever had a burger from someone's grill and go oh that was amazing i feel like you burgers on someone else's someone's grill whether you're making them or someone else they're always just okay i've never had a burger off of a grill and gone oh that's like the best burger i've ever had never happened that's a good point right but nevertheless why are why are burgers at restaurant establishments so much better than someone's grill?

42:31I would guess a pound of butter. Yeah, it could be. More fat. That's true. All right. Story time. I work out of a little office complex that's kind of shared office space. I'd say office people from me working in a single office by myself to other places that have, I don't know, 10 or 15 people. Very small. I'm on the second floor. once a week or so, I find this guy in the bathroom, same guy, and he's washing his dishes from lunch in the sink. And he takes his time. He's in there for a long time. Hang on. How long does it take to wash a dish? Yeah, well, I mean, that's a good question. So he does this constantly after lunch.

43:14What's your thoughts on people washing dishes in a bathroom? I think it's, I don't know. I'm not a fan. And I preface this with in the first floor, if you walk down a level, there is like a shared little place where there's a little kitchenette thing. My thought is, and I respect the environment, bring a paper plate. Yes. Right. That's what I do. I use, I use paper plates. I don't, I'm not, I'm not going to, I feel like that's the sink in the bathroom is different than the sink in the kitchen. I agree. Let me ask you this. You walk in to the bathroom and he's washing the dishes in the sink, does he give you a, hey?

43:50No, head down, which is better. How old are you guys? This has got to be a boomer, right? He's probably 50s. Okay. Middle-aged. Yeah. We had a bunch of people from Red Holt's Wealth Management out to Long Island last week. We get together, and we were on the water, and Sean was on the back of my jet ski, which was a dumb idea. Sean is 6 '6". Sean's a left tackle. Yeah, Sean was an offensive lineman in college. So I won't say his weight. He's slim, but he's a giant man. He's a big guy. And the ski just tipped. You were driving and he was on the back? Yeah. And my phone was in my pocket. And I thought, okay, well, there it goes.

44:44It's salt water. And apparently phones are, I was like, oh no. And somebody says, no, they're waterproof. They've been waterproof for like 10 years now. Did you know that? You don't have to do the, I think I've heard that because I talk to my wife dropping hers in a lake and people said, if you got it out, it probably would have been. So you don't need to do the rice thing anymore? No, and I don't think that ever really worked if I'm being honest. But how did that, how is that possible? How did they make a phone that is saltwaterproof? I have no idea. And it works just fine. I mean, I would assume that eventually if you submerged it, eventually it would stop working, but all good.

45:19Same as watch technology, right? You have a watch that can go 40 meters underwater or something. I don't know. Isn't it funny though, how watches have never made the jump from the metric system? If you get a watch, it'll say 40 meters or 30 meters or whatever. It doesn't say feet. No watch ever says feet. Because they're made in Europe. I guess so. yesterday we were doing a podcast and you said like you know it's like impossible to explain words to your kids the word rhetorical that's it I don't even know where to begin yeah I was trying to explain it to my kids and I couldn't so I tried to explain the word pressure how would you explain pressure to a child because I had nothing what kind of pressure are we talking about here there's like different ways of explaining I wouldn't have a good thing I think Kobe was playing a game and there was a lot of pressure on the line And he said, what's pressure?

46:10And I was like, you know, it's like pressure. You know when you see it, right? I explained the word with the word. All right, Ben. So I am breaking out in the movie theater category. Earlier in the week, I saw an independent horror film by Neon, the production company. Do they know you're at the movie theater yet? Because I feel like you're at least, I said I used to go once every other week. You go once a week at least. Not once a week, but I'm breaking out. So I went to see a movie called Cuckoo, which was a bit too cuckoo for me. It was quite odd. This is a, I don't know how, I feel like I'm pretty in the know on pop culture stuff.

46:48Not everything. But you find these movies that I have just never heard of. Like, not even like on the radar for me. Yeah. Well, this is not a Ben movie. Quite frankly, it's not even a Michael movie. This was just, this was out there. Even for me. Last night, I saw the movie Trap, the M. Night movie. Oh, okay. How was it? It was incredible. He truly is a one of one. So the movie, for those of you who have not seen the trailer, Josh Hartnett takes his daughter to a concert and he finds out very early in the movie, this is not a spoiler, that the movie, I'm sorry, the concert was a ploy to trap him.

47:32He's a serial killer. And so there's SWAT, there's FBI, there's cops all over the place. And so the first like hour of the movie with him trying to figure out how to escape, like really pretty compelling and good thriller. And then there was a second act that got a little bit crazy. And then I went with my friend, I turned to him, I said, this is about to go off the rails. And the third final act was completely, completely insane. Absolutely absurd and ludicrous. and he's in on the joke, but probably one of the better like 6.2s I've ever seen. Just a hell of a good time. The premise you described actually sounds like a pretty interesting movie.

48:11It was great. And then again, the ending was just absolutely wild. Okay. Laugh out loud funny in a good way. Okay. All right. Just completely. Yeah. M night is. I'll run it. I'll run it at some point or watch it on streaming. On Thursday, I'm going to see aliens. one of my favorite franchises if not my favorite of all time. I've liked the last two. Does Prometheus count as an Aliens movie? Oh yeah, yeah. Prometheus and Covenant. And Robin has walked in on me watching Prometheus a dozen times and every time she goes, how are you watching this again? I think that's one of my favorite Alien movies there is.

48:50Really good. So I'm going to the IMAX in Lincoln Square by myself. I've never done that before. I'm going to the IMAX by myself. And it's going to be sold out. Okay. Lastly, I'm taking my wife on a date night to the movie theater on Friday. We haven't seen a movie together since, um, what was the last movie? A Star is Born. What year was that? 2017? So wait, can I guess what you're taking her to? There's only one that there is. It's the Blake Lively one. That's got to be it. Correct. So, okay. 2018 is the last time we went to the theater together. So I said to my wife, have you, have you read this book?

49:23Because she's read all those books. I didn't know it was a book. I said, we're going on a date. We're going on a theater. So that'll be Friday. I think the guy from 1823 or 19, one of those, the Harrison Ford one was in it. Looks okay. So don't tell me movie theaters are dead, sir. All right, you're keeping them alive. Here's me not keeping movie theater alive. So I saw The Instigators on Apple. This was a straight to Apple streaming. I don't think it was in the theaters. I never heard of it. Matt Damon, Casey Affleck on Apple. Oh, that came out? It came out last week, so we watched it. How is that possible?

49:58How is that possible? Like, I'm on the internet. I haven't seen anything about it. You knew Cuckoo came out, but you didn't know the instigators of Matt Damon was out. Shame on Apple. So how was it? Was it terrible? So it's a 6 '5 kind of movie, but it's a heist movie, but it's a lighthearted one. Casey Affleck plays a smart-out guy. Matt Damon plays more of the straight guy. And it's kind of a run of the joke, but it's also a ton of actors are in it. So it's those two, and Ving Rhames and Ron Perlman and the guy from Bordock Empire who plays the rival bad guy. What's his name? Michael Shulman or whatever.

50:36Oh, he's great. One of the worst Boston accents of all time in this movie. But it, so it's not, don't go into a thing that's going to be a great heist movie, but it's kind of a, after we got done, I said, good, not great. I enjoyed myself. Okay. So, and it was Matt Damon and Casey Affleck, just the two of them for most of the movie, just kind of cooking. But yeah, you're right. Straight to Apple. Apple does not do a very good job. It seems like they have the Netflix style of advertising, but no one watches Apple. So it does just get lost in the ether. You know what? I saw Neon tweeted something about Cuckoo.

51:12I went and I saw it. That's how I got influenced. I saw it on the internet. I did see those. I've seen nothing. I saw those guys on a few podcasts, but that's about it. What are they doing? Why even make these movies if they're not going to promote it? I really don't get what the strategy is there. Yeah. Worth watching though. Are you sad that the Olympics is over? I am. I think recency bias, that was the greatest Olympics I've ever seen. I think the, and I mentioned this before, the Peacock streaming aspect of it helped. But I think that was the best Olympics I've ever seen. Watching the gold medal.

51:42I was trying to explain to my kids how unbelievable it was to watch Steph and Katie and LeBron all play together and close out games. And they were like, yeah, whatever. And the fact that they were like in their mid to late 30s. But all the other stuff, I watched, I got into ping pong a little bit. I got into, we watched badminton. We watched, like, the gold zone thing where you can just skip around to different sports truly was awesome. And if you didn't, I'd see something on Twitter like, oh, can't believe that race that just happened. And I'd immediately pull up on Peacock and then fast forward to that race and watch it.

52:13Was really an awesome way to watch the Olympics. I thought the Olympics were dead, like, eight years ago. I was like, it's just not the same. And now I feel like it came back. uh first time in my entire life that i watched a sporting event after i knew the result i watched the serbia game uh the next morning okay yeah i cut never i'm not never in my life have i done that not a single time yeah i see i do it with the kids but it was i would just have it on in the background of my office on the gold zone and occasionally check in and look and it it was a really great experience. This is like the streaming networks are like, again, figuring this stuff out.

52:52Where's the next Olympics? Los Angeles. It's going to be even better. Is that winter? There's a winter one in two years. They go every two years but the next Summer Olympics is in LA. In the winter, nobody pays attention to the Winter Olympics? Not as much. I don't mind the Winter Olympics. Good for you for watching one Olympic sport. Thank you. You're a patriot. it email anything else nope all right send us an email animal spirits at the compound news.com thanks to all our production staff as always duncan didn't have any comments this week we must have been pretty clean i didn't see any usually duncan chimes in with a few slack comments about something we've said and he was he was good i think i won our man of the people fight last week that's that's based on the comments and emails i'm pretty sure i i was a slight i slightly edged you out.

53:43Okay. We did get a funny email. Somebody said like not to outman other people you but I also was a dishwasher. Yes. Everyone's got their thing. Alright. Thanks for watching. Thanks for listening. See you next time.