Does Government Debt Matter? (EP.330)

22:34And people really thought that Google sold off. And now Google's back to an all time high. And it's kind of like nothing ever happened. But people were seriously saying, is this the end of Google? Which seemed nuts to me at the time. This is an obvious overreaction. The Ozempic thing, I think, is the same thing. People are not going to stop being unhealthy. Like, who's kidding who? No, I have a hard time seeing that too. All right. This is from Fortune Magazine, Jamie Dimon, talking about the war in Israel. The war in Ukraine, compounded by last week's attacks on Israel, may have far-reaching impacts on energy and food markets, global trade, and geopolitical relationships.

23:06This may be the most dangerous time the world has seen in decades, he said. I'm sorry. What he talked about in the third quarter earnings report. Is this not to discount the tragedies that we're seeing, but is this not recency bias? Yes. And I think people see this kind of stuff in these kind of headlines or see the geopolitical stuff and assume that they need to do something with their portfolio because of it. And I think that's a big mistake to try to conflate anything going on in geopolitics with their portfolio because most of the time, it's very counterintuitive what happens to the economy or the markets when something like this happens.

23:42And you assume, well, I need to keep my hands in the steering wheel now and do something because this seems bad. I think that's a huge mistake for investors. Agreed. All right. I read my first Howard Marks memo in a while. Investing for a sea change. You reading his stuff still or not? It's been a while. Okay. So he did the whole thing where he. Somebody, somebody, I wrote a great quote years ago. Like something about like, you should graduate from your mentors. Like that's a good thing. That's a healthy thing. And I think so many investors, myself included, have learned so much over the years from Howard Marx.

24:18Right. People like Buffett and Marx, you don't read them as religiously anymore. Yeah. Like I just, same thing with Buffett. I mean, I know what they're going to say. And sometimes, in fact, oftentimes it's worth a reminder, but to answer your question, I have not read him. So he went, he went through this whole thing about a sea change is his big thing. And he talked about how we've gone from this same thing. I said, it's consensus. Now we've gone from a period of low rates and low inflation to high rates and high inflation. And it's going to be harder for people who own assets that benefited.

24:46And he's saying that That's with a sea change. He's a bottom line. If this really is a sea change, meaning the investment environment that has been fundamentally altered, you shouldn't assume the investment strategies that have served you best since 2009 will do so in the years ahead. He says, S &P 500 has returned 10 % per year for almost a century, and everyone's happy. He says 10 % a year for 100 years turns the dollar into$14 ,000. Not bad. Compounding. Nowadays, the ICE B of A U.S. High Yield Constrained Index offers a yield of 8.5%. The CS leveraged loan index offers 10%. Private loans offer considerably more.

25:19In other worlds, expected pre-tax yields from non-investment grade debt investments now approach or exceed the historical returns from equity. To me, this means allocators should ask themselves, what are the arguments for not putting a significant portion of our capital into credit today? It is kind of crazy how high the, so I looked at some high yield bond ETFs. It's like HYG and JNK. They're both yield, average yield maturity is 9, 9.2%. And I asked you and Josh this morning on Slack, like, what's the argument against this? And I know that the easy one is we go into recession and spreads pull out and these things get killed.

25:49But 9 % yields on high yield is pretty, that sounds like a pretty darn good deal, right? What's the counter here? So let's look through this. So you could say, all right, I'd rather just wait for spreads to widen and for some defaults to pick up because we haven't seen that yet. And then I'll buy when yields get to 12%, 13%. You know what the average, I looked this up last. You know what the average default rate is in high yield? 4 %? Yeah, 3 % to 5%, basically. So you could say I'd rather hide out in cash. But if you're like an equity investor, if you want to take some from your equity sleeve, you could say, but if there's a credit event or a recession, high yield is going to fall 25%, 30%.

26:30Right? But guess what? So is the stock market. At least with high yield, you have a 9 % buffer. So yeah, I think you can make a case for high yield for sure. So in the pandemic, high yield fell 23%. And it bounced back really quick, just like the stock market. But the timing is the thing that gets you on these. Because let's say you are going to wait. I'm going to wait for spreads below. Then I'm going to have a high yield. But what if it doesn't happen for two years? And then you missed out on 18 % in yield in the meantime, which kind of makes up for the loss. So I don't know. Bond yields approaching 10 % with a relatively low default rate, And I know a lot of these high yield companies are maybe going to feel more pain because rates are higher now and maybe the default rates raise a little bit.

27:13But I don't know. That sounds like a pretty darn good deal to me. For if it's, like you said, kind of like an equity sleeve type of situation. I think that's. How about this? I remember not too long ago when high yield was yielding like 5%, literally. Right. And people were saying this is insane. Yeah. Right now actually is more a little more normal, I think. Yeah. If there is such a thing. You saw this chart being shared around. This is from Goldman Sachs. Half of all publicly listed firms by profit margin, half of all stocks have no profits, meaning the profit margin is negative. This is going to...

27:51I was going to say this is going to correct pretty quickly, but maybe not. I don't know. So here's the follow-up, why this chart doesn't really matter. It's like less than 10 % of these companies by revenue share. So the companies who make the most money, 90 % of them, 90 % of the companies that make the most money have positive margins. So the point is that these companies that have such low profit margins are very tiny in the grand scheme of things. Well, it matters if you're an investor in them because these companies are getting destroyed. But don't you think, though, that this is the kind of thing that isn't going to mean a word and it's probably going to stick around because of technology?

28:33Which part? Which part? having more companies that don't make a lot of money, that the market is more forgiving for that? Or do you think that's going to reverse? No, that's over. The market is not forgiving for companies that don't make any money. All those companies got mangled. It is kind of crazy how, I mean, it was less than 10 % in 1960 and now it's 50%. Is this also a reason why we've had these discussions in the past where there was 7 ,500 publicly traded companies in the 70s, and now there's 3 ,500 or 3 ,000. And maybe one of the reasons for that, besides all the consolidation of these things, is that a lot of these companies just simply wouldn't have made it anyway.

29:09Yeah, maybe. I also wonder if there's another part of the story is that these companies are never, not never, these companies, there's an exit strategy for these companies, which is M &A. So they don't necessarily need to survive and become profitable for there to be a successful outcome for the investors, right? bigger company to take them over. Think about the Mopison piece about market activity with IPOs. M &A is still the dominant theme. Yeah. I'm guessing that a lot of M &A happens with these companies that have negative margins. I could be wrong, but that would just be a guess. So Datatrek, Nick Colas' research company had this chart.

29:46I really like it. It compares the current long-term treasury bear market to the 2002 bear market in stocks and then the 2007 to 2009. I'm just saying, I think I made this chart first. You made this? Okay. I shared it with you and Josh last week. Oh, I didn't realize you put it on the same thing. Did you? I did. Yeah, I did. I didn't have 2008. Okay. Yeah, but did you have the red writing on there like that? I did not. The point that I made that I'm actually using this chart, the one that I made for what he thought tonight is that, as we mentioned, TLT, it's a longer and deeper drawdown than 2000, than the dot-com bust.

30:29But what I did was I looked at like the worst days compared to the worst days for the Qs. Oh, not even close? Not really even close. But the thing that is, I think, most surprising is just the fact that it's lasted longer. Because that 2000 to 2002 bear market was a really, really long, that took forever. It's just surprising that it's lasted longer. This is an interesting, if you're looking for asymmetry in the market, Katie Griefield from Bloomberg. She looks at the 12-month expected returns if yields rise or fall. And she looked at three different scenarios. If they 50 basis points, 150 or 300 basis points, if they rise and fall.

31:07So for instance, a 10-year treasury or 30-year treasury, if rates rise 300 basis points from here, which would be crazy, long-term rates go to 8%. If that happens, back up the truck and buy 30-year treasuries for everything, right? Just do the 50 basis points rise and fall. Okay. Sorry. 50 basis points, uh, for the 30 year, you would, you lose 3%. If three, if, if they fell 50 basis points, you'd rise 13%, more than 13%. You'd rise. Sorry. But it's, it's showing that like a rise in rates right now is you, you lose a little money, but if rates fell by the same magnitude, you'd make a lot more money.

31:47The duration thing is flip-flopped. I think you could buy the snot out of long-term bonds. Even like, yeah, rates might go up. So hold on, where's that chart again? So if rates go up another 100 basis points, I'm ballparking this, you're gonna lose 10%. Okay, could lose 10%, right? But you'll get paid back. And if rates fall, you'll do exponentially well. Yeah, I mean, I still like, I don't know. I shy away from 30, but even the 10-year. If 10-year yields rose 150 basis points, you're losing 6%. If they fell 150 basis points, you're gaining 16%. That's a pretty good trade-off. Really good. Really good.

32:26Right? This is interesting. This is another from Goldman Sachs. Ownership breakdown of U.S. Treasury market. We talked last week about like supplying demand being maybe the big thing that's causing yields to be messed up besides the economy. And they show households only own 9%. Passive funds own 2%. Active funds own 10%. The biggest owner of US Treasuries is foreign investors at 30%, and that's falling a little bit. Look at the Federal Reserve, though. They actually owned more Treasuries in the 70s than they do now. It looks maybe similar, but they own 18%. I just have to imagine if the Fed wants to get control of the Treasury market, I think they're just going to have to become a bigger piece of it.

33:07And kind of like, you know how Japan, the Bank of Japan basically buys all their bonds now? I honestly think if the treasury market gets crazy all the time, the Fed's going to have to take a bigger and bigger role. People will like that. All right. Last week, I found this tidbit interesting. Last week, we showed the Bank of America bond thing going back to the 1800s, the worst bear market going back to 1800 or whatever. And the longest bear market was in 1835. And so I had to look at it. I said, what caused this bond bear market from 1835 to 1839? Those are the vigilantes. President Andrew Jackson achieved his goal of entirely paying off the United States debt.

33:46It was the only time in history that the national debt stood at zero, and it precipitated one of the worst financial crises in American history. I thought it was hilarious that he literally paid off the entire debt, and it led to like a six-year depression. Like kind of like, careful what you wish for, people. I don't know. I just thought that was pretty funny that like they literally paid the entire debt off. That was his goal. And it led to a huge depression for like six years. Somebody on Twitter at Austin tweeted, would you invest in this company? Annual expenses,$6.4 billion, up 1.5 % year over year.

34:21Annual revenue,$4.8 billion, up down 2 % year over year. Net loss,$1.5 billion. Outstanding debt,$25.8 billion. And you're like, well, no, of course you wouldn't invest in this company. Changed the billions to trillions. And this is the financial status of the United States federal government. And Elon Musk tweeted, replied to him, yikes. and then, of course, you can imagine what the comment section in here looked like. I don't understand this line of thinking. I mean, I get what they're saying that this is unsustainable, but the United States government, needless to say, is not a corporation, and you don't invest in them.

34:53Well, here's the problem, though. You're showing debt. How much is the United States military and land? Actually, I guess you buy it. You do invest in the United States with the debt. I guess you do. Hell, yeah. If I'm investing in a company that can literally print its own money, yes, I'm investing in that hand over fist. I'm long America for sure, but he shows the debt, but he doesn't show the assets. You know how much money, how much land the government owns, how many monuments, um, how much do you think they could sell? That's true. The, the, the statue of Liberty has got to be worth a couple of 10 to 50, 20 million.

35:20How much could we sell the Washington monument for the, the military, the ability to print their own money. I get it. I, I was actually at a speech one time and a guy did this thing where he said, if the U S government was a household, this is the credit card debt. And he went through it all in some guy in the, in the Comment section. Yeah. Some guy at the conference raised his hand and just destroyed this guy. It was like a Colin Roche type of guy. Just destroyed him and put him in his place. And the guy, like, he had no comeback. He's like, I just thought it was funny. So. I do wonder if this is going to become, as we approach the elections, if this is going to become more and more of a political thing, the debt.

35:53I mean, the debt is crazy. I don't know how it matters. I also don't know how it doesn't matter. You know what I mean? Yes. With higher rates. We said at the time, like, listen, if rates are 3%, the debt doesn't matter as much. With rates at 5%, it matters a lot more, I think. Yeah, it matters. I don't know how this, you know, I don't know where and how it matters, but I can't imagine it not mattering. All right, I thought this was a pretty good take from Conor Sen. Over the past year, inflation has come down a lot. Real growth has been solid. Real wages are up, which, again, a lot of people probably don't know about.

36:24Oil production is up. Gasoline prices are down. Rent growth is minimal. Supply chains have healed. And yet, because of interest rates and financing costs, the vibes are still bad for many. I think, like I talked in the past about how, well, the average rates in the 90s were higher than they were today. Same thing in the 80s. And the economy did great in the 80s and 90s. But I think there's something to the psychological impact of anchoring to way low rates and then going higher versus going way higher and going lower. So even though average rates were higher in the past and the economy sloughed it off, I think psychologically, people can't wrap their minds around these types of financing costs when they can look back so recently in their memory and say, well, wait, I used to be able to borrow for this.

37:04I think psychologically, that's the biggest problem now is the quick change in rates from such a low level. I think that's going to have an impact for a while. If rates do stay higher for longer or whatever, people will eventually get used to them. But I think for a while, it's going to take, I think the vibes are going to constantly be off. So many people in the economy are insulated from higher rates. Like, have higher rates personally impacted your life? Not at all. Like, at all. I mean, yeah, maybe I would like take more money on my home equity line of credit or something. But I don't know.

37:38What would I do with it? So for most, obviously not all, but a lot of people have a mortgage below 5%. Pay off their credit card. higher interest rates don't impact me at all. And this is not like, I'm not like, oh, what are the privileged ones? I mean, I am one of the privileged ones, but there's tens of millions of people like this that aren't impacted. The home ownership rate in this country is 66%. Guess what? The majority of the people already own their home and have low financing costs locked in. So it really sucks for people who are first-time homebuyers or people who are changing jobs and moving or whatever, but that's a very small percentage of the population.

38:15Now, I know the cost of capital impacts everything, right? So even if it doesn't directly impact me, I know it impacts me. But I don't know. I'm having trouble squaring the circle of why the, quote, vibes are bad. And I was thinking, like, I don't know if it's a social media thing, but I don't think that it is. I don't think that's what this is. Because if you just look at, like, small business surveys and things like that, like, vibes aren't great. No. but i also wonder if this is the new world that we live in where surveys will never reveal things as positive is that possible yes it's just a new world and is it also possible that the pandemic just threw the vibes off too we went through this really crazy thing doesn't it i feel like there is like you know they like the calendar thing that's like the bc and ad thing like it just has that break point i feel like the pandemic for me is that like i excuse me the What?

39:07Like going back to year zero, it's like BC, like 10 ,000 BC, right? I'm sorry. I feel like the pandemic is like that in my life. I, I anchor to that pandemic starting point of like before then and after then. Yeah. And I feel like after then, I think it really screwed a lot of people up psychologically and mentally going through that experience. Vibes are dead to me forever. I don't trust them. They're vibes of the new surveys.

39:32What's that? We're anti vibes, pop cat podcast. Yeah. I think, I think we are. That's right, Ben. I think we are. Remember all of the tech and fintech layoffs? Yes. 10 ,000 every day. And so that was like just the beginning of the rolling recessions that we were seeing. We saw a lot of the layoffs in financial services, specifically in the mortgage departments. And it was just going to keep rolling through the economy. And it was going to hit this sector and then leisure and then hospitality and then building and manufacturing on this and that. Well, not really. This chart is kind of crazy that it just, it just, it rose and then it fell.

40:05It was like companies anticipated a recession. And I guess you're right. There probably was a mini recession in the technology industry. But then it just rolled over and stopped. And it didn't go elsewhere. That is surprising. What's this YouTube comment?

40:23Oh, we talked about how sometimes the best thing that can happen to you is a job you didn't get. And this person says, it was 2007. I was pissed at a certain prestigious company that didn't want to interview me because I had a different engineering degree and they needed a different one, even though the coursework was 95 % the same. They paid a starting salary of 75K, which was a solid salary for a new grad. Yeah, it was. I made$256. Fast forward to 2008, a couple months into starting full-time work elsewhere, Lehman Brothers went bankrupt. So this guy was so mad he didn't get hired at Lehman Brothers in 2007, right out of college, and realized it was probably the best thing that ever happened to him.

40:59Not bad. All right. So yesterday, who was the crypto coin telegraph or something? There's all these crypto publications. I can't. They, in the morning, tweeted out, iShares crypto ETF has been approved by SEC, right? Something along those lines. And then people went crazy. Bitcoin spiked 10%. And then they issued, reportedly, right? Right? They edited it to report it. And then all these other people who actually follow this stuff, Eric Belchunas and some of these other Bloomberg people, are like, hey, listen, I can't verify this. Something doesn't smell right here. And apparently it wasn't. And then Bitcoin fell right back down.

41:42Here's my question. No, it didn't. No, it didn't. No, it didn't. It didn't fall right back down. I mean, if you look at the chart, it's still up pretty substantially. It's at$28 ,400. What was it before? But it fell. It wasn't at$30 ,000, though? No, but on Saturday, it was at 26 ,800. Okay. But yes, the spike from 28 to 30 came back down. My efficient market thing, like it's a when, not an if for a Bitcoin ETF being approved. Like it's going to happen. So why would, if Bitcoin took off 10%, why would it just stay there if it knows the Bitcoin ETF is coming at some point? Like the market should price this kind of stuff in, should it not?

42:23Why is it not priced in? Yeah, I was playing ping pong in my brain. Like, obviously, Bitcoin's going to pop when the ETF gets announced. But why? We know it's coming. I was like, but if everyone knows it's coming, why would it pop? And it's like, because it's going to pop, because people are dumb. Maybe that's it. It's so dumb. It makes no sense. Like, it should be at the prices. Ben, you have to remember that Tesla was up like 10 % when they announced the stock split. All right, that's a valid point. Like if it gets an ounce of Dan, are we going to go up another 10 %? Probably. It just makes, like just stay there then.

42:59It makes no sense. I don't know. What really surprised me, I almost couldn't believe it. Larry Fink went on Fox Business and said the rally today is about a flight to quality, talking about crypto. And he lumped, he grouped crypto in with treasuries and gold. Really? How did this happen? He wants that Bitcoin ETF, I guess, huh? The funny thing is that there really hasn't been a huge flight to quality or safety in gold. The gold was down in 2021. It was basically flat last year. I guess you could say that helped. And it's up 5 % this year. There hasn't been like a huge influx of investors into gold that you would think with the government spending and all this stuff people are talking about.

43:47Interesting take, though. Sorry, I do want to play this. This rally is way beyond the rumor. I think the rally today is about a flight to quality with all the issues around the Israeli war now, global terrorism. And I think there's more people running into a flight to quality, whether that is in treasuries, gold or crypto, depending on how you think about it. And I believe crypto will play that type of role as a flight to quality. That's almost unbelievable to me. I mean, listen, BlackRock manages, I don't know, 11, 12 trillion, 10, whatever the number is. You really think that he's talking like this so that they get$50 billion into a Bitcoin ETF?

44:29Hey, credit to Larry, the consummate salesman. I almost give him credit for this one. He's making a pitch. I don't know. I guess. I was just, I mean, that was surprising. All right, let's talk about real estate. 6.8 % of listings had price drops. this is the largest number of price drops in October over the last four years but barely and I saw a data point that damn way lower than it seems like it should be there was a there was a price drop either nationally or in some markets of like 0.1 percent I looked we are starting to get more supply where I did a quick Zillow search in my area last week and there's there's starting to be more houses on it's just the prices are so much insanely higher and I feel like people are still not going to be willing to drop prices.

45:19I was talking with somebody in my town the other day. Like, I don't, this doesn't make any sense. Prices are going to crash, right? I'm like, dude, look around. There's no houses. Right. That's the thing. It's like a collusion. Like if everyone lists their house for a higher price and no one decides to ever like lower the bar, it's, I don't know. When is it, how is it going to happen? Well, let me ask you this. I was just going to say, how literally do prices correct the way that people think they are? It has to be a fire sale of someone who can't afford their mortgage anymore. People aren't going to panic leave their house.

45:51Right. It's not like a stock where it's down after an earnings report and you go get me out. It doesn't work like that. There's just no supply. And I honestly don't see that dynamic. I don't know what would cause that dynamic to change. Right. From Bloomberg, typical family spent 27.3 % of their income on their annual mortgage payment, which actually to me sounds relatively low. Like I think 30 to 32 % is usually the number. Qualifying income for For a new mortgage, though, based on a 20 % down payment, was$107 ,000 to make, marking the third straight six-figure reading. So that's the haves and the have-nots.

46:22It's fine if you already had a mortgage, if not if you didn't. I want to talk about the 70s and 80s housing market. I looked into this a little bit, looking at what people are saying that housing prices are going to crash. And we talked about Josh's take last week that actually, that'd be a good thing. It would drive up economic activity. Pent-up demand would come off the sidelines. But I looked at, I think the worst-case scenario is if prices don't correct a little bit. So the 70s, a lot of people don't realize this. Stocks underperformed inflation. Bonds underperformed inflation. Cash was the only thing that was slightly positive on a real basis.

46:53The only thing for like the middle class that was up in the 70s was housing. Housing prices are up 130%. Now, that's before inflation. And you could have bought gold, I guess, but you would have probably had to have like coins in your safe or something. It was not easy to buy gold back then. So housing for the middle class in the 1970s is when it really took off as like an asset for people. And mortgage rates never got lower than 7.2 % in the 70s. And they ended the decade at like 10%. And then they went from 10 % to 19 % from 1980 to 1981. And guess what? Housing prices didn't fall. So housing prices were up 130 % in the 70s.

47:28And then over the course of the 70s and 80s, they were up 300%. And that's in a time when mortgage rates averaged 11 % and got as high as 19%. And housing prices never rolled over. They fell for a slight time on a real basis. but nominally housing prices did not fall for that two decade period. And I think I'm not saying like housing prices are going to continue to take off because we've already pulled forward so many gains, but I think that's the, that's the nightmare scenario for people is housing prices just refuse to roll over even in the face of higher rates. I don't think anybody wants that, but I think that unless we just build more houses somehow pull them out of thin air, I don't see what changes the dynamic.

48:09All right, Let's do great quarter guys real quick. Here's some Delta. Our expectations of full year revenue growth of 20 % over 2022. Robust demand for travel on Delta is continuing into the December quarter where we expect total revenue growth of 9 % to 12%. Oh, that would be a good search on quarter. Robust. I bet that word gets thrown out a lot. Here's a good one. Weighted average interest rate. Okay. We spend a lot of time talking about how insulated the corporations are. weighted average interest rate of 4.5 % with 89 % fixed rate. Wow. Even for a company like Delta who ran into a ton of problems in the pandemic, right?

48:46That's, yeah, that's not bad. JP Morgan kind of sent me to this. Where are we seeing softness in credit? Nowhere. At least nowhere that's expected. That's, I'm sorry, at least nowhere that's not expected. Nothing? Okay. No, it's the funny thing. The funny thing is that the bank CEO is forever. And I hate to keep harping on diamond, but it's like the hurricane is coming, the hurricane is coming. And it's like, how is your business? Fine. No problems at all. Everyone keeps spending money. And there's no delinquencies and things are okay. All right. BlackRock. This is the CFO. Rate hikes over the last 18 months mean that for the first time in nearly 20 years, clients can earn a real return on cash.

49:28In the short term, that has benefited many portfolios. investors have been able to generate positive returns while waiting for inflation to cool and for more policy certainty from central bankers. This waiting has weighed on industry flows, including here at BlackRock. Investors are being paid to wait. Yes, they are. So they're saying they're seeing flows into probably T-bills and money markets and short-term treasuries and that sort of stuff. Yep. All right. Survey of the week. We've got two this week, actually. There was an article in the Wall Street Journal. Is reclining your airplane seat upright behavior or downright rude?

49:58Now, there's two schools of thought. School one is it's my seat. I paid for it. A lot of money for it. If I want to recline, I can recline. School two is, well, yeah, but it's rude. Like, it's just rude. And I'm in school two. I don't think I've ever reclined my seat because I don't like when people do it to me. The worst is when you have like your laptop out or something and they recline it back. And they're like, yeah. I live by a very simple rule. Treat people how you want to be treated. And so that's why I don't recline. Okay. In a recent survey of 1 ,100 Americans, 46 % said it is rude to fully recline and that they don't recline.

50:3728 % said it was rude and they would politely ask if it was okay before reclining. And 23 % said it wasn't rude. That's not right to me. Three out of four people think it's rude. One out of four people don't. I think that that's about what I would have expected. I don't know why. This made me laugh. I've just – the picture of the article of the CEO of Delta just sitting on an empty plane smiling awkwardly. I've never heard anyone ask if they can recline though. Hey, is it okay if I recline my chair? Yeah. I think – what is that? Okay. So 28 % said it was rude and they would probably ask if it was okay.

51:11All right. So 28 % of the country are liars. Nobody asks. You're right, Ben. No way. Here's a great survey from John Huber. Buffett described Apple's customer value and pricing power by posing a hypothetical question. if you were offered$10 ,000 to never buy an Apple product again, do you take that deal? No. 49 % of people said no. I say no. $10 ,000, a lot of money. I need the Apple products. I'm hooked. Duncan is a recliner. He said it's the airline's fault for cramming people in there. Wow. Duncan's like sneakily rude. Duncan's got a little bit of something in him. I don't know what the word I'm looking for.

51:50Duncan, come on and defend your honor. He's too crammed in. Duncan, you're not a big guy. I really don't want to do that.

51:59You're the one out of four. Okay, fair enough, fair enough. This is good news. More than 71 million Americans receiving Social Security benefits will see their checks rise by 3.2 % next year to help them keep hands with inflation. And last year it was like 8%, wasn't it, or 9 %? So average benefit is$1 ,900. That's not nothing. No. continues to be the best retirement program that there is. Okay, real quick on parenting from Derek Thompson. There was a study done. This is more of an opinion piece than a study. Our thesis is that a primary cause of the rise in mental disorders for kids, because a lot of people are trying to figure this out, like why are kids so unhappy these days, is a decline over decades in opportunities for children and teens to play a role and engage in other activities, independent of direct oversight and control by adults, more or less saying it's helicopter parents that are causing kids to be mentally unstable.

52:49there could be some of this, like kids, parents put more pressure on kids today. I think that's, that's almost a certain. Oh, absolutely. I was at the pumpkin patch the other day and it's crazy. I saw some lady like hysterical, freaking out, like Timothy, Timothy. And not to listen, I know losing a kid is terrifying. Yeah. He was, he was right behind her. Yeah. We lost my son in the grocery store once. She turned around. He was, he was directly behind there and she's like, you scared me. And I, my son would like, he would bolt in the past. I'm surprised we never lost in a mall. something but at the grocery store he ran back to where all this they store all the food and bring it in and stuff he like ran to the doors and we couldn't find him like frantically running around the thing he was fine i don't really think this is the i think part of i think honestly kids are just uh have more access to information and stuff these days and the screen stuff i think it's i think it's all internet based that in the past we were i mean yeah we that's the same thing Internet is the same thing.

53:45It's the same thing. Yeah. This is saying like helicopter parents, but I just think it's kids know. I don't think we were meant to know so much about what's going on in the world at such an early age. And I think kids are just – they know what's going on more than people did in the past. Agreed. Okay. So Culture Critic tweeted, once upon a time in the 1950s a family could own a home a car and send the kids to college all on one income what went wrong and how can it be fixed holy moly i don't know this one gets debunked once a month i feel like yeah okay well what's what's the debunking way fewer people went to college back in the day that's the thing uh houses were way smaller which is another thing the home ownership rate was actually lower i think if you look through each of each one of these, you could go point by point and show why it never actually was this.

54:41And people have this nostalgia for a time that didn't exist. Most houses holds didn't have two cars. They do now. It's like all these things where things are much better today, but people don't want to realize it. Also back in the fifties, people couldn't be miserable with their lives because of social media. So there's that. There is that. They didn't have that. Um, all right. So I got a call from Robin the other day. She's like, did you send Logan to school with a peanut butter sandwich? I'm like, yeah, what? She's like, you can't send peanut butter to a preschool. Oh, he got yelled at for it or reprimanded?

55:20I mean, he didn't. You did? He did. Because obviously, peanut allergy is like a huge thing. Well, that's interesting because we have like a peanut free, but we actually send our kids with peanut butter and jelly all the time. Really? And we got one of the allergic, my son, he's allergic to like cashews and pistachios. Pistachios, really bad. But what kid brings cashews and pistachios to school? I do like a good cashew. I like pistachios too. We can't have him anymore. He gets like violently ill. Maybe the 50s were better. Kobe loves, every day he's bringing home a new book. It's like animals versus animals.

55:59scorpion versus tarantula like who would win in a death fight apple doesn't fall far from the tree i could see you doing that for sure you know how i feel about uh imagine like the meg versus well actually in the meg too is a meg versus a giant octopus i loved it who would win i don't know i'm guessing the meg won the meg won of course but would the meg really win it was good fight uh all right but i i met somebody in future proof that i followed up with and his assistant sent me an email back saying they would love to catch up, but their schedule is busy or whatever. Do you have any time in November?

56:35Now, I'm pretty positive that this was like two or three weeks ago. That's a busy person. I mean, is that incredibly rude? That is, I don't value your time very much, but that's getting to Thanksgiving-ish. Let's circle back after the holidays kind of thing. That's like an early circle back after the holidays. But I'd rather, I think I'd rather the assistant, which made me feel a little bit even worse, have said like, Timothy is very busy. He'll circle back. Like that would have been fine. But like, yes, he's going to find a place for you. Put something on the calendar in November. It's like, well, just say he doesn't want to meet.

57:14Right. Like he can meet in 40 days. What? No. All right. I got this email. Hi, Michael. Happy Thursday. Oh, and you know what? Credit to this person. The subject line was Michael question mark. So I'm like, oh, Michael. They're getting smarter. Yeah, what do they want? Hi, Michael. Happy Thursday. I was searching for wealth management firms that came across your site. I noticed some simple changes you can implement to make the design and functionality 10 times better. Would you be opposed to receiving a completely free website mock-up? Well, actually, yes, I would be opposed to that. But then here's what got me.

57:45P.S. Because you read all this and you're like, oh, this is just computer generated, right? Yeah. And this is probably a computer generated tool. In fact, it must be. P.S. Cool to see that you graduated with a bachelor's degree from a quiz college. I can only imagine how much work you put in. Yeah. What a backhanded compliment. Yeah. Tons of work. Oh my God. I never worked so hard in my entire life than when I had to. But anyway, but that also is pre-filled too, right? They just scrape the college. I have to imagine. That's pretty good though. All right, Ben. I got some recommendations. It's still Halloween season.

58:20I'm still cranking out horror movies. so I saw one I guess this was on Netflix I think it's called Haunt got 100 % from the audience 70 % from the critics fewer than 50 verified ratings that's like a sample size problem 70 nonetheless that means no one saw it oh yeah I saw it and if you are a fan of the horror genre I know there's tens of you that are listening this is pretty good not great but pretty good But I bring this up to say that – so the movie was about six friends that went to an extreme haunted house. I have no interest in that whatsoever. Kobe and I last year were on a Halloween walk.

59:02And this was not like an extreme Halloween walk. It was for kids. And I was petrified. Petrified. There was people that you're not sure if they're – if it's like a statue or – Kids hate those things. Kobe loved it. He wasn't scared at all. I was freaking out. I was very scared. I was using my phone as a flashlight. He wasn't scared and you were. Okay. I was very scared. And there was a documentary on Hulu, which I only saw a little bit of. It was very bad. There's people that love extreme haunted houses. Like love. And like there was one where it was just totally over the top. The guy was like torturing his guests.

59:36It was – I get too scared. So that would – that would be a movie you would watch, right? A haunted house for Halloween that takes things a little too far. That's the movie Haunt. That's what I'm saying. Oh, that's what – okay. See, I could literally write these movies. Me and Chet GPT could write a horror movie easily. That's what haunt is. Now, but I don't think that I could call myself a horror fan because there's a horror series that I found on, I say found, like I discovered it, called VHS. There's like six of them. You ever hear of this? Okay. It's found footage, basically. Blair Witch style?

1:00:17Yeah. Yeah. Holy shit. Absolute nightmare fuel. The original one in 2012, if you like the horror genre, this was super gnarly and really, really scary. Like really, really scary. I have an analogy for your movie recommendations and it's a Seinfeld reference that you probably won't get because you didn't watch Seinfeld. But there was an episode where George lost his glasses and the whole point of the episode was George's eyesight would come and go and he could like spot a dime from across the room. But then he picked up an onion and ate it and it was like, Jerry didn't know what to trust. He's like, George is spotting dimes and he's eating onions.

1:00:53They can't tell which to trust for George because it's like he's spotting a dime from across the room, but he also can't see what's right in front of him. And that's you with your movie takes because - I don't get it. It's like, sometimes he's way off and sometimes he's right on the money. And so you told me to watch Somewhere in Queens with Ray Rano and it's on Hulu. And I loved it. Oh, great movie. I loved it. That's what I'm saying. Some of your takes are you're eating an onion and some of them you're spotting a dime from across the room. Only Seinfeld fans will get this. You know, I knew you would like that movie.

1:01:17Somewhere in Queens was a good film. And one of the things that it had that most movies don't, it had a high school basketball game. And the basketball was actually like relatively realistic. It was good. The kid could play. And here's my other take. How great was the final line that the mom said? Was it like, oh, f*** that h***? Yes. I love sort of family coming of age movies like that. It's just like a regular normal family. in a sort of name, but here's my take. Ray Romano, underrated as an actor. Phenomenal. Phenomenal. I feel like he gets underrated because he was on a sitcom and it was like right as sitcoms were kind of tailing off, which I loved that show.

1:01:58Everyone loves it, but I think he's great. All right, fine. Hold on. I got to defend my honor on this. No, I get it. I get it. I know that I like bad movies. It's not like, but hang on. VHS is a good movie, but it's not like I think good movies are bad I happen to like I have wide range of tastes yes you do so here's my dad of the year my two daughters and my wife wanted me to go to the Taylor Swift movie with them the concert eras tour or whatever this is a three hour long concert movie okay my son lucked out and got to go to a trampoline park for a birthday party instead so I had to go with some friends and I was bitching and moaning about it all week just to make sure I got my points for this right like hey listen And if I'm going to do this, I'm going to complain the whole time.

1:02:45And I did complain. And it wasn't bad. It was definitely way too long for my taste. Was it busy? It was busy. There was no dancing. My daughter was – my oldest daughter, Libby, is a great dancer and singer. And she rocks it out a little bit. She's not self-conscious at all, which totally would be me. I couldn't do that unless I had alcohol on me, which I kind of respect for her. I'm glad she didn't get that from me. But there's not much more you can say about Taylor Swift at this point. But I think the combination of her being like the girl next door, but also being like literally one of those confident people on the planet is just like it's kind of unbelievable.

1:03:20And the fact that she's been popular for so long, she goes against my thesis of the more rich and powerful you get. Like if she keeps this up, I mean, she's kind of like LeBron in a way. Like LeBron never got messed up, even though he was started from such a young age. But think about it. Michael Jackson was totally screwed up. Whitney Houston went off the deep end. And the Beatles were only around for like seven years. Like she, her run as like this popular person is just unprecedented historically. It's kind of amazing. And yes. But anyway, I got dad points for the week. That's all that matters.

1:03:57You know, but I also get self-conscious in public about those sort of things. That's not a skill. It's a trait. It's a trait that I wish I had. We went out to a Mexican restaurant and there was mariachi guys that came over. and they sang Sweet Carolina. You're supposed to sing along with them? I couldn't. I was too embarrassed. Right. My daughter doesn't have, and I'm really glad she has that because I think that's a great quality to have just to be not self-conscious at all. It's a wonderful quality. All right. What's our new email, Michael? We got a new email. All right, listen. I know that people are going to be perturbed because you're used to emailing animalspiritspod at gmail.com and it was a great email address.

1:04:31We had a lot of fun there. So for our regulars, I apologize. Please delete that contact. I don't know how you do it, but just remove it. Get rid of the contact. We have a new email address. it's animal spirits at the compound news.com deal with it. Just kidding. I'm sorry if it, if it, uh, Michael's angry because everyone says that it's way worse. Email. We had, we had a vote internally. It's not as good. No, but listen, uh, people don't like change. I don't like change. Animal spirits at the compound news.com. Sometimes you got to change. All right. Send us an email. If I could change and you could change, you know what Rocky said.

1:05:07That was another good part about somewhere in Queens. he was quoting Rocky the whole movie. That killed me. Good movie. All right, thank you. Thank you, Duncan, Nicole, John, everybody who helps on the show. Thank you for listening. We will see you next time.

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