Is the AI Trade Over? (EP. 439)

25:11Cleaning out three, four bedroom houses is going to be a lot. Yeah. So I think what you have to invest in in the coming years is dumpster rentals. how do you invest in dumpster rentals because think about all the stuff you're gonna be throwing so they talk they give all these stories about people throwing stuff away baseball cars and china and collections and hoarding stuff cold wallets um but think about all the renovations that are gonna have to be done on these houses that people have lived in for 40 or 50 years like honestly like i'm gonna start a dumpster rental company you know because when you do a renovation you they put the dumpster in your front in your driveway right and then everyone in your street all your neighbors have to ask hey what are you what are you guys doing over there, right?

25:52Everyone has to ask. So I put it, I put some pictures in here of my stuff. So my dad has all these baseball cards and football cards from like the 1950s and 1960s. Check some of these out. I found these pictures that I had last time I went there. Mike Schmidt, classic mustache guy. So we're talking, he's got Willie Mays, Pete Rose, Al Kaline, um, Roberto Clemente. Yeah. Mike Schmidt. Um, I feel like Mike Schmidt, Mike Schmidt drank a million beers. He was definitely a here comes trouble guy. I think it's a Nolan Ryan rookie card. I put this into chat GPT and I said, Hey, hey, are any of these things worth anything?

26:20And they're like, listen, if the edges are frayed, probably not. They're probably worth a couple hundred bucks. But he's got some really good ones from like the 50s, 60s. So that's what I'm going to walk away with someday. Great. That's my stuff. But yeah, I say go long dumpster rentals for renovations too. So Ben and I did a podcast with Derek Thompson on the topic of are young people screwed? And there's a lot of companies that are blaming the weakness in young people for their woes. A lot of the bull companies, Chipotle, Cava. They're not mentioning their overexpansion. They're not mentioning how expensive their stocks were.

26:53Such a cop-out. Blimmy young people. Yeah, they're not mentioning how expensive their slopples were. So who do you trust? And listen, there's obviously lots of shades of gray here. But Chipotle or SoFi? So SoFi, who I would say probably catered, not probably, SoFi definitely caters to that audience. Anthony Noto, CEO, said, we've seen very strong performance of credit So we're really not seeing any deterioration in the consumer at all. Right. So it's consumer choice. Not that they don't have any money. Right. And you were early to that train. You got off Chipotle like three years ago. I really was.

27:29Now you're coming back. See, you're. No, no, no, no, no. I'm not coming back. And in fact, I have no interest in dumpster diving in the stock. I listened to the conference call. Wait, so how much is the stock down? 50 %? Tons. Tons? Tons. I listened to the conference call. You know, I think this is the quarter that I've listened to more conference calls than I ever have. And I'm not saying that there is necessarily like quantifiable edge here, but there is definitely quantifiable insight. 55 % drawdown. This feels like a stock every time it falls 50%, like it's a screaming buy. Yeah. Well, not this time.

28:02I'm not buying it. You know why? I don't trust the CEO at all. Not for a second. That is true. They have the new, because their CEO left and went to Starbucks, right? Not for a second. Because of the fact that he is like pulling a sleight of hand and not being honest. You don't trust him. I don't trust him. Blaming young people. Okay. No, that was in the opening remarks. And the Q &A, I did not like what I heard. So last night on this topic, I listened to Apollo, legendary founder, investor, Mark Rowan. And I listened to, and Apollo is one of the biggest private credit players in the market. And I listened to Blue Owl's Mark Lipschultz, who was clapping back at Jamie Dimon.

28:44and Mark Rowan was asked about the opportunity in wealth management and the pushback specifically with rates coming down, how attractive is private credit? Listen to this answer from Mark Rowan. Private lending was a better business four years ago and three years ago and two years ago and last year. By the way, I wish I owned NVIDIA four years ago and three years ago and two years ago and last year. This is fundamentally what people fail to understand. The rotation into private credit is a rotation out of equity. That is what investors are doing. That is what we observe. They are making a decision to take risk off because they perceive the ability to earn long-run equity returns in first lien debt top of the capital structure as an attractive opportunity, but I think we cannot as an industry deny that there was more value, just like there was more value in the equity market.

29:45Okay. Right. The guy's telling the truth. That is a phenomenal answer. I don't have to repeat what he just said. You just heard it. He's telling you the truth. Okay. Now contrast that with the, with Mark Lipschultz, when he was asked a similar question about how investors should think about what's going on. And by the way, I think we have Blue Owl later in the doc. Not pretty what's going on in that stock. All right. So Mark Lipschultz, he sounds defensive. He sounds antagonistic. All right. So an analyst asked a question about some of the publicly traded BDCs, which is getting murdered. So tell me if this answer makes you feel better or worse as an investor, Ben.

30:26So as to what investors don't understand, it's probably hard for us to give you a comprehensive answer. fact, you obviously talk to a lot of investors. We can offer some theories. I can certainly tell you what we're doing. We're doing two things that I think at the end of the day will solve this problem. One, we are executing, executing, executing. Business is good. Business is continuing to be good. And we're focused on continuing to deliver. We haven't seen an opportunity as good for investors and by extension for Blue Owl as the digital infrastructure investment cycle that we're in. And so we're just going to continue to deliver results for investors and continue to deliver.

31:16Oh, you're just going to continue to deliver to continue to deliver and business is good. Really? If business is so good, why is the stock down 48 %? Why is the BDC down whatever it's down? Why are you merging some of the funds? Why are you getting, I don't know if they're getting redemptions. Why are they limiting redemptions? So you listen to these people and it gives you some sort of insight as to who you want to put your money behind. I think it's incredibly valuable. I think someone asked us that a few months ago. What do you actually get out of these earnings called? Are they being level with you?

31:49This was always the thing for me. When I used to be in a manager of managers business and I'm picking the managers to help perform or whatever, the ones that I appreciated the most would tell you straight up when they're underperforming, listen, this isn't our cycle. We're out of style right now. Or listen, we missed it. We missed them. Whatever the trade was, we missed it. We're not in what's working right now, as opposed to the people who make excuses and say it's the Fed or we would have been right if only this would have happened. Like, I always appreciated the people that, yes, that would level with you and be honest with you.

32:18The people who like BS you like that guy, you can't trust them to tell to tell it to you straight. So how are you going to trust them to run a company? Okay. Back to, sorry for the tangent on the SoFi thing, but back to what we were talking about. Here's a good chart from Apollo. About 5 % of the US population are experiencing third-party collections. The blue line is the dollar amount. And unfortunately, the dollar amount is up and to the right as everything has gotten more expensive. No surprise there. But look at the proportion of consumers with collection, which is the green line, Ben. Now, it is going up, but off historically, literally historically low levels.

32:57Way low. That is pretty crazy. Okay, so it went from a high in the mid-2010s of 15%, now down to like 5%. Okay, remember a couple weeks ago, I said, hey, listen, when the stuff starts getting disrupted and the economy slows, they're going to take some of these tariffs off as a form of stimulus. It's already happening. Trump administration is preparing tariff rollbacks on goods from countries beyond those that have reached agreements with the U.S. in an effort to lower prices. I think they're looking at coffee and food and some of these things. Do you think that the White House saw the, like, employment data and got a little freaked out?

33:36Or saw the whatever data that we didn't get and said, all right, you know what? Actually, we're going to pull these off. But this makes sense that this would happen, right? I don't know. I don't know their motivation. I do know that last week when I was in Washington, D.C., it was very eerie. It was an absolute ghost town. I had a great time, by the way. You know, I love to wake up early, walk around cities. I was listening to the Harry Truman book. Man, what a wonderful walkable city DC is, right? Phenomenal. Harry Truman, who actually redid the White House, who was the first like president to really invest in the White House and say, wait a minute, we gotta up our game here.

34:09Did you know, this is news to me because I don't follow politics like this. During the shutdown, because I have a friend who works for a congressman, the congresspeople, the elected officials were getting paid. Yeah. Isn't that the worst thing? And my friend hasn't had a paycheck in seven weeks. People in TSA aren't getting paid, weren't getting paid, but the politicians were. Isn't that awful? I think everybody agrees. It doesn't matter where you are. Absolute horseshit. The politicians should not be able to hold the country hostage because they can't come to an agreement. Absolute garbage. All right.

34:40What's the Chardonnay price? Okay. This is been once in a while you get a new blogger. It's rare these days. I feel like the heyday of bloggers is long over. Although Substack, actually, maybe that's not true. Be that as it may, there's this guy who writes a blog post, a Substack called Chartinay. I believe that we referenced him a couple of months ago. So he has this incredible chart that looks at CPI, which includes obviously a basket of goods. But what he did was he looked at, hey, let's take away some of the things that are not like everyday inflation. Let's take out used cars. Let's take out some durable goods, washing machines.

35:18Now, it's not that these don't matter because they do, but he wanted to focus on like everyday inflation. And people really think about, I mean, this chart is just magnificent on the eyes. So these are the TLDRs. So he said, television's gone, mattresses out, used cars get lost. So what was once 338 lines suddenly became about 40 lines of goods and services that show up in an everyday budget. Okay. Before the vaccine rollout, official inflation and my index were basically indistinguishable, right? Same thing. Once inflation picked up, the official numbers started to come in much hotter than what my index showed, likely because used cars ran red hot in 2021, in 2022.

36:00Oh, yeah. It was probably housing was probably a big part of it too. Since then, I think that's an everyday type of expense. Since then, the Chartanay price index has been running about 1 % to 2 % hotter than the official CPI. Lately, though, they've started to converge. And I think this is what people are talking about. When they say CPI is not whatever percent it is, like I feel, it feels higher. And guess what? Yeah, it probably is. Well, no, it isn't, but it's just the stuff you're buying feels higher. Well, yes, that's the same thing. The buying more often, though. Yeah, things that you buy every day are higher than...

36:36But no one ever feels like the aggregate economic data is them because their personal experiences. True, true. So no one ever believes the inflation number. True. If you just bought a used car, you go, gah, inflation is out of control. If you bought a television, you need to go, oh my gosh, deflation. I'm thinking a lot about my new car these days. Oh, forgot to mention this. I got into an accident. Uh-oh, what happened? So I haven't been in an accident since I was like 19 years old. I'm in dicks. Whose fault? When I was 19? No, now. Oh. But you tell me whose fault it was. Okay. It was a one-car accident.

37:19You hit a light pole? Yeah. I'm in the parking lot in Roseville Field going to Dix with Kobe. And the pole came out of nowhere. I honestly don't know what I was thinking. I just didn't see it. And it was literally… You were backing up or you were going forward? No, I was going straight. It was right in front of me. It was like a handicap hole. Um, and I saw it, I slammed on the brakes and Kobe's like, daddy. So I get out and, uh, not like, not damage that I'm like taking to the body shop, but like, yeah, it looks like my car is definitely. So you decided that your car wasn't underwater enough.

37:57You had to like make it even more underwater. So I, I just, I don't know. I was, I think, I don't know what happened, but I went into, went into a pole. So anyway, I've been thinking about what car I'm going to get a lot as my car lease comes due. I think I might get a Jeep Grand Cherokee. Not a hybrid. Just a straight-up gasoline Jeep Grand Cherokee. I feel like you've changed your mind on this like 13 times. I have. From a Range Rover to a Toyota. Yeah. Just right down the fairway. What do you think about that? My mom used to have a Cherokee. I'd drive it all the time. I loved that car. Yeah, it's a great car.

38:38Right? It works. A to B. Yeah. All right, let's talk more AI stuff. Yeah, so Bezos, Project Prometheus, coming out of the gates with$6.2 billion in funding. I guess he's not going back to Amazon. I guess I could put that hot take to bed. Duncan wants you to get a Lexus. A Lexus? Yeah. Somebody did tell me to get the Lexus. The TX or the GX? I can't remember which one. But let's say you're in a technology guy like Bezos, but in your whole career, essentially. Like you're going to let this opportunity pass you up and not get involved. Of course he got involved. Yeah. So it's so over. Come on. It hasn't even started.

39:11We don't even have the robots yet. All right. So I liked, so Jerry Newman was on odd lots with Joe and Tracy and I liked, he had, he had kind of a contrarian take and I don't know if I buy it, but he said, what happens if opening eye gets hit by a bus, right? Opening eye goes under Microsoft is not a bunch of money. A whole lot of big companies are out of a bunch of money. I don't think much happens to the economy in the dot-com bubble. People were spending money for their options before they liquid. It was a much different dynamic. So he's saying like, so what if, if one of these big AI companies, and I said, you know, Microsoft is not going to let them go out.

39:40Like none of these companies, open AI cannot go out of business. Microsoft would just, you know, if open it, I love a contrarian take because everything is consensus these days, including everything that we're saying. Yeah. It was very, it was very contrarian. That's what I liked about it. If open AI, and I like that guy, he's, he's, he's smart and entertaining, but if open AI gets hit by a bus, we're in deep, deep trouble because like the economy is, well, the stock market's going to crash. And you would think that, not you would think, let me not hedge that. The stock market crash will have a deep impact on the economy, obviously.

40:12So - Deep? I don't know. I don't know about deep. Just from open AI, I don't - It's not just open AI. The entire economy is resting on the shoulders of these hyperscalers. No, it's not. Get out of here. No, I think it is. The entire economy? Come on, man. Get out of here. I will not get out of here. All of the growth in the economy is happening because of the hyperscaler spending. Grok, is this true? Actually. So, okay. So in terms of like what OpenAI is actually paying Microsoft, this is from the Financial Times. So the OpenAI quarterly inference cost at Azure. Now, this is only inference. It is not the more expensive part of the AI story.

40:55So they said OpenAI appears to have spent more than$12.4 billion at Azure on inference compute alone in the last seven calendar quarters. So forget about the promises that have been made to Oracle and every other company on the street. Where do you think all of the beat from NVIDIA is coming from? It's coming from the promise of these LLMs and what they're going to deliver. So the entire market rests on the shoulders of OpenAI not getting hit by a bus. So speaking of Microsoft and CEOs are tell like it is, Satya Nadella was on the Dwarakash podcast and it was so refreshing to hear a guy who just like told it like it is and told he was not a bullshitter.

41:36And like that guy, that's a person I trust. I trust Satya. I have terrible listening comprehension. I think when it comes to this tech stuff, I don't understand any of it. I listened to the entire podcast and there was like not one part that I was able to like pull out and say like, Oh, but then I see people tweeting the clips and I'm like, oh yeah. When I see the clip, it makes sense. But when I'm listening on my own, I'm like a child. Like I have no idea what's happening. It's hard to understand some of the AI stuff because they're getting so technical about it. So here's the thing. There's two things, two ways to look at this.

42:09One, the market already knows what's going on, right? Like how could you think you're smarter than the market? This is like for all the people who say like, look at the depreciation expenses of these, all these data centers and GPUs are going to be depreciated in three years and have to buy them again. like the market knows this. Wait, can I just interject one thing? I think the opposite is true. The market doesn't know this. The market doesn't know anything, which is why you're seeing such violent price swings because we're all just guessing. We don't know. That's the point. We don't know. Nobody knows.

42:37But the thing is the market is always smarter than everyone. The collective. Yes, of course. Of course. But two things can also be true. The other thing is sometimes the market is wildly off the mark. So how do you wrap your head around like, listen, everything everyone's talking about with AI, everyone already knows it. We all know it. But nobody knows. It's not like this because - Everybody knows, but nobody knows. People think, well, yeah, no one knows. That's obviously the problem. By the way, I asked Chad to do some coding for me this week. I asked Nick Majuli, hey, how do I fix this thing on my blog to make it look bigger and fancier?

43:10And when people send it for my newsletter, I want it to stand out more. Nick said, just put it in a chat GPT. And it gave me the code and allows me to copy the code. And I said, well, where do I - I've never coded anything before. Or where do I put this in? And it was magical. Did he say, ask Chachibite? Yeah. Well, he kind of showed me a little bit, but it's magical. I did something similar. There was an arithmetic problem. And I'm not even kidding. It was straight up arithmetic. Not like plus, plus, plus. But I couldn't figure out for the life of me. I was staring. I'm like, wait a minute. I'm looking at a spreadsheet.

43:37I said, I don't understand what I'm doing wrong. And I said, hey, wait a minute. Boom. Yeah, two seconds. But why do you think technology people are so excited about AI? because they're the ones doing that. How about this? The set arithmetic, it might've even been calculus. I don't even know what type of math it was. There was no scenario in which I got to the bottom of it. None. I could have started it for seven hours. All right. We've been talking about stocks falling a lot in one day. And we had a guy email us in and give us an answer. He said, Ben raised a question. How many securities? That's 30 % drops.

44:12He said, from March 31st, 2020 to today. So just basically this decade. For the S &P, it's only 15 names. Russell, 1 ,053. Russell, 2 ,469. He also said, he responded, he said, if you do 20 % instead of 30, the number is quadruple. Like, 60 names, 205, and 955. So actually, I guess fewer names have fallen 30 % in the S &P than I would have thought. But a decent amount have fallen 20%. Yeah. It's funny. Bespoke did something similar. They said 19 stocks have fallen 30 % of their earnings reaction days this season. And the median market cap of those companies was less than$3 billion. Versus 14 that have gained 30%.

44:45So this does happen. No, but of course it does. But the median market cap was$3 billion. Right. So it's small. It happens all the time in the Russell 2000. Yeah, all the time. All right. This is a really good question from hashtag or at long equity. Sometimes compounders stop compounding. What lesson do you take away from this? So he shows Nike and Fiserv and Charter Communications and Estee Lauder and like six of these companies that had these beautiful long-term charts that have now come crashing down on the other side. These are compounders. And in the last year or two, all these things have come back down to earth.

45:17I'm trying to catch a falling knife in Nike. So I thought this was a good question. What do you take away from this? So the answer, by the way, I don't like Nike's knife. I think you're going to cut your hand. My whole thesis with Nike is I'm betting on Caitlin Clark. That's it. Okay. I'm betting on Caitlin Clark to have her own shoe line. And as long as she stays healthy, that's my Nike thesis. Okay. No offense. That sounds like my thesis when I was back in 2010 when I bought, which minor? Because of the Olympics. Oh, I bought like an Australian mining company. Was it BHP Billiton? Billiton? Is that even the name of it?

45:51The bronze medal. Because yeah. Anyway, don't love that thesis, but hey, credit to you. So all right, Bucco Capital has a great take on this take or the answer. Like what's the takeaway? Bucco said, the actual answer is that this is the rule, not the exception. Great returns attract competition. That's the beauty of capitalism for the consumer. The more interesting question is what companies do to avoid this fate. I was, the new book that I'm listening to is called Invention. The book, the audio, the audio, the autobiography of James Dyson, the guy that, of Dyson, the vacuum cleaner. Oh yeah, I have that book somewhere.

46:30I just never read it. It's, I just bought a new Dyson this week. The vacuum cleaner? They're magical. They work so good. So I don't, I don't know that I would necessarily recommend the book. Although, oh, there is a great quote that I, that I wrote down. He said, everything changes all the time. So experience is of little use. I feel like that's so applicable in the stock market. To markets, yeah, that's pretty good. So, but anyway, my point was this. So when he was building the vacuum cleaner before the Dyson, I'm sure you had a Hoover vacuum cleaner growing up. I did, right? Yeah. Like it was so 80s.

47:06Do you remember the bags with the zippers on them and stuff? Yes, I do. So the point is, I think they made$500 million a year selling the bags. it was classic innovators dilemma like their entire business was the bags inside of the vacuum cleaner so they just were going to go down printers and ink cartridges they were just that was their business model they were never ever ever going to do what dyson did and then guess what dyson killed them right so that's it that that's business all right uh cliff as is on aqr and he's talked about how AQR is, or sorry, he was on AdLots, and he was talking about how AQR is thinking about making a push into sports betting.

47:45And I thought about this, because I've heard a lot of people say, I wondered if this is good or bad for like DraftKings slash FanDuel slash Polymarket slash Kelsey, all the ones that have the betting. Is this good or bad for them to have the big whales come in? Because you'd think it'd be good because we had a huge layer of liquidity, it'd be more volume. But is it bad if they're arbitraging away? Because I've heard stories from that, like FanDuel and DraftKings, If you're a whale of a gambler and you're really good at it, they will find you and they will kick you off the platform. I don't know if this is true.

48:16I've seen - Yeah, you know what? I'm the opposite of a whale. I get no incentives. They say, hey, look how much this asshole keeps losing. He wouldn't even give me any incentives. He just keeps losing. But let's say AQR and Citadel get into, and they arbitrage away a lot of the parlay stuff, right? And they see there's massive mispricings because people who are betting on them, like you, are idiots and don't know the odds. Okay. They come in. Am I an idiot because all the Bengals had to do was not literally let the Steelers get six points on defense in the final drive? Am I an idiot because that happened?

48:45Yes, I guess I am. So do you think, would this actually be a bad thing for these companies because they couldn't make these enormous spreads anymore? Yeah, that's a good question. Would they make it up on volume or is the spread the thing for them? Or would they make all the money off of idiots who don't know what they're doing? Very good question. I'm not sure is the answer. I don't know. All right. So Bitcoin is getting killed. I think it was under 90 ,000 last night. And is this one of those things where crypto is signaling more pain to come? Or is this just like a risk-off asset and like, this is it?

49:17Because I looked at this. So it's crazy. The volatility I mentioned before. This is Ibit was down almost 20 % on the year through April. Then it was up 35 % just a couple months ago. And now it's like flat or down on the year. Like, remember when people said the ETF is going to take volatility out of Bitcoin? Yeah. But look at the drawdown profile of Bitcoin. It's almost exactly the same as Meta. It follows it to a T. Like, Bitcoin still acts like a tech stock. But it's not following the cues at all. Okay. Yeah, but my take is I think Mark Zuckerberg is actually Satoshi. What do you think? So, Balchunas tweeted, IBIT is now Harvard's largest position in its 13F and its biggest position increase in Q3.

50:07Pretty wild, Harvard. Here's my question about Bitcoin. What is the next catalyst? Because all of the promise, all of the catalyst, which was ETF adoption, institutional buying, it all happened. So what's next? What breaks the spell? Now, maybe it's just the bull market resumes, like the broader macro bull market comes back. But I don't know. So I don't know the answer to your question. I don't have a very strong - I guess the catalyst would be money just keeps pouring in. People have it on autopilot now because of the ETF. Yeah, but that's not - Advisors keep putting money in. That's not a catalyst if there's just like auto flows in.

50:44I don't see why that's not a catalyst. If more money keeps pouring in, how is that not a good catalyst for it to go up? Because that's literally what's been happening for the last year and it's gone nowhere. It's flat, it's down on the air. Yeah, but it pulled forward so much, so many gains, right? It's down on the year, but it's still up a lot from, I don't know. But do you still think that it is a precursor of things to come and like, okay, the stock market is going to roll over now or is it not like that anymore? I think it's different every time. Sometimes it is, sometimes it isn't. I don't know.

51:14Yeah, that's fair. All right. Let's talk about, you wrote a good post on the 50-year mortgage. This is a very sensitive topic. I think people hate more government intervention, more fake money. I think they hate that people that would use the 50-year mortgage are people who could least afford it. Because you're not really saving a lot of money, and you're just paying way more interest. Yeah, you'd be harming the middle and lower class probably. Because you ran a calculation on a$500 ,000. Was this a$500 ,000 mortgage, Ben? Yeah. So the 30-year mortgage monthly payment is$3 ,000. The 50-year is$2 ,630 and change.

51:53So it's a difference of$366 a month, which is definitely not trying to minimize that. That's not nothing. But you're looking at 80 % interest in the beginning for a 30-year versus like 95 % interest. It's all money. It's all money to the bank. And here's the other thing. I looked at this using the same interest rate. I said 6%. A 50-year mortgage would definitely be a higher interest rate too. So it would take the monthly payment difference down even more because you would assume the 50 years probably if 30 is at six, 50 is probably at six and a half. So I didn't even do that. The monthly payment is even worse.

52:29No, no, no. The monthly payment is less. That's what I'm saying. You'd have less of a savings. No, you're saying the 50 year interest would be less. No, the 50 year interest rate would be higher. Right, right, right. My bad. So your monthly payment difference would be even lower. Allison Schrager said, I think the 30 year fixed rate is a freak of financial nature. Something that requires tons of intervention and causes all sorts of distortions. but I'm not sure why a 50-year is so much worse. That's fair. That's, yeah. How many people actually live out? How many countries do floating rate mortgages?

53:01Most of them. Most of them? I know Canada does. A lot of European countries. The U.S. is kind of on its own island. But so what happens in inflationary periods when interest rates go up? It's like, uh-oh, I can't afford my mortgage? Yeah, your payment goes up. I think a 30-year fixed rate mortgage is one of the greatest financial inventions that we've ever done in this country. Some people hate it for whatever reason. I think it's amazing. All right, we're going to talk about this. We're going to do an episode on home stuff with our friend Logan Motoshami. Because there is, we spoke about this with Derek.

53:37The median age of first-time homebuyers is now 39 years old, according to the National Association of Realtors. No, 59. No, that's all buyers. Yeah, all buyers. I said first-time buyers. It used to be 30 and now it's like 39. Yeah. So I think they said 40 last week, NAR. And this Conor O 'Brien puts out all the other surveys saying, wait a minute, is it really 40? If you look at these other surveys, it doesn't look like it's increased at all. And so a lot of people are saying, wait a minute, the NAR data is bad. Their survey is bad. These other surveys, right? So all this stuff that we've been saying, like the first time homebuyers now got to be 40 years old or something, that might be wrong.

54:14And honestly, and we've been using this data. Everyone's been using this data to support the case that millennials are screwed, housing is broke, which by the way, both doesn't mean that it's not, but if the data that's supporting that argument is. It sounds like the data is faulty and Logan's going to kind of set the record straight for us. So that'll be out hopefully soon. All right. There's a story in the Wall Street Journal or sorry, New York Times. They rushed to buy homes during the pandemic. Now some feel trapped. And it talks about how Americans who bought their first houses when mortgage rates were low.

54:42Now they're ready to move, but they feel locked in by the rates. I'm sorry. We can't feel sorry for everyone. Not everyone gets your sympathy. You know, what's the problem now? They, they, they rushed. So they talk, they have all these stories about these people who rushed into buy a house in like 2021 because rates were low and houses are going fast. And now they like their life has changed. They want to move, but they can't because they're stuck in a 3 % mortgage. Sorry. You know, not everyone gets your sympathy. Like if you bought a house and it's up 50 % and you have a 3 % mortgage, but it would be expensive for you to move.

55:13You don't get any sympathy. of the person who didn't get to buy and didn't get the 50 % price appreciation and didn't get the 3 % mortgage, they have my sympathy. Not you. Yeah. Not everyone deserves your sympathy. Okay? And I have a thing coming later about my, it's going to seem like I'm looking for sympathy, but I'm not. Sometimes you just have bad luck. All right. We'll skip the Schwab stuff. If you save something to the doc for two weeks in a row, delete it. It's never going to happen again. Come on. Let's just, it's not going to happen. There's too much stuff that happens in a given week.

55:46How many pages do we have? You know what? No, we'll do this real quick. So Schwab announced that they're buying Forge Global. They project in their press release that private wealth capital allocated to alternatives is expected to reach 13 trillion by 2032, up from$4 trillion today. That's aggressive. I gotta be honest. How about this? How about this for an analogy? private markets to financial advisors is like ai to people like some people just don't want it yeah right it's the same thing like you're gonna we're gonna force down your throat but a lot of people don't want it at all hit the nail on the head i gotta be honest i had no idea that forge was public they went public in a spec um at a stupid valuation six billion dollars like everything else looks like they're gonna getting bought at like uh 600 million something like that Oof.

56:34So here's my take. I think that the private market stuff is going to happen. I don't think that there's going to be a widespread revolt that sort of stops this track. And I think it's done. It's just a matter of degrees and what we get. I think they're just going to be disappointed in the flows into this stuff. Yeah, I think that could be too. I think they could make a hard push and the flows don't reciprocate. However, if we go into recession and interest rates go back to 0%, which I think they will. I think you said it's never going to happen again. You really do? Oh yeah, definitely. If we get a recession the next three years, interest rates are going to zero.

57:08I love this take. Mark it down. All right, good for you. Finally, a stand. Okay. And when that happens, are people going to like look at privates again and go, oh, actually, private credit's eight and this is zero? Well, yeah. So that could happen. So, all right. So my take on this is it is going to be a rocky transition between here and 20 years from now when this is all available. And I do think of that in 20 years from now, people are going to look back and be like, wait, seriously? There was a time where like people couldn't invest in this stuff. Why? Yeah, you're right. There'll be better rappers and better, and there already are in a lot of ways.

57:42So PitchBook, and I don't know if I'm the only one that reads this stuff. I feel like I never see it being circulated, but they do like a weekly rundown that's like really, really, really super duper high quality. So I read it. I guess you got your ear to the ground on the private credit stuff, huh? The credit pitch from PitchBook. You're damn right I do, Ben. They say while the 12-month run rate of interest income from payment-in-kind loans – Ben, to your point, I could hear people's eyes glacial. Who gives a shit? Well, I give a shit. The payment-in-kind loans, which basically is like, all right, things aren't great right now.

58:13I'm not going to pay you cash right now. Just tack it on. It's an IOU to the end of the payment. That's just as good as cash. Payment-in-kind loans for the top 15 exchange-traded BDCs remains a hefty$1 billion. It declined in the second quarter, which is the third straight quarterly dip, perhaps indicating that lenders have reached their threshold for non-cash paying interest. So lenders are saying like, nope, been there, done that. You pay. You pay. Fair enough. Fair enough. All right. So this brings us to Blue Owl. So the Wall Street Journal had a report. Not long ago, Blue Owl Capital was an upstart investment firm that lent money to mid-sized U.S.

58:56companies, such as Sarah Lee Frozen Bakery. I hate frozen bakery food. You? I don't have an opinion. Okay. Fair. These days... Yeah, Ben's like, I'm f***ing over this. Can we just move on? These days, the firm is financing massive data centers, costing tens of billions of dollars for the likes of Meta and Oracle, a sign of just how quickly Wall Street has become the enabler of America's artificial intelligence boom. So they showed a chart looking at the bond issuance by big tech AI companies. And it's more now than it has been the past several years combined. And this is before yesterday, Amazon announced that they did a$12 billion offering.

59:34So like I mentioned earlier, the stock blew out was getting killed. It is in the epicenter of two places you don't want to be. Number one, BDCs are getting slaughtered. The liquid BDCs are getting slaughtered. People don't believe it. They're scared of first brands, tricolor, whatever. They're selling, rightly or wrongly, they're selling. This is a lot like AI where it's like The skepticism has like kept the lid on a lot of this stuff. Yeah. So by the way, I sold, Blue Owl was a stock that I own. Thank goodness. I sold it a couple of months ago. I think if you're selling it down here, you're a donkey.

1:00:01That's just my opinion. But then, and also, so there's the BDC side. There is the AI skepticism side. Hey, wait a minute. Like this deal with Meta, like they have an opt-out, like what's going on here? And then also there was a really gnarly article in the Financial Times, Blue Owl Credit, a blue owl private credit fund merger leave some investors facing a 20 % hit. And I encourage you, if you're interested to read the article, it's not great. It's not, it's not, it's not great. We're already going, we're already going to log in this topic, but there's some forced mergers happening. I think there's pending shareholder votes, but it's not pretty.

1:00:37So they did a picture of these guys when they went public or something, they rang the bell. Has anyone ever looked cool? Like cheering the ringing of the bell? You can't look cool. It's like wearing Crocs. You can't look cool doing that. Can't. Okay. Yeah. But yeah, this, no, you're a lot of the stuff I roll my eyes about with private credit, but like, this isn't, I think this is a legitimate story worth paying attention to. This is a story. Absolutely. Yeah. There was an article in charter or a great survey, visual and charter showing many young Americans are jilting marriage. So you don't see that we're jilting too often.

1:01:10The share of us households with married couples peaked at 79 % in 1949. 49, and it's now down to 47%. I was talking to Josh the other day. I feel like divorce is like under decline. Now, I'm sure there's data for that, but just anecdotally, I feel like divorce was so hot in the 90s. My parents got divorced. A lot of people's parents I know got divorced. Think about how many movies dealt with divorce in the 90s. Mrs. Datfire killed me. Every family movie had a divorce in it. What was my dad thinking? Take me to see Mrs. Datfire. Way too soon. Anyway. The Santa Claus, a Christmas movie, had a divorce in it.

1:01:41This is all part of, that'd be a good list. Top 10 divorce movies. this is all part of the bigger story of young people taking longer to do things that was once done earlier. Maybe not a popular take. I don't think you should be getting married in your 20s and buying a house. I didn't. No. In fact, I think that's part of that. The fact that people are waiting longer, I think is a good thing. That's part of a lot of the reason. And that makes you more mature in your appearance as well. Like, I don't think it's a big deal. You have no business having three kids in a house before you're 30. Now, I know people make it work, but all of America, it's too much responsibility.

1:02:14Yeah. I think this is like, this is more normal. Yes. And they're asking the percentage of 12th graders saying they're most likely to get married in the long run. I didn't even look at that. I can't trust a survey of high school students. I'm sorry. They lie. All right. Quick PSA. This is from the Wall Street Journal, but a bunch of other places had it. The limits for your retirement accounts are going up in 2026. $24 ,500 up from$23 ,500 for a 401k. $7 ,500 up from$7 ,000 for your IRA. You get a bunch of extra money for a 50-year-old or if you're a 60-year-old. older, we spend a lot of time focusing on the markets, right?

1:02:47And focusing on investments and stocks and private credit and all this stuff. If you max your 401k out, it almost doesn't matter what you invest in. Put it in something, anything with risk, and you're going to do better than most people. I endorse this message. Let's get to it, Ben. I got a story. You know, sometimes you have such a bad day that you don't even, you're not even mad. You don't swear. You just kind of do an angry laugh. That was my day yesterday. Let me tell you what happened to my day yesterday. I start off just a very bad Monday. My wife's car is flat tire, right? So I got to bring it into Bell Tire to fix.

1:03:18There's a screw in it. I can hear it coming out. I have to take the tire off myself. I know how to change a tire now. You know, I can't wait till the robots come and do it for me. So I got to bring the tire in. So I'll already, it's 30 degrees out. My fingers hurt. I'm trying to, you know, I'm hitting my knuckles against the thing. Oh, that hurts. So flat tire. In the morning, sick kid. My daughter has an upset stomach, has to come home. I didn't have to deal with it, but that's another thing. uh finally we had we did a bunch of home projects i've been talking about we had new floors we painted the walls we painted the trim everything was nice then the door is just all beat up from the kids all over the years and then all the work we had done the door from the garage of the house is all beat up so i said you know what i just want a new door it'll look nice it'll make everything look finished so one of the two big home improvement places there's two of them um i'm not gonna say the name it was one of them i said i just needed a door can i just pop the pins out and put the new door and they could say no no what you do is because they might not fit you have to get a whole new door so it's the frame and we'll put the bottom plate on and it's new trim and it's gonna look so nice just do the whole thing it's a little more expensive but it'll look so finished you know what yeah i'm doing a project let's do it right so the guy shows up yesterday and my wife calls me and says this does not look good just the look of it doesn't you can just tell so he walks in and he said where's the door and she said you you're installing it you should have the door he said i I don't have it.

1:04:35So he had to go back to get it. Now this guy's installing the door. He takes the trim off. He puts the door on and he's there for like three hours at this point already. He doesn't have the door on. It's just this open and it's 30 degrees out and it's cold. And he's holding it. And he said, I need to call for, I hear him on the phone. He's calling. He's asking for help from someone. He said, like basically, I don't know what I'm doing. This guy had literally never installed a door before. Now, what do you do in this situation? So he has his buddy come. I know what you do. Nothing. So this guy, his other guy comes and he's helping him.

1:05:03This guy's walking through. I'm like, all right, fine. You know what? That was a little rocky at first, but this guy, he's got a helper now. This guy's going to help him. This guy's saying how you have to be level and to shut the door. It's like, there's all this stuff you have to do, right? So this guy's helping him. I'm like, this will be fine. This guy's here now. It'll be better. It's a bad start. This guy helps him a little bit. Then he leaves. So this guy's finishing. This was, honest to God, the worst. It's comical how bad it was. There's caulk everywhere. He put holes in the wall. There's dents.

1:05:29there's dings the door barely shuts this is i like i couldn't what are you let this happen i mean did he what's the result this guy was not he was there till 7 p.m last night he got there at two and he finds he goes all right i'm done and he leaves um he did not have anything to clean with he asked us if he could borrow a broom and a dustpan to clean because he didn't have anything so of course i called the place today i said this is unbelievable like our house is like ruined you've got to come back and fix this so they're going to but this was like if i asked him to fix it he was going to make it worse it was a project now so we the guy finally leaves we're like decorating for christmas and then it's time for bed all right kids go to bed and george goes into the bathroom and proceeds to exorcism his head turns around and throws up all over the wall no the walls on the walls all over the toilet on the floor the worst smelling vomit i've ever of my life.

1:06:26Courtney had to leave because she was gagging. So I had to clean it up. I needed like a hazmat suit. So that was my day yesterday. Two sick kids, a flat tire, and the renovation from hell. Wow. But it's one of those times where, you know what, I poured myself a big glass of red wine and said, let's rip the bandit off and start new the next day. How's your day today? I'm doing good. I'm really good. That's a bad day. That's a bad day. All right. Let's do some recommendations. Did you watch Death by Lightning? I loved it oh you did did you watch it I did okay you okay so I thought it was fantastic it was four episodes I thought Tom Wobbsgam as the crazy guy was he's unbelievable he's so good but here's the thing so I've heard of James Garfield before I've heard of Chester A.

1:07:11Arthur I've heard the names I had never heard this story before that he was assassinated I had no idea this happened no clue so um okay I felt like I was learning as I was watching it was so It was four episodes. That was the best part. Four episodes. So the book, Destiny of the Republic, is by one of my favorite authors, Candace Millard. Highly recommend her books if you are interested. So she wrote a book called Destiny of the Republic. And I don't know if you noticed this. You probably didn't. But the fourth episode was called Destiny of the Republic. Okay. So the cast was amazing. And I thought Whams Gam was amazing.

1:07:49Like, totally amazing. And it was cool to see these characters brought to life. Michael Shannon, too. They kind of looked like the guys, too. They were great. And I did enjoy it. But it kind of felt like such a Netflix show. Like, what was the point of it? See, I'm sorry. I thought I was going to say I've been complaining Netflix has had low-quality shows. I thought this was their highest-quality show in a while. I thought it was fantastic. Okay. Maybe because I just didn't know the story. So I felt like I was learning. The tone was interesting because it was sort of like, what genre was that show?

1:08:18See, I thought it was because they had some humor involved. Yeah. Like, I thought that, I don't know. I thought that was it. But the way that he became president with his speech and like, I thought that was just really well done. Yeah. It was an accidental president. But Wham's Game, where has he been? Because he is so good. He reminds me of like Brendan Fraser and the Mummy, but better. Which they're bringing back, you know, with Brendan Fraser and Rachel Wise. It's coming back. I can't wait. The original people. I love that movie. Okay. So I've got an Audible of the week. Okay. So at the end of his book, Andrew Ross Sorkin actually mentioned this book and said, I was trying to frame my 1929 book after this.

1:08:51so it's called the titanic a night to remember by walter lord and all it is is there's no preamble there's no backstory there's no like biography stuff it's just this is what happened when the titanic hit the iceberg and this is what all the people did okay and it's it's good and it's not that long on a two times you can listen to it in two hours it's really really good just like what happened and all the people being like wait like people getting out of the rooms at night and be like what happened we hit an iceberg go back to bed don't worry about it um and like all the stuff that people decided to bring and how the fact that there weren't enough lifeboats and really, really good.

1:09:25I enjoy it. Okay, good work. All right, I watched the Eddie Murphy doc, being Eddie Murphy. I assume that you were a huge Eddie Murphy fan, obviously, literally who wasn't? Yes, love Eddie Murphy. Yeah. It's worth watching. Not the best doc I've ever seen, but it's worth watching. So at the end, and this is not a spoiler really, but at the end, so at one point during the doc, But during the doc, he's talking about how he ordered two dummies. So he could be like a ventriloquist if he ever does stand-up. And it's Bill Cosby and it's Richard Pryor. So at the end, of course, he hasn't done stand-up because he got too famous since 1987, I guess.

1:10:04I don't know if Delirious was the last one. Oh, wait. Was Raw 87? Can't remember which was which. I used to own Delirious. Ridiculous. I owned the DVD. Funniest thing ever. But anyway, so at the end of the doc, the puppets come. and he does like 30 seconds, and it's like the funniest thing ever. Okay, he was - It's just like, come on, man. I know you're too famous, but like, please. He was one of those guys, when he was on Comedians in Cars getting coffee with Seinfeld, he still had it in him a little bit, but he got too big, I think. But in one of his, I can't remember if it was Raw or Delirious, he had this bit where he talked about how all Italians thought that they could beat people up after Rocky.

1:10:43Oh my God. It's just, that's one of my favorite bits of all time. Yeah. It's so good. Truly a one-of-one legend. All right. Lastly, speaking of comedy, I saw Louie at the Beacon. So in 2014 or maybe 15, when was the flaking? I can't remember. But whenever that was, Josh and I were at Artie Lang's apartment. I don't think I've ever told this story before. Have I on air? I don't think so. All right. So Artie Lang was my favorite character on Howard. I am a lifelong Howard Stern listener. and when Howard and Artie broke up, when they had that fight, I remember I was in my bedroom like, wait, why are mom and dad fighting?

1:11:23And so anyway, Artie was like my guy and we were in his apartment and it was surreal to say the least. It was Josh, one of Artie's friends is a comedian who was a fan of Josh's. So Josh and I did Artie's podcast. Josh's friend was like a couple of hours late. So me, Josh and Artie were hanging out in his apartment from like 11 to two. We watched SportsCenter. when Goodell was talking about the flake gate. And then we watched my favorite documentary of all time. It was called The 7-5, I believe, about the corrupt, yeah, The 7-5, about the corrupt cops in New York City. And we were just watching them.

1:12:00It was unbelievable. Really a pinch me type of moment. Like, how did I get here? And so Artie's friend walks in and he said, hey, you hear about Louis? And Artie's like, yeah, I heard some stuff. what did you hear? And so they, they, they, so he tells him, I'm like, wait, what? Huh? Louie's my favorite comedian of all time. And it was what came out. I don't know if it was a couple months later or a year later, whatever it was. I sort of like kind of forgot about it. I was like, wait, what? Then it came out anyway. So Louie needless to say did some bad things. He's been canceled forever or canceled himself, disappeared, whatever.

1:12:36All right. All that aside, it was so good. Like it was, he's for me, that is my type of comedian, just belly laughter on, on, unbelievable. So I don't know if he, he doesn't do nothing. He does like his own thing. So probably be on his website in a couple of months. It was such a good special. Okay. Yeah. We saw him live before he got canceled. And, uh, it was one of the best shows I've ever been to. I mean, it's rare to like, get like multiple actual belly laughs, right? Where like your face hurts. Yeah. Um, smarter comedians. All right. And then, And you know what? We're going to save this for next week.

1:13:09So Michael Sembalist did a really good dive onto the media landscape, Netflix, YouTube. And he has his, he ranked his top films in the 21st century. So we're going to talk about that. But next week - He's a Ben guy. The Ballad of Wallace Island is number one. He's a Ben guy. Save it for next week. He's a huge Ben guy. That was my first observation. He is a Ben guy. All right. Thank you very much. Take the survey in the show notes, please. Survey in the show notes, please. Thank you very much for listening. Thank you, Duncan, and the entire production team for doing what they do for us every week.

1:13:41Thank you for listening. Animal Spirits at thecompoundnews.com. We will see you next time.

1:14:00Hey, Ryan Reynolds here. Wishing you a very happy half-off holiday. because right now Mint Mobile is offering you the gift of 50 % off unlimited. To be clear, that's half the price, not half the service. Mint is still premium unlimited wireless for a great price. So that means a half day. Give it a try at mintmobile.com slash switch. Upfront payment of$45 for three month plan equivalent to$15 per month required. New customer offer for first three months only. Speed flow after 35 gigabytes of networks busy. Taxes and fees extra. See mintmobile.com.