Paycheck-To-Paycheck on $500,000? (EP. 462)

10:33Ben Carlson:If there's one obvious risk that's going to cause excesses to happen and a big downturn, like AI has to be it. It has to.

10:40Michael Batnick:Yes. Yes, both things are true. But do you think that the leaders of these companies are really that dumb, that they're just pissing away money?

10:47Ben Carlson:I keep giving this example. Facebook literally changed its name to Meta, and then they got rid of the whole thing. Are they really dumb enough? They can be. That's one example.

10:57Michael Batnick:A pretty big example. You think they're all collectively stupid people?

11:01Ben Carlson:No, I don't think they're collectively stupid. But I think the fact that they all decided if one person is going to jump off the ledge here, I'm going to do it too. We have to all jump.

11:10Michael Batnick:Oh, come on. Literally, the first thing your parents say is, if your friends jumped off the bridge, would you? Yeah. I think it was a broken bridge, specifically. Come on. I know it's cute to say, like, yeah, Meadow was stupid. But come on. But no, I'm saying the tech leaders are holding hands,

11:24Ben Carlson:jumping off the bridge together. They all said, like, everyone in the boat, let's go. I think that's like a jackass comment. Like, too cute behavior. But isn't that what happened, though? They all decided. It's a big circular thing. They invest in them. They invest in them. Like, they're all into this, regardless of what happens. But they said, like, remember, they all said, I'd rather overspend than underspend. That's the risk.

11:43Michael Batnick:But, like, I just don't think that they're all willing to risk at all. And them just this completely flop. Like, I was looking back in three years, like, what the hell were they doing? Possible, obviously. But I would not I would not bet on that.

11:55Ben Carlson:Sure, doesn't seem like that. I agree. It doesn't seem that way now. But but the thing is, all this spend can still create excesses. Sure. That's the thing. OK, so last week, we talked about how this bull market is like fast approaching the 1980s, 1990s one. I wrote a little piece on this. And I just want to talk about how crazy this whole run has been. So we're now, this is from the bottom. And a lot of people, every time I write about this, someone we work with, I'm not going to name any names. His name rhymes with Larry. He sends me something saying, you can't start a bull market from the bottom.

12:25Ben Carlson:Like 2009, you can't start a bull market. And my argument is things are different now. All bull markets almost start from the bottom by now, by definition. Because that's when things move faster now. This is how markets work. regardless, splitting hairs. The S &P 500 was up almost 17 % per year from the bottom in 2009. So that's 17 % per year for 17 years. Okay?

12:48Michael Batnick:I can't believe it.

12:50Ben Carlson:The 2020s have a higher annualized return than the 2010s did. 2010s did 13.4 % per year. 2020s are doing 15.1 % per year right now.

13:00Michael Batnick:Wow.

13:01Ben Carlson:Totally different environment. Here's another crazy thing. Despite all the government spending, and I want to unpack this one a little bit. Okay, that was a podcast line. So some people here who are younger might not remember this, but when the Fed took rates to zero and the government printed money to save us from a great financial crisis, there were tons of people who said the dollar is going to collapse. We're going to have hyperinflation. This was not just like some perma bears spouting off. This was real people saying like, oh my gosh, the Fed took the rates to 0%. This is going to cause a massive crisis down the line.

13:34Ben Carlson:Just wait. From 1982 to 1999, biggest US bull market in history, arguably. CPI was up a total of like 80 % essentially. Okay, cumulative inflation was 80%. From 2009 to 2026, cumulative inflation is 56%. Despite the 9 % huge upswing, right? Because it was so low. So 0 % rates, and I put the Fed chart in here. We had 0 % rates essentially for eight, nine years. They never led to a financial crisis. Of course, there's no headlines that say like, hey, this thing some people thought would happen didn't happen. That's not a headline event. This thing didn't happen. Guess what? But there was all these people saying like, you can't take rates that low without having a financial crisis.

14:20Ben Carlson:It has to happen. We never had one. All that spending, all the monetary QE, all that stuff, the dollar was stronger throughout most of the 2010s. And inflation wasn't that much higher than it was in the 80s and 90s. This has been like a miracle of a bull market. You know, those stories of people like prematurely born babies. They're like, oh my gosh, they were born at like 30 weeks. They're in the incubation thing for so long. And they're like, they can't believe it. They survived. That's this bull market. This is the incubation bull market. It's a preemie. It survived. I can't believe it. I'm just taking a step back and like giving flowers, kudos, whatever you said a couple weeks ago to this bull market.

15:03Michael Batnick:It is something to marvel at, for sure.

15:07Ben Carlson:This is why bull markets are so important. I think most investors make their money during a bear market by just hanging on and not capping out and selling. But if you miss this kind of bull market because you got scared and you went to cash or you tried to time the market or some doomer scared you out of it, this can impact your investing lifecycle for decades to come if you miss out on something this big. Yeah. This is why you stay invested. And I think the longer this continues, the more it feels like this has to end eventually.

15:38Michael Batnick:And eventually being sooner than later.

15:41Ben Carlson:And it will. But is it a bang or a whimper? A bang would be a crazy financial crisis. A whimper would be, ah, returns are lower than average going forward for five to seven years or something.

15:52Michael Batnick:Yeah.

15:54Ben Carlson:Pretty incredible. All right. We've talked a lot about markets moving faster. Intel has one of the craziest charts I've ever seen because this thing was in a 70 % drawdown. It came back, dropped, came back, dropped. It was dead. It was dead money. Basically, essentially in the last, I don't know, six months has taken off like a rocket ship and completely erased a 70 % drawdown. And then some to go back to all-time highs that hadn't been reached since the dot-com bubble. Markets move so fast these days. And obviously there's reasons for this. the government taking a piece of intel and where they sit in the tech stack has something to do with it but this move is absolutely insane for a company this size what's their market cap

16:37Michael Batnick:at this point i don't know 300 billion dollars yeah how much i guess three i have no idea

16:42Ben Carlson:i don't either we both guessed that i feel like for an also ran tech company 300 billion ads 250 $400 billion is a pretty good get.

16:52Michael Batnick:Wait, where did you get$250? It's$427.

16:55Ben Carlson:Oh, nope. I put the wrong ticker in.

16:58Michael Batnick:Okay. Wow.

17:00Ben Carlson:I'm going to get Philip Morris. All right. Overnight. Markets just blinking. You missed it these days.

17:06Michael Batnick:Really wild. All right. It's the end of an era. Tim Cook is retiring.

17:15Michael Batnick:And going back to things that people got wrong. like everybody nobody was like don't worry when Steve Jobs died

17:22Ben Carlson:it was a huge worry it was in so it was in the fall of 2011 and that was also when the European debt crisis was in full swing the S &P was almost in a 20 % bear market it fell 19 % and change and Apple was people were like this is it it's over not to pat myself on the back and toot my own horn I was buying Apple then because I said there's no way this company's over like they got such a long run with the iPhone But it was not like people are like, oh yeah, Tim Cook's going to take over and it's going to be great. This is a multi-trillion dollar company.

17:54Michael Batnick:So I've shared this chart before. The numbers are so ridiculous that I had to fact check them. Since he became CEO 15 years ago, Apple's market cap has added$684 million a day. $684 million a day. so 250 billion per year 4.8 billion per week 4.8 billion a week um here's something that that tim cook deserves credit for mark uh rubenstein has a great sub stack called an interest he wrote about apple pay apple pay is used by 785 million people worldwide It is accepted at over 90 % of U.S. retailers, where it has a market share of 14.2 % in online payments and 5.6 % of in-store purchases. Cook said on his latest earnings call that last year alone, it eliminated$1 billion in fraud.

18:59Ben Carlson:I still don't want to use it. Stop. You're kidding, right? I've used it like five. At a store, I've used it like five times. You just double tap. I know. I've used it to pay for stuff on my phone, obviously.

19:12Michael Batnick:You're too embarrassed to tap your phone? You still take out your wallet?

19:16Ben Carlson:I just, yeah, use a credit card. Okay.

19:20Michael Batnick:You know your credit card, you know you can link your credit card to that. Yeah, it's linked. Okay, all right, just checking. Last thing, I'm putting Apple revenue context. We've shared this before in terms of the services, the segments of Apple, comparing it to other companies.

19:34Ben Carlson:If you stacked dollar bills all the way from here to the moon of Apple's revenue, right?

19:40Michael Batnick:It would go to the moon in Project Hail Mary and back.

19:43Ben Carlson:Yeah, it would go to Tau Ceti.

19:45Michael Batnick:So, the iPhone did$226 billion in revenue in the last 12 months. That's more than NVIDIA.

19:55Ben Carlson:That's pretty nuts.

19:57Michael Batnick:Is that true? NVIDIA's done $216 billion in revenue over the last 12 months. Holy smokes. Okay.

20:05Ben Carlson:That's a mind blower.

20:06Michael Batnick:That's a face blower. That packs a punch. Services. $113 billion. Tesla,$97 billion. Johnson & Johnson,$96 billion. Not bad. Wearables, $35 billion. AMD,$34.6 billion. So watches and AirPods, more than AMD. The Mac,$33 billion. The Big Mac,$27 billion. McDonald's. I got it. More Macs than McDonald's. And then finally, the iPad,$29 billion and whatever. Again, McDonald's,$27 billion. Charles Schwab,$25 billion. Pretty good business.

20:55Ben Carlson:Just think if they could actually get a functioning AI assistant on the phone for you.

20:59Michael Batnick:Speaking of that, multiple people have recommended a product called Whisperflow, which I downloaded. And it does work very well. It's kind of a pain in the ass because every time you use talk to text, you have to open the app. It's inside the messages, but so it takes you to a new screen and it's annoying. And it says, we wish you didn't have to switch apps to use flow, but Apple Nav requires us to activate the microphone. It does work a lot better. it does work a lot lot better hey apple buy whisper flow or build something better you cheap pricks i'm talking about the nicks and it kept saying next i'm like nicks and even if you say well why don't you just type everyone can type really fast on their phone why don't you just type well if i'm walking i'm out for a walk or if i'm driving i don't want to that's fair because

21:55Ben Carlson:Because I think if you're walking somewhere, a sidewalk, wherever, a store, and someone goes into zombie mode on their phone in the middle of everyone, I feel like you should be able to like either arrest that person or give them a shoulder to the back because you just stand there in the middle of everyone. Oh yeah. In the way.

22:11Michael Batnick:Says the person who climbed out of his window.

22:14Ben Carlson:Yeah, I want to make it a lot. Yeah, that's fair. All right, let's talk about something I was wrong about.

22:19Michael Batnick:But what's good about Whisperflow is at least you can say like, no, no, no, delete. And it will delete. If you type that into Siri, if you say in Siri, it will type out no, no, no, delete.

22:30Ben Carlson:Okay. Oh, I gotcha. Okay. I won't use it. Talk about something I was wrong about. Two things, actually. Airbnb. Look at the stock price. This thing went public in 2021. And I bought it at the IPO. And the entirety of the gain in Airbnb's share price is from the opening day pop at the IPO, which how many people actually got subscribed to that? Not many. This stock has gone absolutely nowhere. They completely changed an industry. They created an industry out of thin air, effectively. They were going to be the Uber of homes. And it's changed the way that my family vacations. Obviously, rental houses existed.

23:09Ben Carlson:But Airbnb made it so much easier. And I think them getting into it made a place like VRBO 10 times better, too, because we use them a lot as well. And the stock has done absolutely nothing. During a boom in technology stocks, hand up.

23:24Michael Batnick:I never would have expected this. Well, two things. It came, the value issue when it came public was obviously very rich, but ironically, ironically, stocks looking pretty good for the first time in a long, long, long, long time. It's might be breaking out here, Ben. Do you still own it?

23:40Ben Carlson:No, I got rid of it a long time ago. I didn't do it. It's not doing anything. So yeah, I don't know. It came, I think it came public at what, a hundred billion dollars or something.

23:47Michael Batnick:Yeah. I forget it. I think it was a hundred times sales type of thing.

23:50Ben Carlson:But that's the easy thing to say is, oh, it came, it was way too pricey. But you would have, if this turned into a$600 billion company, you'd go, oh man, it was cheap at the time.

23:58Michael Batnick:Of course. Well, yeah. Well, now we have more information. But no, I mean, no. There was people saying like, this is a crazy valuation of what an IPO did.

24:05Ben Carlson:Yes, I do remember that. But it was a crazy time. But one more thing, Zillow. I was bullish on the housing market through all the early 2020s, late teens, early 20s. And I said, Zillow is the best brand in housing. Everyone checks it all the time. I think they have two or three hundred million users or something that check the website. Not that many people obviously buy houses. This stock has absolutely stunk. Suck. Absolutely horrible. I don't know. It's in a 50 % drawdown still. I think I bought it after it was down 40%. I still lost money. It's crazy how the name ran. So I nailed the housing thing.

24:42Ben Carlson:Nailed it. I was bullish on housing at the perfect time. Housing went crazy. And Zillow stock stunk.

24:50Michael Batnick:well this is why i'm not a stock picker i've i've been way wrong on more stocks and i've been right so you're not alone i think i think everybody listening if they're being honest with themselves

24:59Ben Carlson:hey turns out stock picking is kind of hard it's true and this is why all right two things are true all right one there are way more degenerates in the economy right now everything is a casino everything's a market people are gambling more day trading zero day options prediction markets Two, there are way more people who are behaved, and that swamps the degenerates by a factor of, I don't know, a thousand. Here's from ETF.com. VOO becomes the first ever ETF to cross$900 billion in assets. Here's from the story. VOO has pulled in$36.9 billion this year so far, more than any other ETFs on a pace to surpass$100 billion in annual flows for the third consecutive year, a feat no other ETF has ever accomplished, even once.

25:45So I know that you get, there's a lot of press today about how everyone's a gambler and no one invests in financial nihilism.

25:52Ben Carlson:This is the opposite of that. Vanguard is$12 trillion in assets. BlackRock is fast approaching$15 trillion. This is not the behavior of a bunch of people who are gambling. This is the behavior of people who are putting money away at a low cost in a tax efficient product and leaving it alone.

26:10Michael Batnick:This is the classic, like, if it bleeds, it leads. Nobody wants to read these articles. They're boring as shit, but they dwarf the degenerate economy 5 ,000 times over.

26:19Ben Carlson:Yes. I found this article on Twitter. I think the article had zero retreats and one like. No one cares. Nobody cares. And this to me is the investor class winning. And this is why it's so hard to beat the market now because most of the suckers have left the poker table. The only people left are the really smart people trying to beat the market.

26:43Michael Batnick:Well, that's not true. The degenerates are the easy pickings. That's why there was an article in the FT, Jane Street made more money last year.

26:55Ben Carlson:I did see that, yes.

26:56Michael Batnick:Yeah, Jane Street made more money than Walmart. What? So your point is well taken, but except for the last part. The suckers have not left the table. There's more suckers than ever, even though there's more investors than ever.

27:10Ben Carlson:How about this? On a market cap basis, more suckers have left the table. The suckers at the table don't have a lot of money.

27:19Michael Batnick:Well, but it's worse because the professional suckers, and they're not suckers. So I don't want to be disrespectful. Yeah. The professional active managers, these are short and bright people that set the market prices. They do every single day. They're still there, but their market cap has shrunk. Fair. All right. This is not a great story. from the Wall Street Journal. Doug Horner has seen plenty of customers walk into his Northeast Ohio Mercedes-Benz dealership who are more on their trade-ins than those cars are worth. But being$40 ,000 underwater on a pickup truck is a scary sign of a growing trend, I'd say.

27:55Michael Batnick:A prospective buyer recently sought to trade in a Ford F-150 Lightning for a Mercedes GLE Coupe, but that potential customer owed about$87 ,000 on the pickup truck. Horner estimates the Ford pickup truck was worth about$47 ,000. Check this out. In 2026, buyers with negative equity financed an average of nearly$56 ,000 for a new car in the first quarter, about$12 ,000 more than the typical new vehicle buyer. And that translates to a monthly payment averaging$932 for negative equity borrowers, the highest level ever recorded. So Robin's Audi. Wait, they could have interviewed you for this story.

28:38Michael Batnick:Robins Q7, I pay$1 ,270 a month. And I know that car does not cost that much money, but I was underwater, you know, a lot. Big league underwater. Now, my intention with my previous car that I was underwater on was, all right, well, just drive it until we pay it off, right? Like, I don't love being on -

29:02Ben Carlson:That's the obvious advice. So this guy who owns 87, owes$87 ,000. Guess what?

29:07Michael Batnick:Don't buy the Mercedes. Yeah. Wait it out. Of course. So it's not a catastrophe in general. It's not fun being underwater, but just drive it until you finish the payments. And then - Yes, exactly. With our car, and unfortunately, this is not super unique to us, the car started having problems and we were putting more money into the negative equity. Remember my engine was busted and it was going to cost like$18 ,000 to fix? I was like, no. Like we already are under water at$20 ,000. I'm not putting$18 ,000 into the car for a new engine. So we had literally no choice. But if you are underwater, you just drive it until you're done and then that's it.

29:52Michael Batnick:But the pandemic f***ed everything up.

29:55Ben Carlson:Yeah, isn't this a one-time thing? This isn't like something that's going to keep happening. This is the car prices got so out of whack.

30:01Michael Batnick:It'll normalize in a few years. But yeah, we're working off all of these overpriced pandemic purchases.

30:08Ben Carlson:Yes. So that average payment of$900, it's crazy how high car payments are now. Yeah. Just nuts. All right. Last week, I talked about how we're in a new era of just higher inflation. 3 % is the new 2%. What that means is also that we're in a higher wage growth environment as well. So this is the Fed wage tracker. I think the Atlanta Fed does it. And you can see it through the 2010s. It was kind of rising, but we're just in a higher shift. And now that inflation is turning back up, guess what else is turning back up? Wages. And look at the job switcher thing. It's still much higher if you switch jobs.

30:45Ben Carlson:So wages remain much higher. And I still think most people, if you ask them, honestly, would rather have the 2010s. I would rather have lower inflation and lower wage growth than higher inflation and higher wage growth. 100%. Most people would say that.

31:00Michael Batnick:Oh, yeah. People hate inflation. It's tearing our country apart. It's funny because we just keep making it worse. What do you mean?

31:10Ben Carlson:Spending more money, going to war.

31:12Michael Batnick:I can't stop spending money, Ben. Ever since inflation started. Look at this thing. This is my new workout tool. What is that? That looks like a sex toy. What is that? So this is, I'm not a boxer, but look, right? Right.

31:32Ben Carlson:so instead of paying uh your 200 fee for a personal trainer you're gonna do that listen that looks like my dad so my dad would always the infomercials back in the day of the exercise tools my dad would always get taken for those so i actually bought two things recently i

31:46Michael Batnick:bought this thing and i'm using it i don't know if you could tell uh i'm starting to feel results where did you see is that an instagram purchase yeah of course all of my spending happens in Instagram. Okay.

31:59Ben Carlson:So my dad would always get taken for the infomercials and he had this one thing called a body blade and it was like this long thing and you would, you'd hold it and you'd, you'd shake it and it would like put resistance against you. And it was kind of like the original shake weight. The thing, everyone, you get one of those for someone at like a white elephant gift party at Christmas. Uh, I don't remember the body blade.

32:20Michael Batnick:So your dad had this. Well, you listen, your dad's in great shape. So get a, just get a membership to a gym.

32:27Ben Carlson:What are you doing? I can't. I don't have time for a gym. Go to the gym. I don't have time.

32:31Michael Batnick:You're an early riser. Kids go to school. No, I'm not.

32:35Ben Carlson:I thought you wake up pretty early.

32:36Michael Batnick:When am I going to the gym? I get up at 630. That's pretty early.

32:40Ben Carlson:All right. Let's talk about AI. Oh, you go first. So for the first time, and maybe I'm oblivious to this stuff.

32:50Michael Batnick:In fact, I think I am, but it became overwhelming. The AI writing. I just canceled one of my Substack subscriptions. I was reading, like, wait a minute. This is like, this is so.

33:02Ben Carlson:It's a huge turnoff. When I notice it, I immediately check out and I leave. I'm not reading. If I can tell it's AI read, I'm not. Sorry.

33:08Michael Batnick:So I will never read this person again. And like on the flip side, so Nick Majuli just wrote his 500th blog post. And guess what? It sounds exactly like Nick Majuli. There's such a difference between like what somebody writes warts and all versus just something that's like made by the computer. I don't want to read it.

33:29Ben Carlson:So when I first started my blog and I thought about doing it, I went through and I read, remember the one thing back in the day in the early 2010s, the blog thing was you'd have on the side, it would list the 20 most popular blog posts you did or something. They don't, they don't do that anymore, but you, so I went through and I read like all the old blog posts from Eddie Elfenbein and Josh and Barry and all these people who were blogging. And the one thing that I took away from that is, oh, these people write in their own voice. That's what you have to do. That's how you stand out. You don't just like have this monotonous robotic thing.

33:57Ben Carlson:And that's what AI, that's so people who write in their own voice, I think are going to be able to stand out more. That's what I was trying to do. Okay. I got some AI job anecdotes. So I was in Oklahoma last week. I was speaking at the annual Oklahoma CFA conference. Very nice place. It was kind of, it was very toppy though, because it was in downtown Tulsa in this like, uh, art deco kind of place. And they just re, re, uh, re renovated this place. And it looks like a great, Great Gatsby kind of hall, like 1920s, very roaring 20s. It was very toppy. Anyway, talking to people there and sat next to, they had all these college students there who were there because they were in this equity contest.

34:34Ben Carlson:And so their professor was there. So I asked the professor, I said, how, how is the job market for young people? Because I keep hearing about it. And he said, it totally depends on what your major is. Every finance student we have is getting placed in a job. That's not a problem anymore. He said, people in finance are getting hired. It's the humanities and other jobs that are not getting hired. So he said, it's totally dependent on what you're going into. Another one, I talked to one of the largest asset managers that there is. I will not name them. They told me about how they have built their own AI system internally, okay?

35:02Ben Carlson:And they use it for their equity research analysts, the buy, sell, hold people, right? So he asked me a question. He said, we built this whole AI tool. It allows us to more efficiently track every company we're following. Every company in our universe, we can track them way more efficiently. It's unbelievable how much more efficient this has made us. He said, do you think our employee headcount has gone up by 40 % or down by 40 % since they implemented this new tool that allows them to track more companies? What do you think? More or less employees? I mean, I would think. The answer is obvious, right?

35:30Ben Carlson:Okay.

35:31Michael Batnick:Right. But now that you're asking it that way, is it the opposite of what I would think?

35:35Ben Carlson:Yes. He said, actually, no, we've hired 40 % more people on this staff. He said, you know why? The whole line used to be in the past that these small cap stocks and mid caps are totally under follow. and that's where the alpha is. He said, guess what? There's so many stocks that aren't being covered that weren't covered before. We can cover a wider universe now and it's allowed us to hire more people because we can produce more research to sell.

35:58Michael Batnick:Interesting.

35:58Ben Carlson:So we actually have hired more people. And it wasn't a huge number. I thought that was very interesting. Anyway, I think if there is going to be a moment for AI that resets certain parts of the labor market and my whole point here is you're not going to know which ones they are, I think. I think it's going to be hard to guess which parts of the white-collar labor economy are going to be impacted the most. So this is Ernie Tedeschi now writing for Stripe Economics, which is a great sub-stack. And he shows the decline of travel agents over time. And he said it's kind of a slow burn, but it really happens during recessions.

36:33Ben Carlson:That's when you see this massive waterfall of travel agents going away. And I think that's going to be what happens. The next recession, that's going to be the big tell when you're going to have people who have big layoffs and they don't get hired back. That's when you're going to know like, okay, this is the industry. These are the industries that are really impacted here. You're going to see a huge divergence in the recessions. Do people get hired back or not? I think that's going to be the tell.

37:00Michael Batnick:There was an article in the journal that I've had up for two weeks. I haven't read it yet. I don't know why. The CEO preaching straight talk about AI and job losses. It's the Verizon thing. Did you read this article? No. Okay. Well, I got home.

37:13Ben Carlson:Okay. Sorry. I guess I said the headlines. Okay.

37:16Michael Batnick:I got home on Sunday between kids sports games and my internet was out. Like just out. Like no internet connection. So I called Verizon and I'm going through the automated thing. And I was getting so frustrated. Like pressing zero customer service. Sorry. We cannot record. It's like, are you kidding me? how is this not any better at all? Like at all. It's the most frustrating thing. How are these automated phone solutions like not immediately overnight better? And I understand that like they're not dumb people. They're trying to fix it and they know it's frustrating.

38:00Ben Carlson:I always just say, talk to an operator, talk to an operator, talk to an operator. It never works. So how many content jobs do you think AI is going to create? Because the Wall Street Journal had this piece about how big brands boost creator spending. And they say, Dove Parent Unilever has led many other large companies to its embrace of creators. The company now has 300 ,000 people recommending its products, up from 10 ,000 to two years earlier.

38:25Michael Batnick:Holy cow.

38:25Ben Carlson:So this is like the, and I know this from having daughters, like the whole skincare, beauty, whatever, is such a huge thing. This is one company with 300 ,000 creators. And it just got me thinking about all the jobs that exist now that didn't exist in the past. Uber driver, DoorDash driver, but people who are content creators, right? People who just go create content on YouTube and TikTok and Instagram, podcasts, whatever, social media managers. What is AI going to lead to that we're like, oh yeah. But obviously it's like AI fact checkers. There's going to be in-house AI experts like they have IT now.

39:01Ben Carlson:AI video producers. They're going to have to be more data managers because the data is going to be so much more important. There'll be like AI governance people, but there's going to be all these jobs that exist from AI that we just don't think about. Totally. I'm trying to look at it as a positive. All right.

39:17Michael Batnick:We got, we got a few emails from Austin residents, um, saying that our explanation last week was totally off the mark. Um, and I think the gist of it was like more supply leads to lower prices, right? Like they built more and prices came down. Somebody said, I've lived in Austin for 20 plus years and I listened to your talk about Austin. There has been a boom in the building, especially apartments, but to say that more housing alone is the reason for lower rents is way oversimplified. I can't tell you just how much of a boom town Austin has been. And since the pandemic, that's slowed way down.

39:46Michael Batnick:The fall in rents is as much demand as it is supply. So, I mean, that was pretty much the long and the short of it.

39:53Ben Carlson:I don't buy it. I don't buy it. The fact that the thing has slowed down and they built more, that's supply. Why?

40:01Michael Batnick:Well, that's what this person said. This person said, the fall in rents is as much demand as it is supply. I think what we spoke about last week was only supply. Oh. There has been a massive slowdown in Austin.

40:14Ben Carlson:Okay. So he said there's still 18 ,000 people moving here the past three years. That's a huge slowdown. It's not like they're seeing a net migration, though.

40:22Michael Batnick:That's not what he's saying. Don't move the goalposts. Yeah, he is. I'm reading it.

40:26Ben Carlson:He's saying there's been a huge slowdown on people coming here. because they're adding way more people per year before.

40:34Michael Batnick:The slowdown is demand slowing down.

40:37Ben Carlson:Sure, but this wouldn't have happened if they didn't build all those apartment buildings.

40:43Ben Carlson:I'm disagreeing with the feedback here. Sorry. Great email. I don't believe it. It's the supply. They built more apartments. That's why prices fell.

40:51Michael Batnick:This is a weird, this is you failing to it. This is a weird take by you. This person said, the fall in rents is as much demand as it is supply. Which part are you disagreeing with?

41:02Ben Carlson:I'm saying it's more supply than demand.

41:04Michael Batnick:Okay. But last episode, we didn't speak about demand at all. And this person's saying, hey, it's not that simple. Yeah, don't be so defensive. This person's right.

41:12Ben Carlson:I'm not being defensive. I'm just saying it's supply.

41:14Michael Batnick:Yeah, but you're being defensive. All right. Bethany McLean and two other authors from Hunterbrook wrote a piece on Hamilton Lane, a publicly traded alternative asset manager, which they are short. and they gave credit to the journal and the FT for highlighting the accounting shenanigans that are commonplace across the industry. It's not just Hamilton Lane. But basically they buy companies that are private equity backed called secondaries and they're buying them for the secondary market has boomed because there's been a lack of exits and you hold the company for three years, five years, seven years, eight years, and there's no exit, like investors are willing to take a, quote, discount to, I guess, quote, again, air quote, NAV.

42:02Michael Batnick:And so the explosion of secondaries happened. Fair enough. All, you know, that all is above board. But the problem is that Hamilton Lane will buy a company for 80 cents on the, again, air quote, dollar, and then just mark it up to dollar. It's like, buddy, if you could buy a company for 80 cents, it ain't worth a dollar. Now, fine. You buy something for 97 cents, yeah, it's probably worth a dollar. And not only that, but then they're obviously doing that to charge fees on that. And that's responsible for a large portion of the growth of the last three years, like a large, large portion. So they wrote, last year, Hamilton Lane brewed another accounting portion, changing the way the firm is compensated.

42:42Michael Batnick:It used to be paid incentive fees when gains were realized, meaning when the underlying assets were actually sold. Now it can collect fees regularly based simply on increasing its own marks. The change allowed Hamilton Lane to pull forward fees that may have taken years to accrue. Thanks to the new fee structure, Hamilton Lane took in$58 million of incentive fees from the private assets fund in the year that ended in March 2025. In a statement to Hunterbrook addressing the issue, the company said that because semi-liquid funds typically reinvest proceeds rather than distribute them, traditional carry calculations based on distributions are less appropriate, making NAV-based carry a better fit.

43:26Ben Carlson:So they do this because their employees need to be paid. Right? They're worried they're going to lose employees because they're not getting carried. They're not getting the fee. They're not getting the 20 % of the 2 in 20 because there's no exit.

43:39Michael Batnick:well it might it might not be that quite that innocent they also wrote later in the article about the co-ceos i believe um getting a huge restricted stock grant with performance-based you know numbers in there like every other executive pay package um so okay so you're

43:56Ben Carlson:going are you going from a long long the private equity industry is short now

43:59Michael Batnick:no paper wise no no no no no i think that uh well first of all hamilton lane is particularly exposed because they are much more in the retail space. They are much less of an institutional-based company as opposed to like Carlyle, for example. So the gist of that is like these easy markups, it could go the opposite, easy come, easy go type of thing.

44:28Ben Carlson:The stock is in a 55 % drawdown, which is actually not as bad as Blue Owl, which is still 66 % down from the highest.

44:34Michael Batnick:no i i uh i am not pounding the table that i think that like the private credit credit stuff is overblown because how would i know how bad the loans really are but i do think so is there smoke yeah listen obviously if there's 25 of your of your portfolio is loaning money to these software names that are in in trouble yeah you're probably gonna have a few write downs but i guess my take is like yes some of these funds will have maybe negative three-year returns like forget about the 9 % to 11 % returns, maybe it goes to 2%, maybe it goes to negative 2 % CAGR for the next three years. Do I think that there's going to be blowups that take down an entire industry asset class?

45:12Michael Batnick:That's where I think it's hyperbolic.

45:14Ben Carlson:This is why it's easy to pound the table on both ends of the spectrum, though, because it's so hard to understand what's going on with these portfolios. Yeah, how would we know? That's the thing. That's why you can say there's way more trouble underneath the surface than you realize. Or no, no, things are actually fine. People on the outside don't know.

45:30Michael Batnick:Correct.

45:31Ben Carlson:That's what makes it hard.

45:31Michael Batnick:We're speculating.

45:33Ben Carlson:Goldman Sachs. This one was flying around social media. And this shows a survey from Goldman Sachs. And I had to look this up because I kept seeing the numbers on social media. So I went to the actual source. Mebfavor posted it. It says 40 ,000 or 40 % of people who make$300 ,000 to 500 ,000 and 40 % of people who make$500 ,000 or more live paycheck to paycheck. Okay. 40 % people who make a half billion dollars a year report living paycheck to paycheck. Now, here's how they define this, though. I looked because a lot of people look at this and go, see, lifestyle creep. It doesn't matter how much money you make.

46:07If you spend it all, you're not never going to get ahead.

46:10Ben Carlson:And like they take this stuff at face value. I, my way of looking at this is two things. One, surveys are broken. Two, brains are broken. That's way more of a reason here than people who make a half million dollars aren't saving any because it also, it asks primarily living paycheck to paycheck means I find it tough to make progress on any long-term financial goals. Oh my God. That's how they define living paycheck to paycheck.

46:34Michael Batnick:I'm so glad that you said that, Ben, because almost always, we never see the questions.

46:40Ben Carlson:I had to go to the actual report to find this. Good for you. I find it tough. And the funny thing is, it says people who make$200 ,000 to$300 ,000 a year, only 16 % report living paycheck to paycheck. Then all of a sudden it jumps to 40 % for people who make a half a million.

46:54Michael Batnick:This survey is throughout the window. If you find it tough to make progress on any long-term financial goals, now that means you live paycheck to paycheck.

47:03Ben Carlson:Right. If you make half a million dollar a year, what if your long-term financial goals are, I want to own a big house on the ocean. I want to fly private. Well, I'm not making any progress for those goals.

47:13Michael Batnick:I think most people find it tough to make progress on any long-term financial goals. Because it takes time.

47:20Ben Carlson:Yes, that's the problem.

47:21Michael Batnick:Unless you have a windfall, it takes time to hit your goals. Isn't that like the nature of what a goal is? It's something that you strive for. So by definition, it takes time to reach.

47:33Ben Carlson:Yes.

47:34Michael Batnick:Nobody's goals are what they can accomplish tomorrow. This is such nonsense.

47:39Ben Carlson:That's why that's not paycheck to paycheck. And there's also a lot of people who max out their 401k and also their Roth IRA and their HSA and their 529 and maybe make a brokerage account and then say, I'm living paycheck after all that. But I also think the other part is social media has just broken brains. We're not meant to see how other people live, how the better, the top 1.1 % live. We see that on a daily basis. Our brains weren't evolved enough to see that all the time.

48:08Michael Batnick:I just don't think social media is great for society, but I think it's just had all sorts of impacts that we can't quantify. So look at this chart from... Go ahead. Were you about to say something?

48:17Ben Carlson:How much does that thing weigh? I don't know.

48:20Michael Batnick:It's not that heavy, but it's got some good resistance. Look, one to five. One to five. I'm on five, not to brag.

48:29Ben Carlson:Derek Thompson. More than$20 on that. You got ripped off.

48:33Michael Batnick:I think it was$30. Okay, that's not bad. Derek Thompson wrote a post, like, if Americans are so rich, why are they so unhappy? Something like that. And the gist is, well, there's a bunch of things. It's inflation, it's social media, it's all that. But the pandemic broke everything.

48:48Ben Carlson:Yeah.

48:49Michael Batnick:Look at this chart. I forget where he pulled this from. Reported happiness. 1972 to 2018. It was steady. You know, you had your ups and your downs, but basically you could draw a straight line through it. And then permanent crash. Never to be recovered ever again. Yeah,

49:08Ben Carlson:I agree.

49:09Michael Batnick:It's COVID. All right. On the flip side, going back to my transcript stuff, new week, same story. The consumer is in pretty good shape. Key Corp. The consumer is in great shape. If you look at all of our credit metrics, if you look at the fact that these tax refunds from the big, beautiful bill will exceed what they did last year, if you look at spending, spending is kind of up mid-single digits year over year. Online spending is up maybe double digits. So on the consumer side, the consumer actually, our consumer is in good shape. Synchrony financial, and then the consumer is still in pretty good shape.

49:40Michael Batnick:It's been very consistent over the past few quarters. We've seen signs of strength when you get spending patterns. Wells Fargo, the economy is still extremely strong. Loan demand is decent. Delinquencies on the consumer side are extremely well controlled. Listen, we're not making this up. When this changes, we'll read the new quotes.

49:56Ben Carlson:Someone asked me, I'm going to be doing a lot of podcasts in the month or two ahead. I've already done a lot for a book because this is what you do. You go on a podcast book tour. And I was on a Seeking Alpha podcast. And they asked me about how I think about earnings reports. And I said, I think it's a great macro tell. I said, I'm not a forensic accountant that digs into the numbers. That's not my forte. But if you listen to the credit cards and the banks and the retail about how they talk about a consumer, I think it would have saved you a lot of poor economic takes over the past four to five years.

50:27Michael Batnick:Earnings, calls over headlines. If you want to hear about what's actually happened to the consumer, don't read the Wall Street Journal. No offense. You can pick any publisher. I love the Wall Street Journal. All right. I listened to the kindergarten coffee watchables and I thought this was a movie that I had seen in theaters because I had just seen it so many times as a child. Came out in 1990. Did I see this when I was five? Probably not.

50:51Ben Carlson:I showed it to my kids about six months ago because we were going through an Arnold phase and they absolutely loved it.

50:57Michael Batnick:It's so good.

50:59Ben Carlson:He's just a one of one. Yeah. The accent, you can't recreate that. The accent is just perfect, how he says words.

51:07Michael Batnick:So that was, did you listen to the Rewatchables episode?

51:10Ben Carlson:Yeah, I did.

51:11Michael Batnick:Thoroughly enjoyable. It was good. All right, the most watched movies right now on streaming. so the the shitty movie thrash garbage so bad 904 million what is that minutes hours whatever it is oh oh minutes there is um it's not it's eight times number two netflix is so dominant um number two is balls up which wait wait so here's the thing you you

51:46Ben Carlson:talk about people using AI to like better themselves you know what everyone does when they go on Netflix instead of searching around they go to the top 10 and oh this thrash movie is number one I'll watch that that's what people that's the amount of research people do they look for shortcuts I've never heard of any of these other movies by the way none of all these other

52:03Michael Batnick:four movies I've never heard any of them so I started watching balls up I fell asleep after 10 minutes but it's uh it's Mark Wahlberg and who's the guy from let me just google his name Paul Walter Hauser. So he invented a condom for the Olympics. Like they're the biggest, they're the sponsoring condom brand. And it goes over your penis and your testicles. And it's called Balls Up. Okay. So I haven't finished it, but. Is that a Keanu Reeves movie on Apple TV? All right, so check this out. What is Apple doing? So Apple made a movie with Jonah Hill, Keanu Reeves and Cameron Diaz. And... Seriously?

52:47Michael Batnick:I've never heard of it. Well, it got a 29 % from the critics, which is sort of not relevant for comedy, but it got 30 % from the audience. So you know it's straight trash.

52:57Ben Carlson:It's got a 4.5 on IMDb. Holy cow.

53:02Michael Batnick:Anyway, Netflix is so dominant. It's eight times number two. Number three is Outcome, the Keanu Reeves movie. Number four is The Truth Truth and Tragedy of Mariah Wilson, another Netflix movie I've never heard of. I watched the most recent one, Apex. It was so, it's with Charlize Theron and Paren Edgerton.

53:21Ben Carlson:Okay. George wanted to watch that one.

53:23Michael Batnick:So bad. Don't let him watch it. It was like, but like, I know we've mentioned this a million times. There's just something hollow about these Netflix movies. Yes, obviously. Like this, it was just garbage. Really, really, really not a good movie. All right. Also in streaming news. so peacock is now where a lot of the nba playoff games are homed housed uh yes i learned this by

53:51Ben Carlson:we went to a restaurant to try to watch the pistons game like i said we don't have peacock

53:55Michael Batnick:so so they reported earnings last week and they posted a first first quarter loss this from Comcast. Peacock lost$432 million. They've lost$6 billion cumulatively. I mean, that's a lot of money. No, Lucas Shaw's had$11 billion since they debuted in 2020. Oh, okay. So I just pulled this from since 20. Okay, so $6 billion was since 2023.

54:25Ben Carlson:Okay, so since they debuted, they've lost $11 billion since 2020.

54:29Michael Batnick:Subscriber growth is it's growing a little bit, you know, 46 million up from 41 million in the previous quarter. But look at their churn. So Lucas Shaw's a chart. Peacock has started to draw lots of viewers with live sports, so football, basketball, Olympics. But it struggles to keep them as the worst churn of any service by far. Look at that.

54:51Ben Carlson:So who do they combine with? Like they need to, obviously they need to be consolidated into someone else. I don't know if I don't know I don't know what happens but it's not it's not working all right

55:04Michael Batnick:um I was right about this Ben no offense you were wrong uh Michael Jackson is a Michael Jackson Michael the Michael movie is a smash hit so I heard they didn't go into the later stuff of his life no no no because the family had the family was you know they had they were able to take that that. $97 million domestically. Biggest opening ever for a biopic of any kind. Biggest opening of the year for a live action film. First biopic in history to surpass $100 million worldwide in a single day. Monster movie. Monster movie. Will you be watching this one?

55:39Ben Carlson:I won't be watching it.

55:40Michael Batnick:I'm not watching this one. $217 million worldwide. Huge numbers. That's from Matt Belen. No, I don't love these movies. I liked Queen. Bohemian Rhapsody, but I just I just don't care about them. I didn't see Bruce. The Bruce one. No. Didn't see the Elton John one. It's too much. Oh, I saw the Bob Dylan one, but I fell asleep on the plane. It's just not my thing. All right. Real quick. Prediction markets, which are essentially just gambling, sports gambling websites. Somebody posted this chart. Outside of sports, Polly Market owns the market. So Cal, she is 87 % sports. Wow. Polymarket is only 39 % sports.

56:26Okay.

56:26Ben Carlson:So most of it, so they have both platforms at 12 billion in volume. Wow. Okay.

56:32Michael Batnick:But CalShare is predominantly sports, which is why they're fighting so heavily with, you know, for their survival, I guess, with the States and whatnot. Okay.

56:40Ben Carlson:I saw this tweet. Ben Eisenhardt on Twitter. Being in your early 40s is weird, man. People around your age are in every stage of life. You have people who are grandparents. You have people who have newborns. People who are grandparents.

56:52Michael Batnick:I don't have people at my age that are grandparents.

56:54Ben Carlson:Yeah, that'd be weird. I guess late 40s. You have people dating 25-year-olds. You have people celebrating their 20th wedding anniversary. Some of them look 60 and some of them look 30. All the bases are covered in your early 40s. I was thinking about this recently. I can, being that, like, you're at a touch point where you're, like, you're thinking about, you're right in the middle of, like, retirement age and, like, your 20s. And I guess I'm just, my point is, I understand where the midlife crisis comes from. Being at this age, I totally get it. I get why it happens to so many people. Because you look back and you go, oh, my like super duper fun days, like my woohoo, those days, like those are gone.

57:28Michael Batnick:I've been thinking about this a lot as well. I saw somebody recently who I haven't seen in a while and they looked old. And I thought, well, yeah, we are getting old. So I've been thinking a lot about life and our age and our kids and all that stuff. And I still very much view myself as like a baby because I was the youngest of three kids. So I grew up the baby. I was a jackass for people that have not listened to every episode. I was an idiot in high school. I got kicked out of college twice because I was just a clown. I didn't take anything seriously. And I still very much identify with being that person.

58:03Michael Batnick:But and also, obviously, I very much more identify, thank God, at this point in my life with not being that person. But that push and pull between like, I still feel like I'm 25, but I need this thing because my body is breaking down. Yeah, man, it's real. It is.

58:20Ben Carlson:I'm just saying I totally get where it comes from. I read all the stuff about like how it happens and why it happens. And guess what? It's everything people tell you before. And you kind of like brush it off when you're younger. Like, eh, like it's all true. Everything they tell you is true. The time goes fast as the kids, all that, all that stuff. It's so it's true. Funny how that works. That's right, Ben. All right. Recommendations. I got two non-recommendations. I was on a flight and I said like I'm going to try some new release movies and I tried The Housemaid that's a Sidney Sweeney one and I tried Mercy with Chris Pratt and for me they were both that sucked boy they were both five minute movies five minutes and I ripped the cord and I cut my loser short both of them like I'm not going to like these movies I can tell

59:07Michael Batnick:Housemaid is a good airplane movie

59:09Ben Carlson:okay I can just tell like I'm not going to I'm not going to like this

59:11Michael Batnick:so Mercy was Mercy was I mean it was an obvious

59:16Ben Carlson:Minority Report ripoff two minutes into the movie and you could tell it was going to be worse. So what's the point of watching it? Right. I did finally finish DTF St. Louis. Just one of the weirdest shows ever. Did you enjoy it? Very funny. So weird. Yeah, I enjoyed it. It was very weird. But then someone emailed us last week and said, hey, the guy who wrote and produced all these and the showrunner for DTF St. Louis, he also wrote and did one of my favorite shows on Amazon called The Patriot. And my brother pounded the table on this show for me forever. And so I'm like, you know what? Fine. I'm going to watch this.

59:44Ben Carlson:And I'll have five episodes in. and so again it's the same guy who did DTF and it's got to be tonally one of the weirdest shows ever it's a dark comedy slash dramedy about a guy in the CIA

59:56Michael Batnick:did it give you a toner?

59:59Ben Carlson:it's it is one of those shows where the people who love it will like fall on the sword for this movie or this show

1:00:06Michael Batnick:I'm sorry to interrupt, that was a weird reference I know that was a sexual innuendo that I did not make up that was a reference to a movie called Pitch Perfect A toner is a musical boner. So just for the audience.

1:00:18Ben Carlson:Okay, sorry. I'm behind on Pitch Perfect references. I did not get that reference. Okay. But this is the kind of show where you either love it or you hate it. There's no in between. You're like, oh my gosh, this is my kind of comedy. It's very subtle. And I really like it. And I know, I bet a lot of people would probably hate it. But if you like DTF St. Louis, you should probably at least give it a try.

1:00:39Michael Batnick:Okay. I feel like you were talking to me when you said people would hate it. Would I hate it? Okay. Well, you liked DTF St. Louis. I loved it. But I don't know that I... Yeah, I think because Bateman and the other guy were so good.

1:00:49Ben Carlson:True. That was part of it. But it's got John Locke from Lost, the guy who played Joe Pickett in the Joe Pickett series on Paramount. Anyway, that's what I got. One other thing. I've realized something. Why movies of the past 10 years or so just don't hit anymore. Marty Supreme is on HBO, right? Awesome. It's a one... But every good movie for the past 10 years is you watch it once and that's it. You never rewatch it again.

1:01:15Michael Batnick:Yeah, it's not rewatchable.

1:01:17Ben Carlson:There's like no good movies are rewatchable anymore.

1:01:19Michael Batnick:That's the problem. Ooh, ooh, ooh, ooh. Top Gun Maverick. By the way.

1:01:23Ben Carlson:Okay, that's fair.

1:01:25Michael Batnick:They're making a third.

1:01:26Ben Carlson:Yeah, they probably shouldn't. Yeah, they should. I'll go. Obviously, I'm in. Tom Cruise probably die. Let's be honest. One of these, he should die. Did he die?

1:01:35Michael Batnick:I thought he did die in the last one.

1:01:37Ben Carlson:No, he should have. Okay. That's my thing. There's no more rewatchable movies anymore. Even if they're good, high-quality movies, there are very few that are rewatchable. I think that ended in 2015. It's probably because there's no comedies anymore.

1:01:50Michael Batnick:Yeah, that's probably right. Oh, speaking of that, though, I did see on Instagram a quote from Jonah Hill, and he said, I'm back. He basically said, I spent the last decade being all serious and not happy, and get ready to turn your brain off because I'm back to making the stupidest shit you've ever seen. And I can't wait. There was nothing better. There was nothing better than Jonah being Jonah.

1:02:09Ben Carlson:He's one of the best sarcastic line readers that there is.

1:02:13Michael Batnick:The best. No recommendations for you? No horror movies this week? Well, I've been busy with playoffs, so that's been cutting into my watch time. I did watch the Hulk Hogan doc. I think we spoke about Hulk when he died. You were not a wrestling fan, right?

1:02:29Ben Carlson:I mean, until I was like eight.

1:02:30Michael Batnick:Okay. So I was like a weirdo, but I watched it in middle school, like DX and The Attitude Era, NWO. Like that was a big part of my seventh and eighth grade childhood. And Hulk Hogan was like, he was, he was bigger than wrestling. I mean, obviously, right. He was like one of the legitimately the most famous people in the world for as big as the rock is and stone cold was like Hulk Hogan was up as famous as like Michael Jackson globally.

1:02:58Ben Carlson:And then he had the reality show. Remember that one?

1:03:00Michael Batnick:Yeah. Hogan knows best. Sure do. So if you're a wrestling fan, nothing in there that you don't already know, but I enjoyed it. Okay. Okay. Okay. All right, Ben. Everything else good?

1:03:13Ben Carlson:There's not a lot to talk about the market these days.

1:03:15Michael Batnick:Oh, there's tons to talk about.

1:03:16Ben Carlson:You think so?

1:03:17Michael Batnick:Oh, yeah.

1:03:18Ben Carlson:Okay. I think the stock market just for the last week or so is boring again. That's all I got.

1:03:23Michael Batnick:Certainly more boring than March, which is a good thing. Okay. AnimalSpirits at the compoundnews.com. Appreciate everybody's emails. Hope everybody's getting ready for spring weather to roll around. I sure am. thank you for listening see you next time