Say Bubble One More Time. I Dare You! (EP. 474)

11:33Ben Carlson:Yeah, but we have bigger companies now. So you can't say that because the size is bigger. So let's inflation adjust it. Inflation adjusted or something.

11:41Michael Batnick:All right, so inflation adjusted and say, yeah, probably during the GFC it happened like four times.

11:45Ben Carlson:Okay.

11:46Michael Batnick:So I think - You want to rewind 10 seconds? Does the IBM, I'm trying to pigeonhole stories. Yeah,$300 billion software or company falling 25 % in a day isn't more a moving story. But back to you, Mr.

11:58Ben Carlson:Boring. You just talked about the fact that you're trying to be nicer. I don't believe you. Not to you. You're not a stranger. All right. Well, you just said you're going to go after this episode, you're going to yell at your neighbors. I'm not going to yell at my neighbors, but they're pushing me. All right. So this is the most normal. I think we've gone through a period of normalization where this has been one of the most abnormal decades we've ever seen. I think that's pretty fair to say. I think we're back to almost a normalization. point because GDP growth is 2 % to 3 % right now. Inflation, 3.5%, which is right on the 100-year average, 3.5%.

12:34Ben Carlson:The 10-year is yielding 4.5%. The US stock market is up 11 % six months into the year. Some people would say, no, no, no, that's a full year. But actually, I would say the average up year is up 21%. So this is like the most normal, take a snapshot, the picture of this right now, right in the world cup they do this with the square i don't know why they do this what do they do that with oh with the cards when they do var like we're gonna go for the replay they draw they draw a picture of a tv what is var you didn't watch the world cup never mind i'm not gonna explain it to you uh so donna donna you're out of your element this is yeah you're like a child that wanders into the middle of a movie everything is average right now everything is kind of normal market wise.

13:19Ben Carlson:Now, when you tweet this, are you like giggling?

13:23Michael Batnick:Like you're just trolling the internet?

13:26Ben Carlson:No, because this is facts. I'm saying the people who think this is the craziest thing ever and that this is normal. This is a normal market environment in some ways.

13:36Michael Batnick:Through the prism of milquetoast, if you are a snapshot investor, which I don't know, I happen to look at a screen during the day. I'm crazy like that. Then yes, this is a normal market year.

13:48Ben Carlson:If you look just at the averages of the economy and the markets, this is a normal year.

13:52Michael Batnick:Yeah, if you fell asleep in January. You know, Chris keeps texting me pictures of his vacation. I'm not Instagram. Why does he do this? I feel like I'm being a curmudgeon and I love him and I'm happy that he's happy, but I don't do this to him. this is my partner chris he treats me and josh like where is it personal instagram

14:16Ben Carlson:remember back in the day that you people you'd get back on vacation and you do like a slideshow for people of all your pictures and no one cared then either you're right um all right great story in the wall street journal anyway uh normal year okay you don't believe me it's pretty normal year We had a 9 % correction. No, I know where you're coming from,

14:37Michael Batnick:but this is a very exciting year. When I hear normal, I think boring. I think average, standard, typical. It doesn't feel like that to me, but I hear where you're coming from.

14:48Ben Carlson:All right. Everyday investors are over the Mag 7 and into new AI darlings. This is your whole thing about money going to where it is treated best. This is interesting. So they showed net flows by individual investors this month and a ton of retail money went into SpaceX. A lot. and I guess it's all gotten slaughtered at this point. So do you think most of this sale has been people being like, okay, I was banking on a huge pop. It didn't really happen. But they're showing these names, and I don't know, half of these names I've never heard of, Andas and Iren, and it's still some Mag7, but it's not the names that you'd expect to see.

15:24Ben Carlson:What is Andas, O-N-D-A-S? I don't know. Someone's going to tell us in the comments that we're idiots because we don't know all the stocks.

15:32Michael Batnick:Yeah.

15:33Ben Carlson:It's interesting that we talked about buying the dip. Oracle down 60 % has seen a huge inflow of retail investors trying to catch that falling knife. Okay, I think they put these types of stories in here just for me. Davis Cantrell, a college student based near Atlanta, has been investing for roughly two years and closely following the biggest AI players over that period. Listen, the 19-year-old recently trimmed his Microsoft holdings. I'm looking for aggressive, more high-risk growth stocks, he said. I just don't see Microsoft and NVIDIA fitting into that category anymore.

16:01Michael Batnick:Neither do I.

16:03Ben Carlson:I totally agree with him. Yeah. This guy's got it figured out at 19. Yeah. I didn't know what the stock market was at 19 years old. I barely, I really didn't. Um, I just, I think, I think it's hilarious that they asked a 19 year old what he thinks of this market. And I think it's awesome that we read that quote and we're like, Hey,

16:21Michael Batnick:credit to Davis. It sounds like this was AI. I don't know. Davis. No, that's a real guy. All right. Citadel. I just want to say the$300 million since the SpaceX, I'm going to guess that half of that money is out. Or maybe that's a lot. Let's say a third of the money has sold.

16:38Ben Carlson:It had to be fast money.

16:39Michael Batnick:Yeah.

16:40Ben Carlson:Right? Yeah. It is interesting, though. This makes sense. Citadel Securities had another report. They said, has retail started selling equities? No. The retail remains the strongest structural buyer of U.S. equities. Unbelievable. We have not seen a single net sell day on a retail cash equities platform in July. Second strongest month for retail buying since January 2020, and the strongest July on our data set.

17:03Michael Batnick:So people are still, money's still going in. I love that this is still happening. That retail, that the everyday investor is still buying the dip, still making money. And I hear buckle up buttercup asshole in the back of my head. Just wait. Yeah, okay, fine, just wait. But you've been saying that for a long time. Matter of fact, the buckle up buttercup, was that an email to us or a quote in a story? I can't remember. That was four years ago. How long have these just mean-spirited curmudgeon's been mocking retail?

17:34Ben Carlson:Five years, 10 years?

17:37Michael Batnick:Just wait, they say, as they sit in cash while everyday know-nothing investors get rich.

17:43Ben Carlson:This is interesting, though. They show the leveraged ETF assets under management, and it shows the total. And if you show, they show semiconductors. So the total is$198 billion. semiconductors are already one fourth, one quarter of that, which is absolutely insane because they were basically nothing before. So that the growth was just, so semis is 53 billion tech. X semis is 76 billion. The other ones are 70. So this, these leverage ETFs, it's all technology. That's pretty insane how quickly this new category can form, right? It's like building a brand new town in a week or something.

18:22Michael Batnick:I did a talking wealth episode that's coming out. next week, I believe, with James Seifert, our friend at Bloomberg. Have you ever heard of a company called Corgi? Ish? It's a new ETF. Do people mention it? It's a new ETF company.

18:37Ben Carlson:Oh, they're the one that is like, they're acquiring all the new ETFs, right?

18:41Michael Batnick:No, they're filing for hundreds. They're just spraying and praying. So they're bringing like a VC style playbook to the ETF land, which is super interesting. ETFs are... ETFs are having a moment. The number of launches is insane. But so we've been talking about this a lot. $200 billion. When you amplify that for the amount of actual exposure, it's about half a trillion. And that's why you're seeing these wild gyrations in these memory names.

19:13Ben Carlson:Yeah, when you get... So your whole thing about IBM being kind of like, oh, that doesn't happen very often, that's going to happen way more in the future now because of these single stock ETFs and leveraged ETFs. Fair? Probably. All right. More of a bloodbath. I can't believe that Nike lost its moat. So Nike is down 75 % from the highs. I think it's at the same price it was at 2014. And my number one rule of thumb for stock picking, never invest in fads. Like Peloton was a fad. I sniffed that out pretty, like every exercise workout thing is a fad. When's the last time you used your Peloton? Five years ago?

19:52Ben Carlson:No. Four years ago?

19:53Michael Batnick:No, no, no. Three years ago.

19:55Ben Carlson:Okay. I can't believe mine. I bought it in April of 2020. It's still working. I used it last night. Still going strong. I'm still using it.

20:03Michael Batnick:I did do a Peloton exercise class five weeks ago, not to brag. Okay.

20:07Ben Carlson:Good job. But it seems like Nike looks like a lot of these other fads. So Lululemon is down 80%. Under Armour is down 84%. Gap is down 62%. It's funny. Gap still never recovered its price from the dot-com bubble. And it never will. It's come back a few times.

20:22Michael Batnick:I think Nike might be toast. And when I say toast, Nike is still my number one brand. And there's not even anything close. Like whenever I buy any sports attire, I don't buy Adidas. I mean, I buy Ainclauts, but whatever.

20:36Ben Carlson:It is for me too. Nike is still my number one brand. Maybe that's why I'm so shocked by this. It seems like it's done based on the stock market. But I mean, the numbers suck.

20:49Michael Batnick:Like the numbers are not good. You know, I'm a big gaps get filled guy. And there was a big juicy gap up at 52 that I think probably will get filled. But I don't know. So Nike's at$43. Is the stock ever going to trade at$90 ever again? I don't know. I don't think so. I don't think that in two or three years from now, we're going to be talking about an amazing, put the stock price aside. I don't think we're going to be talking about how Nike regained its mojo.

21:18Ben Carlson:There are all these brands from our youth that just don't really exist anymore. MTV was a huge brand we grew up with. Sports Illustrated. The biggest. It feels like Nike is going to be put in that dustbin. I can't believe it. This really does shock me.

21:32Michael Batnick:Well, it's not going away. Nike will be around for the rest of eternity.

21:37Ben Carlson:But the stock market is telling, and maybe this is like the buy signal of a lifetime, but it seems like it's like, okay, this company, they're not what they were used to being. It's not going to be again.

21:46Michael Batnick:The fundamentals of Nike's business sucks. It's not doing well.

21:50Ben Carlson:Right. Yeah, they kind of blew it. All right, this is kind of cool. Someone sent us this. Zook Data on Twitter. I think he must be an AI guy. Oh, he works at Data Analyst at Blockworks. He says, are you hearing the word bubble everywhere these days? I counted every mention of bubble across hundreds of episodes from two of my favorite investing podcasts. Can you spot the trend? So he pulled up Animal Spirits and the Compounded Friends and looked at how often we say the word bubble. and he did some graphs in here and there was not much mentioned at all 2022 to 2025 ish and now to start this year massive he's doing an eight-week rolling mean i wonder how he did this um showing that the bubble talk for this show has skyrocketed this year but you know what

22:40Michael Batnick:credit to us we are a reflection of the market commentary that's floating around we are we're pushing back on the narrative yeah we're a concurrent indicator though we're not like

22:52Ben Carlson:a leading indicator right we're talking about what everyone else is talking about we talk about

22:57Michael Batnick:what's happening but i think i think it is interesting and notable and i want to i want to clarify one one thing about this when i'm saying my opinion is that this is not a stock market bubble in general right like i don't think the sb 500 is going to fall 70 i can only talk about the stock market i have no idea what's actually happening with the supply chain bottlenecks and uh there's no compute like how what do i know about lithography and this and i know i know

23:31Ben Carlson:nothing and as much as you do nothing yeah but the thing is even the people who do know that stuff they're not good at predicting what's going to happen to the market either well that's true i'm

23:39Michael Batnick:I'm just saying to the audience, I know our audience is not counting on us to tell them that Micron is overestimating demand. We can't do that. But I don't see a bubble in the stock market. And if people say, well, the earnings aren't sustainable, and that's where the bubble is, hey, dude, the market agrees. The market is saying their earnings aren't sustainable. We think this is a great insight. That's why these companies are trading

24:07Ben Carlson:at 12 times forward earnings.

24:08Michael Batnick:So this chart from Peter Callahan at Goldman, from Daily Chartbook, the forward PE multiple gap between semis and the S &P 500 is at the lowest levels of this AI era. So the market agrees. It is not contrarian to say these earnings aren't sustainable. That's not going out on a limb. Literally, that is consensus. Right.

24:29Ben Carlson:So if the market was valuing these things at 50 times forward earnings, you'd go, okay, this is crazy. They think these earnings are going to continue or continue to grow or whatever, but then that's not what the market is saying.

24:38Michael Batnick:Right. So, uh, duality research has this great chart that we've shared before. It's the distribution of forward PE ratios. So he shows the percentage of S and P 500 companies, as well as the percentage of the overall market cap that trade in various buckets. So for example, Alex says that more than 300 names, 61 % or 40 % of the total market cap trade for a forward PE that's under 20 times.

25:04Ben Carlson:So this is the, if you've been a, if you've been a portfolio manager who has railed against overpriced tech stocks for years. This better be your year. This is like, this is when you pound the table on the stock pickers market. I would hope so. Right? Because I'm sure there are people who've said for years to their clients, listen, we can't invest in this. Everyone's invested into this over concentration, over valuation, all this stuff. This has to be your year. Has to.

25:31Michael Batnick:He has, he also shows the forward P breaking, broken down by sectors. and just look at this. Basically, everything is going down and to the right, for the most part. Everything is compressing with the exception of, I don't know, industrials are hanging high, I suppose, and real estate, but everything for the most part, forward piece are coming in. This is like the opposite of what happens in a bubble.

25:52Ben Carlson:These charts make it, if you just showed me these charts and didn't tell me what was going on in the market, I just took it from a coma, six months ago, I'd say, oh, the market's rolling over. Yeah. Not the market is up double digits this year. I'd say, oh, the market's probably down 12%.

26:03Michael Batnick:And this is happening with the backdrop of all-time high earnings and margins and acceleration. Like, this is not a bubble. Stop it. It might turn into one. That's not what this is. Yeah, I tend to agree.

26:21Ben Carlson:The hard thing to square is there's bubble-like behavior in places like South Korea and retail investors, but that… That's never going away. I think that's the new normal.

26:32Michael Batnick:If we have a five-year bear market coinciding with a recession where people just lose it all, yeah, they'll stop speculating. But hang on.

26:42Ben Carlson:Absent that. If we have a financial crisis that like the stock market falls 40%, the Reddit crowd is going to be shorting stocks. Maybe. You don't think that's going to happen? Or do you think they're just going to keep piling in? And like, they're going to go where the momentum is. I think. You also, I don't want to say what I was about to say. Keep going. All right. Let's move on from the bubble talk. We can't say it anymore. I'm going to say it like five more times just to up our ranking on this guy's data. Of course. Bubble, bubble, bubble, bubble. All right. I was thinking about this in relation to my normal economic environment.

27:13Ben Carlson:I know you think I'm trolling. I'm just putting out what the data says. Why don't we have recessions anymore? It feels like now a lot of people, I put this question out there and I looked at the National Bureau of Economic Research has the data going back to 1857. So look at all these 20-year blocks of how many recessions did we have. And pretty much for 100 years, we averaged four to five recessions every 20 years. And since the 70s, early 80s, that has completely flipped. The recessions are shorter in months, and they're fewer in magnitude. We don't have recessions anymore. Now, some people say, well, the reason we don't have recessions this decade is because fiscal deficits and government spending and monetary policy.

27:59Ben Carlson:And I would say, if that stuff stopped us from having recessions anymore, it's worth it. And I know that's obviously not the only reason that we don't have recessions anymore. You couldn't possibly say, no, that has no impact. Of course it does. Policymakers have figured out how to manage the economy better. And that's a wonderful thing. We don't have recessions anymore as much as we used to.

28:21Michael Batnick:You know how, uh, Bill Simmons will sometimes say, how does like, uh, I don't know how many MVPs LeBron has, but let's just say, how does LeBron only have three MVPs? Right. And that's like, well, zoom in. Let's, let's actually look at it year by year and say like, which year was he robbed? And then let's assess it that way. So to answer your question, I want to do something similar.

28:44Ben Carlson:Oh, 2022, for sure. That should have been a recession. Should have been, totally should have been a recession.

28:49Michael Batnick:But so, so zoom in. The 2010 post-GFC decade. Obviously, we were coming out of the worst recession since the Great Depression, right? So consumers, balance sheets, governments, corporations, everybody was healing. And it probably took three to five years after that, at least.

29:13Ben Carlson:Yeah, but 2011, everyone and their brother said, double-dip recession, Europe, the European debt crisis, this is going to drag us into the recession. Everyone was saying that. Yeah, fine. 2011, that was... Yeah, yeah, yeah.

29:24Michael Batnick:But to me, that was still post-GFC. That gets lumped in with post-GFC. That was not that far removed.

29:29Ben Carlson:Yeah, you're right. That would be like 1937 after the Great Depression.

29:32Michael Batnick:Right, same thing. And then the mobile cloud hyperscaler, what was Scott Galloway's book? The Four Horsemen. Like the tech giants dragged us out. I'm going to say us. I mean the stock market and making people rich with it. The tech giants dragged us out of that.

29:58Ben Carlson:Well, I think technology is definitely one of the reasons that we don't have as many recessions anymore. The economy is more efficient than it used to be. The technology stocks have turned the United States of America into the stock market.

30:13Michael Batnick:And the stock market fuels everything. So then we had a slowdown. Pandemic, obviously. Fiscal stimulus. That stopped the recession. 2022. Inflation. Interest rates. We genuinely would have had a recession if it were not for AI. If Chad GBT did not come onto the scene.

30:33Ben Carlson:I don't believe that.

30:34Michael Batnick:I 100 % believe that.

30:36Ben Carlson:That saved the stock market, but there wasn't enough spending then to stop a recession. No way. There was not enough spending.

30:41Michael Batnick:The stock market saved the economy. I 100 % believe that.

30:44Ben Carlson:No, it was really the wealth effect. People had locked in low interest rates. They repaired their balance sheets. That's why we didn't have a recession. There was not enough spending on Chad GBT to cause a non-recession then.

30:53Michael Batnick:No way. That's a huge part of it. But the stock market rebounding, because Chad GBT called the stock market to rebound. If there was no rebound in the stock market, we would be in a way different place today than we were in 2023.

31:05Ben Carlson:Here's the point. It's always something now. And a lot of it is policy. Like, I think we've just the one thing, the economy is bigger and more mature than it was. Like we were emerging market back in the 19th century. So of course there was more booms and busts. We were more of an industrial economy. So it was like plant and equipment and depreciation and right, like that inventory and all this stuff. And now it's a service-based economy. So that's, that's a big part of it too. We just, we're more diversified. We're more dynamic. But policymakers, and some people hate this. Some people want, the doomers want a recession.

31:38Michael Batnick:I don't even want to give those people any oxygen. When you say some people, it's like, yeah, it's a few pundits. And like, less than 1 % of the population wants everything to blow up. These are morons that don't deserve our airtime.

31:49Ben Carlson:I kind of thought we'd got rid of these people, but I got tagged on this tweet a million times. So this guy on Twitter says, if we divide the S &P 500 by the Fed's balance sheet, the line is basically flat since 2008. I do too. So many people said, hey, can you please address this? And someone said, hey, this seems like a blog post to me. What this guy is saying seems true. And I can't believe people still believe this. I just thought I'd address it really quick. Fine, what's the tweet? The guy stopped the chart in 2024. And if you go forward in 2024, the correlation goes away. So the Fed's balance sheet has actually contracted since 2024.

32:26Ben Carlson:Can we just stop? Stop, stop. So the Fed's balance sheet has literally contracted since 2024. 2023 contracted too, and the stock market is booming. I think people forget that the Fed literally tried to put us in a recession in 2022 by taking a rate from 0 % to 5%.

32:42Michael Batnick:If you're still obsessed with the Fed's balance sheet and for why the stock market isn't where you think it should be, you're an angry person and things are not going well. I'm sorry.

32:52Ben Carlson:Yes. I don't want to have been right except for. So here's another reason why things remain strong. This is from Torsten Slott. Unemployment has been below the feds 4.5 % NARU estimate for a record tying period. 57 months in a row, the unemployment rate has been under 5%. And if you take away that COVID period, which was kind of this fake thing because people lost their jobs. Yes. But they were being paid sometimes more from unemployment insurance. Like we've had below 5 % unemployment for almost a decade, essentially. Right? Take away the COVID period, which kind of doesn't count. That's one of the reasons things remain so strong.

33:30Ben Carlson:Let me ask this. People have jobs and they're going to spend if they have a job.

33:33Michael Batnick:Over the next 30 years, will this trend remain in place of fewer recessions?

33:38Ben Carlson:Yes.

33:39Michael Batnick:We're looking at like,

33:40Ben Carlson:and they're not going to be economic. I mean, sure, there's going to be a credit cycle eventually. But it's going to be more exogenous shocks. It's not going to be like typical.

33:49Michael Batnick:We're not saying no recessions, obviously. There will be recessions. The business cycle exists. Immutable force of nature. But - No, but if you're using the playbook from the previous 80 years,

34:03Ben Carlson:you're going to be wrong in the future. You just are. It's a totally different environment now. All right. Let's talk about technology world. Okay, this is from the Washington Post. A bunch of people were posting this on social media. I thought it was interesting. It has to be very weird to work in the technology industry right now because you're seeing certain people get like not just life-changing amounts of money, but like certain individuals are getting like buy a sports team amounts of money. It's like it's insane. And other people are every day going into work going, oh, my gosh, when am I going to get?

34:34Ben Carlson:Because the tech industry is not going to. They're going to be the first ones. They're the first line of defense, right? They're in the, what do they call it? and like Braveheart, like the people, the first line, you know, like those guys are probably going to get killed. They're going to get rolled over by that big log thing that rolls really fast, you know, and all the arrows. The tech CEOs are not going to have any like sympathy for their employees. If they can replace their job with AI, they're going to. So it has to be a very weird place to work. You could get a life-changing amount of money or you could have got a job tomorrow.

35:04Ben Carlson:So the Washington Post did this thing where -

35:06Michael Batnick:I don't have a, I have very few people in my life that work in this world.

35:13Ben Carlson:Yeah, I'm just saying, so they interviewed a bunch of these people. It has to be, so they said, at tech companies, leaders obsessed with winning the AI race have tasked their workforces of coders, lawyers, and HR professionals with becoming the front line of the transformation. They're being measured by how quickly they can automate their own jobs while watching their colleagues get pushed out in successive waves of layoffs. So they said 800 ,000 tech workers have been laid off since 2022. Now, again, a lot of that is overhiring, whatever. So they posted this one thing about, there's this 31-year-old tech startup worker in San Francisco, Didn't want to say her name.

35:44Ben Carlson:She said that her engineering manager husband told her a few months ago that he needed to focus all his energy on becoming an AI native. And requested that she take on almost all parenting responsibilities for the couple's preschool-aged daughter. She complied. And she talks about how this is, like, surreal and it's weird. And they have a combined income of, like, a half a million dollars. So they're doing pretty good. But they're saying they can't get a house. And it's funny to me that a lot of people on the Internet were up in arms about this. Like, oh, this guy said he's going to focus all his energy on his job.

36:11Ben Carlson:Pre-1990s, this was just life. Yeah, is this a f***ing joke?

36:18Michael Batnick:Dystopia? We're talking about a 31-year-old couple with a two-year-old where one of the spouses is working hard?

36:29Ben Carlson:Oh my God, life! This is a sign of progress in many ways, though, that this is the way that people think now.

36:36Michael Batnick:She described her experience as surreal?

36:40Ben Carlson:he better get some uh shares out of this or something though from open ai but also i think what if this guy is really secretly taking naps under his desk because he's tired from having a toddler throwing that out there can i say one thing are we getting got is this like manufactured

36:56Michael Batnick:by the internet is this a three-hour interview that was put together in a way that the author editors knew it would go viral. I'm pretty sure that's what happened here.

37:08Ben Carlson:That's part of it.

37:09Michael Batnick:No, that's the whole thing. That's the whole thing. There's no way that this is real, that this person is despondent. I would hope, and maybe I'm naive and kidding myself. I hope that this person read this article and thought, this is not what I said. I really hope that's what's happening here because I don't want to live in a world where a 31 year old making half a million dollars with a two year old is despondent Because her husband has to work hard.

37:36Ben Carlson:I just, yeah, you're right. Again, the Mad Men era, even like the era that our parents grew up in, like this, the one parent working a lot and not being around was just normal. That's why they called, like they had, there's a whole latchkey generation. That was a whole thing. Like your parents are working a lot. Some parents are working multiple jobs. You come home and you let yourself in and you watch TV and make yourself a TV dinner or something. That was just life before. Maybe a sign of progress. Again, I just think if you live in the Bay Area, or you are a tech worker, your life is very weird right now.

38:08Ben Carlson:It has to be. Yes. It has to be a very weird place to work and live.

38:14Michael Batnick:Yes. Chart from A16Z, share of U.S. household with paid AI subscriptions. We've made this point a bunch. It's hilariously low. We're not the ones that thought of it. But it's at zero. It's 2%. I mean, it's up from zero, so it's up a lot. but households this number's gonna be 10 20 30 i don't know where it's not isn't it just going

38:40Ben Carlson:to be like most people will have a paid license through their employer and their the individuals will mostly use the free service unless they unless they really make the free one so bad that you have to pay to get like don't you think most people are never going to pay i don't know i

38:57Michael Batnick:don't i don't i have no idea what people how people are going to use ai i i i don't know

39:02Ben Carlson:or will it be a Netflix bundle? You get Netflix, Hulu, and open app.

39:07Michael Batnick:But when we're like the thesis that I'm using in my brain, which I could be way off, I have no idea. When we're talking about like, will the demand continue to be there in 27 and 28? Like, I think people are being so short-sighted. Of course it will be there.

39:23Ben Carlson:There's a massive runway, you're right.

39:24Michael Batnick:We're just starting. And I think the stock market breaks our brains a little bit But because we saw the news last week about this new moonshot AI company in China, another open source model that further amplified or exacerbated the memory stock sell-off. I think we're just – every time this happens, a stock market, we just lose sight of the bigger picture, which is that this is just starting.

39:49Ben Carlson:I think so. So we got a good email about this. Some guy wrote us a real long email saying he's on the front line of this. And I said last week the AI doomers are wrong to this point. Obviously, I don't know what the future holds. He says, I think we have at least another 12 to 18 months of jobs netting out to something not ugly. I fear, however, once all these governance process and integration steps get commoditized, we'll see some pain. Which basically means, like, get over the hurdles, get through the red tape. While I don't subscribe to the idea that AI will create tons of new jobs we never thought of because we'll just point even better AI and robotics and 3D printing at those, too, I do think this same technology will invent different offsets and offer a better quality of life in the long run.

40:24Ben Carlson:I still subscribe to the idea that, like, just no one knows how this is going to work out. Like right now, there is no disruption, like wide scale disruption.

40:34Michael Batnick:Well, I'm glad you said that because last week you were pretty emphatic, like the doomers are wrong. It's not, we're not seeing the data and it's just way too early. It is.

40:42Ben Carlson:I think the doomers will always be wrong. I think that the tech leaders that say like 50 % of all entry-level white collar jobs, like, come on, I just, I don't believe that.

40:51Michael Batnick:I understand. That's the thing I don't believe. We will continue to draw conclusions that are way too early.

40:57Ben Carlson:Yes.

40:57Michael Batnick:You and I over the next couple of months and years. But this is going to take years to play out.

41:03Ben Carlson:Yes. I still think my favorite take on this was the guy who said, AI is going to keep us on the same trajectory we've been on. I still kind of think that's probably the baseline I'm thinking of.

41:14Michael Batnick:Would love it. All right. This made me happy. F*** StubHub right in the face. I shared my story years and years ago, several stories about how upset I was with StubHub's shenanigans, where I allegedly listed my same set of tickets seven times. They charged me thousands of dollars because I couldn't deliver the tickets. Like, just a garbage organization. And it turns out, CBC ran a story. StubHub's marketplace for fans is run by a mass scalper, SEC filings reveal. CEO Eric Baker runs a side company that resells millions in tickets on StubHub. So this guy's basically running a hedge fund, providing like short-term financing and cornering the marketplace.

42:01Michael Batnick:An estimated 70 to 80 % of all tickets on global resale sites are controlled by mass scalpers. According to a -

42:08Ben Carlson:So wait, will this guy say, no, I'm like Citadel, I'm providing the liquidity here. Is that what his defense would be? I don't know. I don't know. I don't know if they would - I mean, isn't it also the thing that these tickets go on sale and they're picked up by the bots? Like, it all does seem very... It doesn't seem very efficient, the way they do things, obviously.

42:28Michael Batnick:Yeah.

42:28Ben Carlson:Who would you use instead of Subhub now? Like SeatGeek or some other? I know there's a million of them.

42:34Michael Batnick:TickPick. Okay. I think they're the cleanest of the bunch, as far as I could tell. This is unbelievable. The NFL suspended Cardinals personnel executive Ryan Gold after he placed a$25 wager, parlaying the results of the team's first five draft picks. He was paid out$732 ,000 in winnings. Is this the boner of the year award? What a dumbass. Are you kidding me? Wow, okay. You didn't think you were going to get caught?

43:02Ben Carlson:What a payout. I mean, yes, obviously. How many of your friends put the bet in, man? I wonder how he got caught. Did he literally put it in himself? I'm assuming it was a friend.

43:12Michael Batnick:I don't know. But either way, All right. And other truly unbelievable news. Here's a headline. Trump, oh, Truth Social to sell Wall Street firms the fastest access to Trump's post. This is not a political podcast. We often don't talk about what's going on in the White House because I don't care, but this is a market story. So I'm going to talk about it. All right. Trump media and technology group has unveiled a paid for licensed data feed that will give banks and trading firms the fastest access to posts from influential truth social accounts, such as president Donald Trump's whose posts often move global markets.

43:54Michael Batnick:The product called truth API will deliver posts from the 10 most influential accounts to customers at a significantly faster pace than a regular push notification on the truth social platform. A spokesperson said, This is absolutely mental that the president of the United States is selling his tweets faster, that the market moving tweets. Who is happy about this? If you think this is good, you're an idiot.

44:21Ben Carlson:So I guess all the people that worry about the government debt and all these other crises, I guess this would be my bigger worry, is that everything is such a financial market now that it finds its way into our biggest politicians. And that they say - The president! What? Yeah, the level of grift is, it's not good for faith in our markets, obviously. Yeah, no, this is insane behavior. Don't like it one bit. No, this is not pushing the country. So, you know, I think I mentioned this before. I didn't finish it, but I rewatched the movie Dave about the 1990s when Kevin Klein looks like the president, the real president has a stroke, they bring him in.

45:02Ben Carlson:It was just such a simpler time. And I know that politicians were bad back then too. But you literally couldn't make a movie like that today because everyone would go, what? The funny thing is though, he ran on a platform of full employment. And I wanted to be like, Dave, if you run on a platform of full employment, it's going to be high inflation. People are going to hate it. Right? Anyway. All right. Boomers were supposed to downsize. They're buying bigger homes instead, stored from the Wall Street Journal. Wealthy older Americans are ripping up the traditional script for aging. So the script is, you have to buy a home because it's your biggest and best investment.

45:35Ben Carlson:And then when you retire, you downsize. And then young people will move into those homes because boomers don't need bigger houses anymore. And they say, especially for wealthy people who have a lot of money, that's just not the case. Eight of the clients for Merrill Lynch Financial Advisor this year retired. Every single one of them upsized. Only one client has downsized in the past year. This financial advisor says the historic retirement play of sell your home and buy a smaller one just isn't happening. They say the new demand for even bigger properties is another way boomers dominate the housing market.

46:05Ben Carlson:They account for 42 % of homebuyers, the largest share of any generation. They're often cash buyers to give them an advantage over younger purchases. Now, they ask these people, why are you buying a bigger home? And one of them's like, listen, we have all these grandchildren, and we want a bigger home. And so it's like, you can't get mad at these people for doing what's in their best interest or what they want to do. obviously. But this seems like a script that was something people thought would happen. And for a lot of people, it's like, no, I have a lot of wealth. I'm going to buy it. And they interviewed this couple that went from like a 2 ,500 square foot house to a 5 ,000 square foot house.

46:34Ben Carlson:And again, this is just wealthy individuals. But here's something from Kyla Scanlon. She wrote this in the New York Times. Empty nesters now own about 28 % of large homes in the US. Millennials with children own about 16%. So there is something where the baby boomers are holding on to their big houses. They're not, they say, no, no, we like this. We're happy where we are. And again, you can't fault them for this, but this was a big thing that like, no, no, no, this is the next step. This is supposed to happen.

47:02Michael Batnick:I, this is supposed to make me mad. I, right. Like this is,

47:05Ben Carlson:this does make some people mad.

47:07Michael Batnick:Yeah. I think, listen, this is not an awesome situation, but who are you getting mad at? Like I think these people acting in their own self-interest

47:16Ben Carlson:Yeah.

47:18Michael Batnick:They want bigger houses to have their families over. Yeah, this is what it is.

47:26Ben Carlson:I made the point last week that the middle class rising out of World War II is an economic anomaly. It's never happening again. And Kyla put in her piece that the post-war generation is the only American cohort ever handed a starter home ecosystem by federal policy. Where the government literally said, we're going to back all the loans. We're going to help the builders. We're going to build the suburbs. We're going to build houses that Americans can afford. and we're going to give them low mortgages. It's the only time the federal government has actually said, we're doing this, and the only reason they could do it is because there was so much goodwill coming out of the war that they had to do it.

47:57Ben Carlson:You couldn't have that type of federal program today. No one would agree to it, even though obviously it seems like it would make sense for young people. So my question is, and Alison Traeger had a piece about how the stock market for younger people is starting to take over, like housing is your biggest investment, because housing just doesn't keep up with the stock market. Because of this, what if just this new idea takes hold for enough young people that, okay, fine. The stock market, we've been talking about this. The stock market is just the thing. It's not the house anymore. Pure Research says one in four adults younger than 40 say buying a home is a good investment.

48:35Ben Carlson:One in four. Older generations, it's way higher. I don't think we've thought through what if this is the new script for people, like the new narrative.

48:44Michael Batnick:People need houses. to live.

48:47Ben Carlson:I know, but what if enough young people say, it doesn't make sense for me to spend 55 % of my budget on a home when I could rent and spend 35 % and put the rest in the stock market.

48:59Michael Batnick:Well, they have two options. I think they have one option in this case. Move. That sounds very callous because

49:07Ben Carlson:But a lot of people don't want to do that. That's not happening.

49:12Michael Batnick:The other option is what is the other option? A lot of suburbs don't have rental homes. And if you are having a family, you can't live in a 650-square-foot apartment.

49:27Ben Carlson:And the funny thing is, so someone sent us this story. Now, hold on. Hold on.

49:31Michael Batnick:One other thing here. A lot of the population, obviously not all, but a lot of the population is getting help from their parents. That is what's happening. The people are mad at the baby boomers.

49:43Ben Carlson:Like the people with the baby boomers with money are in a lot of instances helping their kids. You're right. Yeah.

49:47Michael Batnick:And a lot of baby boomers, a lot of baby boomers have a lot of money. And it sucks for people who don't have a parent with money, obviously. Right.

49:58Ben Carlson:Okay. I was born into a family where my parents aren't rich. What do I do now? Yeah.

50:02Michael Batnick:That fucking sucks.

50:03Ben Carlson:Yeah. But to your point about moving. So someone sent us this story. The top 20 metros were the largest share of millennial homeowners. Number one, Grand Rapids, Michigan at nearly 70%. We've had a lot of people, we have a lot of friends. It used to be like, if you lived in West Michigan, it's because you grew up in West Michigan. We have a lot of friends now with young kids who've just moved here from other states. And we're kind of like, what's your tie to West Michigan? Nothing, we just moved here for jobs. We moved here because it was a good place to raise a family. So there are people who've just, and it's a very affordable place compared to the coasts, obviously.

50:38Ben Carlson:Housing is a little more expensive, but I think you're right. That, unfortunately, might have to be the case. But I still think, I think you're poo-pooing this idea of the stock market overtaking the housing market in terms of like, this is your biggest investment.

50:50Michael Batnick:No, to be clear. I don't think we've thought through what happens if that takes hold for young people too. I'm not saying that. What I'm saying is, I don't think people are going to say to their spouses, to each other, we're not going to buy a house because we want to invest in the stock market. I think homeownership has become obviously unaffordable and young people have been crowded it out and therefore have been putting their money into the stock market. That's obviously what's been happening. But people, as they age and have families, need more space.

51:19Ben Carlson:Yeah, but I do think it could just be the house comes later. Stocks earlier, house later.

51:23Michael Batnick:That is what's happening.

51:25Ben Carlson:Yeah, okay.

51:26Michael Batnick:By the way, also, this is like a borderline national emergency for the people that are impacted by this. And it's not like 10 ,000.

51:32Ben Carlson:Yes, but the reason it's not a national emergency is because the people who own homes have gotten fabulously wealthy from it. And the homeownership rate is 65 % of this country. So it's not a national emergency because it's a minority of people, unfortunately. And I feel for them. Every time something's happened to your house and you tell someone about it, of course, the first thing I say is the joy of homeownership. I've had many joys of homeownership in the last month. So this is the people who think that house is like always a great investment. This is just in the last month for my house. Garage door wouldn't open.

52:02Ben Carlson:We had to get a whole new set of wheels and tracks. In our home, we bought brand new. We built the house when my kids were born. In the same month, my wife had twins, and the next month, we moved into a new house. I don't know how we did it. So our house is nine years old. So the great thing about having a new house is, like, the upkeep and maintenance right away is nothing. That's a wonderful thing about having a new house. Like, there's nothing like, oh, no, this went out? But now stuff is starting to go out. The garage doors went out. We had moles in the garden beds. They make these little tracks, you know, the moles?

52:33Ben Carlson:Little jerks. had to have some guy come. I said, how do you kill him? How do you get rid of him? He said, we stuff carbon dioxide down the hole. Oh, wow. Anyway, our house is white. So we had to have a whole house washed, right? They come spray this stuff and then they wash the house. The light fixture in my house. You know, I have a farmhouse, whatever, modern farmhouse. They have those lights that kind of hang over like this, you know? They look great. I love them. But my kids play basketball and the balls are constantly hitting these lights. So the light is like hanging like this now. and new light fixtures, dryer went out, washer went out.

53:09Ben Carlson:Had to get a new washer and dryer, okay? And while they did it, hey, why don't we come clean the dryer vents too? This is all in the last month for my house. By the way, got a new washer and dryer last week and they got it installed yesterday. It was very fast. I have no more sticker shock for prices that are too high. Like, oh my gosh, I can't be so high that price is. My new sticker shock is when something is actually not as high as I thought it would be. And the cost of a washer and dryer, $2 ,800. We bought a new one, a new set for our house on the lake four years ago. And the price hasn't changed in four years.

53:40Ben Carlson:And I think last, when we bought maybe it was a supply shock thing. But I couldn't believe that the prices weren't higher than they are. How much was the washer drawer? For the set? They're each$1 ,000, I guess, a piece. $2 ,000 for the total. Not bad. That's what we paid four years ago. I couldn't believe it. I thought it'd be way higher. Anyway, the joys of home ownership. All right, let's talk about Netflix. Jake, our friend at EconomPic. We used to actually blog at EconomPic. Doesn't do it anymore. This is almost hard to believe. Disney spent$129 billion acquiring Marvel, Star Wars, Pixar, ESPN, and Fox.

54:14Ben Carlson:$182 billion in today's dollars. Throw in all their legacy assets and the entire company's market cap is$169 billion. Man. If they could do a Doc Brown DeLorean back in time, would they not do Disney Plus? Knowing what they know now, would they not do Disney Plus? Oh, yeah.

54:31Michael Batnick:I think they do a lot of things differently. But yes. We said this at the time that streaming is a really bad business model. All these companies were losing hundreds of millions of dollars. Peacock, Paramount, Disney, HBO, chasing Netflix. Netflix was a coyote that ran over the cliff and then ran back and everybody. And now it seems like Netflix ran over their own cliff and hit the ground as well.

54:56Ben Carlson:Netflix and Disney are both in a 50 % drawdown from the highs right now. and netflix is obviously they're the obvious winner of streaming they're the best technology platform they don't have the best stuff for sure but they won and they're still down 50 and the thing is i think a lot of people assume like okay fine they don't get the warner brothers deal i think that'll help the stock it hasn't it hasn't really changed it and is it is this just are people just realizing yes this is just a crappy business it's kind of hard to believe

55:28Michael Batnick:So Netflix's operating income is up and to the right. In 2022, Disney had$12 billion and Netflix was six. So Disney was 2X. Netflix is about to pass Disney's operating income, which is wild because they don't have the parks and the parks are wildly profitable. Streaming is not a bad business for Netflix. So Netflix is growing at 12 % to 13%. Now their growth is slowing down. their margins are 30%. So their margins look nothing like these media companies. But the problem is for Netflix, and I own the stock, it's not a small position for me, and I bought more of it. The problem is that Netflix is still in the content business and it's still a hamster wheel business.

56:08Michael Batnick:And their daily average views is not really growing anymore. I mean, it's growing one and a half, 2%. So it's just really hard.

56:15Ben Carlson:So people are saying like, yeah, it's not the growth story it once was. I got to be honest. I dipped a Michael Batnick big toe in Netflix as well, even though I keep...

56:26Michael Batnick:So my average cost is like 90 bucks. The stock is 67. I've said as many times it's true. I've been really good at taking losses fast, probably to a fault. In fact, not probably, definitely to a fault. I don't have a lot of like double digit losses, like even 10 % losses, which cuts both ways. I'm really bad at holding on to stocks, right? But the history of Netflix would tell you this is... I don't buy that, though. So anyway, Netflix is a stock that I'm down 30 % in or 27%. But I don't buy that history says anything. History says nothing. History says that it has declined and come back.

57:05Ben Carlson:So yes. So since it went public, it's had a 60 % drawdown, 75%, 56%, 82%, 76%, and now 50%. So it's had these massive, massive drawdowns. And it's still put up like... And tells you nothing going forward. But this is what makes stock picking so hard. Because you look at that and you go, oh man, every one of those times I should have bought. And then this time you go, yeah, but now this time is different because it's actually a media company and the growth is slowing. It's not a growth play like it was before. This is what makes it hard.

57:33Michael Batnick:Correct. So right now, Netflix is trading at a market multiple, which is kind of hard to believe because it is a premium brand still growing with awesome margins. So if you look at the financial profile, it doesn't look anything like traditional media.

57:47Ben Carlson:The reason these other companies wanted to get into streaming, because they said, we want the same PE Netflix has.

57:53Michael Batnick:Correct.

57:54Ben Carlson:But it went the other way instead. Netflix is now coming down to them.

57:57Michael Batnick:Yeah. Anyway, I am, as somebody with a vested interest, but even if I didn't, I'm just very curious to see how the market values Netflix on a go-forward basis. Because right now, obviously, to say it's pessimistic is an understatement. I thought this was very interesting. We've been talking about the season one to season two drop-off. And I thought Ted Sarandos made an excellent point. So they spoke about this on the call. He said, we are not seeing any material change in our second viewing, in our second season viewing compared to season one. Our second seasons are performing well within our bands of expectation.

58:32Michael Batnick:Very often we see drop-off from season one to season two. It's very common in the industry. It's even more so with us because we launch our shows so big. Our global reach, our discovery mechanism, releasing all at once, this enables us to find a very large audience early. Our shows tend to start really big, while most other places, their shows start pretty small and occasionally grow from there. I think that's very valid. Think about White Lotus season one. Like nobody, I mean, obviously there's a brand new show. It took a while for that to gain. You had to discover it.

59:05Ben Carlson:That makes sense.

59:05Michael Batnick:And Succession as well. Like it takes a while for these names to find traction. Yellowstone didn't hit it big until like season three, I don't think.

59:13Ben Carlson:And that didn't really happen because of the pandemic, right?

59:16Michael Batnick:So I thought, as I'm reading this, I'm like, I have a bullshit excuse. No, I think it's valid. All right, let's talk about The Odyssey.

59:23Ben Carlson:I think he's the reason that you also have kind of faith. I have faith in him as a leader.

59:28Michael Batnick:Yeah. Right? Yeah, I do. I do. I do. I think that, and by the way, this is an example where like, I'm not staring at the screen saying like, the market is wrong. Why are you selling you idiots? I totally understand the story and what's happening. I totally understand it. I don't think the more, like, so I'm not pounding the table that Netflix will all of a sudden like get re-rated higher. But I think that -

59:46Ben Carlson:But based out of all those companies I mentioned at the start of this show, like where would you buy blood on the streets? Netflix is the one to me that makes the most sense.

59:56Michael Batnick:Netflix is the only company that I understand, right? So like as an investment, I'm going to hang around. I couldn't tell you the first thing about Intel or SpaceX. Like, are there trades in there? Like, yeah, I don't know.

1:00:08Ben Carlson:We're doing both first-level thinking and second-level thinking.

1:00:11Michael Batnick:Boom. All right.

1:00:12Ben Carlson:Let's talk the Odyssey. Two and a half times thinking.

1:00:15Michael Batnick:I'm really upset. I saw it last night. I'm really annoyed that I didn't see it in IMAX. But it sold out through August.

1:00:24Ben Carlson:It doesn't really matter. It doesn't really matter. Yeah. Yes. Come on. The people were like, you have to see it in IMAX because you can see the... Come on. It's a movie.

1:00:32Michael Batnick:You have such a... You have weekend... I'm trying to be nice. You have a bad attitude here.

1:00:38Ben Carlson:I think that the IMAX people need to settle. I mean, you're wearing an IMAX hat, but the IMAX people need to settle down just a little bit. Like, fine, make more IMAX theaters then. IMAX is my biggest position.

1:00:48Michael Batnick:What do you mean make more? It's expensive. Hold on. So there was a side-by-side video of Stan.

1:00:55Ben Carlson:We used to watch movies on a tube TV. Come on. It's better, but like, it can't be that much better. All right.

1:01:02Michael Batnick:Let's just move on. So, The Odyssey did$124 million domestic. There's some variety. Defying expectations and setting up the R-rated spectacle for a long, long journey in theaters. The ticket sales are notable as Nolan's biggest...

1:01:17Ben Carlson:Wait, did it really defy expectations? I thought the expectations for this were massive. No?

1:01:22Michael Batnick:These ticket sales are notable as Nolan's biggest debut since 2012's The Dark Knight Rises, as well as the third largest opening of the year following Toy Story and Super Mario. They're also impressive, not just because The Odyssey is a three-hour long movie, but because it's rated R, which limits who can buy tickets. So look at this domestic box office openings for movies directed by Christopher Nolan. Biggest since Dark Knight Rises. So in between there, we've got Interstellar, Dunkirk, Tenet, Oppenheimer.

1:01:50Ben Carlson:He really is the guy right now, isn't he? He's the man.

1:01:55Michael Batnick:Significantly bigger than Oppenheimer. So this is from IMAX. Second biggest domestic weekend ever.

1:02:02Ben Carlson:It still kind of blows my mind that Oppenheimer was as big as it was. That might be one of his greatest accomplishments. Christopher Nolan's? Oppenheimer, if you just explain that movie, it's unbelievable how big it was. Yeah, massive. It's kind of a boring movie in a lot of ways. For regular people.

1:02:25Michael Batnick:He's the only one. Who could have done that, right? To put my Dan Ives hat on. Nolan is the godfather of IMAX. He's the only one that can do what he's doing right now. So IMAX had 24 % of tickets. 45 % of tickets were premium format. Highest pre-sales ever with$50 million. All right, so anyway, needless to say, movies are back. Adam Aaron, this chairman and CEO of AMC, on the call said, in AMC's entire 160-year history, there has never been a quarter like this one. Domestic box office hit 2.99 billion, the highest second quarter in seven years, fifth best quarter in the past 50 years. Obviously, there's an inflationary component in here and premium tickets.

1:03:15Michael Batnick:The overall domestic box office was up 10.7 % year over year. Six different films had$75 million opening weekends or more. And we've still got a bunch on the docket. We've got Doomsday, Avengers. We have Spider-Man. We have doing three, we have resident evil. There's the Tom Cruise movie digger that I think is going to be big. And I've made a lot of bad calls. I mean, too many to count on this show. Um, but this was one of the good ones that I had been. So I was reminded of this by Sean Russo, who said, Michael, you made a hell of a call. And I thought I would take a second to go back in time because Ben, you said, let's revisit this conversation.

1:03:58Michael Batnick:So we're going to. All right. Let's talk the box office. 2025 was only$350 million below the previous year. For a kind of underwhelming year, that's not so bad. Really?

1:04:13Ben Carlson:I thought people said this was like a banner year for movies.

1:04:17Michael Batnick:No, it wasn't.

1:04:18Ben Carlson:We had Avatar. We had Zootopia. We had - Minecraft. You don't think so? Sinners and One Battle After All. There was a lot of movies people talked about.

1:04:27Michael Batnick:No, it wasn't. I'm telling you, it was down$350 million from the previous year.

1:04:30Ben Carlson:secular decline. I'm totally selling your theory that 2026 will be higher. Every year is going to be lower from now on. This is it, man. It's over.

1:04:39Michael Batnick:2026 will be higher than 2025.

1:04:43Ben Carlson:No way. Sorry, man. It's done. Movies are done. I don't think you've realized this yet. They're done. Unless they double the ticket prices, movies, like as a thing, it's just, it's slow. sec. It's, it's not cyclical. It's secular.

1:04:58Michael Batnick:I have more experience than you do on this topic.

1:05:02Ben Carlson:You're blinded. You have blinders on because you go to the whole time.

1:05:06Michael Batnick:How do I do the opposite? You have no idea because you have never been to the movies. I go frequently. So for numbers,

1:05:15Ben Carlson:people would rather watch a movie at home and go to the theater. It's true. It's easy. Of course.

1:05:19Michael Batnick:Of course. That's true. Of course. That's true. And that is already reflected in the revenue. That's not going to happen in 2026. That's been happening. 2026 is not the year that people decide to watch movies at home. That's been happening for the last decade.

1:05:34Ben Carlson:It's just slowly but surely eating away. It's going to continue to get worse.

1:05:38Michael Batnick:All right. So I tell you a story about how I took Robin to see The Handmaid. And you're like, what's The Handmaid? By the way, The Handmaid did$400 million in box office.

1:05:47Ben Carlson:I still can't believe that. That movie stunk out loud.

1:05:50Michael Batnick:I'm almost done. Pat myself on the back. Last one. Anyway, yeah. Listen, I'm not an idiot in the box office. I understand numbers have been down every single year. I'm just saying I think 2026 is the year that it comes out. One of the reasons why it was as bad as it was is because some of the movies that were supposed to come out in 2025 didn't. The Michael Jackson movie, for example, is probably going to do a decent. That was punted to 2026.

1:06:14Ben Carlson:No. Any of those biographies about musicians now, they're dead money. No one cares.

1:06:19Michael Batnick:I think the Michael Jackson one is going to make money.

1:06:21Ben Carlson:All right. If you're hanging your hat on Michael Jackson biopic for 2026, I'm going to be the winner here on this bet. We'll check back in and eat. Okay, I was wrong about Michael Jackson. Can I defend my honor?

1:06:34Michael Batnick:No, they don't have to defend your honor. Michael Jackson did a billion dollars in boxes. By the way, honestly, I didn't realize that you were going to look bad in this clip. It was just about making me look good. But so what? I'm wrong all the time. This just happened to be one of the times that I was right.

1:06:44Ben Carlson:Can I caveat your take that movies are back, though? Because big movies.

1:06:48Michael Batnick:Why does it have to be caveated?

1:06:50Ben Carlson:Well, because big, I got the numbers here from my friend, Claude. He has a little beret on. So if you inflation adjust the numbers from 2014 to 2019, every year it was essentially$15 billion in box office. Okay? Inflation adjusted. This year so far is$5.3 billion. So let's say it stays on the same course and we double the first six months to the last six months. So you'd be looking at$10 billion in ticket sales versus$15 billion pre-pandemic. You're still 30 % below pre-pandemic levels on inflation-adjusted basis.

1:07:21Michael Batnick:Talk about moving the goalposts.

1:07:24Ben Carlson:So I'm saying big movies are back, all movies not back.

1:07:28Michael Batnick:I said 2026 would be higher than 2025, and you're saying it's still below pre-pandemic levels. I mean, of course it is. I'm not saying we're all the way back.

1:07:36Ben Carlson:Okay, so we get 5.3 right now. Last year, it was$9 billion. So it's on course, but it's basically on course to be the same. You're not quite there yet. I know Dune and the Avengers are probably going to help.

1:07:47Michael Batnick:Numbers are up 11 % year over year. Okay. Movies are back. This is great.

1:07:52Ben Carlson:We celebrate this. I think it's a little bit of recency, but it's not back to, I was saying pre-pandemic levels is never coming back. That's true. Okay. I was wrong that it's going to go down every year. You're right. I was wrong about that. Anyway. But it's not pre-pandemic numbers. That's gone. That's toast.

1:08:11Michael Batnick:You can watch, you can watch The Odyssey at home and have a terrible time.

1:08:14Ben Carlson:I will be seeing The Odyssey in the theater. But I will see it in a regular theater not the IMAX. I will definitely be seeing The Odyssey. My kids are going to camp next week. I'm going to see The Odyssey. I can't wait.

1:08:24Michael Batnick:Okay, could you please see it on a big screen? Just please see it on a bigger than a normal screen.

1:08:29Ben Carlson:Our IMAX seats are not comfortable. I would rather be in one of the recliners if I'm going to sit in a movie for three hours.

1:08:37Michael Batnick:Anyhow, congratulations to Christopher Nolan and movie fans across the globe. What an unbelievable movie.

1:08:44Ben Carlson:He really is the man. Even I didn't care for Tenet at all. And that's his lowest number by far. It just didn't work for me, but he still took a swing. So I appreciate him as a movie maker.

1:08:56Michael Batnick:Okay, Ben, we've been talking about GLP One Land a lot on the show in recent weeks. KFC is closing 207 US restaurants. I'm sorry, they closed 207 restaurants between January 2025 and March 31st. That wipes out roughly 5%. That's a lot of its domestic locations. I don't know what's going on overseas, but they added 2 ,971 internationally.

1:09:24Ben Carlson:Chick-fil-A's probably eating their lunch too, don't you think? Places like that? Raisin canes, those kind of things?

1:09:31Michael Batnick:Also, Uts. Uts? Uts? The potato chip company? Is it Uts or Uts? I have no idea. Well, they are going private. The stock is down 70 % and they were just bought for a nice little premium. So whoever owns Outs or Outs, the stock, credit to you.

1:09:47Ben Carlson:I've never heard of these chips. Is this a New York thing?

1:09:49Michael Batnick:Maybe it's the East Coast thing. I don't know.

1:09:51Ben Carlson:Okay. I got a story for you. I think I told you briefly, but I tell the whole story. So my daughter plays in a summer league basketball league. So I'm walking into the parking lot and there's two guys in the parking lot, me and another dad. And he's probably 100 yards away from me. And he puts his hand in the air and he goes, there he is. Very loudly at me.

1:10:09Michael Batnick:Did you think it was a fan?

1:10:11Ben Carlson:No, I thought it was another parent. And I kind of squinted and I'm like, I don't know who this guy is. Then I thought, oh, maybe he's a fan. And he got closer and he realized he didn't know me. And he goes, kind of looked both ways and just like, okay. And just kept walking. Just nothing. He thought I was someone else. He didn't acknowledge it? No, didn't acknowledge. Just kind of looked at me, kind of looked side to side and then kept walking. That's weird. Yeah. He should have said something. All right. Let's do recommendations. All right. Speaking of, I watched some movies. I went to the movie theater this week.

1:10:40Ben Carlson:I took my kids to see Monsters and Minions last week. Minions and Monsters. It seems like the people who make those movies have to be on some sort of drugs, the way that they do the plots, but they're entertaining, and I've laughed like five times. My daughter, Kate, loves the Minions. She's seen every one of the movies like six times. You should take your kids to Universal Studios. It's really good. I'm sure they would like it. And it was only 90 minutes. That was the best part. And I barely only dozed off once. My wife and I watched Obsession. And the only thing I knew about this movie is a guy makes a wish that a girl loves him.

1:11:11Ben Carlson:That was in the trailer. That's all I knew. And I know this movie got huge, supremely high hype. And I, so my expectations were probably like, I better rein it in a little because the hype is so high. Can I, you loved it, right? I loved it. It was so good. And it's not really my, I don't know how you even describe this movie. A thriller, a suspense movie, not really horror. I don't, it's hard to even like pigeonhole it, but.

1:11:35Michael Batnick:You know what? You know what? There's some movies that are so good that expectations can't ruin it. Like Hail Mary and The Odyssey. They're just movies where it's like, I'm just going to tell you flat out you're going to love this movie. And I'm not, because sometimes I don't want to raise the bar too high and then you're disappointed. If you don't like this movie, you're an idiot.

1:11:53Ben Carlson:But here's why this is so impressive to me. So I know this is like a young filmmaker. The movie just felt really high quality with a bunch of people I've never seen act in a movie before. I didn't know any, there was one guy who was Conan O 'Brien's right-hand man. He was in it for like five minutes. What's his name? I don't even know who you're talking about. The dad in the record store. They worked. Oh. But he was the only actor in the whole movie I knew. I knew none of these actors. And I thought the two leads were both really, really good.

1:12:21Michael Batnick:I thought she was way better than he was, but he was good too. So the lead actress, she has a big role. She had a big role as a result of this. I'm happy you liked it. How great was that movie?

1:12:31Ben Carlson:My wife loved it too. It was just really, really well done. And there was so many things like, Like, oh, I just love the choice. And it just felt like a high-quality movie. I can't explain it. You could make that movie be very low-budget, low-quality, and be like, oh, okay, it's kind of interesting, but not great. But it was just a really good, well-done movie.

1:12:47Michael Batnick:And that kid, Corey Barker, who directed it, I think he's like 23.

1:12:51Ben Carlson:Right. Yeah. There was a lot of very creative choices. I really liked it. Okay, so you mentioned Rewatchables as your favorite podcast. They did She's the One last week. They actually did Hitch this week, which is kind of hilarious because my daughter and I are in a rom-com binge and we just watched Hitch, which just, that's gotta be one of the funniest rom-coms of this century. I haven't seen either of these. Okay. I can, so the Ed Burns, I'm a huge Ed Burns. I thought I was the only Ed Burns fan there is. He's made all these movies. He makes, it's about him and his family in Long Island. That's why you probably could like it.

1:13:22Ben Carlson:I don't know where in Long Island because there's all these different places in Long Island, but I've always really enjoyed his movie. They're not great movies. They're just well done and they're always about family. And so I've always really appreciated them. I didn't realize that there was like an Ed Burns fan club out there because I'm a member. And obviously, there were articles this too. So I enjoyed it. And finally, I have a book recommendation. How to Get Rich in American History by Joseph Moore. This guy actually sent me a note when my book came out. And I didn't know who he was. And he was on Meb's podcast last week, but I listened to it.

1:13:50Ben Carlson:And this is the most unique finance book I've read in years.

1:13:53Michael Batnick:Oh, wow.

1:13:54Ben Carlson:How to Get Rich. It's a history of the financial advice people have gotten over the years. And it's really - Oh, I love that idea. It's really, really well done. And it's like this stuff that you, and his whole point at the beginning is like, you don't realize how good we have it today. And how he said, there's never been a better time to get ahead than today. And he talked about how like in the 19th century, in 18th century, like pre-Civil War days, there were so many different currencies. No one thought about saving money. It was, you got the money, you spent it immediately because that currency might be gone in a month.

1:14:24Ben Carlson:Yeah. It's just, it's really, it's a really fascinating book. He's a history professor. And it was just, and he talked about how, He decided to try every form of getting rich that's ever been invented. And he talks about how he got rich being a broke college professor. It's really, really good. I loved it.

1:14:41Michael Batnick:I will certainly listen. I love this. That's a very cool idea.

1:14:45Ben Carlson:What do you got? Just the Odyssey?

1:14:49Michael Batnick:So I watched the second half of the World Cup finals, Argentina versus Spain. Okay. You picked the worst game to watch. I had a great time. Okay. I thought it was absolutely riveting. And I feel like a total schmuck because I missed the entire thing. And it turns out.

1:15:12Ben Carlson:There were so many good games.

1:15:13Michael Batnick:It turns out I'm a fan. Yeah. I loved it. I was glued to the screen. I thought it was excellent. And the fact that you say it was a terrible game. And I know, like, I guess by all accounts, it wasn't a great game. But I loved it. Will I watch the next one? I'm not sure. but I genuinely felt like an idiot. Like I listened to, uh, uh, Simmons and Chris Ryan and some other guy, the soccer guy, and they were recapping. And I really did feel like a schmuck. It was fun. I missed the whole thing. Great sport. I liked it. One final thing. Um, I was at fanatics fest last week and I was in line for quite a while.

1:15:54Michael Batnick:I bought a next poster and had them all sign it. Jalen and OG weren't there. So I have to find them, track them down at some other point. So I had some time waiting in line, sitting down. Anyway, I say that to say that I binge watched season two of The Agency. And I thought season one started out awesome and then it petered off for me. I didn't really like I thought it was like the horse meme, the horse to donkey meme. So I was sort of iffy on season two. And I watched the first two and I thought it was going to turn it down. And then somebody told me to pick it back up. So fantastic. I thought it was so good.

1:16:30Michael Batnick:but it was so much better than season one, I thought.

1:16:33Ben Carlson:This is a very underrated show. It's funny. I started season two last night, and one of the very first scenes in the show is Michael Fassbender, Jeffrey Wright, Richard Gere, and the guy who plays McNulty on The Wire all sitting there having a drink and a cigar. I'm like, oh my gosh, look at the firepower in that room right now.

1:16:49Michael Batnick:Jeffrey Wright is so good in that show. The whole cast is great, but...

1:16:52Ben Carlson:So the thing I like about it is a lot of these spy shows, it's like a season, this is the whole story. Then the next season, you go to a new story, but it's a continuation of the story from the first season. It was excellent. Truly, truly excellent. I can't wait. I'm one episode in. It's a very underrated show.

1:17:07Michael Batnick:All right. That's about it.

1:17:10Ben Carlson:Yep.

1:17:11Michael Batnick:Okay. Animal Spirits of the Compound News.com. Personal emails. Personal responses. Thank you for listening.

1:17:17Ben Carlson:I answered a bunch of emails this week. I know you don't think I, you know, fulfill my quota, but I did a lot of answering emails this week. Okay. You shamed me into it. Thank you for your service. We'll see you next time.

1:17:32Thank you.