The Ben Carlson Top (EP.337)

22:38Is that fair? I think so. I don't know. Again, that's a theory that's like – that's my point is it's buckets. It's not – because when we say the economy is strong, it's not like it's strong for everyone because people always tell us – It never is. It never is. And then when people say, no, the economy is weak, it's like, of course it's not weak. So I think it's a little bit both. But I think this – I think the negativity part is – I think it's part of it. And I'll put this rest. Wells Fargo – Wells Fargo CEO, Carl Cantone tweeted this. I didn't see the context. Charlie Scharf says, U.S. consumer and businesses are very strong.

23:13Again, not for every business, not every consumer, but. This episode is brought to you by State Farm. Listening to this podcast, smart move. Being financially savvy, smart move. Another smart move, having State Farm help you create a competitive price when you choose to bundle home and auto. Bundling, just another way to save with a personal price plan. Like a good neighbor, State Farm is there. Prices are based on rating plans that vary by state. Coverage options are selected by the customer. Availability, amount of discounts and savings, and eligibility vary by state. This episode is brought to you by Indeed.

23:50You're ready to move your business forward, but first you need to find the right team. Start your search with Indeed Sponsored Jobs. It can help you reach qualified candidates fast, ensuring your listing is the first one they see. According to Indeed data, sponsored jobs are 90 % more likely to report a hire than non-sponsored jobs. See the results for yourself. Get a$75 sponsored job credit at indeed.com slash podcast. Terms and conditions apply. Okay, getting back to my negativity thing. Did you see this tweet? This is from Heisenberg on Twitter. Who the f*** is this guy? It looks like an AI to me, but it talks about...

24:28Someone told me it's real. I said, there's no way this is real. So it's this guy, and it takes all of his thumbnails from YouTube. And this YouTube channel has 200 ,000 subscribers. Each of these videos has tens of thousands of views. And he talks about how it's a nation in free fall, and chaos begins Monday, and hell is coming, and the major economy is breaking. And every single video is fire with a crazy title to it. And this guy's got 200 ,000 YouTube subscribers. And again, this looks like it could be AI. And maybe in the future all this stuff will be AI. It'll be just doom scrolling nonstop for AI.

25:02But let's just admit that the negativity stuff, that's a real thing for certain people can just get down that rabbit hole and we'll never get out of it. I'm tired of talking about this. All right. Here's the outrage inflation. I just don't want to highlight negativity all the time. I agree. We know that this is a thing and it's always been a thing and it always will be a thing. People are attracted to fear. It is what it is. We're not going to change it. Yeah, but my point is, I think it's gotten worse, unfortunately. Well, it's not getting better. So, okay, so here, I want to defend my honor a little bit because a certain CNBC contributor who will not be named sent a message to Josh saying, hey, my warning signals are flashing yellow.

25:47This is hilarious. Because Ben Carlson is dunking on the bears on Twitter. And I would like to defend my honor here on this because I don't think I'm a contrarian indicator. Yeah. I think that there is a difference between doomers, and these are the negativity people I'm talking about, and bears. I'm perfectly happy hearing a legitimate, rational, bearish argument for people that get bearish on occasion, but I can't stand the doomers, and the doomers are my sworn enemy. I can't stand the people who try to prey on people's fears all the time. Those are the people that I'm dunking on. It's okay to have a balanced take that this could be good, this could be bad.

26:27I'm bearish right now, but I can't stand the doomers. And so that's why Ben Carlson is not a contrarian indicator. Is that fair? We'll see. We'll see. We'll see. This person said that Ben's been feeling himself. It's been pretty vocal. It's been pretty vocal. Is this the Ben Carlson top? We'll see. All right. I have some. I'm saving the stats for later, but I have some stats on this for what this year in the stock market means for later. We'll save that for our Michael Batnick's 10 predictions for 2024 podcast. You're going to do it again, right? Absolutely. Okay. All right. This was a headline that people got really angry at, but I thought the meat of the piece was actually decent.

27:11So Annie Lowry for the Atlantic wrote, inflation is your fault, and people got really mad at that. That's like the outrage headline, right? People know if you print the right headline, you're going to get some outrage. But she says, people have a lot more money on hand. More broadly, they seem to be less likely to change their purchasing habits in response at price shifts, even when budgets are leaner. A raft of studies have found that American consumers have become less price sensitive in recent decades. Households are using fewer coupons. Remember people used to cook coupons all the time? People are spending less.

27:40My uncle is a huge coupon guy. I'm surprised that hasn't become a thing with inflation that like, there's not like all these coupons. Maybe there are coupon groups. People are spending less time mulling over what to buy when they're shopping. You're out of touchness is showing. Of course their coupons. I'm just teasing. Why? Maybe because although prices of consumer goods are higher than they were a few years back, they're still much, much more affordable than they were a few decades ago, thanks to globalized trade and manufacturing advances. So her whole point was, I think something we've talked about that obviously the headline, take the headline aside that inflation is not consumer's fault by any means.

28:11People are still not really changing their habits, which I think is a little surprising. I don't. You don't change your habit if you still have a job. You just save less and maybe go into more debt. Yeah, I guess that's true. It's just funny that I think in the past - Unless you're really hurting, you're not saying to your spouse, honey, we're not going out for dinner on Saturday night. Prices are too high. Now, are there people that are changing their habits? Of course there are, right? Of course there are. I'm just saying people in the aggregate that shows up in the data are not changing their habits because you don't want to go backwards.

28:51You don't want your lifestyle to go in reverse. Now, if we get a recession, people will change their habits. But absent that, rising prices don't apparently cause people to change their behavior in a vacuum. But if we get a recession and the unemployment rate goes from 4 % to 7%, let's say, that's 3 % of the workforce, there's still 90 % plus people who are like, are those people going they change their habits or just the people lose their jobs? Just because you don't lose your job doesn't mean that you don't feel it. Maybe you don't get a raise that you were counting on, right? Like maybe you get more anxious that you might be next.

29:29So just because you don't lose your job doesn't mean that you don't change your behavior. I also think credit card debt is just going to explode in that instance if that happens. If like wage growth falls off a cliff and really slows. Oh, absolutely. Absolutely. Absolutely. All right. Here's some good news from the Wall Street Journal. Prices for long-lasting items known as durable goods. I really don't know. So durable goods is just stuff that you make that doesn't go bad. Durable goods are refrigerators and washing machines. Have fallen on a year-over-year basis for five straight months. In October, they were down 2.6 % from their peak.

30:07This is pretty good. So they show year-over-year changes from October for selected categories, recreational goods, household goods, and appliances. There you go. Appliances, motor vehicle parts. So we're seeing some deflation and stuff like this. I think this is so this is this is the supply chain stuff getting better, right? Yeah. And here's more in that vein. A car dealership guy tweeted biggest drop price drop since August. So fun fact, Porsche Cayenne prices have dropped over 10 percent since August, more than any other luxury vehicle. And it says price drop refers to the actual transaction price, not a change or reduction.

30:44I'm surprised how many of those I see on the road. The Porsche Cayenne? That's the sedan, right? No, Porsche Cayenne is the SUV. What's the sedan? Oh, the Panamera? Something. The Cayenne is the truck, right? The four-door Porsche looks a little weird. Porsche? Did we say Porsche? We're not saying it right? I like it. Did you say Porsche? I'm a Porsche. I say Porsche, sorry. Okay. Not sorry. I, but I, it's, so the Cayenne is 70, 67 still. I see it was, but it went from 75 to 67. That's a 10 % price drop. That's a lot of money. That's, that's good news. So we got my wife re-upped her lease on her Hyundai Palisade.

31:20She got a new one two or three weeks ago. And when we got the first one, I think we got, we got it a little early. Cause I said, Hey, you got some equity. Come take a look at it. And so we, we turned it into early two years ago. They had two of them on a lot. This time the whole lot was full. So that was a good supply chain indicator for me. There's more cars than the lots now. What else is in here? The... I don't even know a lot of these cars. What's the Audi e-tron S? That was$97 ,000. That must be their EV. You know, this is my problem with the electric vehicles. I'm all for saving the world and all, but the electrical vehicles are still too expensive in my mind.

31:57They'll come down, no? I think Tesla's probably going to bring the prices down. Oh, you saw the Cybertruck videos? God, what an ugly car. just heinous just absolutely heinous I want to almost take a contrarian picture and say it looks good because everyone says they hate it I mean let's be honest though a lot of tech bros are going to buy that buy that just to show off don't you like people are still going to buy that thing absolutely listen I don't like to be too judgmental but I'm sorry if I see somebody driving a Cybertruck I'm just being honest I'm going to judge them I think that's fair I mean it looks like something Sylvester Stallone would have driven in Demolition Man.

32:35Oh, it's a great call. It's like a 1990s version of what a future car should look like. What was Wesley Snipes' name in that movie? Cyrus? Yeah. Didn't he have the blonde streaks? Was that peak Wesley Snipes? Pretty close. You know what his downfall was? He didn't pay his taxes. He needed a better financial advisor. He needed a better CPA. He was him before him was a thing. Simon Phoenix that's a great bad guy name total 90s movie early Sandra Bullock alright so I think 2023 is a great what am I trying to say reminder yeah it's a great reminder that this is why you don't invest on headlines because if you think about what we've gone through to get in the market is 4 or 5 % from all time highs now actually actually alert our beautiful Dow Jones Industrial Average total return.

33:34Oh, yeah. All-time highs. Is it from total returns? Yeah, I wasn't even using total. We're back. We did it. All-time highs. So, I mean, two wars, 40-year high inflation. By the way, talking about negativity selling, shame on us. We're 33 minutes into the podcast and haven't even mentioned the fact that those beautiful industrials, all 30 of them, total return basis, all-time high. Pretty incredible. We're back. All right. Now I have to look at the S &P. So I have these charts on the dock. So Ben, the S &P 500 is within spitting distance, I believe is the correct nomenclature here. Is that what we call it?

34:11Yep. Stones throw spitting distance, that kind of thing. We're right there. How far away? So how far away? I don't know. Percent or two? Oh, 1.8 % as of this morning. And we're recording on Tuesday. Think about all of the things that – all of the worries in the proverbial wall that we've climbed this year from inflation to interest rate hikes to banks to the potential credit crunch that ever came to leading economic indicators and the yield curve conversion. Here's the caveats I want to hear because I tweeted something about being close to all-time highs yesterday, and someone said inflation adjusted.

34:49And I said, no, no, no, no. No one ever inflation adjusts the S &P 500 or the Dow. You can't do that. That's a thing no one ever does. If that's your caveat, then you're splitting hairs here. I don't like that. Okay, let's think of some good news here. So we're always talking about what's the downside, what's the recession and a bear market and rates go higher. Neil Dutta at Renaissance Macro, who I think has been one of the best analysts on this whole period of inflation, says the outlook for 2024 right now is pretty good, actually. Like, if inflation continues to moderate and we could see decent growth, that's like a good setup.

35:24So he says, if I'm right, and we have that setup of like decent growth, inflation falling, we get kind of this Goldilocks scenario, and the Fed is cutting rates even as the economy continues to grow at a modest pace, it will be a nirvana-like situation for equities. Stock prices are up already. Many stocks have underperformed the broader market. If the Fed indeed cuts rates next year, it could provide a lift to some of these laggards. So we could see the beyond the magnificent seven kind of thing. If we have this situation where a soft landing occurs, what are the odds? The odds? I don't think that's a, I don't think it's that far fetched that in 2024 equal weight plays catch up.

36:07Spoiler, that might be in my 2024 predictions. I don't know. Maybe it is, maybe it isn't, but I don't think it's too unlikely. Okay. That's not contrarian enough for a prediction. I feel like. Not all my predictions are contrarian. Some are very boring follow-ons and some age horribly. For example, in 2022, value beat the shit out of growth. And I thought that trend would continue to 2023. Was I right? No, I was dead wrong. What was your Bitcoin one though? You said Bitcoin would double? I got a lot of things right. We'll review that at the end of the year. All right. So I feel like whenever there's a big move in interest rates, you and Josh and I will have a little slack conversation about it.

36:39And Josh will say, what's happening here? And we'll throw out some ideas. And then we always end with, you know what? it's just positioning, right? Isn't that where we always kind of fall? That's always our conclusion. It's positioning. It's investors buying bonds or selling bonds. And so if you look at, think about the, remember the narratives a month ago in treasuries when they went to 5 %? Higher for longer? Higher for longer? Honestly, was that six weeks ago? But it was also It became a consensus almost overnight. And it was also the government's finances are out of control and they can't pay their debt.

37:12and all these things, these narratives, and we talked about the narratives because it was fun and it was interesting. And now all of a sudden, whoosh, right back down. So you went from 3.3 % was the low in the 10-year this year. Then we shoot up to 5%. Now we're back to 4.2%. So I think the next narrative, and it's fun to have these narrative talks, but you really just don't know. The next narrative position is going to be, are rates falling because of a soft landing or are they falling because of slowing economy? And it's going to take a while, I think, to realize who's right about that. But that's the next pundit argument, right?

37:44It's exhausting. But isn't that what it's going to be? Sure. Yeah, probably. It is just bizarre to me how quickly the bond market is just as confused as everyone else. That's my takeaway here. Yeah. All right. So this is interesting. I don't know if this was on your radar, but ARK had just in November, ARK had its best month ever versus the NASDAQ 100. So on a relative basis. Isn't that wild? So the NASDAQ underperformed ARK by 20-something percent. Jeez. So year-to-date basis ARK's up 56%. Not bad. From the highs in 2021, still down 70%. This thing hasn't bounced nearly as much as you would think.

38:33Flows have not returned, though, to ARK. Oh, really? Probably not too terribly surprising. Well, but it's interesting, though, Remember, the flows kept happening during the downfall. So they finally slowed down a little. So this fund peaked at$28 billion in February 2021, which was the height of the meme stock craze. Check this out. Now it has about$9 billion. Look at the flows. They peaked in December 2020. And now it's just been in, out, in, out, but pretty wild. Pretty wild. 2021 was a crazy year. I'm working on a - So the dollar-weighted, not that you can judge an investment manager on this because this is more about investor behavior than anything.

39:13The dollar-weighted returns in ARK have to be awful, just dreadful because all the money that went in right before the peak. Horrendous. Okay. I meant to talk about this last week, and this topic blew up this week. Like, we talk often about how intelligent people think that their intellect will transfer over into the stock market. I'm smart. I can pick stocks. I'm smart. Success in one area of life means I'll have success in this area. We talk about that a lot. What we don't talk about a lot is the opposite, is people in finance thinking they can do things outside of finance. And David Tepper is right now the poster child for this.

39:55So front office sports. Wait, before you get into this, David Tepper is one of the most legendary hedge fund managers and probably doesn't get enough credit for his track record. But like he navigated the post-GFC crisis about as well as anyone. When a lot of hedge fund managers did really, really bad. Becky Quick asked Charlie Munger, she said you've spoken about the importance of psychology and investing. Is there a cognitive bias that you think is particularly significant in the markets today? And Charlie said, there are lots of cognitive biases that are very significant. One has a constant tendency to override your own intelligence and skills in deciding what to do and what not to do.

40:31So here's a quote in front office sports. As his last five years, as Panthers owner have shown, buying stakes in distressed and undervalued companies isn't the same as running an NFL franchise. Here's another quote. His track record is exactly what I would expect it to be. There's a difference between being an investor and an owner. People like Tepper have made lots of money, but that doesn't necessarily translate into them being good owners. They don't know what it's like to build things. the founder of a sports consulting firm said, when you run a hedge fund, you are making decisions constantly every day.

40:58Being an NFL owner requires a different skill set. So through 93 games, the Panthers are 30 and 63, which is obviously not great. He's just going through coaches like water, which obviously - He's fired like four coaches, right? Just destroys culture. I think he's been through six already. And this is interesting. So given the new requirement or given the requirement that team purchases be made with at least 30 % cash, the next new NFL owner will likely continue the trend of owners coming from the financial world. Now, NFL teams don't go on sale very often. But yeah, I just thought this was an interesting.

41:37It's also true that there have been people in the financial world who've been successful. The guy who bought the Bucks. The guy who bought the Red Sox was a former CTA guy, right? Henry. So there have been financial people. But yeah, it's true that – so I guess the – Cut Josh Harris owns the Sixers. Yeah, cut your winners short works better in hedge funds than it does in coaches, huh? Yeah. So this chart seems sort of out of order, but not sure how it got here. But the last four-week change in the AAII bear index is one of the largest drops we've seen in the last 20 years. And this would coincide nicely with the Ben Carlson top.

42:17well wait but everyone got all bared up because we had a 10 correction and now we've gone the other way yeah i mean look at this it's pretty wild so the last four weeks you're calling for a index i do i do think the difference between having this this mini bull market that we're in or whatever it is and having a sustained bull market from current conditions that seems a lot harder to me i i still if i'm trying to guess the long term i still think that I'd be a little skeptical on that. Having a bull market start from like 3.5 % unemployment. I don't know that that's ever happened before. That'd be my one worry about, I think this time can put like an extended, like 10-year-long bull market or something.

43:02Seems bizarre to start from this stock. We had a reset in stock prices. We had rolling recessions all across the economy that never showed up in the aggregate data. But you're right. We never had the labor market recession. Weird, weird, weird times we're living through. All right. I know we said we're done with the negativity, but this one got me. I just, Americans are doom spending. Here's why that's a problem. We got to stop giving so much oxygen to these. You know, but I like to tell people why they're not. I just, I like to tell people why these are not true. But the more people talk about it, the more people click on it, the more we get.

43:41It's like this circular doom loop that we're in. but that's why I like to point out their fallacies. Nearly all Americans, 96 % are concerned about the current state of the economy, according to Intuit Credit Karma. Still more than a quarter are doom spending or spending money despite economic and geopolitical concerns. Even as inflation and high interest rates have squeezed budgets, a record 200 million shoppers turned out between Black Friday and Cyber Monday. That's a new record. Much like doom scrolling, we're seeing people mindlessly shop to soothe concerns about the economy and foreign affairs, which could take a toll on their financial well-being.

44:12Give me a break. Just stop it already. Although I will say that. People are spend spending. They're not doom spending. Well, I personally doom spent on a backpack. I got a backpack yesterday. It came in the mail. I forgot that I even bought it. Excuse me, sir. You're almost 40 years old. Stop buying backpacks. Interesting you should say that. That's a New York thing. Listen to this. I told Kobe to get his backpack. And every time I say backpack, they look at me like, what? I'm like, your book bag. Get your book bag. Oh, they don't know a backpack? They don't know what a backpack is. Wait, other word I was thinking that's going out.

44:45This word is dying with the boomers. Here's a word you will never hear once boomers are gone. Supper. How many people under the age of 60 say supper? Supper is very, very, very old. It's a terrible word too, right? This is not quite to the same level of words that are dying, but a word that people older than 60 say, evening. Ah, that's true. Yeah. evening supper. Wow. I got called sir the other day at the gym. That was, that was not great. My backpack came in the mail and I bought it because it's like a travel backpack where they've got a nice pouch for your sneakers. And it came and I looked at it and I said, why did I buy this?

45:30I feel like people who walk around New York have backpacks because you have to like bring all your stuff with you everywhere to go when you go into the city. Well, yeah, I carry my laptop. What am I going to carry in a briefcase? Yeah, that's fair. Speaking of things that are going extinct. All right. Apollo had another good outlook for the US economy piece with like a million charts. Here's some good news. Total employment is now 4.5 million jobs above February 2020 levels. That's kind of crazy to think about. We had that huge drop-off where unemployment rate went to 14%. Now we have almost 5 million more jobs than we had back then.

46:04Remember the World Bank was calling for like, I think it was the World Bank, calling for like 25 % unemployment? Yeah, it felt like it at the time. See, that's why I'm grading the economy on a curve based on like how bad things were in the pandemic or how bad they could have been. That's not the real world. I have an economy in my head. That's all that matters. Economic metaverse. You want to talk about crypto? Yes. All right. So Bitcoin back to 42 ,000. It's always funny to me how the big, a lot of the big moves happen on the weekends and at nights. just when like no one's paying attention. But this, whatever you call this, a new bull market, a snapback from, what did it get to at the lows?

46:4514 or so, 15? So it's more than doubled. The Bitcoin bottom is a really great lesson on how markets work. It bottomed when things were - Was Sam Bankman free, basically? Actually, no, it didn't. No, it didn't. The real, real bottom was in September. So then in September, it bottomed at, what was the low here? The low was, oh, no, I'm sorry. I'm sorry, I'm sorry, I'm sorry. The recent bottom, like the local bottom, because it did, it got as low as 15 ,000 in November 2022. Oh, you're right. That was the, was that when FTX blew up? Yes, it bottomed with Sam Baker. Okay, so it did. So it actually did bottom when the FTX news came out.

47:36That's kind of wild. So that's how markets work when things are at their blackest. But you could have said in the case of crypto specifically, like, all right, it's a wrap. Go to zero. And we kept saying, why is it not at 5 ,000? We couldn't believe with all the bad news that it wasn't even lower. It just won't die. And I think there was another thing. I was telling you this. This is the way that markets work. I would say certainly, not that this is like super unique to Bitcoin, but the other day I said to you, I was like, and I was sort of, I said this talking to you guys, I was like, man, I don't own enough Bitcoin.

48:10And the truth is I probably own way too much of it, but that's how your brain behaves, right? I feel like crypto is more so than the stock market. Crypto is different than the stock market in this way. It's that when it's going up, you think, yes, I need more. And when it's going down, you think, why do I have any of this? Way more than the stock market. So I don't know if this is like recency bias or hindsight bias or whatever the hell you call it. But it does seem like it's not unique to crypto, but it is especially in crypto. This move in crypto, though, if it continues and we get to like 50 ,000 and there's all these pieces, but hey, crypto back above 50, people are just going to hate this so, so much.

48:47Because there are a lot of people who - There were so many grave dancing and people - There's a lot of people who's - This is it. It's done. There are people who don't get crypto, who don't like crypto, which is probably a lot of people, most people. But then there are people whose identity is tied to crypto failing. And for those poor souls. You really want it. And I still don't quite get it, get it. To me, it's still a call option, and that's always been my case. I just think it's funny that crypto got crushed when inflation spiked and rates went up. And then it's rallying now that inflation is falling and rates are falling.

49:20and it's like, eh, we'll just push those other macro. Like I think crypto people should just completely disavow macro for good and just not bring it up to any of their points because obviously that narrative failed. Well, the crypto macro takes were just horrendous. I mean, Jack Dorsey is a great example of this. He said hyperinflation is coming. He's a big crypto guy. And the crypto macro takes are, they're not all, but they feel sort of anti-American and not all, I'm playing with a broad brush, but it's very easy. I would focus more on the technology and the macro. Just leave the macro alone.

49:52Like you don't need to have the macro. The people whose identities are tied to hating crypto. I kind of sympathize, but you know what I did instead? I bought crypto to protect myself, to insulate myself in the off chance that this thing goes to, that this thing went to$100 ,000. I think I would have, if I didn't own it, I would have spontaneously combusted. That's the reason I bought it in the first place too, because I was getting so fed up with beating my head against the wall going, I don't get this. I don't get this. Oh, well. So, yeah, it feels like a call option. NFTs are back, I guess, or maybe— I don't follow the NFT market too closely, but pudgy penguins were a big— Wait a minute, sir.

50:29You did follow it closely for like a month. I did. I did. I did. No, no, no. I was super interested in NFTs and what was happening at the time. Just a wild, wild scene. Can we just say that literally everything is tied to the price of Bitcoin? Like Coinbase got crushed. Now Bitcoin's going up. Coinbase is going up. Bitcoin goes up. NFT price— Everything is just tied to Bitcoin. That's it. So I don't think it's like shocking that crypto is back. I mean, it wasn't one of my predictions in 2023 that it would double. So I'm not shock shocked. I am surprised that NFTs are rocking again. Like, are we back in 21?

51:06We're doing this again? Cycles move faster these days. I thought interest rates ruled everything around us. isn't it just if crypto prices are higher people are finally able to sell some of these things so you get more activity because it was just dormant forever is that how it works a lot of people would say hey dummies this is all money laundering like what are you talking about i don't know i don't know but uh dull moment never a dull moment i want to do some more myth busting here someone sent me a bunch of people sent me this because we've been talking for recent weeks how housing prices have come back to all-time highs and like five people sent us this and said hey wait a minute.

51:44I see this, this chart here from this Kobe Yossi letter. I, it's the guy from Usual Suspects, I think. New home prices just crashed by the largest amount on record down 18 % over the last year. The biggest decline going back to 1965. Chris just walks in here. I've clearly got a microphone in front of my face. He's like, are you recording? No, I'm on, I'm on a zoom. Unbelievable, this guy. All right. Uh, new home prices crashed by the largest amount on record down 18 % of the last year, the biggest decline since 1965. Even in the worst month of the 2008 financial crisis, biggest decline was 15%.

52:21So they talk about how this is bad. And you look at the chart here and it makes this look bad. People are going, wait a minute, how are new home prices down 18 % if home prices are at all time highs? This makes no sense because there's so many more new homes being built, right? Well, Logan Modashami, good friend of the show, set these people straight. The reason the median housing price for new homes is down is because they're building smaller homes. this is actually a good thing, right? That's great. This is not like prices crashing. It's more people want to build new homes because that's kind of the only game in town and builders are buying down mortgage rates.

52:53And so they're actually building smaller homes. They're building like$300 ,000 and$400 ,000 houses now instead of$500 ,000 and$600 ,000 houses. So the median price of new homes sold has actually fallen. This is a good thing. This is good news for people who've wanted smaller starter-ish homes. So not the end of the world. We need people like Logan to come in here with data and set these people straight. I love it. Well done. He loves Logan loves dunking on doomers more than I do. I love dunking on doomers. He loves it more than anything. He's the LeBron James of last week. I talked about why don't more people leave these high like places like New York because their inflation, their cost of living would immediately get better.

53:33And you live where you live. I know, but I'm saying if people can't survive financially in a high cost of living area, don't you think some of them have to be thinking, I got to get out of here to a place that's more affordable? And some of them are. So there are. So the 10 housing market places with the biggest outflows, San Francisco, New York, Los Angeles, and DC. And they're going to Sacramento, Miami, Las Vegas, and Salisbury, Maryland. So this is quite a lot of people. 25 ,000 people left New York. But how many people live in New York? 7 million. Yeah, it's not that. And you probably have more coming in, I guess.

54:09This is in the net outflows. No, this is net. people coming in. But still, I'm surprised that you won't be seeing more of this in years ahead. All right. I have two dumb surveys this week. The percentage of, this is from Morning Consult, share of consumers who said they would prefer that personal incomes go up or prices go down. 37 % want their personal income to go up. 63 % want prices to go down. Which part of this is dumb? The 63%. You'd rather see prices go down than your income go up? Are these people mental? They're just being honest. That's dumb. You don't want your income to go up? This is like the relative heads being broken thing.

54:56All right, here's another one. This is from CNBC. 60 % of investors with$1 million or more of investable assets said they are more likely upper middle class, according to a recent Ameriprise survey, of those making more than$175 ,000 a year, roughly of the top 10 % of tax filers. One quarter said they were either very poor, poor, or getting by, but things are tight. Even the share of people making$500 ,000 to a million dollars said the same. Despite their high net worth, just 44 % of all millionaires felt very comfortable, according to Edelman Financial Engines. So we've talked about this a couple weeks ago.

55:28I think 12 % of American households are millionaires by net worth, but that includes the house. So to have a million dollars in investable assets, I'm guessing that's 3 % of the population, maybe? I'm going to say something that people are going to get angry at, but it's the truth. Have at it. Having money is expensive. And I'm not saying that you should feel bad in any way, shape, or form. Cry me a river. That's not what I'm saying. The reality is that when people make more money, they spend more money. It's like how you fit. What's the Seinfeld joke about the newspaper every day? It's incredible how it all fits on the same page.

56:05All the news fits exactly on those eight pages of the news or whatever. Okay. Same thing with money. Same thing with income. The goalposts move, your lifestyle expands. Like that is just the way the world works. So that explains why people who make more money don't feel like they're getting ahead. But don't tell me you're upper middle class then. You're upper, upper class at that point. If you have a million dollars in investable assets. Fair. I'm not saying that it's right. I'm just saying that's how people feel. That's how people feel. And this is the habit thing. And maybe this is part of it too.

56:40So this is interesting. This is from Twitter from Rico. No one fully appreciates how volatile income is. People get raises. They become unemployed or disabled. They marry, divorce, they retire. They appear temporarily rich from an asset value, sale, et cetera. Nearly half of this year's top 1 % will not be in next year's top 1%. Yeah. It's kind of a wild number. How common is it for people to overextend themselves? And I'm not talking about athletes and celebrities, which happens all the time. You say, how the f*** is that possible? How is that possible? But it happens with regular people that are making good money.

57:09My favorite. It happens all the time. It's very common. One of my favorite studies is they studied people in Canada who won the lottery. And their neighbors were more likely to go bankrupt than the regular person because they saw these other people spending money. I do think. Yeah, and then you make money and you hang out with people who make money and then you try and keep up with them. I mean, this is keeping up with the Jones is not a new phenomenon. Yeah, but this is another thing I think social media has taken to a new level. The Joneses used to be the people on your block or in your town.

57:36Now the Joneses is everyone. What social media has done to this is you're right. The Joneses are everywhere. And articles like this, you never had articles like this back in the day. And it triggers people. What I just said, even though, again, I'm not saying these people deserve sympathy. That's not what I'm saying. But articles like this piss people off. It's like, remember that spreadsheet? I forget what the numbers were. People with$4 million have no savings. Well, it's like, yeah, you make$4 million. dollars, you spend, you invest, and you save, and there's no more savings. That's how it works.

58:06You spend everything, or you invest everything. But to your point, people get mad at a story like this, and then if they ever get a million dollars, then they act exactly the same way. Of course. Right? Of course. Okay, here's where keeping up the Joneses have gone wrong for people's personal finances. This is from Charter. America's love of trucks has only grown in recent years. It shows the share of purchases, and in the 1970s, it was like 80 % of cars were sedans or wagons. That was the biggest one. We spoke about wagons last week. Oh, speaking of, I have a follow-up on your parents' van. You know, they never did find the Zodiac Killer.

58:46That one finally came to you a week later? Not bad. I mean, that is very, I still need answers. I need more information. It was like a gray conversion van. Honestly, it should have just had a sign that said candy coming here. Was your dad a painter? No, of course not. My dad does less manual labor than I ever did. So sedans and wagons are not a 26 from 80. And trucks and SUVs were, I don't know, less than 10 % up until the 90s and now 45%. Which the funny thing to me is everyone needs like the huge suburban and Tahoe and stuff this year. And I'm just telling you, please keep holding out. Okay?

59:23I know you wanted to get one. Who, me? Yeah. But people had - Hang on. I did the prudent thing. it's just it's just it's it's ludicrously expensive yeah but people back in the day had more kids than people have now and yet we think we need bigger cars and trucks now than we needed back then that's the funny thing is that my parents both come from families of five kids and do you think they had a suburban to haul the kids around and stuff no way i don't they made it work with like one car between the whole family somehow. It's - We were, we went out to dinner on Saturday night and Friday night.

1:00:00And by the way, I've told Robin, it's too much. I'm out on Friday dinners. Oh, I am the same way. I do not like plans on Fridays at all. No, it's too much. But then she's like, well, what, you get to go out just because you got on Thursday, it means we can't go out on Friday. And she's got a fair point there. That's a fair rebuttal, actually. Robin, score one for you. It's a fair rebuttal. But the reason I bring that up is because we took an Uber home. There were six of us. So I got the Premier one, which was like the Tahoe XL. Ooh, Premier. Fancy guy. Well, there were six people. I wasn't being fancy, but you needed a six-seater for six people.

1:00:41My God, is that a humongous car? Massive, right? I get the appeal. It's very nice. It's like driving a pontoon down the road. It's very nice. Very spacious. All right, recommendations. I will, you know what? You go first, Ben. No, no, no. I'm sorry. Sorry, before we get there. Real quick, Ben, I just want to talk about your take on Twitter. Perfect number of donuts, two. Perfect number of beers, three. Perfect slong length, three and a half minutes. Perfect number of lifting reps, eight. I don't know why, but it's true. Perfect movie length, one hour and 45 minutes. Perfect number of TV episodes per season.

1:01:23Six only British shows do this. I have to say, 10 out of 10. This is a perfect take, especially the TV episodes per season. I love, the only six episode shows that I could think of was Bodyguard, which is a British show. Yep. And was, what was the show in Pennsylvania with Hugh Grant? Oh, yeah. Nicole came to one. Yeah. Not Nicole. Yeah, oh, Nicole came in. And not Maisel. What the heck? What was the name of that show? I can't remember now either. But I think that was a six-episode miniseries. So I started watching the fall of the House of Usher or whatever. And, I mean, it should have been a four-episode show maybe.

1:02:02I gave up because it's like it's too much. I gave up too. I think I gave it through four and then Robin finished it. But you're right. It's too much. TV, six episodes, it's perfect. Good morning, Michael and Ben. As a spine physician, I would like to comment on the important topic of airplane seat reclining. First of all, the seats are made to recline, which means it's okay to recline them. Secondly, reclining the seat decreases the pressure on your disc, which is under a lot of stress, while seated and bouncing up and down on airplanes or cars. I see a lot of people with disc herniations after long air travel.

1:02:33Do yourselves a favor and recline your airplane seat. I'm talking to you, Michael. All right. So if you want to recline your airline seat, you need a doctor's note then. Well, I'm going to turn around. I mean, this person has one more. I'm staunchly anti-reclining because I think it's just impolite. But, you know, if we're talking medical health here. Dr. Bob says it's okay. One more airplane email. I write this while we experience some rough air on a cross-country flight home. And I'm reminded to send my thanks your way because I've taken to listening to the podcast during turbulence to calm my irrational nerves.

1:03:05It gets me out of my own head and you guys are just easy to listen to. Finally, for anyone else who gets a little anxious, I found the turbulence forecast on this website. it's turbli.com T-U-R-B-L-I.com to be extremely accurate and knowing ahead of time it allows me to prepare mentally the site is called Turbli so I said this on a show I said this on a show a couple months ago I like most everybody else don't like turbulence I mean who's a fan of it that'd be weird you know what I like? I like turbulence planes don't crash from turbulence true it happens all the time right? what planes crash from turbulence?

1:03:37no I'm saying turbulence happens all the time it happens all the time it's terrible one more thing on on the inbox. We get a ton of emails every week. And it's one of my favorite things to come out of this podcast is the way that people open themselves up to us. And Sean over here, I'm looking right at him, helps us with the inbox and helps us with everything else and has been indispensable. Just what a great, what a great hire. What a great employee. True. Sean is our left tackle. Sean However, we gave him access to the inbox and we're revoking his access. Not because Sean did anything wrong, but when you, the listener, sends us a personal email, I want to send you a personal response.

1:04:27So just know that if you had emailed us in the past couple of weeks and you sort of felt like you got an impersonal response, that's Sean's fault. But you know his fault? It's my fault for letting that happen. So rest assured, if you come to us with a personal email, you'll get a personal response. If you want to write to Michael at all his horror flicks, have at it. He'll write you back. All right, recommendations. I don't know if Wonka's getting good reviews or not, but this is interesting. Hugh Grant plays an Oompa Loopa. Did you see the Johnny Depp one? Why do they have to keep trying to remake this stuff?

1:05:00It was awful. I had no interest. No interest. No interest. I'm sure my kids will probably want to see this, but I have no interest in it. No interest. I saw on Sunday night at 820. I haven't been to the theater in a long time. And you know what? I said, it's time. Get off your ass. Go to the theater. I saw Godzilla minus one. And I have said over the past couple of weeks, I was talking a lot about Godzilla that I'm not even a fan of the franchise, which I know sounds weird considering that I'm endorsing the show on Apple Monarch Legacy of Monsters, which is quite good. And then I also want to see Godzilla minus one.

1:05:32And I'll get to Godzilla minus one in a second. The Hollywood versions of the Godzilla movies are trash, in my opinion. And they're very, they're just not good. Kobe is excited for Godzilla X King Kong and King Kong. I saw the trailer for that movie. It looks horrendous. Did you see the trailer yet? Yeah. There's too much Godzilla content going on right now. Looks awful. Nevertheless, I'm going to bring Kobe to the thing. My son will love that movie. Yeah, I'm going to bring Kobe to see it because he's into it. Okay, so I saw Godzilla Minus One. The reason why I wanted to see it was because it's not the Hollywood version.

1:06:05It's Japanese, and it's in subtitles. So before I get to the review of the movie, these were the coming attractions, which speaks to the times. It was an independent film. Then it was Planet of the Apes. Another one? Then it was Ghostbusters, which actually looks good because we've got the original cast back. And then it was Blumhouse. And just those four trailers, that's the world that we live in. An indie, a franchise, a franchise, and a Blumhouse horror movie. I guess it gave us an indie. And I don't hate it. Okay. So I was thinking about this movie as I watched this. And are foreign films better than domestic films?

1:06:43Or do I think they're better because they're in subtitles and I have to pay more attention to them than it has my full attention? You know what I always wonder? Are these people good actors? Because I can't tell because they're talking a different language. Are they really good actors or not? That's a great point. So this is the 37th Japanese Godzilla film. And guess what? This movie was awesome. Like it was more about like the psychological horrors of war than it was about Godzilla. But the monster scenes itself were, I mean, this was easily the best Godzilla movie I've ever seen. Easily. It was made on a fair.

1:07:23It was made on a$15 million budget, which blew my face. and it was one of the better movies I've seen all year. It was f***ing awesome. It was really, really good. Shockingly good. Godzilla minus one. Credit to the Japanese for making an incredible film. Okay. Any other ones? Horror flicks this week? Any other horror films? I did see one that I listened to recommend that I didn't care for, so I'm not going to shout it out. But somebody said, somebody did email us, since you were both pondering this on the last episode, I thought I would share something I recall reading in high school, a very short essay from Stephen King on why we watch horror movies.

1:07:57I hope you find it useful. We'll link to the show notes, of course, but I just wanted to grab this one bit that I thought was interesting. From Stephen King, the mythic horror movie, like the sick joke, has a dirty job to do. It deliberately appeals to all that is worse than us. It is morbidity unchained. Our most base instincts let free. Our nastiest fantasies realize. And it all happens, fittingly enough, in the dark. For those reasons, good liberals often shy away from horror films. For myself, I like to see the most aggressive of them. Dawn of the Dead, for instance, as lifting a trap door in the civilized forebrain and throwing a basket of raw meat to the hungry alligators, swimming around in that subterranean river beneath.

1:08:31Why bother? Because it keeps them from getting out, man. It keeps them down there and me up here. It was Lennon and McCarthy who said that all you need is love, and I would agree with that, as long as you keep the gators fed. This is a very good essay. I can see that. What do you got? I'm in on the new Fargo show. The one last season I thought was awful. I think they've done like five of these seasons now. The last one with Chris Rock was just not good at all. I didn't even finish it. This one is, I thought, started off great. It felt like the movie. I rewatched Black Swan on Netflix. Have you ever seen this movie?

1:09:04It's a Darren Aronofsky movie. You never saw it? No, I have. You never saw it? I have. I just haven't seen it since it first came out. I saw it in a theater. This was a tough watch. It's kind of a deranged movie, but it's almost like a horror movie in some ways. I mean, it's like psychological thriller slash horror, but that's a good movie. I kind of forgot. That's a really good movie. A little out there, obviously. Really good. Really good. I like that one. Natalie Portman and Sarah Marshall. Mila Kunis. Not Sarah Marshall, but yeah. Mila Kunis. All right. All right. Where should people email us so we can respond to them?

1:09:39People should email us at animalspiritsathecompoundnews.com. Personal emails, personal responses. That's what we're all about here. Thank you for listening. We'll see you next time.