Transcription
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Welcome to Animal Spirits with Michael and Ben. Got an email. Subject line: Miami Vice drinking technique. And I want to open the show as we head into the warm summer peak Miami Vice season. Somebody wrote, "Hey there, I'm at the shore on vacation. I think to myself, what's a proper beach drink?" I, of course, think back to the many podcasts where Ben is enthusiastically pushing the Miami Vice. Uh, they bring me a drink that has the colada on the top, on the bottom, and the daiquiri on the top. So, what is the proper way to drink this thing? Am I supposed to stir and mix it all together? Use a straw to go deep and suck the colada, then rise up and drink the daiquiri? No straw. Ben, what say you?
That's great because I read this one and I thought, man, I have to think really deeply about this because there's one place in Marco Island that does a side by side. I don't know. I don't know if they put a little cardboard divider in there. They do the piña colada on one side and the...
It's got to be a side-by-side machine, though. That poisons both at the same time.
Oh, there you go. That, that, that makes more sense. Uh, I don't stir. I just...
Yeah, they thought they put a piece of cardboard in every drink.
Your way probably makes more sense. Uh, I don't really stir. I just, I drink it as is. And the best people know how to do a swirl or something to kind of blend them the right way. Anyone who's made a Slurpee with multiple flavors knows how to do that.
I go just straw in whatever. I, I play the field as it lies, like Shooter McGavin said.
But it's, it's, it's usually the, the one, then the other. Although...
I'm not mad if somebody wants to stir it up. Like, that's probably, that probably works just as well.
Yeah, I've never done that, but it probably would make sense. But it looks prettier if you don't stir it. So that's the thing. It's all about the looks. You got to have a pineapple on top and obviously the floater.
The floater.
All right, we have a ton to get to today. I'm, I'm excited about the show today. We have a million things to talk about.
48 pages in the doc.
Is it? All right, let's, uh, this is going to be a Tarantino movie, essentially. All right, let's talk about leverage. This was a story in Bloomberg. FOMO really got me. Taiwanese go deep into debt to amp 100% stock rally. So, there's all these stories about South Korea and Taiwan, and this is the Jesse Livermore quote. I'm going to butcher it, but he says, "Nothing is new in the stock market. Everything that has happened before will happen again." And what he means is...
There is nothing, there is nothing new under the sun.
Right.
I believe was the quote.
Andy Chang is 26, unemployed, and with the help of a little borrowed money, the proud owner of $60,000 worth of Taiwanese tech stocks. And in many ways, he speaks for the entire island of 23 million people when he does, when he doles out the following advice: "Buy any stock and you will make money." Okay. Uh, they look at this chart they have in here of, of stock leverage in Taiwan that is just gone absolutely vertical. Right. Uh, many of the island's brokerages have hit the internal limits on certain types of loans, forcing them to demand more collateral and bump up their rates, according to people familiar with the matter. Like, the, the brokerages are saying, like, okay, this is, this is getting a little scary here, right? Similar in, in South Korea. And Taiwan is now the fifth largest stock market in the world, bigger than India, bigger than Canada, bigger than the UK, which is just mind-boggling. I'm sure you could do a, have Claude do some sort of, this is the population, this is the land mass, this is the, all that stuff. So that, that's in Taiwan. And South Korea, I think, is doing something similar. Then yesterday, in the Wall Street Journal, the trillion-dollar borrowing bid lifting the stock market to risky heights. And they highlight the fact that there's a ton more money in leveraged ETFs, which we've talked about before, that just keeps going up and up and up because now you have single-stock ETFs, double, triple, every new thematic has to have a leveraged version. Now, my original thing, we talked about this in the research channel yesterday. We had a lively debate and I said, listen, if you look at the history of the margin debt stuff, it just kind of follows the market. Jake, who used to write, who actually blogged at Economic... I don't think he does anymore. Early days of the financial blogosphere. He said, "Look, it, if you put a chart of margin debt in the stock market, they're concurrent indicators. They're not leading indicators. And if you do it as a percentage of the index, it's kind of similar over time." And I, I recreated the data. He wrote this...
2015. "We're not in Kansas anymore."
2015. But the point was, those relationships still hold. So I, I updated the data. The market goes higher, margin debt goes higher, right? And as a percentage of the market cap, it's still very similar. You said, I'm actually kind of worried about this.
Yeah, I think this is a dated indicator. So, in 2015, people were, Jake wrote this because it was like non-stop margin debt stuff. And I agree, at the time, it made a lot of sense to normalize things because at that time in 2015, which is a million stock market years ago, margin debt, traditional margin debt was the way that people leveraged up their exposure.
Well, the, and the point was, when the market hit its all-time highs, so does margin debt. So people saw margin debt hit new highs and people go, "Oh no, what does that mean?"
I am concerned about leveraging the system. I'm not concerned to the point that I think like, "Oh no, go to cash." But I think to like, not at least be aware of what's going on is putting, burying your head in the sand. So I had a chart, can make a chart showing what is the, what is the year-over-year FINRA margin debt change? And it's up 54% year-over-year. Which, to Ben's point, well, yeah, the stock market's up 42% year-over-year. Like, it makes sense directionally that they move together, and they do. The thing is, the last one, this is now the fourth time that margin debt since 1997 has risen by 50% or more year-over-year. And let me tell you the other previous times: 2000, 2007, 2021, 2026.
All right, we need to have the cover, the thumbnail for this YouTube video be fire behind us because that is...
Uh, here's the, here's where my worry would be. My worry would not be like, "Oh gosh, this is a generational top because of all this debt." My worry would be there's going to be air pockets in the market.
Well, we're seeing that. You saw them. You saw them last week and even yesterday. I think Micron closed down 8%, ended up the day 1%. You're seeing a lot of...
Yeah.
You're see, I think Micron has been up or down 5% or more on the day for the last seven sessions in a row. The tail is starting to wag the dog. This is 100% being pushed around by leverage. So this is, this is why those South Korean stocks and Taiwanese, Taiwan Semiconductor, they can be down 10% in a day easily, 20% in a day potentially, because of all this leverage. That's the worry is that you're going to get an air pocket and then selling begets selling. That's what that's what happens.
So FINRA margin debt is boomer margin debt that doesn't show... No, seriously. That, that is the way that people used to leverage up their portfolios back in the day. And there are all sorts of instruments that do not show up in this chart. So swaps, for example, that's how Arcos blew up. Nobody knew because this is like, there's no record of this.
Uh, options and futures. These... So I think a lot of these double things run on swaps. That's not in the system. Now, we saw the chart. What is it? $200 billion worth of money in there. That's, that's not nothing. Um, box spreads and other synthetic lending is not in here. Now, obviously that impacts a lot of wealth management clients. It's a little bit sort of, it's a different type of leverage because yes, people are leveraging up their portfolios, but it's not to buy more stocks.
That's not all, not all leverage is being used. Sometimes it's used for a house down payment, sometimes it's used for renovation. It doesn't always have to go back into the market.
But to, yes. But to be very clear, let's like not mince words. There is a lot of demand for leverage. There is a lot of borrowing in the system, and yes, it does have my attention. I am a little bit worried about it.
This is one of the reasons though that I've always said on this show, and this doesn't cover, it's not a blanket statement, but interest rates matter way less than people think because rates have been going higher and people are still borrowing money.
So...
From this stuff. So that, that's surprising to me that rates keep going up and people don't care. And this is what happens though in a bull market.
People keep taking more and more and more risk. Nobody cares about, nobody cares about the annualized interest expense when you're trying to make 20% in a day. Who cares?
So there is so much demand for borrowing that then the brokers only have so much money that they're willing to loan out, and there is a cost to this capital, and right now costs are skyrocketing.
But there's this idea that the Fed can control people's behaviors through interest rates, and it, I just don't believe it. Behavior matters more than rates until rates get to a certain point. Rates matter in the sense that they slow down the economy. They slow down growth, which eventually, not overnight, but definitely hits.
Yeah, obviously going from zero to five had a huge impact, but not as much. But here's the thing. I would be more surprised if people weren't leveraging up right now, given where, given that the way this cycle is playing out. Of course, this is happening. This is a boom, a huge boom. Of course it's happening.
Of course it's happening. Right. I don't think, I don't think anybody's surprised. Like, why are people taking out leverage? Well, because these stocks are wall-to-wall up there every day. Yeah, of course it makes sense.
Um, all right. Uh, Corey Hoffstein tweeted this chart from, uh, who, who made this chart? I don't know. It says Bloomberg, as compiled by Citadel Securities. Okay. The combination of concentrated positioning, growing buyside leverage demand, and constrained balance sheet capacity has begun to tighten funding markets, pushing one-month equity financing spreads to as high as 138 basis points above SOFR. Um, prime brokerage, like hedge fund leverage, does not show up, as far as I know, in FINRA margin debt, the chart that we were mentioning. So, yeah, people are speculating their [ __ ] off. And can this, will this cause more volatility? Um, you know, Micron coming down 27% in three days?
Single-name volatility to me would be, it's, the risk of that is way bigger, and it's been, it's just...
All right. So that, that's kind of, that's obviously something to worry about. That's not a, again, it's not a 1929 situation by any means, but it's, you're right. It's, it's got to be concerning at some point that we could see big air pockets from that. Um, how about this for good news? Small caps this year. Russell 2000, as of the close on Monday, was up 22.3%. S&P up 7.5%. This is a huge, huge. We, so I took all of the Russell 2000 stocks, downloaded them from YCharts, uploaded that to Claude. I said, "What's going on here? Why? What's going on with the, the stocks in the Russell 2000?" Breadth, not concentration. 67% of the names are up year-to-date. Median return is over 15%. 900 stocks in the Russell 2000 are up 20% or more this year. So this is not just a handful of names. And obviously, with a, with an index that big. So this is, this is like, this is a big time widening out of the market. Again, I think pretty good news for a bull market.
I would agree. I would agree.
All right. Look at, look at this chart from Luke Kawa. He did this last week. The day Apple announced, in the morning on Bloomberg, there was a story saying, "Hey, Apple's raising the prices of everything. Macs, iPads, iPhones, because memory is too expensive now." So they're raising...
I'm shocked that Apple fell 6% on the day.
Because of that.
Yeah. It's a big ass move. Why? Because I would have thought that people think that, uh, the demand for these products is inelastic and who cares what the price is. It's not going to impact sales.
Well, doesn't it show that maybe Apple doesn't have, uh, as much power as people thought? I don't know. But so he shows on this day last week, the memory producers, SanDisk and Western Digital and SK Hynix and Samsung, gained almost $500 billion in market cap. The same day, Apple, Microsoft, Meta, Amazon, and Google lost $500 billion dollars in market cap. It looks like a very clean transfer. This is a beautiful chart that he created here.
It's a great chart. Um, hold on. A, not a, not a subtle. I mean, not this is not a footnote to that story. That was the same day that Micron reported earnings.
Right. Micron was up 16% and they... Yeah.
It, it would have been up 16% regardless of the Apple announcement.
But why did Micron have such good earnings? Because of the capbacks from the hyperscalers. My question is, how long can they let this keep happening?
Who's they?
The hyperscalers saying, "We're going to lose, and you're going to win, and we're, we're basically powering your win."
This is, this is like the Porter's Five Forces type stuff. These suppliers have all of the pricing power right now. What's Apple going to do? Make their own memory stuff?
Slow their capex eventually. Are they going to, are they going to all live with 30% declines or 40% declines? Not even the one spending the money.
I know. It's... So this other Tracy Alloway chart went viral from Nomura, showing that the hyperscaler free cash flow projections is essentially going from, I don't know, $700 billion to effectively zero over the next 12 months. And this is Amazon, Microsoft, Google, Meta, and Oracle. I, I just think we're getting to the point where we're testing, like, the metal of these, the intestinal fortitude of these CEOs to stick with us. They keep saying, "No, we're going to, we're going to, we don't care. The bigger risk is backing down." I just think it's really interesting if they're, we're going to power these memory producers higher and our stock price is going to fall. How long can they handle that for?
From a human perspective, the...
Don't you think the employees start going, "Hey, what? Our stock's down 40%. This stinks." Now, on the other hand, you being a stock guy, what would you rather have right now? If you're buying stocks today, for the next, call it, three years, would you rather own Meta, Netflix, and Microsoft, or SanDisk, Western Digital, Micron? What would you buy?
That's not even close. That's not even close. The hyperscalers.
That would be the, the way that I'm sure most people...
Micron's up, Micron's up 1500% in the last year and a half. Justified. Microsoft has underperformed the S&P since 2019 and it's down 35% from the highs. Yeah, this is not, this is not a hard question. Now, for the next three months, six months, yeah, probably, probably the memory stock.
And this, this is why owning a momentum portfolio is so hard because the momentum answer would be no, you double down on these stocks that are continuing to go up. That's why it's hard to do. It's probably why it works too, for at least time. Uh, I bought Microsoft, I bought Microsoft yesterday, as a guy who keeps retiring from. I bought Microsoft and and Netflix and I said, "I'm going to close my eyes and look at it again in five years."
We own, uh, we own SanDisk. We own a lot of these stocks in our Porter House Momentum Strategy.
Yeah, Western Digital. And we bought SanDisk at like $300 bucks, and then a few months later, we bought more at $625. And I was like, "What in the what?" Uh, and but that's part of the reason why momentum works. It does what the humans can never. I would never do that. Are you kidding me? If I bought SanDisk at 300, I'm selling it at 370 if I'm lucky.
Right. That, that's why to me, I have to. A few people have asked questions about the strategy. Like, why do you do this if you're like a Boglehead person? Like, I will never buy these stocks in my life. I need to have rules-based. As long as it's rules-based, I can stick with it better. Here's the thing. I would never be able to put my own money into these individual stocks and stick with them. But if it's a rules-based thing and it's a process-based and it's the factory you're investing in, not necessarily the companies that you like, that to me is emotionally easier to invest in.
Yeah, 100%.
Some people can handle the individual stocks. I can't.
So, I, I think that I think that, uh, the market is acting very rationally, as insane as it seems with the memory stocks. Micron's earnings since January 2025 are up 1,400%. The stock is up 1,400%. It's rational. The free cash flow projections for these hyperscalers going to zero. The company's getting rerated and now traded at a forward PE the same as the market. Rational.
Uh, everything... The idea when this started was these hyperscalers are spending money and they're just going to be the biggest monopoly in history.
Yeah.
It's not working out like that. That is the surprising outcome. It's so awesome to see the narratives changing over the years because prior to the AI era, the question was, "What can unseat Google?" Like, there's not going to be another search engine.
Yeah, there's not. Them. Google did. They unseated themselves.
Maybe.
Yes. Like we were thinking like, "What's, which one of these stocks would not be in the Mag 7?" And in no world could we have foreseen a universe where their $300 billion worth of free cash flow goes to zero. Nobody could have predicted that. So here we are in 2026 where everything is outperforming the Mag 7. Look at this chart that, that Matt made. We're looking at small value, small growth, mid growth, mid-value, everything divided by the Mag 7, and everything is outperforming it. To me, this is such a healthy bull market.
This is an everything rally, ex-Mag 7.
And it's everything you want to see. So, if you step aside from the circus, push the leverage conversation to the, to the back burner for a second, and you say, "Well, what's rallying?" Transports, industrials, small caps, regional banks. If you are purely a technician and you don't know anything about the fundamental story of what's happening, forget everything. Just look inside the market. You would say, "Holy [ __ ] is this bullish."
Right? It's crazy.
Um, all right. We were, uh, we were on Derek Thompson's podcast. Yeah, Derek does a good job of synthesizing a lot of the stuff that we're talking about, the biggest stories, and then we talk about it, and he holds our feet to the fire a little bit. And he said at the end, like, "Listen, stop doing the both sides thing. What do you think right now? Is this a bubble?" And we both had the same answer.
We both said no. Here's, here's why. I didn't say this to Derek, but I'll, I've said it before, I'll say it again. Can memory stocks fall 50%? Yes. Will they? Yeah, probably. They probably will at some point in time. Will that have proven it's a bubble? No. The way that I think about a bubble is there is, it, it's a cocktail of of things. You need to have all these things. Speculation being the first obvious one. Is there speculation? Duh. Yes, of course there is. But to me, it's about the fundamental valuations. Like, there, there has to be that is the underpinning of a bubble in which the multiples that investors are putting on stocks, there is no, there is no universe in which the stocks can go into the fundament, the valuations, like you roll the dice a thousand times and a thousand times they fall short. When Nvidia is trading at 24 times forward earnings, is that expensive? Yeah, fine. I don't, whatever. But is it in a bubble? Is the market in a bubble? Look what the market is doing to the, the hyperscalers. It's debubbling them. It's saying, "No, you're, we don't like this. We're going to, we're going to rerate you lower." So, I don't, I think that this, we, we can get to a bubble. You know, like, we can debate about whether we will enter a bubble, but are we in a bubble today that's going to burst and fall 80% and take everything down with it? I don't really see it. Even though, even though I'm not blind, I see a lot...
As defined, was no reasonable future outcome can justify current prices. That's a bubble. I would think it would have to... Like, could we see...
That's the dork, that's the dork academic way of saying what I just said?
It is. Yeah. Yes. But so my definition is, will the NASDAQ 100 fall 50% or more? To me, that would prove this was a bubble, and I don't think that the market is going to allow that kind of buying opportunity with these stocks and this opportunity. That's why I think this is not a bubble.
Well, for 50%.
Yes. I think if that happens, that, yes, this was a bubble. If the NASDAQ falls 30%, we get a bear market. I don't think that constitutes a bubble. No.
What about 40?
40's gray area. I think it's got to be 50 for it to be a really, like, all the bubbles that people are putting this in the same class as the dot, the railroad, all these things. This has to be 50% if that's going to be in that class of bubble.
And 50 is like, light, like 80.
Fell 80%. Yeah.
Yes.
So, if, if it falls 80%, um, the world will look a lot different than it does today. I just, seeing, I know for anyone, I know you could say, "Hey, listen. These earnings numbers, they're just, they're, they're going to go away because all it is is the, the hyperscalers taking all that free cash flow and it's, and it's going into earnings of other companies." I, that's a, I think that could be a fair argument if you wanted to make it.
Yeah, but they're all saying the same thing. And I know they, I guess they can all change their mind together, but even on Micron's call, they said, "We thought that this was going to go through the end of 2026. Now we see it going through the end of 2027."
Right. The demand.
Are they all wrong? Like, are they, is these hyperscalers going to rug the entire stock market?
I don't think so.
I don't either. I'm just saying it could happen. I don't know.
Anything could happen, right?
Um, okay. So, remember the whole debasement idea and the end of the dollar? We talked about this Bloomberg story a little bit with Alex Morris. He's from FM Investments, going to come on soon. Um, but Michael Semler on his latest piece had all these charts, and it's funny because people keep saying that the dollar's ending and no one wants to invest in the US anymore. And he's saying, "Look at all the government debt data. Places like China are worse than us." So, if you think that the, the dollar is going away, give me a good, something that's going to step in. Guess what? It's not crypto. It's not the renminbi. It's not one of these other currencies. What else is going to replace the dollar if the dollar is going to fall from its status, reserve status?
Well, that's the thing.
There's nothing. There's no replacement.
He says it's 89% of FX transaction volume right now. 89%. You may have your problems with the debt and the deficits in this country. I get it. It's just as bad everywhere else. That's the problem. Everyone, this, the governments...
Governments around the world are like the hyperscalers. They all went in this together this decade. Everyone increased their debt by an insane amount. This was the mic drop. This piece.
Right?
Sorry, it's not happening. You can, you can...
Scare people with all your debasement stuff and dollars and deficits and this is the end of the world and Rome's falling.
It's a great story. It's not happening. Sorry. Try again next time. Oh, he had this really good chart in here too of how the US is at the lower end of concentration by country. So the only stock markets that have lower concentration in their top 10 companies than the US is Japan and India. Everywhere else has much higher concentration. Canada, UK, and France, like these, their stock markets are all more cons, more highly concentrated than the US. I think this whole concentration worry for the last really 10 years or so, it really started like 10 years ago. I wrote my first blog post in 2017 about people worried about stock market concentration. I really think it's been one of the dumbest worries about risks that we've had. This is just the way the stock market is.
Um, I understood the risk and the, the worry. I think that if you're still worried about it, you just have to, I'm going to another happy, the play of the field as it lies. This is what it is. I forget where I pulled this chart, but the, I think this is from John Authors, actually Bloomberg. Um, it's global. As we've said a million times, they showed the average market cap of the top 20 stocks in the MSCI All Country World Index. It's now 60 times bigger than the average stock of the remaining 2500 stocks.
And this doesn't, this doesn't look like a cyclical or a, this is like a structural change in the index, in the world, right? We, we all know like the, the balance of cruise to the winners. I, so I asked Chart Kid, um, to recreate something similar. For the past five years, we've been looking at the MAG 7 as a percentage of the market cap. And by the way, I saw a chart the, you know, Goldman Sachs has a chart, MAG 7 percentage of earnings, percentage of market cap. And they've, of course, they've gone up to the right together. The market cap has outstripped the earnings a little bit. That gap is now completely closed. So they're 38, whatever percent of the, the index, and they're 38% of the earnings. All right. Anyway, so if we zoom out, because now there are a lot of gigantic stocks. Micron is a trillion-dollar stock. Broadcom, like, there are a lot of gigantic stocks. It's no longer the MAG 7. So I asked Matt to look at the top 25%. I'm sorry, the top 25 stocks.
Right. Broadening the universe out a little bit.
So look past the MAG 7. Let's go to the top 25. In 2017, for example, the top 25 stocks were roughly 40% of the market. They're now 54%. And I'm guessing that there's five of them that are the same maybe since 2007.
If this were to return to 40%, I would think it would have to be because they're falling, not because the rest of the world, not because the, the 475 is like growing that much, right? The concentration usually goes down in a big bear market, right?
All right. So, because of the concentration, all of the breadth data is now, is, is permanently busted. There are, there is weird things happening inside the market where this data point, like, oh, this has never happened since bubble...
Explain breadth for the, uh, the civilians out there.
Does not matter anymore. So the S&P 500 was up 97 basis points. Only, um, 140 stocks were up. That would be weak breadth. It's, you, it's being led by fewer, fewer stocks. You want participation.
People look at a ratio of advancing stocks to declining stocks to know what...
You want, you want the advance-decline to keep going up.
To confirm, confirm the rally. All right. So, for, so Kevin Gordon tweeted, "The third straight day with the S&P 500 declining, yet the advance-decline spread remaining positive." Bespoke has a couple of charts on this showing the rolling number of days with price and breadth in opposite directions. So price is up, and more than half of the indexes down. So that means that the MAG 7 is down, but the rest of the stocks are up, essentially.
Basically, or, or at this point, it's not just that, it could just be like the software names because the software names are now big enough where they could power the index higher with negative breadth and vice versa.
Right. So you're, a lot of these historical charts need, they're going to need a lot of context.
They're busted. They're just busted. So they show the, they show, uh, rolling 50-day periods, 100, 120-day periods, and 200-day periods, and we've never seen anything like what is happening now. Um, so any, like, historical data on this just is completely useless. Another chart that to me really epitomizes what sort of weird market environment we're in, negative beta. This is from UBS. They have a chart that shows the largest 10,000 US companies by market cap and the number of stocks with a negative beta to the S&P 500. I don't know if this is like 30-day periods or whatever they're using. Uh, oh, here it is. 252-day. So, a negative beta means that stocks tend to go down when the index goes up. That is bizarre. And prior to 2025, the line, there was no line. It, it like happened like a few times where 10 stocks would have this, like, 10. And now it's 108. All right. So the previous record looked to be about 10. I'm just eyeballing it, maybe even less.
And now it's 108. Now, that is a combination of the energy stocks and the war in Iran when there was peace talks and crude oil fell 9% and energy stocks fell and the index went up there. So there's that baked into it. And of course, there's all of the semiconductor trades, the, all of the AI stuff, all the hyperscaler stuff. So the market and breadth dynamics look very, very odd.
The 2020s have broken a lot of historical relationships in terms of economic data, economic charts, stock market data. It's...
It's a brave new world. We, we, uh, we should have covered this chart earlier when we were talking about the debasement trade, but this is my favorite chart that Semler made. We've seen a lot of charts showing central banks' gold allocation as a percent of their total cash reserves.
Right. People have been saying that's the reason gold has been going up for so many years because of central banks buying it.
Exactly. And is that part of the story? I, I suppose. But looking at this chart, and I don't know if there's like a, a start date that's that's moving this, but Michael shows the actual gold shares of world FX reserves, again, up into the right. But he makes the astute observation: it's a price thing. Yeah, when gold goes from $2,000 to $5,500, of course, it's going to be a bigger slice of the pie. But are they actually buying gold to the extent that these charts suggest? No. So he shows, if you assume the actual holdings and no change in gold prices since March 2009, they have less than they did in 2009.
Interesting. So gold right now is in a 25% drawdown. So that means that that percentage is obviously gone down because the price has gone down.
Silver is down 50% from the total, from the high.
Uh, pretty wild unwind. Last, last thing on the, on the market stuff, and then we'll move on. Couple of good charts from Torsten Schlack. He's showing earnings growth converging between the MAG 7 and the S&P 493. So in 2023, the MAG 7 grew 34%. The S, the 493 was down 3%. Of course, that was well-documented, right? Like that's all we were talking about in 2023 because it was the reality that the entire market was being led by the 49, by the by the MAG 7. That persisted in 2025, 23, and 11. Um, but in 2027, analysts are expecting 19% growth for the MAG 7 and 15% for the 493, which would be a wonderful development.
So this would be, that would be three years in a row of double-digit earnings growth for the 493.
Yeah.
It's pretty good.
Pretty good. All right, one final thing on Nvidia is cheap, and I'm going to use air quotes on Nvidia's cheap. If somebody is listening and they were yelling through the screen, "Michael, stop saying Nvidia is cheap." I don't care that it's trading at 24 times forward earnings because we've actually, we did this a couple of months ago, couple weeks ago. It can't have a premium multiple because it's too big. It wouldn't make sense. It would swallow the market. That's fair. I would accept that rebuttal. So, Nvidia has a larger market cap than Canada, then the UK, then France, then Germany, and then Italy. So maybe they were just bumping up against the laws of how big a company can can realistically get. Anyone in your life who doesn't know how to pronounce Nvidia? Feel like everyone has that person in their life.
Yeah, a lot of people say Nvidia.
A lot of, a lot of market professionals say Nvidia.
Right. It's like someone who says Chipotle and said Chipotle.
Everyone has that person in their life. They just can't get the pronunciation. I have those words too.
Yeah, you say, we all have them. You say, Dram.
Oh. Oh, it's DM.
It's DM.
Okay.
But we all have those same specific use case, but yes.
Yeah. Uh, all right. Um, okay. Paychex reported last week. I would think that Paychex is a pretty good read on the state of the, um, labor market. Would you agree?
Yeah.
This is from the CEO.
I would say the...
Quotes again.
I would say the macro environment, despite all the potential challenges that we have going on globally around us, has been stable. No signs of a recession. In fact, if you look at our index, the last several reports have actually shown an increase in index under 50. We continue to see good growth. Um, Lowe's, our core customer is a homeowner.
Wait, there's another one. My mother, she says LOLs.
What? Oh, like, like LOL, LOLs.
Lols. Yeah.
Lols. I, for, she can't, she can never get Lowe's.
Oh, Lowe's. I thought you meant LOLs.
My mom is very bad at knowing names, so she, she thinks it's LOL. Anyway.
All right. So, Lowe's says that their C, their core customer is a homeowner with an average annual, with an average household income north of $100,000. They have gainful employment. They've received wage increases. They have record equity in their home. They have money in the bank. Overall, we describe it as a consumer with a really strong personal balance sheet. And this consumer is resilient.
Yep. You could say that every year for the last five years. It's funny, the word "gainful." Sorry to keep picking nits here. That's, that's a word you only hear for employment. In front of employment, you never use the word "gainful" for anything else besides you're gainfully employed.
Correct.
All right. The next, uh, thing here, you and I both put this in the doc.
And so I, most viral.
Uh, yes. This was a viral, uh, thread by, I think Matt LeBlanc's brother, Brian LeBlanc.
From PNC.
He says it was Matt LeBlanc. Was that an actor?
Yeah, he's from France.
Uh, so he's from PNC and he says they track the debit and credit spending trends of 4 million households. And he says, "Long story short, lower income spending, balance sheet trends have been on a tear in 2026." This is a narrative buster. Why don't you go through some of these?
Okay. So, he breaks out the lower income, middle income, and upper income. Uh, the year-over-year change in card spending, ex-gasoline, right? So, is there some inflation stuff going on in here? Of course there is. But the shape of the lines is what's interesting, cuz upper and middle income is dipping a little bit, and lower income is straight up and to the right. Um...
And it had dipped for years heading into like 2025, and now it's gone vertical.
So he plots, he plots the gap between the upper income and the lower income, and that peaked in what, 2025, or so, and it's gone...
It's collapsed pretty dramatically from a 4 and a half percent spread down to one and a half percent. He said, "Where does this leave us?" Um, "I'm encouraged by it. Bigger tax refunds, lower withholding taxes, improving job growth, and people monetizing wealth gains by bringing more cash into their checking accounts from their brokerages have been more than enough to keep spending stable in 2026."
I got to, I got to be honest, this, the data he provided here was very surprising to me.
And then he concludes with this. Me too. He said, "Here's where it gets interesting. We're also not seeing any evidence that lower income households are dipping into their savings to maintain spending patterns. If anything, lower income balance sheets may have improved through the war with Iran, Iran. This is wild to me." Um, so he's looking at the cash savings buffer days for lower income households. And he says it shows the median number of days a lower income household in our data set can maintain their spending trends if their income suddenly stopped, and still, uh, pre-pandemic levels. Um, he said that being said, lower income households are burning through their tax receipts, their tax refunds more rapidly than last year. Not sure, I mean, this is just the data. He's not, he's not doing like commentary or anything like that, but...
Uh, yeah.
Surprising.
The thing is, I think some people assume when you think about the K-shaped economy or whatever, people assume that these trends are going to be in place forever.
And the economy is dynamic. It's constantly, it's never the same. It's constantly changing.
It feels like a weird position. Nobody wants to hear that the lower shape of the K is doing well because almost by definition, how can they be?
Right?
And obviously the bottom 10% is never doing well by definition. But this is, you know, this is encouraging. It is what it is. It's good stuff.
I think this, I think one of the big reasons is, I, I've showed on this show time and again that bottom 50% their, their increase in equities this decade, it's like a 300% increase in ownership of equities. I think that helps people. It's like a wealth effect for the, for the bottom half that they've never had before, really.
So part of this, next chart shows the cash held by households. And it followed a trend of 4.8% or followed a, a pretty good trend line from 2010 to 2020. And then the pandemic broke it, obviously, with fiscal policy. And I think everybody assumed that this gap was going to close, that the cash held by households would revert back to trend.
So part of the story here is on the other end of the spectrum, the number of ultra-wealthy individuals. We're talking about people with a net worth of $30 million. So the Journal wrote a piece on this jump by 14.4%. 4% last year. Obviously, the stock market, you know, drove all of that. There's 556,850 people worldwide by the end of 2025. Fastest pace of growth since 2017. Again, that's a stock market story. Um, 60,000 people, the top 0.001% of people are each worth at least $254 million. Uh, the population that can fit in a football stadium own three times more wealth than half of humanity combined.
Holy [ __ ]
So one of, one of, I mean, obviously, obviously I think most American listeners, us would agree that capitalism is awesome. Wealth creation is awesome. A rising tide lifts a lot of boats to varying degrees, obviously. But one of the, one of the really gnarly side effects of capitalism baked with social media is a really nasty cocktail of disgusting wealth inequality. And I don't think anybody would hear what we just said and think like, "Yeah, that sounds good. I'm, I'm for that." It sucks.
I keep saying it. I think there's a greater than 50% chance we're going to have a socialist president in the next 10 years. Mark it down. I think I think that's a real. Because this wealth is, again, AI is going to make it even worse.
I'm just not knowing anything about, I don't know anything about how politics works other than the fact that like putting somebody in office is very expensive.
And you know, people that want socialism don't have a lot of money.
So, um, people don't always agree with what they, uh, do with their money. Um, one thing I, so I had, I had lunch with a local financial advisor yesterday, and we both talked about this, and I said, and we kind of talked about how things are going in the business. And I made the comment, like, "I can't believe the number of wealthy people that there are that we come into contact with." And he said, "Same with me. He's like, there is just so much wealth sloshing around right now from everything that's happened in this, you know, past 15 years or whatever." It's... There is...
Weird. Yeah. Not weird. I understand it. There is like a fantasy of a cohort of the population that wants us all to come crashing down. And I, you know, I understand the sentiment. Um, a bare market in equities, a 50% crash will certainly fix a lot of the inequality. It'll make life terrible for everybody, but...
Yeah. But it would be worse for people on the low end. Of course.
Of course. Well, um, uh, all right. Somebody sent this to us a while ago when we spoke about some, some tax stuff and whatever. I had it on my screen, so I thought this is an appropriate time to include this. So, in 2025, according to the latest Tax Policy Center estimates, 40% of households, this surprised me. I didn't realize, I didn't know this, or about 76 million tax units will pay no federal individual income tax.
That's a lot. That, isn't this just Jeff Bezos thing where he wants to...
Yeah. So, um, this is also not awesome. Um, there was something in here about like, oh, um, so 70% of those people earned less than $75,000. So the Basel, I guess a lot of, you know, a lot of that is happening already.
That's why the tax refunds are getting bigger, right? I don't know. This, like, this, I'm out of...
Quick comment on this story from the Wall Street Journal. Someone sent this to us. "Forget work. Passive income is the new American dream." And they go through all these people who have decided like, "I'm going to start a business. I'm going to have a side hustle. I'm going to create a product. I'm going to create a service. AI is going to help me." And I, I'm sick of the nine-to-five job. And I just want to stand up for the nine-to-five job. The nine-to-five job is okay. Passive...
Income is really, really difficult. It's, it's, it's way more work. And I think that's, that's honestly where the story comes down. Like, if you do really want to, it's, it's not as, the word passive shouldn't be in there anywhere. It's active income.
>> Very active.
It's really hard to do something on the side. Like, there's nothing wrong with, with slowly but surely building wealth through a 9 to 5 job.
>> Do you know anybody that has a side hustle?
Well, that's a good question. I'm sure I do. I mean, you and I, everything we've done has been started as a side hustle. Not to brag.
>> Yeah, but guess what? It's a lot of work. That's my point. It's not easy to do something on the side. It's just more work on top of your job you already have. You're wearing polka dots. You know the scene in uh, you probably don't know this scene.
>> In Wayne's World where G says it's like, people do things just 'cause they get paid and that's like, really sad. And he's wearing like, he's wearing like a Reebok jumpsuit and he's drinking Pepsi and it's.
>> Coming from the guy who's wearing an IMAX hat.
>> Yeah.
>> Yeah.
>> No, that's, yeah, it's true. Easily your most quoted movie on the show. You've quoted Wayne's World more than any movie that we've.
>> Right.
>> Without a doubt.
All right. Uh, artificial intelligence. This is, this happened. We talked about this with Derek a little bit. Uh, there's this subset called the exponential view and they looked at, uh, Aziz Zahar looked at the, the Gen AI economy. He said it's generated 110 billion in sales over the past 12 months on an annualized basis. That run rate exceeds 175 billion. And the, he's got a great chart in here. It just keeps going up. And this is like, how much money is actually being created from all the AI spend. And it's going up at a pretty fast rate. It's funny because numbers don't mean anything to me anymore. Like, I look at this number and I go.
>> That's why you have to normalize it to the moon and back.
>> Right. It's, I'm like, I don't, is 175 billion a good return on all that capital? I don't know.
>> But I think, I think as long as this, the chart keeps going up, then you say, okay, this is, something's happening here. He, he was saying like, this is, this is great news, like, it's finally happening.
Getting back to the conversation earlier in the show about the cash flow going to zero for these companies. Do we think that it's more likely that we'd look back in two to three years and say, "Can you believe we didn't think that this is going to work?" Like, these guys were just like, completely asleep at the wheel. They had no idea. They just drove their business off a cliff. Or is it more likely that, yeah, they actually, they actually had a plan and trading at a market multiple made no sense and was an generational buying opportunity?
That was my point to Derek that these are the biggest, best-run companies in the world and it could be one of the, this could be the biggest folly of all time and we have egg on our face. You're like, you idiots. They don't know what they're doing.
>> Come on. I don't believe that.
>> Possible. It's possible that Sundar Pachai and Satya and all these people, it's possible that they're all complete morons, but how dumb do you have to be for that to be your base case?
>> Yes. I, I don't believe that.
Um, all right. Um, from Ramp Economics Lab, I love this substack, Ara Karazzian, who we've had on the show before, actually. Uh, he says, "Is AI actually a job maker? Firms that adopt AI grow headcount at 10.2%, 2% faster over two years following adoption. Entry-level headcount grew even faster at 12%." And he's got this chart here that shows firms with high AI adoption are seeing growth in their number of employees. This is a head scratcher to me. Now, you could say, and you've said before, wow, this is still early. Come on. I think this, this is a positive sign for what I think is going to happen that it's going to, AI is going to lead to more work. You could also make the case that this is, this is still early and the companies that are most aggressively leaning in are best positioned to take these sort of risks.
>> Fair.
>> You think that AI is going to.
>> It's, I'm just saying.
>> Create. It's possible. I don't know.
>> Early positive sign.
>> We, we haven't seen any really huge negative signs of AI yet, is what I'm saying.
>> Correct.
>> Um.
>> Not like, not a huge one that like, oh my gosh, yes, this is the end. We haven't seen that yet.
>> Correct.
>> That anecdote hasn't happened yet. Even earn the data, especially.
>> Uh, all right. Um, I don't know. I'm sure there's been work done on this. When a company puts their name on a stadium, it's usually not a great sign of capital discipline. So Kurt Benhausen tweeted, "The Warriors signed a new jersey patch deal." Oh, it's just a jersey patch. All right, never mind. Um, with AI Cloud from Iron, uh, but nevertheless, costing more than $50 million a year. That's a lot. I don't know how to calculate that brand recognition.
>> It is. Uh, okay. Someone, I, I said last week, they need better names for AI. They all have to use a name. And someone says in Tokyo, the nickname for Chad GPT is Chappie.
>> Okay.
>> That's not bad. Not good, but it's not bad. All right. What's the mode here for prediction markets? I said this last week, like, where's the mode for Koshy and Poly Market? New York Times says Mark Zuckerberg directed Meta to create a prediction markets app.
>> Uh.
>> What's the.
>> Well, we discussed this last week. I'm on record that there are a lot of examples of companies where you would say, well, what's the moat? And they've gone on to do incredibly well. Now, maybe I have one example, but still, one is one, is it not? It's more than zero.
>> But degenerate gamblers will go wherever they're treated best and.
>> Well, why would they be treated better anywhere else? The odds are the odds. Once you have the customers, why would they go somewhere else? Maybe better signup bonuses, but like, all right.
>> That's, I, I just. What was the moat for FanDuel and DraftKings, whatever?
>> Well, first of all, why is that the criteria for anything? But I'll tell you what the moat is.
>> Because the reason all the growth is happening for Kelsey and Poly Market is just because of sports betting. That's it. Sports betting.
>> Okay. So I'll tell you what the moat is for for these companies. For me, I have a FanDuel account and I've dabbled in with Fanatics and DraftKings, but I've bet whatever I've bet on FanDuel. That's my personal record. So I want to know what my track record is. And I had a pretty good run in the NBA playoffs. Not to brag. So, I am back down to only seven cents of losses per every dollar spent. So that's the moat, at least for me. That's why I'm not leaving FanDuel.
>> I just, I, in when it comes to sports betting, I just don't see any, any moat at all. And I feel like the, these are fly by night companies. There's going to be 12 more of them. Maybe I'm wrong.
>> Uh, well, yeah, maybe you're wrong. I don't know. I don't really have a strong opinion here.
Um, all right. Uh, Michael Saylor tweeted, "Volatility tests every capital structure. Strategy remains focused on Bitcoin, discipline capital allocation, credit quality, and long-term value creation." This is not The Onion. He actually tweeted this. We appreciate our investors and will continue to execute with transparency and resolve.
>> Um, so.
>> You and I saw him speak at a conference like two years ago and Bobi was interviewing him and.
>> And I, Bob's entire body language was, I, and he didn't say this, I was, I feel like I'm taking crazy pills.
>> Yes.
>> He was like apoplectic. So I'm going to get into this tonight with Josh thoughts. I don't want to say too much other than the fact that strategy is in a 30, what, 50% whatever it is. Strategy is getting killed.
>> It's down 82%. It is.
>> 82%. Yes.
>> Okay. 30, 80. Okay.
>> Um, they issued a preferred security that was supposed to trade at par. It's now in an 18% drawdown. Not awesome. They're selling Bitcoins.
>> Um, but what is interesting and I keep saying this, like, there are things happening with blockchain stuff despite the crashes in these companies. And by the way, a couple of weeks ago, when you told me Visa was in a 12% drawdown when I mentioned these names, Mastercard was at a 52-week low.
>> Okay.
>> So, I think these companies are being.
>> I think MicroStrategy getting blown out of Bitcoin is the best thing that could happen for Bitcoin.
>> Yeah, I would agree. I would agree.
Um, so Torson Slack tweeted, "The tokenized real world asset market has grown to nearly $32 billion, highlighting increased institutional adoption of blockchain-based infrastructure." $32 billion is not like 20 million. That's a real number. So he breaks it down by US Treasury debt. That's like $15 billion worth tokenized assets, private credit, commodities, stocks, and others. This is going to be a hundred billion dollars. I guess I'm just thinking of the way that, how could, how AI could save crypto somehow and really use the blockchain. There's there has to be a way. But, uh, I don't know. You said 170 billion for AI is not that big, but 35 billion for crypto is big.
>> What did I say? 170 billion. I didn't say it's not that big.
>> Yeah. Okay. All right. I, I, I still just think that with all the fanfare that we heard about all the things that crypto is going to do, if stablecoins are the thing, that's going to be a really boring outcome from all the things that this could fix this and it could fix this. And.
>> What if tokenized real, real world assets are 100 billion? Is that, that's not nothing?
>> Yeah.
>> Huh?
>> Right. It's not, I don't know.
>> No, listen. Two things can be true. The hype was ridiculous.
>> Yes.
>> And we've paid way too much attention to it. But it was also a new asset class, a new vehicle. Like, it was exciting.
>> Oh, the fact that $2 trillion was created from thin air is unbelievable.
>> Is that nothing? Like, is that a fail? They invented a new asset class that people, institutional investors allocated to.
>> Overhyped, sure, but not, you know.
All right. So, we talked last week on Ask the Compound. Someone asked, "Hey, I live in North Carolina. I've got a 2.9% mortgage, but the house is too small for my family. The kids are growing. Getting moving in a new one would be a 6.5% mortgage." And someone, and I said, you know, if it's going to make your life better, do it. And someone in the comments said, "Sorry, but trading a 2.9% mortgage for a 6.5% one on a much higher loan balance is an idiotic move. Quality of life is defined by the people you're spending your time with, not how big of a house you're spending that time in. There are numerous academic studies that conclude upsizing your home doesn't lead to higher overall life satisfaction." And guess what?
>> I am a perfect counter example.
>> Yes. I, I, this is why I think sometimes behavioral studies are just flat-out wrong. So I, you did this and I'm sure you're much happier.
>> I did this. My mortgage is went, I went from 2.9% to where am I now? 5.5. I think my mortgage payment is way higher than it was in my old house. Like, an uncomfortable amount higher.
>> Um, but I did this for my family and for my life and to be on the water and to make lifelong memories with my kids. Now, obviously, obviously there's like a line, like if you can't do it.
>> Diminishing returns at some point and there's.
>> Right. But I'm just saying, like, if it doesn't make financial sense to the point where, like, if this, if this blew up my life where I wasn't able to do things because I was underwater on my mortgage payments, obviously that's an. That's a person in the question said, "Listen, I can afford it. I just don't know if I want to."
>> Fine. Do what you want, right? Is this, this is like personal.
>> I said, I said do it because a house is honestly something that will make you happier. It will put you in a much better mood if you're in a much happier house situation. I totally agree with that. I think the behavioral studies on this are wrong.
>> I would say it's, it depends, but I generally agree with you.
>> Diminishing returns anyway.
>> I agree.
Um, all right. We've been talking about this, uh, the fact that the economy continues to be as resilient as it is with the housing market in a depression is remarkable.
>> Right? There's this idea that there's a line that housing is the economy.
>> Guess what? Nope.
>> Kevin Gordon tweeted, "New home sales fell sharply in May, down 7.3% and are getting closer to their cycle lows." And, uh, Tom Smith said, "It is still completely insane now. GDP has been above trend this cycle while the housing sector, typically responsible for up to 20% of commercial activity, has been effectively frozen." Now it sounds like a mystery, like, well, what's happening? Well, yeah, it's, it's all AI. So, um, Warren P is has a chart showing residential fixed investment, um, in raw dollars versus information, equipment, and software. And it's just the lines have just gone, whoop.
>> Guess what? Most people would prefer if we built more houses than more data centers. But that's not where the incentives are right now.
Um, somebody sent this article to us. There was an article, an opinion piece in the FT. "Your Summer Holiday is a Retirement Killer." And basically, like, if you were to invest the money instead of spending it on X, Y, and Z. And I think this was satire, but I can't, I'm not 100% positive. I think this was like, very dry British humor. Did you read the article?
>> Okay. I, I did kind of skim it. I didn't, I guess I didn't get that. So the, the whole idea was, yeah, if you just take the $10,000 you're going to spend on vacation and mult and grow it over 30 years, this is how much you're giving up, right?
>> Yeah. Now, I'm like 65% sure. I'm not, you know, I don't know. I don't know who this person is, but I think we would all agree that if you are putting an 8% return on your vacation and depriving your family of these memories because it could be worth whatever.
>> Yes. This is, this is, this is satire. And the thing is, some people probably would look at this as being real.
>> Um.
>> That $10 a day you're spending on ice cream for your kids could be $2,000 by the time they retire.
The Wall Street Journal in an article, "No Hair Transplants, Pills, or Toupees. Meet the Men Embracing Baldness." I've been bald maxing for years and I wasn't asked to opine.
>> You got a lot of this. Yeah. Someone said Michael should have definitely been interviewed for this.
Um, I, I mean, these, if these solutions are coming, I mean, if you're a bald person and you grow your hair back, I'm not going to look down on you. I think you should, if you can do it. I think you, I don't, more power to you. I don't care.
>> But Josh is regrowing his hair somehow. He's in, he's injecting himself.
Well, I.
>> I heard he did. I heard Josh did a speech for a group of adviserss in Turkey.
>> And then he came back. I, I don't know what happened.
I want one more personal finance thing. So, it is funny because we, a lot of what we've been talking about in the last five or 10 minutes is just judging people on their financial decisions. And, and I think I'm not one of those people that says don't judge people on their financial decisions. I love judging people on their financial decisions.
>> Oh, it's great.
>> Internally, right? It's, it's fun.
>> Yeah. Yeah. We don't publicly shame, but.
>> But, but we always get people. We've talked a lot on this show before about the benefits of leasing versus buying. We've, we've run the numbers. We've gone through the posts. Like, we've, we've looked at it. And a lot of people, every time we talk about the fact that you and I lease cars, someone will, uh, comment that we're idiots, right? I get it. It's like, it's not the greatest financial decision in the world, but I think there is a huge benefit of leasing a car today than there, way more than there was in the past. So, I got a new, I got my new Tellyride. And it's funny, you got a, a Range Rover or Land Rover. I never know the difference.
>> Range.
>> What's the difference between a Range Rover and a Land Rover?
>> Yeah, different cars. Okay.
And I drive like a Kia Tellyride, whatever. And someone's like, "Hey," I had a few people say, "Hey, looks like a Range Rover." I told you it's kind of, I'm a, I'm a homeless man's Range Rover. Uh, but the biggest benefit of leasing today is all the new features you get in these cars. I feel like the features are multiplying in terms of the, the cameras and the safety and the alerts and the sensors and the self-driving capabilities. Driving a new car is just way safer for you.
>> Also making it like impossible to fix.
>> Oh yeah, my dad got in a fender bender and it's $6,000.
>> Oh yeah, that, that's on me before because all the sensors. It was $12,000 for a bumper car. Insurance, I guess that makes sense why it's going higher. But you go on the, the highway and it's not like Tesla self-driving, but it's like adaptive cruise where it, it keeps you in the lane and it, it steers for you and it slows down if the car in front of you slows down and it speeds up if it speeds up. And I just think that the amount of features that happen in two to three years is kind of insane these days. The technology is getting so much better in cars.
>> Yeah.
>> That's how I justify my terrible financial decision to lease.
>> It's not a terrible financial decision. How about what about this? It's fun to get a new car for three years.
>> It really, honestly, for a week, my kids were talking about the new car smell is so good. My kids were just going and sitting in the car in the garage sometimes 'cause they like the smell so much. When's the last time you had, uh, Domino's?
>> Pizza.
>> Last night. My son gets it every Monday night. It's his favorite pizza in the world. We have a Domino's, right? It's the closest pizza by our house. Every Monday from him, I, I will now get it. It's the, in the summer, I'll get a text, "Hey, when are you coming home from work? Can you give it to Domino's on the way home?" He, it's his favorite pizza. We had a birthday party for him and his sister and all their friends came over. What kind of pizza do we get? Domino's. Well, turns out that Georgia is alone on this one because pizza slice keeps shrinking. The Journal had a post showing that Mexican is going up a little bit. This is the market share of like these, these restaurants.
>> Pizza is crashing. If you look at Domino's stock, it looks horrible. A stock that I owned in the past looks horrendous. I think the CFO just resigned or I can't remember what's happening, but really bad. Chicken. Chicken is going up into the right. It went from 10.5% in 2019 up to 13 and a half percent. This chart is a little bit of a truncated chart crime. This is like a misdemeanor of chart crime 'cause it's.
>> It's a very small axis.
>> 9.5 to 14%. But you're right, the.
>> Trend change.
>> Um, we had, I had a party for Robin's 40th birthday.
>> Never had a party in my old house. We had a bunch of friends over. It was very nice. At the end of the night, Robin and I had been drinking and I said, "You know what? Let's get Domino's. It's been a while." It was terrible.
>> Really.
>> And I, I hate to, I really hate to be like the food snob guy because I grew up eating Domino's and I thought I liked it, or maybe, maybe it was just, it was too late and we got like.
>> You know.
>> Cuz one of the reasons the stock did so well for so many years is 'cause they improved their quality. Uh, it% drawdown, but one of the reasons that pizza is losing share is just because there are so many better options out there today. People got more pizza in the past because there wasn't, there wasn't good options for eating and pizza was the only one that had delivery. Now you can deliver DoorDash and you get other stuff. So that's why that's happening. This is a DoorDash phenomenon.
>> Um, all right. Go ahead.
>> Okay. Um, okay. So there's the Tony Soprano idea that remember when is the lowest form of conversation and I.
>> We've done this before and we make fun of Chris 'cause he's the biggest remember guy.
>> Yeah, but I, I reject this premise. Tony Soprano was one of the least happy people alive. He had to go to therapy because he was so unhappy. Uh, there are, I think there are times when remember when is the, there, there are certain people who do it way too much. Of course, right? One of the people we work with is one of them. But I think there are times when it is, it is useful. So this past weekend, uh, my parents have a cabin in the middle of the woods on a river. It's like, there's no cell service, there's no TVs, there's no technology, there's no internet, there's no nothing. It's like in the backwoods, middle of nowhere, two-track road right on the river. And you go there and you play yard games and you do a campfire and you go kayaking on the river. And so I went there with a bunch of my brother's friends. Kind of like everyone wants to keep get together, remember my brother. And all we did all weekend was drink beer, go kayaking, do campfire, play yard games, bocce ball, you know, uh, that kind of stuff. And tell stories about my brother. And I had the best remember when day of my life. It was so fun telling sto. That's the kind of stuff where remember when is good for you.
>> I'm a huge remember when guy. I love it.
>> It was like, it was actually like very cathartic for me and good to have it and like got it out of the system and like all we did was tell stories all weekend and it was so much fun. I laughed all day.
>> That's what life's all about. Remembering the good times, right?
>> Yes. Exactly.
>> Um.
>> Recommendations.
I want to talk about why Rewatchables is for me unequivocally the best podcast of all time. So, they're going through Hell Month, which is '90s nostalgia. So, what is from hell? And why am I talking about this? Because it's my podcast. Um, The Tenant from Hell, Pacific Heights, The Roommate from Hell, Single White Female, The Nanny from Hell, uh, The Hand that Rocks the Cradle, Stepdad from Hell, Domestic Disturbance. All right. So, Bill Simmons on The Rewatchables goes to all these movies. I watched all of them. Um, and I watched Domestic Disturbance, which I had, I did see when that came out. That was with Vince Vaughn and Travolta.
>> Terrible movie.
>> Terrible movie.
>> So, I watched the movie, re-watch it. So bad. So, so bad.
>> Mhm.
>> And then I listened to the podcast and it was amazing.
>> I mean, obviously it's an intentionally bad movie or they did because it was int, you know, it was it was horrendous, but.
>> Those guys got to give credit. It's a very good podcast.
>> It gives me ideas of movies to rewatch as well that I would have never thought to rewatch.
>> So, I don't know that I saw. I, I know I've seen parts of Single White Female because I do remember it was probably on TBS and TNT all the time seeing Bridget Fonda and Jennifer Jason Leigh with the same haircut.
>> Yeah. But Pacific Heights, I never saw that one. Matthew Modí and, uh, Melanie Griffith.
>> Is it a Michael Keaton movie as well?
>> Michael Keaton, of course. What am I saying? Yeah.
>> Okay. So, should I watch them? I think I've never seen it before.
>> Yes. Yes.
>> All right.
>> Yeah, it was good. Really enjoyable. Terrible movies for the most part, but man, great podcasting. All right. A couple of, a couple of, uh, I don't know, last month, the other month, I, I forgot to to mention that I watched what I thought was a very good doc. You ever see The Dark Wizard on Max? The Dark Wizard is about, um, like one of the pioneers of, uh, rock wall climbing. What's that thing where you, Oh, free soloing.
>> Yeah.
>> Like just without a rope. And then he got into, um, hang gliding or like where you just, you put like the bat wings on and spoiler, he didn't make it, but it was, uh, it was very good.
>> Oh, okay. Those guys are nuts. Absolutely nuts.
>> Do you watch, uh, House of the Dragon?
>> Oh, yeah. Here's the thing. I was going to talk about this. So my wife's like, "Do you want to watch?" She's like, "I, she watches all the TikTok videos to know what's going on." And like, this person is this and she's like, "Do you want to watch the, the review of last season, like the recap?" And so it was like 10 minutes long and then 20 minutes into the first episode I'm like, "Wait, who's that person? Wait, are they good or bad? Is that?" But that's why I love Game of Thrones because I can turn my brain off and just be entertained. And I don't have to be one of those nerds that knows like, "Oh, this is the House of Baratheon. This is that." Like, I don't care about any of that stuff. I just like being entertained.
>> Constantly confused.
>> Because I, I watched the recap season, first episode was fantastic. So it was a second, but I saw the recap, two, and I was like, "Wait, that happened?" I don't remember any of this. And even.
>> 30 minutes through episode one, I have no idea what's happening. Honestly, I couldn't tell you which f, I mean, sometimes, but like, which kid belongs to which mom and.
>> Blah, blah, blah, blah, blah. I love it. Can't tell you anything. I have no idea what's happening, but it's great.
All right. So, my son has been really big into alien movies. I think it was because of Project Hail Mary. So, he's, "Dad, give me more alien." We watched a bunch of alien movies and finally I let him watch the alien movie. Alien. Okay. Sigourney Weaver.
>> And so he watched that and absolutely loved it. And he goes, "Are there more?" And when you know, he watches it on Amazon, it shows the rest of them. He's like, "How many of these are there?" So I pulled it up on Chad GPT and we got them in order, right? And so we watched Alien, Aliens, Alien 3, Alien Resurrection, Prometheus, Covenant, and Romulus. We watched them all and I looked at, like, I didn't, I never thought of like, where do these movies rank? Where when did they happen, right? I never thought, I knew Prometheus was the prequel. That's about all I knew.
>> Um, and he loved every one of these movies. But it's kind of funny because as they got further along, you got the alien, the technology got better, right? 'Cause the first one was in 1979. The technology gets better and better and better and the action sequences get better, but none of them come close to touching the first movie. Not even close.
>> No. Aliens is Aliens is the best.
>> It Alien.
>> No, Aliens. The James Cameron movie is by far.
>> The second one?
>> Yes.
>> You think the second one is the best? No, the first one is by far the best.
>> No.
>> I like the second one.
>> Alien was great. So, this is, this is.
>> Alien was more of a suspense thriller. Aliens was a better action movie.
>> Yeah, they were very different movies. You're right. Alien was like a slow burn.
>> I think none of them even, like the fact that the, they didn't have the technology back then made it so you had, but you would never make the movie Alien today 'cause it.
>> Wait, did James Cameron do the original and Ridley Scott did the second?
>> No, Ridley Scott did the first one.
>> Okay.
>> Um, I forgot that there were seven of these movies. Yeah, my son ate them all up. Just.
>> I didn't. This, this is my favorite movie franchise of all time. Did you know that?
>> I think you've mentioned that before. So, yeah, we watched them all. And.
>> But wait, hold on. I'm surprised because the second one is quite scary. When N's parents are like stuck in the wall and they're like white as a ghost, he wasn't scared.
>> So, my son has the same thing as me. He does not get scared by these movies. They don't scare him at all. He finds them entertaining. Like, it doesn't impact him at all to see all this stuff. Uh, he also watched the two Alien versus Predator movies, which are complete garbage.
>> AP2 is the worst movie. The, the wor, I, so I love the first one.
>> When they're going down the.
>> But the second one is, uh.
>> AP was it Requiem?
>> Yeah, it just.
>> Worst movie of all time.
>> I watched that with Robin back in the day, like 2006. We were in my bedroom and I'm watching it on bootleg and she's like, "What in the hell is this garbage?" Terrible movie.
>> I got one more. Um, The Bear on FX is like The Hangover. I don't know why I'm still watching it. Uh, it's on season five now. Sometimes you have lightning in a bottle and you cannot recreate it. Like The Hangover 2 and The Hangover 3. It was the same characters and they tried to recreate magic and it just, it never happened and you almost wish they didn't make them. The Bear season one and two is like one of my favorite two television seasons of all time. And season three, four, and five just got progressively worse where they obviously ran out of ideas and did a complete money grab. Uh, and the show is almost unwatchable now. Why am I watching it? Sunk cost fallacy. I don't know.
>> I have, I have one thing before we go. So, Ben and I, well, actually, you don't work from home. I work from home. And I still, it still feels weird that I work from home. I mean, I'm in the city once a week. I go to Belmore here and there, but I really primarily am in my house. And it still is very bizarre. It's not new, but it still feels new. And it still feels like I'm like cheating or something. It feels like.
>> It's weird because you feel like you're on an island sometimes.
>> It's bizarre. It's a bizarre thing. And, um, obviously, like, I, I feel blessed out of my mind that I'm able to to do this, right? I'm not, not everybody's so lucky. A lot of people have to go to the office and they have jobs where they can't work from home. So, um, that's just a little bit of throat clearing. I feel extremely lucky to do this. But it is, it does do something weird to for me for like the father-son or kid relationship. So Kobe went to sleepaway camp, um, on Saturday and the night and like, I was just like, yeah, I'll see you in seven weeks.
>> Um, and he loves camp and like, whatever. It's all, it's all great stuff. But I feel like my sort of like, whatever about it or just like, just in general with being with him all the time. When, when our parents came home, now, I guess my dad didn't even come home 'cause my parents were divorced, but for non-broken households back in the day, when your parents came home, like work was done, right? Like they left work.
>> And they came home.
>> And they gave their kids all the attention.
>> I feel like I am giving my kids, like, I don't know, 8% of my attention because I'm with them literally all day, every day now. Like, you know, they don't, they're not homeschooled, but like, I'm just, I'm around all the time. And it's like a trade-off. Like, so I'm not suggesting that, like, it's better when our parents went to work and came home and were with the kids, right? Because then they missed a lot, they missed like sports and whatever, they just weren't able to be around. But it is like, it is doing some stuff that I don't love that I do feel like I'm like, sort of not present, taking it for granted because I'm with them all the time.
>> It's a completely different. It's, it changes the relationship in a lot of ways. I totally agree. My, my dad never once brought work home with him, but parents didn't spend as much time with their kids back then.
>> No, parents did. It was just kind of known that like you weren't spending as much time with your parents. You were kind of on your own.
>> Yeah. It's, it's just, it's weird. Like I feel like disconnected, but even though I'm with him all the time. I don't know. It's just, it's, it's interesting.
>> Yeah, I get it. Okay. Glad you got that off your chest.
>> Just something I've been thinking about. I see what you're saying. It, the way that we parent our kids is totally different from the way our parents parented us, but their parents did this different to them, too, so it changes.
>> Yeah. I'm not saying like, it's, it's all bad or it's all good. It's just, you know, it's different. All right. Um, whatever. Whatever. As Ben likes to say, Adamal Spirits at the Compound News. Uh, hope everybody is enjoying their summer.
>> Happy.
>> You know what I'm trying to do? I'm trying to remind myself, getting back to Kobe, that he'll be home in 47 days. We have a reprieve. I love him. He's having a great time. It's all good. But summer goes so fast. I'm trying to enjoy every day.
>> You're going to be saying, "Can you believe it's fall already, Ben?" Before you know it.
>> I, you have, I am, I will not apologize for being a "can you believe it's that time" guy.
Happy Fourth of July to everyone.
>> Hell yeah. Great holiday.
>> My, it's behind, behind Christmas. It's my second favorite holiday. I love the Fourth of July. Can't wait. Sun, water. Let's do it. All right. See you next time.