The Compound and Friends - All the News That’s Fit to Print

Episode Date: August 23, 2024

On episode 154 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by New York Times economics reporter, Talmon Smith, and The Compound's very own Ben Carlson to discuss: inflation, the Fed, economic policy, the labor market, and much more! This episode is sponsored by Public. Make your savings work harder and earn an industry-leading 5.1% APY with a high-yield cash account on Public. Visit https://public.com/ to learn more! Sign up for The Compound Newsletter and never miss out! https://www.thecompoundnews.com/subscribe Instagram: https://instagram.com/thecompoundnews Twitter: https://twitter.com/thecompoundnews LinkedIn: https://www.linkedin.com/company/the-compound-media/ Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ A High-Yield Cash Account is a secondary brokerage account with Public Investing, member FINRA/SIPC. Funds from this account are automatically deposited into partner banks where they earn a variable interest and are eligible for FDIC insurance. Neither Public Investing nor any of its affiliates is a bank. Learn more at public.com/disclosures/high-yield-account Learn more about your ad choices. Visit megaphone.fm/adchoices

So I have a migraine for the first time in my entire life. Okay. So that's my flu game. Just uh... This is your flu game. Okay. No, I appreciate that. I would not have been offended if you were just like...

Nah, I don't miss shows. This is show business and the show must go on. You all have like a crazy dedication. So you all take off for this show sometimes, right? Yeah, because Josh is soft. But don't... Ben and I never miss. Yeah, you two have like, wasn't there like-

We did miss one. Yeah, because as you all know, you all are the first compound news thing that I ever listened to. First time in a long time? There we go, first time in a long time. Wait, we gotta get to that. That was the last time we took off.

One of us was in Disney. You were at Disney. I was at Disney. I recorded from Disney. Duncan is recorded from Disney. I'm always like- You were the one who punked out. Is this one mine or his? Oh, my bad. I don't know which one's which. No that was on I was on Marco Island and my

internet wouldn't work so I was literally in the lobby of a hotel doing it. They're like we don't have any other good internet so you have to do it from here. Ben patched in via fax. Yeah. Nothing much. I think, uh, I've been waiting for Josh, you to like, uh, Oh, let's go. I've been waiting for you to eventually after this, uh, eventually after this intro that you have with this like secret producer that you never tell anybody about like the beat, the beat for the theme of the show is high. I am the producer. Okay you did it. Okay. I wasn't J. Cole. I'm a rapper producer. So I think that... Who does

make our music? Josh is a Pharrell of Adults Wealth. Who's the Pharrell of podcasts? Oh no we don't ever give up the beat maker. No because we look because everyone's always biting our shit. So like the last thing we want to do is give them more of an opportunity to try to do what we're doing. You know what I mean? So like that's a sack percent. Get your own mix man. I'm just waiting for you like eventually after the lead in to just like start dropping a

verse. Yeah, no. Next time you come here I'm going to have turntables in front of me too. Okay, there we go. Absolutely. So I have a question for you guys. What the 818,000 revision? What was that about? Does that? Why all of a sudden is there a revision of 800,000 jobs from 2023?

Yeah. Yeah. Well, essentially, the government does its best every month to basically assess payrolls reaching out to establishments. That's the establishment survey. That's where we get the monthly jobs number. There's a household survey, that's where we get the key ratios like the unemployment rate, labor force participation, things like that. Now, once a year goes by in Q1 or through Q1, they go back and they look at basically,

I mean, it gets complicated, like everything with BLS and the rest of the government, because they are doing really gritty work that takes time. So they go back and as I understand it, look at the state UI. So it's like state jobless claims. And after a year passes, that's actually really, really reliable data. And the government economists essentially and the statisticians defer to that count.

They say, well, we're going to revise back towards that. So sometimes actually it's rising up if you go back and look at the years. I don't think we have a chart of that. But I guess my question is not, not the eight, 18 itself, but I don't even remember this being a thing. Like, does this happen once a year? Do we do it every quarter?

I'll explain it. It's because it's an election year. No, this is true. So in 29, they went back and revised 2019 by 500,000 jobs. Yeah, Bloomberg showed all the years. It happens. But like the Democrats didn't seize on that as like a talking point for the 2020 election. It just was like, oh, okay, there was a revision.

Nobody really cares. But it's the thing that happens every year, once a year? The revisions aren't usually this large, but revisions are common. But this year it becomes a political talking point because effectively the Harris campaign owns the Biden economic record. She's in the White House and you know, so that's why it's noisier this year than usual. I think what's hilarious is the stock market rallied on that news.

Yeah. But it's because everyone seemed to know that the revision was coming. Yeah. Well, because... No, like the downward, like it was going to be a big downward revision. Everybody knew that. The expectation was 600 something thousand and it was 800 something thousand. Some people go to economists to see whether they should care about this or not.

I looked at the stock market, the stock market didn't care. So wait, so worse than expected, meaning that the Fed is going to cut. Was that the market's reaction? I think the market already basically shifted to the idea that they are cutting basically as close to for sure as market pricing can get. Actually, I don't think the pricing for 50 changed that much. But it can't go 50 right away, though. That's like just human nature, unless it was a crisis, because that'd be them admitting they were wrong.

And I feel like they have ego involved. They would never do it for ego purposes. Go 50 first and say, nope, we were wrong. We should have done it earlier. They would never do it for ego purposes go 50 first and say nope. We were wrong We should have done it earlier. I think if you got like a monster ugly Payroll on let's see the first yeah the first Friday of September because it's always the first Friday the month that you give NFP You know, maybe that you know it maybe would be a saving grace in terms of the embarrassment or not But like I do think there's a situation which would be you know, not even

You know that yes that human tendency to not want to admit you're wrong. This is 20 some odd percent chance of a 50 basis point cut right now being priced in. So not everyone agrees that they wouldn't do it. I don't think they'll do it for exactly the reason that you said. If you are accustomed to doing 25, you don't want to look like you missed a step and do 50, especially after everyone thought you already should have done 25.

So I think for that reason they probably won't, but we also have more data coming. So to your point, if it's really bad, that'll be their opportunity to say, hey, we're doing 50 because we're data dependent. Yeah, but to Ben's point, they are human, and they hear everybody screaming at them, you're late, you're late, you're offside.

And they're pushing back. How do you think your old pal makes his hamburgers? That's an Animal Sparrows teacuff crossover. How does he grill a burger? I don't think he does. My sense is this is not a man who is preparing a lot of meals for himself. Oh, remember you saw Schumer throw a piece of cheese on the raw hamburger? Did you see that?

I did see that. That was, he deservedly got roasted for that. That was a shangha. John, how are we feeling? I think we're looking pretty good. How you doing, Ben? Alright, let's come in with the claps. Nervous anticipation.

In front. Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of Ridholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ridholtz Wealth Management may maintain positions in the securities discussed in this podcast. At Public.com, you can earn 5.1% APY with a high yield cash account. That's not just a good rate,

it's literally an industry leading rate. Plus, no fees, zero, so you can maximize your interest. What's the point of earning a high yield if you have to spend a bunch of it on fees? At public.com, it's just 5.1% APY, straight up, no strings attached, and no balance requirements. Use as little or as much of a deposit as you'd like.

This is a paid endorsement for public investing, 5.1% APY as of June 17th, 2024, and is subject to change. Full disclosures in the podcast description. Let's go. compounded friends episode. What is it? 154? I like that shirt. podcast description. Let's go compounded friends episode. What is it?

One 54. I like that shirt. What is that? Like a woven material. Let me see. I like that. John styling. Ladies and gentlemen, welcome to the best investing podcast in the world.

My name is downtown Josh Brown. I'm here with a couple of really great markets slash economic commentators. I can't wait for you to hear the show. First things first, I don't have a written intro for Ben Carlson. Ben Carlson is the head of institutional asset management here at Ritholtz Wealth Management. When did you join the firm? 15? What team? It's been 10 years. It's been 10 years. Come on, join the firm? 15? 14? 15? It's been 10 years.

It's been 10 years. How much? Dude. He minored in economics. Right. Ben is the cohost of Animal Spirits with Michael Batnick, the longest running podcast here at the firm. And as they were discussing previously,

they never miss an episode. You guys are on every one. Except one time. Except one time. What was the reason for the one time miss? What happened? I was in Disney. Fair enough. Fair enough. For the kids. They only have one childhood, Michael. You should be missing more. I literally left my kids at Disney and went to podcast when I did it. Joining us today for the first time, Talman Smith is an economics reporter

for the business section of the New York Times. Talman covers macroeconomic developments, labor markets, and financial markets. Prior to this role, Talman spent time on the opinion section of the Times, at a nonpartisan think tank on campaign finance, and worked at GQ Magazine. Welcome to the show. Yeah, thanks for having me.

This is a real pleasure, a real privilege. So this is from your New York Times bio page. Depending on the day, week or month, I may be covering breaking news related to key economic data, traveling across the country to write about a community that is representative of a broader economic trend, or staring into my laptop all day making phone calls, working on an explanatory or investigative article. If something relates to the distribution of people, money and power, chances are it is

of interest to me. We talk to a lot of journalists who cover the markets and the economy, not to the diminishment of what they're doing. But I feel like your perch is maybe importance, the wrong word, but you, you kind of like, there's maybe a higher level of sensitivity given how many readers the times has and given how emotional people get when the paper of record says something. Would you agree with that?

Oh, do you feel that? Yeah. Um, just, just first off, I remember being cringy about having to do a first person bio, because it's this big change at the paper, because it's always this third person thing. Like you have input, but then it's kind of nice because somebody else writes nice things.

Well, you're not an opinion writer anymore. You're a journalist. No, no, no, but newsroom side and opinion side. You've got it. Okay. And then, you know, I did it, and I was like, you know what, this is honestly, this is breaking the fourth wall. It's more honest, it's more conversational.

So I've actually gotten used to and actually kind of liked the first person intro. To your question, yeah, I mean, the block is definitely hot, but I think deservedly so. Like if you have the privilege of that perch, if you put it, it's on you to do your best work, do the homework, learn, admit when you're wrong, either after publication or ideally when you're doing the work, before you put out

a news article or a feature, et cetera, et cetera. And it's really rewarding. And honestly, when I get heavy criticism, especially from readers or hyper subject matter experts that really know what they're talking about, you just take it to heart and either you, you know, you've fated a bit because you think they're overlooking this or that,

or you fully incorporate it and recognize it for what it is. Yeah, I mean, I think that's important. Well, the block is hard because you're not writing for a sub stack of people who have deliberately subscribed to you because they're interested in what you have to say. You're writing for the world.

You're writing for policy. I don't mean to make you nervous when I do this, but you know this. You're writing for every economist reads what the New York Times is saying about the economy. Every policymaker is paying attention. So that is definitely an elevated plateau to be standing upon.

Did you have to develop a thick skin really quickly from hearing feedback from the comments section and from people on Twitter and people in your inbox? Um, I mean, I think I've always just like, I mean, maybe it's just growing up playing sports. Like there's just a lot of, can you say the crap word? Yeah, like literally there's a lot of shit talking, right? Like just as a boy growing up playing sports, I ran track played soccer.

I was all flat tracks and I just switched to focusing on soccer. Same, same. And yeah, I mean, it gets rowdy, but like as long as it's all honest and like above board, like, I don't know, you kind of just like take it on the chin and also like some like, like, like more than half of everybody involved in this. I mean, huge nerds, right? Like, like, honestly, you know, the further I've gone into my career, the more I spend time with, you know,

Wall Street and financial world folks. And like, they're much more slick. I mean, they're nerdy as well, but, and they're also, you know, intellectually rigorous. But, you know, especially when you're dealing with, you know, labor market economists, you know, and sort of more anthropological people and academics, they're really just trying to nail it down and get it right. So, yeah.

All that kind of feedback is helpful. It helps you learn, right? Yeah. I was gonna say these are people that eat, sleep, and breathe these very narrow topics, but they know them inside and out and you're trying to be a little bit more general and just incorporate things from these topics, but these people live there. Right. But these people live there. Right. And so you could understand like the magnifying glass that they have on

whatever your comments are on these topics. Right. And the trick of it, right, is to layer, right? So just no matter what you do in any of this world or our shared worlds, it's like, okay, well, we all know a table itself is only so helpful, right? So then we make charts, right? And the chart is a great data visual.

Sometimes it's dot plot, scatter plot, da-da-da-da. But then you might want to look at, let's say it's a chart about a certain sector. And then you're like, well, let me reach out to the firm of the guy that's doing coverage for that sector, talk to him on the phone. And you're like, OK, I learned a lot from that. Your notebook fills up based on that.

And then you're like, okay, well, now I have five other questions for somebody that might actually be operating that sort of business. Call him on the phone, realize, okay, maybe it's worth the trip out to this factory, this ranch, this restaurant, this boat. And then you go there and then, you know, on the side or before or after,

you know, a certain event or a certain tour, you know, kind of pull workers aside, get their perspective, and then that all adds up, right? So there is the pressure of like, I wouldn't call myself a generalist at all, but you know, it is a general interest publication, So you have to make it accessible, but the most offensive thing you could do, both to people's experiences on the ground, or to experts that really know what the hell they're talking about, is dumb something down.

But yeah, it has to be distilled. You spend a lot of time with people that fill out the surveys, that answer the surveys, that we've spent the last year plus talking about, and we're saying like, what is the disconnect? From your point of view, what did you hear from these people? Like, how do you explain the disconnect between the soft and the hard data? Yeah, I think it's changed across the cycle in terms of how to best explain it.

I think everybody could understand how scary, annoying, and unmoored like June 22 felt like. So in that case, I feel like the hard data and the soft data are actually quite aligned. But yes, as we got into 2023 and even 2024, the divergence was amazing. And it wasn't just consumer sentiment, right? NFIB, which I kind of throw that in there with LEI

in terms of the soft data. LEI is supposed to be somewhat predictive, so it's slightly different. But I wouldn't say that NFIB, I should say, is the best indicator. But it was NFIB and other surveys like that, as well as consumer sentiment. And when I drill down, I just think, you know, it was such a volatile change.

People are pegged to 2019, and they had low interest rates, low inflation. It was a really long, boring, and probably too slow expansion. But nevertheless, there was a virtue in that. And then all of a sudden sudden we're in this snow globe and it gets just shaken up, right? And that itself is volatile, right? People were worried about their livelihoods and their literal lives.

And then there's this sort of euphoria when it's like, oh my God, the vaccines were supposed to take like what? Four or five years potentially? And then it took however many months, shout out to the Trump administration for Operation Warp Speed, and all the brilliant scientists that actually contributed to doing that groundwork.

I think the volatility that you talk about is a big part of it. Like back in the late 1800s, early 1900s, they were used to that. There was a recession like every 24 months. Inflation, we'd go huge inflation, then deflation and back and forth. And the last 20 or 30 years,

the Fed is essentially, not just the Fed, it's taken a lot of the volatility out of the economy and we're just not used to it. Yeah, and we're a less interest rate sensitive economy too where services economy, services are, you know, it takes a real big shock to the labor market for services to fall apart. And then to just wrap up in terms of the most direct part

of your question, you know, I think even once, and this was so predictable, that even once inflation itself, the rate of price increase had settled, people were still going to be upset because it takes a while for people to stop being upset about something that had literally just happened to them. I remember being in a meeting at the Times with my colleagues and I was speaking with, well, actually, I think this might've been on background off the record, so I cannot say who it was, but a very high official in the administration

on the economic side, like tippy top. And I- Of what, the Biden administration? Yeah, yeah, yeah. Okay. And- You could say it was Kamala. It was not.

It was not Vice President Harris, but I think this was July of 2023. So this was like peak, first level soft landing euphoria. And I was like, look, everybody's happy right now, but you know the narrative is going to change very quickly too. Well, you know, price levels are still high. And I was like, so what's your plan? Because it's not for me, not to make me happy,

but like, what's your plan for real Americans out there that are concerned about that? How are you going to message that? That is tough to message. Some people don't even quite understand. Intuitively, they do, but mechanically, they don't quite understand the difference between rate of change and level.

And also, do you have things to sort of targetably bring down price levels on a sector by sector thing? You all have talked about antitrust and da da da. And there was an answer, but it was a bit meek and sort of... Well, it's only really one answer and that is invent a time machine. Prices don't go back down. They don't go back down. I mean, selectively in some categories, but in general, that's at the heart of why part

of the unpopularity of Biden in the context of a 3.6% unemployment rate is that, number one, most people just, if you say to them, yeah, inflation is up cumulatively 27% across the economy over three years, and that's terrible. But also you got a wage gain of 18%. Well, A, I'm still behind and B, I got that raise because I'm really good at my job. Right. All right, fine. So you're not going to win that and you shouldn't even try. And then the second part is what Ben just said. We're not having the same conversation.

People experience inflation as prices, not rate of change. They're not worried about, well, what was it three months ago versus six months ago? And did it only go up 1% versus 3%? All they know is this thing used to be five and now it's eight and it's not going back to five. And there are plenty of people that I've met

all across the country who were able to refi down to, because there are a lot of people that are not, you know, in the top quintile of the country, that are still homeowners, right? I think two thirds of American households are homeowners. They too got to often refi down to three or below. And a lot of these folks, like, you know, I met a nurse and I think I put this in the story that I did, you know, basically traversing Pennsylvania for a week and a half. I met a nurse that went from $40,000 in 2020 to like 80 something.

What, in income? Yeah, so that's like a... 100%, it sounds like. Yeah, yeah, I mean, yeah, that's a crazy increase. And yet, to your point, you know, in percentage terms, but he was so focused on the, you know, cumulative change of produce, because he talked about how him and his wife, like, work really hard to eat point, you know, in percentage terms, but he was so focused on the, you know, cumulative change of produce, because he talked about how him and his wife,

like, work really hard to eat healthy, and it's just like, how is this cabbage, like, you know, 2X what it was? And so, it's frustrating. The one thing that you can't say as a politician is you are the inflation. I mean, nobody wants to hear that. It's not a winning message.

And then in a lot of cases, it's the truth. You have a situation where we just didn't have enough people, like period, to do jobs, which means wage inflation, which means the price of everything goes up, and then it becomes a cycle. And I don't think that individual people think too much about it. Again, I just think they look at their own bills.

And I totally understand that. You did that other story about, wasn't it Nebraska had the lowest unemployment rate of any state? Yeah. You were like... This is 2022. You were saying like the bartenders were going from like job to job to job to job. They're like, someone from down the street hired me and they pay me more.

And it was like, they couldn't find enough people. And you think from the workers' perspective, that's amazing. But then the business owners' perspective, they're probably going, I think that's why a lot of the business surveys were so bad, because they're going, well, this is terrible for our business. We're having to pay our employees more. Yeah. But the funny thing is, what I found there is that the bosses are actually doing quite fine. And you see it in the data. I mean, corporations are doing quite fine. I think there was, I can't remember, there was late 22 or early 23.

I don't have the chart in front of me right now, but there was a I can't remember, there was late 22 or early 23. Don't have the chart in front of me right now, but there was a dip in corporate profits. But then it zoomed right back to all time highs. Yeah, margins are still healthy. Margins are actually elevated compared to 2018 and 2019. So, I mean, in a sense, everybody won, but in these detailed-

And nobody thinks they won. Yeah, but it's America. We're going to do, we're going to argue with each other. So, we're going to start with this. Is the Fed a little out of touch? This week they're very out of touch. This week they're in Jackson Hole, Wyoming. They're fishing and hiking.

And by the time people hear their show, Jerome Powell will have delivered his address. And we don't necessarily know what the theme of the address will be. I don't think it's going to necessarily a full-blown victory lap, but a lot of people have been highly critical of Fed policy over the last couple of years in unwinding restrictive policy and I think he's gonna want to say something about it. What do you think on the scale of one to 10

is the degree to which the Fed is out of touch with maybe not even Wall Street, but Main Street, and just like how things are really going? Because I feel like they kind of have it right now. I think they have the pulse. Yeah, I mean, I would say like at worst, they're probably, and look, we're talking about them as a collective. I'm sure there's somebody that is the most down home,

and just talking to people in every single sector who are non-supervising workers every day. And then I'm sure there's somebody that spends all their time in the ivory tower. Again, these are hypotheticals. I'm not actually knocking on the FOMC. But I'd say they're probably as disconnected as anybody that is in the managerial elite and in banking. They're central bankers, but they are in a sense bankers.

Maybe seven, like a six. Seven in terms of out of touch. Yeah, six or seven. More out of touch than Ben? Yeah, Ben's extremely out of touch. Flower state guy here. I think where we've shifted from in terms of the vibes is people really hate inflation,

but American consumers love to borrow money and they hate being told borrowing money is more expensive. And I think that's where the Fed doesn't get it, is they can ease the vibes a little bit and make things better if they lower rates and make it cheaper for people to borrow. I think that's a- But does that risk re-accelerating? I don't think's a- But does that risk re-accelerating?

I don't think it does, but could that risk re-accelerating inflation? Does that increase wage growth if the Fed cuts rates a little bit? I don't see that happening. I don't think so either. And I mean, to your point, I mean, wage growth,

which some people call wage inflation, obviously played some role. If you call it wage inflation, you're an employer. For sure. But obviously, if for a while at the beginning of the recovery of the cycle, right when we were kind of reopening, but depending on the state, you still had unemployment insurance at a jacked up

percentage, that allowed some people to say, you know what? I'm not going to work in the back of this hot kitchen for a not lovable wage. And I'm going to hold out for something better. And then they realize, oh, I'm in a mountain town. OK, I'll be a ski lift operator for 16, 17. Now, if you're in a ski town, that's probably still not great. But you're that much closer to paying your bills, maybe.

But also, it's true that a jump from 11 to 17 in percentage terms is pretty large. But I do think that one of the things that I try to do in my job, over email and on Twitter and on the phone with sources, is just try to get everybody to speak in a way where like, just imagine that there's a pie, right? And within the pie are all the reasons

that any phenomenon is happening. And I feel like instead things get so dichotomized into, is it this or is it that? And I don't know whether that's a- Oh, I agree with that. I don't know whether it's like a quote tweet thing. I don't know whether it's a, you know, fence CNBC segment thing.

No, I think it's people just want an answer and they especially want an answer that agrees with their political feelings. Yeah, or just their prize in terms of how they view the economy, which at times isn't perfectly aligned with their politics. But in terms of where the Fed is with interest rates, I think that interest rates today impact the economy

a lot more than the individual. Like most people aren't exposed to borrowing costs because if you have a mortgage, you're locked in. Credit card interest is f***ed either's, it's 18% is 29%. What's the difference? They're both punitive. But small businesses are big time borrowers and big time reliant on interest rates to fund their businesses. But like most people aren't borrowing money every day.

I think if you're in the housing and mortgage industry, it's like the, it's the only thing. It's the only thing. It's like the sun and everything else revolves around it. Outside of people that are getting a mortgage today, most individuals, individually, are not that exposed to interest rates. Not on a month to month basis. Right. It affects all of us much more than it affects each of us.

Yeah, I mean, I think, yeah, that's a good point. I mean, I think if you're sort of in, let's say the bottom third of the income spectrum and the wealth spectrum, you're much more likely to be rolling over a balance, obviously credit card rates, which have gone up, that affects you. But, and that's more of a sort of siloed,

or big silo, but still siloed distributional outcome. But to your point about all of us, I do think that when multifamily, which had a great boom recently, but now has really sort of cooled off, that matters in the aggregate. I talked to a lot of small business people, not even small business people,

there's people that are unlike 13 businesses in Houston, I guess small to mid-size. And he was talking about how like, he tries to have his business model basically over the past two to three years dependent upon his sales, just bringing enough money to where I don't have to worry about going to my bank because-

Not worry as much about the financing of the business. The financing, right. Because bank loans, while we see in the data that like, Sluice, who knew about Sluice before this cycle, but the senior loan officer something survey opinion survey We've seen easing now, but it tightened a lot and he was like, oh if you're you know like a concert venue person or you know a restaurant person or a flower shop like

banks will lend to you but like You know, I don't want to guess the rate off the top of my head, but in many cases, like, you know, double digits. So- When the Fed says they're data dependent, are they strictly talking about like the hard data? Do they care about the survey stuff at all? They, like, does Beige Book factor into rate decisions or is it really just more like color,

the feeling in the room? I think it's more color. You know, beige is a color. Inflation expectations, I pay attention to, right? Because they want to make sure those aren't anchored, that people expect more inflation and that becomes a self-fulfilling problem. But that also rolled over. It rolled over and like, I mean, look, I write about what the options are for our country,

for policymakers and what I'm seeing. And I would never want the job of like, this is what we should do. Because almost certainly I would be wrong and it's not my place anyway. But one of the oddest things is like, one in three year, because there's some surveys that do three year, were, you know, they fluctuated a lot more

and they got a little bit scary, you know, during, you know, right the worst of things, 2022. But like five year forwards and breakeven, so like, okay, there was a brief period, I think, where it got up to three or four, but it snapped back down really quickly when oil did. And it's been pretty tame for like, like a year and a half or so we have, I think the chart in there somewhere. But it has been this really wild time where it's just data, data, data, data. I mean, who cared about portfolio management fees and PPI,

the producer price index, until like, I mean, it's been a really fun learning experience. Oh, it's a good point. Like, we used to just say, what's the CPI? And that was good enough for everyone as a shorthand for what's inflation. But that's when inflation was like somewhere between one and two percent and

not really a political issue. Yeah, where the f**k did super core inflation come from? But now everyone's got their own recipe and which ingredients they want to include and not include to make whatever point they want to make. That's what we all learned. One of the things that we all learned over the last couple of years is how the sausage gets made and how these components are counted.

Yeah. What's CPIX pizza? No, the shelter component was something that I never really appreciated until it mattered. And now nobody wants to know an inflation number that doesn't break out what the shelter component is because it's like a third of it for PCE. And it's delivered on the biggest lag of all of the components. Yeah, so for core PCE, I believe it's,

and the teens, maybe somewhere between 13 and 18, in terms of the OER weighting, the owner's equivalent rent weighting, which a lot of people that I really respect do not think has been appropriately weighted in terms of how much, how seriously we should take it. Wait, I'm sorry. Have you spoken to people that answer that survey?

No, no. Owners equivalent, right? Owners equivalent, no. So, I mean, so do we have to- Have you run into a person that answers that call in the wild? That would be so interesting. Where do those numbers, like how would they know?

They call up an 80-year-old who's been living in the same house for 60 years, and they ask said 80 year old, how much you think you could rent your f**king attic for? And that's data. I feel like that would be a good story for you. So yeah, I wrote about that. I wrote about that in, it must have been March.

Yeah, I think it was in March because there was this big hullabaloo over whether, the Q1 was just a seasonal pop and it's like, oh, the adjustments have been, you know, made weird by the pandemic, da da da, and then everybody that was actually betting on, you know, when I say everybody, I mean, you know, big research shops on Wall Street. You know, they were essentially expecting, there were some people in the March camp, some people in the May camp, and you know.

What, so the first rate cuts? Yes, I'm sorry, for the first rate cut. Okay. All those predictions temporarily got blown up. Now they don't look so dumb. And there was a big debate over, look, how much of this is auto insurance and owner's equivalent rent?

Because there is a version, especially when it was, inflation was everywhere, right? Like in July. Late 21. Yeah, from late 21, basically all of 22, you were doing too much nitpicking and well, X, you know, these three things.

You couldn't X everything. People were. And people were. Yeah. So I'm not here to defend those folks. But it got to a certain point, especially when the labor market, you know, from what I saw in my reporting was no longer a driving force of, you know, employers saying why they had to raise prices.

I thought it became legitimate to ask, okay, well, like, what are we talking about when we talk about inflation? Let's actually, like, disaggregate, like, if I'm being paid to talk about the economy, and the biggest thing in the economy is inflation, and the same thing goes for somebody that does sell-side research, it makes sense for us to, I guess, earn our pay

by digging into the details, because otherwise we should just do the, you know, and those people are very smart too, but like the Good Morning America, today's show version of inflation, which is just like, here's headline, and here's core inflation. Have we proven that too much data is probably a bad thing

for how people think? Because there's a confirmation bias piece of it, but NPR did this story a number of years ago where they said the economy as a concept didn't really exist before the Great Depression. No one talked about the economy. How's the economy doing? No one knew.

It was how's life in your small business around the farm? And the fact that we now ask all these people, how do you think about the economy? That and you can slice and dice it a million different ways It's probably not good for most people to even think about that. Well, also everyone has their own economy Yeah, that's the thing that they should focus on. How am I doing? Yes, but a lot of so I'm gonna tell you something though a that they should focus on, how am I doing? Yes. But a lot of, so I'm going to tell you something though. A lot of people who are not doing well or they're dissatisfied with some other aspect

of their life or they're politically unhappy. Yeah, you have the people who say, I'm doing great, but the economy's gone to shit. The country's gone to hell. We had a lot of that. So this is almost everybody that I talk to, where I live. I've never seen these people make more money. Like literally, it never stops. Buy a house, buy a bigger house, boats, Europe.

The economy's going to hell. So why, so why you have, because that's not what they're really saying. What they're really saying is I read the New York Post and I don't like Joe Biden, or I don't like this thing I heard about, something that happened at my kid's school. They're not talking about the economy because they don't know about the economy. They don't like this thing I heard about something that happened at my kid's school. They're not talking about the economy because they don't know about the economy.

They don't know anything. We just love to complain. It's our national pastime. So people have their own economy, number one. Number two, when a survey person asks them a question, they don't even know what the question is. This is a good mood or a bad mood. Yeah, I think that's part of it. And I think there's a lot of legitimate economists, you know, all across the spectrum that have said, okay, you know, we really need to take into account how much, you know, whether it's, whether it's Conference Board or whether it's the New Michigan Consumer Sentiment Survey, how much of this has been broken by politics? All of it?

All of it. I don't know if it's, I don't know if it's all of it. And I don't know whether I'm trying too hard to sign up. Sorry, sorry. What was the thing that happened last week when two weeks ago when Joe Biden dropped out of the race? The University of Michigan- Joe Biden was the five session Kyla. Right, literally, Joe Biden drops out of the race, the University of Michigan survey

has its biggest one month jump ever. This is like, to me, this is like really obvious and just talking to people. And it works the other way around too So when Trump is in office and you ask people who don't like Trump how they think the economy is going They think Trump is tearing it apart like Godzilla. And of course, that's not what's happening No, so everyone does a version of this. Yeah, it's it's a it's universal and we're allowing people's like, um

people's feelings about everything get concentrated into an answer about how do you think the economy's doing? Yeah, I mean, so that's a great point. And then it leads back to Ben's question of when is the data useful? Because it is so overwhelming, so you have to kind of pick your spots. I think that when we got to a point in

the cycle where disaggregating for very particular things that just, if you just used a bar chart, you're like, wow, okay, well, three fourths of this bar chart explaining what the components of inflation were, you know, and core services, ex housing this month was auto insurance. It's like, okay, well, one, what is the federal funds rate doing to auto insurance or not? And, you know, what does this mean going forward? I thought that a man that we both really, that we all really respect, David Kelly, was right when he was one of the people that was like, David Kelly at JP Morgan, chief global strategist there. Where it's just like, if you're not fading this, then you're just being irresponsible,

especially when the labor market is coming back into balance. And we see that in the quits rate, the hiring rate, and even in job openings in JOLTS, which I actually think despite the hate that it's gotten, in part because of the low survey responses. You think there's still value in things like the JOLTS? Yeah, I mean, the survey response thing is tough. But I think that even though they are very human

and they do make mistakes, they're working as best as they can to keep the data as reliable and as consistent as they can. And when you just look at it in terms of like, right, folks at firms like RemMac, I think appropriately have just thrown out certain leading indicators. I think we all can agree that while Cam Harvey is a brilliant economist, that at least in

this particular cycle, yield curve inversion, you know, had a false positive. He said that. Yeah, yeah. He said it's possible. Yeah, yeah. And he was, you know, had the intellectual humility that not all people have to say that. One more thing before we move along, but all of the economists who got quote unquote got 2023 right, we're saying the same thing.

The fed's shelter data is a year out of date. Every one of the people who was, including Ren Mac, including Neil Dutta, everyone who was constructive on 2023 got the same thing right. Like we already know that the shelter component of PCE or CPI are heading in the right direction because that's one year old data and we have newer data. If everyone knows this, why are we still looking at the same?

Yeah, well now you're... If we have real-time data in the internet age, why are we doing owner's equivalent rent on a one-year lag? So this is where I joined the Ben Carlson school of like, objectively... Of what, not taking a stance? No, no, this was actually, this was like, as I remember...

I've been taking some fed stances. Yeah, yeah, you've had some hot fed stances. All right, so as the feds unofficial mouthpiece in the podcast realm, why is the fed impervious to this thing that's being screamed in their face? Like you guys are focusing on lagged data when real time data now exists for the most important component.

Explain yourself. I do think that in some ways the fed is a little out of touch on this stuff. Lagged data when real-time data now exists, but you for the most important component yourself I I do think that in some ways the Fed is a little out of touch on this stuff And I think I don't know I think it's the human nature elements the only way I can because everyone else is looking at the same Data and talking about it, so I don't know what other explanation there is I think I think it's this I think it's that it's July 2023 all the doves are screaming soft landing, soft landing, right? Whether they're, you know, policy people, you know, regular citizens are just really interested in the economy and politics or, you know, whoever. And it seems overdone. Core CPI is

like either was still at four or above four. I mean, it was it was hanging around there, right? And even if you think it's lagged, it's like, you know, okay, I mean, be careful before you dismiss, like, you know, Core CPI, which for a long time was just the sort of key anchor that you look at. Even if this cycle, it seems like it's funky because of certain ways that we couldn't have expected that shelter data is weird.

But yes, you're like, wait, but this is an imputed price of where we are, of what a household that owns its home would pay if they were renters. That's odd. It's driving us basically from where we would be tenths of a way from target to being off target. And it's baffling. And here's the thing they could have done. They could have taken on a really, really hard communications job to the press, to the public, to let's be honest, a lot of times I think, and this is I'm speaking out for my colleagues, but you know, to let's be honest, a lot of times I think, and this is I'm speaking out for my colleagues, but you know, for myself, I think some of fed credibility is, you know,

my peers who often appear on CNBC or Bloomberg or, you know, other formats like that, are they going to yell at me or not? Because as you said, Ben, they're human. And I think that's part of how consensus is formed. And that would be that would have been a really hard case that like, hey, if you look at these things and fade these things, we're pretty near target. We got immaculate disinflation. We basically had the labor market back at a 2019 level that people thought was unbelievable then, not everybody, but I mean, a lot of folks thought that was Goldilocks.

So, hey, you know, we're going to create another, you know, in the same way that they did Supercore. They could have said, we're going to create another, in the same way that they did Supercore, they could have said, we're going to really focus on, let's take out OER. If they also took out auto insurance, that would have been really bold. You could have had a targeted case for doing that. People like Mark Zandi at Moody's were arguing for that.

Ellen Zentner at Morgan Stanley, I don't know whether she was arguing for that, but she was certainly saying that the Fed risk. What if they got overconfident because they just thought like, listen, we didn't have to do anything. We're gonna get a soft landing. Let's just keep letting this play out. They felt they had room. And then so they waited too long and now they're forced to act. We'll have that.

So that's a great segue for I want to go next. So through your talking to regular people, talking to business owners, traveling, you saw through the 2022 recession, you never believed in it. No, but to your credit, like, you just, that was just not what you were seeing on the ground. The most interesting thing that happened this summer was the growth scare that we just had. And of course, that's now since been explained away and people are less worried about it. But I want to put this chart up. This is the indeed chart.

This is showing payroll gains were much slower than previously expected. So this is a period between April 2023 and March of 2024. But the point here is that this kind of thing happens. And then we start saying, oh, no, they missed. Or such and such. It was good, but it wasn't as good as we thought it would be. And then the narrative can change so quickly. Right.

The reason I want to bring this up is, we're like at this moment where it could absolutely tip over, but we can't interpret every single data release as being the beginning of the end. But we're still going to do that. Yeah, well, I mean, come on. It's like, we love this shit. We're sort of going to do it anyway, but we know we should. Wait, you have a top gun analogy in here?

I gotta hear this. Oh, yeah. Yeah. So, um, I remember talking to Conor Send. I know, and I think your listeners will probably know who Conor Send is. Reitz for Bloomberg. And you know, also, you know, knows a lot a lot about finance and knows how to manage money. Great guy. And I was like, you know what this moment feels like? And this was, I think, January, where it was really sort of a close call between whether we knew that the January print would be hot for inflation. But there was a question of like, well, will it be just cool enough to where all these calls for the first rate cut in March still pan out?

Are you trying to say we're in the high-wit of the danger zone? And exactly. It reminded me of Top Gun 2, which was like, it's been, it's like my favorite movie of the past. Really? Alright. We're fans. Yeah. We're fans. And do you remember that scene, right, where they've practiced it, you know, in the middle of the desert a million times? Go up vertically. Yeah. So they practiced it in the middle of the desert a million times. So they go up vertically? Yeah.

So they practice it in the middle of the desert a million times, but they'll actually, I think they're in whatever, Northern Iran or whatever. No, they specifically don't say where they are. Oh. Which is a whole other topic. It's a faceless bad person. It's a faceless bad person with Russian overtones. Very, very clear to steer away from it possibly being China.

Like, it could be anybody but China. I think they were in Nevada. The bad guys in Top Gun always have the visor that's blacked out so you can't see the face. That's right. And no markings on the planes and it's just a nameless face. I think it's really meant to be Canada. Yeah. But they really they go very far to not tell anybody. Yeah. Okay. And then so they have to essentially do this crazy maneuver, you know, whatever going the speed of light, where they're only 30 yards above the ground because they don't want to get hit by the

radar that these faceless enemies have. And then they have to cruise, still trying to avoid the radar, at a million miles an hour or whatever, I'm exaggerating, up the mountain, you know, gaining, you know, whatever, eight, nine positive Gs, which is, you know, crazy on the human body and really dangerous for the plane to be going that close to a cliff Or a mountain etc And then but it's necessary right because of this threat right all that threat inflation And then just says you know you hit the top of mountain you also have to invert and pivot back down

Right because then the risk is so not too tight So you're not too tight at the absolute worst moment exactly and so they're And that's what they're trying to do, you know And at first I thought they were going to try and do it it seems like maybe based on whispers and so you Are you ready to refer to Jay Powell as Maverick or you know? You know, it wouldn't be my job to say whether he's Maverick or not But I do think we're in this really interesting liminal space. Neil Kashkari is Iceman. Okay.

I mean, it's a funny, you know, I mean, obviously I'm biased. He's like a huge nerd for this movie. I wanted to be a fire pilot when I was young, and then I realized I get motion sick, so that was done. But, you know, we're in this really weird liminal period where either he will be cheered and he'll really, you know, land at the plane and people will be like, ah, we're being too tough on him.

That film sees all right. You can easily see the market broaden out. We can see you three, unemployment at 4%. 4% to 5%. Well, you have a question here for us. You said, do you guys see the unemployment rate at 5% first or 4%? That's the big thing is the labor market.

Yeah. I mean, history would suggest it's going to be five before four. So then Powell will be Charlie Sheen in Hotshots landing the plane on the end of the carrier where he just falls out of the sky. Yeah. It would be hard to see, because I saw something. What is the question?

Do we see unemployment back under four? No. So the way I've been framing this to folks is on the phone. It's like been an informal survey. I've been putting to people since the growth scare. You're saying like picture Miles Teller's mustache. Yeah, pictures, mustache.

Did he have to have a mustache just because his dad had one? I don't know. Was that a really key component to selling? It worked for him though. I still can't believe Meg Ryan wasn't in the movie. So I would say that one of the things that we know is that the size of the labor force is growing. Wages have grown large enough to pull people off who were not participating, is one.

And then two, immigration has resumed. We had no legal immigration for two years and no illegal immigration. And that's now changed. And so the denominator is getting larger, which is why it's really hard for me to envision a situation where we go back to this, oh, there are 50 open jobs for every person seeking. John, throw the labor force participation right up here,

the 25 to 54. This is one that is kind of perplexing to me. So prime-age labor force participation rate, 25 25 to 54 is basically at all time highs, which was last seen in 2000. And it's still going up. So how do you explain this as thinking the labor market is slowing? How do you explain that?

These people were playing video games. You understand? These were prime age workers not working. A, they didn't have to. There's a lot of stimulus in the economy. Or B, they were doing things that weren't necessarily full-time unemployment. And these are the people that are having a hard time

finding a job. Yeah, but they're not having a hard time anymore. But you're asking, like, how much bigger can the labor force get? Well, no, my question is, people keep saying the labor market is slowing, and obviously, in certain data points it is, but this tells me that the labor market is still doing pretty well. This is the denominator this is

the amount of people participating right? Yeah so I mean it's a it's a it's a tug right so this is prime-age labor force participation rate it excludes both children because we got rid of child labor for the most part and super inflationary by the way getting rid of child labor I the most part. And it's- Super inflationary, by the way, getting rid of child labor. I have always said this on the show. Yeah, I'm right there with you, bro. So we're at 83%, which is very healthy. Yeah, and that's a sign of economic vigor,

in some sense, Ben, because it's, you know, there are good enough jobs that are attracting folks into the labor force. It also means that if they're not able to find jobs relatively quickly, they'll not just be in the labor force. It also means that if they're not able to find jobs relatively quickly, they'll not just be in the labor force, they will be considered unemployed because they are seeking a job, but they don't have one yet. And in that case, we're in this, again, really odd pivot point where if that continues for longer and longer and longer, well then you get to 5% before 4% very quickly.

But the overall labor market is still healthy. You have 5% unemployment, but more people working. And that is what the labor market bulls who actually think that- That's what Claudia Sama is saying. Who I know you spoke to. Yeah, yeah, so I'll divide that into two. So on the one hand, I totally get the labor market bulls who think also in terms of Fed

policy that that reason positive labor force growth means that, you know, okay, maybe the Fed does a slight adjustment, but we don't need to go back to 3.5. That's what they think. That's fair. But regardless of whether the labor force participation rate is going up because of native born workers or because of immigration, you are really testing the waters according to the SOM rule

and other indicators if you let unemployment go greater than a percentage point over its load. If it's at 5%, politicians are going to say, what are you doing? What's going on here? If we're not in a recession and we got to 5%, it would be the most remarkable anomaly in American economics. So if you get to 5%, if you get to 5%,

no one's going to want to hear, yes, it's 5%, but there's 2 million more people working than there were two years ago. That's not going to... Or looking for work. Looking for work, rather, in the labor force. Documented as being in the labor force. Yeah, employed or looking for work. for work rather in the labor force Yes documented as being in the labor force employed or put John Let's do the chart before this month over month change in total non farm employment

This is what it looks like the tipping the tipping point like What are we looking at here? This is just literally the month over month change in NFP and the next chart should be farm employment, right? All right change in a NFP. And the next chart should be farm employment, right? So we'll have the average. Yes. Yeah. It's slowing down. All right. Anything left to say on the labor force or what?

Anything for, so you spoke to Claudia Somme earlier this month. Well, I have one thing left to say. It's confusing. Like it's hard. Of course it is. It is. Right?

It's hard to figure out like what exactly is happening. There's so much noise. Right. The monger quote, right? What do you say if you're not confused, you're not paying attention? Yeah, I love that. I love that.

I mean, and I, whenever I see super overconfident people in either newsletters or on television, and I've talked to them before, I think, okay, like if I have to figure out who to make a phone call for a story, maybe I don't call that person. Because I think that's a, sometimes it's just a signal of like you're, like you really have a view, and sometimes it's your job to's just a signal of like you're like you really have a view and sometimes It's your job to pitch your view, especially if you're you know in a certain role other times

I think it's a sign that You're not paying close enough attention and you probably should be confused You should at least be has you qualify there are times when a lot of the indicators are all saying the same thing Yeah, like up or down and there's times like where we are right now It's just like we're just not exactly sure because there's a lot of different conflicting signals. And credit to Claudia, who I have to shout out as actually one of my intellectual mentors, right? Before I stepped from behind the scenes,

I was a staff editor at the Times on the editorial side. So like, you all know Steve Ratner, right? I edited his column. I edited Claudia when she wrote for the New York Times, and half the time she was really schooling me the other way around. So we have a personal relationship outside of the professional one where I call her

and we talk in a serious voice for a quote. And I talked to her, God, it must have been a week ago or something, and she was doing the whole thing where she's just really trying to tell people that she, similar to Cam Harvey, isn't trying to wave the Psalm rule flag and be like, I'm the greatest like how great of a track record has. And so you all should be very scared. Recession, downturn, doom is definitely coming.

She said that it is a red flag, but that there's no reason that due to the volatility of the cycles, you know, her indicator could also be quote unquote proven wrong. Also being triggered from a very low level of unemployment. Yeah, yeah. Yeah. But at the end of the day, what I told her as a sort of like pitch of a way to think about what role the song rule could play is that she originally designed it for fiscal policy makers. This idea that the song rule catches you

in the early innings of a recession. Or that's the empirical pattern. And the idea is, well, lawmakers in Congress at that point should all put aside their partisan beefs. LOL. LOL, and shoot out automatic stabilizers, right? Unemployment insurance is automatic stabilizers. You could do checks, you could do a lot of things.

But the idea was Claudia was like, here you go, Congress. I'm a Fed economist. I'm not telling you what to do, but here's the framework. The pattern is clear. I think oddly the role that it could play in this cycle, and maybe even future cycles, is also give a red flag or code red to the Fed. Not tell it what to do, but say, hey, if you are tight, it might be a good time to consider. Oh, yeah, I agree with that.

And I actually think that they're probably paying attention because she's a former Fed official. Yeah. She's not like somebody screaming on TV. Right. She's somebody that's done research inside the building. Right. So, and they know there's not going to be any fiscal.

There's not going to be anything coming from Congress before a recession. They already know that. So, I'd imagine they're paying attention. In a weird way, she could be like the D-Wade, you know, LeBron meme, right? Where D-Wade tosses up and then, you know, LeBron dunks it. Like in a weird way, people get freaked out based on labor market weakness because of the SOM rule. It's still early enough to where it seems like maybe it's too late.

We'll find out. But the Fed reacts in time and they get a slam dunk. And then, Ben, Michael, you all talked about this. If they do pull this off, I think the idea that the Fed was both too late to go and then too late to act could turn into, hey, we're all human and like A minus, B plus. I don't think it's them pulling anything off. I think we did it.

Like if we have a self-righteousness, it's despite their efforts to crash us into a wall. Yeah, I would say corporate America did more to keep us out of a recession by finding ways to continue the profit machine rolling. Like I would argue the housing market did more by just not completely going off the rails. It's not that anyone tried to save the economy.

Jensen Wang saved the economy. Yeah, people just going about their business and dealing with higher rates for borrowing, and finding a way. And that's what American style capitalists does better than any other system is. Everyone is profit motivated in the end. Ty, you brought this chart, which I love.

One of the wildest charts in the pandemic is non-financial corporate business, net interest, and miscellaneous payment. So you would have thought to the point of like, well, who's really impacted by higher interest rates? Well, actually, higher interest rates paradoxically sent net interest expense for these companies down. Because they were earning so much more on their cash

because all of their debt was already fixed and locked and loaded from three years prior. Yeah, I showed this to some people and they didn't, they like, did not believe me. It's a brain melter. hash because all of their debt was already fixed and locked and loaded from three years prior. Yeah, I showed this to some people and they didn't they like did not believe it's a brain melter and I was like, oh, okay, that means I got to do a story. That's a signal to you that you should write about it. Yeah, immediately. So what did you what did you find?

I worked with my colleague Joe Renison, who covers markets specifically for us we snag it from the FT. And he's been great to work with. I go to him with a lot of questions. And he was like, oh yeah, we got to get into the weeds of why and how this is happening. And essentially, it's a mixture of the fact that, I mean, if you look at both the support

that corporate America got in the depths of the pandemic, both from Congress and the Fed, I mean, Microsoft was borrowing at what, 3%? 2.5%. 2.5%. I think so. They were borrowing like a AAA sovereign, and they still are. both from Congress and the Fed. I mean, Microsoft was borrowing at what, 3%? Two and a half. Two and a half. I think so. They were borrowing like a AAA sovereign,

and they still are. Even Carnival got like, I think, low single digits. Yeah, high yield companies were at like five or four. High yield was five. Yeah, so that's great. And then you think, okay, well then that's all gonna blow up because those are not bad, but those not as great credits,

will run out of the ability to expand and keep customer sales going and you'll get sort of delinquencies. But because of fiscal, I think in part, business was great, right? And then so while there's very, very active debate about how much of fiscal was responsible for inflation, I think we also have to keep in mind that regardless of what percentage you assign to big fiscal, it's also true that it really healed the balance

sheets of consumers and with PPP, small business, and it just drove everything forward. You're talking about 70% of the economy being connected to consumer spending. And then so when you are able to buy low in terms of, you know, borrow low, and then business does really well immediately coming out of it. So it's borrow low, invest high. How much is, we spoke about this recently, Google is earning $30 billion a quarter on the cat. I mean, it's not quite that high, but it's something ridiculous.

Right. No, that's a great spread if you- Well, it's the same thing for consumers. If you refinance into a 3% mortgage in 2020, and you're earning 5% on T-bills, that's not everyone, but that's a lot of people. You're like almost a hedge fund manager at that point. Right.

It's like a great spread trade that you accidentally put on. You locked in an insanely low price on your biggest budget monthly item that you have to spend money on. So that you were hedged from inflation on that. Yeah. Right. If you had the 3% mortgage, that's why consumers could still spend money.

And without beating a dead horse, that point you just made about it being a great inflation hedge, it's also why I think a lot of really smart economists thought that OER just didn't make as much sense with that context. Well, I was doing this and probably a lot of people were. I was prepaying my mortgage. And then I said, hey, wait a minute. What am I doing? Why am I prepaying my mortgage? Why would you prepay a mortgage that you locked in at 3%? Exactly. When I could just put the difference in money earning 5%. Yeah.

Right. So everybody had their own personal carry trade that was fortunate enough to lock in their borrowing costs at high 2s, low 3s, which I don't know, you only had 4 years to do it. So there's plenty of time or 3 years to do it. And then to your earlier point, the amount of fiscal stimulus, whether it's 4 trillion, 7 trillion, there were 11 million PPP loans to businesses and only 10 million were paid. 10 million were never paid back. So only a million of those loans were paid back. So that's all money that's still with us in the

system. So there's a lot of reasons for that. But I think the idea that like Apple, Alphabet, the amount of cash that they have on their balance sheet and now earning more on the cash than they're paying in interest is fascinating. We never could have envisioned that like in 2021 or 2022 as that being like one of the big takeaways from what happened. And it's not just corporate America. So Torsten Slak has a chart showing that money market funds currently pay around 500 billion dollars in interest. That's two and a half percent of annual consumer spending. Right.

I mean, I look at that and yeah, Slock and Apollo have been great tracking that issue. This is what it looks like. That's bananas. Yeah, it's bananas. And Josh, we were right there with Rick Reader. Dude, I said it before Rick Reader. Rick Reader bit that for me. No, no, no.

No, Josh had that on TV and Gunlock laughed. I think I saw that segment, yeah. This was like a year ago? So you, right, so this doesn't apply to everyone, but for people with a surplus of cash, who are earning a lot of money on their cash, there's going to be a wealth effect. We could argue about the extent of it,

but we can't argue that people don't feel more flushed than they normally do. And that's after 15 years of no interest. So now all of a sudden, you have money in the bank and it's earning you a ton of money. It's like, it's not the stock market wealth effect, but it's not nothing. It shouldn't happen that your real estate,

your homeowner, your home could be at an all time high, your stock portfolio could be at an all time high, and the interest on your money market could be at a multi decade high. Why not? It's a triple play. You wouldn't anticipate higher rates and then also. It almost seems too good to be true.

Yeah, it's gold deluxe for the consumer. Take away the inflation, that was the 1990s basically. Yeah, I think that was a big part of consumer price and sensitivity. I mean that was in termss basically. Yeah. I think that was a big part of consumer price and sensitivity. I mean, that was in terms of just being humble rather and taking a victory lap on 2022 because this has been an incredibly hard cycle. There's stuff I've gotten wrong.

That was something I got wrong. I was sort of in the school of thought that not, not that consumer price and sensitivity and margins would fully re you know, revert. But I thought it would cool off a bit. And then whether it's just, you know, anecdotal stuff or not anecdotal because I've actually, you know, been on the road for two weeks and I've been, you know, following the sort of households that have been in the top quintile or whether it's just sort of looking at the

data listening to earnings calls with the help of quarter shout out the quarter. It was just like, we love the quarter. Yeah. Um, rich people, rich people were just spending. And then like, I mean, you know, I'm not rich. I'm upper middle-class, but like I've seen, like, you know, I remember, uh, just being so euphoric about being able to go out again in 2021. Yeah.

Um, and it was like, I was like, hold on a second, like pints are 11 bucks now. And I was just like, nah, you know, I'm out. I'm happy to see my buddies again. And it's just like, like, you know, I'm out. I'm having some of my buddies again. And it's just like, like, what are you going to do? Like not. But it all comes back to the labor market. People aren't going to change their spending habits if they're employed.

I think that's true. I largely agree with that. We're going to jump ahead and this thing that Ben wrote, how to predict the recession. So this is particularly poignant now. And what you're not saying here, Ben, is that there's not going to be a recession. But you're so castently saying how to predict the recession. And then you're showing us all of these recession calls.

And one of the main points that you made, which I loved, is that for all of the screaming about recessions in the last 15 years, we've only been in one for a couple of months. Like, what's the actual data? Literally 1% of the time in the last 15 years, we've been in a recession. When did that recession take place? Was I here for it? COVID, right?

COVID, that's it. It was two months. Okay. Isn't that part of the reason why it was- Well, hold on. Let me back up. Let me quote you. In 15 years, the US economy has been in a recession for two months.

That's 1% of the time since July 2009, meaning we avoided a recession 99% of the time. This helps explain why people have been predicting recession for so long. It feels like we're due. There have been 11 recessions since 1950. That's one every seven years or so on average. But we just haven't had it. And maybe we'll have it next year. I don't know. Maybe you're after. But the point is, we have continued recession calls, I would say like every week over this stretch of time. And we've avoided it the entire time. Is it possible a lot of the

consumers and households were beat over the head with recession predictions in 2022 and the fact that it never happened and that they almost like wanted that release because it's like, well, I wouldn't have lost my job. Someone else would have been, I would have been fine. And it's like, people just almost wanted to like, just get it out of the way and just come on, get on with it already. Then we'll move on. And, and it hasn't happened yet.

There were a recession recession in certain industries, like obviously anything mortgage related done. Venture capital. A lot of venture capital tech layoffs. That's how you're not wrong with a recession prediction though, you go, well there were rolling recessions. There's always been rolling recessions in some field. Manufacturing had the, obviously,

we all lived through it, huge, huge boom, because good spending was all that a lot of people could or wanted to do for a bit. And then when everybody was just like, no, I'm going to go hang with my folks, my friends, my family and have experiences. And you already, I mean, how many grills can you buy? How many Nikes can you buy?

How many fill in the blank? Well, I thought we would do for that reason. In late 22, I was in the recession camp. And one of the reasons was I was thinking about comps and I was thinking about how many people bought shit in 2021 and 2022, who would like, no way they're going to buy it again next year. So I was just thinking of it more like mathematically,

like it's absurd to think that we could have a boom like that and no bust. Right. And manufacturing did have a bust. Yeah, we had a bust in the stock market too. So we just didn't have this thing where like everyone got laid off. That was the missing component. And Michael was saying that all along. You can't have a recession sub 4% unemployment.

How is that a recession? In what way is that a recession? And consumers took way longer to push back against the higher prices. It finally happened, I guess, this year to some of these big brands. But that took a lot longer than people thought would, I think. So we put in the doc something about discounting. I saw a headline today that Walmart Plus, starting this week, Walmart Plus, this is from the journal, members will get 25% off all digital orders at Burger King. What the hell is Walmart Plus?

They have 8 million members. It's like the Amazon Prime. I use it. Is there like a Walmart Mandalorian on there? You get, they ship you stuff from Walmart. Wait, you're a Walmart Plus member? I signed up for it because one of my American Express cards said, hey, if you sign up for it, we'll pay for it.

Oh, but it's like same thing as Amazon Prime? Free shipping? Same thing, and it's cheaper. It's free shipping. Same day delivery sometimes. Maybe I'm more out of touch. Consumer discretionary stocks, relative to the market, are getting not hammered, but they're not doing great. And a lot of them didn't know where the line was and how far they could raise prices.

And a lot of them overdid it. Starbucks, McDonald's, a lot of these companies got into a lot of trouble. Do you all think they over-earned that term? Like you saw that you could push price, you saw you could push price. and then right as I've heard the term it's like okay well you push it and then you lose consumer loyalty because eventually you piss people off yes it happened maybe people yes it did it

happened at Starbucks Chipotle McDonald's I've literally no anecdotally people are like I can't stand Starbucks anymore just because of the price and the weight in line well so I, right, the price is absurd, but taking 15, 20 minutes to make an iced coffee at an airport Starbucks is an absurd experience. But I do think that's right, I think they over-earned. And the Democrats are trying to make that point. Kamala Harris's platform in part is like taking aim

at like supermarkets and food service companies. I think because that's probably the thing that consumers scream about the most. But wait a minute, I want to do a... Maybe not a me a couple, but Ben and I spoke on animal spirits this week about price gouging or inflation, and I think we're all probably in favor of this. My understanding is that they're not talking about price controls. They're talking about price gouging. When there is a hurricane, they don't want Walmart to be able to jack up prices.

And I think most reasonable people would say, yeah, who would disagree with that? Yeah. They're not trying to control prices at the supermarket. Yeah. So I mean, I think there was this, you know, there's the policy that was announced. And then I think there was this sort of outsized reaction to it, honestly, by some people that did not read the actual policy and then you could critique the policy because there wasn't like this hyper we debate policy on headlines alone now but am I right is it are they trying to

literally make supermarkets lower their prices or is it no no no no no so I mean so there's it's like two levels to it like some I know Elizabeth Warren is going after them right well a perfect example is, you know, so I don't know exactly where Elizabeth Warren stands on this, but like one of the things that you can never critique Elizabeth Warren about is that she's hyper detailed, right? It's not just an announcement. It's not a press release. It's like, like, here's the exact percentage, you know, point that this tax or etc. or whatever will be. And that was going pretty well for in 2020 until, it didn't, but very smart person,

also very polarizing for a number of reasons. You cannot say that the Harris campaign and sort of now the Biden Harris administration, because we're in the twilight of- It's a weird thing. It's a weird thing. Anyway, you cannot say that they were detailed. and some of the critiques were like look well You can't say something this polarizing and not be detailed

But I think I saw a lot more reaction that clearly is you just looked at the headline I saw cable saying thing with the capital gains tax weight. She's not pinning herself down to a number, right? They're imagining the worst right? pinning herself down to a number. So they're imagining the worst. Unrealized cap gains, is that it? Yeah, 100% we're gonna make unrealized cap gains 100%. But did she say that? No, so I looked at the price gouging proposal.

I didn't look at the, like just did everybody look at it, I looked at it in passing. I didn't look at the unrealized gains one, but from what I understand- Who's against, who's for price gouging? I understand. Who's against, who's for price gouging? I'll help here. Wait, who's for price gouging? I'll help here.

No, no one's for price gouging. It's ideological. We actually did try price controls in the past. You're a ticket broker. And they haven't worked well. But this is ideological. It's not I'm pro gouging. It's that where do you draw the line

and decide what's being opportunistic and taking price versus what's gouging? It's that where do you draw the line and decide what's being opportunistic and taking price versus what's gouging. That's where they did. So if you're a libertarian, you're saying the market will sort it out. There's no need for anyone to say anything about someone else's price because if the price is too high, a competitor will come along with a lower price. So it's ideological. It's not an actual debate. And 40 states have some form of price gouging law. I mean, that's really important to keep in mind. All right, here's price gouging.

Martin Shkreli says this $7.50 dose of insulin is now going to be $750. Why? Because I bought the company that has the, that's price gouging. Nobody is pro that. Republicans aren't pro that. This is more about like, well, who's to say that the Harris administration gets to decide that I can

make 20% selling batteries during a hurricane, but not 21%. Yeah. Where's the line? Well, I mean, we saw, I mean, these are a lot of issues, right? We don't have to look that far into the past. Like I believe Lysol got in trouble. Purell, toilet paper. Oh, right. Well, yeah, the Lysol are Lysol distributors because people were freaking out in New York

during the pandemic because they go to the bodega and this is back when you thought it was touch. I think Fomites is what it was called. And we find out it's mostly airborne, right? And it's like, whatever, 10x the price. And then the bodega owners, the corner store people, wherever you get your groceries, are like, no, we swear. It wasn't us, which sometimes it is also the retailers.

But in this case, the New York AG's office, I believe, dug into it. And it turned out, oh, no, actually, it was the distributors that were egregiously taking price. And if you look at whether it's Kentucky, you know, Idaho or yes, New York, you know, which is a blue state. I mean, they have very similar language around where you jump from, you know, just covering your costs and maintaining your

previous margin to what we would call the gouger. It's weird to pick on supermarkets. Seriously. This is the lowest margin industry God has ever allowed to exist. I mean, I think that's where- It's a weird place for them to start. I think that's where the politics comes in and I think- Can we do auto insurance first?

$86 tequila, there should be press controls on that. Right, can we do an Anejo tequila first? That was a weird thing. Tyler, I want to make sure we get to a couple other things here. So, one thing I wanted to ask you about was your travels to Pennsylvania. So this was my favorite thing that I've seen you do. Not that I don't read all your stuff, because I do. But I love this idea of just like talking to regular people.

Are you going to do more of that this year? How do you decide where you want to go? And how do you talk to people? How do you get people to like, do people just want to talk or how does that work? Well, I mean, it's a mixture of things. I mean, you go in with a general plan based on, like for example, I mentioned how I saw a data point

about how corporate net interest payments were actually like plunging during our rate hiking cycle. That's a story. At the same time, if you see, oh, hold on, Nebraska has the lowest unemployment rate in the country and it's near record lows across cycles, might be worth going there. So it's like a data point that usually sparks it. In the case of Pennsylvania, it was actually performing in terms of state GDP ahead of

the country. And this is- Oh, that's interesting. Yeah, yeah. So this is 2023 to 2024, year over year. And I was like, that's interesting. And unemployment rate was doing well and business starts were doing very well. And how people rated the Pennsylvania economy was doing pretty well in terms of state level

sentiment surveys. And yet there was the national disconnect. And obviously it's a very important swing state, right? Consumer sentiment has this sort of policy and politics knock on. Because if people in Pennsylvania decide, I don't care what the numbers say, I hate the economy, you know, that's going to affect what happens in November and what happens in November.

It's one of the four states that really matters. And like what I care about is not what happens in November because of, you know, rah rah, this team or rah rah, that team, like, you know, that could have real consequences for what policy is in 2025. So that's why I find it interesting. Okay, so you pull up in the parking lot at Hershey Park and then what happens? I pull up everywhere, man.

So I like, I first I got on Amtrak, took the Keystone line, and then I, you know, spent some time around, you know, Bryn Mawr, da da da, that sort of area. How do you approach somebody that you wanna talk to? You can usually tell who wants to be approached. Other times there's just the natural social lubrication. Sometimes you- But you're not wearing a vest that says journalist like you're in a war zone.

No, no. So you have to kind of tell people like, hey, I'm doing a story. So the way I approach it is like, for example, one of the first people I met when I was in Harrisburg, sorry, not Harrisburg, in Altoona, was this guy that just seemed very friendly, kind of gave me a friendly nod as he was working on two laptops in Barnes and Noble. And I was just like, I got a friendly nod, we made eye contact, I'm going to go talk

to him. Within two minutes or so, I will let him know I'm a journalist and I work for the New York Times. But like, I just try to let conversation flow at first. Now in a very formal setting or something that's high stakes, you absolutely should let people know from the jump. Are there people who when you introduce yourself and where you work, just no matter what, just don't want to talk to you as a result of that

or not really? I don't really see a lot of that. And I don't know whether that's because I usually introduce myself as a business or economics journalist. Maybe if you're like, hi, I'm a... That's actually smart of you to do that. Yeah. I don't know if I do that on purpose.

But it's different. Yeah. Yeah. But another thing about American consumers, American voters, American people is like, generally folks are pretty sweet. Or if not sweet, they're curious. If they have time, right? I mean, people are in a rush people have kids

They're either in the middle of work on their way to work You totally understand that but if I'm at a hockey game if I'm in a dive bar, you know off some random highway route You know people people are pretty open to talk ever wanted somebody that actually says something that's like really poignant or surprising or... Yeah. You didn't have... Oh, I mean, that's the best part about what I do is like, I always, as a writer, right?

I'm a reporter, but in some ways, I'm also a writer and you want to think that you'll have like the chef's kiss line to sum up something that's going on that you're covering. Right. But usually when I do a story that's supposed to be, this part of the country, or these sorts of people are a microcosm of this broader macroeconomic trend sort of stories, it's the people that I talk to that give me the like perfect line. And so I remember this one woman in Pennsylvania,

she was really representative of a lot of this conversation. On the one hand, she worked as a hotel manager, was making good money. But, you know, they gave her one raise at the start of the pandemic, didn't give her another, but because they were understaffed, she got more and more and more and work. More hours. Yeah, more hours. More.

Yeah, yeah. More in work, but you know, not necessarily in pay. And she was like, you know what? I don't need this. I have enough savings. I, you know, to leave. I have a good fixed mortgage. I want to spend more time with my daughter who's in high school. And she spent, I think, the past year going to two or three Tellers Swift concerts,

not just the one in Pennsylvania. She flew other places. And those tickets are expensive. But at the same time, when I asked her what she thought about the economy, and not in any of these politically charged ways we've been talking about, but just as somebody that has experienced the past three or four years, she was just thinking about like, you know, I don't know exactly what it is, but whether it's the fact that, you know, we had to deal with our kids in Zoom school, a lot of people had divorces or breakups. And, you know, she just listed all the things.

I was like, yep, remember that. The variance, yep, remember that. Mask, remember mask. Right. Like, it's just, it's been a lot. And I think, you know, we should all be proud of ourselves that like with some level of sanity, we've gotten through it.

And she summed it up though, with this sort of poignant point of like, it feels like somebody, you know, it's related to my snow globe thing, but this is so much more original. Feels like somebody put us in the washing machine and put us through a cycle. And then, you know, kind of forgot to take us out.

And we're kind of just sitting there like clothes are, when you wash them, it's kind of smelly, kind of damp. But then she mentioned, but I feel like enough time is passing and that folks, at least in her network, are feeling better. Whether that ends up showing up in the sort of macro level soft data, I don't know. It's literally something that just like with the labor market will happen. Damn, that is a good analogy. Tile Smith, ladies and gentlemen, can I pitch you a story? I want to send you to Grand Rapids.

I want you to find out what's going on there. I'm going to introduce you to upper middle class people like Ben, and I want you to really dig in and just see what makes them tick and how they're feeling about it. What's with all the modern farmhouses in Grand Rapids? What would Tao learn if he were to appear in your neck of the woods?

Beer City USA, we have the best beer in the country. But how, like what's the vibes I'm saying? Oh, we're doing well. You don't talk to anybody that you live around, do you? Yeah. This guy's like, when I want to talk to you, I'll put you on my podcast. No, no one come there, it's fine.

I don't want a lot of traffic. I was telling him before we got on, how are there not more fist fights on the streets here with people looking at their phones and texting all the time? I'm an, listen, I'm an elite walker when it comes to dodging people in crowds. As am I. I can't believe the amount of people who just stand

in the middle of- They're tourists. Those are not New Yorkers. They bump into each other with their toys. Like zombies on their phone. Everyone's okay. You don't have that in Grand Rapids. There's not that many people. You have fun on the show today?

Oh yeah, absolutely. Dude, thank you so much. Thank you so much for coming through. And I just want to tell you, I really enjoy your work. And I learn a lot about how people are experiencing the economy away from Wall Street. Because most of what I consume throughout the course of the week is like research.

Right. So when you're speaking to people and relaying that to the reader, I think it goes a long way. We really appreciate it. I want to do a favor to mine before we get out of here. John. Okay. John, throw this up. You got somewhere to be?

So, no, we do have somewhere to be. We're contributing to the inflation. That's right. There's an account on Instagram. The handle is... This is a weird handle. R-Key-O-H... I'm sorry, it doesn't even matter. It's a bunch of letters. R-Key-O-H-I.

So, they show like film premieres from back in the day. And this was... I'm into this. This was Aliens, the premiere of Aliens in 1986. Tia Carrera. Wow. Who are these people?

Sigourney Weaver. It's Marley Matlin. Where's Sigourney? Oh, there she is. In the red? No, the light, I can't see it. Okay. Next, the guy with the mustache.

Is that Bill Paxton? No, it's not Bill Paxton, is it? No. The guy with the stache. Well, wait, all their names. Paul Reiser. It is Bill Pa paxton his name is Paxton this is

This is definitely a full I can't see there was lights on that anyway. This is a great follow, and I will link to them the show notes That's a cool. That's a cool account. I think the three eyes are three I Don't know I think it's our.K. O'Hara III. R.K. O'Hara III ladies and gentlemen. Right? Yeah. Right? Love that account. All right. Shaz that Ben, have you a book or a detective novel or something to share with us? This is for Duncan and all the cinephiles out there. Okay. So I think you guys talked about the pulp fiction rewatchables and they talked

about Tarantino on that. I haven't read it yet. So I started reading the talk about the pulp fiction rewatchables and they talk about Tarantino and that. I haven't read it yet. So I started reading the Quentin Tarantino book called Cinema Speculation. Came out in 2022 and Duncan always gets on me for not watching the classic movies from like the sixties and seventies and I can't do it because they feel too old. But what do you get on them for not watching? He wants to see Casablanca. Sunset Boulevard.

I was telling him about that a while back. Okay. So I just can't go back that far because my movies for me start when I was born in the 80s. So, but Tarantino explains, and I think I understand the reason why because all these movies in the 60s and 70s did stuff that helped create the movies of today. And he explains how these movies did this thing first. And then we built on it and it got better. It's really good. He talks about these old Steve McQueen movies that I've never seen, and Paul Newman, and Warren Beatty, and he's going through all these movies

in the 60s and 70s, and he's hard on some of them too. He tells how this person shouldn't have been in it. They were the terrible actors. But it's- So where is this? It's called Cinema Speculation. It's a book. Oh, it's a book, okay.

He just writes about all the movies that he grew up seeing, and it's fantastic. It's so good. Well, so one of the things about Tarantino is if you're a cinephile He's one of your favorite directors because of the how ref how the reverence with which he Goes back and refers to these old movies. Yes So if you if you really know film and you watch a Tarantino film there's like 30 Easter eggs planted there just for you He talks about he started going to see movies like once or twice a week at age six with his parents.

And he still has like a photographic memory of all these movies. It's awesome. What part of you thinks that Ben Carlson would appreciate Sunset Boulevard in real life? You can't possibly think he would like that. I think he would like it. I know why you like it.

And Citizen Kane. I was trying to get him to watch Citizen Kane. So what part of Citizen Kane do you think Ben would like? It's literally a business. It's black a business, it's a business movie. It's black and white. It's a non-starter for Ben. You edit the show, you know this. Duncan. Okay, we'll colorize a version of it for you.

We colorize Citizen Kane for Ben. Did you watch Chinatown? I did watch Chinatown. Not so great. I'm going to try some of them. Butrated. But it came first and did stuff in other movies that never died. By the standards of the day that it came out, it was groundbreaking. It's like an NBA player in the 50s that couldn't play today. Back then, yeah.

15th anniversary today of Inglourious Basterds. That's a good one. I have to go back and rewatch that one. This one? Yes. The best. So we saw some Long Island Wise guys did in Long Island with this, and we say we're on Long Island. So in Long Island is a huge...

Oh, wait, hold on. I don't want to run over time because I have to get to this event. I'm like, I should be like an honorary Long Islander now. Say more. I might allow it. Okay, so the wonderful woman that I'm with, Natalie, used to be in Colorado.

We were long distance for a while, which wasn't bad for me, honestly, being in Colorado half the time is sweet. She moved back to New York, great. Then I was like, oh man, but the job that she has, she has to be in Long Island, like Central Island. Central Island, on Long Island. What does she do that she has to be on Long Island?

She's a federal clerk in Eastern District of New York. She settled disputes about bagels and pizza. Yeah. Pizza inspector. Yeah, pizza inspector and people doing... Wait, so did you move to Long Island? Brought from the Hamptons. Are you about to tell us you moved to Long Island? Not quite.

I still live on the Upper West Side. I just talked to myself. I love it up there. But I didn't know, like I'll be honest, I had a little bit of Manhattan, Brooklyn supremacy. You were not familiar with our game. You know, which was ridiculous because I don't even own anything in Manhattan, Brooklyn.

Like how are you going to be snobby about something that you have no assets in? But you know, I went out there, so she's in Rockville Center, which doesn't have a horny toy reputation at all. But it's actually like this wonderful community. Rockville Center is Irish Roslyn. Yeah, I know, and I got to go back there.

This is the highest end Irish dominated town on Old Long Island. This is Josh's best take on Long Island. No, truly. Rockville Center is a cool spot. Rockville Center is four towns away from where Michael and I live. We're on the same train line.

Yeah. Merrick. Yeah, Merrick. So it's Rockville Center and then Baldwin, then Freepeport then Merrick. So I'm over there a lot and I gotta say like Lake Lake Hempstead, right? Okay park. Yeah amazing like yeah up there with the best parks in New York What about food? Where you eating when you're in Rockville Center? There's this really kind of even know the name of the spot and it's in this strip mall, but there's a there's a There's a great pizza spot

right off of Center Avenue. I'm sorry to this pizza spot. Get the wings at Croxley's. Mother Kelly's. I've been to Croxley's before. Croxley's great wings. Go to Mesita for Mexican. So you guys sitting up as they're talking about food.

Mesita's good Mexican. All right, we can do this for hours. So shout out to Long Island as your favorite, because I like it. Yeah, that and The Century of Self, which is this BBC film by Adam Curtis, and it basically features the rise of the PR industry, which really didn't exist before.

It's like 10 parts, people can look it up. I think it's still mostly on YouTube. And it's a crazy story. He's like the nephew of Sigmund Freud. It's one of those things where it's a rabbit hole that you go down and it's not one of the sort of, you know, you know, sort of squeamish or boring documentaries. It really is sort of exhilarating. The center of the center of self, the century of self, it's a century of self. It's about basically the rise of PR and the creation of want.

My kid just went to school to study public relations. So I'm all in. I'm all in. I'm going to watch it. Mine is The Singularity is Nearer by Ray Kurzweil. And it's about humans merging with AI. This is like the Ray Kurzweil is like the godfather of writing about AI. He's been predicting a lot of the things that we're living through now for 20 some odd years.

And the book is really, really well done. It just explains so much that you're going to need to understand as all these innovations come our way. And I'm not an AI scientist, obviously, so it's really helpful for me to be able to speak about it. All right, that's it from us this week. Big special thanks to John Duncan. Nicole is away this week, but we missed her.

Graham, Rob, Chart Kid Matt, Sean, everyone who works on the show. Thank you guys so much. Thanks to our special guest, Talman Smith. Where can people follow you? Give us your handles. Thanks. I'm just at at Talman Smith, T-A-L-M-O-N Smith on Twitter. And yeah, subscribe to the New York Times.

Subscribe to the New York Times, my God. Thank you. Special thanks to Michael Batnick, battling the migraine today. We appreciate you. Thank you. And to Ben Carlson, thank you for joining us this week. All right, that's it from us, guys. We're out. Thanks for listening. Talk to you soon. You can bring it one time.