Episode summary
Tax the Billionaires | Animal Spirits 446
Animal Spirits
· · Hosts: Michael Batnick, Ben Carlson
Summary
Michael Batnick and Ben Carlson opened the year by comparing 2026 market expectations with the kind of “same as last year” path that often frustrates both bulls and bears. They argued that the AI boom may not pop, megacap tech can keep doing well, housing can stay frozen, and recession risk may stay delayed rather than disappear. They also highlighted how valuations have stayed elevated because profit margins, revenue per worker, and earnings power have all moved higher over time, making simple valuation calls less useful without context.
A big theme was how markets and the economy can look contradictory at once. The hosts pointed to international stocks outperforming in 2025, record ETF flows, and consumers still spending on food and alcohol, while also noting that recession talk has faded and many obvious risks already feel priced in. They discussed AI hallucinations, saying current models still make too many factual mistakes to be treated as reliable authorities.
The back half focused on self-driving cars, Disney, real estate, and California’s proposed billionaire tax. They were enthusiastic about Waymo’s product experience, skeptical of Disney’s stock performance despite the strength of its parks, and doubtful that a billionaire tax would solve California’s healthcare funding problem without driving wealthy residents away.
Key takeaways
- Ben Carlson’s base case is that 2026 mostly extends the 2025 playbook: AI stays hot, the stock market rises, housing stays stuck, and recession risk keeps getting pushed out.
- The hosts argued that elevated valuations are easier to justify when profit margins and revenue per worker keep making new highs.
- Michael Batnick said the biggest market risks are still obvious, but obvious risks can remain risks even when everyone sees them.
- They pointed to international stocks’ outsized 2025 outperformance as evidence that diversification finally mattered again.
- The hosts said AI tools are useful but still hallucinate too often to be trusted as factual authorities without verification.
- They were bullish on Waymo’s user experience and skeptical that California’s proposed billionaire tax would solve the state’s structural funding problems.
Notable quotes
“The AI bubble doesn't pop. Mag 7s do good, not great. Housing market remains stuck. Activity is low. Not great”
“I love that the market is rejecting the bubble for now”
“how could valuations not be so much higher”
How the episode opens
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Click the link in the show notes to subscribe on LinkedIn and get 20% off your initial Y charts professional subscription when you start your free Y Charts trial through Animal Spirits, new customers only. Welcome to Animal Spirits with Michael and Ben. Happy New Year to everybody.
Hope you had a nice break from school, from work, etc., etc. Uh, I had the flu and I think I had it coming, Ben. I uh I came back from Disney, spent one night in Universal, had a great time.
Spent another three, four nights in Disney, had a wonderful time. And uh when I got back, somebody was saying like, "Oh, you must be exhausted. No, not really.
I've got stamina. Not to brag. I just I don't get tired.
I've got a I've got a motor. I've got an engine. I've been above my 200 day moving average for a long time.
I was due. I was due for a correction. And boy, did I get a correction.
So, Thursday night I watched uh Beonia with Robin.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- billionaire tax
- bear market risk
- ai hallucinations
- self-driving cars
- real estate affordability
Companies and tickers mentioned
- DIS
- GOOG
- GOOGL
- Disney
- Waymo
- Alphabet
Watch the episode
Watch “Tax the Billionaires | Animal Spirits 446” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Animal Spirits, this episode and its artwork belong to The Compound. Octagon is not affiliated with the show; this page is an independent summary.
