Episode summary
This Won't End Well | Animal Spirits 464
Animal Spirits
· · Hosts: Ben Carlson, Michael Batnick
Summary
The hosts spend much of the episode on the market’s “meltup,” arguing that the rally is real, broadening beyond the Mag 7, and still supported by fundamentals. They point to semiconductors, Micron, SanDisk, and South Korean stocks as examples of stocks and markets that have gone vertical while still trading at valuation multiples that do not look absurd on forward earnings. Their main point is that this does not resemble a classic bubble yet, because profits and valuations have both moved with prices.
They contrast the current cycle with 2000 and argue that fiscal policy is a major difference: a 6% deficit today versus a surplus then, with some of that spending flowing into corporate profits. They also note mixed investor behavior, with one data set showing a sharp drop in Schwab activity while another showed a surge in retail buying, suggesting different kinds of investors are reacting very differently to the same market.
A major theme is AI’s effect on business and work. The hosts discuss AI capex, white-collar job displacement, the erosion of apprenticeship paths, and how consumers may become more informed and harder to fool. They also connect AI to portfolio management, customer service, and financial advice, while warning that if AI spending rolls over, the macro consequences could be severe.
Key takeaways
- The hosts think the stock market’s run is historically strong, but not necessarily a bubble because valuations for names like Micron and SanDisk still look reasonable on forward earnings.
- Semiconductor stocks and South Korean equities are now major drivers of the rally, and the hosts argue the market is broadening beyond the Mag 7.
- The hosts say a 6% federal deficit is a key difference from 2000 and helps explain why profits can keep growing in the current cycle.
- They argue AI is already changing hiring, training, customer service, and advising, with more work being automated before junior employees can learn it.
- The hosts think investors should expect more violent short-term pullbacks, even if the broader bull market remains intact.
Notable quotes
“This is why I think that I don't know how long it's going to be, three years, 5 years, 10 years, there's going to be an overreaction the other way”
“The S&P has gained 16% in 6 weeks most since most since the GFC. And now the new worry or part of the new worry is oh [ __ ] we're in a meltup”
“the market is sort of discounting it. The market is saying like yeah no you're trading at 10 times earnings. That makes sense”
How the episode opens
This episode is sponsored by NASDAQ Global Index Solutions and their blueprint of tomorrow series. The markets of tomorrow aren't built overnight, and neither are the indexes that help investors navigate them. NASDAQ global indexes designs benchmarks across asset classes, sectors, and geographies built to stay in sync with a fast changing market environment.
With NASDAQ Global Indexes, you can explore how index-based solutions are shaping the modern economy, igniting innovation, unlocking opportunity, and helping build the financial infrastructure of the future. Welcome to Animal Spirits with Mike and Ben. Michael, my least favorite thing to do is self-promotion, but I'm going to do it.
Okay. Which is kind of weird in a content game. I heard Michael Kitsius at a talk one time say that blogging is marketing for introverts.
Oh, that's good. Yeah. which is which is why I think I liked it so much.
Uh so I have a new book out today called Risk and Reward. I really I love the cover. The uh I had a really I had a cover in mind that I wanted and my publisher wasn't quite getting there.
And so I went to Daniel on our production team, one of our creatives, and I said, "Daniel, here's what I want. Do it for me. And he gave it back like even better than I thought it would be.
And so I really wanted this book to look nice. And so I also went to chart kid Matt and I said hey I'm going to have I think there's over 50 charts and tables in the books and I said I want it to look really good. Help me make it look good.
So he format he gave me these formatting things and he said use these formats and then just input your data in there.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- stock market melt-up
- semiconductor stocks
- ai portfolios and advisors
- crypto and retirement
- glp-1s and longevity risk
Companies and tickers mentioned
- NDAQ
- Nasdaq
Watch the episode
Watch “This Won't End Well | Animal Spirits 464” 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.
