Super Bullish (EP.195)

Episode Summary

Executive Summary: Animal Spirits covered a wide range of macro and market themes, arguing that housing wealth, fiscal stimulus, low rates, and innovation are supporting a durable economic expansion and bull case for stocks. The hosts also challenged common market narratives around money printing, deregulation, and bearish sentiment while highlighting growth vs. value, NFTs, private markets, and changing wealth dynamics.

Main Topics: Disney, streaming growth, and media disruption (Priority: 5/5): The episode opened with a YCharts chart breaking out Disney’s revenues, showing fast growth in Disney+, ESPN+, and Hulu against the collapse in parks revenue. The hosts used it as an example of streaming adoption, bundling, and the long-term shift away from cable and legacy media. Housing equity extraction and the wealth effect (Priority: 5/5): They discussed record home-equity cash-out activity, refinancing, and the role of housing as the primary store of wealth for most households. The conversation emphasized how rising prices and low rates benefit homeowners while first-time buyers and millennials are disadvantaged. Bullish macro view on growth and stocks (Priority: 5/5): The hosts argued that fiscal policy, pent-up demand, innovation, and easier policy make a strong case for economic growth and a supportive stock market environment. They pushed back on persistent bearishness and noted that politicians can choose growth through spending. Money supply, debt, and stimulus debate (Priority: 4/5): They revisited fears around money printing and showed that much of the M1 jump was an accounting change, while also arguing that falling rates have cut government interest costs even as debt rose. They defended the $1.9 trillion stimulus as protective and pro-household. Value vs. growth, quality, and concentration (Priority: 4/5): A discussion of earnings trends and valuation argued that value has more mean-reversion potential, but also that many traditional value stocks are low-quality. They noted the continued dominance of mega-cap growth and the challenge of replaying the dot-com-era value setup. NFTs, private markets, and the power of wealth (Priority: 4/5): They talked about Beeple’s $69.3 million NFT sale, the role of crypto wealth in creating new markets, and rising private fundraising. The broader point was that wealthy investors increasingly set prices in markets and can accelerate new asset classes. Consumer apps, delivery, and asset-management incentives (Priority: 3/5): The hosts discussed DoorDash’s potential end state, driverless delivery, and the political/career-risk distortions in institutional asset management. They used these examples to show how business models and incentives evolve in ways that are easy to underestimate.

Key Arguments: Housing is acting as a balance-sheet asset and forced savings vehicle for most households, so low rates and rising prices disproportionately help owners while hurting new entrants. Cash-out refis are less dangerous today than before the financial crisis because most originations are higher credit quality and less subprime-driven. The economy can experience strong growth because fiscal policy and the Fed have made growth partly a policy choice, not just an organic outcome. Bearish market calls are easier to maintain than bullish ones because pessimists can always claim they are early, while bulls are held accountable immediately. The M1 money-supply surge was heavily distorted by a rule change that moved savings deposits into M1, so the headline chart overstated true money creation. Lower interest rates mean government debt service is much cheaper today than in prior decades, leaving more room for fiscal expansion. Traditional value investing is not always a high-quality strategy; during the dot-com bust, value unusually had better quality exposure than usual. NFTs may seem absurd, but they demonstrate how capital-rich groups can create and price new markets when they want to. The stock market can remain supported by strong earnings, low rates, innovation, and broad economic growth even if many participants are worried about bubbles. The biggest structural market story is ownership: wealthier households own most financial assets, and that concentrates gains during both rallies and downturns.

Data Points: Disney Plus subscriber count: 100+ million worldwide - Used to illustrate streaming success and validate the bullish Disney call ESPN+ revenue growth: up 200% - YCharts chart showing rapid growth in Disney’s streaming revenue Disney+ revenue growth: up 160% - Part of the breakdown of Disney’s revenue sources Parks revenue: down about 50% - Pandemic impact on Disney Parks revenue U.S. homeowners cashed out home equity: $152 billion in 2020 - Wall Street Journal report on home-equity extraction Increase in home-equity cash-out: 42% vs. 2019 - Compared with the prior year Cash-out refis before crisis: almost 90% - Share of refinancers extracting cash before the financial crisis Cash-out refis last year: about one-third - Share of refinancers choosing the cash-out option in the recent period Homeownership rate: 66% - Shown in YCharts data as the approximate U.S. homeownership rate Goldman Sachs 2021 GDP forecast: 8% growth - Raised forecast reflecting fiscal policy news Goldman Sachs year-end unemployment forecast: 4% - 2021 unemployment expectation Goldman Sachs 2022 unemployment forecast: 3.5% - Projected unemployment rate for 2022 Goldman Sachs 2023 unemployment forecast: 3.2% - Projected unemployment rate for 2023 Lithium-ion battery prices: down 90% since 2010 - Used as evidence for innovation and productivity improvements M1 increase attributed to rule change: $11 trillion of $14 trillion - Savings-account reclassification explained much of the M1 surge Government debt change since 1990: up nearly 3x - Chart showing long-term debt growth Government net interest cost: almost cut in half since 1990 - Lower rates reduced debt service despite higher debt Airline workers furlough notices: 13,000 workers affected - House stimulus passage extended payroll support and canceled furlough notices Child poverty impact: potentially cut by 50% - Referenced as a likely effect of the stimulus bill Fan MAG share of S&P 500 earnings: 25% in 2020, 27% currently - Illustrated earnings concentration in mega-cap growth stocks Stripe valuation: $95 billion - Private-market valuation discussed as evidence of continued fintech enthusiasm Online commerce share: 14% - Stripe’s estimate of commerce that happens online today Beeple NFT sale: $69.3 million - Highest-priced JPEG sale at Christie’s NFT bidder age profile: 64% under age 40 - Christie’s auction participant demographics Private equity fundraising: $641 billion globally in 2020 - JP Morgan alternatives report showing strong fundraising Private debt fundraising: $122 billion in 2020 - Part of alternatives fundraising totals U.S. household stock ownership: 53% by 2019 - ICI data showing broad participation in equities Lowest-income household stock ownership: 15% - Up from 3.6% in 1989 Middle-quintile household stock ownership: 56% - Up from below 30% in 1989 Retail energy overcharge: $19.2 billion more than incumbent utilities - Journal analysis of deregulated electricity providers from 2010-2019

Pivotal Quotes: "I cannot imagine being a bear on the economy right now." — Ben Carlson: Reaction to strong fiscal support, reopening, and Goldman’s upbeat forecasts "The upside will take care of itself." — Dick Grice (as recalled by Michael Batnick): Cited as a reminder that risk management should not crowd out participation in upside "It’s a policy choice." — Michael Batnick: Argument that economic growth can be accelerated through fiscal spending and supportive policy

Implications: Listeners should expect continued strength in housing, consumption, and equities if low rates and fiscal support persist. The episode suggests wealth concentration will keep shaping markets, while old assumptions about money printing, value investing, and deregulation may need updating.