Are Higher Rates Worse Than ZIRP? (EP. 486)

Michael Batnick (0:04)

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Ben Carlson (1:04)

This episode is sponsored by Janus Henderson, investing in a brighter future together. At Janus Henderson Investors, we believe working together is the way to work better. By combining our portfolio plans in our in-depth strategy, your valued assets and our valuable insights, your mission and our vision. Always working in perfect harmony to find the right investment opportunities, Janus Henderson Investors, investing in a brighter future together.

Welcome to Animal Spirits with Michael and Ben. Michael, we are coming to Broadway in December. So the link went live today, so you can now buy your tickets. If you're signed up for a newsletter, you should have gotten that. I just want to talk real quick about the artwork here.

Michael Batnick (1:47)

Well, when you said we're coming to Broadway, you were a little, it was a little vague. We're not, it's not like you and I are going on a date to Broadway. I mean, I would love to be on a date.

Ben Carlson (1:53)

You and I are going to go to Hamilton or Lion King.

Michael Batnick (1:55)

But we're doing it. We're doing it. We are on Broadway.

Ben Carlson (1:59)

Yeah, we're doing a live show. You, Josh and I, plus we're going to have, who else? Tom Lee, Nick Colas, Jessica Rabe, Ankara Crawford and Adam Parker.

Michael Batnick (2:09)

It's going to be great.

Ben Carlson (2:11)

Yeah, early December, tickets are on sale.

Michael Batnick (2:12)

A lot of firepower in that lineup, am I right?

Ben Carlson (2:15)

Yeah, I got to talk about the ad real quick though. Josh got Hamilton, you got the, what's it called? Oh, sorry, Phantom of the Opera.

Michael Batnick (2:25)

You definitely don't know this about me. So, one of my earliest, I think pre-divorce memories, so I had to be five years old, was going to see Phantom of the Opera.

Ben Carlson (2:36)

You liked it?

Michael Batnick (2:37)

Not only did I like it, Ben, I still listen to the music.

Ben Carlson (2:41)

Really? Okay, I would not have predicted you as a broadcaster.

Michael Batnick (2:45)

Mildly embarrassing to admit. I mean, I don't listen to it every week, but here and there, when I'm feeling some feelings.

Ben Carlson (2:55)

I'm just saying.

Michael Batnick (2:56)

Anyway, keep going.

Ben Carlson (2:56)

Yeah, Josh Scott Hamilton, you got Phantom of the Opera and I got The Lion King.

Michael Batnick (3:02)

I feel like you think you were shafted. What's wrong with The Lion King?

Ben Carlson (3:05)

Yeah, I guess it's, I don't know. It looks great. I did see The Lion King before.

Okay, it's going to be fun. I can't wait.

Michael Batnick (3:13)

You didn't take your kids to see The Lion King?

Ben Carlson (3:16)

No, I went with my wife. My kids have seen it though, here, not on Broadway. All right, I want to talk again about all the risks that everyone always talks about. So right now, everyone has the same level of worry about everything, right? Worry about government debt levels, worried about higher interest rates, worried about an AI bubble, and worried about stock market concentration.

Michael, what's that? What else were worried about?

Michael Batnick (3:40)

Deteriorating breath.

Ben Carlson (3:42)

Okay. Well, that's kind of hand in hand with concentration. It's funny how often that ebbs and flows in the concentration thing really has been going on for a long time. So Michael Semblis has some really good charts on this. It's funny. So he shows share of returns, earnings growth and capex from AI stocks since January 2024

And so it's two-thirds of the price return, 60 percent of earnings growth, and 81 percent of capex. So obviously everything's concentrated. And then he looks at also the percentage of stocks, more than 20 percent blow all-time highs when the S&P is within 1 percent of its all-time highs. It looks like you've been doing some work on this too, similar, right? That's the breadth thing.