Why Baby Boomers Have All the Money (EP. 488)

Anthropic

Across the shows: 66 speakers in other episodes, 59 bullish and 55 bearish calls, past 30 days

• Michael Batnick · Ritholtz Wealth ManagementBullish

  Anthropic's financials look strong: well funded with losses narrowing sharply.

  From Anthropic's preliminary S-1, Michael notes it has raised about $141B in aggregate, with $112B in cash and equivalents and $19B in short-term investments, so roughly $130B remains after burn. Its operating loss fell from $2.135B in the six months to 2025 to $693M in the six months to June 2026. He calls these numbers extraordinary and says they undercut the view that the company is burning cash unsustainably.

  “The operating loss for the six months ending June 2026, only $693,000,000. That's pretty extraordinary.”at 16:22

• Ben Carlson · Ritholtz Wealth ManagementBullish

  Anthropic is a real company with enough cash to survive; going-bust bets are unlikely to win.

  After reading the S-1, Ben concludes Anthropic is a real company. Its margins are improving and it has large cash reserves. He argues that anyone betting on a collapse, such as a Polymarket bet that it goes under, will wait a long time. Even in a bad scenario the company has enough cash to last a long time.

  “this is a real company, and if your polymarket bet is they're gonna go under, you're gonna be waiting a long time. They have enough cash to last them a long, long time even if things did go bad.”at 16:30

Netflix

Across the shows: 16 speakers in other episodes, 9 bullish and 12 bearish calls, past 30 days

• Michael Batnick · Ritholtz Wealth ManagementBearish

  Netflix's growth is rolling over and it won't grow as it once did, despite strong results.

  Batnick says the business looks strong: incremental run-rate revenue of about $12.8B over 24 months, more than the direct-to-consumer revenue of Peacock, HBO Max and Paramount individually, and rising operating income. He still says the stock stinks. It is down about 6% over five years despite a 94% rise in queues (probably meaning subscribers, though the transcript says queues). He argues the company is maturing, with no levers left to restore its past growth, and that YouTube has pulled ahead in TV viewing time, with Netflix now at about half of YouTube's. He acknowledges it is not dead and notes caveats such as slowing growth and YouTube competition.

  “It will never grow like it has in the past ever again. There's no more levers to... It's more mature company... So the growth is rolling over.”at 52:57

• Ben Carlson · Ritholtz Wealth ManagementUncertain

  Netflix isn't dead; it has a brand moat and time to turn around, but its content has lost ground to Apple.

  Carlson disputes the view that YouTube has killed Netflix, saying he would not call it a dead company and that its brand recognition gives it a built-in moat with people still clicking there. He argues the problem is content. Apple has delivered several shows he has enjoyed in the past year, while Netflix has not had one show that would displace them for him. He says the company should act more like Apple and HBO and less like an algorithm, and that it still has time to turn things around. He points to East of Eden as a sign it can do higher-quality work.

  “I would not say that this is a dead company... So I think they still have time to turn it around, but obviously they... lost their way.”at 55:01

Roundhill Memory ETF

• Michael Batnick · Ritholtz Wealth ManagementBullish

  Would buy the memory chip ETF DRAM after its 40% drawdown.

  Ben points out that semiconductor earnings are up 176% year over year while the industry's P/E multiples have collapsed. The DRAM ETF is about 40% below its highs but still up 75% year to date. Michael says that if he had to buy or sell, he would buy. He does not currently own the fund.

  “But if I had to buy or sell, yeah, I buy.”at 26:21

Toll Brothers

• Michael Batnick · Ritholtz Wealth ManagementBullish

  Toll Brothers stock looks far better than Lennar because luxury buyers pay cash and prices are rising.

  Batnick and Carlson compare the two builders. Lennar, an entry-level builder, is seeing falling prices. Toll Brothers, a luxury builder with an average home price near $1 million, is seeing rising prices. Cash buying is a big part of Toll's business, with about 25% of buyers paying cash in its last earnings report. Carlson links this to people selling homes outright or drawing on equity and parents' portfolios. Batnick says Toll's stock looks way better than Lennar's as a result.

  “Guess what? Toll Brothers, the stock looks way better than Lennar.”at 43:19

SPDR S&P Homebuilders ETF

• Ben Carlson · Ritholtz Wealth ManagementBearish

  Homebuilder ETF XHB's roughly 22% drawdown looks too shallow given the housing slump.

  Carlson says XHB is only about 22% off its highs, which he finds surprising given weak housing data. He cites Pulte's buyer traffic falling 14% year over year and 11% sequentially as rates surged higher. He wonders whether investors are still hoping rates will fall, and says he would have expected a drawdown near 50% to 60%. Batnick notes that the broader homebuilder ITB is down about 30%, which Carlson takes as a sign that builders have managed the downturn better than their stocks suggest.

  “How is it possible that this thing is not in a greater drawdown than it is? Are people just still holding on hope that rates are gonna fall?”at 44:54

AI bubble & tech valuations

• Ben Carlson · Ritholtz Wealth Management

  Market is far more levered to AI today than to the internet in 1999.

  Responding to Michael's question, Ben says the answer is clearly yes. In the late 1990s the biggest companies included Citigroup, AIG and General Electric, not only tech names. Today the largest companies are almost all tech, so the market is much more concentrated in the AI-linked trade.

  “Because if you look at what the biggest companies were in the late nineteen nineties, it wasn't all tech companies. ... The biggest companies are all these tech companies.”at 6:01

• Ben Carlson · Ritholtz Wealth Management

  If an AI bust happens, it likely means a short, minor recession, not a financial crisis.

  Ben reviews a TS Lombard bust scenario built on capex recycling, vendor financing, off-balance-sheet leverage, circular financing and customer concentration. That scenario ends with a minor recession rather than a financial crisis. Ben says this is his baseline if a bust happens: a short, shallow recession, after which the market recovers and AI remains a big theme.

  “To me, if we did get a bust, that would probably be my baseline as well. Like this isn't gonna be some nasty financial crisis. We get a very short recession.”at 12:31

• Michael Batnick · Ritholtz Wealth Management

  Bull market likely continues; bearish fear is already priced in, so caution may look wrong later.

  Michael says the market is already pricing in a lot of risk: forward multiples have contracted and everyone talks about risk. He leans toward the bull market continuing and finds the bust case less compelling. He cites AI firms with large cash balances and improving losses, and the Polymarket bubble definition, which he thinks requires extreme outcomes. He suggests that in a few years people may ask why they were so bearish.

  “Isn't there also another world where three years from now, four years from now, ten years from now, we were like, why were we so bearish?”at 17:19

AI & jobs

• Michael Batnick · Ritholtz Wealth Management

  AI labor impact is not yet visible in data, but calling the fears overblown is premature.

  Michael agrees that layoffs and claims remain low and AI has not yet shown up in the data. He thinks it is premature to call the fears overblown. He cites a Goldman finding that AI adoption among US firms now shows a statistically significant negative correlation with employment growth, which he reads as a sign the impact is spreading beyond tech.

  “all of the AI fears overblown, not happening. I still think that is way premature.”at 30:35

• Ben Carlson · Ritholtz Wealth Management

  Surprised AI is not yet showing in labor data; the job market is still very strong.

  Ben cites an unemployment rate of 4.2%, a level never seen in the 1980s and not seen in the 1990s until 1999. Job openings are higher than in all of the 2010s, and initial claims are near record lows. Given where AI models are and the predictions made about them, he finds it surprising that AI is not yet showing up in labor data.

  “I am still really surprised by these labor market numbers. If you think about where the models are and the predictions people made, it is surprising that we're not seeing more of this.”at 30:47

• Ben Carlson · Ritholtz Wealth Management

  AI productivity gains show up in company revenue per head but not yet in aggregate US productivity data.

  Carlson says companies are seeing productivity gains because revenue is growing faster than headcount, so they are doing more with the same staff rather than more with less. He notes this is still not visible in general economic productivity statistics. He argues the economy adjusts like a slow-turning battleship, pointing to how quickly remote work spread, so AI's economy-wide effect will take longer than people expect. He thinks people keep pushing the timeline out and suspects the payoff may be a 2030s story.

  “It's more with the same. You are seeing productivity boost because revenue is growing faster than headcount... it's really not showing up in the general economic productivity numbers yet.”at 33:58

Earnings & corporate profits

• Ben Carlson · Ritholtz Wealth Management

  Median company's net margin doubled to 13%; the expected mean reversion has not happened.

  Profit margins were long considered the most mean-reverting economic data point. Goldman's chart shows the median company's net margin rising from under 6% in the 1990s to about 13% today. Ben notes that margins did not jump much during the internet boom but rose slowly over time, and that competition has not pulled them back down.

  “And this goes from less than 6% in the nineties to 13% today. The thing is you didn't really even get a huge jump in profit margins from the Internet.”at 4:26

• Michael Batnick · Ritholtz Wealth Management

  Profit margins won't mean-revert because competing now requires huge capital, deterring rivals.

  The textbook view is that competition erodes margins. Michael argues that this no longer works because competing with modern monopolies requires raising around a trillion dollars, which most companies cannot do. Only firms like OpenAI, Anthropic and SpaceX have that access to capital, so the usual economic forces that compress margins do not apply.

  “But officially, it's gone because in order to compete effectively with these modern monopolies, you need to raise a trillion dollars. And most companies can't do that.”at 5:05

AI: overall outlook

• Ben Carlson · Ritholtz Wealth Management

  AI will be revolutionary, but unclear whether a bust comes before the payoff.

  Ben says he is not arguing AI will be fake; he expects it to be revolutionary. His open question is whether an AI bust happens first. He finds the arguments for a bust and the arguments for a breakthrough without a bust both compelling, so he is torn between them.

  “I'm not saying AI is gonna be fake. I'm saying it's gonna be revolutionary. It's just, are we going to have a bust before we get there?”at 8:36

AI infrastructure & data centers

• Michael Batnick · Ritholtz Wealth Management

  Main AI bear risk is access to capital; if the funding spigot shuts off, buildout stalls.

  Michael says the bear case is access to capital for AI infrastructure. He points to a neocloud CEO who said last week that the company could not raise more money. Ben adds that AI firms are turning to equity raises to avoid relying on debt markets, and that Nvidia is investing in a Meta equity raise. If that funding dries up, the buildout would be at risk.

  “To me is [the] bear case. Like, the access to capital, if that spigot turns off...”at 21:41

US Treasuries & yields

• Ben Carlson · Ritholtz Wealth Management

  Bonds are the best hedge against AI-stock risk; Treasuries rose while the Nasdaq 100 fell.

  On a day the Nasdaq 100 fell about 3%, ten-year Treasuries rose about 1%. Ben argues this makes bonds the most direct hedge against AI-stock risk. He notes that bonds are now closely tied to the debt markets that finance AI spending, so they offer a near one-for-one hedge.

  “If you're really nervous about AI, bonds are the best hedge you can get.”at 22:43

Credit markets

• Ben Carlson · Ritholtz Wealth Management

  Yields are attractive across the bond spectrum, not just core bonds, so investors have many choices.

  Michael notes core bonds yield about 5.6% now versus 1.7% five years ago, and munis have a tax-equivalent yield of about 7.9% at the top marginal rate. Ben adds that yields are high across corporate, high-yield, emerging-market and municipal bonds, and that cash pays about 4%. He says investors now have far more attractive options than they did five years ago.

  “Look at all the different yields too. Corporate bonds, high yield bonds, emerging market bonds, munis. It's across the whole bond spectrum. Even cash is still paying 4%.”at 24:08

US inflation

• Michael Batnick · Ritholtz Wealth Management

  Upper-end services prices, like limited-capacity experiences, will keep rising sharply.

  Michael uses a $600 concert ticket at Barclays as an example. In 2021 companies blamed inflation for price hikes even where it did not affect their costs, and he sees no reason they will stop raising prices at the top end. He expects prices for limited-capacity experiences to rise 8-12% a year for the next ten years. He says the inflation is in services rather than goods, and Ben agrees, citing hotel prices.

  “The tickets for experiences where it's a limited number is gonna go up eight to 12% a year for the next ten years.”at 29:27

US consumer

• Michael Batnick · Ritholtz Wealth Management

  US consumer spending stays resilient, led by younger and wealthier households, with credit performance steady.

  Batnick uses Bank of America card data to argue spending is holding up. Entertainment card transactions rose 7% year over year and dollar volume rose 13%. Travel transactions rose 4% and dollar volume 7%. Retail transactions rose 6% and dollar volume 5%. He says some of the gap reflects inflation. He thinks much of the strength comes from young people: Gen Z and millennials rose from 20% of American Express spending in 2019 to 38% today. He backs this with Synchrony's CEO saying consumers keep spending through higher gas prices and weak confidence, and with its credit data showing net charge-offs flat to down, which he says is main-street consumer data rather than Amex's premium customer base.

  “the transaction number is up 7% year over year, but the dollar volume is up 13%.”at 35:21

US housing

• Michael Batnick · Ritholtz Wealth Management

  US housing demand is slumping sharply as rates rise, with first-time buyers pulling back most.

  Batnick reads Pulte's earnings commentary. Its CEO described a notable slowdown in home-buying demand in the third quarter as interest rates surged higher. Traffic to its communities fell 14% year over year and 11% sequentially. Batnick says most of the missing traffic came from first-time buyers who lack a down payment from selling a previous home, and calls the situation brutal.

  “we experienced a notable slowdown in home buying demand as we moved through the third quarter, and interest rates surged higher. They said traffic to our communities was down 14% from the prior year.”at 44:01

Wealth, inequality & billionaires

• Ben Carlson · Ritholtz Wealth Management

  Boomers' wealth lead reflects compounding, not an unfair system, and younger savers will catch up later.

  Carlson cites Fed data showing baby boomers and the silent generation hold 62% of US wealth. He draws on an Adam Nash thought experiment where everyone saves 10% of income, earns 8% and spends 4% of their portfolio in retirement from age 65. Under those assumptions, by 65 or older about 75% of wealth sits with people 65 and over, because of compounding. He argues this is not an unfair system: boomers have had longer for their capital to grow, and Gen Z and millennials who start investing earlier should also hold most of the wealth when they reach 65.

  “There's no secret here to baby boomers holding all the wealth. They've had longer to let their capital grow... This is a compounding thing. This is not like an unfair system thing.”at 56:52

US entitlements

• Ben Carlson · Ritholtz Wealth Management

  Medicare, Medicaid and Social Security take 49% of the federal budget, mostly flowing to boomers.

  Carlson cites JPMorgan data showing Medicare, Medicaid and Social Security make up 49% of the federal budget. He argues that baby boomers are getting most of that money. He uses this to respond to complaints from people who say they do not know where their tax dollars go, arguing that the taxes young people pay are largely funding boomer benefits.

  “JPMorgan has this data. Medicare, Medicaid, Social Security make up 49% of the federal budget right now. The baby boomers are getting the majority of the money.”at 59:00