An Economy So Good No One Can Live In It with Jill Schlesinger⁠

Meta Platforms

Across the shows: 33 speakers in other episodes, 35 bullish and 13 bearish calls, past 30 days

• Josh Brown · Ritholtz Wealth ManagementBearish

  Meta will need new capital for AI spending via equity issuance, diluting Class A holders.

  Brown expects Meta to need to raise a lot of new capital for AI spending. He expects it to use at-the-market equity offerings and says it is cheaper to dilute the Class A shareholders than to keep the founder's voting control intact. Schlesinger adds that the founder's voting share would fall from 60% to 53%.

  “He has to because he's gonna be doing ATM offerings at some point... he's gonna have to finance a lot with new capital. Well, and it's cheaper to dilute the C shareholders.”at 1:05:49

• Michael Batnick · Ritholtz Wealth ManagementBearish

  Meta is spending its once-huge profits on AI, with negative free cash flow and still not enough.

  Batnick says Meta was one of the most profitable businesses in history and is now spending all of its cash. The quarter showed its first negative free cash flow since 2012. He says that is not enough for Meta, and it needs more. The stock fell about 14% after the report, reversing an early gain.

  “This was one of the three most profitable businesses in the history of capitalism. Now they are spending it all.”at 1:06:26

• Josh Brown · Ritholtz Wealth ManagementBullish

  Meta's AI is already paying off in ads: impressions up 10% and average ad price up 14%.

  Brown points to good news from Meta's earnings call. Ad impressions rose 10% year over year and average price per ad rose 14%. He reads these as evidence of AI return on investment, since AI helps Meta serve ads better. Users of Meta's apps reached 3.64 billion.

  “Some of the good stuff from the call, ad impressions up 10% year over year. That's AI ROI. Like they get better at serving ads. Average price per ad plus 14%.”at 1:06:42

US consumer

• Jill Schlesinger · CBS News

  The US consumer is doing okay overall, with affordability strain concentrated among some groups.

  Jill says she is repeatedly surprised that the consumer is holding up. People with jobs are paying their bills, and older households that have accumulated wealth and own homes are doing well. She acknowledges real affordability problems and that some groups, such as truckers and farmers, feel energy price spikes. She argues the overall picture has nuance but is not broadly deteriorating. Her view draws on polling and conversations with real people on CBS programming.

  “I think from my perspective, I'm always pleasantly surprised that the consumer is doing okay overall, and you know who is. These older people who have gathered their wealth and they own their homes.”at 17:06

• Michael Batnick · Ritholtz Wealth Management

  Consumer credit is healthy: Bank of America consumer net charge-offs are falling, and jobless claims are near multi-decade lows.

  Despite widespread anxiety about affordability, Michael points to hard data as evidence the consumer is fine. Bank of America's consumer net charge-offs, a read on Main Street borrowers, are declining each quarter. Initial jobless claims of 194,000 are the fourth-lowest level going back to the 1960s. He argues that the gap between sentiment and this data reflects media negativity rather than actual consumer stress.

  “We have consumer net charge offs, and it's going down... This is Bank of America, and take that literally. Consumer charge offs are going down. We also have today... initial jobless claims down to 194,000, which is the fourth lowest level going back to the 1960s.”at 23:33

• Michael Batnick · Ritholtz Wealth Management

  Companies are raising prices at the top end because wealthy buyers seem to pay anything.

  Batnick says inflation has hit the bottom half of the K, such as an $8 bottle of water. Companies have now realised there is no limit to what wealthy people will pay for exclusive experiences. He cites United and Delta raising miles prices and Disney raising prices at the top of its range. He treats this as a deliberate shift toward premium pricing.

  “But United and Delta are jacking up the miles. Yep. Disney is raising prices at the top of the k because why wouldn't they? There is no limit”at 37:41

• Josh Brown · Ritholtz Wealth Management

  Affluent spending on premium experiences will persist as long as jobs and portfolios hold up.

  Brown argues that if people keep their jobs, keep earning money and see their investments grow, they will keep upgrading to first class and paying for premium experiences. He thinks this is business as usual. Behaviour will change only if jobs and portfolios decline, which has not happened.

  “If people's portfolios hold up... if they have jobs, and if they're earning money, and if their investments are growing, they're gonna keep upgrading to first class.”at 43:04

AI regulation & safety

• Jill Schlesinger · CBS News

  AI regulation is lacking and will likely arrive only after something really bad happens.

  Schlesinger says she is less worried about AI harms happening now than about the absence of any real commitment to regulation. She uses a bank-run analogy to illustrate how fast systemic risk could build. She agrees with Steve Eisman that meaningful rules will only follow a serious incident.

  “What I worry about is that there is no commitment to any sort of real regulation... There's not going to be until something really bad happens.”at 54:59

• Josh Brown · Ritholtz Wealth Management

  US AI rules will come only after a major incident, then likely overshoot, as past regulation did.

  Brown argues that US society writes articles about threats but acts only after something bad happens. Regulators then clean up the mess and write rules that usually go too far. The next party in power then rewrites them, and the cycle repeats. He expects AI regulation to follow the same pattern.

  “And then something really bad happens, and then we clean up the mess, and in the wake, we write regulations. And they usually go too far.”at 55:49

AI pricing & unit economics

• Josh Brown · Ritholtz Wealth Management

  AI competition is shifting from model quality to efficiency per dollar as cheaper models launch.

  Brown cites OpenAI's lower-cost midrange GPT models launched in September and Anthropic's Haiku 5.5, which offers better performance at lower cost. He also notes IBM's CEO saying large enterprises are scrutinizing AI ROI and worrying that some AI spending has no real return. Brown predicts that efficiency per dollar spent, not raw model superiority, will define 2027 after three years of a model race.

  “This is to me gonna be the story of 2027, efficiencies in AI per dollar spent. We spent so much for the last three years in a model race. Whose is better? It's about to tip over.”at 1:02:50

• Jill Schlesinger · CBS News

  Buyers will pay for top AI only where needed; most users want good-enough, cheaper AI.

  Schlesinger says there is a trend around when AI is good enough and for which users. Large companies that need specialised compute and software expertise will pay for the best. Many other buyers, such as a media company that only needs AI to run scripts and fact-check them, need far less. She compares this to a fintech firm's overbuilt systems, which customers do not need, and suggests companies may pull back after overselling capability.

  “I think there's an interesting trend of when it is good enough and for which people... if you're a big media company and all you want is AI that can run scripts through the machine and fact check it.”at 1:03:15

Oil & fuels

• Jill Schlesinger · CBS News

  Higher heating oil prices from the Russia oil deal will hit only a small, specific group, not most Americans.

  Heating oil prices rose after the Russia oil deal. Jill notes that only about 3% of US households heat with oil, so the impact is concentrated among Northeast households, truckers and farmers. She argues the spike will not materially affect most people, who have jobs and can pay their bills.

  “It's like 3% of The United States. But people are noticing that if they are truckers, if we have people who are farmers... And then we also would say that... it's probably not going to help the vast majority of people.”at 15:45

AI bubble & tech valuations

• Jill Schlesinger · CBS News

  AI investment and consumption are a key reason US equity markets, including retirement accounts, look frothy.

  Jill argues that AI investment and AI-related consumption are a major force powering the stock market, though not the only one. She ties this to the market's elevated level and says it is part of why 401(k) balances look so frothy. She also notes restaurant spending and other sources of economic activity, so AI is a large but not sole driver of market strength.

  “Powering the market is this investment and consumption of AI. It is not everything... yes, it is absolutely true that that is part of why your four zero one is as frothy as it is.”at 28:06

US stock market outlook

• Josh Brown · Ritholtz Wealth Management

  Stock dips have been V-shaped, and investors have not spent twelve months far from record highs.

  Brown says the market has seen only V-shaped recoveries and has not spent twelve months at a meaningful distance from record highs for a long time. He argues that a change in investor psychology requires people to see year-over-year declines in their portfolios, and that has not happened. He concedes it could, but it has not yet.

  “It's all V shaped recoveries... I don't think we've spent twelve months at any reasonable distance from record highs in a really long time.”at 40:20

US immigration

• Josh Brown · Ritholtz Wealth Management

  Lower immigration shrinks the labor pool, keeping labor demand high in many industries.

  Brown says that the lack of immigration is a big shift in the potential labor pool. In many industries that pool is the whole labor supply. As a result, demand for workers stays very high even as complaints about prices grow. This is part of why he sees no labor-driven reset.

  “we don't have immigration. So that's a big shift in the potential labor pool. In a lot of industries, it's the whole labor pool.”at 41:44

US jobs & labor market

• Jill Schlesinger · CBS News

  Demand for hospital nurses is very high because there is a real shortage of frontline staff.

  Schlesinger says demand for healthcare workers is off the charts. Frontline nurses are leaving hospitals for concierge services. She describes a real nursing shortage in hospitals that the economy does not have enough people to fill. These are hard but important jobs.

  “Demand for healthcare workers is like off the charts... there's actually a real nursing shortage of like in hospital nurses.”at 42:01

AI & jobs

• Josh Brown · Ritholtz Wealth Management

  Three years into the AI era, employers are still holding staff; no visible AI-driven job losses yet.

  Brown argues the labor market shows no sign of AI displacement three years into the AI boom. Companies are holding onto employees, and labor demand remains high in most industries. Wage growth is slower than in 2021 but still positive, and in some industries it is strong. He says this is why the economy has not reset.

  “Three years into the age of AI, and we're really not seeing any change. Like, people are holding their employees.”at 42:41

Enterprise AI adoption & AI software

• Josh Brown · Ritholtz Wealth Management

  AI will let advisers serve more clients but won't replace the human attention clients pay for.

  Brown says his firm uses a lot of AI, which will let it scale and serve more clients. It will give the most talented advisers extra support, like a third or fourth hand. He argues it will not replace what clients pay for. The sense that someone is paying attention and cares how things turn out remains the core product.

  “It will absolutely enable us to scale up and serve more clients... It's not really gonna replace the thing that the people are actually paying us for.”at 59:23

Consumer AI products

• Josh Brown · Ritholtz Wealth Management

  Consumer AI advice startups will earn nothing because clients pay for human attention, not agentic tools.

  Brown says he sees many consumer AI startups claiming they will do financial advice agentically. He argues clients will not pay for automated responses. What they pay for is being heard and having someone who remembers them and has a stake in outcomes. He expects incumbents such as Vanguard and Schwab to offer similar tools with no margin, leaving startups with nothing to sell.

  “I see all these b to c AI startups that are, oh, we're gonna do this agentically. Nobody will fucking pay you for that. That will be $0.”at 59:57

US entitlements

• Jill Schlesinger · CBS News

  Social Security needs a real fix soon, as the trust fund cut is closer than it used to seem.

  Schlesinger says she is concerned the US is getting perilously close to needing a real solution for Social Security, so that a statutory benefit cut of about 25% does not take effect. She notes that 2032 used to seem a long way off, and now it feels pretty close. The concern rests on the nearing date of the statutory cut and the lack of a fix in place.

  “I do have some concern that we are getting perilously close to actually needing a real solution on social security so that we don't have a statutory cut of 25”at 1:12:36

US elections & politics

• Jill Schlesinger · CBS News

  Midterms unlikely to move markets; a Democratic House win would not change investor outcomes much.

  Schlesinger argues the midterms will not be a market mover. She says the stakes for investors are low and that political fatigue is high, even though voters are angry and may vote out incumbents. She reasons that even a wave election that gives Democrats control of both houses would not change much for markets, because it would not change key outcomes such as who heads the SEC. She admits this may just be her view, and says she is not saying the election does not matter, only that it may not matter to investors. The tax bill has already passed, which she cites as the main economic policy event of the cycle.

  “So I don't think it's gonna be a market mover. ... I'm saying like, does it matter to investors? ... This time around, this stakes are low.”at 1:12:51

AI infrastructure & data centers

• Josh Brown · Ritholtz Wealth Management

  Wolfe's Stephanie Roth sees midterm-driven AI selloffs as temporary, with no material hit to AI growth.

  Brown reads out a Wolfe Research note by Stephanie Roth. Roth says a growing concern is that the midterms could trigger an AI correction, but that federal restrictions are unlikely while Trump is in office and regulatory risk sits mainly at the state and local level. She argues restrictions mostly add costs and timelines rather than reducing aggregate data center investment, and that even the most vocal critics in key governor races are not trying to stop development, only to ensure local communities benefit. She names the Texas governor race as the biggest election-related sentiment risk. Her conclusion is that even if the election triggers a temporary AI-trade selloff, she does not expect a material negative impact on AI growth. Brown closes by saying it 'doesn't matter', so he appears to endorse the view, though he is relaying a third party's research.

  “Even if the election triggers a temporary sell off in the AI trade, we don't expect a material negative impact on its growth.”at 1:14:46

Europe's economy

• Josh Brown · Ritholtz Wealth Management

  France's bond market is not like a systemic risk, as foreign holders have positive-yield alternatives.

  Brown contrasts France with the cascading-crisis scenario Schlesinger raised. He says about 55% of French bonds are owned by Japanese and other European investors, and that those bonds now offer positive returns in Japan, the rest of Europe and the US. His implicit argument is that these holders have other options, so French debt is less likely to trigger a cascade. The reasoning is thin and not developed further, which lowers confidence.

  “France is not the same. France is 55% of the bond market is owned by like the Japanese and other Europeans. And the problem is those bonds have a positive rate of return now in Japan”at 1:16:11