Animal Spirits Podcast · Sep 30, 2026 · 1h 1m · 46m saved
With Michael Batnick, Managing Partner at Ritholtz Wealth Management · Ben Carlson, Director of Institutional Asset Management at Ritholtz Wealth Management
The Bloomberg Aggregate bond index, which goes back to 1976, is posting the worst 10-year return after inflation in its history, according to data the hosts pulled for this episode.
Most investors treat that as a reason to stay away from bonds. Michael Batnick and Ben Carlson said it is the reason they are buying, because the same losses pushed yields to levels neither has seen in his investing life.
"You couldn't ask for a worse bond market than we just lived through."
Batnick, a managing partner at Ritholtz Wealth Management, and Carlson, its director of institutional asset management, have hosted the Animal Spirits podcast together since 2017. This week they asked whether a 10-year Treasury yield above 5% finally gives the stock market a reason to fall.
The full episode is covered here so you can skip it. 61 minutes of audio, 15 minutes of reading.
Here are the 16 calls that matter.
Key Takeaways
The hosts do not expect rising rates to break the stock market yet, though a 5.6% 10-year yield would change that
About 40% of S&P 500 stocks are down this year even with the index up 13%
More than 70% are at least 10% below their highs while the index is within 1% of a record
Valuations have fallen in every sector but consumer staples this year, and AI stocks no longer trade at a premium
The S&P 500 is up 19% a year since Treasury yields bottomed in March 2020, as rates went from 0.5% to 5.2%
The bond index's worst decade after inflation came from low starting yields, fast rate rises and high inflation
The share of US households earning $150,000 or more after inflation rose from 5% in 1967 to almost 30%
More households are selling investments to fund spending, and the share among top earners rose to 20%
AI assistants that move money and cancel subscriptions have already hit "consumer inertia" stocks such as Planet Fitness
Private credit funds keep facing redemption requests, and listed alternative asset managers are near lows
1. An Excuse to Sell Off
The episode opened with a question from one host: past bubbles from Japan to the dot-com era, 1929 and the 2008 crisis all ended with central banks raising rates, and the market is now pricing a Fed that could raise rates to about 4.5% or 5%. Will the stock market use that as an excuse to sell off?
"What pricked the Japan bubble? Central bank raised rates." — Animal Spirits
The other host said no.
"My experience is that the market usually doesn't give you this long to get out." — Animal Spirits
He compared it to April, when markets were "staring at the strait being closed" and stocks fell only a little each day, with no 1% or 2% drops.
