The Compound and Friends
Episode: Economic Data Deteriorates, Private Credit Struggles, Retail Traders Give Up
Date: March 24, 2026
Hosts: Downtown Josh Brown & Michael Batnick
Episode Overview
This episode dives deep into the weakening economic landscape, challenges within the private credit and housing markets, and the substantial retreat of retail traders from the stock market. Downtown Josh and Michael offer candid, sometimes acerbic commentary on the contradictions and confusion in the current economic data, discuss how structural imbalances are affecting average Americans, and explore where risk and opportunity might lie as markets shift.
Key Discussion Points & Insights
1. The State of the US Economy
Main theme: Economic data is deteriorating, with rising concerns over growth, employment, inflation, and consumer sentiment.
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GDP Shocks:
- Hosts note a dramatic drop in GDP forecasts—from 5.4% growth (Atlanta Fed GDPNow, January) to 0.7% (March).
- "We came into January talking about like 4 or 5% GDP, and now we're scraping the bottom." —Josh [02:57]
- Josh calls the economy “terrible” due to its downward trajectory, even if it isn’t absolutely catastrophic yet.
- “The economy is terrible because I always think about the economy as something that's on its way in one direction or the other, and the direction that it's on its way to is the wrong direction.” —Josh [07:30]
- Michael’s more nuanced: “It's middle. It's not great at all, obviously. I wouldn't say it's terrible. It's somewhere in between.” [06:39]
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Labor Market:
- Flattening job creation: Private payroll growth is anemic (<33,000/month), and ex-healthcare/social assistance, jobs are down.
- “If you pull out healthcare and social assistance, private payrolls are actually down. Manufacturing jobs are down. Retail jobs are down.” —Josh [05:15]
- “The labor market's soft. Not a lot of hires, not a lot of fires. Initial jobless claims look totally fine.” —Michael [06:39]
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Inflation & Consumer:
- Price increases shifting from goods to services, creating “weird stuff” in consumer prices; inflation not abating as hoped.
- “Consumer spending is pretty sluggish... Retail sales are not growing.” —Michael [06:39]
2. Private Credit: Struggling, Redemptions & Liquidity Squeeze
Main theme: Private credit funds are facing mounting stress, with increasing withdrawal pressures, downgrades, and the risk of liquidity crises.
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Redemption Pressure:
- Apollo is keeping withdrawal rates at 5% vs. 11% requests—described as “the problem.” [08:47]
- Moody’s downgrades FSKR Capital Corp to junk, underlining sector risk.
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Systemic Risk:
- “The entryway is the size of a football field and the exit is... the size of a phone booth. And everybody wants out at the same time.” —Josh [30:10]
- Mismatch between public/private vehicles, liquidity and redemption obligations highlighted.
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Market Impact:
- Publicly traded BDCs like Lennar down 50%+, stocks trading down on expectations of a tough fundraising environment—not portfolio implosions per se.
- “I don't think the stock is down 40% because people think Apollo's whole portfolio... is going to blow up. ...the dream has gone up in smoke.” —Josh [34:58]
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Media Perception:
- Coverage focuses on retail investor pain and the “Monopoly men” at the top; hosts note difference between actual credit blow-up and loss of growth narrative.
- “The media just... love it. It's like catnip.” —Michael [31:27]
3. Housing Market: “Frozen Solid”
Main theme: Housing is in a deep freeze, with historically low transactions, high rates, and mounting inventory, potentially leading to falling prices.
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Data Recap:
- 30-year mortgage rates above 6% for years.
- Existing and pending home sales at 10-year/all-time lows. [10:38], [12:39]
- Inventory rising—but attributed more to lack of buyers than strong building.
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Consumer Impact:
- “This is the most important part of the economy for most Americans. Outside of whether or not they have a job...” —Josh [12:50]
- The real wealth effect for Americans is closely tied to home valuations and liquidity, versus stocks.
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Distortions:
- Home builders now offering record incentives (14% avg. discount), reminiscent of 2010 crisis.
- “That's completely abnormal. Way elevated versus our experience in the last 10 years.” —Josh [15:43]
4. Retail Traders: Activity & Market Sentiment Collapse
Main theme: Retail trading drove recent rallies but has now essentially “given up,” with volume and interest declining as favorite stocks falter.
5. AI, Employment & The College Grad Crisis
Main theme: The job market for college grads, especially in STEM and office roles, is collapsing as AI adoption accelerates and companies restrain hiring.
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Unprecedented Flip:
- For the first time, unemployment is higher among recent college grads (6%) than the broader workforce (~4.2%).
- “Unemployment rate for college grads is now 6%... we've never been in an environment where it was harder for a college educated kid to get a job than for a non educated kid our entire lives until the last five years.” —Josh [48:50]
- “Even computer engineering, 8% unemployment.” —Josh [49:53]
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Hiring Sentiment:
- Companies “hanging tight,” waiting to see what AI can automate before adding new headcount.
- “Let's wait and see where all this AI that we're spending all this money on, let's see what it can really do before we just add the requisite body count.” —Josh [52:11]
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Political Implications:
- Hosts anticipate this will soon boil over into a political flashpoint, particularly as new grads job search in late spring.
Notable Quotes
- “The housing market is just absolute ass.” —Josh [10:38]
- “This is the opposite of the pandemic. When you listed a house, you sold the house in 20 minutes... the ratio of sellers to buyers is in a historic imbalance.” —Michael [14:41]
- “The retail trader from '23 to '25 kicked the shit out of professionals.” —Michael [23:16]
- “I do believe that this is overblown. I do believe that the incumbents are ultimately going to be the biggest beneficiaries... But the sellers are in control, period. Hard stop.” —Michael [44:53]
- “If anyone is still out there and hasn't killed themselves yet, let's do make the case.” —Josh, dark humor as segment transition [54:19]
Important Segment Timestamps
- Economic deterioration & weak GDP: [02:57]–[08:02]
- Private credit/BDCs struggles: [08:47]–[18:53], [29:00]–[38:21]
- Housing market deep dive: [10:36]–[17:25]
- Retail trader washout: [19:16]–[24:01]
- AI and college grad employment crisis: [45:37]–[54:19]
- Quick hits: Expedia & Clear stocks, “Halo” trade in AI-resistant assets: [24:42], [54:19]–[56:16]
- Mystery chart—memory chip stocks as current bubble: [56:16]–[57:58]
Memorable Moments
- Josh's recurring use of "ass" and "terrible" to describe markets/housing, setting the episode’s exasperated tone.
- The bickering over just how bad “terrible” really is for the economy, reflecting honest disagreement on market semantics.
- Detailed breakdown of private credit vehicles and their liquidity traps—a cautionary tale for retail participants.
- The insight that the real wealth effect in America still centers on housing, not stocks.
- Lively banter and dark humor about job prospects for college grads (“If anyone is still out there and hasn't killed themselves yet...”) and the AI disruption.
Final Thoughts
This episode provides a frank, unsparing assessment of current economic woes—from weak labor and GDP data to frozen housing, and the fallout in private credit. The hosts lament the vanishing tradeable opportunities for retail, while warning of a brewing crisis among younger job seekers as AI transforms white collar employment. Still, they highlight that new investment opportunities could soon emerge from price dislocations, especially in distressed private credit—if you pick your spots carefully.
Actionable Insight:
If you're interested in private credit, “choose your fund very carefully,” as the entry point may improve, but risks abound.
—Josh [39:13]
For more expert takes and charts, visit The Compound’s YouTube or podcast feed for this and future episodes.
