The Compound and Friends: "It's Like Free Money"

Release Date: December 12, 2025
Featured Guests: Josh Brown, Michael Batnick (The Compound), Joe Weisenthal, Tracy Alloway (Odd Lots/Bloomberg)

Episode Overview

This rich episode brings together the hosts of The Compound and Friends (Josh Brown and Michael Batnick) and the "royalty" of financial podcasting, Joe Weisenthal and Tracy Alloway of Bloomberg’s Odd Lots. The group dives into the state and future of markets, AI's impact on investing and business, trends in podcasting, the transformation of New York's economic life, the mechanics and psychology of prediction markets, and the shifting definitions of "free money" in the stock market. Underneath the humor and camaraderie, the discussion offers valuable insights into macro trends, financial narratives, and how traditional and new market mechanisms are changing.

Major Discussion Points & Insights

1. Life in the Office, Post-Pandemic (00:15 - 03:42)

• Hybrid return: Odd Lots’ Tracy joins in-person 3-4 days/week; in-person work trends are Tuesday-Thursday.
• NYC's resilience: Despite recession fears, the city is bustling—crowded trains, packed restaurants.
• Quote (Joe Weisenthal at 01:03):

  "If there is a recession, you will not see any evidence of it in New York City right now."

2. Behind Podcasting: Production & Scheduling (03:35 - 05:15)

• Production insights: Odd Lots and The Compound discuss challenges with advance booking vs. flexible content needs.
• Evergreen vs news-driven: Joe and Tracy often bank evergreen episodes but react fast when news hits.

3. Market All-Time Highs & "Big Numbers" Fatigue (05:24 - 07:47)

• Markets are at all-time highs.
• The Dow approaches 50,000, but it’s met with apathy, demonstrating how quickly investors recalibrate to larger numbers.
• Quote (Michael Batnick at 06:35):

  "We're not talking about Dow 50,000 yet. 2.7% away."

4. Changing Market Narratives: From AI to Crypto (13:12 - 19:19)

• Oracle’s stock crash: The company had its worst day since 2002, but broader markets shrugged it off—cracks in the "AI stocks hold up everything" story.
• Sentiment shift: The group traces recent turning points, notably Sam Altman's shaky podcast appearance, which led to skepticism about AI business models—as previously happened with crypto after SBF’s infamous Odd Lots episode.
• Quote (Michael Batnick at 15:21):

  "[SBF] effectively explained his Ponzi scheme... you could literally draw maybe not a price line, but a sentiment line the day before you aired that episode and the day after—and the day after started a new chapter in the crypto market."

5. AI, Productivity, and Ubiquity (20:15 - 24:51)

• AI as a catch-all narrative: Even old-line companies like insurance giant The Hartford are rallying on AI buzz; every management team claims an AI angle.
• Broad reach: The "AI" story is so widespread it colors sectors like banking and insurance, not just big tech.
• Profitability focus: Sentiment has shifted from AI hype ("vibes") to demanding proof of actual revenue.

6. Pop Culture, Media & Market Psychology (24:39 - 27:03)

• Group discusses Time Magazine’s "Person of the Year" cover being a group of AI architects, and the history of Time’s covers cursing stock prices (Bezos, Musk).
• Quote (Joe Weisenthal at 25:18):

  "...that might have been one of the most vindic--given where media [is]. It was about the dawn of social media... Might have been 2006... Babe Ruth calling his shot..."

7. Federal Reserve Actions and Liquidity (28:41 - 34:06)

• Recent Fed moves: Dovish cut despite inflation still high and growth robust; multiple dissents among Fed presidents.
• Liquidity management: Tracy notes the Fed's active liquidity approach, targeting specific events like the April tax date.
• Quote (Joe Weisenthal at 32:44):

  "The opening paragraph of the statement said inflation has risen since our last meeting... The stock market's at all time highs, inflation is above target... It's rising and they're still cutting. So by implication that is extremely [dovish]."

8. AI's Real Impact on Jobs and Economy (34:37 - 38:59)

• Productivity gains: Tight labor markets pushed companies to adopt tech and AI, boosting productivity, but the real effects on headcount are still uncertain.
• Job loss or stagnation: Companies may not shed workers immediately, but new jobs may not get created at historic rates (see recent-graduate job struggles).
• Cyclical hiring and firing: The pandemic triggered extreme hiring/firing cycles; a new catch-up hiring cycle may come if AI productivity gains are overestimated.

9. Global Yields, Deglobalization, and New "Growth" Narratives (39:05 - 43:01)

• Rising yields despite cuts: Longer-term government bond yields are up globally, even as rates fall in the US.
• Globalization vs. deglobalization: Both have proven "good for investors"; now, the trend is re-shoring (e.g., European AI/software), boosting local markets.
• Quote (Joe Weisenthal at 40:46):

  "...when you reduce trade, that's anti-productivity... So you have more money coming into a less productive system. I think there's good reason to think that inflation over the medium to long term will just be higher..."

10. Money Market "Bubble" & the Myth of Cash on the Sidelines (44:27 - 45:39)

• Record flows into money market funds (~$8 trillion) while stock markets set records; rates have fallen but cash has not moved.
• They debate whether this is truly "cash on the sidelines" (Josh: "This is absolutely cash that's on the sidelines", 45:28), or a financial riddle (Joe: "I never... established whether that's a myth or not. It's a riddle.", 45:24).

11. Stock Market ‘Rigging,’ HFT, and the Democratization of Access (46:52 - 50:13)

• Gambling vs. investing: Betting apps and prediction markets rise, but are still fundamentally different (no positive bias).
• Legacy US capital markets are still the "fairest, most democratic" in the world; spread costs and manipulation are marginal compared to other countries.
• Quote (Joe Weisenthal at 47:17):

  "...look, are there issues with the stock market? I suppose, but the US, like, real legacy capital markets is probably the fairest, most democratic legitimate market to have ever existed in history."

• HFT outrage and "rigging" complaints are now passé; people care less, and retail trading is more widespread.

12. The Rise and Risks of Prediction Markets (51:59 - 56:30)

• Exploding volumes: Kalshi and others raising huge amounts for "prediction markets" mostly driven by gambling flows.
• Insider risk: No clear protections—in some cases, insiders could use private info to bet.
• Still, institutional use lags; real money and liquidity are concentrated in sports, not financial outcomes.
• Potential: Tokenization and prediction contracts could partly democratize trading in private company equity, blurring the public/private distinction.
• Quote (Michael Batnick at 56:30):

  "I am going to make a prediction you could bet on though. We will see the launch of a prediction market hedge fund."

13. Private vs. Public: The SpaceX and IPO Boom (58:35 - 62:53)

• SpaceX IPO plans surface; expected $1.5T valuation dwarfs previous records.
• Public market appetite: Debate whether there is demand for multi-trillion dollar tech IPOs.
• Impact on Tesla: Would investor enthusiasm split between Elon’s public vehicles?
• Private equity and tokenization: Complex capital stacks make tokenizing real private exposure tricky.
• The trend: Private companies replacing government entities in key services (SpaceX, Starlink, etc.).

14. Macro Strategy & Wall Street Targets: The "10% Free Money" Debate (64:39 - 68:21)

• Chart: Most years, the S&P exceeds even bullish consensus targets; strategists are often not bullish enough.
• Average 2026 Wall Street target is for another 10% gain—remarkably consistent, despite huge macro and market swings.
• Quote (Joe Weisenthal at 68:07):

  "It's insane that... by and large, it's like 10% year after year after year. It's just like, free money..."

15. Podcasting Reflections & Odd Lots’ 'Secret Sauce' (68:31 - 72:57)

• Odd Lots’ longevity ("the Simpsons" of finance podcasts), and the satisfaction of putting unknown experts in front of big audiences.
• Quote (Joe Weisenthal at 69:54):

  "There is literally nothing more satisfying than finding that person no one has heard of and like, oh, that person’s amazing. Like, that is. That’s the dream."

• Rarely do podcasts fail—the bar for guests is high, and the show sometimes chooses not to air episodes if the chemistry isn’t right.

Notable Quotes & Memorable Moments

• "If there is a recession, you will not see any evidence of it in New York City right now." —Joe Weisenthal [01:03]
• "Stock market doubles all the time." —Michael Batnick [06:50]
• "Every number that we talk about on Wall Street is now probably in the trillions. It’s all trillions from now on.” —Michael Batnick [07:11]
• "What happened on Brad Gerstner’s podcast with Sam Altman... something shifted. Not gradually... he had a horrible podcast appearance... not even on a news network." —Michael Batnick [16:13]
• "AI is so huge right now that it touches literally everything." —Tracy Alloway [20:45]
• "[The Fed statement] said inflation has risen since our last meeting and remains elevated...and they’re still cutting." —Joe Weisenthal [32:44]
• "This idea that in America... 10% year after year after year. It's just like free money." —Joe Weisenthal [68:07]
• "There is literally nothing more satisfying than finding that person no one has heard of and like, oh, that person’s amazing." —Joe Weisenthal [69:54]

Key Timestamps for Segments

| Topic | Timestamp | |-----------------------------------------------|---------------------| | Podcasting logistics & NYC life | 00:15 – 05:15 | | Market all-time highs, Dow 50k | 05:24 – 07:47 | | Oracle, Market’s reaction to AI stocks | 13:12 – 14:40 | | AI, productivity, and “vibe-driven” stocks | 14:40 – 24:51 | | Time’s Person of the Year, Media & Markets | 24:39 – 27:03 | | Fed actions, liquidity, & market reactions | 28:41 – 34:06 | | AI, hiring/firing, job market dynamics | 34:37 – 38:59 | | Global yields, deglobalization, Europe | 39:05 – 43:01 | | Money market funds, cash on sidelines debate | 44:27 – 45:39 | | Stock market “rigging,” democratization | 46:52 – 50:13 | | Prediction markets, gambling vs investing | 51:59 – 56:30 | | Private vs public markets, SpaceX IPO | 58:35 – 62:53 | | Year-end targets, 10% “free money” debate | 64:39 – 68:21 | | Odd Lots podcasting philosophy | 68:31 – 72:57 |

Tone & Style

• Conversational: Banter, in-jokes, and plenty of ribbing between longtime friends/colleagues.
• Candid & Humorous: Willingness to poke fun at market narratives, themselves, and even the absurdities of the industry.
• Smart & Analytical: Deep dives amid the laughs—especially around AI, market structure, and future predictions.

Takeaways for Non-Listeners

• US stock markets remain robust and, surprisingly, appear less dependent on AI/Big Tech than consensus narratives suggest.
• AI is permeating every corporate narrative—sometimes with substance, often with "vibes."
• The Fed is cutting rates despite rising inflation, and money market funds are seeing enormous inflows despite lower yields.
• Prediction and betting markets are booming, but they’re not (yet) rivals to trading equities; risk of insider info is high.
• Podcasting in finance is maturing—with Odd Lots paving the way by focusing on unknown experts and agility in production.
• Longevity in financial content comes from ability to adapt and continually elevate the conversation—rather than simply tracking hot industries or personalities.
• The idea of "10% free money" in US stocks (via passive investing) persists, despite enormous annual uncertainty.

This summary captures the substance, quotes, humor, and structure of the episode’s wide-ranging discussion—making it approachable and useful to anyone, whether or not they listened.