The Compound and Friends – Episode: "The Week We All Found Out"
Release Date: August 8, 2025
Hosts: Downtown Josh Brown, Michael Batnick, Sam Rowe
Guest: Luke Kawa
Description: Join Downtown Josh Brown, Michael Batnick, and a rotation of their friends every Tuesday and Friday for expert insight and hot takes on the latest in business and investing.
Overview
In this episode of "The Compound and Friends," the hosts—Downtown Josh Brown, Michael Batnick, and Sam Rowe—welcome returning guest Luke Kawa. The conversation spans a range of topics including personal challenges, investment strategies, the impact of AI on the economy, data integrity concerns within governmental agencies, and celebrating achievements within the financial media community.
1. Sam Rowe’s Apartment Flooding Experience [03:04 - 07:06]
Sam Rowe opens up about a recent personal ordeal where his downtown Brooklyn apartment was flooded for the second time. He details the challenges of dealing with water damage, including the remediation process involving industrial dehumidifiers and replacing drywall to prevent mold growth. The experience underscores the frustrations tenants face with landlord responsibilities and the resilience required to manage repeated disruptions.
Notable Quotes:
- Sam Rowe: “So the rent, it's either frozen or you get credited for the time you're not able to access the apartment. And then they reimburse you for the hotel, and then anything that's damaged gets replaced.” [05:33]
- Josh Brown: “Do we have your landlord here? Duncan, would you like to apologize?” [05:24]
2. Navigating Alternative Assets in 401(k) Plans [20:00 - 25:00]
The discussion shifts to recent policy changes allowing private equity, real estate, cryptocurrency, and other alternative assets within 401(k) plans. The hosts debate the potential benefits for educated investors versus the risks posed by higher fees and the suitability for average participants. They explore whether this shift represents a democratization of sophisticated investment strategies or exposes retail investors to undue risks.
Notable Quotes:
- Sam Rowe: “I think even the existence of people like us talking about investing and having listeners who are sort of in control of their 401k plans already makes our work more complicated.” [21:28]
- Michael Batnick: “This has been a week for you. What happened?” [20:50]
3. AI's Role in Economic Growth and Potential Bubbles [29:00 - 51:00]
Luke Kawa leads an in-depth analysis of AI capital expenditures (capex) and their disproportionate impact on U.S. economic growth compared to traditional consumer spending. The hosts express concerns about whether the current surge in AI investments resembles historical infrastructure bubbles, such as the railroads and telecom sectors. They discuss the sustainability of AI-driven growth, the possibility of obsolescence in rapid technological advancements, and the broader implications for the stock market and the economy.
Notable Quotes:
- Luke Kawa: “Consumers want to spend a lot, so you have to produce more. The second is a big boom in commodity prices that tends to be more localized.” [32:06]
- Sam Rowe: “It's possible for an industry that completely takes over the economy, the stock market, the growth narrative...” [54:48]
- Michael Batnick: “Apple's total operating expenses from the report for the last nine months was $46 billion. So where does $100 billion come from?” [19:07]
4. Data Integrity and the Firing of the BLS Commissioner [59:00 - 64:00]
The conversation addresses the recent dismissal of the Bureau of Labor Statistics (BLS) Commissioner, highlighting concerns about the politicization of economic data. The hosts discuss the potential ramifications for financial markets, emphasizing the importance of trustworthy data for instruments like Treasury Inflation-Protected Securities (TIPS). They debate the implications of reduced response rates and funding for data collection, questioning the feasibility of maintaining data integrity amidst political pressures.
Notable Quotes:
- Michael Batnick (Reading from JP Morgan): “Having a flawed instrument panel can be just as dangerous as having an obediently partisan pilot.” [60:11]
- Luke Kawa: “Do you think you could collect accurately data on how many jobs are changing in a month in an economy of a couple hundred million jobs? I don't think I can.” [62:29]
5. Celebrating Joe Weisenthal and Tracy Alloway from Odd Lots [64:00 - 73:00]
The hosts celebrate the Odd Lots podcast by Joe Weisenthal and Tracy Alloway for being featured in the New York Times. They share personal anecdotes about their interactions with Joe and Tracy, highlighting their mentorship and influence in the financial journalism space. The segment underscores the value of thoughtful reporting and the impact of quality media on the investing community.
Notable Quotes:
- Michael Batnick: “Tracy is someone who will take the time on every piece not just to give you a fish, but to teach you how.” [65:31]
- Josh Brown: “Joe is the true everyman covering economics.” [69:20]
6. Announcements and Future Proof Festival [73:00 - Close]
The episode concludes with upbeat announcements about the upcoming Future Proof Festival, featuring performances by Bush and Blues Traveler. The hosts share light-hearted banter about the festival lineup, personal plans, and express excitement for upcoming events. This segment adds a personal and communal touch, celebrating the intersection of finance and culture.
Notable Quotes:
- Sam Rowe: “I'm doing some late summer house cleaning. I'm throwing crap out like crazy. I'm turning into a full minimalist.” [71:33]
- Luke Kawa: “Looking forward to that more. I think it's gonna be an incredible adventure.” [72:34]
Key Insights and Conclusions
-
Personal Resilience: Sam Rowe's experiences with apartment flooding highlight the importance of tenant rights and effective landlord responses in mitigating personal crises.
-
Investment Democratization vs. Risk: The inclusion of alternative assets in 401(k) plans presents both opportunities for diversification and potential risks due to higher fees and the complexity of these investments for the average investor.
-
AI as a Double-Edged Sword: While AI investments are driving significant economic growth and stock market performance, there is an underlying concern about sustainability and the formation of a potential investment bubble reminiscent of past infrastructure booms.
-
Data Integrity is Crucial: The politicization of economic data collection, as evidenced by the firing of the BLS Commissioner, poses a threat to market stability and investor confidence. Reliable data is essential for informed decision-making in financial markets.
-
Mentorship and Influence: Recognizing key figures in financial journalism like Joe Weisenthal and Tracy Alloway underscores the role of quality reporting and mentorship in shaping informed investors and professionals.
-
Community and Culture Integration: Events like the Future Proof Festival exemplify the blend of finance and cultural engagement, fostering a sense of community among professionals in the industry.
Notable Quotes with Timestamps:
-
Sam Rowe: “Do we have your landlord here? Duncan, would you like to apologize? Is there anything that you want to say to Sam?” [05:24]
-
Sam Rowe: “It's possible for an industry that completely takes over the economy, the stock market, the growth narrative...” [54:48]
-
Michael Batnick (Reading from JP Morgan): “Having a flawed instrument panel can be just as dangerous as having an obediently partisan pilot.” [60:11]
-
Luke Kawa: “Consumers want to spend a lot, so you have to produce more. The second is a big boom in commodity prices that tends to be more localized.” [32:06]
-
Michael Batnick: “Apple's total operating expenses from the report for the last nine months was $46 billion. So where does $100 billion come from?” [19:07]
-
Josh Brown: “You can't buy a standalone biotech stock in a 401k because the guardrails that exist are like, you're buying funds, fund administrator, plan administrators, they're putting in these menus of like very diversified funds.” [28:31]
Follow the Hosts and Guests:
- Sam Rowe: Twitter Handle
- Luke Kawa: Follow on Sherwood News
- The Compound and Friends Podcast: Subscribe
Thank you for tuning into "The Compound and Friends." Stay informed and engaged with the latest in business and investing every Tuesday and Friday.