Podcast Summary: The Compound and Friends – "Why Oil Could Be Next Year’s Gold"

Date: November 28, 2025
Host(s): Downtown Josh Brown, Michael Batnik
Guest: Peter Boockvar (author of "The Book Report" on Substack, CIO at One Point BFG Wealth Partners)

Episode Overview

In this high-energy pre-Thanksgiving episode, hosts Josh Brown and Michael Batnik welcome back market strategist and fan favorite Peter Boockvar. The discussion dives deep into the current state of tech, AI, and energy markets, before shifting focus to macro risks and the changing narrative around inflation, the Fed, and commodities — with a bold thesis that oil may be next year’s “gold.” The hosts and Peter also blend market chat with candid takes on investor psychology, market cycles, and the politics behind the current inflation and capex surge.

Key Discussion Points and Insights

1. Market Surprises and Seasonality (00:00–11:30)

• Conversation opens with commentary on recent volatility and market psychology, noting how Thanksgiving week often sees a cheerful market mood.
• Quotes:
  • "When the market tops on good news, like, okay, that's usually about it at least in the short term. And this is just the opposite. It's so bizarre." – Josh Brown (00:25)

2. The State of AI and Big Tech Narratives (13:54–26:09)

• Peter and the hosts dissect the fast-evolving AI investment theme and how market favorites shift rapidly. Discussion includes recent sharp sell-off and rebound in AI stocks, and the meaningful divergence between OpenAI/Microsoft-related names versus others like Google.
  • "The market starts to differentiate the winners and losers." – Peter Boockvar (14:57)
  • Discussion of Sam Altman and OpenAI’s influence (15:15)
  • The importance of writing investment narratives in pencil, not pen, due to rapid narrative shifts (20:48)
• Critical analysis on tech companies’ capital expenses, new trends in "asset light" shifting to "capital intensive," especially among cloud giants and AI leaders:
  • "Oracle is spending 52% of their revenue on capex... It was 10% in 2021." – Peter Boockvar (27:22)
  • Are these expenditure rates sustainable or setting up disappointment? (27:58)

3. CapEx, Profitability, and Tech Industry Themes (26:09–34:52)

• Examination of how large tech firms are pivoting CAPEX messaging toward efficiency and ROI, with Alphabet seen as a new leader in responsible AI infrastructure spend. (29:11)
  • "The market's rewarding Alphabet for getting some discipline and thinking about cost." – Michael Batnik (29:11)
  • Google’s fortress balance sheet and capital flexibility discussed (29:11–30:12)
• International AI competition:
  • Chinese AI models and strategies differ vastly from the US approach, leading to open-source advances but questions on true competitiveness (32:09–34:52).

4. Market Rotation, Small Caps, and Year-End Trends (34:52–41:47)

• The hosts and Peter discuss the sudden rally in small caps (Russell 2000), how "year-end-chasing" exaggerates market moves, and renewed questions about the ability of the Fed to meaningfully stimulate borrowing or address inflation through rate cuts.
  • "Small caps are the best beta to own in that sort of rate cutting environment..." – Peter Boockvar (36:53)
  • On international returns: Spanish IBEX and Italian stock markets up 40–50% in dollar terms (39:40)
  • Ongoing search for "the next narrative" and skepticism about the real breadth of new opportunities: "Everyone wants a new narrative... but so often the most obvious thing in the world is the same old thing." – Michael Batnik (40:03)

5. Valuation, Margins, and Bubble Talk (41:47–47:50)

• A close look at current S&P 500 valuations normalized by margins, with recognition that profit margins (and their sustainability) are the wildcards in all valuation models.
  • "To me, this whole bubble talk was sort of conflated... are we building too many data centers? That's a legitimate conversation." – Peter Boockvar (45:21)
• AI is not a bubble, but the capex arms race may be.
• On the essentialness and pricing power of AI tools like ChatGPT:
  • "If it quintupled, I would pay for it." – Josh Brown (46:00)
  • "You can no longer function without it if you are a working person in America... And don't tell me you're not willing to pay more." – Michael Batnik (46:40)

6. Commodities: Why Oil Could Be Next Year’s Gold (61:03–64:00)

• In the context of impending US rate cuts and potential dollar weakness, Peter lays out the bull case for oil outpacing gold as an outperformer in 2026, citing low energy weighting in the S&P 500 and fundamental supply risks.
  • "One of the cheapest assets in the world is a barrel of oil at 60 bucks in nominal terms." – Peter Boockvar (61:38)
  • Underlines that shale oil production is rolling over, with all the best US drilling basins now seeing declines (62:55).
  • Rig counts at post-2021 lows; discussion about Venezuela and geopolitical supply (63:45).

7. Macro: The Fed, Inflation, Politics, and Social Implications (49:21–60:56)

• Lively analysis of mounting political pressure around inflation, utilities, and energy bills — especially as they affect younger Americans and renters.
  • "Inflation is a nightmare for the average person... The big anchor point... is the cost of housing and buying a house for that young person." – Peter Boockvar (52:41)
• Discussion of the risks of Fed rate cuts reigniting inflation, particularly in housing, and the limited efficacy of manipulating short-term rates when there are structural supply constraints.
  • "If we start to cut interest rates and start jamming up demand, do we screw up the progress?" – Michael Batnik (60:09)
  • "Inflation volatility" is the most likely, rather than perpetually high inflation (60:52)
• If dollar weakens further with rate cuts: bullish on gold, international stocks, hard assets, and especially oil (61:03–61:45).

Notable Quotes & Memorable Moments

• Market humility:
  • "I am shocked at the four-day return... The market is humbling Peter." – Josh Brown (00:24–00:52)
• Advice for Tech Investors:
  • "If you're investing in tech, you almost have to be reading every day or you're going to miss the next shift... Maybe invest in a different sector." – Michael Batnik (20:48)
• On Google’s Comeback:
  • "You probably shouldn't bet against the potential of a pivot from a company that has a printing press in its basement." – Michael Batnik (25:13)
• AI and Productivity:
  • "You can no longer function without it... and don't tell me you're not willing to pay more." – Michael Batnik (46:40)
• Oil Bullishness:
  • "No one is long. It's less than 3% of the S&P right now." – Michael Batnik (61:55)
  • "One of the cheapest assets in the world is a barrel of oil at 60 bucks in nominal terms." – Peter Boockvar (61:38)

Important Timestamps

• 00:00–04:03: Thanksgiving banter
• 13:54–18:11: AI stocks' recent reversal and "winner/loser" market differentiation
• 26:09–34:52: Tech CapEx discussion, sustainability of spending, Alphabet’s efficiency lead, global AI narratives
• 34:52–41:47: Rotation and breadth in markets, international stocks, and “year-end rally” behavior
• 41:47–47:50: Valuation normalization, is AI a bubble?, CapEx vs. use-case debate
• 49:21–53:29: Political/economic tension of inflation, utility bills, generational impact
• 61:03–64:00: Oil as next year’s “gold,” supply/demand dynamics, US shale, rig counts, Venezuela

Episode Tone and Style

• Conversational, candid, irreverent at times
• Clear expertise informed by deep market experience
• Frequent use of humor and real talk to cut through common investor and media narratives
• Willingness to admit mistakes and maintain humility
• Encourages constant learning and skepticism of consensus views

Conclusion

This episode is a quintessential example of what "The Compound and Friends" does best: blending sharp market commentary, humor, and open debate about where opportunities and risks lie next. The hosts and Peter Boockvar critically dissect narratives in technology, commodities, and macro policy, making the case for why oil could be the stealth winner as market cycles and economic policy evolve—a can’t-miss for investors trying to understand the next rotation.