Podcast Summary: The Compound and Friends

Episode: Wilfred Frost Comes By, Margin Debt Tops $1 Trillion, Nvidia Earnings Preview
Date: August 26, 2025
Hosts: Josh Brown (A), Michael Batnick (C)
Guest: Wilfred Frost (B)

Main Theme

This episode features a wide-ranging conversation with British journalist Wilfred Frost, exploring differences in investment culture between the UK and US, the challenges and strengths of UK markets, and Will’s new podcast project. In the second half, Josh and Michael dive into the current state of the stock market, including a deep Nvidia earnings preview, analysis of margin debt surpassing $1 trillion, and a spirited discussion about market rotation, earnings, and ETF proliferation. The episode integrates investing insights, market structure, financial media dynamics, and lighthearted debate.

Key Discussion Points & Insights

1. Interview with Wilfred Frost: US & UK Market Perspectives ([02:15]–[37:06])

- Wilfred Frost’s Background and New Podcast

• Josh introduces Wilfred and highlights his distinguished TV career, including his time anchoring "Closing Bell" on CNBC.
  • “Wilfred is here to discuss the current state of markets as well as his new weekly show, the Master Investor Podcast, where he interviews legendary investors and business leaders.” ([03:15])
• The Master Investor Podcast aims to give listeners an edge by celebrating and learning from global business leaders.
  • Wilfred: “In the UK there’s been something lost...we seem to want to criticize success rather than celebrate and learn from it.” ([04:37])

- Differences Between US & UK Investing Cultures

• The US is more entrepreneurial and risk-taking; finance media is “ESPN for money.”
• UK financial media caters to a much narrower audience; business news is more niche.
  • Wilfred: “In the UK, CNBC and Bloomberg are fighting for 1%...just the people that work in finance… In America...fighting for maybe 25% potential audience.” ([14:18])
• The UK has a tradition of criticizing rather than celebrating success, which Wilfred hopes to help change.
• FTSE 100’s underperformance relative to US tech megacaps is discussed; structural factors, including fewer globally dominant tech companies and stricter regulation, are cited.
  • “Nvidia, I believe, is larger than the entire FTSE.” – Josh ([08:07])

- Talent, Listings, and Capital Formation

• The “brain drain” and relisting of successful UK companies in the US add to the malaise; Wilfred stresses the importance of fostering a startup ecosystem and retaining talent.
  • “Worse would be as if [ARM] says we’re closing 50% of our research...and moving it to Cambridge here.” ([11:50])
• Fund management and client attitudes differ: UK advisors less incentivized to take risks due to old-money, stable relationships, whereas the US model is more dynamic and client-performance driven.

- Structural/Pension Differences

• The UK followed the US in moving from defined benefit to defined contribution plans but hasn’t achieved widespread active participation.
  • “People here are so actively engaged on their own 401k...in the UK...they won’t have a slightest clue about what’s in it.” ([20:59])

- Financial Media and Live TV

• Wilfred is bullish on the future of live TV relative to its depressed valuations, seeing opportunity in rejuvenating the format with more relatable and energetic presentations.
  • “Live television, outside of sports, has been really hollowed out and there’s always a need for it.” ([23:54])
• He discusses the power and legacy of live interviews, referencing his father Sir David Frost’s journalistic impact—most notably the Nixon interviews.
• The Frost/Nixon interview is highlighted as a turning point for televised journalism (clip at [32:09], “When the president does it, that means that it is not illegal by definition.”).

Notable Quote – The Culture Gap

“I was blown away by the scale of interest in…business news [in America]...CNBC and its rivals...fighting for maybe 25% potential audience...In the UK, CNBC and Bloomberg are fighting for 1%...the people that work in finance.”
—Wilfred Frost ([14:18])

Notable Quote – Celebrating Success

“There’s a lot of people that want to celebrate success and not just always have this tone of envy and criticism.”
—Wilfred Frost ([15:44])

2. Nvidia Earnings Preview & Market Pulse ([41:47]–[50:39])

- Why Nvidia Earnings Matter

• Nvidia’s earnings are “probably the most important stock with one of its most important reports ever.” ([00:58])
• Options market is pricing a 6% move, signaling anticipation but possibly less volatility than in past mega reports ([41:58]).
• Nvidia’s growth has been mind-blowing, with data center revenue eclipsing all other segments ([46:47]).
  • “The company’s earnings have actually out–the growth in...forward earnings estimates...has been rising faster than its share price.” ([44:08])
  • “Nvidia went from 5 to 178 and over the same time frame its forward PE ratio shrunk from 38 to 33...” ([45:22])

- Growth and Valuation Insights

• Despite the high market cap (~$4T), forward earnings growth keeps the multiple reasonable; the stock rerated lower even as the fundamentals accelerated dramatically.

- Analyst Commentary on Earnings ([54:00]–[55:03])

• All major analysts remain bullish, citing upcoming chip launches (GB200, GB300), continuing AI infrastructure buildout, and surging data center demand.
  • Dan Ives (Wedbush): “The pieces of the AI puzzle are forming...Now, the biggest and most important piece...is hearing from Jensen and Nvidia around demand transfer...” ([54:55])

3. The “Everything Rally” & Market Rotation ([57:14]–[64:01])

- Broad-Based Bull Market

• Michael: “This is a bull market. Don’t fight it...You have to give the stock market the benefit of the doubt. It’s working and everything is breaking out.” ([59:54], [60:55])
• Microcaps, equal-weight indices, non-MAG7 (i.e., “S&P 493”) stocks are showing strength.
  • “Look at this. Equal weight, new all time highs. Micro caps, new all time highs.” ([58:57])
• Market breadth and rotation out of momentum names and megacap tech into “everything else.”

- Disconnect Between CEO Guidance and Wall Street Skepticism ([64:17]–[67:41])

• “Among S&P 500...that adjusted their revenue views...44% have raised, the highest since 2021…Outlook downgrades only 14%, the lowest since 2015.” ([65:31])
• Michael argues, CEOs are “trying to tell you the truth…they’re not trying to…overpromise.” ([67:16])
  • “For all the ones that I listen to, the consumer is fine…they’re all saying the same thing: growth, growth.” ([67:41])

4. Margin Debt Tops $1 Trillion ([75:59]–[81:18])

- Is This as Alarming as Headlines Suggest?

• Margin balances have indeed crossed $1T, but when measured as a percentage of total market cap, not at historic highs.
  • “Margin debt as a percentage of market cap...2008 got a little nutty...3.3%...today it’s 1.8%...” ([80:48])
• Michael: “So as a percentage of the S&P 500’s market cap, you guys just are not fired up enough.” ([81:27])
• They stress FINRA data aggregates all margin debt, including that used for shorting and professional strategies, not purely “animal spirits” retail speculation.

5. ETF Proliferation – More Funds Than Stocks ([81:50]–[87:18])

- Record Number of ETFs, Possible Implications

• “More than 4,300 exchange traded funds, a figure that for the first time eclipses the total number of stocks…about four per day.” ([82:14])
• Lower launch/maintenance costs, “zombie funds,” and active strategies—many are not classic indexes.
• Risk: With so many funds, investors can inadvertently fall into risky or junk products, but Michael is optimistic that most will learn from experience.
  • “There’s a lot of shit being thrown against the wall and some of it is sticking…” ([85:15])
• Josh: Suggests exchanges could raise standards to focus on quality, but recognizes capitalism’s push for more products.

6. Rotation & “Make the Case” Segment ([87:19]–End)

- Bullish Case for Market Rotation

• Michael: “I’m bullish on the rotation trade...the rally is broadening out for real, for real, for real. In fact, how about this? It is happening today.” ([88:59])
  • Sectors/indices like small cap, micro cap, and Chinese internet are highlighted as breaking out or poised for a run up.
• Mystery Chart: Western Union has seen massive insider buying despite concerns it could be disrupted by blockchain. ([90:06]–[92:45])

- Notable Banter

• Good-natured arguments on everything from ETF quality (Josh: “I come from the 1900s where things mattered!”), to earnings scheduling, to the timeless efficacy of live TV.
• Light-hearted contest over margin debt charts: “Mine’s better because I’m a professional.” – Michael ([79:42])

Timestamps for Key Segments

• Wilfred Frost Interview: [02:15]–[37:06]
• Nvidia Earnings Preview: [41:47]–[50:39]
• Bull Market/Risk-On Narrative: [57:14]–[64:01]
• CEO Guidance vs. Wall St: [64:17]–[67:41]
• Margin Debt Analysis: [75:59]–[81:18]
• ETF Proliferation: [81:50]–[87:18]
• Rotation, Mystery Chart (Western Union): [87:19]–[92:45]

Memorable Quotes

On UK vs US Investing Culture

“It is important because when you have inflation at 11% in the UK a couple of years ago…if you’re just standing still, you’re losing.”
—Wilfred Frost ([05:53])

On Forward PE and Growth Stocks

“The ultimate buying opportunity in this stock was when it was selling for 70 times earnings. Which should tell you a lot about the usefulness of backward looking PE ratios investing in growth stocks.”
—Josh Brown ([46:33])

On Market Breadth and Bullishness

“Everything is working. Maybe there’s something that comes along tomorrow…but my goodness, this is a bull market. Don’t fight it.”
—Michael Batnick ([59:54])

On Margin Debt Hype

“So as a percentage of the S&P 500’s market cap, you guys just are not fired up enough.”
—Josh Brown ([81:27])

On ETFs and Financial Innovation

“There’s never been a more educated investor class ever. People are not dumb…they touch the stove, once they burn their hand, they don’t touch it again.”
—Michael Batnick ([85:28])

Summary

This episode delivers a robust, sophisticated dialogue on the global investing climate, markets, and media—anchored by the perspective of a transatlantic professional, Wilfred Frost, and punctuated by Josh & Michael’s signature blend of market expertise, data-driven argument, and humor. Listeners are treated to a preview of one of the year’s most consequential earnings events (Nvidia), a clear-eyed look at margin debt and ETF “mania,” and an evidence-based, bullish case for market rotation and breadth. The show captures the evolving financial landscape—with all its risks, opportunities, and ironies—while staying true to the tone and conversational energy that define The Compound and Friends.