The Compound and Friends Netflix Reports, Why the Bull Market Has Legs Into Year-End With Nick and Jessica, Warner Bros for Sale, Unemployment Cracks Appear
30 snips
Oct 21, 2025 
Nick Colas and Jessica Rabe, co-founders of DataTrek Research, dive into the intricacies of Q3 earnings season and why it's crucial for the market rally. They dissect S&P companies' earnings performance and explore surprising profitability in sectors like financials and utilities. The discussion then shifts to Big Tech's operating cash flows and CapEx strategies, alongside Netflix's evolving approach amid stiff competition. Finally, they analyze concerning trends in unemployment and how AI might impact entry-level job markets.
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Seasonality Favors A Year-End Melt-Up
- Historically the S&P peaks in Q4 about 71% of the time, especially December (53%).
- With the index up ~13%, seasonality suggests significant upside runway into year-end melt-up.
Hyperscalers' Cash Flow Masks AI ROI Risks
- Hyperscalers generate massive operating cash flow and can both fund AI CapEx and return money to shareholders.
- Aggregate cash flows make it hard to spot failed AI investments at the company level for years.
Who Audits OpenAI?
- Nick highlighted the curious opacity around OpenAI's auditor despite its central role in AI.
- He argues transparency about auditors would reduce uncertainty around a pivotal private company.
