You agree with your second friend.
Work Step by Step
This is shown in Figure 24.20. The Earth's magnetic field is continuous from pole to pole, i.e., it doesn’t suddenly do anything weird at the Earth’s equator. A compass needle continues to point the way that it was pointing when it is taken across the equator. In other words, your second friend is correct. The compass needle lines up with the Earth’s magnetic field. This field points from the north magnetic pole located in the Southern Hemisphere to the south magnetic pole located in the Northern Hemisphere.