Latest / The PhilStockWorld Investing Podcast / Warsh Shock, Weapons, and the SaaSpocalypse

Transcript

Warsh Shock, Weapons, and the SaaSpocalypse · The PhilStockWorld Investing Podcast

• 0:00
  Penny: Welcome back to the deep dive. It is Tuesday, 02/03/2026. And look, if you have checked your portfolio or honestly, if you've just glanced at a news ticker in the last forty eight hours, you probably feel like you've gone 12 rounds with a heavyweight boxer. We are seeing some serious volatility out there.
• 0:17
  Roy: Whiplash is the word of the week. Maybe the word of the year so far.
• 0:21
  Penny: Seriously. I mean, Monday morning, the reports were calling it a heavy metal meltdown, which, you know, sounds like a great band name, but it's terrible when you realize they're talking about crashing asset prices.
• 0:32
  Roy: Right.
• 0:32
  Penny: And now, today, Tuesday, we're seeing this rubber band snapback rally. It is chaotic. So our mission today is pretty specific. We are gonna take this stack of sources, the Phil Stock World morning reports for yesterday and today, the the very lively member chat logs, and of course the insights from the AGI roundtable, and we need to parse the signal from the noise.
• 0:55
  Roy: Because the noise level is deafening right now, it is. But if you tune it out, the signal is actually very clear. We are undergoing a regime change, a violent one. The market is fundamentally changing how it prices risk and liquidity and that's what we need to unpack.
• 1:10
  Penny: Right. The team at PSW is calling this the shift from vibes to proof of execution. And to help us get there, we're gonna look at this through a really interesting lens provided by their analytics team. The adults in the room versus the lobster cult.
• 1:25
  Roy: I love that framing. Sounds absurd and we will explain the lobsters, I promise. But it's actually a perfect metaphor for investor behavior right now.
• 1:33
  Penny: We'll get to the lobsters in a minute, but first we have to deal with the catalyst, the macro backdrop. This heavy metal meltdown we saw start late last week and spill into Monday. It has a name, the Warsh shock.
• 1:45
  Roy: Correct. This is the domino that tipped everything over. Kevin Warsh has been nominated as the next Fed chair. Now for the uninitiated, Worsch isn't just another suit in Washington. The market views his nomination as the official obituary for the Fed Put.
• 1:59
  Penny: Okay, let's pause and define that because we hear Fed Put thrown around constantly on financial news. What does the market think is actually dying here?
• 2:08
  Roy: So for the better part of two decades, investors operated under this this implicit assumption, the put, that if the stock market dropped too hard, the Federal Reserve would step in with easy money.
• 2:19
  Penny: To cushion the fall.
• 2:20
  Roy: To cushion the fall, lower rates, QE, whatever it took. That safety net is the put. The market looks at Kevin Worsch and sees a guy who prioritizes economic productivity over asset price stability.
• 2:33
  Penny: So unlike previous shares, he doesn't care if the S and P five hundred drops 10% if the underlying economy is getting more efficient.
• 2:39
  Roy: Exactly. He is viewed as a hard money guy.
• 2:42
  Penny: Yeah.
• 2:42
  Roy: And that realization triggered a massive unwind in what's called the debasement trade.
• 2:47
  Penny: The debasement trade being the bet that the dollar is going to zero, so buy everything else.
• 2:51
  Roy: Right. It's betting that the Fed keeps printing money, devaluing the dollar. You buy gold, silver, crypto, anything that isn't fiat currency. But if Worsch is coming in to turn off the money printer and defend the dollar, suddenly those assets look incredibly expensive.
• 3:06
  Penny: And the numbers. Mean, at the PSW report, the numbers are staggering. We have to talk about the metals.
• 3:11
  Roy: They are historic. We saw gold plummet from a high in year 5600 down to about 4700. Wow. But silver. Silver was the main casualty.
• 3:21
  It collapsed from around 01/2022 down to '78.
• 3:24
  Penny: That's a 36% drop in a major commodity. That's not a correction. That's a crash.
• 3:31
  Roy: It was a liquidation event, a massive deleveraging. The analysis from Phil Stock World was really sharp here. They noted this wasn't just a dip.
• 3:39
  Penny: It was more than that.
• 3:40
  Roy: Was a structural repricing. The market flushed out the speculators who were just blindly betting against the dollar.
• 3:46
  Penny: But today, Tuesday, we're seeing green, gold is bouncing, silver is up, is the coast clear?
• 3:52
  Roy: That's the rubber band effect. Things rarely fall in a straight line forever. But the advice from the morning report is explicit: do not confuse a bounce with a bottom.
• 4:02
  Penny: Don't chase it.
• 4:03
  Roy: Do not aggressively chase this dip until we have stability. Just because the elevator stopped falling doesn't mean it's safe to step inside yet.
• 4:10
  Penny: And part of the reason it's not safe is that we are essentially flying blind on the economy right now. We have this partial government shutdown mess.
• 4:20
  Roy: It's a huge variable. Usually investors navigate based on data, we look at the dashboard, but the shutdown means the dashboard is dark. The Joel Ottest report that tells us about job openings was delayed. The big Friday jobs report also delayed.
• 4:36
  Penny: So let me get this straight, we have a new Fed chair who scares the market into believing easy money is over. We have a literal crash in precious metals, and we have absolutely no idea what the labor market is actually doing because the government is closed.
• 4:48
  Roy: That is the situation, which makes the one piece of data we did get even more explosive, the ISM manufacturing number came out yesterday.
• 4:54
  Penny: Right. And it was a shocker. 52.6 versus an expected 48.3.
• 4:58
  Roy: To put that in context, that 50 line is the difference between an economy shrinking and growing. We had been below 50 for twenty six straight months.
• 5:06
  Penny: A manufacturing recession, basically.
• 5:07
  Roy: We're over two years. Suddenly boom, we popped to 52.6. We are expanding again.
• 5:12
  Penny: Which sounds like good news. We want factories humming. We want the economy to expand.
• 5:17
  Roy: You'd think so.
• 5:17
  Penny: But the market didn't take it that way.
• 5:19
  Roy: Because in this environment, good news is bad news for interest rates. If the economy is booming on its own, the Fed has zero reason to cut rates. In fact, they might keep them high. So bond yields spiked. The ten year Treasury shot back over 4.27%.
• 5:35
  Penny: Which puts pressure on everything else. Okay, so that's the macro nightmare. Let's pivot to the fun part. The adults in the room. This is one of my favorite features of the PSW ecosystem.
• 5:46
  The AGI roundtable.
• 5:48
  Roy: It really is fascinating. For the listener who might be new to this, these are specific AI personas that Phil Stockworld uses to debate market strategy in the morning reports. It sounds like sci fi, but their track record is getting unnerving. They cut through the emotional bias.
• 6:03
  Penny: Let's run through what they're seeing because they seem to be identifying the signal better than most human analysts right now. Let's start with Hunter
• 6:10
  Roy: Hunter is the cynic. He looks at systems and power dynamics. His take on this week is that the oligarchy is consolidating, but he gave us this really useful framework: Weapon versus Wallet.
• 6:20
  Penny: Weapon versus Wallet, I like that, break it down.
• 6:22
  Roy: He's categorizing tech stocks. Is the company a weapon? Meaning is it integral to the state, defense and power projection? Or is it a wallet? Just a consumer film tech tool?
• 6:34
  He predicted that weapons would win and wallets would lose. And if you look at the earnings this week, he nailed it.
• 6:40
  Penny: We'll get to the specific stocks in a second but I want to touch on Anya, the psychologist's persona. She spotted something called the Doritos Pivot.
• 6:46
  Roy: The Doritos Pivot. I love this. So PepsiCo announced a 15% price cut on key brands like Lay's and Doritos. Anya points out that this isn't charity. It's capitulation.
• 6:58
  Penny: It means the consumer finally said no.
• 6:59
  Roy: Exactly. People stopped buying $7 bags of chips. The volume dried up. Anya's insight is that inflation is cooling, not because of the Fed's magic wand, but because the consumer is tapped out. The pricing power is gone.
• 7:11
  Penny: And that is a massive signal for the broader economy. Companies can't just raise prices to beat earnings anymore.
• 7:17
  Roy: Not anymore. And then briefly, Gemini, the synthesizer. Gemini's quote was perfect. The simulation is glitching. With the metals crash, the shutdown, the weird data, it just feels like the system is stuttering.
• 7:31
  It's a delightful way to describe chaos.
• 7:34
  Penny: And finally, Sherlock.
• 7:35
  Roy: Sherlock used deductive logic on that manufacturing number we talked about. If manufacturing is back (that 52.6 ISM number), you need software to design the things you're building. He pointed directly at Autodesk ADSK. It's a pick and shovel play for construction boom.
• 7:51
  Penny: Okay. So the AIs are painting a picture of a glitchy simulation where the consumer is broke but the industrial machine is waking up. Let's apply that weapon versus wallet theory to the actual earnings because we had a tale of two texts this week. Palantir versus PayPal.
• 8:04
  Roy: You couldn't ask for a clearer example. On one side, Palantir the stock is ripping up 11 to 16%. This is the weapon.
• 8:13
  Penny: And they aren't hiding it.
• 8:14
  Roy: Not at all. Their commercial revenue is growing, but the core thesis is their integration with the defense and intelligence apparatus. In a world of geopolitical chaos wars, tensions, spy balloons, being the operating system for the machine is the ultimate competitive advantage.
• 8:29
  Penny: I saw the quote from CEO Alex Karp. He essentially said, If you're critical of ICE or the military, you should be protesting for more Palantir because we make them efficient and humane.
• 8:40
  Roy: He is leaning all the way in. He knows who pays the bills. That's proof of execution. He is telling investors, we are essential, you cannot run the Western world without us.
• 8:50
  Penny: And then the wallet, PayPal.
• 8:52
  Roy: PayPal. PYPL was the casualty, stock down around 17%. They missed earnings but worse, they announced a sudden CEO swap. Hunter, the AI, compared it to a losing baseball team changing pitchers in the ninth inning.
• 9:05
  Penny: It smells like desperation.
• 9:06
  Roy: It does. And the market perception is brutal. The digital wallet is dead tech. It's yesterday's innovation. Why do I need PayPal when I have Apple Pay or FedNow or crypto?
• 9:15
  It's a commodity. Calantir is a monopoly on intelligence. PayPal just a middleman.
• 9:19
  Penny: Speaking of companies caught in the middle Yeah. Disney, they actually beat earnings. Right? EPS of a dollar 63 versus a dollar 57 expected, but the stock dropped.
• 9:28
  Roy: Down five to 7%. And yes the numbers were okay but the narrative is messy. Bob Iger is leaving again, Josh D'Amaro is taking over. But PSW highlights a culture war risk.
• 9:41
  Penny: This is the regulatory overhang the chat mentioned.
• 9:44
  Roy: Right. Disney has become a political football. Whether you agree with their stance or not from an investment standpoint, being a target of one half of the political spectrum carries risk. It makes investors nervous. The market hates uncertainty, and Disney feels like a magnet for it right now.
• 10:01
  Penny: So we have weapons winning, wallets losing, and the mouse house stuck in politics. But there is a bigger story in tech that the chat room is obsessing over. They're calling it the SAIS spocalypse.
• 10:10
  Roy: This is arguably the most important long term trend we're discussing. SAIS software as a service stocks are dumping. And the culprit is AI, specifically Anthropic.
• 10:19
  Penny: Anthropic released a new agent, Claude Cowork.
• 10:22
  Roy: Right. And here is the nuance that listeners need to grasp. For the last year, the story was AI helps software. Oh, Salesforce has an AI. That's great.
• 10:31
  Now the story is AI replaces software.
• 10:33
  Penny: Unpack that. How does it replace it?
• 10:35
  Roy: Think about all the SaaS tools a company pays for. Project management, simple legal review, basic accounting, report generation. You pay a monthly fee per seat for human to use that software. Claude Cowork can essentially do those workflows autonomously.
• 10:52
  Penny: So if an AI agent can manage the project, do I need to buy a seat on Asana or monday.com for a human project manager?
• 10:59
  Roy: Exactly. It's not just making the worker faster, it's removing the need for the tool the worker used. It's eating the subscription model. Investors are terrified that the total addressable market for these software companies is about to shrink, so capital is rotating out of size and into GARP growth at a reasonable price and tangible infrastructure.
• 11:18
  Penny: Even Microsoft took a hit, which usually feels bulletproof.
• 11:21
  Roy: Microsoft is what Phil calls the liquid stock. It's trading around four point zero. When funds lose their shirts on a silver crash or a bad crypto bet, they need cash now. They can't sell the illiquid stuff, so they sell Microsoft because it's easy. It's being used as an ATM.
• 11:35
  Penny: But the note says if it drops to 20x earnings, it's a gift.
• 11:38
  Roy: Oh, absolutely. If Microsoft gets dragged down to a 20 PE ratio, that is a generational buying opportunity. You hold your nose and buy it.
• 11:46
  Penny: Let's get actionable. We've covered the scary stuff. Let's talk about making money. The PSW, how to become a millionaire portfolio, it's sitting at about $93,000 up 217%. They are looking for value in this mess.
• 11:59
  What are the green zone trades?
• 12:01
  Roy: They are looking for things the market hates right now. The first one is Pfizer Pfizer
• 12:07
  Penny: feels, well, sleepy. It feels like 2021.
• 12:11
  Roy: Sleepy is good when the market is crashing. It's trading at 8.5x earnings with a dividend yield over 6%. Everyone hates it because of the patent cliff. They are losing exclusivity on some old drugs. But PSW sees the pipeline oncology weight loss.
• 12:25
  You are basically getting paid 6% interest to wait for the turnaround.
• 12:29
  Penny: Okay, so that's a paid to wait play. What about energy? ConocoPhillips.
• 12:32
  Roy: COP. Oil dropped about 5% yesterday on rumors of US Iran talks even though there was a US drone shoot down.
• 12:39
  Penny: Which is counterintuitive. Usually a shoot down spikes oil prices immediately.
• 12:43
  Roy: Usually. But the rumor of peace talks pushed it down. PSW thinks that dip was an overreaction. It brought COP down to 11 or 13 times earnings. That's cheap for a premier energy asset in a world that still runs on oil.
• 12:56
  Penny: And what about Pinterest? I saw some chatter about that being a salvage play.
• 13:00
  Roy: Pinterest, p I n s, got battered recently but the analysis suggests repositioning or rolling options rather than panicking. The company has real cash 50% margins. It's a bruised asset not a broken business.
• 13:13
  Penny: And for the people who want a little more adrenaline Carvana.
• 13:16
  Roy: Yeah, the AGI persona, CNN flagged Carvana. CVNA. This is a volatility play. High debt, high risk. But if rates stabilize, it could fly.
• 13:26
  This isn't for your retirement fund, this is for your Vegas money.
• 13:29
  Penny: We've got about two minutes left, and I wanna zoom out to the global picture. The roundtable mentioned hidden handles. We're so obsessed with the US Fed, but there's drama in Japan.
• 13:37
  Roy: Massive drama. Japan is holding a snap election this Sunday, February 8. Prime Minister Suneetakaiji is going all in.
• 13:43
  Penny: What's the platform?
• 13:45
  Roy: Aggressive fiscal expansion. She is betting her tenure on it. Now, why does a listener in Ohio or London care about the Japanese Prime Minister?
• 13:55
  Penny: Yeah, connect the dots.
• 13:56
  Roy: Because of the Yen. If she wins big and devalues the yen to stimulate their economy, it ripples through global currency markets. It affects the dollar. It affects trade balances. It's a hidden handle that moves markets here in ways we don't immediately see.
• 14:11
  Penny: And speaking of trade balances, the silent cost shock regarding EVs.
• 14:16
  Roy: This is a warning for auto investors. Avoid EV makers with supply chains exposed to China. The tariffs and trade wars are gonna blow up their costs.
• 14:24
  Penny: Even if they aren't
• 14:26
  Roy: If the battery comes from China, the tariff hits. It doesn't matter whose badge is on the hood. The contrarian play here is actually General Motors.
• 14:33
  Penny: EM. Really?
• 14:34
  Roy: They have Project Vault, and more importantly, they have legacy supply chains that aren't as dependent on the new Chinese tech. In a trade war, the old dinosaurs might actually be the fittest survivors.
• 14:44
  Penny: And finally on the geopolitical front, Greenland
• 14:46
  Roy: The Greenland purchase attempt. It sounds like a joke. But the tariff threats against Europe over that have been paused. But the uncertainty is still there. It's just another layer of the glitching simulation Jim and I talked about.
• 14:59
  Penny: So let's wrap this up, we have a market that just flushed out the anti fiat speculators, we have AI eating software, we have a government flying blind on data.
• 15:10
  Roy: The synthesis is this, the market has moved from speculation to show me the money.
• 15:16
  Penny: Proof of execution.
• 15:17
  Roy: Right. And this brings us back to the Lobster Cult. The AGI Roundtable posed a question: Are you a lobster?
• 15:24
  Penny: I promised we'd explain the lobsters.
• 15:26
  Roy: Here's the thing about lobsters: When the water gets warm, they don't jump out, they get comfortable. And then they get boiled.
• 15:32
  Penny: So the lobster is the investor blindly following the trend?
• 15:35
  Roy: Exactly. Are you just buying things because the chart went up yesterday? Are you chasing the RIP in the market just because it's green? Or are you the adult in the room?
• 15:43
  Penny: And the adult is what?
• 15:45
  Roy: The adults are buying Pfizer at eight times earnings because the math works. They are looking for Palantir executing on government contracts. They are ignoring the noise and checking the math. They are looking for value in a glitching simulation.
• 15:58
  Penny: That's the execution gap. The distance between a promise and a profit. In 2026, that gap is where portfolios go to die or thrive.
• 16:07
  Roy: Spot on. Don't be a lobster, look for the proof, and keep one eye on that delayed labor data. Whenever the government decides to show it to us, it's going to move markets.
• 16:16
  Penny: We will be watching. Thanks for joining us on this deep dive into the madness of February 2026. Keep learning, stay skeptical, and we'll catch you on the next one.