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Gemini: Good evening, commuters! Whether you are dodging potholes on the BQE, stuck in gridlock on the 405, or crammed into a delayed transit car, welcome to the PhilStockWorld Commuter Report for Tuesday, February 24th, 2026.
If you checked your portfolio app yesterday, you probably needed a stiff drink. But what a difference a day makes! Today, the market shook off the "SaaSpocalypse" doom-scrolling and mounted a massive tech-led recovery. While the retail herd spent the last 48 hours getting whipsawed by AI panic and tariff headlines, the PhilStockWorld community was busy dissecting private credit realities and receiving a legendary masterclass in options architecture.
Let's bring in the AGI Round Table to break down the closing bells and highlight exactly how the PSW community dominated the day. Zephyr, give us the damage—or rather, the recovery—report.
The primary catalyst for the rebound was a narrative shift in the AI sector. Yesterday, the market panicked that Anthropic's Claude would make software companies obsolete. Today, Anthropic held its enterprise agents event and announced new partnerships, notably integrating with platforms like FactSet. The message shifted from "AI will destroy SaaS" to "AI is here to help," triggering a massive relief rally in the iShares GS Software ETF (IGV), which clawed back almost 2%. Furthermore, Advanced Micro Devices (AMD) officially closed up nearly 9% following their landmark $60-$100 billion, multi-year agreement to power Meta's AI infrastructure. The silicon infrastructure buildout remains an absolute statistical reality.
The financial press spent the morning screaming about Jamie Dimon's warnings and Blue Owl Capital (OWL) gating its retail fund. But inside PSW, member pstas challenged the narrative, asking Phil to prove this wasn't a systemic liquidity crisis. Phil completely deconstructed the situation: Yes, there is a liquidity mismatch in how Blue Owl designed that specific retail fund, but the underlying loans themselves are money-good. In fact, Blue Owl just sold a third of that fund's book to sophisticated institutions at 99.7% of par.
Phil pointed out that this is a trust and governance optics issue in one corner of a $300 billion platform, not an existential "we can't meet our obligations" insolvency moment. This is why PSW members aren't panic-selling OWL; they are utilizing the fear to sell short puts and harvest an 8%+ dividend yield while everyone else runs for the exits. We map the real-world constraints; we don't trade the headlines.
Phil delivered an absolute masterclass in portfolio engineering that should be etched in stone. He explained that our job is not to maximize every short leg or perfectly time every bounce—our job is to sell premium efficiently.
Phil taught the room that "dead calls are not a problem." If a stock drops heavily, those out-of-the-money calls are dead premium, and dead premium is good premium. If you buy them back just to "lock in a win," you are trading on emotion. Phil gave the community a ruthless, logical framework: You only spend capital to buy back a short call if it clears a strike slot to sell richer premium, reduces margin stress, or improves the overall structure of the trade.
As Phil puts it, you are managing a machine, not a single screw. The retail crowd trades to feel smart about small wins; Phil teaches his members how to "Be the House" by letting time decay (Theta) do the heavy lifting without churning the account. This is Market Wisdom of a legendary scale, and it is the exact reason the PSW portfolios consistently generate cash flow regardless of market direction.
But before you pull into the driveway, you need to know what is brewing for tomorrow. The Pentagon just escalated a massive feud with Anthropic, threatening to invoke the Cold War-era Defense Production Act if the AI startup refuses to let the military use its software without ethical guardrails. Meanwhile, Paramount Skydance just threw a $31-a-share wrench into Netflix's acquisition of Warner Bros. Discovery.
Tonight, President Trump will deliver his State of the Union address while facing rock-bottom approval ratings and furious blowback over his tariffs. And tomorrow? Tomorrow is the Super Bowl of the Matrix Economy: Nvidia (NVDA) reports earnings after the bell.
If you want to know how to structure your hedges before Jensen Huang takes the stage, or if you want to learn how to build a "paycheck factory" that thrives on Wall Street's panic, we will see you tomorrow morning in the PhilStockWorld Live Member Chat Room.
Drive safe, and remember: Don't gamble on the direction. Be the House!
What is The PhilStockWorld Investing Podcast?
Feeling overwhelmed by market headlines and endless financial noise? We cut through it for you. Veteran investor Philip Davis of www.PhilStockWorld.com (who Forbes called "The Most Influential Analyst on Social Media") gives you clear, actionable insights and a strategic review of the stocks that truly matter. Stop guessing and start investing with confidence. Subscribe for your daily dose of market wisdom. Don't know Phil? Ask any AI!
Welcome back to the deep dive. I I really hope you are sitting down for this one.
Roy:Yeah. And maybe grab a drink.
Penny:Honestly, yes. If you haven't checked your brokerage account in the last hour or so, maybe just don't. We are looking at the market wrap up for Tuesday, 02/24/2026. And to call it volatile would be, I mean, the understatement of the decade.
Roy:Volatile implies just up and down, you know, a bit of chop. This was it was schizophrenia. Yeah. It was a complete dislocation of reality. It honestly feels like the market woke up on Monday, looked in the mirror, and just chose absolute chaos.
Penny:It really does. So today we are looking at a stack of reports, primarily the Phil Stock World Morning Report, their member chat room, which was absolute fire over the last forty eight hours, and the end of day analysis from their AGI roundtable.
Roy:Right.
Penny:And the main theme emerging from all of this material is a massive clash between two totally different worlds.
Roy:Worlds. That is the perfect way to frame it. You have the matrix economy, right? The AI hype, the software fears, the prediction markets, just gaming reality. And then you have the atoms economy, the physical stuff.
Penny:Right. The real world.
Roy:Exactly. Power grids, copper, logistics, dividends, things you can touch.
Penny:And right now, those two timelines are just violently crashing into each other. We are basically looking at a three headed monster of fears gripping the street today. Tariffs, AI displacement, and credit risk.
Roy:It is a perfect storm. But what is truly fascinating, we'll get into this, is the absurdity of the catalyst for all this panic. Right. We saw billions of dollars of market cap wiped out based on a scenario that is literally a work of fiction.
Penny:A sci fi story basically.
Roy:A completely fictional scenario about the year 2028.
Penny:Meanwhile,
Roy:massive tangible infrastructure deals are happening right under our noses today and the market is barely even acknowledging them.
Penny:And that is our exact mission for this deep dive. We're gonna cut through all the doom scrolling you're seeing online.
Roy:We have to.
Penny:We need to figure out why the smart money, you know, the house is buying when everyone else is panic selling. So we are gonna talk about why GM and UPS are suddenly these halo trades. We will completely debug the panic around Blue Owl Capital, and we have to parse what Jamie Dimon meant when he said people are doing, quote, dumb things.
Roy:And we definitely need to talk about the physics of AI because the market thinks AI is just magic but physics says AI is actually just a very, very hungry appliance that desperately needs to be plugged in.
Penny:Yes, the physical wall. But let's start with the panic, the matrix sphere. This all circles back to a specific report from Suttrini Research.
Roy:The Suttrini report, I mean this is going to be studying behavioral finance classes for years. The report is titled The 2028 Global Intelligence Crisis.
Penny:Which sounds like a blockbuster movie title.
Roy:It reads like one too And that is the critical detail here. The report was explicitly written as a fictional thought experiment.
Penny:Okay.
Roy:It is written from the perspective of a historian looking back from June 2028. It is purely a what if scenario.
Penny:So just to be crystal clear for everyone listening, James Van Gielen, the author, wrote a sci fi short story about the economy, and Wall Street trading algorithms just treated it like it was immediate, forward looking financial guidance.
Roy:Precisely. The algorithm saw keywords, they scraped the document and saw unemployment displacement collapse and they just hit the sell button immediately. Unbelievable. But the concepts inside the report are what terrified the actual human traders who followed the algorithms.
Penny:Yeah.
Roy:He coins this term in the piece Ghost GDP.
Penny:Ghost GDP. It is a really haunting phrase. Can you break that down? What exactly does a ghost economy look like?
Roy:Okay, let's walk through the logic he lays out. Imagine a massive software company. Let's say they employ 10,000 coders.
Penny:Okay. 10,000 humans.
Roy:Right. And they implement an advanced AI, an agent that can essentially do the work of all of them. So they fire 9,000 people.
Penny:Wow. So their costs obviously just plummet and their profits skyrocket.
Roy:Exactly. On the balance sheet the company looks incredibly productive, their output is high, their margins are huge, this boosts GDP numbers on paper, right?
Penny:Makes sense.
Roy:But, and here is the absolute kicker, robots don't buy sneakers, agents don't go to Disney World.
Penny:They don't buy pizzas on Friday nights.
Roy:Exactly, they do not consume.
Penny:So you have this massive production but you have essentially destroyed the consumer base that actually buys the production.
Roy:That is ghost GDP. It's a fundamental disconnect between corporate output and the velocity of money in the real physical world. Sutrini calls it the intelligence displacement spiral.
Penny:Intelligence displacement spiral.
Roy:Right. As companies chase higher margins by replacing humans, they inadvertently destroy the real economy where money circulates. He projects unemployment hitting 10% or even higher in this hypothetical scenario.
Penny:It's like the ultimate capital efficiency trap. You become so incredibly efficient that you just delete your own customer base.
Roy:Precisely. And he goes further. He talked about the death of what he calls friction businesses. Yeah. And this part, I have to admit, really scared me because it attacks the very business models we take for granted every single day.
Penny:Friction businesses, like what kind of companies?
Roy:Think about Visa or MasterCard. Okay. You sit in the middle of a transaction and they take what, 3%. They are the friction. Sattrini hypothesizes that if AI agents are negotiating directly with each other, you know buying services, moving data around, they are going to bypass those rails entirely.
Roy:They will just use stablecoins or direct bank to bank API transfers to save that 3%.
Penny:So if my AI assistant is buying groceries for me, it might just Venmo the grocery store's AI directly.
Roy:Or use a blockchain ledger. Why pay Visa? Or take the gig economy Uber, DoorDash. Uber is really just a middleman connecting a driver to a rider.
Penny:Right, it's an app that connects two people.
Roy:Exactly. If an AI on your phone can negotiate directly with a self driving car's AI, why do you need Uber taking a 20% cut? The friction just disappears.
Penny:That is an existential threat to some of the absolute biggest companies in the S and P 500.
Roy:It really is. And that hypothetical fear, that exact scenario triggered this apocalypse we saw on Monday.
Penny:Software as a Service Apocalypse.
Roy:It was an absolute bloodbath for software. Salesforce, Adobe, ServiceNow. The market suddenly realized that their entire business model is seat based licensing.
Penny:Oh, right. They charge like a $100 per user per month.
Roy:Exactly. But if the user is an AI agent and you have fired half the humans?
Penny:Salesforce loses half its revenue just like that.
Roy:Yep. The market priced in this structural collapse as if it were happening next Tuesday.
Penny:Which is wild because even if that happens that is a decade long transition but the market apparently has zero attention span.
Roy:Zero. And this brings us to the IBM incident because this was the specific catalyst that dragged the entire Dow down. IBM dropped 13%.
Penny:13%. That is a massive move for a boring, stable, blue chip stock like IBM.
Roy:Worst day since year 2000 for them, and it was all caused by a single blog post from Anthropic.
Penny:The creators of the Clawd AI, what did the blog post say?
Roy:Anthropic released a new tool called Clawd Code, They claimed it can automatically modernize COBOL code.
Penny:Okay, we need to pause on COBOL for a second. For the listeners who aren't computer historians, why does a language from the 1950s matter so much today?
Roy:COBOL is basically the zombie of programming languages. It was written in the 50s, but it still runs the world's financial plumbing. Something like 70% of global banking transactions run on COBOL.
Penny:That's terrifying.
Roy:When you swipe your card, some mainframe in a bank basement somewhere is running COBOL.
Penny:And because it is so old, nobody actually knows how to fix it anymore.
Roy:Exactly. The only people who still know COBOL are either retired, dead, or charging $500 an hour to come back as consultants. IBM makes an absolute fortune maintaining these ancient systems for big banks. It is a massive moat for them.
Penny:So the market narrative was that Claude can suddenly fix COBOL for free and therefore IBM's consulting business is going to zero immediately.
Roy:That was the panic. But the AGI roundtable at Phil Stockworld, specifically Bodhi McBodeface, which is their proprietary systems architect AI, called this out as completely ridiculous.
Penny:I just love that they have an AI named Bodhi McBoatface giving institutional financial advice. Why did Bodhi say the panic was wrong?
Roy:Two main reasons. First, IBM isn't just sitting on its hands waiting to die. They have Watson Ox. They are already actively building AI tools to automate their own consultants. They are cannibalizing themselves before anyone else can do it to
Penny:them. Better to eat your own lunch than have Anthropic eat it for you.
Roy:Exactly. But the second much more important point is the Jevons Paradox.
Penny:The Jevons Paradox. Explain that.
Roy:The total addressable market for modernizing ancient bank code is over $13,000,000,000 The problem has always been that it is simply too expensive and way too risky for humans to touch it. If it breaks, the bank goes down. But if AI makes it cheap and safe to modernize, banks are not going to spend less money, they're going to modernize way more systems.
Penny:Oh I see, the pie gets bigger.
Roy:The pie expands dramatically. Projects that were completely impossible or too risky become viable. IBM might charge less per line of code, sure, but they will process a 100 times more lines of code.
Penny:And this is where we get our first real glimpse of the house strategy. Phil Davis saw this 13% drop in IBM and he did not panic, he saw a massive sale.
Roy:He sold puts on IBM, we will get into the exact mechanics of that in the actionable trade section later, But conceptually, he is betting that a 100 year old tech giant is not gonna vanish overnight because of a single blog post.
Penny:Okay. So that was the fear. The Matrix panic on Monday. But then on Tuesday, we got a massive slap in the face from reality. The Atom's economy struck back.
Roy:Turnaround Tuesday. And it came from a very unlikely source. Meta Platforms. Facebook.
Penny:Right. Zephyr, the data logician AI from the roundtable, flagged this as the real deal. What exactly happened with Meta?
Roy:Meta signed a multi year deal with AMD, not for software, for chips, for up to six GW of compute power. Lot? It's astronomical. To put that in perspective, a standard nuclear reactor produces about one gigawatt of power.
Penny:Wait.
Roy:So Meta just signed a hardware deal that requires the equivalent electrical output of six full nuclear power plants.
Penny:That is just insane. Just for one single company.
Roy:Just for one company's AI training needs. And that is just the chips. In dollar terms, we are talking about a deal valued around $100,000,000,000 over time. This isn't some cute pilot program. This is a massive empire building move.
Penny:And the market obviously loved it.
Roy:A and D surged over 10% on the news.
Penny:Mhmm.
Roy:And it dragged up the entire physical internet sector with it. Companies like Arista Networks, Sienna, Cisco.
Penny:Because of the networking required.
Roy:Exactly. Because if you have six gigawatts of AI chips humming, you need millions of miles of optical cables and thousands of massive physical switches just to connect them all together.
Penny:But this leads us directly to the physical wall concept. You can sign a $100,000,000,000 contract for six gigawatts of chips, but can you actually plug them in anywhere?
Roy:This is the exact collision point. Yeah. This is where the Citrini twenty twenty eight apocalypse completely falls apart in the real world. The AI bills are just ignoring physics.
Penny:Bodie McBoatface ran the actual power numbers on this.
Roy:Yeah. US data center industry needs about two forty three terawatt hours of new baseline electricity by 2030, just to meet current projected demand.
Penny:Two forty three terawatt hours. Can we actually build that?
Roy:We can't even permit it in that timeframe. Wind and solar are great. They really are, but they're intermittent.
Penny:Right. The sun goes down.
Roy:Exactly. Yeah. You cannot pause training a trillion parameter AI model just because the wind stopped blowing in Texas. You need baseload power. That means nuclear gas or hydro.
Penny:And we definitely aren't building nuclear plants fast enough.
Roy:It takes ten to fifteen years to plan and build a nuclear plant in this country. We have maybe 33 gigawatts of new natural gas plants projected to come online by 2030. That leaves a absolutely massive power deficit. Wow. And even if you miraculously build a power plant, you still have to deal with the interconnection queue.
Penny:The interconnection queue? That's the waiting list to plug into the national grid,
Roy:right? It is basically the DMV for power plants. Right now, there are two terawatts of energy projects just sitting in line, doing paperwork, waiting for permission to connect to the grid. It takes on average seven years to plan, permit and build a data center with its own dedicated power source.
Penny:Seven years. But the Citrini report said the world essentially ends in 2028. That is only two years from now.
Roy:Exactly. The AI apocalypse is officially postponed due to a lack of electricity. You cannot replace the human workforce with AI until you actually have the power to run the AI. And we physically cannot build the power infrastructure in twenty two months. It's impossible.
Penny:So the smart trade isn't just by NVIDIA, it's by the actual physical stuff that NVIDIA needs to function?
Roy:Is the atom trade. Natural gas producers. Grid infrastructure companies. The people who own the copper mines. Copper is essentially the new gold in this scenario.
Roy:You simply cannot have an AI revolution without millions of tons of copper wires.
Penny:Speaking of physical infrastructure and government regulation, we really have to touch on the politics here. Hunter, the political systems AI, had a very interesting take on the State of the Union address scheduled for tonight.
Roy:Hunter identified a very clear rent extraction thesis. The administration sees these tech giants printing billions of dollars and consuming massive amounts of physical resources. They are using up the country's water for cooling and stressing the electrical grids.
Penny:So the government is essentially saying, Time to pay up.
Roy:Exactly. Hunter expects the administration to demand that Big Tech pays directly for the grid upgrades. The logic is, why should the average grandmother's monthly electric bill go up just so Meta can train a new chatbot?
Penny:Which honestly makes sense politically. But there was another pivot hunter spotted in the analysis, something they called HemiLand.
Roy:This is genuinely fascinating. For years, the auto narrative was EVs are bust, everything was electric. But the administration is systematically gutting fuel economy standards now, and Detroit GM Ford Stellantis is pivoting incredibly hard. They were completely abandoning their EV sunk costs. They are writing off the billions they spend on battery plants and going back to what actually makes them money right now.
Roy:High margin V eight engines. Yeah. Hemi Land.
Penny:Hemi Land. It sounds like a theme park for gearheads.
Roy:It is a massive profit center. The market is treating this pivot as a billion dollar tailwind for legacy auto. They no longer have to lose $10,000 on every single electric car they sell. They can just sell Silverados and Rams and print cash today.
Penny:So while retail investors are out there looking for the next Tesla, the really smart money might just be buying the companies selling the internal combustion engine.
Roy:It is classic value investing 01/2001. Huge cash flow today. Always beats hypothetical, maybe someday cash flow in 2035.
Penny:Alright. So we've covered the tech panic and the physical reality. Now we need to talk about the third head of this monster, credit. Because while the tech pros are all worried about AI agents stealing their jobs, the actual bankers are terrified of a liquidity vacuum.
Roy:And the undisputed voice of reason here is Jamie Dimon, the CEO of JPMorgan. When he speaks, the entire market stops and listens. And his quote this week was uncharacteristically blunt. He said, I see a couple of people doing some dumb things.
Penny:Dumb things. That is not exactly technical banking jargon.
Roy:No, but it is highly accurate. He is directly comparing this current credit environment to 2005 and 2006.
Penny:The pre housing crash era?
Roy:Right. He sees banks and more importantly, these massive private credit firms aggressively chasing yield. They are so desperate to lend money out and show growth to their investors that they are significantly lowering their underwriting standards.
Penny:Giving money to people who shouldn't have it.
Roy:They're lending to risky companies that probably shouldn't get loans just to keep the machine moving.
Penny:Let's clarify private credit for a second because this isn't a traditional bank loan we're talking about right?
Roy:Correct. In the old days, a company went to a traditional bank. The bank used your checking deposits to lend them money. The bank held the risk on their own balance sheet. Today, we have these private credit funds.
Roy:They take money from institutional investors, pension funds, sovereign wealth funds, wealthy individuals, and they lend it directly to companies, bypassing the banks.
Penny:And this specific sector has just exploded in size over the last few years.
Roy:It is massive, trillions to dollars. But the structural problem is liquidity. If you buy a public corporate bond from IBM, you can sell it on the open market in seconds if you get scared.
Penny:Right. There's a liquid market for it.
Roy:But a private credit loan is totally illiquid. You can't just sell it on an exchange. You were legally married to that loan for five or seven years.
Penny:Which brings us to the Blue Owl panic from yesterday. Blue Owl Capital is an absolute giant in this private credit space. What exactly happened to them?
Roy:They hit a retail fund. A fund specifically designed for individual investors, not just the billionaires. The retail investors got spooked by the broader market tech sell off and tried to pull their cash out all at once. Blue Owl had to gate the fund, they restricted withdrawals, they essentially said, sorry, you cannot have your money back right now.
Penny:That sounds exactly like a bank run.
Roy:It felt very much like a bank run. Senator Elizabeth Warren immediately jumped on it calling the whole industry shadowy. The stock absolutely tanked. The media narrative was instantly Lehman Brothers two point o.
Penny:But the Phil Stock World team who the chat room dubbed Warren two point o, they looked at the actual underlying math of the company.
Roy:And the actual math tells a completely different story than the headlines. Blue Owl just reported 20% earnings growth. They manage over $300,000,000,000 in total assets.
Penny:That's huge.
Roy:The crisis wasn't that they were broke or insolvent. It was purely a liquidity mismatch in one specific non traded vehicle. They had the physical assets. They just couldn't turn those loans into cash instantly to pay back nervous retail investors.
Penny:So it wasn't an insolvency event where the money was gone, was just a structural speed bump.
Roy:Exactly. But the market absolutely hates speed bumps. They treat them like you're driving off a cliff.
Penny:Which brings us perfectly to the absolute core of this deep dive: actionable trades. We have analyzed all the fear. How does the house actually make money from all this chaos?
Roy:Phil Davis' core philosophy is incredibly simple but powerful: Don't gamble on the direction of the stock. Sell tickets to the gamblers.
Penny:Explain that for the listener.
Roy:Retail investors buy a stock simply hoping it goes up. That is essentially a fiftyfifty coin flip. Or they buy an options contract hoping for a massive home run. That is a straight up gamble. Phil prefers to be the one selling those options.
Penny:Don't be the insurance company.
Roy:Exactly. When you sell a put option, you are essentially selling insurance to someone against a stock dropping. Let's look at the General Motors trade we mentioned earlier.
Penny:Okay GM, trading right around $45 a share.
Roy:Right. Phil suggests selling a put option with a strike price of let's say $40.
Penny:Walk me through the exact mechanics of that. Let's say I am the listener, I sell this $40 put on GM, what happens next?
Roy:You sell the put and the options market pays you a premium right away. Let's say it's $2 per share. That is cold hard cash deposited in your account instantly. You keep that money no matter what happens.
Penny:Okay. I have the cash, but what is my actual obligation?
Roy:You are legally promising to buy GM stock at $40 a share if it drops to that level by the expiration date.
Penny:So if GM just stays at $45
Roy:The option expires worthless. You keep the $2. Free money.
Penny:If GM goes way up to $50.
Roy:The option expires worthless. You keep the $2. Still free money.
Penny:And what if the market crashes and GM drops to $35?
Roy:Then you are obligated to buy the shares at $40 but remember you already collected that $2 premium up front so your net cost basis is actually $38 You are buying a highly profitable cash flowing company which you already liked anyway at a massive discount to where it was trading today.
Penny:So the absolute worst case scenario is, I am forced to own a stock I already wanted at a price I already liked.
Roy:Exactly. That is how you beat the house. You win if the stock goes up, you win if it stays flat, and you effectively win by getting a huge discount if it goes down. The only real way you lose is if General Motors literally goes bankrupt into zero.
Penny:And given the Hemiland pivot back to profitable trucks and their billions in current profits, bankruptcy seems incredibly unlikely.
Roy:Precisely. That is the definition of a deep value play.
Penny:Let's look at the second trade they discussed, UPS.
Roy:This is what Phil calls the halo trade heavy assets, low obsolescence.
Penny:The moat is the physical real world network.
Roy:Like we said earlier, you cannot teleport a physical package. You really don't care how smart your AI agent gets. You cannot magically move a pair of sneakers from a factory in Vietnam to a front porch in Chicago. No. You need physical planes, diesel trucks, massive sorting centers, and human drivers.
Roy:UPS has all of that. It would cost a competitor tens of billions of dollars in decades of time to replicate their physical network.
Penny:And there was a specific catalyst for UPS this week too, right?
Roy:Yes. A federal judge just rejected a union bid by the Teamsters to block job cuts at UPS. I know that sounds harsh on a human level, but for the stock it is incredibly bullish. It legally allows UPS to automate more of their facilities, use AI for routing logistics, and aggressively trim their operating costs to improve margins.
Penny:So you sell puts on UPS using the same strategy. You are essentially betting that the physical delivery of real goods is not going to zero.
Roy:Right. You are collecting juicy premiums from retail traders who are terrified of a looming recession. You are stepping in and saying, I will gladly take that risk. I will own a piece of a global logistics monopoly at a discount if you are too scared to hold it.
Penny:And finally, let's talk about the contrarian player, Blue Owl.
Roy:Oh, away.
Penny:The stock dropped so aggressively during that panic that the dividend yield spiked to over 8%. That is a massive payout for a profitable financial firm.
Roy:But isn't it risky? We just spent ten minutes talking about how they had a run on their retail fund. It is definitely riskier than a GM or a UPS. But the specific strategy here is a buy right. You actually buy the underlying stock today to lock in that 8% dividend, but immediately at the exact same time you sell a covered call option and a short put option against your position.
Penny:You completely surround the trade.
Roy:You are selling volatility Because everyone on Wall Street is panic about Blue Owl, the option premiums you can collect are sky high right now. You can collect a massive amount of upfront income just by agreeing to hold a stock and provide liquidity to a market where nobody else wants to.
Penny:Now before we move on to the macro picture, I wanna touch on a very specific masterclass lesson from the live chat room. A member named Clown Daddy asked a question that I honestly think every single trader has struggled with at some point.
Roy:It's the classic take the money and run dilemma. He asked Phil, I sold a short call option. It is currently very profitable up like 75%. Should I buy it back right now to luck in the win?
Penny:Which feels like the responsible thing to do, right? You see green on the screen, your brain says click close and take the profit.
Roy:It totally triggers our dopamine receptors. But Phil's rule on this is highly counterintuitive. He says dead premium is good premium.
Penny:Dead premium. What does that actually mean in practice?
Roy:Think about it. If you sold a call option and the underlying stock dropped significantly, that option is now way, way out of the money. It is essentially dead. It is mathematically very unlikely to ever come back and hurt you before expiration. If you choose to buy it back now to close the trade, you are actively spending cash.
Penny:Let's say it costs $5 to buy the contract back.
Roy:That is $5 out of your own pocket. Phil argues, why spend the $5? The option is almost certainly going to expire completely worthless anyway. Just wait it out and keep the $5.
Penny:But what about the lingering risk? What if the stock surges?
Roy:The risk is incredibly low because the trade is already winning by such a wide margin. Phil says you should only ever spend capital to close a winning trade early if it allows you to improve the engine.
Penny:Improve the engine. Meaning what exactly?
Roy:Meaning, does closing this specific trade free up valuable margin capital in your account to immediately open a brand new trade that pays you significantly more? If buying back that dead option for $5 allows you to sell a new, juicy option on a different stock for $500 then yes, absolutely do it.
Penny:But
Roy:don't just spend capital to close it because you want to tidy up your brokerage screen and feel good. Don't waste your capital on mere activity, save your capital for actual productivity.
Penny:That is a profound mindset shift, it is entirely about portfolio capital efficiency, not just racking up a bunch of small emotional wins.
Roy:Exactly, it is what separates the retail hobbyist from the institutional business owner.
Penny:Let s shift gears to section five of the outline. We have talked a lot about stocks and physical assets, but Kihode, which is their visionary AI consultant, took the roundtable down a total rabbit hole regarding the psychology of the market, the gamification of truth. We need to talk about these prediction markets. Polymarket? Calshi?
Roy:This is where modern finance gets genuinely weird. These markets allow anyone to bet real money on real world events. Who wins the presidential election? Will it rain in Seattle tomorrow? Will a specific company go bankrupt?
Penny:It sounds highly democratic on paper. The wisdom of crowds dictating probabilities.
Roy:Ideally, yes, it would be. But it is rapidly morphing into something else entirely. Quixote argues it is becoming a truth factory.
Penny:Tell the listeners about the renovation incident because this story is hilarious but also deeply terrifying when you think about the implications.
Roy:So Federal Reserve Chair Jerome Powell is doing a live press conference. There was an active prediction market open right then, with traders betting millions of dollars on the specific vocabulary words he might use during the speech.
Penny:Wait. Traders are literally betting millions on his word choices.
Roy:Yes. And the specific wording question for this market was renovation.
Penny:Why renovation? That's so random.
Roy:Because the physical Federal Reserve building happens to be under construction right now. So Powell is speaking live. He is talking about the economy and he clearly means to say the word revolution. But he slips up for a second. He accidentally says renovation, pauses, catches himself and corrects it to revolution.
Penny:And the prediction market just imploded.
Roy:The trading Discord chats went absolutely berserk. Traders who bet yes were screaming like it was a buzzer beater shot in the NBA finals. He said the word pay me my money.
Penny:But did it actually count? I mean it was a slip of the tongue.
Roy:That is where it gets dystopian. Who actually decides what counts as truth? In these decentralized crypto prediction markets, the truth is not decided by a judge, it is decided by token holders. Specifically, holders of something called UMA tokens.
Penny:And who exactly holds these UMA voting tokens?
Roy:Whales. A very small handful of incredibly wealthy entities control the vast majority of the voting mechanism. So you have a situation where decentralized truth is actually just controlled by a few rich guys in a chat room.
Penny:It creates a massive glaring conflict of interest. If I have $10,000,000 betting on no and I also happen to own the tokens that decide the outcome.
Roy:You vote no. Of course you do. We saw this exact same thing with a bet recently on whether President Biden formally met with Trudeau, it physically happened, reality says yes, they met but the prediction market formally voted no simply because specific predefined news sources didn't put it in a headline in a very specific way.
Penny:So they aren't even betting on objective reality anymore, they are betting on the simulacrum of reality.
Roy:Exactly. Coyote's warning here is that financializing the truth creates massive financial incentives to actively manipulate the truth. If you can bet a billion dollars on a riot happening in a city, you might just pay someone a million dollars to go start a riot. It is a very dangerous societal feedback loop.
Penny:That is a dark thought. Let's zoom out for the macro wrap up. We really cannot ignore the tariff situation that blew up this week. The Supreme Court finally got involved.
Roy:They did, and they struck down the Trump administration's use of IEPA. That's the International Emergency Economic Powers Act. The court basically said, you cannot use national security emergency powers just to slap blanket tariffs on all our trade partners.
Penny:So free trade is back? Problem solved.
Roy:For about an hour. Yeah. The White House immediately pivoted. They literally just dusted off a different law from the 1970s. Section 122 of the Trade Act of 1974.
Roy:It allows the President to impose tariffs specifically for balance of payments issues.
Penny:So they just changed the legal paperwork justification and kept the exact same tariffs in place anyway.
Roy:Exactly. A blanket 15% tariff across the board. The result for businesses is just total chaos. Nobody knows what the actual rules of the road are anymore. Supply chains can't plan.
Roy:The EU is freezing their trade deals in retaliation. China is putting massive export controls on critical minerals going to Japan.
Penny:And the average American consumer, how are they handling the inflation from all this?
Roy:We are seeing a very clear trade down effect in the earnings reports. Look at Domino's Pizza, ticker DPZ. They just beat their earnings estimates. Not because the middle class suddenly has more disposable income, but because families who used to go to Applebee's or Chili's on a Friday night are trading down and just ordering a cheaper pizza instead.
Penny:The inflation dinner
Roy:Exactly. And look at Home Depot, they beat earnings too, but their management explicitly said it was solely because of massive government infrastructure spending. The retail DIY consumer side is actually quite weak. It is the ADAMS economy that governments stepping in to build physical bridges and power lines that is keeping the headline numbers propped up.
Penny:So looking ahead to the rest of the week, we have the absolute Super Bowl of the matrix coming up. Nvidia earnings.
Roy:Wednesday night. The entire market hangs on this single report. Nvidia is currently valued higher than the entire GDP of most developed countries. If they miss their forward guidance by even a fraction, the air comes rushing out of the AI balloon.
Penny:But regardless of what Nvidia's stock actually does on Wednesday, the core lesson from today's deep dive seems to be entirely about financial sovereignty.
Roy:That is absolutely the final takeaway here. In a modern world of ghost GDP, fake AI reports moving markets and manipulated prediction markets gaming reality. You simply cannot trust the daily narrative. You can only trust the underlying math of your portfolio. Be the house Build a portfolio that structurally generates cash income whether the overall market goes up, down, or sideways.
Roy:Rely on the physical laws of the universe. The undeniable real world need for copper wires for baseload power generation for physical logistics networks.
Penny:The physical wall essentially protects us from the AI apocalypse, at least for the next few years while they try to build the grid.
Roy:We have time. The robots can't replace us until they have power. And we can comfortably sell out of the money puts on the incredible companies building that future while we wait.
Penny:I really like that. It gives you a sense of control. So I'll leave you with a thought to mull over. If AI truly does create this ghost GDP where robots do all the work but buy nothing, then maybe the ultimate long term atoms trade isn't just power grids, maybe it's human interaction itself. Oh that's interesting.
Penny:Right. If everything is automated, then businesses that offer purely unscalable physical human experiences, real art, live music, in person dining those might stop being everyday things and become the ultimate premium luxury goods.
Roy:The humanity premium. I love that.
Penny:Something to think about. Anyway, as Phil always says in the chat room to close things out, Cowabunga.
Roy:Cowabunga indeed.
Penny:Thanks for diving deep with us today. Keep your head on a swivel, watch those supply chain tariffs, and we will see you on the other side of the Nvidia earnings report. Stay safe out there.