💰 The $600B FOBO Selloff

OUR PARTNER: WISPR FLOW

Speak naturally. Send without fixing.

Wispr Flow turns your voice into clean, professional text you can send the moment you stop talking. Not rough transcription you have to clean up. Actual polished text - ready for email, Slack, or any app.

Reid Hoffman sends 89% of his messages with zero edits using Flow. Millions of people worldwide have made it part of how they work, including teams at OpenAI, Vercel, and Clay.

Speak the way you think. Go on tangents. Change your mind mid-sentence. Flow strips the filler, fixes the grammar, and gives you text that reads like you spent five minutes writing it.

Works on Mac, Windows, iPhone, and now Android - free and unlimited on Android during launch.

Try Wispr Flow free →

THE MAIN EVENT
Too Much, Too Fast: The AI Doom Loop ⚠️

On Sunday, a future-dated report from Citrini Research landed like a thunderclap.

It was written as a retrospective from June 30, 2028. In this imagined future, unemployment had surged above 10% and the S&P 500 was down nearly 40% from its highs.

The twist? This was not a story about AI failing.

It was about AI succeeding. Perhaps too well.

In Citrini’s scenario, AI delivers massive ROI. Companies replace operating expenses with capital expenditures (i.e., employees get swapped for agents). Payroll shrinks. Margins expand.

Each decision makes sense at the company level. Cut costs. Boost efficiency. Please shareholders.

Collectively, it creates a spiral.

Highly paid white-collar workers disappear. Consumer spending weakens. Aggregate demand softens. Companies respond by cutting more headcount and leaning harder into AI savings.

AI improves. Jobs shrink. Spending falls.

The first feedback loop is economic. Capability rises, payroll falls, demand weakens, margins tighten, and firms double down on automation.

Then it turns financial. Income impairment hits mortgages. Credit tightens. The wealth effect cracks. The spiral accelerates.

That is the AI doom loop.

Why Certain Stocks Got Hit

Despite being framed as a thought experiment, markets treated it like a warning flare. Nearly $600 billion in market cap evaporated on Monday. All three major indices fell 1-2%.

The report became a hit list:

• SaaS companies like IBM and ServiceNow fell because Citrini suggested they could be “prompted out of existence.”

• Cybersecurity names such as Datadog, CrowdStrike, and Zscaler sold off on the logic that autonomous systems could replace monitoring and compliance software.

• Payment companies like Visa, Mastercard, and Amex dropped because AI agents using crypto rails could bypass transaction friction entirely.

• Private equity firms like Blackstone and KKR were caught in the crossfire because much of their portfolio value is tied to recurring revenue software businesses.

• Even gig economy names like Uber and DoorDash fell. In the doom loop scenario, AI booking agents search for the lowest price every time. App loyalty evaporates, and margin disappears.

The selloff was not about earnings. It was about business model fragility in a world where friction is no longer a moat and intelligence is free.

The Case Against the Doom Loop

The narrative is powerful, but it is also built on assumptions that deserve scrutiny:

1. The Self-Correcting Economy

If AI slashes production costs and increases competition, prices should fall. Cheaper goods and services effectively raise living standards, which offsets some income loss.

2. The Demographic Wall

The developed world is aging rapidly. Fertility is collapsing. Labor supply is already tight, especially with more restrictive immigration policies.

Healthcare is leading job growth for a reason. AI might not create mass unemployment. It may simply arrive in time to fill labor shortages in elder care, infrastructure, and logistics.

3. Replacing Systems Is Hard

It is easy to build a demo. It is much harder to replace a bulletproof banking system or insurance underwriting engine.

AI today is probabilistic, not deterministic. That is fine for drafting marketing copy. It is not fine for handling billions in financial transactions. The transition to an agent-driven world will likely be slow and uneven.

4. Jevon’s Paradox Arises

When a resource becomes cheaper, we tend to use more of it, not less. If coding becomes ten times cheaper, we do not just shrink teams. We build more tools, more personalization, more software.

The economy could become more fragmented, but not necessarily smaller.

5. Policy Does Not Sit Still

A 10% unemployment rate would not go unanswered. AI taxes or some form of UBI (universal basic income) would likely enter the conversation quickly.

The report acknowledges weak policy response, but history suggests governments don’t allow their entire tax base to evaporate without a fight.

So, Why Did Stocks Fall?

Because markets price probabilities.

The report did not need to convince investors that this is the base case. It only needed to remind them that it is a possibility.

When valuations are rich and positioning is crowded, even a hint of risk can shift asset allocation and increase hedging on the margins.

In other words, the AI doom loop may never materialize. But after Sunday, it is no longer sitting at zero in the probability column.

That alone was enough to rattle the tape.

MARKET MOOD
Anthropic Sparks FactSet, Spooks IBM 👻

Winners

FactSet ($FDS) - Market Cap: $8.0B (Week-to-Date: +9.9%)

For once, Anthropic didn’t nuke a stock. It lifted one. FactSet jumped after announcing that users can now pull its market data directly into Anthropic’s Claude. That means analysts can blend FactSet’s deep financial data with AI tools in real time.

Given that recent AI releases have erased nearly $1 trillion from software stocks, this partnership felt like a relief rally. Instead of being disrupted, FactSet got invited to the table.

Constellation Energy ($CEG) - Market Cap: $117.2B (Week-to-Date: +9.7%)

Constellation keeps riding the AI power wave. The nuclear-heavy utility closed its $16.4 billion acquisition of Calpine, becoming the largest electricity producer in the U.S. with 55 gigawatts of capacity. It then beat earnings with $2.30 per share versus $2.25 expected and highlighted a new 380 megawatt deal with CyrusOne.

PayPal ($PYPL) - Market Cap: $42.6B (Week-to-Date: +9.4%)

Since its origin as eBay’s in-house payments arm, PayPal has missed nearly every major fintech wave: Apple Pay, Affirm, Cash App, and even Stripe. Maybe that’s why the stock is down 85% from its 2021 highs.

This week, takeover rumors flipped the script. Reports that Stripe may be eyeing all or part of the business sent shares ripping higher, with trading volume jumping 187%, as investors bet a deal could modernize the platform and revive innovation.

Losers

IBM ($IBM) – Market Cap: $226.2B (Week-to-Date: -5.9%)

IBM suffered its worst single-day drop since 2000 after an Anthropic blog post highlighted how AI can modernize COBOL systems. Shares plunged 13% before paring losses. Investors fear AI could pressure IBM’s legacy consulting revenue, and over the long run, that risk is real. But replacing deeply embedded, mission-critical financial infrastructure is not something that happens overnight.

Lowe’s ($LOW) – Market Cap: $148.3B (Week-to-Date: -5.7%)

Lowe’s actually beat earnings. Sales rose 10% year over year, same-store sales increased 1.3%, and online revenue climbed 10.5%. Didn’t matter. Management guided full-year earnings to ~$12.50, below the $12.95 consensus, sending shares lower.

Elevated mortgage rates, weak housing turnover, and tariff uncertainty continue to weigh on demand for both Lowe’s and Home Depot. Mortgage rates dipping below 6% could help, but for now, the housing market remains sluggish.

OUR PARTNER: MASTERWORKS

Someone just spent $236,000,000 on a painting. Here’s why it matters for your wallet.

The WSJ just reported the highest price ever paid for modern art at auction.

While equities, gold, bitcoin hover near highs, the art market is showing signs of early recovery after one of the longest downturns since the 1990s.

Here’s where it gets interesting→

Each investing environment is unique, but after the dot com crash, contemporary and post-war art grew ~24% a year for a decade, and after 2008, it grew ~11% annually for 12 years.*

Overall, the segment has outpaced the S&P by 15 percent with near-zero correlation from 1995 to 2025.

Now, Masterworks lets you invest in shares of artworks featuring legends like Banksy, Basquiat, and Picasso. Since 2019, investors have deployed $1.25 billion across 500+ artworks.

Masterworks has sold 25 works with net annualized returns like 14.6%, 17.6%, and 17.8%.

Shares can sell quickly, but my subscribers skip the waitlist:

Skip waitlist

_{*Per Masterworks data. Investing involves risk. Past performance not indicative of future returns. Important Reg A disclosures: masterworks.com/cd}

CHART OF THE WEEK
If AI Wins, Do Utilities Win Too? ⚡

In the spirit of AI storytelling, let’s flip the script. If the AI boom creates turbulence elsewhere, where might investors look for shelter?

One of the more interesting trade ideas I’ve read recently came from an analyst arguing that utilities may be the sleeper trade.

The chart above assumes:

• Hyperscalers like Google, Meta, and Amazon continue pouring money into the AI build-out

• U.S. data center power usage explodes

• AI consumes a dramatically larger share of total electricity

• Grid capacity demand far exceeds consensus expectations

That last point is key.

If AI makes computing cheaper and more accessible, usage may not slow down. It may accelerate. Lower costs could expand adoption across industries, driving even greater electricity demand and forcing utilities to build even faster.

For context, here’s how utilities actually make money:

1. They are regulated monopolies. Roughly 85-90% of $XLU, the Utilities Select Sector ETF, consists of regulated utilities.

2. They do not profit from higher electricity prices. Fuel costs are passed through to consumers at cost. They make zero margin on the electrons.

3. They profit from construction. Their return is earned on the “rate base,” meaning the physical assets they build.

If a utility constructs a $1 billion transmission line to serve a new Amazon data center, regulators typically allow it to earn ~10% annually on that asset for decades. In that sense, you are not betting on the price of AI or the price of power. You are betting that utilities will be required to build.

History is on their side, too.

When the country has gone through major infrastructure build-outs in the past, utilities inside $XLU have generally performed well.

Plus, there’s the rate backdrop.

If the Fed keeps cutting, those steady dividend yields suddenly look a lot more attractive compared to bonds and cash. In other words, if Treasury yields fall, utilities may get a boost from income-focused investors.

This is not an endorsement, but it is a compelling case.

In a world where AI is so bullish that it becomes bearish for most equities, utilities could be one of the better places to be invested.

FAST FACTS
Finally, A Break for Borrowers 🔑

🏠 Mortgage rates dip below 6%: The 30-year fixed just fell to 5.98%, the lowest since September 2022. [Read]

🤖 Anthropic scraps safety pledge: The AI firm ditched its promise not to train models without guaranteed safeguards, saying it cannot slow down while rivals race ahead. [Read]

📉 GDP cools to 1.4%: Q4 growth slowed sharply during the government shutdown, with federal spending plunging 16.6% and shaving more than a full percentage point off the economy. [Read]

🚕 Waymo widens its robotaxi lead: Google’s self-driving unit is expanding to four more cities, bringing its footprint to 10 major metros and logging 400,000 paid rides per week. [Read]

💵 Trump proposes $1,000 retirement match: The president vowed to create tax-advantaged accounts for workers without employer plans, offering up to $1,000 in annual matching contributions. [Read]

🎯 Kalshi cracks down on insiders: The prediction market froze accounts, handed out multi-year bans, and fined rule-breakers up to 10x their trade size after suspicious bets on elections and YouTube videos. [Read]

⚖️ Supreme Court upends tariff playbook: Justices struck down Trump’s emergency tariffs, raising questions about refunds. The White House quickly reinstated 15% duties under a different statute. [Read]

WORDS TO REMEMBER
The Folly Of Forecasts 🧠

Thanks For Reading!

Spread The Wealth 💸

Like what you read? Do me a favor and don’t keep it a secret! Send this newsletter to a friend and help them level up their financial game—one fact at a time.

Click the button above -or- copy and paste this link: https://read.themoneymaniac.com/subscribe?ref=PLACEHOLDER