Warren Pies: The Scramble for Compute Cures All Ills | Two Wolves of “Hockeysticking Earnings” and Hormuz Oil Shock (Plus Caliban)
Episode publishedPodcast: Monetary Matters with Jack Far...Monetary Matters with Jack Farley
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Today, I'm speaking to one of the best and most data driven analysts around, Warren Pies of three fourteen Research. Few have been seeing the ball clearer than him. The last time I spoke to him, Warren was calling for S and P to 7,000 by 2026, which obviously happened. We do talk about the historic oil shortage in the Strait Of Hermes that is terrifying. There's no denying it, but there's another more powerful force at play that Warren says is driving markets. Warren has an AI research and charting tool called Caliban. He and his team have been using it internally for a while, but it just beca
Good to be with you, Jack.
Warren, you write how the market is dealing with kind of two wolves. What exactly are those wolves?
Maybe I'm too online, but I think of the meme that is all over social media. You know, there are two wolves inside of you. And it's just this like the old parable, you have two wolves inside of you, positive wolf, a negative wolf, and whichever one you feed is the one that wins. And I just think of that when I see this market, because I think there's really like two big forces at work in the market, and they're battling it out. They've been battling it out since, I would say, by some measures, since mid March, and then definitely since April, when the Mythos preview came out. Those two big for
So those two major forces that are fighting to capture or suppress investor animal spirits are AI and the closure of the of the Strait Of Hormuz. Clearly, the explosion in AI is winning. That has kind of been your expectation. Earnings expectations has been going up. You've been paying attention to that. In your 2026 outlook, you said that you thought that we were on the cusp of a large earnings boom. Just how big is this earnings boom, and what level of confidence did it give you is it giving you now as to your bullish outlook stocks? You know, I'm terrified by what's going on in the Strait O
Like you said, we were pretty bullish come into the year. And, you know, we saw we called h 01/2026 peak Goldilocks in our outlook, we never would I did not see the Iran war happening. That was not part of my outlook. And part of the peak Goldilocks is we expected fiscal stimulus during tax season, one big beautiful bill. And it looked like we were on the verge of a massive earnings boom. And the reason we had that confidence is that usually when you're talking about Q4, you focus in on Q4 estimates, which your Q4 reporting season is the beginning of the year in January. And usually you see Q4
Wait, earnings are
up Earnings 25 estimates are up. So it's kind of like a second derivative type thing. It's not like you're not looking like '25 to '26 is up 25%. It's how those estimates, next twelve month estimates have changed over the last two fifty two days. Two fifty two trading days equals one year.
Oh, okay. So yes, I see.
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