AI Stocks Search for Solid Ground 11/11/26

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0:43That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to Discover. Terms apply. See discover.com slash 5 for details. The Bell is bringing an end to the trading day at the NYSE. Woodside Energy ringing the bell. And at the NASDAQ, it's U.S. Marines and Sailors from the USS San Antonio in honor of Veterans Day. Welcome to Closing Bell. Over time, we're live from Studio B at the NASDAQ Market Site. I'm Melissa Lee along with Mike Santoli. Sox soaring as the markets clear a big hurdle with CoreWeave earnings. The Dow gaining 250 points. S &P 500 up 1.3%.

1:18Bigger gains for the NASDAQ indices. Corweave clearing the way with its results and easing fears about raising more capital. Also, CEO Michael Intrader telling CNBC he has canceled his planned share sale program. That's another issue which had been weighing on the stock. Corweave up 25 % today. But if we zoom out, the stock getting back above$60. That was where it was on October 29th. And over six months, it's lost nearly half its value, even with today's game. Well, the rally extending throughout the AI trade, especially those other names which had struggled with debt concerns. Oracle, for instance, up 8 % chips, also getting a boost from this news, and also some relief in shares of NVIDIA.

1:56That's stuck up 3%. AMD is up 23 % so far this week. While money poured into tech, it didn't come flooding out of the defensive sector. Staples, utilities, health care, all basically flat on the day. And defensive within tech, Apple, it was underperforming the big AI gainers, but it was higher as well by 2%, hitting an all-time high along the way. Another factor in today's action, the bond market closed for Veterans Day. Let's get the first take on the close. And so we managed to gain here, and it was sort of the picks and shovels. I mean, Corey, you said every single thing that investors wanted to hear about the AI buildout.

2:29And, of course, Anthropic really helping as well. Absolutely. Coming also after several days when the market was forced to absorb a lot of misgivings and bad news about the AI trade and semis in general, really dating from the reaction to the election. And what I like about the days since the election is it finally perhaps convinced everybody you shouldn't trade elections. Because if you thought the election was a sell or a buy, it was both and it was neither on a given day. I do think you've climbed out of the hole for the S &P. It's in a pretty neutral spot right now. It's kind of like this spine that's gone for the last six months.

3:03So we held the July lows. You didn't break the 200-day moving average. It's still an uptrend. But it doesn't necessarily mean that we kind of pulled the slingshot back so far that we're going to shoot that much higher from here. I think we still have those offsets that the market's been dealing with, which is if we get really excited about AI, rates probably go up. You start talking about the Fed getting more involved. And so I think we have to work through that. Yeah. And it's also positive the market continues to see NVIDIA as a very, very idiosyncratic story. We had sort of, you know, the attempted recovery in NVIDIA shares, the shares closing closer to the lows of the session than the highs of the session for sure.

3:37And we still saw that AMD bid under AMD. I mean, we still saw that notion that AMD could win off of NVIDIA's woes. That was still in place. So it's not like NVIDIA is dismissed from this whole thing. But we're sort of looking. No, you're absolutely right. It's really rotating into the competitors. Broadcom is another one that was a huge contributor to the upside today. So that is true. And, you know, not not much to speak of in terms of that bounce, as you say, with NVIDIA. It's a lot of wait and see there. Well, as you mentioned, CoreWeave is rise is the rising tide lifting all of AI today. Let's get more on the reaction with Seema Modi.

4:07Hey, Seema. Hey, Melissa. What CEO Mike Intrader managed to do was change the narrative around CoreWeave, saying it's moving away from its debt field strategy to one that relies increasingly more on customers that pay up front, collecting about$9 billion in the recent quarter. This as it raises the price of its GPUs by over 30 percent on a sequential basis. Intrader also telling CNBC he's canceling a planned share sale. Those comments instilling confidence and sending the stock even higher on the day. But the road ahead is still long and questions circulating around when another equity sale could kick in.

4:41And while it's not planning to raise debt in the near term, the street is still modeling a sizable capital raise in 2027 to continue to fuel its data center strategy where it's not slowing down. Plus, interest expenses are still higher than its operating income. For now, the market fixated on the demand story for AI Compute remaining strong, the stock ending the day higher by over 24 percent, guys. Do we get any color from the call, Seema, about whether or not that big backlog is being translated into revenue and what that looks like in the out years? Right. So the backlog is increasing. That's good news, Melissa.

5:18But of course, what investors really want to see is that conversion from backlog to revenue. I think one thing that Intrader and executives really tried to convey was, again, they're pushing customers to pay up front. That's revenue that they can recognize sooner than expected. And I think that was sort of what Iron CEO Daniel Roberts also communicated last week, as this is one strategy they're using to raise capital and ease some of the concerns out there. Seaman, thank you. Well, that core weave bounce helping lift the broader AI trade that has been under so much pressure in the past few weeks, does it signal a return to tech dominance over the market?

5:53Joining us now is Andy Goldberg. He is Nomura chief investment strategist. Andy, good to see you. You too. Thanks for having me. So this has been the question. I mean, if you go back and look at tech relative to the, let's say, equal weighted S &P over the last year, it's been underperformed for three years, outperformed for three months, outperformed for two months. So you've had this sawtooth action. Where do we stand with that? And which way would you lean? Well, my base case is like you still got to stick with tech and the most likely scenario is it does outperform. But as an investor that's trying to shape a diversified portfolio that's durable, I'm not.

6:28I already have all the exposure that I need as an investor to it just vis-a-vis exposure to the S &P 500, for example. So it's like 40 percent of the index is 10 stocks. So even though I think it will probably be the winner, I'm not in a position to go and add more to my exposure than I already do. And the difference between now and then is the risk of an accident, and as we've seen in the last few weeks, is higher. And so when the risk of an accident is higher, I like to kind of add diversification to the portfolio, even though I still think that's where the trend is. How do you define value?

7:04So in terms of where we see opportunity, there are sectors like, for example, the consumer staples sector is trading at its lowest level relative to the other 10 sectors at any point in the last 30 years. And so the other thing I would look at is when we started 2026, the market was broadening and you saw small caps beating large caps by 1.1300 percent. That's all gone now because rates surged. You saw all these other interest rate sensitive sectors winning. If we think that interest rates are going to be relatively well contained and not a runaway train like they were between like, you know, call it June and August.

7:43I think there's an opportunity for that broadening trade to come back. And I think there's a lot of value out there. Just just a quick stat, something like 50 percent of the stocks in the Russell 3000 are down by 20 percent or more since June. And so we think of the market as high because the S &P is near a record high still within five percent anyway. But most stocks are not high. And so I think there's a lot of value there. If you think in 2027, rates will be more well-contained. I guess that was going to be my question. So what leads you to think that rates will either stay contained or the Fed won't have to do more than the market currently anticipates?

8:15So the Fed and long-term interest rates are a little bit two different conversations, I think. You guys have covered it really well. I think the Fed looks at last year's three rate cuts as a policy mistake. And if you really listen to what Warsh is saying, he's talking about wanting to see evidence that inflation is moving in the direction of their target. He's not concerned about employment right now. And he also talks about removing excess accommodation. And so I think, like, you know, they cut rates three times last year. I think he took one back. I think he wants to take two more back. On the long end, I actually think those rate increases at the short ends give us confidence that what the Fed can control with respect to inflation is probably that's good news.

8:54And then I also think if you ask yourself, is the economy from here going to accelerate or decelerate? And is the AI capex boom from here going to accelerate or decelerate? It's kind of hard to see how it ramps up from here. And so I think rates will be well behaved in 2027. What is the overall market view then if you think that these value sectors are going to outperform or beat opportunities? I mean, do we have to have the rest of the market, to Mike's point earlier, underperforming? Therefore, on a broader indice basis, we're not really going to see much. It's interesting, and that's exactly why you have to take some of, you know, if you have the S &P and 40 % or in 10 stocks and, you know, something like that, you have to take some of that and broaden out your own holdings in order for that other performance to matter.

9:37Because otherwise, you're not going to feel it. It's just not enough. There's not enough juice from the other 493 unless you start to underweight the big tech sector. It's funny because the bull case from a lot of folks who say, you know, the MAG-7 or thereabouts should lead is everybody's structurally underweight. And it's kind of true because you could never run an active fund and have, you know, 6 % in NVIDIA. Yeah, no one's calling the active manager up and saying, hey, let me let me pay you 1 % to overweight these seven stocks that are. Yeah. So you're you're you're right. But I do think that, you know, the other thing is if you just look at all these other sectors, most of the stock charts look kind of the same.

10:17It's like earnings are pretty strong. Like average earnings across the broad market outside of tech are still double digits. And the price is down. So there is some value out there. And by the way, sorry. And bonds, too. That's the other thing. Like the real value is actually in bonds. So an overall portfolio allocation, where do you see that in terms of bonds and allocation to value and underweight? So I'll start with the 60-40. So let's assume that for investor A, their strategic long-term allocation should be 60-40 because of their goals and whatever, right? In the last 10 years, when there was no, remember, there was no alternative, so you had to buy stocks instead of bonds.

10:56A lot of people moved a lot closer to 70-30 than 60-40. And so what we've been doing in multi-asset portfolios is moving back much closer to that 60-40 than you would have seen before. And again, like we think we're in the sixth or seventh inning of this AI CapEx build out. More to go, for sure. But later in the inning, you want to start to build a diversified portfolio because, you know, when those corners come, you've got to be able to navigate them. Andy, great to see you. Thank you. You too. Andy Goldberg. Let's turn to the latest in the NVIDIA and Jensen Huang spy scandal, a flurry of congressional members weighing in today.

11:28demanding answers from the White House and from NVIDIA. Megan Casella has the very latest. Megan. Melissa, that's right. We have heard a steady drumbeat of news from Capitol Hill today. But I want to bring you this news story breaking just in the last few minutes from Axios, which is reporting that President Trump has repeatedly, at least three times this year, authorized a crackdown on companies that are allowing NVIDIA's chips to be sold to companies in China, and that Commerce Secretary Howard Lutnik, according to this Axios reporting, has been the official standing in the way. So they report that just on Thursday was the most recent instance of this, of President Trump authorizing a crackdown on these companies suspected of routing these NVIDIA chips to China.

12:08They have many details here on a Situation Room meeting with a number of cabinet officials where all of these officials reportedly confronted Howard Lutnick on this. And then they brought their concerns to the Oval Office. They say President Trump called Elon Musk to ask him about this, that Musk agrees to move forward. but that Howard Lutnick warned that doing so would start a trade war with China. And then as they leave the Oval Office, Howard Lutnick proposes a new delay tactic, according to Axios, saying he will develop some options and come back. Now, this is all Axios reporting, citing six high-level sources who were briefed on or heard the discussions.

12:46They say, again, that at least three times this year, President Trump authorized a crackdown on these companies routing NVIDIA chips to China and that Lutnik has been standing in the way. I will say, guys, we had reached out to the Commerce Department earlier today on one piece of this, which was that the Treasury Secretary, Scott Besant, confronted Lutnik over this on Thursday in the Situation Room. At the time, on that piece of it, Commerce had said this was false. There was no such conversation between Besant and Lutnik. We're out to them again on this, and we'll bring you any response once we have it.

13:16But guys, this goes to this point that everyone in Washington is trying to get at, at who in the government knew things about NVIDIA and Megaspeed, and when did they know them. The latest reporting here suggests that most of these cabinet officials were in the know, that the president had been trying to crack down on this routing of NVIDIA chips to China, and that the Commerce Secretary was the one standing in the way. And of course, the question is, what is the motivation behind stalling all of this? Is there some other motivation besides avoiding a trade war? Megan, also it seems like Jensen Huang is approaching a deadline in terms of responding to the House Select Committee on China and their request for him to come to Capitol Hill for a closed-door meeting.

13:56That's absolutely right. Those three Hill Republicans last week had asked Jensen Huang to come to the Hill for a hearing next week to testify to them behind closed doors. They're giving him until the end of the day today to respond to them, to either say he will come or to suggest a new date. Some of our reporters on Capitol Hill have been in touch with those Hill Republicans today. They say if they don't get a response from Huang on that hearing that they are prepared to issue a subpoena. So we're only a couple of hours now until the end of the day, which is their deadline. So we'll see what happens there and whether we'll see the NVIDIA chief on the Hill next week.

14:29Megan, thanks. Megan Gosella. So can the U.S. maintain its lead in AI chips if it can't control where those chips go and who may have access to them? Joining us now, former White House chief information officer in Fortaleas, Solution CEO Teresa Payton. And Teresa, great to have you with us. Thanks for having me. If Jensen Huang had had an affair with a U.S. citizen, we wouldn't be having this conversation at this point. But it's the fact that as the Chinese nationally put himself into this situation where it becomes a national security issue, how serious do you think this is? And are you surprised that there is even a thought that he should remain as CEO of NVIDIA because of his importance to American AI?

15:10Yeah, I mean, I think this is the real question here. You have a couple of things that you asked me to address. So the first one is, you know, AI chips are considered a national strategic asset. And so if they have been put at risk, if they have found their ways into hands of countries that we said we didn't want them to be in those countries, China being one of them, then that could be a national security risk that they have our technology. This also shows sort of the flaws in our thinking around how we're actually going to track these chips after they're sold. And then lastly, there is no known succession plan for NVIDIA.

15:47And so that is a concerning problem. There's no ready next CEO ready to step into place to take over if he were asked to step down. So a lot still to unpack. The thing is, is right now, whether or not there are national security risks and concerns, those are allegations under investigation. So more to come as the facts present themselves. Yeah, I mean, the way you frame that, the very sale of these particular products represent the potential national security risk. It sort of allows everybody not to actually necessarily care what the motivation was, whether it was because he was having an affair with somebody who ran one of these companies or because he's maximizing the end market for NVIDIA's highest, most advanced chips right now.

16:34Now, if you're a member of a board of a company, what are the lessons to be drawing out of this whole episode? Obviously, you know, obey export restrictions and things like that. But just in terms of, you know, the interactions that a CEO might have with customers around the world. No, you bring up such a great point. So for starters, even on the chips, because there's a debate whether or not you should put tracking devices on the chips to figure out where they go, but you could do independent verification and validation. So you could say, I self-attest on buying these chips. These chips are going to be installed here.

17:11And periodically, I'll have a third-party audit firm that everybody agrees to that will come and audit me and tell you whether or not the chips have moved and are no longer here. So that's one way we could start to actually validate this. boards need to be thinking about a couple of things. One, where's your investment in AI technology? Two, many boards are, you know, we're thinking a lot about how do we protect the physical security of the executive? How do we protect the digital security of the executive? But nobody's really taking a look at the people that get on the executive's calendars. And we shouldn't be expecting CEOs who are targets of both, you know, kind of national and international espionage.

17:51We shouldn't expect them to be their own counterintelligence officers. So this is an area that is a blind spot, I think, for a lot and a lot of boards and a lot of executive teams. And additionally, a succession plan that is absolutely paramount, especially as it relates to things like the AI ecosystem. I mean, I guess, Teresa, you also sort of brought in the definition of what kind of company could be a national security risk. So there might be some companies out there which, you know, maybe even five years ago were not considered, you know, to be the target of maybe a Chinese spy plot. But at this point in time, things have changed.

18:29I mean, everybody from an open AI CEO, for instance, to Jensen Huang in all the picks and shovels, the whole entire AI ecosystem trade, all of them could be could be a weak link. I think what American businesses need to understand is every industry that we have, America is considered the place in the globe that you go for innovative thinking, creative thinking, and cutting-edge, bleeding-edge technologies and businesses. Every business is a national security business. No matter what you are doing, especially if you're in critical infrastructure, not just the AI ecosystem, These industries are under attack, but for both economic and intellectual property, espionage is something real.

19:18It's something happening. And so every business needs to understand your executive team is a target. Teresa, thank you. Teresa Payton. for four days. Online travel companies such as Booking and Expedia have had their ups and downs this year as markets assess the impact AI agents would have on their business. Today, those companies getting a little help from a friend, well explained. And being able to bet on practically anything is a lure for prediction markets. But can that be taken too far? Two senators say yes. That's coming up on Close the Bell Overtime.

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20:37Oh, and it is completely ad-free. Yes, I said it, ad-free. Try YouTube Premium for two months free at YouTube.com slash premium. Trial eligibility varies, Terms apply. Cancel any time. Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow.

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21:48participant could see perceived odds of success that could lead to lower enrollment in some cases. Perhaps valid in a hypothetical sense, I guess. I mean, the interesting thing is, I mean, maybe most people wouldn't pay attention, but there are individual biotech companies who trade entirely based on trial good, trial bad. It's a binary. And you kind of can infer what the, you know, what the implied outcome of that is going to be. You know, so it's hard to know exactly whether it would corrupt the trials, even if, you know, obviously you have to have safeguards against inside information and all the others.

22:23Yeah, yeah, yeah. I mean, the question too is for the contracts, if there would be much more granular in terms of will the phase one trial of something, or will the phase two trial, because that's really kind of hard to say, you know, I can see an investment case for this sort of contract here. Right. There should be a specific threshold, right? Because sometimes there's a trial result and it's like it didn't meet every single target. And the stock still goes down or whatever. And so maybe this is another way to trade. I don't know. But it seems so specific. Yeah, it does. Really interesting. United Airlines is putting AI agents on the naughty list this holiday season.

22:55The carrier says it is restricting personal AI agents like Meta's Muse from using its system to book tickets for passengers ahead of the holiday travel season. The airline citing concerns over unintended purchases, exposing sensitive customer information, and agents not being able to confirm checked bags don't contain prohibited items. agents will still be allowed to show customers flight options and prices, but just won't be able to finalize the purchases. I think the security aspect of it is an interesting angle, but I think just the whole notion of blocking agents off from completing that transaction, that's sort of what Amazon is doing, not allowing agents.

23:28And who, in the end, is going to lose out? In today's session, it looked like Meta lost out on that a little bit because it was softer. But in the long run, not allowing an agent to make a purchase, is that going to be perceived as something negative? Yeah, I mean, it would certainly be negative relative to kind of the maximalist case of what the agent should be able to do for you, whether, in fact, that was going to be most people or not. I do find it amusing that that final little like rubber stamp checkoff box saying I have no prohibited items in my luggage is the thing that everyone needs to keep control of right there.

23:59But I guess it's one way for the airlines to keep it at bay. Well, we're about a week away from what's expected to be the second biggest IPO of all time. I'm up next. We'll look at the sentiment surrounding Anthropics IPO compared to what we saw ahead of SpaceX in June. Overtime, we'll be right back.

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25:31No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required.

25:55We're just a week away from Anthropic pricing its highly anticipated IPO. And today we are getting new financial information about its biggest rival, OpenAI. The company's revenue jumping to$10 billion in the third quarter. That's a 50 % increase from Q2, according to sources, but adjusted operating losses rose to$10.9 billion from$10.1 billion in the previous quarter. OpenAI is expected to go public next year. And Mike is taking a look at some recent IPO sentiment. Yeah, it's quite a contrast between the lead up to the SpaceX IPO in June in terms of how hyped a lot of investors were about the idea of getting in on this big IPO.

26:29One measure of that, these are two ETFs that track recent IPOs. Renaissance IPO, that's the First Trust Equity Opportunities Fund. Right in here was the lead up to the SpaceX IPO. And you see everybody got very excited kind of with that momentum stampede that we had at the time. Of course, the overall market, this is when semiconductors peak. I've kind of looked at it as potentially the speculative peak of the AI theme. We'll see if that plays out. Right now, you've had bad underperformance by these funds going into this period right now. Maybe that's good, where it basically keeps a little bit less hot money, even though it seems like Anthropic has plenty of demand at the moment for the offering at the expected valuation.

27:07Yeah, these ETFs, though, also encompass some of the other ones, even a core weave, I would imagine, still? Some of them may still have that. They can be up to two years later. Both of these ETFs, SpaceX is 9 % or 10 % of the holdings right now. So it is a lot, largely SpaceX. And of course, SpaceX itself, if you bought it after first trade, has not really performed. So, Matt, it's one of the things holding it back. And then once Anthropic is added, I'm sure that's going to be a huge weight. Definitely. I mean, to keep in mind also, once there are IPOs, what other indices, what other ETS will these new issues join?

27:39That's right. Will it have an outsized impact? For instance, if Anthropic joins software, that could mean a lot for the IGP. Eventually, for sure. And what's interesting is, so it's going to go into the NASDAQ 100. We know that because of its size very quickly. And then some of the Russell and indexes and things like that. But, yeah, once it gets in the S &P, and it seems like it could be profitable soon. So maybe it's a candidate to get the S &P 500. software would be hilarious if it were, you know, them and Microsoft fighting it out. Right, exactly. Time now for a CNBC News update with Julia Borson.

28:06Julia. Melissa, the House is set to vote soon on a new effort to release the remaining files related to the late sex offender Jeffrey Epstein. Republican Representative Thomas Massey secured the signatures of four Republican colleagues to force the vote. The bill allows Epstein survivors and state attorneys general to sue the Justice Department for the release. It also enables Congress to demand the unredacted files from the department. Ukrainian President Volodymyr Zelensky said today the progress of peace negotiations will largely depend on how Americans talk to Russia after U.S.-led talks this week in Abu Dhabi.

28:40U.S. Special Envoy Steve Witkoff and President Trump's son-in-law, Jared Kushner, are set to meet with Russian President Vladimir Putin tomorrow and then with Zelensky afterwards. And Roku is reportedly ditching its smart home business so it can refocus on streaming. The company tells tech newsletter Lowpass it will not make smart home hardware anymore. The change comes just days after Fox completed its$22 billion takeover at the company. Back over to you. Julia, thanks. Julie Borsten. Up next, we'll discuss whether today's rally could be the start of the bulls running wild on Wall Street to end the year.

29:14Closing Bell Overtime, be right back.

29:21Welcome back to Closing Bell Overtime. I'm live from the Nasdaq market site. CoreWeave giving the AI trade a boost today. The Nasdaq 100 gaining 2.3%, 1.3 % for the S &P 500. CoreWeave's results in its commentary easing investor fears about overspending and racking up debt. CoreWeave up 25 % today, but still down 47 % over the past six months. Chip stocks lifted the CoreWeave on the CoreWeave news, but also some relief in the NVIDIA selling AMD and Micron. Big gainers. AMD up 23 % just this week. As the major averages extend the rally, are options traders betting for more upside into year-end?

29:54Joining us now is Susquehanna co-head of Derivative Strategy, Chris Murphy. Chris, good to see you. Thanks, Mike. Good to see you, too. Pretty much everything I was reading over the weekend and coming into this week was, last week was this sort of massive liquidation, de-risking, you know, downside hedges got cashed in. Kind of a classic flush, I guess, in a lot of ways, positioning-wise. What are you seeing as the market has now tried to make the case that we found some kind of a tactical low? What are options traders doing and what does it tell you about what's to come? Yeah, so you're right on last week.

30:28Big washout. This week, very consistent all week long upside positioning into year end in anything related to AI. NVIDIA, DRAM, the SOX, etc. And it makes a lot of sense. Everybody has pared down their exposure last week into the AI sector. And the last thing an institution wants is to be caught underinvested if we get a year-end rally. So you can set up these upside options positions via calls and call spreads. Limit your exposure to a downside pullback if this is a head fake. But have that exposure on to cover yourself if we do rally into the end of the year. Chris, what we noticed is that when the volatility spiked higher, it spiked higher and then it reverted back to its sort of low normal levels.

31:22But within within the index, Chris, we're still seeing, I imagine, high volatility for tech shares. And I'm wondering within technology where you see the most opportunity in terms of some of these options strategies where volatility might be high, it might be, you know, good selling calls, for instance, on some subsectors of technology. Well, you know, it's interesting. Volatility is definitely higher. You are right. But after the selling that we saw last week and before that, the setup in the options has actually shifted where the downside options are a lot more expensive than they had been during the euphoric times of earlier this year.

32:01But actually, the upside options are less expensive. So we call that a big shift in skew. So investors can actually get decent volatility levels on these upside options in something like the DRAM ETF or in something like the SOX, even in NVIDIA and individual MAG7 names, because all the concerns shifted to the downside and away from the upside. So actually, there's some pretty good opportunities across the board in upside positioning because of that dynamic. So, Chris, one of the interesting aspects of last Thursday was it was finally kind of a sell almost everything day. Right. It was the first 80 percent downside volume day in the New York Stock Exchange in like a year.

32:51And I wondered if it was going to represent, you know, the beginning of a new phase where, you know, Stocks are more correlated and you have a little bit less of this kind of rotation that just continuously turns around and keeps index volatility suppressed. Is there any way to make a call as to whether we're kind of back to normal or if, in fact, we're going to have a little more of a across the board volatility environment? Well, I think the institutions and the hedge funds that are playing the options are typically pretty smart. They're not betting for correlation to spike. Yes, we're seeing a lot of bullish positioning in the AI sector, but we are seeing the opposite in some of the defensive areas.

33:32For example, like consumer staples, that's been all downside, all bearish, all put buying all week long. So if we're going to follow the flow, the options flow is seem to be pointing towards. That was a capitulation event next week with volatility. I mean, you said it with the broad percentage sell-off. You had different things that happened in the VIX that are capitulation indicators. So the market is seemingly pointing towards AI is going to take a turn leading, but the defensive areas of the market are going to lag. But also pointing to higher yields, right, on treasuries. Yeah, I mean, and that's another area.

34:15If you're looking at the HYG and the IEF, those are areas that we're seeing pretty consistent hedging. You know, ever since the hotter CPI, that was really the main catalyst there. But if you're looking at those areas of the market, you're seeing, you know, it kind of feels like, you know, let's, you know, the markets, you know, wants to overheat a little bit. and we're going to see higher yields, but we're going to continue to see the AI trade move higher. And then, Chris, in terms of NVIDIA, is there any particular level that traders seem to be focusing on or defending? How is that setting up?

34:57NVIDIA is interesting because we're more seeing the upside call positioning. We think of that more as we're under-owned in this area potentially, and we want exposure to upside. We're not really seeing as many of the aggressive downside put selling. We love to see a lower level, 150 or something like that, be consistently sold via puts. But people, I think, are seeing a very binary type situation in NVIDIA with what happens with the CEO. So they're not really excited about setting up to buy a downside move. They just want exposure to an upside move with limited risk via calls and call spreads.

35:42Yeah, they want protection. They want upside risk protection, I guess, is the way to think about it. Chris, thanks very much. Chris Murphy. Sure. Thank you. All right. Bitcoin on track for a sixth straight losing week. Up next, Adam Back, who many suspected was the creator of Bitcoin, joins us exclusively on whether there are any signs Bitcoin is ready to bounce back. Closing bell over time. We'll be right back.

36:07Corning, one of the big winners in the S &P 500 today. Jeffries initiating the stock with a buy rating and a$134 price target, implying upside of nearly 20 percent from yesterday's close. The analysts there writing Corning sits at the center of an AI driven fiber shortage with multi-year hyperscaler and carrier contracts underpinning growth. Despite today's rally, Corning shares are still down more than 50 percent since hitting a record high in late June. I was just reading Quest Diagnostics hitting an all time high in today's session. And it was spun off from Corning in 1996. A while back. I remember it.

36:39That's fascinating. Well, Bitcoin just can't catch a bid. The cryptocurrency hitting the lowest level since August amid the recent sell-off and is on pace for closing lower for a six straight week. It bounced modestly today, but it's still struggling to regain momentum. So far this month, outflows from U.S. Bitcoin ETFs have topped$1.5 billion. So after weeks of selling pressure, what will it take to turn the crypto trade around? Joining us now in an exclusive CNBC interview is Adam Back, co-founder and CEO of blockchain technology company, Blockstream. Adam, great to have you with us. Thanks for having me on.

37:09I'll start off with what do you think of the price of Bitcoin here? Because it seems to trade along with the Nasdaq. Yeah, it seems to in the short term. I think the longer term, it's shown significant decorrelation during the year. So I expect that to pick up at some point. I think it's held up relatively well in the sense that it is inherently more volatile. and given what's happened with the general markets in this month. Although, you know, so I was looking back five years ago this week, Bitcoin hit 69 ,000 for the first time. We're in the low 70s right now. CPI is up 20 % since then. The S &P 500 is up, I don't know, 30, 40%.

37:46So what's it supposed to be connected to? And have we ever had this? We haven't really had a five-year period when it's been sideways, have we? No, I mean, it's been continuously. There's the 200-week moving average price, which is a kind of floor price. And obviously, when it was 69, that was an all-time high. Yes. The moving average was probably down to the 20s. Way low, yeah. And now it's in the 67 ,000. So you can see that during the drawdowns, Bitcoin rarely goes below that 200-week level. So you can think about it as the kind of, you know, if you take the speculation out, it's the kind of where it's growing slowly.

38:25So, you know, I can see that. You can see on the historic information that feeds that metric that it's going to continue growing upwards through to next year and so on. So I think that, you know, there was some kind of maybe premature optimism about institutional adoption. and I think, you know, we had the ETF, the BlackRock ETF. Some of the inflows and outflows are technical because people are doing basis trading. But for the longer term, I think the institutional adoption is yet to come, which is the managed money, the mutual funds, the model portfolios of BlackRock and others are put out. I think those are still to come, and those are large pots of money because the average person doesn't do self-directed investments.

39:10And so those large pots of money, I'd say we're, you know, still 95 % or more of that to come in the following years. And that could very well be a wave of money coming in. But at the same time, what is, for the longer-term investor, what is the bull case? What is the investment case for Bitcoin? Because before it was a store of value, and then it was the technology behind it. We've seen the adoption of the blockchain. That technology is all over the place at this point. And yet, here we are. Mike mentioned five years ago, Bitcoin's the same place where we were. So what is it? What is it a measure of?

39:48I mean, I think ultimately it's improved gold. I think it's the simplest way to think about it. You have a kind of mathematically assured scarcity coming from the physical factors, right? The proof of work. And so, you know, in an uncertain world, there is some certainty there. and it has a lot of advantages compared to physical gold in terms of, you know, possibility to send it, to assay it more cheaply, to send it online, to trade with it. You know, it's a highly liquid market. Now, I think while the price is not that much higher than it was four or five years ago, the 69 ,000 top in the prior cycle, that was a cycle top, whereas we're just coming out of a market bottom rate And it is cyclical on a four-year period, roughly, with the halvings.

40:39So I think we're in the early innings of a bull market cycle. Personally, I have a bet on for Bitcoin to top a million by the end of the cycle, which is later in 2028. See if that pans out. When you say you have a personal bet, how do you expect on what? Like, how are you expressing that bet? So that Bitcoin would be over a million before the end of the halving cycle, which is sort of mid-2028, roughly. OK, so in other words, you have an actual trade on or you have a bet with somebody? It was a side bet. It was a proposition bet. OK, gotcha. How should we be thinking about security? Obviously, there's the alleged North Korea hack, but that was not a hack of the blockchain, really.

41:21It was just getting credentials. But with things like, you know, people talk about quantum and other threats and AI in general. Yeah, I mean, I think AI, you know, is sort of in a transition period where AI-assisted computer security is coming into play, both on the offensive side and on the offensive side. And so we're seeing a lot of activity in the very short time. Bitcoin itself, the core network, hasn't had any kind of major vulnerability arising from that. But a lot of the online systems around it, like the trading platforms, the Binance hack, and so on have. I think it does put into the forefront cold storage, the custody that ETF providers use.

42:06And my company Blockstream has an announcement coming this week that we're partnering with Talos to implement secure multi-party computation to do more cold HSM-supported storage for Bitcoin, which is ultimately what ETFs and custodians use. So I think it does bring, you know, going back to basics, cold storage, keep things off the internet, high value, and obviously secure platforms that are trading venues as well. Adam, good to see you. Thank you. Thank you. Adam back. Up next, how a looming debt wall could impact software stocks and stoke new fears of the cesspocalypse. And here's a check on the S &P stocks hitting 52-week highs, Apple, Coca-Cola, Berkshire Hathaway, Hasbro, and Fastenal.

42:52Closing bell over time, live from the NASDAQ MarketSite, we'll be right back.

43:10Investors already worried about software stocks being replaced by AI, but now they also have to fear a looming debt refinancing wall. Pippa Stevens got the details. Pippa. Hey, Melissa. So there is always a maturity wall on the horizon, but investors are watching the debt coming due in the near future closely because while investment-grade and stronger speculative has been pushed out, distressed borrowers who couldn't necessarily refinance means that the riskier debt is now front-loaded. In the speculative market,$356 billion worth of debt matures in 2028, according to Moody's ratings, down from$613 billion last year as companies refinanced.

43:43But what's left is riskier. Of the spec debt maturing in the next two years, 27 % is for distressed companies, up from 19 % last year. That includes$40 billion of software debt, the firm said, could be susceptible to replacement by AI. Credit spreads have widened, especially for distressed borrowers, on top of rising rates, meaning it's a whole lot more expensive for companies trying to refinance. It's not as much of a problem in investment grade, where a record$1.56 trillion comes due starting next year through 2031. Those spreads are near the tightest in decades, notes Moody's, which would usually indicate good refinancing conditions.

44:19But total costs have increased because of higher treasury yields. And every dollar that goes to higher interest costs is a dollar not going to shareholders or investment. So a tougher refinancing cycle could squeeze profits. Guys? Yeah, and Pippa, I mean, we've, I guess a lot of bond investors have become somewhat spoiled with very low default rates for quite a long time. In fact, lower than you might have expected. So, you know, anytime somebody is looking at these, you know, nominal yields that look pretty juicy, you're going to have to, I think, start having some assumptions about how much of that's going to go bad.

44:51Yeah, I mean, we're not seeing estimates rising meaningfully about the percentage that could be distressed. But I think the market is going to have to adjust to this new normal where post-financial crisis, every rate hiking cycle has been seen as, OK, we'll get to the other side of this and then rates will come back down. But increasingly, we're seeing that that might not be the case. And so these companies will have to get used to these, you know, this higher for longer interest rate environment that a lot of them are not used to. And then specifically, if we do start to see some issues in the distressed area specifically, that could then trickle up to higher grade credit as well.

45:25Because if private equity, for example, is then forced to get out of some of these positions because of redemptions and they can't offload the distressed, then they might move up the value chain and then have to sell some of those at a loss, lowering those prices as well. So by no means any type of warning bells just yet on this, but certainly something to watch in this rising rate environment. Yeah, I'm glad you mentioned what happened before with the last apocalypse in terms of the fallout on the private credit side, because, I mean, to see that play out again would be really interesting. And to see if they've already unloaded some of the riskier debt in that process, in that cycle.

46:00Yeah, I mean, we'll have to wait and see. And what's clear, though, is that, I mean, we heard from Corweave today, and clearly the market was heartened to hear what they said. But, you know, he said that they're not going to use unsecured debt to fund their business at the current yields, nor do they need to. And I guess part of that is, OK, good, they can use given that unsecured debt is more expensive than secured loans. But then also, if they're unable to raise junior debt, what does that mean in terms of their expansion plans going forward and the rate at which they want to build out the data centers?

46:28If they don't have free access to capital markets or tighter access and yields do keep going up, that's going to have a lot of ripple effects. Yeah, I mean, the market kind of decided that Corwee wasn't going to borrow any more on secure debt. It wasn't them. Pippa, thank you so much. Appreciate it. I like what you said up with tomorrow's trade today. Jobless claims and existing home sales are the only reports on the economic calendar. But we will get some key earnings tomorrow, including Cisco, Applied Materials, Cerebris, and Nebius. And the stock market will have some adult supervision because bonds will trade again after the holiday today.

47:01Yes, yes, everybody's back. And that's going to do it for overtime. Fast money is up right after this.

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