Closing Bell 10/26/26

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0:59Scott Wapner: Oh, you guys. Thank you. Welcome to Closing Bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the most anticipated three days of earnings season unfolding over the course of this week as Microsoft, Amazon, Alphabet all report earnings, not to mention the Fed meeting right smack in the middle. We'll discuss what's at stake with our experts today. We'll also talk to early anthropic investor Jeff Richards about that company's S1, which also dropped today. In the meantime, the scorecard with 60 to go in regulation looks like this. We've been green throughout the day today, led by tech, industrials, discretionary.

1:35Scott Wapner: Most of the semis are having a nice day as well. And a big deal in the energy space, EQT is buying range resources,$13 billion, the value of that deal. We begin with our talk of the tape, whether the AI trade is really hanging in the balance this week as those critical earnings reports hit. Let's ask our panel. Solas' Dan Greenhouse, CIBC's Chris Harvey. Gentlemen, it's good to have you both here. Is it hanging in the balance, this trade? Absolutely not. Definitively not. We keep talking on the channel, on the network, about the importance of hyperscale earnings. And they are obviously incredibly important for any number of reasons.

2:13Azure and all the specifics that I don't need to reiterate. But ultimately, the CapEx plans are what people focus on. But this is not, as I described it, the tip of the spear. It's not like Amazon's going to report and they are suddenly going to announce a decrease in CapEx expenditures. It's going to come from somewhere else. It's going to come from the neoclouds. It's going to come from some other consumer of the CapEx rather than the CapEx itself. So I don't like the almost unimpeded focus on the CapEx plans as if that's the barometer of the AI trade. I'd much more, I should much more encourage people to focus on GPU rental rates, on token demand, token utilization.

3:01Things like that, I think over time, will be more indicative of a peak, if you will, quote unquote, than anything the CapEx data in any quarter is going to tell me. You agree with that? We're also looking at the funding markets, right? You want to see all the latest applications, how they're doing.

3:17Scott Wapner: They're doing well. You want to see sentiment. But I think there's still plenty of room in this trade. And to look at things on a day-to-day basis, you're just going to drive yourself nuts. I think overall what you want to do is hyperscale is in a good spot. What we also are looking at is the AI industrials, which have gotten really beaten up here. Once we get through the election, I think the rhetoric around the data center start to die down, and those names can begin to work. But we need a little bit of time for that to occur. I want to push back on that. I would argue, I will argue, after the election, I think the AI debate might actually ramp up.

3:54As it goes as expected, Democrats take control of the House. That seems like a foregone conclusion to this point. Maybe they take the Senate, maybe they don't, but that's largely irrelevant from a headline standpoint. point, you're going to have Speaker Hakeem Jeffries and all the associated Democrats as head of committees. And they're going to make a lot of noise about the data centers around the country, which, as we all know, poll quite terribly. So I don't think that this headline risk goes away anytime soon. It may be enough to get G. Vrnova and Vertiv, et cetera, higher for a couple of quarters.

4:24But I don't think that narrative is going away. I think that's with us straight through the 2028 election.

4:28Scott Wapner: On the point you made about the trade not hanging in the balance by virtue of what the mega caps have to say this week. Do you think we're in any way too complacent about some of the other issues in the funding markets with the neoclouds? There's a view out there that you don't have to worry, just like you're not worried about the mega caps, but you have to worry about an eventual maybe debt default, and then that cascades somewhere else, and then that jumps somewhere else, and then that jumps somewhere else, and then it stays largely away at the beginning from the mega caps, but the whole market is impacted by the somewhere else to somewhere else to somewhere else.

5:08We all got trained quite clearly in 2008 on the something else to something else. And so everyone is looking for the interlinkages. What's the first shoe to drop the canary in the coal mine? We talked about this last week. Sure, something like that might happen. As I argued last week, I don't think what's going on with Corweave is sufficient for a number of reasons.

5:25Scott Wapner: I didn't mention their name specific for a reason. The neoclouds. I don't think what's going on with it, because Nebius and I are doing similarly. You can go ahead and name as many as you want. Aren't we here to name things? Go ahead. So my point is, I don't think what's going on there is sufficient as of yet. As a reminder, the core we've debt that's selling off is its parent unsecured debt. The secured debt is doing fine. That's largely true across the space. The distinction might be lost on some equity viewers, but not unimportant. I think you have to watch it closely, though, because when I talk about, I alluded to the tip of the spear before.

6:01I said the tip of the spear before. Demand from the neoclouds is crucially important for demand eventually becoming CapEx, et cetera, et cetera. I'm jumbling at this a little bit, but it's important. So if the financing markets tighten up on neocloud-type companies, the periphery of the AI investment cycle, that could ripple throughout the investment theme for sure. We have not seen that as of yet. We're going to hear from everybody over the course of earnings season. I imagine it's not going to happen yet. But that's what you want to watch. Is the tightening of the financing markets having some material effect on these companies' demand?

6:37I don't think it's happening yet for some of the reasons that we've articulated and some others. Scott, you make a great point. The contagion. Are we going to see contagion? I don't think we're going to see that contagion or the contagion in a big way, where one tree falls and the dominoes just fall down. But what I do believe is what the market's saying is, hey, as we go forward in time, the amount of capital that's available is somewhat less.

7:04Scott Wapner: The cost of capital as you go down the risk spectrum, a lot more. But that's not over time. That's what's happening now. That's what's happening now. And that's what's going to continue to happen. What's the funny thing is, I talk to a lot of PMs and what they say is this is what we want. We want the Fed to step away. We want the markets to take care of the cost of capital. However, when it's happening, they're not feeling all that great about it. That said, I think that's a better place to be. I think that's what we need to do. And I also think that's what Kevin Walsh wants. He wants the markets to take care of this.

7:34And the other thing is, it's as we go forward in time, the economy is beginning to slow down. You do have to worry about we have to start thinking about is this money good? Is this money bad? And what am I willing to pay for this?

7:47Scott Wapner: Because for too long, the cost of capital was a bit too cheap. Are you by and large positive on the market overall? Because there's a pretty good debate on the street almost every day, but certainly today in the notes that have come out. RBC, 5 to 10 percent pullback they're on guard for. HSBC cut equities to neutral in the near term. And then it's balanced by Wolf saying little evidence that fundamentals justify what you've seen in terms of the deterioration in some of the stock prices. than Mike Wilson, Morgan Stanley, says the correction that began in June is now in its final stages. So we've been pretty, we've been up in cap, up in quality since, I'd say, Labor Day.

8:23We're now starting to look at and see opportunities. We want to play offense.

8:27Scott Wapner: If you're asking, do we think equity markets go higher from here? The answer is yes. Where are you playing offense then? So we're starting to look for offense in those really beaten up AI industrial names, right? They have really taken it on the chin. And Dan's right. the narrative is not going to go away on data centers, but will it come down? And I think the answer is yes. But you're not playing offense outside of the AI trade. If you're playing it in the beaten down industrial power names, that's still within the universe. What about some of the sectors that haven't played ball? So the sector that hasn't played ball is financial, and I still don't think it's going to play ball because we're in a tightening cycle.

9:05Usually when you're in a tightening cycle, rates go higher, the curve flattens, people worry about the consumer, and it just doesn't work.

9:10Scott Wapner: You still think we're in a tightening cycle? I do. I think we're in a tightening cycle. I think the Fed's going to have a really tricky conversation about forward guidance, but I still think we're in a tightening cycle. I hope we're not in a tightening cycle. I'm going to go with the more friendly-sounding removal of accommodation cycle. I'm going to go with that. I don't think we're in a tightening cycle. I think they're going to raise rates a couple of times. That's a tightening cycle. That would be three. No, I don't think that's a tightening cycle. This is somewhat of a semantic argument, but we can do that.

9:40One year to losing, but nonetheless. One thing I don't do is lose arguments. But anyway, I'll just storm off set. So I think they will remove some of the accommodation. We're almost surely not going to get a hike at the October meeting. We'll probably get one in December, and then we'll have to see what happens thereafter. But I don't think we're in the middle of a tightening cycle.

9:58Scott Wapner: Wait, so you think we're going to get a hike? No, I do not. I would bet dollars to donuts we do not get a hike at this October meeting. So you think we're going to get one in December? Right now, all signs point to I think they will tighten one more time in December, and then we'll have to reassess next year. To repeat my longstanding position, I don't think they should be doing that per se, but that's a whole other conversation. In terms of the market, I'll just repeat, and Chris obviously knows this, the energy sector is doing really well. And it's not, obviously, some of it is AI related, but a lot of it is the higher price of oil.

10:30The president talked about this out on the stump the other day. A number of these companies are sitting at or near 52-week highs, enormous amounts of cash flow. That's great.

10:38Scott Wapner: That's 3 % of the market. Yes, but if you're an average, okay, so the average investor, so I'm not someone who says, well, I'm going to overweight energy. That's not what we do. Like, if you're an individual investor out there picking stocks, whether it's 1 % of the market or 10 % of the markets are relevant, you're just looking to perform. And anywhere in energy space, you can throw a dart and have hit a company that's a fraction of the size of NVIDIA or Microsoft or whatever. but for your particular portfolio can still do incredibly well. The weighting, all the people come on here and say, we're overweight this and overweight that.

11:10No offense, because Chris, that's for people who weight to the benchmark to the index. If you're just running your own portfolio and having fun at parties, you can own energy stocks and not worry how you are relative to weightings in the S &P. That's the pushback argument one. All right.

11:25Scott Wapner: Last point, then I got to bounce. Yeah. At the end of the day, if you're going to be in U.S. equities, you're going to be along the AI trade. Otherwise, go down in small cap, go to Canada, go to Europe, go somewhere else. OK, guys, thanks. I appreciate it. Now to Anthropics S1 filing. It does reveal a fast growing company, but one warning of possible risks to its story and many of them. We have coverage on all sides of the deal today. Leslie Picker on what the company is revealing. Kate Rooney on some of the other financials. Leslie, we begin with you. Hey, Scott. Yeah. Anthropics could be the largest IPO of all time, surpassing the current record holder SpaceX, which went public just in June.

12:02The company says it plans to use the proceeds from the offering for CapEx, including investments in compute and infrastructure, as well as hiring and retaining personnel. Additionally, Anthropix says it may use a portion of the net proceeds to acquire or invest in business products, services or technology, although notes that it doesn't have any agreements for any material acquisitions at this time. The S-1 so far only includes financials for the first half of the year, but I'm told it will be amended soon to add Q3. Perhaps not surprisingly, though, compute and infrastructure expenses amounted to more than half of the revenue haul of$16.3 billion for the first six months of the year.

12:40The operating loss was$693 million during that time period and narrowed significantly from the same period in 2025. Total net losses for the first half were$81 billion, but the vast majority of that was due to accounting marks. The company said the trailing 12-month revenue per employee was more than$6.6 million as of September 30th, and its personnel expense grew by nearly 500 percent, but as a percent of revenue, it comprises just 19 percent. The lockup here is also quite unique, Scott, even relative to what we saw with SpaceX. Anthropic is planning for about two dozen different dates that could unlock shares available for sale.

13:23There are still blanks in terms of how many shares unlock across its timeline. But after the IPO, the first date will be about 27 days post-listing all the way through about one year after the IPO. Anthropic plans to list under the NASDAQ, under the symbol ANT, and its debut could take place within the next four weeks. Scott.

13:43Scott Wapner: Okay. Leslie, thank you. That's Leslie Picker. Now to Kate Rooney with those details on the corporate governance and some of the risks that are being flagged. And there are many pages of risks, Kate. Scott, very many pages. I do want to start with this massive compute deal that we got from Anthropic over the next few years here. So Alphabet and Amazon are two of the biggest beneficiaries of Anthropic spending, each set to get about$110 billion from Anthropic. Elon Musk, SpaceX or XAI is on track to get$120 billion in the next three years. Anthropic said its total costs could surge to$750 billion.

14:16You also have Broadcom as part of this, about$161 billion. Scott, though, it does underline just how important Anthropic is right now as a customer to the rest of the tech trade as this company goes public. Governance was also a key part of this S1 that came out this morning. Anthropic's founders are set to keep majority voting power through a single special share. It is a class F share. It's going to be owned by the seven co-founders, it carries 50.1 % of the vote. Palantir did something similar, but Anthropic has about five different voting classes in terms of the shares. There is a class T as well, which is mostly the board of directors and this long-term benefit trust, which among other things helps elect board members.

14:57On top of all of that, Anthropic is also structured as a public benefit corporation, meaning it's got this dual mandate. So it has to balance the interest of shareholders. And then it says the interests of those materially affected by our contact conduct. Rather, the risk factors almost 100 pages in this S1. It does range from things like political backlash. They talk about model risk. So self-preserving, coercive, deceptive or manipulative behavior. They also talk about behavior that resembles blackmail by some of these AI models on the extreme side. And then there's access to compute as a risk.

15:31There's debt as a risk and then customer concentration. So they did say that two customers accounted for nearly a quarter of revenue last year, Scott. And finally, open source. So these are the cheaper models out there. A lot of them are out of China. They did say in this that could exert some pricey pressure on a few of their AI offerings, Scott.

15:49Scott Wapner: All right, Kate, appreciate that very much. Thank you. That's Kate Rooney. Now let's welcome an early anthropic shareholder, Jeff Richards, managing partner at Notable Capital, Big Technologies' Alex Kantiewicz, also a CNBC contributor. Good to have you both here. Jeff, I'll come to you first. We last visited with you not two weeks ago. You weren't at the investor day. So presumably this is the most in-depth look that you've had recently anyway into what the true story is. What's your biggest takeaway? Well, obviously, Scott, we've been investors for a number of years now and quite familiar with the financial performance of the company.

16:22I think the biggest takeaway today is hopefully people are impressed. I think that there was a lot of speculation, a lot of fear, uncertainty and doubt. a lot of folks spreading rumors that maybe this company wasn't as strong as people thought. But when you look at the balance sheet, you look at the growth, you look at the underlying metrics with 900 % NRR, you know, now generating$2 for every$1 of compute spend, which is up 5x in a year, growth of 1300%. We just don't have anything like that in the public software market today. And hopefully folks are impressed. And I think all of us in Silicon Valley are proud that this company has finally put its information out there and folks now can see what's happening on the demand side of the AI trade.

17:02Scott Wapner: This seems to be what you just referenced and we're showing on the screen, so let's keep that up. The increase in revenue per dollar of compute. For every dollar that Anthropix spends on compute, they're getting that much of an increase in revenue per dollar. Why is that so significant at this very moment in time? Yeah, what investors want to know when they look at a company like this going public is how durable is the revenue? Is the company getting better as it scales? And what you see in the financials for Anthropic is this company is getting way better as it scales. It's underlying metrics on gross margin.

17:39It's got an 85 % gross margin. It's got a strong balance sheet,$130 billion in cash on the balance sheet. So, you know, what people want to think about is if I'm buying into this stock today, where is it going to be performing in three or five years? And what you see here is a company with a lot of great underlying fundamental characteristics in the business that I think people will be excited about. Alex, what was your takeaway? Well, I think the customer broadening was really the most important stat that we saw in the S1 today. And at the end of the year last year, they had 1 ,500 customers doing 100 ,000 or more in business with them in the year.

18:14Fast forward, now they have 11 ,900. That is a massive leap. it shows that the company is not really dependent on just a few whales, right? We heard the number that 25 % of the revenue came from two companies. Now, five companies make up 21 % of the revenue. So that's really a de-risking in terms of, you know, you used to think maybe Anthropic, if one of those big clients goes to open AI or decides they don't really believe in generative AI anymore, it's a major hit on the stock. Now, I think investors can go in and feel a lot more comfortable that if Anthropic has a hiccup in the sales process or loses one person, one company's business to open AI, their growth can still be really strong.

18:52Scott Wapner: Is that, Jeff, how you view this? It's still a concentration of customer base, but not quite as much as Alex says. Yeah, I think Alex brings up such a great point about the breadth and diversity of the customer base. And you have to remember also, this is a five-year-old company, so that customer base is just going to get broader and more diverse. And then if you think about the ecosystem of companies that are around this from the hyperscalers, You've got private companies, which you and I have talked about, Scott, like Vercel and Fireworks and Foul and just this entire ecosystem of privately held AI companies that can hopefully go out and go public next year on the backs of Anthropic and OpenAI.

19:31But I think what it signals to investors is how broad, how deep this ecosystem is and how early we still are in terms of penetration with Fortune 100, Fortune 500, Fortune 1000 customers.

19:42Scott Wapner: Alex, what do you make of the, what was it, 100 pages worth of risk? What risk do you think is the biggest? Yeah, I think the risk that, you know, they might not have had a separate risk factor for it, but this is the one that stands out most prominently to me, is that the revenue surge, the revenue surge that we've both talked about happened after December 2025 when the company's coding models got really good. And I don't think it's standing out on a limb to say a lot of these massive numbers that we're seeing are the result of Anthropic building an incredible business in coding. And I think the big question for that company, the biggest risk here is, can it translate its impact in coding to the rest of the economy?

20:19They talked a lot about bio. They talked a lot about pharmaceuticals. We've heard about Claude Cowork. That needs to have a similar surge on a number of different matrices for Anthropic to be able to maintain this growth. Otherwise, and by the way, we didn't get the Q3 numbers. So let's see what those look like. Because otherwise, you might end up seeing this big spike and not a company falling off the map, but a company that never matches the growth spike.

20:44Scott Wapner: What about the open source risk, Jeff, and how you assess that in a world where, you know, they're already cutting token prices because of competition that's on the market. So your margins compress. But if you can grow your user base, your customer base, you can far outrun whatever hit you have to take on the margin front. Right. Yeah. Look, open source, open weight models are going to play an important role in the AI ecosystem. I think all of us believe that those are helping to drive broader adoption. As the technology becomes cheaper, you get broader adoption, particularly in large enterprises and among consumers.

21:22And so that trend is a good thing for the industry overall. And then if you look at the latest data from OpenRouter or other sources that are available on X, what you see is consumption of anthropic tokens going up. And I think the company mentioned in its S1 that 80 percent of its revenue comes from models that were released in the last six months. And so what that indicates is that people are willing to pay for the frontier. When you're talking about an open source or an open-to-weight model, you're probably not getting the very latest, the most cutting-edge technology. And if you're running a hedge fund or a biotech research lab or a large retailer or supply chain management business, you want the latest and greatest.

22:00And I think what you see in the numbers that were in the S1 is that people are willing to pay for the frontier models. Not to mention, we're about to enter this massive wave, Scott, which I know you've covered, of robotics. In the next three to five years, we're going to have a huge wave of robotics built around these new AI technologies. And those are going to require the latest and greatest models. So I think the setup, not only for the next few years, but the next probably five to ten years for companies like Anthropoc and OpenAI, and the need for frontier, cutting-edge models is going to be very strong.

22:28Scott Wapner: There are a lot of venture folks who got in early who are going to be sellers into the IPO. Where do you come down in that rank, whether you'll do that when you have the opportunity to or whether you'll be a buyer? We're not a public investor, so we don't generally buy at an IPO, but we love the company. We're thrilled to be shareholders. We invested when it was sub a billion dollars in annual revenue. I believe it was the largest single check we had ever written into a company, but we had that level of conviction. And my partners, Hans and Glenn, felt strongly that this was a bet we should make.

23:05So we haven't even talked about distribution or sale. And obviously, we've got to weigh our obligation to RLPs with our belief in a company like this and our belief in this industry. And as I mentioned, we've got, you know, hundreds of millions of dollars, if not billions, invested in that entire ecosystem of developer tools and other cloud service providers that are built around AI.

23:26Scott Wapner: The lockup makes sense to you very much like what SpaceX did? You know, I just started to dig into it. We just had a conversation about it before I ran over here, so I haven't had a chance to look through all the details. All right. What do you think about the lockup structure? I think it should be fine. I mean, I think the demand for this company is going to be off the charts. And so even if some employees or insiders sell, I don't think you're going to see any problem with Anthropic. It is, you know, if you think about when you sell, who else are you going to buy? This is one of the maybe two foundational companies in the AI race.

23:59They listed OpenAI and Google as their competitors. So you take money out of Anthropic, where are you going to put it? I think the demand is going to be really high. And if insiders take money off the table early, that doesn't seem like it will blunt the momentum at all to me.

24:12Scott Wapner: All right, guys, good stuff. AK, thanks for being here. Jeff, good to see you again, as always, especially on this important day. We'll talk many more times, I know, about Anthropic in the days and weeks ahead. That's Jeff Richards, Alex Kanchowitz. Meta had news today in the AI funding race. Julia Boorstin has that for us. Hi, Julia. Scott, MetaShare is falling about one and a half percent today on news of its$95 billion equity capital raise. The stock is now down about 16 percent in the past month as its AI momentum rally after its Muse AI agent launch is now fading as today's news fuels concerns about Meta's AI spending.

24:46MetaShares first jumped about 1.6 % pre-market on this news, on the clarity, removing some of the overhang of uncertainty, as well as the news that NVIDIA, AMD and Broadcom are interested in buying up to$5 billion in MetaShares. But the stock turned negative as analysts flagged margin concerns. Oppenheimer reducing its EPS estimates, saying its model indicates that Meta has to raise another$75 billion through 2028. 2028. While RBC writes with the deal signaling likely higher CapEx next year and coming dilution, the focus remains on the company's core ads growth, which is fueled in part by AI. This is the first time since 2013, Scott, that the company has issued new stock.

25:31Back over to you.

25:32Scott Wapner: OK, Julia, thanks very much. That's Julia Borsten. To Apple now, we're sales for the new foldable duo well underway. Mackenzie Sigalis has some numbers from the opening weekend. What are you hearing. Hey, Scott. So the first sell side availability check showed that Duo's launch inventory is virtually sold out. JP Morgan says the new foldable is unavailable for in-store pickup across every market it tracks. Bank of America says delivery wait time stand at 91 days across all storage configurations and color. Now, one supply chain report says that Apple has asked suppliers to accelerate production and increase Duo orders by 30 percent.

26:06Now, Apple hasn't confirmed that figure, but its chief marketing officer told me the company is in the process of ramping production. Now, IDC has 7 million as the target number of shipments this year. JP Morgan calls this constrained availability a positive signal for demand. And while lead times for the 18 Pro and Pro Max are already starting to normalize, duo waits are barely moving, with Bank of America actually seeing longer wait times now at U.S. carriers. The counter signal is a secondary market. Jeffries found Hong Kong resale premiums fell to as low as 10 percent by Saturday versus expectations for as much as 50 percent.

26:42Success of the duo in China, of course, is critical for Apple. And then separately, Apple now says a small number of duo units have had inner display failures around the hinge, but hasn't yet clarified how many units are affected. Scott.

26:56Scott Wapner: All right, Mac, thanks. Mackenzie Segalis. Now to Brandon Gomez for a look at the biggest names moving into the close today. Hi there. Hey there, Scott. Starting off with shares of Tesla climbing after Barclays upgraded the stock to overweight. Analysts cited the potential merger opportunity with fellow Elon Musk company SpaceX, growth in the robo-taxi business, and stronger core business outlook as three promising drivers for the company. You can see their share is up almost 6%. Also in the green today, you have Lockheed Martin. After a Morgan Stanley upgrade to overweight, analysts there said that the deal to continue producing F-35 fighter jets for the Defense Department takes significant risk off the stock.

27:30You can see their share is up over 4%. In the meantime, you have Verizon falling despite reporting an earnings beat for the third quarter. The telecoms company also hiked its full year 2026 earnings guidance, but missed expectations on revenue. You can see the stock down almost 4 percent, Scott.

27:46Scott Wapner: All right, Brandon, thanks. Appreciate that. Brandon Gomez just getting started here. Coming up next, the best of the best, J.P. Morgan's Matthew Boss named the top retail analyst on the street. He's going to need a new trophy case. We'll talk about the state of the consumer next.

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30:01All right, welcome back.

30:02Scott Wapner: One of the big questions hanging over this market is whether consumer-related stocks can have a decent finish to 2026. Let's ask Matthew Boss. Just named the top retail analyst on Wall Street for the 12th time. I said you needed a new trophy case. Are you cleaning it out now, or what's the deal? Thanks, Scott. It's great. Right. J.P. Morgan took the title from a research perspective, and we were able to land the best retail analyst again. Well, congrats. It's good having you on. How about the answer to my question? I mean, we only have a short period of time between now and the end of the year.

30:33Scott Wapner: What's going on? So I actually think it's going to be a good holiday, meaning if you look at the acceleration that you've seen in consumer spending, Chase credit card data points to roughly 6 % expenditure growth on a year-over-year basis. that accelerated in the month of August into September, and you've maintained mid-single-digit growth through the better part of October. Little bit of weather. This isn't great other than golfers out there. Yeah. It's pretty nice out here in New York today. Trying to sell winter coats at this time of year with this weather. But, look, if you look at back-to-school spending, which is really the heart of what I'm talking about this August, September, the strength is historically the lead indicator for holiday.

31:16Scott Wapner: I mean, in your world, it's sort of watch what you do, not what you say. That's right. Because if you lived by what you say, you would think the entire consumer world's falling apart. Yes. I mean, consumer confidence recently was a horrible number. That's right. But do you seriously look through that? Well, because I think the building blocks is the piece that really we focus on, which is low-income employment. That makes up 80 % of spending intentions. So we cover Dollar General, Dollar Tree. That's all they talk about is does our consumer have a job and are they fearful of losing the job? And I don't think AI is really impacting the policeman, the fireman, the bartender, at least not for now.

31:56That's why you're overweight, both of those names. That's right. And then the middle income, which is the second part to this, you're seeing them look for value, but they want brands. And you have blue collar. That's a big theme right now. You've had four to five percent wage growth in blue collar. that's actually been eclipsing wage growth with the white collar for the last six months.

32:16Scott Wapner: So correct me if I'm wrong. It does not look to me like most of your ratings, especially on the things you've liked, have changed in any dramatic way in a substantial period of time. Price targets maybe go up here and there. Yes. When do some of the things that you don't like turn? And can they turn? Yeah, I think the key, there's sort of two pieces to this. I think we need to get through holiday, which I think will be strong. I think immediately following holiday, you're going to cycle up against the tax refunds from a year ago. That's an overhang along with rates higher for longer. Now, if you think about gas prices right now as a constraint to the low-income consumer, it's only 2.5 % of the overall wallet.

32:59It's a 65-year low in terms of what gas actually makes up in terms of total expenditures. and the rates higher for longer, if you look at the curve of new home ownership and refinancing that took place roughly a decade ago, I actually don't think that that's necessarily going to be the piece to the puzzle that ends up destroying the consumer spending landscape. So I think it's back to school was solid. We progressed through holiday. We move into 27. And as these individual dominoes continue to, in my opinion, not fall, I think you look at consumer spending relative to other sectors, you have the compounding earnings growth, and these stocks just continue to get cheaper.

33:39Scott Wapner: I'm really interested in what's taking place in the athletic wear and equipment, I guess, areas. The fact that you have Amherst Sports as an overweight and 64 bucks, and Nike Underweight, which we've talked about, we can do more now, and Under Armour, which is underweight as well. Do you cover on as well or no? That's separate. All right, so let's just take those two versus Amher Sports. This is like watch what they do, not what they say. Is this like watch the racket they want to play with, not the shoes that they want to buy? It's performance and authenticity relative to sportswear slash lifestyle.

34:15Meaning if you are authentic and you have performance-led or innovation-led, the percentage of your business tied to that is working. So if you look at Nike, It's 50-50 split. They are seeing gains in the performance and the innovation portion of the portfolio.

34:32Scott Wapner: They are. It's the lifestyle and the sportswear, 50%, that's down double digits. I thought that the whole knock was that they weren't innovating. The innovation and running, for example, is what they would lead with. So running with the Volmero and some of the new releases, that product is working. That product is taking shelf space. The issue is 50 % of the business is in decline. If you look at that percentage over to Amr Sports, that's an extremely low percentage. That's a very low percentage of aloe skims on the private side. And so as you look at the companies, it's really a question of have you grown too far too fast in categories where you are not the number one choice across.

35:12If you think about hike and outdoor, the customer thinks about ArcTeribs. If you look at trail running, they think about Solomon. If you think about tennis and golf, they're looking at Wilson, whereas Nike has a lot of this sportswear. And really what you're thinking about with a lot of it is the swoosh, but fabrications that aren't up to a Viore or an Aolo.

35:33Scott Wapner: So, I mean, at what point do you look at Nike and you're like, this is absurd? The stock's just gotten too cheap. Right. Is it anywhere in the stratosphere of the boss stratosphere of doing that? So I think the upcoming analysts, what they need to do is lay out a two-phase plan. Phase one, which will be fiscal 28, that's next year. We're 25 % below the street in terms of below consensus earnings. You are? Yes. So I think number one is... The street's already low. The numbers need to come down as it relates to next year. And that is the final clearance of inventory in China, inventory in the U.S., getting rid of some of this excess inventory and focusing on the core.

36:14So then they haven't kitchen-sinked it yet. No, not for 28. And now the multi-year is get back to double-digit margins, grow the top line at mid-single digits. I think they're going to lay out a 2031 plan, five years to get back to double digits and compounding top line. It's just too far. So it's a great company, but it's not a great stock. And it's actually not a great valuation for what I just laid out. All right.

36:37Scott Wapner: Well, we'll talk to you again soon. Appreciate it, as always. And congrats again. Thanks. On the great honor that you've achieved for the 12th time. Still ahead, a delivery deal. Reports of a merger in the food space as two well-known stocks moving as we speak. We'll give you those details next.

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38:25Scott Wapner: Welcome back. I have some news on Instacart. Mackenzie Segalis, how's that for us? What are we learning here, Mac? Stock's moving. Yeah, Scott. So DoorDash shares are now down nearly 6 percent after The Wall Street Journal reported that it is in advanced talks to acquire rival Instacart. Now, cart shares are popping on this report up more than 6 percent. The journal citing people familiar with the matter who added that the deal could close as soon as this week, assuming that the talks don't fall apart. A source familiar told me that Instacart had been in talks with Uber as well about a potential acquisition.

38:57Uber didn't go for it. Uber, remember, just paid nearly$15 billion to acquire Delivery Hero. So a lot of consolidation happening right now in delivery. CART, which reportedly has been working with an investment bank to weigh its option, is being rewarded by investors. That market cap was around$12 billion last week. It's added almost$2 billion since then on these reports of possible M &A. Scott?

39:19Scott Wapner: Yeah, the stock started moving late last week when all of this sort of got out there and speculated on. Mac, thank you. Mackenzie Segalis. Up next, the biggest movers as we head into the close. We'll do it in the market zone.

39:34Scott Wapner: All right, with 10 from the Bell, back to Brandon Gomez for the stocks that he is watching. What's on the top of your list? Hey there, Scott. Top of the list, Dollar General taking a dive today after the FTC in 20 states sued the discount retailer for charging more than advertised. The lawsuit alleges that the store repeatedly mislabeled prices for years, costing consumers millions of dollars. You can see shares down almost 4 percent there. And then shares of surgery partners skyrocketing after HealthSpan partners agreed to take the Bain Capital-backed company private in a deal valued at about$5.7 billion.

40:04HealthSpan is an affiliate of nonprofit health system Bon Secures. The stock is now up a whopping, well, almost 48%, Scott.

40:12Scott Wapner: All right, Brandon, appreciate that. Thank you. Up next, Renaissance Macro's Jeff DeGraff on this crucial week for the markets. What the charts are telling him that you need to know. We'll do it in the zone.

40:27Scott Wapner: Hi, we're now in the closing bell market zone. Mike Santoli and Renaissance Macro's Jeff DeGraff here to break down these crucial moments of the trading day. Oliver Rennick, as always, standing by in Chicago, Cibo Global Markets. We'll play options action in a moment. Michael, your thoughts on this day? Yeah, I don't know that the market is speaking with a particularly loud and clear voice today in terms of what's to come, although I think it's it's a net positive. A bunch of groups that probably should have already been bouncing did so today, like the semis in the A.I. hardware food chain, as well as things like industrial.

40:58So I'm willing to think that the Anthropic S1 was a little bit of support for those trades. It's just this idea that they've taken their punishment. We're going to have some kind of, you know, one bit of funding certainty around all this, but really not a lot of push behind this rally. You know, the S &P 500 peaked for the day right at its 50-day moving average. We're right in that very familiar range. So I would say it's certainly not a negative, but it didn't really tell us that we're clear of some of the headwinds that have been, I think, restraining the overall tape for a while now.

41:31Scott Wapner: No, it's nice to have discretionary and industrials, the cyclical areas that have so lagged start to perform at least on a day. Yeah, for sure. I would say with discretionary, a lot of that is Tesla on an equal weighted basis isn't doing much, but that is true. And with industrials, I would agree there. And I think some of that is the AI related ones. Yeah. All right. Good stuff, Michael. We'll see you in overtime in just a few minutes. That's Mike Santoli. Let's go to Chicago. Where's the options action today? Looking at Microsoft and Alphabet, Scott, the stocks have a chance to reboot that struggling hyperscaler trade, but right now it's not looking terribly positive.

42:09Traders seem to be leaning a little more, hopefully, onto Microsoft with more than twice as many calls getting bought than puts today, and more than 80 % of the roughly$300 million traded there tied to calls. They're expecting a 5 % move for Microsoft, but compared to last quarter's monster 15 % rally. That doesn't look like too much. Alphabet, which is now unchanged on the year, is priced for more than a 5.5 % move, which is actually bigger than its usual. The trading in Google wasn't necessarily bearish today as more than twice as many calls traded versus puts. But the catch is it looks like more calls were opened by sellers, including almost $3 million of selling at the 345 strike expiring Friday, fading a big move.

42:58Scott Wapner: Oliver, thank you. That is Oliver Rennick. We bring in Jeff DeGraff. You look at the charts and you see what? I see two different markets. I see an equal weight S &P that's overbought. I see a cap-weighted S &P that's kind of middling here. I see tech hardware and semis in particular being oversold and set up for a nice bounce into the end of the month and probably a decent part of November. But I see a lot of churning going on. And we think that we've got to shift towards defensives. So despite what we see in the very near term, which I think is some relief in the tech sector, I think the market has made its call, which is defensives are going to have a much bigger place in the return function of the market going forward.

43:50Scott Wapner: No, but you still think they're overbought. I mean, because that's why the equal weight looks how it does, right? Because staples, health care, utilities, all these other areas that are so defensive have run away with it over the last few weeks. They have. And we had 50 percent of the S &P, Scott, on Thursday. Remember, that was a terrible day for tech. 50 percent of the S &P made a 20-day high. The last time we had that was coming out of the taper tantrum back in or the tariff tantrum, I should say, back in 2025, in May of 25. So it's a pretty unusual sight to see, 50 percent. But that's a big enough surge and it tends to be good for the market.

44:29But that also happened when tech was down. And we think, again, that the market, given real rates and everything else, is really starting to push its way towards more defensive names than just cyclical.

44:39Scott Wapner: You say 20-day highs hit our 50 % threshold as the world watched the meltdown in tech. That's historically bullish. Can you tell our viewers a little bit more to help them understand what you see? Well, what that means historically is that instead of taking their ball and going home, right, I lost money in tech and I'm going to sell that, they're actually taking that money and repositioning it into other areas, particularly health care. And that historically, when we see that, tends to be bullish, not bearish. 11 out of 12 times that we've seen tech down 1 % or more on the day when 20-day highs are 50 % or greater.

45:1911 out of 12 times the market's higher three months out. And I would stick with that right here. I think that that's going to be a good number.

45:26Scott Wapner: What about the idea that bonds got to a point where they were just too attractive to ignore? That probably hurt equities too. but now we've had a huge drop down in yield. So what do you see in terms of that relationship? Well, I think that's a longer story, but I think that relationship is still in play. In other words, you don't need the same allocation to equities to hit roughly a 7 % or 7.5 % return figure that's blended right through a 60-40 portfolio. To get that when yields were 2 % or below, you needed roughly 85 % equities. Now a traditional household can own a 60%, 66 % equity portfolio and still hit that same target with real rates where they are.

46:10That's going to take some time for people to get through that. But I think that's going to be something that 2027 is going to be faced with.

46:17Scott Wapner: All right, good stuff, as always. I appreciate your time. Jeff, we'll see you soon. Jeff DeGraph. They're clapping. It means the bell is going to be ringing. And it's going to ring green. Across the board today, the traffic S1 dropped. Mark is doing pretty good about AI today. Let's send it into overtime. There's Mike and I off to you tomorrow.

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