Closing Bell 10/27/26

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1:08Whether positioning in that group is cleared enough to launch the next phase of that run. We'll ask our experts over this final stretch, including Mike Wilson. In the meantime, the scorecard was 60 to go in regulation. Looks like this tech's leading. NASDAQ is outperforming today, very much representative of what I'm saying. Good day for semis, right? Look at that trade. Broadcom's up 4%. AMD. Broadcom did get a big upgrade today. Most of the hyperscalers are higher. Alphabet and Microsoft are getting set to report tomorrow, going in slightly opposite directions today. We'll have reports on both coming up.

1:40OpenAI, Sam Altman making some fresh comments today in Las Vegas. And we are there with the very latest as well. It takes us to our talk of the tape. all that lies ahead in the next few days for investors, and there is a lot. We begin with those big tech earnings. Kate Rooney looking at Microsoft, Mackenzie Sigalos with Alphabet. Kate, we start with you. Hey, Scott. Yeah, so Microsoft will be another test for the AI trade. Investors want to see if that Azure cloud growth and then co-pilot seats as well can start to justify the tech giant spending on this entire AI buildout. We're going to get numbers after the tomorrow.

2:13So the big one to pay attention to is that Azure growth. Street's looking for 45 % growth. That's from a year ago. Microsoft is also changing how they report Azure. So we're going to get the raw revenue number as well alongside that growth rate. Then you've got co-pilot adoption. So that's also key for Microsoft's total AI story here. Last quarter, they reported more than 30 million paid seats. That was up from 20 million just three months before. Analysts are expecting a strong quarter, though. We're seeing some bullish notes out of Morgan Stanley calling the company's AI position, quote, underappreciated, and then points to its full stack offering as more companies try to move towards using multiple AI models.

2:51And Microsoft did earlier this week, I guess this was yesterday, announced 60 ,000 employees are being offered a voluntary buyout as part of the company's entire reshaping around AI. Last thing to watch is CapEx. So Microsoft forecasted$175 billion in CapEx for this calendar year. That did come down. It was$190 billion as the company actually shifted the way it accounted for leases. Not really a change there, but an accounting change that's worth noting. And then Microsoft, final thing I'll mention, Scott does also have a stake in Anthropic, which flipped its S1 yesterday. We expect that company to go public in the next couple of weeks.

3:26That lifted earnings, that stake in Anthropic last quarter. So keep an eye on that as a factor in the numbers. Stock's up about 12 % or so. So we're closer to 10 percent this year. It's slightly underperformed the broader NASDAQ, Scott. All right. OK, thank you. I know we'll talk to you much more in the next 24 hours. That's Kate Rooney. Now to Mac on Alphabet. What do you know? Hey, Scott. So the biggest question going into Google's Q3 print is whether it's rapidly growing AI operation can outweigh fresh concerns around its core search ad business. Still very much the company's profit engine.

3:56Now, on the AI side, the clearest payoff is Google Cloud. Wall Street's looking for growth ranging from 90 % up to 120 % year over year as Google adds capacity and ramps sales of its custom TPU chips. Now, until recently, Google has largely sold its AI stack exclusively through its own cloud. But now Oracle will be offering Google's chips, too, giving the company a new way to reach customers who want the chips without moving on to GCP. That's their cloud business. Competition is also getting tougher, including from SpaceX, which is already winning major AI compute commitments from names like Anthropic.

4:30And then there's search revenue, which could be a pain point this quarter. Growth is expected to slow into the mid-teens, while AI agents add to concerns that users could increasingly bypass Google altogether. And finally, CapEx. Google has already said spending will rise significantly again next year, with street estimates at$300 billion or more. So investors want proof that all of that AI spending is translating into faster growth without eroding search or crushing margins. Scott. Mac, thank you. Mackenzie Sigelis. Now let's welcome in Morgan Stanley, chief U.S. equity strategist, Mike Wilson.

5:03He says the correction in AI stocks just about over. He's with me here at Post 9. It's nice to see you again. Welcome back. Thanks, Scott. Is that what we should take away? It's about over, but not necessarily yet. What can you tell us? Well, we've laid this out as a way to think about it, right? which is we think there are several clearing events that we still need to get through. So, I mean, you know this well, Scott. You follow this stuff day to day. We've been in a correction mode for probably four or five months, right? It really started in June. We labeled that the mid-cycle transition, peak rate of change on earnings growth.

5:33There are some concerns around funding, perhaps, you know, credit spreads widening out. The Fed started hiking rates. So there's a lot going on. The market, I think, has digested this very efficiently, all right? And I would say 80 % to 90 % of the breath destruction that normally happens in these has already happened. So all we're waiting for now, we don't know the answer because we don't have a crystal ball, but what I would say is the thing that's missing is kind of that S &P 500 catching down to where the breath has been. Okay, so you're speaking to what we talked about on so many occasions.

6:05Under the surface, below the highest of the cap-weighted part of the S &P 500, the market looked horrible. That's right. You had a whole bunch of stocks that traded terribly. Why do I need the top to come down? You don't need it. But typically, when these corrections happen the way they've happened, you usually get a meeting in the middle. So as you know, last week and a half or so, the average stock, the equal weighted, has started to outperform. To me, that's encouraging. That tells me this isn't going to cascade into something more severe. Even if it's dominated by defensive names, which it has been?

6:41Well, in the last week that was. But recently, we've seen more of the cyclicals do better, for example. Well, on the last day or two. Yeah, but I'm seeing, but it's evening out again. We'll see. We'll see how it goes. So here's a way to think about it, the way we think about it. Okay. Three clearing events that I think are somewhat obvious and one maybe not so much. So the first one's midterms, clearly. That's typically a headwind for multiples and for stocks. People get nervous. We don't know what's going to happen post-midterms. Okay, but 100 % of the time since 1950, the market goes up nicely over the next six or 12 months.

7:09So that should be a potential catalyst. Number two would be around this AI funding concerns. There's been a ton of supply. There continues to be a ton of supply. The market is being very judicious about who it's going to fund, who it maybe is not going to fund, or the price of that funding goes up. We're in the midst of that right now. That probably should be cleared in the next month. And the last one is around the Fed. So we have a meeting that's going on now. We'll find out tomorrow if they're going to raise rates. Probably not. But it's not about raising rates. It's about liquidity, which is kind of harder to measure in the context of an economy that needs a lot of liquidity.

7:42So we're just wrestling with all of these balls. My best guess is that we could have a finishing move 50-50 in the S &P. If we don't, then we can actually go forward without the S &P having that little final correction. But either way, Scott, I'm very constructive on the next six months as we work through this because most of the correction is already over. Okay, so you still think$8 ,000 is possible for the S &P? Oh, 100%. That's your base case. That's our base case for year end. But, you know, December 31st versus January 15th. Well, right. Yeah. But the main message here is I think you could go blow through 8 ,000 into the first part of next year.

8:20We have an$8 ,300 price target for May as a base case. And if all of this happens in a way where you get the Fed to be maybe a bit more dovish, that would be fuel for maybe even something higher than that. So you think that the broadening trade, which is showing some signs of life in a more positive way, right? The cyclical areas now coming along with the more defensive areas is what can ultimately propel you to the more lofty levels. If that happens and then you combine that with the AI trade, which you still think is durable, right? Absolutely. Well, that's the ultimate bull story, isn't it?

8:56Yeah, it's not one or the other. It's both working together like earlier in the year, right? Remember, our call beginning coming into this year was there was going to be a broadening. There was up until basically May or June when you got that rate of change on both growth and earnings and the Fed. The rate of change on the Fed was probably even more important. And realistically, you know, the breadth didn't really break down in the market until Jackson Hole. It was that's when the market really started pricing in a much more hawkish Fed. So that's kind of the thing that needs to change. The market needs to get more comfortable that Warsh and the new Fed together is not going to go overboard on this hiking.

9:34I mean, that's a wild card, obviously. Not that we expect anything to happen tomorrow, but I think the majority opinion from the investing community is the Fed's going to hike at least one more time. One time is less than what the market's expecting. One more time, two more times. Yeah, exactly. But let's go back to Kevin Warsh and his philosophy. which is he doesn't really want to raise rates that much higher because that hurts Main Street. He wants to let the market kind of tighten for him. Well, it kind of has, right? The back end went up above 5%, went to 535. Financial conditions tightened tremendously from the energy price spike, which he had nothing to do with.

10:14So I'm sure watching these financial condition metrics, he's probably pretty pleased that the market has done a lot of tightening for him. And I would be willing to wager that now he probably has to hike less on rates. It's almost, you know, in many respects, it's not even necessarily about him at this point. It's about the more hawkish, you know, presidents on the committee who are decidedly more hawkish, not all of them. But there's a pretty good battle inside the room. That's something maybe most interesting to watch over the next meeting or two is the level of descent, what that signals about where they may go from here.

10:56But on the point of rates, so what do you make of the way that the 10-year yield came down so quickly? What was the message in that? Yeah, I think there's a couple of messages. A, it probably overshot to the upside that the market went to the neutral rate. And this is kind of what I think the chair has been wanting. He's like, let the market take us to where it needs to go to kind of slow things down. So we went from what I would call a bear flattener to a bull flattener. So this is your defensive trade. So the market is wrestling with this. We don't know exactly what the market is saying. But what the market might be saying is, hey, there's been enough tightening here between energy prices, back-end rates, and maybe one Fed hike that we're looking out now.

11:35Maybe growth is going to decelerate more than we think. So maybe we should own a little bit more defenses. Maybe we should own a little bit more duration. And that's the market, once again, adjusting again to uncertainty. So I think it's quite healthy and actually quite brilliant by the markets. How do you see the idea that positioning feels like it's cleaner than it was before? You've had a lot of deleveraging, hedge funds, de-risking, and now the plate is set once again just to start eating. Right. So this is the one area where our work is not fully complete. So let me tell you where it is complete.

12:10We have a large prime broker's business. We deal with hedge funds quite a bit. They're very de-risked. I mean, they're at the zero percentile for the last 12 months. I mean, they can always get less risk-taking, but they've de-risked quite a bit. Right. Act of minutes. Isn't that bullish? That's one. Retail, systematic strategies, passive flows, not quite there. And then we have these other sentiment indicators that we look at. It hasn't quite gotten to a level we like to see to say, okay, all clear. Like, all the risk is price. But once again, Scott, we're not talking about 10 % downside in the S &P 500, even if all these things kind of come together.

12:45We're talking about 5 % probably worst case. It's not that big a deal. Well, people are going to take that as a pretty bullish indicator. And what about the idea of competition from bonds to stocks, which probably led to some of the upset, too, that the yield just got too good to ignore? Particularly on a real basis. So real yield is 2 % to 3%. That's as good as we've seen in 20 years. So I think you're right on all those counts. some defensive posturing, some worry about maybe growth slowing next year more than people are thinking. Let's buy some duration. And then just pure value. It's just value with a 2 % to 3 % real yield, 100%.

13:19It's good to see you again, Mike. Thanks for coming by. It's nice to see you in person. Mike Wilson, Morgan Stanley. All right, now to that Oracle event in Las Vegas where the company announced a new partnership with OpenAI. Its CEO, Sam Altman, speaking on stage just earlier today. Seema Modi's been there throughout this day. Joins us now with more. What are the highlights? Well, Scott, Oracle surprised its audience by bringing OpenAI CEO Sam Altman on stage just one day after investors poured through its competitor Anthropics Financials. Altman saying that the adoption of its latest model, GPT-6, has been its strongest by far of any model.

13:55and gpt-6 uh was one of those moments um where i think the models took a step forward all at once both in terms of their ability to discover new knowledge to do very hard things but also for people's ability to work with the models and get you know substantial pieces of work done at a rate that they never could before altman also calling its jalapeno chip the best in inference, revealing that it will run on Oracle's cloud infrastructure, as will Google TPUs and Cerebrus's AI chips. By the way, Cerebrus seeing its stock pop by around 7 % on the news. Scott Altman's showing up here at Oracle AI World is significant.

14:36It comes at a crucial time for the company, which is in the midst of a very capital-intensive data center build-out while also facing fresh questions about its financing methods. Its success is really predicated on its biggest customer, OpenAI. Seema, great stuff. Thank you so much, Seema Modi. Now let's bring in CNBC contributor Plexo Capital's Lo Tony. He's also, of course, an early anthropic investor. It's good to see you in person. Welcome. Nice to see you. So let's rewind before we go forward for a moment. I mean, your reaction to yesterday's S1 was what? Incredible. I think it's one of the most important documents that we're going to see during this cycle.

15:14And it represents both the extraordinary opportunity, but also what is required to finance it. And I think when you just look at the headline numbers, this is a really solid business. I mean, we're super excited to see where the business has landed, you know, with over, I don't know, 1 ,300 % year over year growth for the first half of this year. And just some extraordinary numbers. When you look at the actual margin that is to serve the compute to users, I mean, we're talking 85%. That's incredible. And the decline over time of the cost of that compute from about, I don't know,$6.50 per dollar to in 24 to about, I think it's about 50 cents or so, 53 maybe now for Q3 26.

15:59So this is an extraordinary opportunity. But, you know, I think one of the things that I thought was actually really interesting, I don't know if you saw this, but, you know, 80 % of the revenue has come from models over the past few months. And I thought that was really interesting because some people think of that as a negative, as the models are getting really stale. I actually think it's a positive because what that shows is that as each new generation comes, we're pushing the capabilities that are new with these frontier models. And so what that means is you have a group of people that are willing to pay that premium at the frontier.

16:36And that premium can help finance the training for the next generation as well as the cost to serve the models. And then you have that N minus one generation that is now more economical for the people that were a little more price sensitive. And so that, back to Jevons, the word we love to use, we can expand the actual customer base for those tasks that formerly might have been too expensive for them. So I think, you know, that's the important takeaway that I saw. But phenomenal business, just absolutely solid. I mean, you know, the$80 billion loss, the headline that everyone's talking about, I mean, that's accounting, right?

17:15Like, when you really look at the company itself, it looks really attractive. OK, well, the good thing about markets is where there's a bull, there seems to be a bear. And there was one on our network earlier today. It was Roger McNamee, early Facebook investor. I want you to listen to what he said on one of our shows earlier today, and I'd like you to respond to it. Let's listen. The problem with the S1 is that it's speculative fiction. It is a moment in time, and it's a very special moment in time because the company has managed to get to this point by trading equity for compute capacity. And that leasing of compute capacity has been at huge discounts to what the cash price of the capacity would have been.

18:01And what the S-1 tells you is that going forward, well, they're going to be buying their compute capacity from here, which means they're going to pay a dollar for a dollar's worth of compute capacity instead of paying, say, 25 cents for it. And those kinds of things suggest that what's in the S1 now is largely a model that won't recur. In fact, probably won't even be sustained through the September quarter. The S1 conspicuously leaves out the September numbers. So we don't really know. Said it was a great time to cash out rather than to buy in. What's your response? First of all, I like Roger.

18:35I first met him after he performed at a concert. You know, he plays in a band. He's an incredible historic investor. Very important. He raises some good points. I think the key is when we think about the projections that we're using, we see the ability for Anthropic to get to$200 billion. And by our estimates, that's going to require about six gigawatts of compute. The company hasn't disclosed how much compute they have currently today. But we know based on the S1 that they have the capacity under contract to be able to exceed that six gigawatts of compute. So that's a positive. But yes, we do need to understand what the actual numbers look like.

19:15B of A had a really good study that they recently published that says, you know, for every megawatt, it's about$57 million. You know, so it gives us kind of an indication of what compute costs. But this is why Anthropic went out and did those deals. When they're early as a startup that doesn't really have any credit rating, they needed the ability to do those deals. and they're taking a different approach to vertical integration, right? We all understand they're a young company still, and they don't have the mature cash flows diversified across a lot of different products, like, say, an Alphabet Google or even a Meta, right?

19:53I mean, it's advertising, right? But they do have that historic base. So we will need to monitor closely what these actual compute costs are going to fully be. And look, a lot of the contracted compute, that won't be deployed, right? We understand we have people that includes like land acquisition and the providers that they've contracted from have to go build the shells for the data centers. But we do know that there will be enough compute. And those are the things that we need to monitor closely. Speaking of data centers and the backlash or the debate around them, which of the risk factors would you be most worried about of everything they laid out?

20:30And there was like 100 pages of risk factors in and of itself, right? Existential threat, if not controlled correctly, governance. They did mention the lack of public support. I mean, is there one that worries you more than any? There's not one necessarily, but I would have to say it is this trust with users. And it really goes back to surface expansion at the frontier. Because what is important for this model to work, Scott, is we need the ability for that pacing to balance the ability to continue to identify and develop new capabilities. And we can't let that slow down the release of those models because that's what's really going to drive those premium users to pay.

21:15So we need to make sure, and I'm sure the team is doing a great job, it looks like they are, of balancing kind of pacing with continuing the push at the frontier. So before we came to you, we obviously had the sound of Sam Altman today out in Las Vegas. And, you know, Anthropik's differentiator has been the focus from the outset on the enterprise. That's right. Right. And OpenAI has been working feverishly to sort of catch up on that. I mean, how today do you view the OpenAI IPO whenever it happens? Well, these are two extraordinary companies, and both are going to do very well. They're going to be very important to the next decade and beyond for what we're able to do as an economy globally.

21:54When I think about OpenAI, the fact that they did get their start mostly with ChatGPT is amazing because they became the brand name when we were making this investment into Anthropic. No one knew Anthropic or Claude, but everyone thought about AI as GPT. They have done a good job, Sam, Sarah, and team, into pushing into the enterprise, and it looks like they've been able to balance it out. That said, they do have a little bit of an albatross with the cost to carry that compute for the consumers. We'll see the advertising model looks extremely promising, and that is the best way to monetize it.

22:35But we need to really see that actually play out. But look, these are two extraordinary companies that are going to be very important. And you think they'll both do well when they go out? I think they will both do well. There's going to be a different set of challenges that we watch for OpenAI versus Anthropic, and that is with regard to the consumer piece that we talked about and the ability for OpenAI to continue to push to enterprise. But both of these companies, I think, are going to do very well. You know, OpenAI took a strategy to take a step back, a little more time to get the preparation in place, which is a hallmark of Sarah, who's an extraordinary financial leader and business leader in general.

23:11And I think we'll see both companies do really well. But we're excited about Anthropic. I know you are, obviously. Well, it's good to get your insight, as always. Thanks for being here as well. That's low, Tony. All right, we're just getting started here. Up next, a pair of pain points for the Dow today. Boeing and Coca-Cola, both in the red following earnings. We'll tell you exactly why. We've got full team coverage on those names straight ahead. And later, Avenue Capital's Mark Lazzari. He joins us live right here at Post 9. Well, what about those sports valuations? Have they hit a top? Are they close?

23:39What's his next big move there? He'll tell us next.

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25:27I told you about two big down movers today. We'll start with shares of Boeing. Slumping on earnings, Phil LeBeau joins us now with exactly what is going on, Phil. Scott, it's all about free cash flow. That is the one metric more than anything else that people are focused on when it comes to Boeing. And today they said, you know what? We're gonna be pushing back our expectation for the growth of free cash flow over the next couple of years. So three things really you can look at here. First of all, the growth of free cash flow, which is gonna be about$2 billion this year. It's not gonna get up to the 10 billion mark that people were focused on in 2028.

26:02That's now been pushed back to 2029. And a big reason why is that 737 MAX production is not going to be increasing as quickly as was previously expected. Here's Kelly Ortberg this morning talking with me at Boeing's headquarters about what's happening with MAX production. We're working on that. We're trying to stabilize. I know everybody wants us to go faster, but we're going to do it right. Make sure that the production system is stable. We're delivering high quality, safe aircraft. And so I expect that stabilization period will last the balance of this year into early next year. Bottom line, some of the suppliers are just not up to the speed or they've had some particular issues that have flared up.

26:46And Kelly Ortberg has said time and again, until we're completely ready, we're not going to increase production. Look at how the cadence of 737 MAX production increases has changed since January 24 when it was capped by the FAA. at 38. Went up to 42 in October of last year. In May, it went up to 47. And they're not even all the way up to 47, by the way. The target right now, second half of next year, they get up to 52 per month. These are monthly build rates for the 737 max. If there is one piece of good news in today's report from Boeing, it is the fact that it's defense business, Scott. It exceeded analyst expectations with almost$8 billion in revenue.

27:28That was an area that was really struggling. Boeing was struggling in that area. They have been increasing and doing much better when it comes to defense and space. It's amazing to see the stock fell down. It's 34 % off of its 52-week high. Is there one big thing for the reason for that? The production. It just hasn't grown as quickly as people were expecting. I think people got caught up in this. Every six months, we're going to see a five airplane per month increase when it comes to the 737 Max. And Kelly Ortberg said today, he goes, look, I would love to do that, but I'm not going to do it until it's ready.

28:04And for Boeing investors, while that can be frustrating, they should also look at it this way. He was brought in to do it the right way. And while it's a little slower than what people were expecting, he wants to make sure that they don't get over their skis and say, yeah, Go ahead, push that production rate up when they're not completely ready. Gotcha. Phil, thank you. Phil LeBeau. Now to that other Dow mover. It is Coca-Cola. Brandon Gomez watching that for us. Tell us more here. Hey there, Scott. Yeah, Coca-Cola raising its outlook again, but investors are looking past the beat. Shares you can see now down over 1%.

28:36The company's third quarter results came in ahead of expectations. You saw global volume grew 5%, but North American volumes were flat, with international markets doing the heavy lifting there. And that's the investor question here, Scott. Scott, can Coke keep growing when its home market consumer is under pressure? Well, the company's CFO confirming on the call that the underlying pressure across the consumer landscape is there, and it could last into 2027. That's a signal for food and beverage companies more broadly. Strong brands and international growth can help, but they may not fully offset a cautious U.S.

29:08consumer or a rising cost that all these companies are facing, Scott. All right, Brandon, thank you. It's Brandon Gomez coming up. As big money in sports continues to grow, has Avenue Capital's Mark Lasry seen a top or something close to it yet? We'll ask him.

29:27Some of the most important design choices are the ones that go unnoticed. The details that together make an experience feel intuitive, comfortable, and above all, exhilarating. At Acura, that means looking closely at how every detail could make your experience behind the wheel more rewarding. Every lesson learned and every idea refined becomes part of what comes next, and it lives inside every MDX, ADX, and Integra. That's precision-crafted performance. That's Acura. I've given my blood, my sweat, my tears to this island. What happened here? We came here seeking a great treasure. We've been out here for 14 years.

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30:54Welcome back. Sports teams, valuations continue to soar. The real question is, are they starting to get out of hand? Let's ask our next guest, Mark Lasry, co-founder and chairman of the Avenue Capital Group, former governor of the Milwaukee Bucks. It's nice to see you again. Welcome back. Good to see you. Thank you for having me. Let's just settle this right at the beginning. There appear to be conflicting views as to whether you and your partner, Steve Apostolopoulos, did I pronounce that right? That is correct. That's great. All right. That's one. Good. All right. I just hit a three-pointer from long distance.

31:25You look at a number of letters in that name. That you're either you're out. Are you in or out? No, we're in. You're in. Yes. We've always been in. The question is, what's the price? Okay. Right. It's always what's the price. It's always what's the price. Now the price is like way up. So we've bid. We've been told by the NBA that we're one of two or three of the finalists. Okay. So we're going through the document, the documentation. I think the other side's higher, but I don't really know. But we're still trying to get it. It's with Steve and Kenny Smith, who's... Kenny the Jet Smith. Kenny the Jet, yes.

32:07Kenny wants to help as well, so we're trying to get this done. I mean, you already did the NBA once, and you want back in. I did. Vegas, a little different than Milwaukee. I think Milwaukee could be one of the most profitable franchises. Not Milwaukee. Vegas could be one of the most profitable franchises, so that's why we're involved in it. I mean, price tag. It was talked about you wanted to pay about$10. Is that right? Yeah, it's between 9 and 10. Okay. Are you thanking Bob Iger and Kushner for ruining that? I mean, 12.5 for the Lakers. Doesn't that reset everything now? It does, but I would tell you the Lakers are unique.

32:52The Knicks are unique. They're the two big franchises. I think Vegas could be the third one. So that's actually why we've been very involved and why we think it's something that could be great. What is it about the NBA that's luring you back? I think when you take a look, franchises are actually going up and they have been going up. Part of the reason for that is just that you're seeing interest in the NBA continue to grow, but it's actually growing internationally. And you're seeing it with NBA Europe, NBA Africa. You're seeing in Asia that there's more and more people watching it. So I think it's one of the few leagues where globally everybody is watching it.

33:39Whereas I would tell you the NFL, it's different. It doesn't have as big of an interest in Asia. But basketball is probably the most popular sport or soccer is the most popular sport. When do you think you'll know? I think we'll know in the next two to four weeks. Oh, it's pretty quickly. Yeah, I think pretty quickly we will. Huh. If you are successful, you mentioned NBA Europe. Do you have to be committed to having a team in Europe as well if you're an American owner of an NBA team now? No, you can only own one team. So if you're an owner of an NBA franchise, you can't own anything in Europe.

34:17You can't own an NBA Europe team. No. Do you have to invest in one or help invest in one or no? You're not allowed to. No requirement at all? No, none at all. When the Lakers price tag of$12.5 billion hit, what was your reaction? It's cable. You can curse. I was like, wow. I think actually Josh did a brilliant move there because he knew where Vegas was going to trade at, which was going to be around$9 or$10. Would you pay 25 % more for the Lakers? The answer is yes. So I think what Josh and Bob Eicher did was brilliant in getting that. and I would tell you I think they're going to make a fortune of money on that team.

34:58Really? Yeah. Even at the valuations today, it's going to be much higher later on. Because I guess the word was they wanted the Vegas expansion team. And then this sort of came out of the blue. It did. I think they saw something that we didn't, and I'll give them credit for it, that he could go to Mark Walters and he could give him a bid. And I think that sort of caught Walters by surprise because I think he had paid$10 billion, what, two years earlier or 18 months earlier. And to make 25 percent, literally$2.5 billion in a couple of years, was good for Walters. And I think it's great for Josh.

35:39It's incredible. You know, we come out with our own valuations now. Mike Ozanian does that. Yeah, I do. And I think people are still astounded at how high the numbers are getting. and then continually being reset, whether it's a Lakers deal doing that, or then you talk about the next NFL franchise that could come up and the kind of numbers that are being thrown around. At any level now, even given the successes that you've had in business and in sports, are you flabbergasted by how big the numbers are or is expected? I'm surprised. But part of that is also because when you look at what's going on in AI, the one thing that AI can't sort of disintermediate is sports and it's live entertainment.

36:28So I think what you're going to find is as more and more people are looking at sports, they're going to say that actually is a great hedge against AI. I'm not worried about investing in this company and finding out two years later, AI has destroyed my company or my company isn't worth what it is. And you're seeing that every day in the market, right, where all of a sudden certain companies are having issues because you've got competitors coming out. You're never going to have that in sports. And I think that's why you're seeing the value continue to go up. What about, so you're in the middle of raising your second fund, your second sports fund.

37:08Yes. What are you going to be targeting with that? Same thing we've been doing. I think we'll target the big leagues, which we've done. we'll do adjacent sports, adjacent businesses. We'll do sort of new leagues. We're trying to invest a little bit more in soccer. Around the world, it's called football. In the United States, it's soccer for us. You have a team in the Premier League, right? Yeah, we have Ipswich. We've invested in that. Aren't they in the Premier League now? They're in the Premier League, yeah. They're up. Yeah, they got promoted. I saw that. We're doing really well. I mean, we're kicking.

37:45Yeah, we're doing well. So what impact do you think have the soaring valuations of the big four leagues had on everything else that you've been looking to invest in for a number of years now? I think that's gone on. Has it rising tide? Has it raised all boats? No, but what you're seeing is you can invest. We invested in the PGA. We invested in TGL, in the Golf League. We've ended up doing NASCAR. You're seeing all of those move up. And part of that is just there's just more interest and there's more people. I would tell you when I bought the Bucks, so here's what's odd. I bought that team 2012, so it's 14 years ago.

38:30I paid the most anybody had ever paid for an NBA team, and that was$500 million. And we were the worst. It was the worst team in the league at the time. So think about what's happened. I'm not saying Milwaukee is the same thing as L.A., but valuations have gone up 20, 25 times from where I invested. And I was viewed as doing something wrong back then. So the reason for that is there's just more and more interest. And I think for what we're doing, you're going to see it over the next five or ten years. More and more people are going to be involved in sports, but it's become an asset class. That's what's different.

39:07As it's an asset class, then you're going to start continuing to see valuations go up because there'll be more capital there. But the supply side dwarfs right now, the demand side. Yeah, it seems like that. It's great to have you back. It's good to be here. That's Mark Lasry of Avenue. Up next, the biggest movers as we head into the close.

39:2910 for the bell. Back to Brandon now for the stocks he's watching. What do you see? Hey there, Scott. Let's start with shares of UPS jumping about 6 % after posting Q3 results that beat estimates and raised its full year forecast and the second quarter in a row. The delivery and logistics giant saw revenue gains in its domestic, international and supply chain solutions divisions. CEO Carol Tomei pointing to positive momentum going into the holiday shopping season, UPS seeing its best day since June. Meantime, Royal Caribbean also up 6 % after it also posted a Q3 beat and raised full year guidance.

40:00The cruise liner sees strong vacation demand in bookings into 2027, even with higher fuel costs. You can see shares up 6 percent so far this year. And ending things on JetBlue surging 18 percent after it said it expects wider fourth quarter margins. The airline says it is still on track to be profitable in the near future with continued strong travel demand and higher fares offsetting higher fuel prices. Still, though, shares are down about 39 percent this year so far, Scott. All right, Brandon, thank you. Brandon Gomez up next. We set you up for the key earnings in overtime in the market zone, which is next.

40:41We're now in the closing bell market zone. Mike Santoli and Wilmington Trust Megan Hsu here to break down these crucial moments of the trading day. We do have some big earnings in OT. Kate Rooney taking a look at Robinhood. We'll get to that in just a moment. Mike, you first. Your thoughts? Yeah, I mean, look, the market making some progress toward winning back the benefit of the doubt after the most recent pullback. Mostly it's about the mega caps and semis in particular closing the gap that it opened up with the average stock and with a lot of the defensive plays. I find it interesting that the 10-year Treasury yield has spent the last three days just pinned right at or just below the 5 percent level going into a Fed meeting there.

41:18Everyone expects kind of no fireworks, no change to the overall story. That's plausible. But I do think that you'd want to see at least one of these days when you have both the macro story working that gets the cyclicals running and then maybe some reassurance on the AI front. So far, it's working fine. But the S &P remains at levels we were at almost three months ago. Yeah. How do you look at it in five minutes time and overtime? Mostly it's the earnings swarm, you know, as you mentioned, in particular Seagate. Here's another classic AI hardware play. It's 40 percent off its highs, but the numbers are going to be great.

41:52So it's going to be a good tell as well, of course, as Robinhood and Visa. Yeah, I'm glad you mentioned that. It sees us up perfectly. We'll see in just a little bit. That's Mike Santoli to Kate Rooney on Robinhood. What do we know? Hey, Scott. Well, Robinhood tends to give us kind of a pulse of how the retail trader is doing, and trading is still the key moneymaker for Robinhood. The big focus for this earnings report in a few minutes is future growth, any sort of momentum in some of the newer businesses for this brokerage firm, And then any signals that those can keep driving growth and help compensate for slower crypto trading revenue.

42:23Street looking for$1.4 billion in total revenue. That would be up double digits from a year ago. One of the bigger numbers and themes to watch is prediction markets and event contracts. Last quarter, Robinhood made more from event contracts than it did from crypto. So investors want to see more evidence that Robinhood can keep that up, keep that momentum, especially as competition in that space heats up. Trading, though, is still very much the bread and butter for this business. That shows up as transaction-based revenue, so that's the one to watch. Options has historically made up the biggest chunk of that, but watch for the entire breakdown within that transaction-based revenue.

42:56Then assets on the platform. Funded customers also tend to be a way to measure growth. Stock has been under pressure. It's been down double digits in the month of October. All right, we'll see what they deliver. Kate, thank you very much for that. Bookending our show today is Kay Rooney. Thank you to Megan Hsu. All right, well, speaking of bookends, I mean, we started the show, Mike Wilson, saying that we're close. We're close to the end of the correction that we've seen. What do you think about that? Yeah, I mean, I think we're generally pretty constructive on the market. We're overweight to equities.

43:28A few things that I'm watching are the market internals. We've been seeing on those tough down days in the market when the headline index is down, capital rolling and rotating into other parts of the market rather than out of the market. I think that's constructive. I also think that this just tends to be a very unloved bull market. So I'm encouraged by the lack of euphoria. The rates environment is also encouraging. We've seen treasuries resume their role as a safe haven asset. That is constructive. And we have a pretty dovish view on the Fed over the next 12 months, expecting two to three rate cuts rather than rate hikes.

44:05So that would be very bullish, particularly for small cap. And then earnings have continued to be the engine for the market, outgrowing the overall index. I think the thing here to watch is negative earnings revisions that they don't start to roll over. That could signal that valuations are maybe artificially low. Why do you think the bull market's been unloved? Because we've been moving through these waves of negative sentiment around AI, and it feels like every few months we get some sort of scare that either the big hyperscalers are overspending or they're too highly levered or productivity will not materialize.

44:47And the sentiment that we read both in the market data as well as just conversations with other investors is a lot of skepticism. And I think this is actually healthy because what it tends to do is it tends to take some of the air out of the balloon along the way so that we don't get into this state of euphoria. And I think we're probably, you know, we have been in a tech correction since about June. I do agree that we're probably nearing the end of it and could be using the Anthropic IPO as a potential catalyst to shift sentiment back into the positive. But it just feels like there's constant skepticism and negativity around AI materializing.

45:28Well, you really have an interesting sector split. I mean, you're constructive, as you said at the outset, but you're underweight industrials and tech. I mean, how does that match up with being constructive on the market overall, but being underweight tech and industrials? Tell me more. Yeah, so we moved to just a slight underweight on tech back in, basically back in the spring. And it depends how you define tech. But when the memory stocks were ripping, we didn't chase that. And so as the market moved, we held steady, moved to an underweight. But we do like communication services. We like some of those other parts of the market that are participating in the AI trade, including in consumer discretionary and real estate.

46:14So I think looking at just the tech sector is, you know, obviously it's much more complicated than that. But we're trying to pick our spots, find companies that are both exposed to the AI trade but also diversified. and then within that, companies have and retain a lot of price and power. We'll talk to you again soon. Thank you. That's Megan Hsu. The bell's going to ring, and the day's going to be about the NASDAQ, obviously, today. It is by far the leader of better than 1%. We'll hear from Sam Altman today, too. Partnership with Oracle. That stock did quite well. They'll pick it up in overtime.

46:49Mike Santoli will. We've got some earnings coming, too.

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