Closing Bell 11/4/26

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1:10Now, we will ask our experts over this final stretch. Let's show you the scorecard here on what's a very big day. We really did rip from the outset. The majors all having standout performances led by the Dow, 3%. Oil's down a lot. Look at that, 8%. That's certainly helping. Yields have been falling. That's part of the story. So let's get right to our talk of the tape. These massive post-midterm market moves, what it really means for this record-setting rally. Mackenzie Sigalos on the hyperscaler shooting higher today. Pippa Stevens covering the data center fallout. Seema Modi on the semis. Brandon Gomez on the very strong day in discretionary.

1:48And Mac, We begin with you. So, Scott, Apple is back on top, hitting a fresh record high, overtaking NVIDIA and reclaiming a five trillion dollar market cap. Now, after Democrats split both the House and Senate, Apple looks like the safe bet. It doesn't need massive data centers to sell iPhones. So tougher restrictions on new builds don't touch it. And revenue is still growing double digits while CapEx is falling. And then the hyperscalers, they are surging today. Wall Street feared that a blue wave would actually hurt big tech. But instead, Needham says tougher regulation protects incumbents by raising the cost of entry for rivals.

2:20So if construction slows down, existing data centers, well, they become a lot more valuable. And hyperscalers have cover to pull back on spending, easing pressure on cash flow. NVIDIA, though, one of the two MAG7 names in the red. If construction slows down, the chipmaker feels it first. Scott? Mack, thank you. That's Mackenzie Segalis. All right, now to PIPA with many of the AI power names falling sharply today. What do you see? Well, Scott, power producers tied to the AI buildout in Texas are under pressure with the Senate seat flip, but especially thanks to Eno Osa winning the governor's seat, which is more consequential for energy policy.

2:54Vistra and NRG both down double digits, with Constellation, Semper, and Centerpoint Energy also in the red. Now, Texas represents 27 percent of planned data center capacity in the U.S. and has an enormous backlog of projects waiting to connect. Governor Lactina Hossa has said moratoriums need to be put in place until clearer guardrails are established. The state's legislature is still Republican and the utility commissioners have long terms, which does add uncertainty to the picture. But the key date to watch is December 10th, when ERCOT releases a widely watched report on large loads, which will give us a clearer picture on the state's data center policy looking forward.

3:29All right, Pippa, thank you. That's Pippa Stevens. Now, Seema looking at this very rough day for some of these semi-stocks. What do you see? Well, it's interesting, Scott. AMD's blockbuster number is not enough to lift Wall Street sentiment as the conversation sort of shifts to data center timelines and whether capital raises could come in in an environment where AI projects are more regulated. Though a note from semi-analysis is being passed around. The author, Dylan Patel, estimates 33.8 gigawatts are due in 2027 across 20 states and says roughly three quarters of them are already under construction.

4:00That is a hopeful sign that projects in the near term are safe. Question is what happens after that. Goldman pointing to this risk largely priced in with semiconductor valuations dropping substantially over the last two months. NVIDIA on track for its fifth consecutive down week. This is the first time in four years, Scott. Wow, a good stat. Seema, thanks so much for that. Finally, Brandon, with a look at one of the best days we can remember for the discretionary space, near 5%. Yeah, Scott, it's consumer discretionary leading the market's post-election rally. Now, the XLY up four and a half percent, headed for its best day, as you said, since May 2025.

4:34Investors welcoming more political clarity, some betting on a drop in oil and gasoline prices, which could ease consumer cost pressures and input costs. Now, that in turn giving travel stocks an extra lift. Expedia and booking holdings among the group's biggest winners, each rising around 10 percent. Amazon adding about 7 percent, while McDonald's is also higher after beating profit expectations. and a move suggesting investors are searching for growth and looking to find it in some of those travel exposure names. But whether that optimism holds up against the real world test of consumer spending is another question entirely.

5:07We'll see how that plays out, Scott. All right, Brandon, thank you. Thanks to all our reporters as well. Now to Schwab Center for Financial Research's chief investment strategist. There she is, Lizanne Saunders. Welcome. It's nice to have you on today. Nice to see you, Scott. Thanks for having me. All right. I don't know if one day makes a trend here, but do you feel like this was a significant enough clearing event that the tables reset for a better year end run? Yes, but not not directly a clearing event. Normally, when you talk about a clearing event, it's the market had sold off in in the lead into whatever the event is.

5:39And then you get the clearing and you get the rally. There really wasn't that much that was election specific in the weakness in the market before. But I think the fact that it was decisive, it's not going to be a long, drawn out affair, and that the Democrats' platform was about cost of living. That has the potential, of course, to bring down inflation. Yields are down. Oil prices are down today. So lowercase C clearing event, yes, but maybe based on the traditional definition, I think it's a little more nuanced than that. What if we add some more things to the mix? I thought there was an interesting note today from Citadel Security's Scott Rubner, who said, we believe the combination of light positioning, returning corporate demand, persistent retail buying, and historically favorable post-midterm seasonality creates a compelling setup for equities into year end.

6:30So he throws several more things into the mix. Yeah, I think the setup is pretty good, but I expect to see the market continue its rotational flavor. We've been saying for a while, I think I've said it probably many times on your show, Scott, that rotation is the new momentum trade. And I think that's likely to persist. So there's more of a discerning eye on the market now in an environment where you've got near record low correlations, near record high dispersion, more stocks marching to the beat of their own drummer. You just saw health care leapfrog tech to become the second best performer.

7:01What's interesting about that, if you think about energy, now health care and tech as the top leading sectors, very different macro stories behind why they're moving. So I think we have to continue to move away from monolithic investment decision making or even analyzing the market in monoliths and understand that there's so many different macro forces impacting different segments of the market at a different time. So my base case is we're going to continue to see rotation, but enough improvement in breadth that even if you continue to see the wind down of this AI driven trade, you've got so many other segments of the market sort of playing catch up.

7:39Yeah, I mean, the rotation thus far, you know, outside today, obviously, had been more focused on staples in health care and utilities, obviously more defensive areas. But do you think now, if nothing else, this opens things up to a better, if you will, broadening discretionary? We know today is up huge financials, some of the more cyclical areas of the market. Yeah, we actually have liked the more cyclically oriented sectors. So we're happy to see that broadening out, be inclusive of the more cyclical side of things and not just the defensive side. But I think, you know, the health care one is interesting because that may represent a bit of a poster child for a broadening way of thinking about AI.

8:20Not so much the creators, the providers, the hyperscalers, the LLMs, the frontier models, but who are the beneficiaries of AI? Who are the adopters of AI? In the case of health care, when you think about the low hanging fruit of inefficiency in that sector and then you add to the mix what AI is expected to bring in terms of diagnostic diagnostics and testing and disease prevention, that is not really a defensive story. That is a sector specific story that has an AI bent to it. How are you thinking about the AI trade from here and what some of the fallout clearly looks like in the market today, worries about data centers?

8:57I mean, the hyperscalers are so outperforming other parts of the AI trade in general. How do you feel about it? I think we're going to continue to see rotation within the AI trade at times, a shift from the creators to the adopters, as I already touched on with regard to health care. You know, the data center story is not really a brand new story leading into the election on a year to date basis. More data center plans have been canceled this year by far than even the combination of both 2025 and 2024. So I think this will continue to be an issue. There were, I think, 44 amendments that had data centers tied to them.

9:33Only one went in favor of data centers in North Dakota. Maybe now we start to hear that everybody's going to target their attention on building new data centers in North Dakota, maybe instead of Texas. But I think it's a broader story where investors are looking for ways to think about AI as that infiltrates our economy and industries and individual companies, thinking more broadly than just the hyperscalers and the frontier models. I think profitability is really key. The stability in profit margins is really key. And trying to finally start to get some meat on the bones of the benefits to productivity and profit margins.

10:15That's what I think the focus is going to be on companies now. So explain your your A.I. model and where you're seeing accrued benefits. What are you on guard for? Is it something from the White House? Is it, you know, I don't know, tariffs? Who knows what the future of that is? Is it a Fed hike? Is there anything you're especially on guard for? You know, Fed hikes, at least a couple in the next few months, I think, are built into expectations. That wouldn't be a big surprise. I think if inflation were to really start to accelerate back up again, and it forced the Fed to be a bit more aggressive.

10:51If something happened that was a bit more disorderly in the yield backdrop, that's not been the case. Yields have been coming down. Even when they were going up, it was fairly orderly and in keeping with inflation expectations and the expected path for Fed policy. So it could be something monetary policy related. It could be a series of really big misses in terms of forward estimates for earnings or CapEx assumptions that in the aggregate causes a bigger problem than just the rotational nature of the market right now. And then, of course, there's always the black swan event, which inherently are are unknowable.

11:23Those would be what I think you need to keep on your radar, even if they don't represent, at least in our case, the base case. Speaking of misses, did investors miss their best opportunity at Treasuries? Well, you know, you talk to my colleague Colin Martin. He better served to answer that. But we did, you know, at 5.3, we did say this is not necessarily a screaming buy, but for income-oriented investors, it's probably a pretty good place to lock in some pretty decent yields. But ultimately, what that should look like in investors' portfolios, fixed income even more so than equities, really requires a sort of concierge approach.

11:59Because not every investor is created equal in terms of what the rest of their portfolio looks like, where the correlations are and aren't, need for income, time horizon, et cetera, et cetera. Good to have you on, as always. Lizanne, thanks for seeing you soon. Lizanne Saunders. Now to CNBC contributor Fundstrat's Tom Lee. He's here at Post 9. What do you make of this reaction in the market? I think it's healthy, and it's kind of expected. I know a lot of people thought a blue tsunami might be bad for markets, but there's many reasons why this is actually a positive outcome for stocks. I mean, among them, Liz, you and Liz covered a lot of that.

12:33But one, I think it's going to force Washington to sort of now negotiate, which is a good thing. I think that's actually healthy. But I think one thing that people haven't talked enough about is the fact that this might also take pressure off the Fed. I think the Fed now can work more independently. We don't have to worry about FOMC members doing credibility hikes. I think that's the reason why markets can also rally pretty strong. If I recall correctly, I think you were one of those who suggested, yes, you're going to have a lot of noise on data centers, but you're going to get beyond the election and then it's going to die down as people are politicking a little bit less.

13:06almost feel like maybe we're going to see the opposite given some of the results, particularly down in Texas. What do you think now as these stocks are obviously paying a price today? Yeah, I think there's a knee-jerk reaction because people have to find something to sell to buy what they want to own. But, you know, as you guys are talking about downstream AI applications, compute's going to get scarce if everyone starts using tokens and then prices will go up. And then we're going to talk about bottlenecks again. And of course, There's going to be many states that will welcome this investment.

13:38So I actually think the AI, as the days pass, the AI trade's very much alive. I think communities really do want money to come in, but just on their terms. And I think it's really healthy to talk about AI safety, which was a voting issue. And then look at crypto. Crypto's rallying because, as you know, the Democrats are now pushing crypto legislation, which they opposed just before the midterms. Now they want to actually pass crypto legislation. What if even a Super Bowl like Dan Ives is not naive to the issues that now exist regarding data centers? 10%, he says, will not happen now. What if he's right?

14:16Well, you know. He's always bullish. Yeah. Like you. Yes, but AI is going to continue to do astounding discoveries. You know, the frontier models are solving health problems. They're going to be solving agricultural issues. This requires compute. I think the conversation is going to turn towards AI is actually, again, good for the U.S. Who's going to turn that conversation? Because, I mean, Lizanne Saunders referenced it. There were like 40-plus ballot measures in various states, and they all got voted away. Yeah, I think every state's going to look at their budgets and realize a lot of the revenues that would come in are for these huge investments coming from data centers.

15:01I mean, you know, it's going to be hard to find other projects that replace the sheer dollars that these things bring. Like, you know, are the states, these 44 states going to bring in a bunch of hotels and car dealerships? You know, I mean, that's a very saturated market. But data centers bring in real money and a lot of dollars. So I think the conversation is easily going to turn. I do think it's an overreaction today. So the Citadel note, which I referenced earlier, this sets the stage, Scott Rubner said, for investors to rebuild equity exposure into year end. If they do that, how does that exposure look?

15:35Is it broad, like some are suggesting, and maybe the market today is trying to express itself as? Well, I think we have to keep in mind that probably 50 percent of all hedge funds are TMT. And technology had a huge correction. I don't think they're going to go out and buy Coca-Cola. I think they're going to dive back into the tech trade. So to me, I think I agree with the Citadel note, but I think a lot of this is going to be a very, very strong tech rally that looks like the one we had after the situational awareness sell-off. So it's at least 15%. Tech could rally 20 % from here. Led by the hyperscalers, which Needham's Laura Martin talks about today, we believe higher regulatory barriers entrench incumbents and increase risks.

16:17Hyperscalers are AI incumbents. They're the ones who are going to benefit. That's clearly what the market thinks today. Yeah, that's right. And as they benefit and compute gets expensive, people are going to suddenly want more chips, and they're going to realize there's a bottleneck with data centers. And I think states are going to have a budget need that they want to fill with this money. So I think it's all going to come back very strongly before you're in. What do you like best outside of tech? Well, I think financials are a clear beneficiary of, I think, what looks like a calming rate market and a market that actually is opening the bond market again and capital markets opening.

16:51So I think the financials are really attractive. And then I think that this drop in energy prices is quite good for industrials and consumers as well. I think discretion is rallying, but the industrials are, again, the ISM is above 50. There's really good earnings visibility. The industrials should be doing a lot better. Do you think the Fed hikes in December? The odds are declining. And I don't know if you saw the Bloomberg project called the Bloomberg Price Index, But they're highlighting that this is a very narrow set of things that are driving CPI and PCE at the moment. It really does argue that if that plays out, the Fed will actually be pausing because energy is really the big python that we're actually having to get through.

17:27And there's not a lot of spreading inflation. You think there's a chance that this result leads to that? I mean, the market's making a bet today. If you show crude oil just again to make the point, oil's down so sharply, I think, on hopes that maybe we're going to have a resolution to Iran sooner rather than later. So if you get a big push down on oil and yields follow suit, maybe they don't feel so necessary in December and they wait until the new year to see what happens. I mean, I agree with that because in the October FOMC press conference, Kevin Warsh made it very clear. It's really the energy that's the shock that they're trying to manage.

18:04Now, if we talk about oil prices falling and the curve is falling, the Fed now has a lot of wiggle room to say it's an energy shock. We can just let that pass. We don't have to be doing preemptive hikes for that. Good stuff, Tom, as always. Thanks for being here. That's Tom Lee. For more now, let's bring in Renaissance Macros' Jeff DeGraff. It's nice to have you as well. And you bring a little bit of a different angle to this story as well. What are you most focused on when you look at the charts now? Well, I think we have to look at trends and then where the extension of those trends were and set up for the seasonality and then the bounces.

18:37So you have a lot of reactions today, obviously energy down. And let's just keep in mind the energy trends are still very, very much in place. We'll see how durable this is. I know there's a nice knee jerk reaction today, but let's watch for the durability and sustainability of that. I suspect they get oversold and they'll start to retrend again. So we're going to be on guard for that. Clearly, the discretionary needs are the beneficiaries of the lower energy prices, and they were very, very oversold. So that's not a big surprise. But again, what you're asking for is a trend change, and I think that's going to be harder to accomplish, particularly with just an election.

19:12That was, let's be very frank, that was pretty well telegraphed by all the calcium markets, etc. So I think we have to be a little careful of that. And what is the reaction to some of these other areas? Things like health care doing well today. OK, that's great. That was doing well before, so I'm happy to see that. Things like Staples doing well today, which is obviously a little bit more of a defensive bid. So we're happy to see that. I think the real issue here, Scott, is what happens to real rates as we go forward. Real rates have been really the chokehold on what's been happening for the market over the last three to four months.

19:47And that tends to shift the focus more towards defensives, away from cyclicality, more towards value, away from growth. Very important points being made by Fed. But I think we still have to wait to see if those things actually work their way through the system. So a little countertrend stuff. Seasonality, very, very favorable for November. That's the most favorable month, actually, in the calendar. 77 % probability of upside. But so, you know, so I'm, you know, I'm happy to see that. And I suspect that we're going to have a little bit of a wave to ride here. But I'm more worried about the overall trends than what's happened today.

20:23Do those who follow technical research hate days like this when there's just such extreme and outsized moves in certain areas? You guys are a lot of times working off what you think trends are going to do. I'm not sure what you do with it with a day like this when you're trying to build a case one way or the other. So you're going to have shocks, right? So the question becomes, are those shocks in line with trends or are they opposing trends? And again, energy and discretionary is a pretty good example of that. And then the question is, from there, what is the next level, right? Are they bought?

20:58Are they oversold? How do we want to think about that? And I think, again, there's some more extension there. So the discretionary names, because they're oversold, have the ability to rally pretty hard still from this point to the end of the year. But I do think it's more of a fade than it is a buy as we look at those and the trend that take place. Now, maybe they'll rally, come back down, they won't make an undercut low, and they'll start the base out and shift. But that's getting the cut before the horse as far as work is. How worrisome are the semis as you look at those? You've got, like, Micron's down almost 7 % today.

21:31You know, Hynix is following suit for obvious reasons. Marvell's still reacting to the deal that it just did. and NVIDIA is the only of the mega caps that's giving some back. Well, the semis and the AI complex, we called it a bubble back in May. We had a note out around momentum, the danger of momentum. The good news of momentum had a momentum crash, but it continues to work its way through the system. On a year-over-year basis, momentum has about six months to go before the calendar ends up being more favorable to get a complete washout. So you'll get bounces, fits and starts. Our term over the summer, we'll shoot them in the back as they rally and they roll over.

22:13You want to shoot them? We've been doing that, and I'm still in that camp. So we'll get some rallies, but I think these things are under pressure. You continue to be under pressure for a long period of time. This was more than just what we saw from the election, for sure. Yeah, yeah, and it seems no doubt about that. All right, we'll talk to you again soon. Jeff, thanks. Brandon's back with a look at the biggest names moving into the close. What do you see? Hey there, Scott. Yeah, Uber jumping 6 percent after posting mixed Q3 results. Now, its beat in revenue was driven by growth in its freight division, where sales jumped 34 percent for the quarter.

22:45Uber CEO told CNBC this morning that the company has more demand than supply for its mobility services, and it plans to commit$10 billion to bring more driverless vehicles to its platform. Meantime, CVS Health tumbling about 11 percent after the company said it would split into two separate publicly traded companies by the first half of 2028. The move would reverse CVS's$78 billion acquisition of Aetna and separates the company's retail pharmacy business. CVS seeing its worst day since late January this year. And I mentioned it earlier, McDonald's up 6 percent after posting mixed quarterly results.

23:20The fast food giant's same store sales rose about a percent and a half globally, despite being negative in the U.S. Growth returned in September after falling in both July and August. But McDonald's seeing its best day since April of 2020, Scott. All right, Brandon, thank you. Got a monster day on our hands. We're at the highs of the day. 1 ,600 for the Dow. That's better than 3 percent. Up next, prediction markets claiming victory after the midterms. But did they miss some of the key upsets? What the markets got right and wrong? Next.

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25:30All right, we have breaking news. We're going to our Eamon Javers, who just spoke with the president, I understand. Eamon? Yeah, Scott, that's right. I just had a brief phone call with President Trump, and I asked him about this new world that we're facing in Washington after those Democratic victories in the midterm elections last night. I asked him about working with Democrats, and the president was very much in a conciliatory mood here, Scott. The president said he can absolutely work with Democrats. And I asked him about some of the bipartisan sort of populist economic ideas that have been floating around Washington.

26:01One I asked him about was this idea of a cap on credit card interest rates, which is something that some analysts have said that you could see the left and the right coming together on in the new session of Congress. The president didn't want to comment on that one. He said, I don't want to comment on that, but I can tell you I can work with them on many things, many more things than people understand. There are many ideas they have are absolute. And he raised the idea of Bernie Sanders in the Sanders campaign. He said he and Bernie Sanders were exactly the same on trade. So he said he wouldn't want to take tariffs off, for example, but he could work with the Democrats on financial items that he thinks would be mutually beneficial.

26:39But a little bit cagey here about exactly what those ideas are, at least at this early stage. But this is a president who is signaling to markets and signaling to Washington that he's ready to deal, Scott. Great reporting. Eamon, thank you for that very much. That's Eamon Jabbers. Let us know what else you get. The Mississippi Senate race remains too close to call. It's now the tightest race in the country, separated by just 65 votes, 96 percent of ballots tallied. Just one of the many races that has seen high trading activity on the prediction market platforms like Calci and Polymarket. Mark and Tessa Brewer following with that story.

27:13What do you see? Yeah. So, Scott, Kalshi is just growing today that the 2026 midterms were the first prediction markets election. Its traders were pricing in the probability of a blue tsunami at 55 percent back in April. At five last night, before the first polls closed, markets had correctly predicted 94 percent of governors races, 94 percent of Senate races and 95 percent of House races. Though predictions platforms may have underestimated the size and strength of Democrats performance. For instance, yesterday afternoon, Calci's event contract on who would control the Senate predicted Democrats with 74 percent probability.

27:51But the individual contracts on each Senate race implied collectively a probability of about 87 percent, according to market analysis firm Tater. Some notable exceptions. Traders missed surprise wins in House races in Indiana, Missouri, Ohio and Texas. They missed Darlene Graham's defeat in the South Carolina Senate race. And they missed the Texas governor's race where Democrat Gina Hinojosa beat Governor Greg Abbott. But look at how those probabilities changed yesterday, especially once exit polling and the return started to be reported in other states. Still, this was several hours before Abbott conceded.

28:31So there you were seeing people making money, even though Election Day was underway. And as you mentioned, it's not over in Mississippi where the Senate race has not been called. Well, Democrat Scott Colombs' odds have skyrocketed since results started coming in last night, going from less than 15 percent to about 90 percent odds of beating Republican incumbent Cindy Hyde-Smith. And there you're seeing a really incredible chart. Two notes here, Scott. CNBC has a commercial relationship with Calci, of course. And elections are just a tiny fraction of overall trading volume, according to Ticker Tracker.

29:06half of 1 % of Calci's October volume was elections. 86 % was sports and combos. Contessa, thank you for that. That's Contessa Brewer coming up. Stocks are surging in the wake of that Democratic sweep. Sycamore Trees' Marco Cotta joins us next. His take on the rally and the best opportunities right now and credit that he sees.

29:55Exactly.

30:01At least that's what everyone keeps telling us. Welcome to Machine Gods, a new NPR podcast that will be your field guide to the AI-powered future. We're veteran tech journalists with front row seats to the industry. And twice a week, we'll make sure you get smarter about AI, so you know what's real, what's hype, and what might come next. Listen to Machine Gods from NPR on the NPR app, or wherever you get your podcasts.

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31:00All right. Welcome back. Stocks up sharply, as you know by now, following the midterms, which resulted in a Democratic sweep of Congress. For more on where markets are heading from here, especially where the best credit opportunities lie today, we welcome back Mark Okada. He's the co-founder and CEO of Sycamore Tree Capital Partners right here at Post 9. Welcome back. Good to see you, Scott. These are the kind of days. I mean, it's great to talk to anybody who's a market participant. I mean, it's being driven, obviously. Equities are the story. But what pops out to you today? Well, it's definitely a relief rally.

31:31The relief is real. The election wasn't contested. There's no kinetic war. We've got gridlock in Congress, hopefully. But I do think that this is a bit of a sea change when we think about what comes next and when we look out further from this. You mean the result was a sea change? I do. I think that the AI trade is not just a trade. It has been an amazing activity, economic activity for the country. It's been dominating really all the air in the room everywhere. And so what's happened in this election is we're going to see a slowing of that AI trade. I think, look at Texas. I just flew here from Texas.

32:16You just came here from Texas. You know, I'm glad I'm not there today to see everybody's on a happy face, but it is certainly a, it's 41 % of the 2028 capacity for data centers. And there's no way it's going to be as prolific as it's been. It's got to slow down. There's a power bottleneck anyway. So permitting is the other thing that's going to happen. So that whole trade slows down. I think that really changes the dialogue for equities versus credit. Even if it's just if it's part of the trade, not the whole thing. Right. I mean, that's kind of what the market's reflecting today. Data centers are at power stocks are obviously having a tough session, semis.

32:58But the hyperscalers look great today. Well, they look great because apparently there's going to be a slowdown in all that CapEx spending. But what we're seeing in credit and what we've seen so far is this focus on supply. There's been a massive amount of supply of issuance within the credit markets to fund this crazy compute from the hyperscalers and everyone else. And so if you slow that down, that's great. But the reality is, there's nowhere close to the capacity to meet the compute. So whether it's$1 trillion next year or there's$500 billion, there's still a massive amount of supply that still has to come to market.

33:37I contend that we're kind of capped out in the credit markets per se for most of that. I would think that supply comes next from equities. I think you start to see a flip between having$85 billion of buybacks last year to several hundred billion of issuance in the next year in the stock market. And that's just a giant sea change. It's not necessarily a change in whether AI is still happening per se and the mix we're seeing between the core weaves and the hyperscalers, it's really about the overall picture of where do they get this financing? Well, because you're talking about there has been a capital crunch, right?

34:19I mean, you can only now, I mean, the credit market sort of spoke loud and clear for some of these companies. There's been a bit of a comeuppance. Absolutely. I was here in September. I said, we're not going to buy this unsecured risk. They've issued$400 billion of it. It's all trading down. I mean, I'd rather own it at 83 than par. But if you buy something with a 5 % coupon, it trades down to 83. It takes you three or four years to get that back. Just get to zero. You've invested in data centers. Yes, we have. And we've been doing these secured, fully amortized data centers where there's no residual risk.

34:58So those are great lumps. Would you do it again? Sure. I do that now because you're sitting there on a situation where there's investment-grade tenants. There's plenty of cash flow. It pays you down. It's a traditional secured financing, and we make good spread on it. That stuff is 200, 300 basis points wider than the loan market, so it's good risk. But you have to be selective. I mean, if you peel back the onion, you can say, oh, credit is great, and I do like credit versus equities per se. But there's things under the surface that are the issue, right? At 10 % of the index, that's where the yield is on the index.

35:38The reason it has moved so much higher is the CCC part of the index has traded down massively. You've got CCCs trading at 30 points below single beats. That's a big credit curve. And we're not buying that. Do you think if issuance is going to go down, do you think rates have peaked? I think supply is the other thing to look at as far as treasuries. I mean, certainly oil coming down today is a good thing, per se. However, the Dems want to spend. Republicans want to spend. Both of these sides are going to spend. I think there's relief that's supposed to be coming from all of this policy, per se.

36:19That just means more treasuries. I mean, we've had$25 trillion of treasuries issued this year. That's up 10%. The amount of the budget that's just on interest costs is 13%. That's at the coupons that they pay. If you mark those coupons to today's rate, Scott, it goes to 18. So I think the bigger risk for the 10-year is six versus four. Really? Yeah, I do. I think the upper pressure from just issuance is something that the market hasn't really priced in. And as we go through this, we'll see. We'll see where that goes. But I'm telling you, if we're at six on the 10-year... I mean, if we go to six on the 10-year, then, I mean, all bets are off for the stock market.

37:03Which is my point. Why take that risk when you can make 8%, 9 % in credit and sleep at night? I mean, we really are finding situations like that where it's good risk. We feel comfortable. We're floating. It's good return. Heck, you can make 6 % in AAA floating yourself. I mean, what's wrong with that? I mean, those are nice returns. It's a good way to take chips off the table. I think that will be a durable dynamic going forward. I know everybody on your show wants to talk stocks all the time, but I just think that the credit market at this point, after the equity market has doubled in the last four years, is probably a better place to rotate into.

37:45Well, that's why we like having you on. Thanks. You're a change from what everybody else likes to talk about. We'll have you back before the end of the year. I think we'll check in and see where we're at. OK. It's good to see you again. Thanks, Mark. Thank you. Up next with Biggest Movers as we head into the close. We're back after this.

38:03We're now in the Closing Belt Market Zone. Mike Santoli and FAS Wealth Partners. Mike Rhoad here to break down these crucial moments of the trading day. Oliver Rennick is standing by, as always, live from the CBO Global Markets in Chicago. We'll do options action. We also have some earnings in overtime tonight. Late Seema Modi watching Qualcomm and Contessa Brewer is watching Expedia. Michael, I'll start with you first. Best day for the Dow in about 18 months. Yeah, I mean, parts of this market are trying to get it all back at once in a sense and trying to kind of rotate and rebalance away from that still under pressure AI hardware trade, it feels like.

38:39A lot of it says much about the preconditions. You know, we had the median stock coming into this week in the S &P down like 16 percent off a high. We all know how sold out some parts of this market were and how kind of tightly wound folks were in terms of being hedged. So we have that release right now. I think you have to certainly respect it. If you were to look at no matter what the policy outlook is, if you just look at where oil's gotten to, where rates have gotten to, Fed expectations, and then the earnings picture is right there, valuation risk has been diminished at least a little bit over the last couple of months.

39:13You can understand why the market has a bid, whether it has enough to to really carry much higher. And this is now the fourth quarter rally game on. That we'll see. Who do you have helping you answer those critical questions coming up in about five minutes in overtime? Yeah, we got Scott Cronin at Citi talking about whether, in fact, you know, maybe things are getting overdone in the very short term for one. And so we're going to do that. Obviously, also break down Qualcomm numbers as well. Yeah. Good day to have that with what's going on with the chips, too. Michael, thank you. That's Mike Santoli.

39:45Oliver, let's play some options action in Chicago. What are you looking at? A rare occurrence in markets today, Scott. The semiconductor group, SMH, looks like it's going to close down more than 3%, yet VIX still fell four points. That looked like a very rare thing, so I pinged the odd stats account on X. He ran it for me and said it's the first time ever that you've got a 3 % drop in semis and a big drop in vol as VIX slips below 17. The options traders are piling on bearish into the chip ETF, which is now in bear market territory. Two times average volume, twice as many puts traded versus calls, and most of the premium tied to those puts.

40:26The most popular trade was buying the 475 strike put expiring November 13th. That means a 7 % further sell-off in the SMH to work. But as traders punished tech, they piled into calls on trades like airlines, housing and solar, keeping S &Ps up and the VIX down the most since July. Oliver, thank you very much for that. Oliver Rennick, let's go to SEMA now with that walk up to Qualcomm. What do we need to know? And what was so interesting, Scott, is right ahead of earnings, the company came out with a new partnership with SpaceX, where Qualcomm's technology will be used with Starlink's mobile infrastructure to power the network across the U.S.

41:05This is a multi-year agreement that spans tens of thousands of macro cell sites and towers the span and really looks to span the nation. It represents Qualcomm's first deal with SpaceX and its biggest 5G deal yet. So on the call, we'll want to have more color just on how big of a deal this could be for Qualcomm as it looks to this new partnership and the revenue opportunity there. Beyond that, given all the focus on midterms and the election, Qualcomm, yes, known for selling its chips to the smartphone players, But it is a latecomer in the data center space. But that is still a line item that we're going to want clarity on.

41:40And again, how the political headwinds facing data centers construction, how that could transpire for Qualcomm. Scott. All right, Seema, thank you for that. Let's go to Contessa now on Expedia. Hi there, Scott. Yeah. So Expedia is heading into earnings today with the pedal to the metal and a full tank of gas. Shares are of about 12 percent on the day. The whole travel and leisure sector, in fact, getting a boost from the midterm results and expectations around the oil trade. Plus, there's this question of AI development slowing down now. Investors might consider that an advantage to an online travel agency like Expedia.

42:12But look, this is a company that has demonstrated a commitment to harnessing AI to advantage the ways it powers its B2B segment and in reducing friction and improving marketing directly to unique customers. The street expects now earnings of$8.89 per share adjusted, earnings of$4.7 billion for revenue there. All right. Good stuff. We'll see in just a little bit. Contessa, thanks for that. That's Contessa Brewer. Mike Rhodes sitting right here with me. Matt, what do you make of this day? Yeah, it's been a wild day. It's a long time coming in terms of the rotation. It's been quite strong. You have a mix of the Trump administration's business friendly policies still in place.

42:50Right. Reshoring the tax bill deregulation and then add on the potential for lower inflation with oil prices down. If AI spending slows a bit, that will also help inflation ease. If you take out AI and energy, you still have 15 % earnings growth going into next year. That's a really healthy environment. And valuations for the non-AI stocks are pretty attractive. So are we clear now for a run into the end of the year? It's pretty short term, but you could be. We'll get some important information on the consumer later this month with Black Friday and Cyber Monday. But yeah, the market feels pretty good right now.

43:27I mean, because we've been like in this range and we haven't been able to get over the hump. Right. Been hanging around the rim a little while. Yeah. You know, giving a little back, getting a little more. And then now here we have this significant day like this. I think removing the overhang and the focus on the election, we now have some certainty going into next year should really help the market. What about the AI trade? Yeah, I think we've passed the chapter two where it's the semis and the memory stocks. And now we're really going to head into, I think, the most important is where the companies that are embracing AI, adopting AI, and are able to expand their profitability, those will be the winners.

44:01And this could be a multi-year type next leg for the AI trade. You mean the winners at the expense of the hyperscalers and the semis, like money comes out and goes in? Yeah, I mean, I think that's what we're seeing. I mean, generally, investors look for accelerating earnings, and you're going to see pretty massive deceleration in AI-related stock. earnings next year from 70 % to 25%. And if you could see acceleration in other areas, companies that are adopting AI and expanding their profits, that's really the next leg of the track. All right. That's Mike Rode. Appreciate you being here. What a historic day in many ways.

44:32I mean, it's the biggest day for the Dow in 18 months following that sweeping result from the midterms. And you're going to see the hyperscalers finish with a big day. NASDAQ's good for 1.5%, but the Dow is the story today. 3%. So many different sectors, discretionary having one One of the best days that we can remember in some time. Don't forget Qualcomm in overtime with that semi story still trying to play out. I'll send it into overtime with Mike and Mel and I'll see you tomorrow.

45:28We'll be right back. 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.