Big Tech Selloff, Election Day Stakes and AI Spending Pressure 11/3/26

0:28Everyone wants healthcare to be simpler and easier. At Edward Jones, we believe rich isn't about having life all figured out. It's opening yourself to all the possibilities. That's why your dedicated financial advisor provides long-term planning built around you, meeting you where you are, and helping you get closer to where you want to be. So no matter where you're starting from, you can move forward with confidence. The key to being rich is knowing what counts. Let's find your rich. Edward Jones, member SIPC. It's Election Day. I'm Morgan Brennan, and this is your Morning Call.

1:17Good Tuesday morning. Let's get a check on U.S. stock futures with the Nasdaq and S &P 500 riding a three-session losing streak, and the Nasdaq 100 entering correction territory for the third time this year. It's now down more than 10 % from its most recent 52-week high, which was not hit that long ago. It was a mixed picture yesterday with the Dow actually finishing higher. And as you can see right there on your screen, the inverse is playing out here as of right now pre-market. The S &P is poised to open fractionally higher by about five points. Dow down 232 points and the Nasdaq up about 106 points.

1:50The big focus remains on big tech and two earnings movers, Apple and Palantir. For Apple, it's all about the margin squeeze. And for Palantir, it's blockbuster commercial business finally taking center stage. Nonetheless, high valuations perhaps contributing to the pressure we're seeing there. We're going to have much more on both of those this hour. And let's get a check on the bond market in the meantime. What we're seeing with Treasuries yields are higher across the curve. U.S. 10-year Treasury yielding 4.9 percent right now. And Fed-sensitive two-year Treasury, 4.58 percent. And the 30-year Treasury yielding 5.27 percent.

2:25We've come down quite a bit here over the past, I don't know, week, two weeks, call it, particularly when we look at that 10-year Treasury yield. Energy after oil's wild swing lower yesterday, pretty dramatic moves that we saw to the downside yesterday in the crude complex. But this morning you can see renewed gains. And this amid reports of renewed but very limited U.S. strikes were being categorized as defensive strikes on Iran by the U.S. And you can see WTIs up about 1 percent right now. But we are trading right around$97 a barrel. Brent crude is up about three quarters of 1%. It's trading around$105.50 a barrel above gasoline.

3:04Diesel futures, all a bit higher, too. Well, it's election day today here in the U.S., with Democrats aiming for a midterm sweep of the House, possibly the Senate. Users on Calci saying that Democrats have a 94 % chance of taking control of the House and a 76 % chance of taking the Senate. Now, among the key Senate races that we're watching, Alaska, Texas, Maine, Michigan and Ohio. Also keep an eye on Texas. Nearly a dozen House races with Texas, Kansas and Alaska in focus. Traditionally, red states that may turn blue in his final push to the Republican base. President Trump urging voters to do the right thing and vote, but also appearing a set to or appearing to set the stage for potential Republican losses.

3:51It all doesn't matter if we're going to be foolish and let people that hate our country win an election. Because if the people that voted for me and voted in the last election where we had such a great victory, if they go out and vote just a good portion of them, we will win in a landslide. Now, that doesn't happen because usually whoever the sitting president is, Republican or Democrat, at good or bad, good president, great president, bad. For some reason, the sitting president doesn't win the midterms, but we gave this a very strong shot. Well, turning back to our top market story in the Nasdaq 100, falling into correction territory for a third time this year, the index is now down more than 10 percent from its most recent 52-week high, which was hit back in early October.

4:43And while a double-digit drop from a recent high does not always mean a bear market is around the corner. Of the seven Nasdaq 100 corrections that we've seen in the past five years, three have seen the index fall another 10 percent. That's according to Dow Jones market data. Well, among some of the biggest names that are pulling back amid this recent sell-off in the NDX, Intel, Oracle, SanDisk, Marvell, Caterpillar, these are all down between 40 and 58 percent from their most recent highs. Those are very big moves. And Jones Trading's Michael Rourke, a friend of this show, pointing to another source of pressure, the massive amount of capital that big tech is raising to fund the AI buildout.

5:21Among the latest, Google tapping the European bond market, Oracle launching debt and equity offerings, and Meta following with a European debt deal of its own. That's all within the past 24 hours. Rourke says the frequency of those capital raises is reinforcing concerns about just how much cash this AI buildout is going to require. and the trading has been violent in response. So Oracle rallied 15 % in just half an hour during its investor day last week. Three trading days later, those shares are 20 % lower. And that kind of action is not unique to Oracle. Meta has posted five separate rallies of at least 16 % this year.

6:00And yet the stock is still down 8 % so far in 2026, about 7.5%. And with a similar story with Alphabet, down 10 % on the year, and that is despite a 50 % rally at one point, the message from investors. They may still believe in the AI story, but they are becoming much more sensitive to the price tag. This has really been the area we've been focusing on for the last couple of weeks with Jensen Wong from NVIDIA actually on the show talking about it, that perhaps the biggest bottleneck now here to the AI build-out rollout is capital, not power and chips and some of the other things we've been talking about up until this point.

6:37Tech could feel even more pressure today from Apple, which is trading lower. It's down almost to 4.5%. That's dragging the Dow lower, too. Company's fourth quarter results. Apple is the largest constituent in the NASDAQ 100. Earnings and revenue beating forecasts. iPhone sales also topping estimates. The new iPhone 18 models are only going on sale at the tail end of the quarter. And Apple's guidance for gross margins and services revenue, that is really part of what is pressuring the stock this morning, because those came up shy of estimates. On the call, the company warning memory chip costs will in the holiday quarter, but that it's taken steps to lock in supplies.

7:13So let's talk more about the results with Richard Kramer, founder and senior analyst at Arite Research. Richard, it's great to have you on the show. What did you think about the results we got from Apple last night? Well, look, in the context of what you just laid out about all the companies that have had very poor performances, Apple stock is up 25 percent year to date before the print. It was really bouncing off of all time highs and it hasn't had that kind of correction. This is a company that just generated$154 billion in operating cash flow and came off a year where they grew 15%. Now, a great example, I think I was on CNBC a few years ago when they had had two years of declining sales in China.

7:53And this year they roared back with 28 % growth. So I think these kind of 100 basis point declines and margins are kind of overstated somewhat, given the solidity of Apple's position, their installed base, the number one brand in the world. And one other thing we didn't really mention is they generated$144 billion of free cash flow, operating cash flow, sorry, and they only spent$9 billion off CapEx. So they're not really exposed to this massive AI data center build out directly the way so much of the rest of big tech is. Yeah, I just want to stick with margin a little bit more here because I think we have a really cool chart from friend of the show, Ben Emmons.

8:35So if we can pull that up, it basically shows, as he puts it, memory and Siri AI costs are pushing Apple's margin guide to 40 to 46 percent, 45 to 46 percent. And that, to your point, at 35 times forward earnings, the safe haven pays the AI tax. The Apple margin decline there is the blue line on the screen. But I do just want to get your thoughts on that, given how that compares to the rest of tech and to also the hyperscalers, which we were just talking about. Yeah, I mean, there has been a massive transfer of value from the hyperscalers, the Internet brands we all know, and Apple, to the semis industry because of this capacity crunch in memory as well as advanced nodes for all of their products.

9:24Again, I think we need to separate the kind of margin decline we're seeing here with the narrative that somehow the company is in distress. Certainly, if we look down the road, they will pay more as people use Siri AI to Google for their cloud compute because they're not building it themselves. But I don't think this is a company in panic. And back to, you know, the basic theory of comparative advantage, I think most of their competitors have it much worse. Apple just posted two quarters of 20 plus percent growth in Macs. I think if you look at the rest of the PC sector, they're looking more at 20 percent decline.

10:01So they're able to take market share, even if margins are slightly lower. I think the company sees no drama in that. And I think the market makes maybe too much of these relatively small changes in their margin profile. So one more question on this, because they did post 12 percent growth, top line growth for the September period. I think part of what sent the stock into reverse after hours last night was the CFO saying they're projecting 7 to 10 percent growth in revenue for the December quarter, which is typically stronger than the September quarter. and we know that they do have all these new products rolling out.

10:33Is this just conservative guidance potentially, or is this part of, I think, the broader story about what we're seeing with consumer demand and higher prices in general? It's part of that. But again, if you look back to the September quarter comp from last year, they launched the 17 and the 17 Pro, as well as the iPhone Air. So they had quite a bit more product in the December quarter last year to sell than they do this year. And they're delaying the 18, the base model of the 18 and the lower cost 18E until likely March quarter. So I think some of this is just tough comps. Some of this is also, I think, really the company sandbagging somewhat.

11:18And I would expect them to do better than the 7 to 10 % guidance that they've given. But again, I think this is a company that is very patient and there's really no drama here. They've gone through periods in the last couple of years under Tim Cook, where they had low single-digit growth. And they managed to come out of that with a year where they had 15 % growth and phenomenal margins. Yeah. Great context there. Just very quickly then to put a fine point on all of it. Would you be buying here on the dip? Well, I think what you've seen with Apple is you want to buy it when there's a sort of 20 % drawdown.

11:54We're kind of half the way through that right now. I also have long said that Apple is a store of value. It's the kind of company that when everybody else is frothy, they're going to underperform somewhat. But it also has an incredibly stable business model given the installed base and the two and a half billion devices, 1.4 billion in our estimates, iOS accounts. So I don't think they're about to lose their position. And they would tend to be relatively well positioned if people are going to be more defensive in the market. Got it. Okay, Richard Kramer, great to have you on. Appreciate it. Thanks.

12:30Let's turn to the other big earnings mover from last night. Palantir, another beat and raise quarter for the company. U.S. commercial revenue with 148 % higher year over year to$984 million. This surpassed U.S. government revenue for the first time ever, which also nearly doubled to$953 million. Palantir now touting an eye-popping Rule of 40 score of 158%. It's a key software metric. Higher is better. I spoke with CEO Alex Karp in a wide-ranging interview. He said, quote, we didn't even have a commercial business when you and I started talking. Now, Department of War is only 30 % of our business.

13:03Most of our market cap now is covered, if not our whole, just by our commercial business. Palance here capitalizing on its sovereign AI strategy. It's taking a different approach with its commercial customers, too. Karp telling me, quote, what's actually happening is we're taking our product, putting it in enterprise and teaching them how to both use it internally and then strongly suggesting to them, and it's beginning to work, that they then use it externally, meaning they build their products inside our ontology and they distribute them with their people. So basically, we're empowering a mini Palantir at our partners.

13:35Why are they doing this? Scale. Karp says Palantir is going to get to a$15 billion run rate in U.S. commercial in 2028. He says, quote, it's a fork in the road and we cannot meet the demands. We need partners. Now, on whether a broader AI consolidation is afoot in AI, he says, I think the economy is downstream from everything. We're in a shakeout politically. We're in a shakeout culturally. We're in a shakeout intellectually. But what does that mean on a day when Americans are heading to the polls for midterm elections? Well, he weighed in on that, too. Quote, as I've been trying to get everybody to recognize for the last two years, if you do not address the fact that a small number of people are going to be 10 or 20 times richer than they are now, you're going to see things blow up.

14:15And every political thing is a downstream reaction to that, in my opinion. Well, if we check shares of Palantir, down 6 % right now, despite that beat and raise, as some folks have suggested, it might have to do with the commercial bookings piece of this moving forward as well. Also, valuation very lofty at a time, where we are, in fact, seeing this consolidation happen, at least in public markets right now. Well, a quick check on trading in Europe and Asia. Our Karen show is in London with more. Hi, Karen.

14:48Morgan, good morning to you. Well, stocks in Asia largely retreated this morning ahead of the U.S. midterm elections. Tech stocks in particular leading South Korea's Cosby and Taiwan's Tayyip sharply lower after Apple's results overnight. Australian stocks also in focus this after the central bank raised its cash rate to an 18-year high, marking its fifth rate hike this year. Typically, they try and avoid hiking on Melbourne Cup Day, which is a horse race that stops the nation. But we return to rates we've not seen since 2008. Meantime, that tech weakness is also playing out across the European stock market today as chip stocks are under pressure in early trade.

15:25Now, the sector is one of the worst performing today, along with mining and media stocks. I think investors looking at that memory chip story and they think it's a gigantic negative, along with all that CapEx intensity that has taken tech stocks lower. Morgan, back to you. All right. Karen Cho, thank you. A lot more to come here on Morning Call, including what's shaping up to be a wild week for oil and reports of renewed regional strikes, or maybe strikes that have been happening secretly, depending on which report you read. Plus, we dive into the toss-up races across Congress that may prove pivotal to the balance of power and why history may be favoring the Democrats.

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17:21We are turning to a developing story and oil inching higher in the wake of it once again as we track reports of new airstrikes by the U.S. on targets in Iran. That's coming just one day after that massive move for oil to the downside on hopes of a diplomatic de-escalation. Our Dan Murphy joins us now live from the ODIPAC conference in Abu Dhabi with more. And Dan, a devil's in the details here in terms of the strikes or at least the reports we've seen regarding them. Exactly, Morgan. Good morning to you. And it's unclear if this is the start of a broader campaign or if this really is limited in nature, but the market appears to be pricing the latter this morning.

18:02We're seeing oil prices stabilizing right now and clawing back some of yesterday's losses after both benchmarks here plunged more than 7 % on hopes of a deal. Of course, coming into that, Brent had been trading at its highest level since 2022 on fears of renewed US strikes after the midterm. So we really have seen oil getting whipsawed in the last 24 hours. These latest strikes, Morgan, have not been officially confirmed by CENTCOM. But as you were pointing out earlier, the Wall Street Journal reporting today that Washington may have kept this quiet so as to not signal a major escalation. The Journal actually goes as far as to call this strike on Kesham, the latest in a series of limited strikes that Washington has been secretly carrying out against Iran in recent weeks.

18:49So that's particularly interesting. Morgan, meanwhile, here at Atapec, the message from the industry is that this is an energy system that has very little room left for shocks. The AdMog CEO, Dr. Sultan al-Jabba, opened the conference on Monday by warning that the world has eroded its supply buffers. He says nearly a billion barrels have been drained from global inventory since Hormuz was disrupted and that shipping now makes up more than 30 percent of the cost of a barrel. That's up from less than five percent before the war. So, Morgan, I would say the mood here at Atapec is pretty cautious and the CEOs that I've been speaking to are certainly bracing for more volatility to come.

19:27Yeah, and you've certainly had an all-star lineup of CEOs and decision makers on from the conference. I just I have to ask a follow-up here because it looks like we've got some headlines coming through that Qatar's foreign Ministry spokesperson is saying that both sides are still committed to the mediation process. So I guess is this a scenario where both things can be happening at the same time, defensive, what are being considered defensive strikes and diplomatic relations? That's exactly right. And as I was saying before, these strikes haven't been confirmed by CENTCOM. There's no official U.S.

20:00confirmation that we've actually seen these strikes taking place, which is maybe why the oil market is reacting in the way that it is right now. But at the same time, you're exactly right. The diplomatic track is still open. The Qatari is still trying to find an off-ramp here. And at the same time, too, the president also signaling in a recent Axios report that he doesn't necessarily need to rush back to bombing. Morgan, I think it all comes back to the next 24 hours to see exactly what happens out of the midterms. And of course, what type of appetite for escalation the Iranian side has as well?

20:31There's a lot hanging in the balance here. Okay. Our Dan Murphy in Abu Dhabi at the Adipak Conference. Great reporting, as always. Appreciate it. Straight ahead. A first on CNBC interview with electric vertical takeoff and landing sector leader, Beta Technologies, fresh off its latest earnings report and a number of milestones that investors need to be tracking. Morning call. We'll be right back. Ever notice how every new AI tool asks you to explain your business to it all over again? Google Workspace with Gemini skips that. You get Google's AI built right into the premium versions of Gmail, Docs, Sheets, and more.

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22:48Welcome back to Morning Call. We've got an earnings alert for you now. Beta Technologies, the company just reporting. a narrower third quarter adjusted loss on an EBITDA basis. Revenue more than doubling in the period now at a record top to analyst estimates. It's raising guidance for the year. Well, Beta Technologies recently became the first company to secure FAA authorization to conduct flights with prospective customers in its electric vehicle takeoff and landing aircraft or eVTOL. Joining me now in a first on CNBC interview is Beta founder and CEO Kyle Clark. Kyle, it's great to have you on.

23:21You had a number of milestones this quarter. I think let's just start there. Yeah, it's been an awesome quarter, Morgan. We've set a certain number of KPIs at the beginning of the year. We've got three out of five of those done prior to this call, which was a big deal for us, and they were aggressive milestones, flew a quarter million miles. We laid down 168 charging sites, and we beat our targets for backlog. So it's been a really fun quarter. You also, just a couple weeks ago, scored landmark FAA authorization for these VTOL flights for putting prospective customers in your aircraft. How meaningful is that?

24:00Yeah, I mean, look, there are very few points for the FAA to provide some type of objective opinion on the progress of the programs. This is one of those times where we had to have a stable configuration over a long period of time, hit all corners of the flight envelope. And I'm like extremely excited about bringing people in that airplane so they can experience the magic of electric vertical takeoff and flight. It is a it is just a very special thing. It's a new form of flight. Everybody recognizes the cost and the noise. But getting in the airplane is a whole nother level. Yeah. The way the way Ron Epstein over at Bank of America put it, it's basically imagine buying a car without driving it.

24:39And so what do you what do you expect this to do in terms of orders for your aircraft? Yeah, I mean, look, we had a go-to-market survey on our conventional takeoff and landing electric aircraft. And for example, I went over to Scotland. I flew with the CEO of Logan Air all around the country with the Royal Mail. Our pilots flew the routes, and it ended in a very meaningful order for us. So I think with the vertical takeoff and landing aircraft, the same thing is going to happen. We're going to be flying into hospitals, distribution centers with a cargo variant, with customers showing them the cost and the efficiency of flying these aircraft.

25:13So to answer your question very bluntly, it can't do anything but increase our order backlog. The other thing I think investors in the future of mobility, including beta technologies, need to be tracking is this EIPP campaigns that are underway, both for beta and for other players in this industry. What are we talking about with EIPP campaigns? How does all of this, you take that, you take what's happening with FAA, How does all of this move you closer to full certification? Yeah, absolutely. The EIPP program allows us to put aircraft into service with our customers prior to type certification.

25:51So it exercises all the other systems required to put a new form of transportation into the market. And the administration right now under Duffy and Bedford have laid the foundation for us to get into this. And we launched seven of those sites so far, which is a really big deal for our industry. The FAA is behind it. The DOT is behind it. And our customers are seeing the real cost and reliability benefits of flying electric aircraft. And we just launched in Florida last week, for example, which was a huge success. Paid commercial services. Are we looking at 2027 for folks like me to finally perhaps maybe be able to start to get onto eVTOLs like yours?

26:29Yeah, I mean, I think you can get on them. It'll be for pay. It'll probably be later, 27, 28, because there's a series of developments that have to happen for beta. We're starting with medical cargo and logistics first and then passenger. But that's kind of a nuance. We'll make a special exception to put you in the airplane because that experience will transform the way you think about flying. It's safer, cleaner, quieter. And, of course, the cost, it just rings true when you get out of it. You plug the thing into a charger and you see your fuel bill be measured in dollars instead of hundreds of dollars.

27:05Kyle, I'm going to keep you to that. We're going to talk about that when the time comes. Kyle Clark from Beta Technologies. And I'll see you in Florida starting tomorrow. Kennedy Space Center for the Upsummit. We have an all star lineup from the Upsummit. That's going to be coming up over the next couple of days. In the meantime, Kyle, thanks so much for joining us on the back of earnings with a stop popping 6 percent right now. And as we head to break, we've got a news alert and new details on the fallout of the Binance hacking. The crypto platform reopening withdrawals for more assets on its networks this morning.

27:35And this is North Korea denies being behind that breach. The company's co-CEO speaking at Hong Kong FinTech Week earlier this morning on maintaining trust with users in the wake of that hack. We're back after this. We have always been by our users and users know that, you know, We stand ready. We're always here. We put the interest at the forefront. And that consistency has earned the trust of users. I'm very, very confident we'll rather this storm together with the support of everybody. And the community has come together very, very strongly on that front. Hi, I'm Morgan Brennan. Welcome back to Morning Call.

28:10Let's get a check on U.S. stock futures this Tuesday morning with the Nasdaq and S &P 500 riding a three-session losing streak and the Nasdaq 100 entering correction territory for the third time this year with a close yesterday. You can see it's a mixed picture yesterday. Dow eked out again. And as you can see on your screen, it's a mixed picture again this morning, pre-market. S &P is basically flat. Dow is poised to open lower by almost 300 points. The Nasdaq higher by 99 points. The big focus remains on big tech. Two big earnings movers, Apple and Palantir. For Apple, it's all about the margin squeeze and also the forward guidance.

28:45And for Palantir, blockbuster commercial business is finally taking center stage, but valuation and a number of other things being nitpicked by investors this morning. You can see shares of Apple are down almost 4%. Palantir, now down almost 8%. Let's get a look at what we're seeing with Treasuries 2 this morning. And you can see yields creeping a bit higher along the curve, but still down from where we were just a couple days ago. U.S. 10-year Treasury yielding 4.91%. Fed-sensitive two-year Treasury, 4.59%. And the 30-year U.S. Treasury is yielding 5.28 % currently. Let's also check on what we're seeing in energy after oil's wild swing lower yesterday.

29:25Pretty dramatic moves to the downside. We are creeping higher this morning. That is amid reports are renewed but limited U.S. strikes on Iran. What, according to some reports with unnamed officials, are being categorized in the U.S. as defensive. You see WTI is up about 1.4 percent right now, trading just below$98 a barrel. Brent crude is up 1 percent. It is trading just below$106 a barrel. Arbob gasoline is also jumping 2 percent this morning. But keep in mind, Arbob prices hit their lowest level in about two months yesterday. We're turning back to Election Day today with Democrats aiming for a midterm sweep of the House and possibly the Senate, with nearly a dozen races in focus with traditionally red states that may get hit with a blue wave.

30:10Well, let's get to our Megan Casella digging into the most pivotal races on the map. Megan, there is a lot to get to here. There absolutely is, Morgan. Good morning. So first, a bit of trivia to start us off. Only two times since World War II has the president's party gained House seats in midterm elections. That was 1998 and 2002. So that history alone is enough to make Democrats bullish about their chances tonight of retaking power in one or both chambers of Congress. Now, the House is expected to be the easier lift for the Democrats. Republicans have a four-seat edge right now, so Democrats need to flip a net three seats for the majority.

30:49That means they could lose every single race currently rated as a toss-up and win just the ones that forecasters say are leaning in their direction, and they would still take the majority in the House. The Senate, though, it's a different story, much more up in the air. Democrats have to flip four red seats and hold on to all of their blue ones to take power here. So CNBC's election desk has zeroed in on just five toss-up races that will likely determine the majority. One of these states, Michigan, is currently held by a Democrat. That's the retiring Senator Gary Peters. If Democrats lose that seat, their next best path to taking the Senate would require winning all four of the others that you see here.

31:29Maine, Ohio, Texas, and Alaska. That's a tall order when three of those states elected the president by double digits just two years ago. And when you remember, Texas hasn't elected a Democrat to the Senate in almost 40 years. Now, Morgan, the earliest polls will close tonight at 6 p.m. Eastern, but I would not expect many results until later in the night. Alaska, one of those key states, their polls don't finish closing until 1 a.m. Eastern, so it will be hours, if not days before we get much clarity on the balance of power, especially if it's close. Morgan. Yeah. I mean, we're going to have first crack at it here this morning on Morning Call.

32:08In the meantime, you did just touch on it, but I want to follow up a little bit more here. The fact that we have seen some legal challenges in anticipation of what could happen in some of these closely held races in different states, how does it speak to the stage that's being set in terms of getting some of those results, possible challenges to those results, if at all? We are almost certain to see some challenges to the results because we're already seeing them even before the votes have begun being counted. We've seen the Justice Department in Alaska, for example, saying that the court should block the results if the incumbent senator doesn't win.

32:45That's amid the mix-up or the controversy over two Dan Sullivan being on that ballot. Now, courts have dismissed that so far, but we do expect that to keep going. We also have seen the president say repeatedly that he will accept election results if he feels that elections were secure. There's always that caveat attached to it. So much, much more to come here, Morgan. And I think the closer that we see some of these races being, the more likely we are to see challenges. If it comes down to singular counties, if it comes down to just a few thousand votes in some of these really big states like Texas, that's when we're likely to see challenges.

33:21All of that said, everybody is very aware that the legal challenges are really expected. And there's been a lot of good reporting around a lot of these states about just what secretaries of state have been doing to make sure that there aren't going to be issues. Everyone's trying to prevent that. All right. Megan Casella, great reporting from you, too, as always. And what's going to be a very busy next couple of days? Appreciate it. Yes. Well, joining me now with more is Kellyanne Shaw, partner at Aiken and a senior advisor at the Center for Strategic and International Studies. She was also a White House trade advisor during the first Trump administration.

33:56And it's great to have you back on the show. Welcome to you. What do you think matters the most? There's so many different things we could talk about, but just what do you think matters the most as Americans go to the polls today? And what is that going to mean for the future of policy. Yeah, good morning. This is certainly a midterm election to watch. And I think, as Megan said, if history is any judge, Republicans were always going to have an uphill battle here. This is really a midterms against incumbents. Even in some of those battleground states that Megan pointed out, there are a number of incumbents who are on the ballot who are really facing a difficult election here.

34:33But that said, while I think most Republicans are resigned to the fact that the House is likely going to go Democrat, the Senate is very much in play. But what does this mean policy-wise? The election is today. The 2028 presidential race starts tomorrow. And that's because if you have a divided government in this kind of environment, you're still going to have a lot of deference to the president in setting some of these major policy initiatives. We're not going to see big legislation move outside of defense and appropriations. So it's really about posturing and positioning for what the agenda and platforms is going to be going into 2028.

35:08I mean, that's that's literally what's going to go with you. If the state of the economy and affordability, cost of living, the impact on people's pocketbooks, high inflation, if these are if these are what are mobilizing voters to get out there and make their decisions today, how is that going to translate to agenda if you do have a divided Congress or a divided government overall? Yeah, I think in a scenario where we have Democrats in control of the House, potentially the Senate, you're going to see them introduce a number of bills, pieces of legislation aimed at affordability, aimed at health care, child tax credit policies, all sorts of things that they know are not going to get over the line.

35:47Now, that said, what I'm going to be watching to see is how a House controlled by Jeffries and a very, very divided Democratic Party, where you have very progressive Democrats on the ballots in some of these key states, you've got the Democratic Socialist Party, how they can really unite and get behind single platform ideas. It's not really clear what's going to happen, even on the substantive point. So what's going to happen in terms of governance is the president will be in the driver's seat, regardless of what happens today, regardless of how these elections play out. So his policies, which will be driven by executive authority, through regulation, through foreign policy, things that are more squarely in Article II authority, That's what Americans are going to have to depend on to try to get those gas prices down, to try to have groceries more affordable.

36:34It's not going to be what's happening on Capitol Hill. At a time, we have the NASDAQ 100 trading and correction territory. AI data centers are certainly on the ballot here, too. How critical are some of the state and local level elections that are going to play out today in places like Georgia, Texas, Arizona, et cetera? Yeah, this is really interesting. This is obviously an issue that has renewed concern for a variety of reasons, whether it's the existential question of human existence, whether it's about resources, electricity bills, or any other number of issues. We're seeing commercials being played in a number of these key states and districts all revolving around this AI data center issue.

37:15I think the industry hasn't properly responded to this in terms of coming up with a way to negotiate with communities to address some of these concerns. So it's not clear to me that this is going to be as much of a 2028 issue as it is a 2026 issue. Now, that said, we could see attempts by Congress to try to regulate some of these frontier models, to introduce export controls on certain semiconductors or components of the AI data center. But I still think even for this, it's really the president who's in the driver's seat and is driving the car on this policy. And we'll see whether or not industry can address some of these concerns going into 2028.

37:50All right, Kellyanne Shaw, appreciate it. Thank you for coming on. and breaking this down for us on election eve. I guess election day, I should say. A lot more to come here on Morning Call, including new details on that massive Marvell Lumentum deal and the apparent blessing that NVIDIA's CEO gave that union. Morning Call is back after this. Welcome back. We're checking shares of Marvell and Lumentum after falling 13 and 18.5 % respectively yesterday. That's after the chip designer announced it will acquire the optical component maker for$115 billion. It's a laser-driven deal. You can see we're bouncing back a bit here pre-market.

38:26Marvell is up about 2%. Lumentum up about 2 % as well. Bloomberg reporting, though, that ahead of that deal, the CEOs of both companies got the blessing of none other than NVIDIA CEO Jensen Wong, seeking his views on the deal in a conversation before the announcement. The apparent push for Wong's support highlights how NVIDIA is encouraging consolidation among key suppliers as demand for faster optical connections becomes a key issue in the ongoing data center buildout. Dan Ives always calls him the godfather of AI. I guess that reputation continues here. Well, straight ahead, the Morning Call crew teeing up the trading day ahead.

39:03Why one member says markets will be the real winner no matter who wins the midterm elections. We're right back. It's time for your call sheet where we look at the topics driving the trading day ahead. Crew members today, Jay Woods of Freedom Capital Markets, also CNBC contributor Kevin Maughan of Penyon and Walsh Asset Management, and Terry Haynes of Pangea Policy Advisory. Great to have you all here. Let's kick this off with you, Jay, because we have two big AI-related, or we'll say big tech-related companies that are both lower here, pre-market, post-earnings. Apple and Palantir, your thoughts?

39:33The thoughts continue to be good earnings aren't actually leading to good results. The tech story has been under tremendous pressure, and we're nitpicking, you used that word in the last segment, for what could be a problem with Apple. We're going to margins. We're talking free cash flow when it comes to, you know, the alphabets and the Amazons of the world. So it seems like we're like, all right, it can't be this good. So what I believe is we're getting an opportunity to buy these stocks on sale. We're getting sell offs. But technically, I am a little concerned. I don't think the worst is over.

40:06And I think this washout is in the midst. So we are getting closer to the end of a sell off. But when technology leads, when the semiconductors break down, I am concerned it could have ramifications for the next few weeks. Election Day, whatever, we can go into that. But I think the tech story is probably going to lead us to a slight leg lower. And the 70 percent of the other stocks that were up yesterday, these rallies may not continue. So it's going to be an interesting few weeks. And I think technology is telling us that the worst is not over just yet. Yeah, well, to your point, you've got the NDIS, you've got the NASDAQ 100 in correction territory now.

40:43You were nodding your head just now, Kevin. You like Apple here? I mean, it's had a very strong year, to be clear, versus other mega cap tech names. You could also argue that valuations are still rich. Yeah, I would argue, if you look at this earnings season, investors are being as discerning as ever with respect to the amount of CapEx spend that's taking place, whether it's too much or it's too little, or the manner in which they're financing their AI build-out. Let's look at Palantir, for example. I know you mentioned Apple. Let's look at Palantir. Beat on revenues, beat on earnings, got it higher.

41:12Their commercial business revenue doubled, now exceeds the contribution that government revenue is providing to the company, which is what all investors want. And what does the stock do? It falls dramatically. Now, what's the issue with the stock right now? It's valued too high. It's not a company issue. It's a stock valuation issue. And I think this opportunity for investors, based upon this pullback, you can find companies that are trading on sale right now and that are going to continue to grow their earnings because the AI revolution, in my perspective, is only in batting practice, and we still have a doubleheader of games ahead.

41:48So look more so for the companies receiving all the spending as opposed to the companies doing all the spending, and I think you'll find more growth opportunities ahead, Morgan. Yeah. You know, Terry, I feel like I've been bringing this up for days now. I'm like beating the drum here about AI being on the ballot here on Election Day. But we were just talking about it earlier, and that specifically on the state and local level, this is very much the case. Baren's had an interesting write-up on this. They said that races in Georgia, Texas, Arizona could determine how many data centers get built and whether utilities can profit.

42:19They called out Oracle. They called out utilities like Georgia Southern Company, Arizona's Pinnacle West, energy companies like Sempra as sort of caught in the crosshairs here. So how much is that contributing to the conversation we're having as it relates to the economy, as it relates to the market right now? Well, it does a little bit, you know, but I would look at the controversy in the state and locals much more as kind of a rent seeking exercise. I don't mean that to be cynical, but I want to summarize it that way. You know, these are these are folks who see not only electoral advantage, but genuine advantage by saying to their local constituents, look, you know, we want to make sure that you're involved in this.

42:56So it's it's a matter of making sure that people don't get steamrolled more than anything else. But I don't think that's going to be a material drag on AI, which is a national security matter, essentially. So, you know, we've got to start from that premise. Yeah, I mean, case in point, Palantir. Terry, what are you watching here with midterm elections? What is really going to matter with some of these too close to call races potentially? Well, what's going to matter is that there's not going to be a waiver, a tsunami. The Democrats have their best night. I don't think they do, but that's beside the point.

43:31They have their best night. They get tiny majorities in both the House and the Senate, nowhere near to being able to affect national security, AI, and much of anything else. And they're already going to be looking towards 2028. So there's that. Trump won't act rebuked. We all know what's coming next. What's coming next is a Besant-led huge fiscal fight and a potential cranking up of Iran again. And finally, for markets, look for New York to lose clout in the Congress. If Democrats have a great night, they don't need Schumer and Jeffries anymore. If they have a terrible night, they don't need Schumer and Jeffries anymore.

44:13Even if they stay leaders, they stay leaders in name only. And the fight between the normie D's and the socialist D's really takes over. But New York financial centers lose clout compared to what they're used to. Interesting. Says the native New Yorker here. Jay, historically, what we've always seen is we've seen a market that rallies after midterm elections on the one hand. On the other hand, I mean, overnight we're getting reports. And I realize defensive and contained, but calculated strikes potentially in Iran by the U.S. And we know that that could become a bigger dynamic as well. So how do you factor this in?

44:50What's pricing the market? Well, we do rally, you know, six months later, 12 months later. But near term, it can be volatile. And we have precedent. We have Trump 1.0. Trump is an X factor. You don't know what he's going to say. You don't know what he's going to do, but he does use the stock market as a report card. And in the end, I think cooler heads will prevail. But we do have Iran on the back burner, on the front burner. So let's see what happens over the coming weeks if these elections are contested. It could cause market angst, but I think any dip will just be that, a buying opportunity, going back to some of the fundamentals and the valuations on these tech stocks.

45:24We will have opportunity. So there's going to be a lot of noise, a lot of rhetoric. It could get volatile. But I think any sell off, which we're in the midst of right now, should lead to a great opportunity six months, 12 months later. I mean, earnings have been strong, especially if you strip out tech, ironically. Does the great rotation continue here? I think the great rotation is muted. I think investors who get lulled into going all into value, that go all into small cap, that try and play the defensive here, do it at risk of missing out on some great opportunities once this rebound starts.

45:56And if we look at midterm elections as a potential tailwind, going back to 1950, 12 months out, they're higher every time by an average return of 15 percent. And if, and these are all the ifs, if inflation continues to moderate, if the Fed stays on the sidelines next year, if the AI infrastructure buildout continues, as we all believe it will, well, 2027 is shaping up as a very strong year for investors. And oil goes down, too. And oil goes down, which will lead to inflation. We have to leave the conversation there. Terry, I saw you wanted to get back in, so we're going to bring you back to finish this conversation.

46:27Thank you to our call crew. Great to have you all on. Your sausage McMuffin with egg didn't change. Your receipt did. The sausage McMuffin with egg extra value meal includes a hash brown and a small coffee for just$5. Only at McDonald's for a limited time. Price and participation may vary. Promotion pricing may be lower than meal pricing.