Blue Wave, Market Rally and AI Data Center Fallout After Midterms 11/4/26

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1:00Morgan Brennan: A blue wave. I'm Morgan Brennan, and this is your morning call. Good Wednesday morning. We have a big show for you. I'm Morgan Brennan. Welcome to a special edition of Morning Call. We're covering our top story. A blue wave. The Democrats flipping the House and the Senate, taking control of Congress after victories in key battleground states, including Michigan, Texas, Maine, Kansas, and North and South Carolina. MS now estimating that Democrats will win at least 250 seats and Republicans at least 160 seats in the House. That's after all the races are decided. And right then and there, we're talking about numbers that are larger than many polls had suggested coming into this.

1:37Morgan Brennan: Voters and investors responding alike with wild moves in U.S. stock futures as results across the country continue to pour in, and we will keep you updated as we get them in real time over the next, call it, 59 minutes. You got a lot of green on the screen right now with futures, which is a real about-face here. S &P, as of right now, is poised to open up about 54 points. The Dow up 534 points. The Nasdaq, 150 points. As of midnight last night, the Nasdaq was trading down more than 2 % in futures markets. So just major reversals here. Check out the action in the S &P 500 futures over the past 24 hours to get a sense of this as well.

2:17Morgan Brennan: We had gains at the close yesterday. we dropped overnight as the results began to come in. And again, this so-called blue wave began to materialize. And now markets are bouncing back. Energy is also in focus. As President Trump says, the war in Iran and high gas prices are partly to blame for Republican losses in states where he won back in 2024, in some cases by wide margins. You can see prices right now on the screen. Crude is lower again this morning. WTI is down fractionally, trading just below$96 a barrel. Brent crude is also down three quarters of 1%, trading right around$103 a barrel. We did get some comments from President Trump overnight suggesting that he did not plan, at least as of right now, to renew strikes on Iran.

3:03Morgan Brennan: So all of that is playing out here in the energy market. The dollar, let's get a check there as well with the dollar index. Dollar is weaker against other major currencies right now. 101.32 is the level in the dollar index, and this is the lowest since probably about late September. AI and issues around data centers also on the ballot amid fears that Democrats may push back against the AI buildout. We're checking some of those names here. Pre-market, they had been lower earlier, and now you can see beginning to reverse course here as well. Vertiv is actually higher. Eaton is slightly higher. CAT is up about 1 % right now.

3:39Morgan Brennan: But other names like Quanta and Sterling are lower. neoclouds. Let's get a check on what we're seeing there, too, because there is quite a bit of red on the screen there, whether it's Iron or Corweaver. Nebius is down fractionally, but the other two falling here pretty markedly pre-market. We're going to have much more on all of that coming up. And by the way, it's not just about congressional makeup. It's also about some of the outcomes we've seen from some of the key gubernatorial races, too, there. Also, let's get a check on what we're seeing in the bond market right now. Bond buying continues.

4:10Morgan Brennan: The U.S. 10-year Treasury yielding a 5.31 percent right now. Fed-sensitive two-year Treasury, 4.61 percent. And the 30-year Treasury yielding a 5.29 percent. Let's also go to check on a few more sectors, too. Health care, you're seeing a lot of stocks in the health care sector move higher pre-market, particularly when it comes to managed care. You're also seeing it with names like pharma. Expectation here that Dems could roll back some of the cuts or some of the regulations we've seen take place or at least rethink them, reshape them. We'll see. Take a look at defense stocks, too, because those are lower pre-market.

4:44Morgan Brennan: Questions about what that's going to mean, given some of the deals we've seen in defense this year and what it means overall for defense spending. Names like Lockheed Martin down at 3 percent right now. Northrop also down 3 percent. Let's also get a check on Tesla and SpaceX, both in part because of founder Elon Musk and how much money he put into these races, but also because of, again, AI build-out. You can see both of those stocks are lower pre-market. Tesla down about 3%. SpaceX down about 3.5%. Let's also get a check on clean energy. There's an expectation that you're going to see more focus there from a Democratic-led Congress.

5:18Morgan Brennan: And all of those stocks are surging. First, solar and Sunrun, each up almost 9 % this morning. And a number of earnings after the close yesterday and before the open today, too, just in case that gets lost. lost. We're not going to lose it in the mix of midterm news here. Look at AMD. Better than expected results last night. Some bullish commentary and metrics around AI and AI build out. That stock's up 7 percent almost pre-market. We're going to be covering all of this this morning. Truly, we have a jam-packed hour. But first, let's get to our Megan Casella in Washington with the state of the races at this hour.

5:53Morgan Brennan: Megan. Morgan, good morning. Now, this was a seismic victory for the Democrats, a bigger blue wave than even some of the most optimistic polls and forecasts had suggested. The Democrats will take control of both chambers of Congress next year with comfortable margins. With some races still outstanding, Democrats have already secured 54 seats in the Senate and 228 in the House. Now, in the Senate, Democrats have flipped so far seven seats from red to blue. North Carolina, Ohio, Iowa, Maine, Kansas, and some especially stunning wins in South Carolina and Texas. Now, just two Senate races are left uncalled.

6:30That's Mississippi and Alaska. Alaska's vote counting could still take some time, but notice the second Dan Sullivan on this ballot has around 4 ,500 votes, more than double the margin right now. That separates the incumbent Senator Dan Sullivan from the Democrat Mary Peltola. So expect that to become under some close scrutiny. Now, in Mississippi, fewer than 50 votes separated the Democrat and the Republican candidates as of this hour, a very, very close race. They are still uncalled as of now. Now, in the House, CNBC's election desk projects that the final tally will give Democrats at least 250 seats and Republicans at least 160.

7:09It's on track to be the largest majority for any party, at least since 2008. Depending on the final shakeout, it could be much larger than that. Now, the broad sweep of this victory was really a stinging rebuke of both President Trump and especially his economic record. Exit polls show deep concerns over inflation, government corruption and the AI data center build out. Tonight's results are a wake up call for corporate special interests and billionaires who have been rigging the economy. We must get big money out of our politics so no billionaire or trillionaire can buy our elections. The wealthy, the well off and the well connected.

7:50tried to buy this election. President Trump gave several interviews to reporters all night reacting to the results. He called it a hard-fought victory for the Democrats. He acknowledged the role that the Iran war and high gas prices played and said that he could work with Democrats on a number of issues. He also said, though, that they are really not in control because he still has veto power. Morgan?

8:16Morgan Brennan: So much there and so much more coming in here, Megan. I am curious what all this is going to mean for what could be another history-making move, and that is minority leader of the House of Representatives Hakeem Jeffries. It means the expectation that come January 3rd, he's going to become the majority leader of the House. And when you have Democratic socialists that are part of the mix too, what is that going to mean? It's absolutely true, Morgan. Likely he still has to be elected to that Speaker of the House position but could become the first black speaker of the House when that is expected to happen.

8:44Now, one thing about these very large expected majorities for the Democrats is that small factions of lawmakers won't have as much power as they otherwise would. If this were a five or 10 seat majority for the Dems, then just five or 10 Democratic Socialists, were they to be elected, would have the power to swing any vote. But because we're looking at something like 40, 30 or 40, maybe even 50 seat majority for the Democrats, that means that just small groups like that won't have the same power. That also said, though, Jeffries, of course, will be taking a look at all of these results and looking at what voters are really asking for.

9:19We're seeing huge wins for further left candidates like Abdul El-Sayed in Michigan, for example, a number of House examples as well. So Jim Bianco had a good note on social media overnight where he said politicians who want to remain politicians will heed some of these calls. So they will be paying attention to the message voters were sending on the economy, on data centers, on all of these pocketbook issues as well.

9:41Morgan Brennan: All right. Megan Casella, thank you for teeing it all up for us and bringing us the latest. And I'm sure we'll see you more throughout this hour. Appreciate it. Grab some coffee. Whipsaw action in equity markets around the world. Our Steve Cedric is live in London with the trade, what we're seeing in Europe and abroad. Steve.

10:00Hey, Morgan. Look, it's been a fascinating night, hasn't it, already? And not many of us have had enough sleep. But what is fascinating is looking at how the tsunami that we're seeing on Capitol Hill and throughout the United States of the gubernatorial, the Senate and the House, compared with how glacial the markets are. By and large, the markets seem to be saying, OK, we don't mind the fact that you're going to have a House and Senate on a different side of the aisle from the administration as well. Asian stocks, let's take a look at these. They're broadly higher. Investors obviously closely watching the outcome of the midterms.

10:32Democrats, as you say, projected to win a lot of gubernatorial seats, the House, the Senate, but fears over more regulatory scrutiny, again, affecting some of the AI stroke technology stocks around the world. European equities, they're going great guns at the moment, if you're long the market, that is. Meanwhile, pushing higher this morning, some weaker performances in sectors such as health care and tech. But banking stocks have led the European equities higher. Now, clean energy stocks you were talking about at stateside, same story over here as well, which have borne the brunt, of course, of President Trump's anti-renewable policies have also been gaining this morning.

11:10Stocks like Vestas up several percent. Trade is continuing to process the outcome of the midterm elections. Back to you.

11:17Morgan Brennan: Steve, I've seen a number of notes coming into the elections here about what this is going to mean, the read through for Europe specifically, whether it's NATO and NATO spending, Ukraine, whether it's trade and tariffs. What is the reaction there on the ground in real time?

11:33Yeah, look, I've spoken to one of the most senior European politicians at the European Parliament today, and I've got to be honest, he was really, really happy that he thinks he's going to curtail some of the more aggressive policies of the president towards the EU, towards NATO as well. We've also seen reaction from Pedro Sanchez, the Spanish prime minister. And every one of our viewers will know that if there is one European leader who the president has ire for on defense spending, and to be fair, with a lot of reason, because Spain is not pulling its way at NATO, it's the Spanish. And Sanchez was pretty, again, excited, animated by the fact that the Democrats have done so well.

12:10So it'd be very, very interesting to see once the dust has settled, whether there will be more of a rapprochement between Europe and the United States, not only on defence issues, but also on tariffs, but also, again, on what it means for Ukraine. I mean, a lot of people are saying that there's been good progress between the Russians, the United States mediators and the Ukrainians in recent days. Does it mean actually we might see even more progress towards some resolution there when everyone else is looking at the Middle East as well? But I think people are definitely on tenterhooks because of those powers that the president still has.

12:41Morgan Brennan: All right, Steve Sedgwick, thank you. For more on the key takeaways from the midterms so far, let's bring in our morning call crew. We have a special hour with our call crew. All hour, Tom Lee of Funstrat, Henrietta Trays of Beta Partners, and Jimmy Pethikukis of the American Enterprise Institute. Jimmy and Tom are also CNBC contributors. It's great to have you all here. Tom, you're sitting right here on set with me. Why are futures higher? Why the about face? I think it's a few things. One is, while people are a little surprised by the outcome, the markets have anticipated this, so it's a bit of a spy the news.

13:17The second is markets do like gridlock. And I think a split White House and Congress is actually a good formula for markets historically. And I think the reason tech is rallying is we have to keep in mind the Democratic Party and the Republican Party aren't either enemies or friends of tech. You know, tech has done well under both administrations. So but I do think it's a new kind of tech approach that we're going to see. So I think it's going to end up being a good formula for markets to rally into your end.

13:48Morgan Brennan: I mean, the swings, though, seem so dramatic to me overnight. I mean, you talked about it on Monday, the fact that you thought this would be a clearing event. It also, I mean, the sweep seems so decisive. Does it take a certain amount of uncertainty or risk of contention or fighting or elongated, protracted battles around the outcomes off the table? And that's part of this? Yeah. And I think if we go back to 2016, the night President Trump won the White House and the futures overnight were down sharply. But then the markets rallied strongly the day the markets opened. I think that's what we're going to see.

14:22You know, there's been a lot of shorting of tech into this election. We know there was not only risk off, but a lot of like outright shorts, both on credit and equity. So I think you're going to have some short covering as well.

14:33Morgan Brennan: Yeah. Henrietta, gridlock. Is that in the future or maybe just something different?

14:43No, I think that's exactly correct. And I would say the market is responding appropriately to the extraordinary gains that Hakeem Jeffries is going to be governing next year. The idea of having a really stable majority is very comforting and should be to markets as well. It'll help Hakeem Jeffries coordinate the caucus so that we don't have government shutdowns unless they all decide that they want to, and gives him a coalition that is not going to be beholden to one small fraction of the caucus, the way we've seen from maybe the Tea Party or the Freedom Caucus on the Republican side in the last couple of decades.

15:20So the overwhelming rebuke and the overwhelming wins, the embrace on the House side and on the Senate side is so decisive. I imagine that's comforting to the investment community just because they know that there is certainty in terms of what the party is going to be able to maneuver around and avoid the fringes on either side. So it makes sense to me to have the market respond this way this morning after they digest this news.

15:46Morgan Brennan: Yeah, Jimmy, what do you think, especially when you go underneath the hood and you see some very dramatic moves across sectors based on anticipation of what a Democrat controlled Congress is going to mean? Yeah, well, listen, I think there's I think there's going to be a lot of uncertainty because even pollsters or all these bank notes that were assuming that Democrats would take the House and the Senate, I don't think any of them expected these kind of margins. And I think it's interesting when you look at those expectations, you're hearing a lot of what we've just heard, which is, hey, gridlock is good.

16:22Markets like gridlock, so you're not getting any crazy stuff done. But like, I think none of those analyses have really taken into account like the sweeping nature of this Democrat victory. So think about AI. Great, you know, there's going to be, you know, the president will veto any AI bills, so there'll be nothing coming out of Washington. Like, I don't know that. That's a lot of Senate seats that Democrats have. You know, might there be an override of a veto? I mean, the president earlier in the evening, last night said he'd be Mr. Veto, though now he's saying he's going to be Mr. Deal. But those vetoes could be overridden, especially on particular consensus issues.

17:04I know particularly with the AI stuff, we're going to talk about it later, a lot of that's going to be at the state level. But I would not rule out that we actually might get something in a veto-proof level and on AI legislation, just to use one example.

17:19Morgan Brennan: Yeah, you literally took my next question for you, Jimmy, out of my mouth, which was about this veto-proof nature and how to think about, you know, the logistics, the calculations, the mathematics around that. We are going to get more into AI a little bit later, but I do want to get your reaction to the comments we did get from President Trump to a number of news outlets overnight, which, by the way, maybe not the same sort of tone and rhetoric that we've been getting from him on Truth Social simultaneously.

17:48Jimmy. Oh, I'm sorry. I thought you were going to throw it to something still early. Listen, whatever the mood is right, whatever the mood is right now, you know, it could be very it could be very different tomorrow. Democrats are going to come. Listen, Democrats are going to come out shooting here. They're going to have a lot of ideas, a lot of proposals, health care, something on tariffs, maybe the Iran war. And the president is going to have a response to that. So I know that he seems very conciliatory, at least as the evening went on. I'm skeptical whether that's going to remain. I think it's up to the president to decide if he really wants to work with Democrats or as lots of as presidents do when they don't have Congress.

18:35And it's the last part of the presidency, whether they're going to just focus on foreign policy or as this president has done, which is rule through executive order. There's no reason like that won't stop. And I think if you're to go on past history, more executive orders and a lot of presidential focus on foreign policy.

18:57Morgan Brennan: OK, we're going to get to all of this in much more depth here throughout the rest of the hour. Jimmy, Henrietta, Tom, you're going to stay with me here for the hour. Stay close in general. Morning Call is back after this with stock futures surging right now. This message comes from Wise Business, the only account your business needs to scale globally. You're building a business with global ambitions, but hidden fees are eating into your margins. With Wise Business, you can pay overseas suppliers without exchange rate markups. Have customers worldwide get payment details in 22 currencies so you get more of each hard-earned payment without hidden conversion fees.

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20:45Morgan Brennan: Welcome back to Morning Call. Americans weren't just voting for lawmakers in Congress and their state house in the midterms. There were several initiatives on the ballot, high profile ones, including the nation's first wealth tax on billionaires, which California voters have soundly rejected. This is called Prop 40. Our Robert Frank joins us now with a look at those initiatives and whether the new Congress will take any action on the matter next year. Robert. Morgan, great to see you. Well, a lot of attention on that billionaire tax, but taxes were on the ballot in more than a dozen states. But there were three big proposals that showed mixed results when it comes to taxing the wealthy.

21:23So in California, as you just mentioned, that billionaire tax is trailing with about 40 percent of votes still to be counted. Now, that is known as Proposition 40 would have imposed a one time tax of five percent on the total net worth of Californians worth over one billion dollars. Two competing proposals there, Prop 41 and 42, they would have defeated the billionaire tax if either gets more votes. Those are also looking very strong with both showing majority approvals so far. In Washington state, voters deciding whether to repeal a so-called millionaire tax that would raise taxes on those making more than a million dollars a year.

22:01That initiative so far being rejected by voters. So voters there effectively wanting to raise taxes on millionaires. So that was a pro-tax the wealthy vote. And in Colorado, results still too close to call on an amendment that would have nearly doubled the tax rate on those making more than a million dollars a year and cutting rates for those making less than$100 ,000 a year. With the Dems taking over Congress, though, they have promised to make the wealthy, quote, pay their fair share. So at the state level, some mixed results here, Morgan. But we're going to see most likely proposals at the federal level to raise taxes on the wealthy in the coming months.

22:45Morgan Brennan: First of all, it's great to have you here, Robert, and to be breaking all of this down. Devil's in the details in terms of some of these taxes, whether it's in a state like Washington or legislation that gets proposed in Washington, D.C. with a California billionaires tax. I mean, part of what that was going to do was basically push billionaires to sell some stakes to pay some of those duties. So how would this potentially, do we have any sort of sense of how this can potentially coalesce and come together if you were to see something emerge on the federal level and what it means in terms of assets versus income and all the different things that go into taxes?

23:26Yeah, it's a great question, Morgan. I think there'll be two reactions to this. On the one side, the far left will say, see, this is proof that a wealth tax will not work at a state level because the wealthy can leave. Californians saw Sergey Brin, Larry Page, Peter Thiel, they saw the billionaires actually move out of California in response to the potential of this tax. So I think what Californians saw is at a state level, the wealth tax makes no sense. People can simply move. These are the most mobile people in America. They can just move to Florida, Nevada, wherever. But on the federal level, I think Democrats will see this really as a motivation for them.

24:09You know, we've seen Senator Warren, we've seen Senator Bernie Sanders propose this in the past, what this could do. And we've seen Ro Khanna say this morning that he will propose this again soon, perhaps on a federal level. So I think some will say this is proof that voters don't want this. Others will say this is proof the only way a wealth tax works is at a federal level.

24:33Morgan Brennan: OK, Robert, stay with us. Tom Lee, Henrietta Tres and Jimmy Pethikoukis are still with me. Henrietta, I want to go to you on this because I bet you have thoughts and I bet you've been digging into what this could potentially look like if it were to manifest. Yeah, I think a billionaire tax or something along those lines has enough support amongst the general population. It's in it pulls in the high 70s, sometimes 80 percent, depending on where you're asking the question. And it becomes a core tenant of obviously our deficit issues and, you know, resolving the underlying problem in the U.S. economy that voters just turned out for last night, which is to say, hey, I'm not benefiting from this AI boom.

25:14I'm not seeing the K-shaped economy benefit me. Loss are too high. We have to pay these tariffs. If the street of Hormuz is closed and diesel prices are high, my annual and weekly revenue that I'm bringing home and my paycheck is just not keeping up with inflation. Do something to provide relief. So it's the tandem issue of having voters telling you that they're unhappy at the consumer level, which is obviously critical to the U.S. economy. And then also bringing in the deficit and debt issue that we have nationwide that I imagine will become a very popular talking point in the years to come as we decide to find revenue to offset these lost costs.

25:53Morgan Brennan: Yeah. I mean, Alex Carp of Palantir was pretty vocal about this when I spoke to him with earnings earlier this week, too, especially as you do see this AI boom and a number, a small number of outsized tech entrepreneurs poised to see exponential gains potentially off of it. Tom, what's interesting to me, and I realize it's been shot down here, but this so-called billionaire's tax in California, the implications were that you were going to see a lot of these billionaires on paper sort of be forced to find liquidity or potentially sell shares in publicly traded or even private companies to actually raise the cash here.

26:26Morgan Brennan: I mean, look what happened with Mark Zuckerberg and Meta and a new class of shares, case in point. How real has that risk been? I guess how much has that factored into a broader negative of sentiment that we've seen play out around tech stocks and the AI trade coming up to this moment? Yeah, I mean, I think there's been a lot of fears building for the tech industry and tech entrepreneurs, and they've kind of had a bullseye on their back because of this not only being a K-shaped economy, but also like the, you know, the divisiveness of AI. I mean, I think it is kind of coming to a head. That's probably why markets are reacting so sharply.

27:02But I just think that we do want to keep a half full view that I think in some ways the Democrats taking control of Congress is a good way to actually reshape AI, you know, to introduce some legislation that protects people in a way that allows data centers to proceed and U.S. AI dominance to remain. So I don't think this is a, you know, AI is going to grind to a halt situation. I think this is really a chance to reshape AI in ways that there are some of the dangers that we've known about that we can actually start to address. And with regard to wealth, it's I mean, it's very California, maybe just highlight it.

27:40It may not be as popular an issue to actually do a wealth tax on billionaires as well.

27:46Morgan Brennan: All right. Stay with us. And Robert Frank, thank you. Hope you come back soon. Keep us updated as all of this and many other things that you cover continue to evolve. Let's actually turn to China now. Investors in China are also watching the midterm results roll between the Trump-Xi relationship, the AI trade, so much more. There's a lot in focus internationally and a lot to digest. Let's get to our Eunice Yun in Beijing, monitoring all of it from there and the reaction there. Eunice. Thanks, Morgan. Well, Chinese investors are attributing a rebound that we saw here today to the removal of the uncertainty around the U.S.

28:24midterm election, as well as a suspicion of purchases by state-backed funds, which are called the national team, so national team buying. However, longer term, there is a concern about the stability of the stock market, as well as the U.S.-China relationship because of this outcome. The AI-related stocks here, similar to what you see in the United States, have been darlings of investors, but they've been down for the year, especially those in the data center space. And there's a concern here that the more aggressive Democrat-led Congress would rein in the AI rollout, the data center rollout in the U.S., the AI spending, which would impact the AI trade in the United States and then in turn in China.

29:13What's also interesting that from a U.S.-China relationship standpoint, The term Trump's total election loss is a top trending topic right now on Chinese social media. The president is scheduled to come to China in about two weeks, and he's likely going to be a much more diminished figure when he meets with President Xi Jinping. There are plenty of people and analysts who are wondering whether or not President Trump is going to be able to maintain the agreement that he made with presidency on strategic stability. Also, whether or not he would be able to maintain what's being seen here as a less aggressive position when it comes to Taiwan, as well as tariffs.

29:56The foreign ministry today stressed the importance. So really reiterating this, stressed the importance of maintaining the strategic stability agreement that they had struck with Trump. This comment, of course, coming right after the the outcome of the U.S. midterms. Social media here, interestingly enough, is also fixated very much on Texas and on James Tallarico, as well as Gina Hinojosa. And the way that it's being perceived here is that because there were these Democratic wins and big wins in Texas, that that could put on the reins for Elon Musk. And in fact, the term Elon Musk, poor returns on Texas spending is also trending in China right now.

30:45All right.

30:46Morgan Brennan: Eunice Yoon, thank you. You're seeing the shares of SpaceX and Tesla both trade lower here, pre-market as well. I mean, total blue sweep in Texas, certainly notable here, too. We'll get into more of that in just a moment. But speaking of the election spending piece of this, in the final month before Election Day, advertisers spent a record$4 billion on political ads. That's according to ad tracking firm Ad Impact. Record numbers overall for the midterm elections, with Michigan Senate race seeing the most advertising spending on the final day before the election, with more than$7.3 billion spent between Mike Rogers and Abdul El-Sayed's campaigns for that Senate seat.

31:19Morgan Brennan: Joining me now with more is Americus Reid, professor of marketing at the UPenn Wharton School of Business. He's also a CNBC contributor. Americus, I want to get your thoughts on this, especially because we talk about it as Dems versus Republicans. Regardless of the political party, populism is very much alive and arguably growing here. And I thought some of the speeches we got last night from some of the newcomers, including, I'll give you just one example, Peggy Flanagan, who just won the Senate seat in Michigan. She said, quote unquote, the powerful better listen. So instead of Dems versus Republicans, should we be thinking about this potentially as us versus them?

31:58Morgan Brennan: Meaning powerful versus the rest of the country. Powerful versus the rest of the country is a great characterization. It's great to be with you, Morgan, this morning. Yeah, I think that's correct. I think that the lines between political parties as bastions of identity are becoming more blurred. And they're sort of giving way to more attention to just the day-to-day issues that people have in terms of being sort of in middle America and sort of surviving and being able to have a good life for themselves and both themselves and their families. And so, you know, what we're seeing, and I think this giant blue tsunami is what it's looking like, is that there was a very clear message that was sent, which is to say, hey, you know, if we spend a lot of money in a particular state, we better have a really good message.

32:43And that message hopefully will not be disrupted by the fact that there's pain on the street in terms of what people are feeling with respect to affordability, health care, all of these sorts of issues that are going on right now that affect them directly. So the big takeaway here, Morgan, is that you can't even no matter how much money you try to throw at this, you can't message your way out of a reality that people are experiencing on the ground. And so when all of these things bubble up and get outside of a specific ecosystem of media conversations and a narrative that starts to form, you get to what we're seeing right now, which is all of this stuff that happens with respect to at least some of the initial data I'm seeing, a lot of things about on people's minds about corruption and all these kinds of things.

33:29And when things start bubbling up like that, Morgan, the idea of corruption, then a moral identity takes precedent over some of these other issues that might be highly politically partisan.

33:39Morgan Brennan: I mean, we've had a number of elections now that have raised questions about the accuracy of polls, including this one. I mean, to your point, should we also be raising questions about the efficacy of spending? We see record sums more being spent by Republicans in this case and yet a much bigger than expected blue sweep. Yeah, I love that point. And I think to your point, Morgan, what's going on here and what I'm seeing here is, again, like we just can't rely too much on the number, like how much was spent. What's really important is what was said and where, how it was said, and what is the overall environmental context, the political climate, the feelings, the sentiment, the man on the street, the emotions that are going on.

34:18Because those messages, you know, essentially political ads are identity badges with a media budget. And so what happens is if that message is not resonating, if it's not landing, then you might get a ton of attention, which is the best measure of add sort of spin. Lots of attention, but attention doesn't necessarily translate into compelling persuasion. And so what's needed is a message that lands in those specific districts with those constituencies and that allows that message to at least activate enough interest to get people out to the polls. And at least so far in what we're seeing thus far, it looks like the Democratic Party has done a pretty good job of this.

34:57Morgan Brennan: OK, Americus Reid, it's great to have you on and get your insights this morning. Thank you. Thank you, Morgan. I appreciate you. Heading to break, we're watching Metashares reports that the tech giant has raised$15 billion through its latest bond offering. Investors placing as much as$58 billion of orders on the offering or about 3.9 times its size. That's according to one report. See, shares are up 2 percent right now. Also, look at AMD shares, because those are jumping on the back of Q3 results. Beating on the top and bottom lines, data center revenue growing 97 % from a year ago to a record$8.55 billion.

35:31Morgan Brennan: AMD forecasting faster than expected. 2027 growth on that data center. Sales surge. Shares are up 7.5 % right now. And CEO Lisa Su will have more on the quarter in a First on CNBC interview today at 9 a.m. Eastern. Morning call. We'll be right back. This message comes from Wise Business, the only account your business needs to scale globally. You're building a business with global ambitions, but hidden fees are eating into your margins. With Wise Business, you can pay overseas suppliers without exchange rate markups. Have customers worldwide get payment details in 22 currencies, so you get more of each hard-earned payment without hidden conversion fees.

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37:22Morgan Brennan: I'm Morgan Brennan. Welcome back to a special edition of Morning Call, covering our top story, a blue wave, the Democrats flipping the House and the Senate, looking to take control of Congress after victories in key battleground states of Michigan, Texas, Maine, Kansas, and North and South Carolinas. We're taking control of Congress. They are taking control Congress after victories in key battleground states, including Michigan, Texas, Maine, Kansas, and North and South Carolina. MS now estimating that Democrats will win at least 250 seats, Republicans at least 160 seats in the House after all of the races are decided.

37:57Morgan Brennan: And we're still awaiting some decisions. Speaking of key races in Mississippi and Alaska, Alaska's vote counting could still take some time. But notice the second Dan Sullivan has around 3 ,400 votes. That's more than double. the margin right now. That separates the incumbent Senator Dan Sullivan, Dan S. Sullivan, from the Democrat Mary Paltola. We're going to continue to watch those results, but it may be not only hours, but days, even potentially weeks, until we get all of that. In Mississippi, less than 50 votes separated the Democrat and Republican candidates as of this hour. That's for a Senate seat with wild moves in U.S.

38:36Morgan Brennan: stock futures as results across the country continue to pour in right now. Let's get a check on the action in the S &P futures over the past 24 hours. First of all, look at those numbers on your screen. Could you just go back to that for a second? Dow is poised to open up about 672 points. S &P up almost 74 points. The Nasdaq up 262 points. These are all greater than 1 % moves right now, pre-market. And as I mentioned, S &P 500 has been a really good example of a roller coaster we've seen over the last, call it, 12 hours. We finished with gains yesterday at the close. We dipped down and stayed down until about midnight or so.

39:13Morgan Brennan: And then you can see the major about face here. Let's take a look at the energy markets, too, and what we're seeing in the crude complex, because crude oil is lower right now. Again, WTI is down almost 1%, trading around$95 a barrel. Brent crude is down almost 1.5%, trading around$102 a barrel. Let's also get a check on the dollar, because that is weaker against other major currencies, the euro and others right now. You can see dollar index level 101.42. Now, the data center and AI debate is also on the ballot this election cycle. And our Pippa Stevens is here with the state of play for the sector and all the stock moves that we're seeing here, pre-market, that are tied to it.

39:50Morgan Brennan: Pippa. Good morning, Morgan. So the data center backlash was front and center and with the blue wave coming to fruition and many candidates who ran on anti-data center platforms gaining election, we could see a tougher environment looking forward. Now, the Nasdaq recovering its overnight losses, but names like CoreWeave, Oracle, and SpaceX in the red this morning, building on recent losses. And nowhere perhaps a better example than Texas, where Tallarico flipped a Senate seat, but its AP calling Hinojosa as the winner for the governor election that could have much broader implications for AI in the state.

40:26By one estimate, some 27 percent of data center projects are in Texas based on gigawatts. And Hina Hossa has criticized the largely unregulated and rapid growth. She'll also inherit an enormous 474 gigawatt interconnection queue, about 90 percent of which is data centers. That's according to Bank of America. Now, Governor Greg Abbott previously called for a pause on data center permits until the grid operated completed a review. But in pro-business Texas, the hope was the data center buildout would resume. That could still happen, but the midterm results show the anxiety for Americans around AI and data centers as their physical manifestation.

41:05Elon Musk posting on X just a few hours ago, quote, data centers in space looking pretty appealing right now. Morgan?

41:14Morgan Brennan: Pippa Stevens. Thank you. I want to bring our panel back in here. And Tom Lee, I'm going to kick this off with you. Because, yes, we're talking about Texas, which it was very much a blue wave across different positions in Texas. You're also seeing it with Amy Acton in Ohio right now. There are a number of others. The flip side here is that Marsha Blackburn is winning the gubernatorial race, it looks like, in Tennessee. Mississippi, similar situation there. They didn't have a governor race afoot. I bring those up because SpaceX is building some of its biggest data centers in some of those markets.

41:52Morgan Brennan: So I just I look at this and I wonder how much of this really impacts AI and AI spending versus just shifts some of those projects to other states. Yeah, I think that's that's the correct way to look at it. I think there are going to be states that are going to welcome the spending and the employment and the economic boost that it brings. And I do think investors are going to also be surprised. I think many states that oppose data centers today, I think it's really an opportunity for the industry to reshape what they're doing, do things that are either pro-community or reduce the risks of AI. And I think you're going to end up seeing data center growth still resume.

42:36I don't think this is the end of the AI trade.

42:39Morgan Brennan: Do you buy back into some of these beaten down stocks? Yes, I think the stocks that got hit hardest into the midterm elections, which is, you know, the memory and the semis and the data centers and the neoclouds, I think these are going to see some of the biggest bounces, even the ones that are selling off today. I think even potentially by the end of the day, they could be reversing. Okay. AMD results are probably helping all of this too. Jimmy, you and I have spoken about this for months, Jimmy Pethokoukis, and I know you've written extensively about it, but I do want to get your thoughts, your reaction to what we're seeing with some of these results, both on the state and local level, also when it comes to Congress, when it comes to AI and data centers and all the things we talk about every day on CNBC?

43:20Yeah, I mean, I think Tom makes a lot of great points there. And my baseline is that as long as AI looks like an economic, a perhaps wildly valuable technology, it will go forward. The data center piece of this? Will it might it take longer to build these sort of mega data centers? Might it be more costly as they try to engage more with the community? Sure, but they will continue to get built. They may be built elsewhere in the United States. It may be built on public lands. And I realize what Elon Musk says, perhaps they will be built in orbit. But I think that will continue. I think the impact on the U.S.

44:02economy right now is very large. And I think certainly in Washington, they're going to be reluctant to do anything that will be seen as undermining the economy. They're still like the China factor, which gets poo-pooed sometimes. But I think we certainly want to be the leading AI power. And when you think about the sort of the general voter anxiety about AI, which, you know, may be somewhat about, you know, data centers and electricity prices, but I think there's just a larger anxiety about, you know, the economic impact. When we're sitting here on Election Day 2028 and all the white-collar jobs have not evaporated, as some tech executives were talking about, when it doesn't look like AI has taken over, I think some of that fear will be sort of drained out from the political debate.

44:53And it can be looked at more rationally, which is the kind of scenario Tom was talking about. These bring lots of jobs. They bring lots of tax revenue. The investment's helping the economy. And to the extent that, like, communities have problems, this will force the, you know, the tech companies to engage with them. But I think the revolution goes on. OK.

45:12Morgan Brennan: I'd also just note, because I'm looking at it right now on my screen, I mean, Arista Networks is up 11 percent, also had killer earnings last night, contributing to, I think, all of what this has meant for the markets and for the economy and this build out. Pippa, I want to go back to you because all of this also ties back to energy and power and utility is something that you cover very closely. We actually see solar stocks, for example, are surging here pre-market. And so regardless of where AI data centers ultimately get built and questions about who gets paid what, what is it going to mean for the power piece of this and the energy piece of this?

45:51Well, clearly, solar stocks are responding to what the market is viewing as a more friendly regulatory environment. But honestly, the industry has continued to chug along even after we saw some of the expirations of those incentives under the former Inflation Reduction Act, the key one being 25D for residential solar, which has really hit the market. But on the utility side of things, solar continues to be the fastest way to get new power to the grid. And when you add in battery storage, that is seen as a very viable route. And we're seeing more and more battery development as a way to tide over the power needs when the sun isn't shining or the wind isn't blowing.

46:28But those, you know, those arrays do take a lot of land. And that is also one of the key factors here in the data center debate. It's just what the footprint is, particularly in local communities. And so the anxiety around data centers seems to not just be about power prices themselves, but also all of the infrastructure around it and kind of how it shifts things within the local community. And so I think that now that the midterms are behind us and maybe it's a clearing event to a certain extent, we'll probably start to see more thoughtful policy about how do we approach this. What, to Tom Lee's point just now, it's going to come down to more local jurisdictions and those local decisions about how can we make sure we're benefiting the community and how can, you know, data centers focus on communities where they are welcome and where there is access to power, access to water, and not going to have, you know, some sort of big disruption on the local community.

47:19Morgan Brennan: Yeah. Henrietta, I just want to expand this out a little bit because I do think it's worth noting in general what we have seen at state and local level with election results so far. I mean, just case in point with some of these gubernatorial races, you have governorships that are flipping GOP-held offices, very high profile. We talked about Texas. You got Ohio, Georgia as well, Iowa, a number of others. Want to get your thoughts on this, whether it is AI, the AI trade and investment and regulatory policies moving forward, or whether it's other things, too, because all of this is going to be very impactful, I think, within local jurisdictions.

47:57Yeah, I think you're going to see governors press ahead, workshopping ideas, and the federal government is going to wait and follow their lead. One of the things that we've seen from last night is that we have a, I believe, record-breaking number of new members that are going to be going to Capitol Hill. So those guys are going to get acclimated. They're going to need to coalesce behind a party ideology around AI and data centers regulation on everything from child protection to consumer protection to electricity prices. That's going to be years in my estimation. So different states will move forward and they'll see and take the best pieces of each state as the next two years go by.

48:38I anticipate that the 2020 presidential will be all about AI and that we will not have actually regulated data centers in a meaningful way at the federal level or imposed new AI level taxes until we get to the next presidential cycle. So that's a 2029 story. And I would just note that we're at the white paper stage of all this on the federal scale. Ron Wyden will be the Senate Finance Committee chair. Richie Neal will be the House Ways and Means Committee chair. You're going to want to pay attention to what those members are doing on both these.

49:12Morgan Brennan: Okay. Pippa Stevens, thank you. We got our final thoughts from our panel. We're going to do this lightning round style because there's still so much to get to. That's coming up. As we head to break, though, let's get a check on some other big stock movers. CBS Health down 1 % right now. Wall Street Journal reported the company plans to split its pharmacy insurance business into two companies. Journal says the breakup is planned for early 2028. 2028. CVS reports earnings this morning before the open. And also, let's get a check on, speaking of data center buildouts, Oracle. The Financial Times reporting it's abandoning its$7 billion chip leasing contract with Tencent, saying the company made the move after the Trump administration approached Oracle to raise concerns about that deal.

49:51Morgan Brennan: Those shares are down 1.5%. We're right back. All right, we've got a couple minutes left. Let's bring back our panel for final thoughts for the hour, see how much we can get to here. Tom, Pethikoukis of the American Enterprise Institute. All right. I'm going to lightning round this. Tom, you had additional thoughts on why markets are rallying this morning. Yeah, I think one is that this is going to take pressure off the Fed and questions about independence, which will be a relief to bond markets. And I think that's good for stocks. Defense stocks, Jimmy, are lower. Health care stocks, at least some of them are higher.

50:22Morgan Brennan: More spending for the latter, maybe less for the former. Yeah. Well, listen, I think I think that those are the kinds of things you might see a deal on between the president and this Congress. What I don't think we're going to get is any kind of deal that will allay any debt and deficit concerns. Nobody ran on that, so I don't expect to get any progress on that in the next two years unless markets make us get some progress in Washington. All right. Henrietta, you're already writing about this. Lame duck, what's on tap? Yeah, I would say don't wait until January 3rd to get freaked out. You should be concerned right now.

50:56We need to get the debt ceiling hiked before Trump negotiates with Democrats in a very powerful position in the House and the Senate. I'm at very low 30 percent odds that we get that risk off the table. But the fourth quarter right now should be front and center, not even to 2027 yet.

51:13Morgan Brennan: You see more spending. What is that going to mean for the bond markets, Tom? Well, more spending, of course, is not great for bonds, but it is good for the economy and stocks. So it might be kind of a push. By the way, crypto higher this morning. Surprised? Yeah. I mean, you know, crypto is a risk gone. So I think it's it's kind of it's been leading equities and it has been leading this year. But, you know, it may also be one of those people are looking for alternative ways to have exposure and owning crypto is one of them. Jimmy Copper session lows overnight here. What does all this mean for trade and tariffs?

51:49Listen, Democrats might try to pass something limiting the president's power, repealing some of these tariffs. But Democrats, you know, they kind of like some of these tariffs. So I think, you know, I think going forward, if anyone is expecting some sort of reversion to the pre-Trump stance on trade, that's not going to happen. I haven't predicted it's going to happen. And this election doesn't change that. The Democrats might try to, you know, push back and limit some of the president's powers on this.

52:13Morgan Brennan: All right. We got to leave the conversation there. Thank you so much to our special Morning Call crew on this special edition of Morning Call post midterm elections. Take a look at futures right now. We're surging here up more than 1 % indicated to open at the open. With the power and endurance of Toyota trucks, you can go to the most incredible places, like this valley where the Echo does different voices. Hello! Hello! Hello! Hello! We know what we're made of. Toyota trucks.