Tech Sell-Off, AI Panic and Market Rotation: Power Lunch 10/30/26

0:29Weren't agents supposed to take things off your plate? An original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts.

1:01Tech stocks plunge as investors. They get spooked. Welcome to Power Lunch, everybody. I am Brian Kelly. You just saw moments ago, I was at a conference in New York. We'll see her in a moment. Big tech getting crushed right now. The Nasdaq down over 3%. And with this move, more than a third of the S &P 500 now down 20 % or more from their 52-week highs. Call it big earnings energy blowout. Quarters from Exxon and Chevron have those stocks actually at record highs. Some other big oil stocks popping as well. And speaking of oil, oil prices up again. An oil tanker hit near Hormuz. Explosions heard at some key Iranian oil ports.

1:39You will hear from a top marine insurance executive on whether this could reclose effectively the Strait of Hormuz. Welcome, everybody. There is a ton to get through on this jam-packed day. And we will see Kelly in moments at an important conference in New York. But we've got to start with tech and the Nasdaq. Now, the NASDAQ composite down about 2.5%. The NASDAQ 100 index, way more widely owned and traded, down more than 3%. The NASDAQ now on pace for its worst month since March of last year. Trader favorites this year, including Intel, Datadog, Sandisk, they're all down double digits. Intel losing one third of its value investors, taking their profits and running at least today.

2:25But with those sales and the money being raised, investors are also buying stocks. They're buying groups like energy, health care, consumer staples. Those are hitting new record highs. But unlike some of the previous sell-offs that we've seen lately, this one internally acting a bit differently. Let's dive in. Let's explain things. Let's kick it off. Steve Sosnick, a chief strategist at Interactive Brokers. He is on set. Tom Lee is Fundstrat's Head of Research and a CNBC contributor. Really important day to have you both on. Tom and Steve, thank you very much for joining us here. First off, this is different from your data at Interactive Brokers.

3:05What we understand is that the retail buyer who's kind of always been there, things sell, they come in and buy. They're not doing that today. You know, I don't get the data real time, Brian, but as of the data I saw yesterday, they still were buying. But the crazy part is they bought Google and the two classes of Alphabet like crazy S-rays. They actually weren't buying a ton of stuff other than running into Alphabet. I think a lot of investors have almost gotten conditioned to running into the building when they hear the smoke alarm go off. And I think to a certain extent today, the events of the last couple of weeks may be getting people to do that.

3:41But we've got some data that shows what I was just referencing is that over maybe the last couple of days, the last couple of weeks, the retail investor, trader, whatever you want to call her or him, has not been there at the level they had been before. Is that true or false then? Because I don't want to say it if it's not active. They're still trading, but in terms of the data I have among the most active stocks, they're still there, but it's like everybody ran to Google and the Google classes yesterday. So yes, they're not buying as much of different stuff. Our customers have been very resilient.

4:12Our customers do tend to stand in there and buy. They have not done it at what I would call Liberation Day type levels where they really rushed in, but they haven't really pulled out either. Tom Lee, what are you seeing? Brian, I think that there is an internal battle, as you kind of highlighted, that today looks like someone's getting liquidated. I don't know if it's an institution. I don't know if it's someone who's had a lot of these names and these drops are causing force selling. but at the same time the equal weight market is rising so i think there still is plenty of money sloshing around and reality is our institutional investors just don't have conviction until after midterm so i think between now and november 3rd uh it doesn't take a lot for stocks to get to fall a lot because i just don't know if there's as much dip buying conviction till after november 3rd well That's that's only three trading.

5:10I mean, two and a quarter trading days from now. You've got the rest of today, Monday and Tuesday. Tom, you think people, maybe some retail traders are sitting this one out until they know how things are going to shake out at the polls? Yes, because I think there's a lot of doom saying about the midterms. You know, there's people saying that, hey, if the Senate becomes Republican, you know, this is going to be forever lost to the Republicans. I think because people are putting such high stakes into this, I do think a lot of people are kind of hesitant to say, I want to buy this dip at this moment.

5:46I think people are going to plan to buy the dip, Brian. But as strange as it sounds, I think people are marking their calendar until November 3rd. Well, that's not too far off, Steve. Do you think that people are indeed waiting to see? I mean, the market expectation, and again, not my opinion or desire. The market expectation is that both the House and the Senate are likely to turn mildly Democrat, which would give us then really mixed branches. You've got Trump in the White House. You have a mildly blue Congress. And the next two years, absolutely zero gets of note gets accomplished. That's the prevailing.

6:23That's right. Yeah, because it's. Go ahead, Steve. And then Tom, chime in. Sorry. That's kind of the prevailing theory. You know, there are people who are nervous that if it sort of seems like there's too much of a wave of socialism or things of that nature, that it's a reason to get panicky. I'm not I'm not in that camp. But to Tom's point about like, you know, this is a get me out day. I do think there's for selling when you have something like Intel down 30 percent. There have to be people getting forced out. But it's this very broad based in tech. But we saw this. So going to that point and we have no information on this, by the way.

6:53So I don't want to be like wildly speculating, but I'm going to wildly speculate. Go for it. A couple months ago, we had that one big hedge fund, Situational Awareness, where things happened. The hedge fund, you know, and then we had Citadel come in and kind of, I don't want to say rescue them, but they added to it. And it's been regrowing. Does it feel, and I'm not saying anything about that company or any others because I have no idea. But to Tom's point, Steve, to you, does it kind of feel that way? And maybe something's getting blown up a bit? Yes and no. It would have to be someone very tech-focused, because Tom did make the point that the equal weight is doing generally okay.

7:27What we're seeing is people not fleeing the market so much as reallocating from risky to less risky, right? We're seeing bond yields go down. You see that in any kind of sell-off. But we're seeing a lot. When I checked in earlier, there were five S &P sectors up. I'm not sure if that's still the case because I haven't been in front of a screen. But all the defensive sectors were doing okay. So if there is selling, it's still very much tech-focused. But I think there's several combinations of that, and it has to do with institutional positioning. It has to do with people really starting to get concerned about ROI, ROE, the kind of metrics that we put aside and just took for granted as we're building out AI.

8:06Well, I know your wife is here. Yes. And I want to just tell – I want to say on the air that she's a lucky woman because you're a smart guy because five sectors are higher right now. So you were correct. Consumer staples, energy, utilities, health care, and real estate. Point of that, Tom, is that some of those are at all time highs as well. There are buyers in the market. Listen, there's always a buyer for every seller. That's how the stock market works. But technology has been running the show. Do you care that there are five sectors that are higher or for Tom Lee and Fundstrat and your clients?

8:41Is it really only about technology right now? uh i mean brian one i think the fact that there's a lot of stuff up is a sign of a healthy market and for those investors that own a lot of tech i you know and i'm going to just make some observations you know did intel's present value drop by 30 today or does it look like someone's panicking i mean i think at the end of the day when you have days like this and we're caught in of liquidity vacuum and the potential that there's a good chance that many hedge funds, which had already kind of lost a lot of their share, could some actually be forced to go flat now?

9:27That is creating a lot of opportunity. So I think when someone sees a lot of red and think that that means they have to get out, just keep in mind when everyone's trying to get out, that does give you price opportunity. Does it feel like panic to you, Tom? Does it feel like panic to you, Tom, today? A little bit? Yeah. I mean, the VIX is over 21 and it's Friday afternoon and people are talking about, you know, war escalation. I think people are selling somewhat indiscriminately. So yes, I look, history has shown days like this are not about the market repricing with certainty. In fact, look at the 10 year yield, you know, that's kind of back to levels that are very supportive of actual risk assets.

10:11So to me, yes, I think today it's going to prove to be a really good buying opportunity, but it's just going to be bumpy maybe until midterms. I'm going to push back a little bit. 2022 VIX, which you just had on the screen, is not panic yet. That's a lot of nervousness. Two weeks ago, we had a sell-off again. Remember, we hadn't had a 1 % sell-off in months. We've now had four in the last couple of weeks plus. But we got up about 21, I think, two weekends ago, and that was sort of temporary, 30 or so is panicky. The other thing that I have to say is the positioning got so crowded, and I think that was a big part of it.

10:44You know, when you look at some of these stocks that we all talk about, is there anyone who doesn't know this, who didn't know the story on Alphabet or didn't know the story on Microsoft or SanDisk or any of these other stocks? No, everybody knew them. So there's nowhere to go. That's why a lot of these stocks do poorly, even when the numbers are good, because there's no one to come in and buy them. If the numbers are bad, the institutions who are now fully are overweighted, they rush out and there really isn't support. They're so crowded, Tom. I think that's maybe that's the, quote, panic that you're seeing.

11:15Right. If you want to call it that, because to your point, if a stock falls 30 percent Intel, and I know it's up 75 percent still this year. Intel's had an amazing year. But when a company that size falls 30%, we've all been doing this a long time, it's eye-opening. And there's a lot of questions that go around that, to me. I mean, I'd like to understand how people are defining crowded and what time frame and what they really mean. I think we've had many, many, many, many instances their last few years where stocks have fallen 30 on a miss okay and we've seen this happen with many tech stocks and how many of them have never stayed at down 30 or worse you know these are companies that are fundamentally strong i would say to me i i think that liquidity explains a lot of drops more than crowded trades.

12:19I think that's a very overused word. People need to own tech because that is probably the most important driver for earnings. And I would say, I don't think people are overweight and consensus overly bullish on AI. It's clear in our conversations with clients that they're actually having very mixed views. And I do think many are under allocated. So So I think if someone's going to just sort of claim everything's crowded because it falls, that's actually sort of a false observation. Stocks can fall not because they're crowded, but it's because there's a shock and that there is a surprise today.

12:56But I think it's amplified by lack of liquidity. OK, listen, these are all these are all good points. And we're left thinking. I'm left thinking as well. And that's why we bring you guys on, Tom Lee. Steve Sazek, thank you both very much. Thank you, Brian. Guys, have a good weekend. All right, folks, if you are feeling a bit nervous about this sell-off, listen up. Treasury just announced a higher rate for a new series of bonds. Listen to this. Treasury is going to pay 5.51 percent annual interest from November 1st through April 30th. That rate includes a fixed rate of 1.4 percent as well. That is the highest in 20 years.

13:315.51 percent. Maybe with some tax advantages. Not a bad number. All right. We've got a lot more to do coming up. Kelly is going to join us on the other side of the break live from the shadow Fed conference with more on this market. The markets are down big right now. Tech selling off. We've got a lot more to do. And we're back right after this. Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished.

14:12No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast, or find Schwab Market Update wherever you get your podcasts.

14:52I'm Serena Williams, and I'm healthier on Roe. I've lost 34 pounds in a year with GLP-1's diet and exercise. On Roe, you can access GLP-1 options, including the first FDA-approved GLP-1 pill for weight loss. Go to roe.co slash journey to see if you qualify. 14 to 20 % average weight loss in one year in non-diabetics with obesity or overweight with a weight-related medical condition versus 2.2 % to 3.1 % in placebo R. RX only. To stay informed about serious side effects, go to roe.co slash safety. Welcome back to Power Lunch. We are live today from the Shadow Fed Conference in New York City, where a lot of the focus in markets has been on AI spending and fears about private credit, we're hearing about that firsthand from some of the best people in the business.

15:38In fact, joining me now is Ken Kensell. He is the president and CEO of Churchill Asset Management. They have$66 billion in committed capital. You do private credit, you do it very well. This is not like the funds that are over-specialized in software and all of that. So I don't know what you would say about the sell-off that we're seeing in the equity markets right now, especially in tech, especially in AI names. From where you sit, I'm curious how you would interpret all of this. Yeah, well, first of all, thank you for having me, Kelly. And it's great to be here. And I was saying earlier to you, I love the dialogue and the academic conversations going on.

16:14So it's been super interesting to have an opportunity to speak with folks and kind of hear the conversations and the questions. Look, I think if you look at what's going on in our world, in the credit world, in the lending world, that the reality is that things have been pretty benign. I mean, underlying credit quality, it's normalized a bit. But overall, we're not seeing the dynamics and some of the volatility that you've seen in the public markets, which I think is a good thing if you're a private credit investor or a private markets investor. I do think you're going to begin to start to see some dispersion among managers.

16:47You know, not every manager has been, you know, following their strategy and being consistent about what they do. Some would say we've already seen it. I would say that's probably true. But is there more to come? I think potentially there is. If you look at where the markets have been, there's been a lot of capital raised. I would say the best managers that are more institutionally validated, who have been vetted by consultants, who have been vetted by institutions, I would say the best of those firms have stuck to their knitting, stayed on strategy, and generally done pretty well. But I will say, I think you will see managers, you'll start to see the tide go out proverbially and look at some of the firms that maybe didn't, you know, are being exposed.

17:34Absolutely. If people want to do their homework on this right now, you're kind of saying like your TIA, Cref is your biggest investor versus some of the funds that are raising from retail. You showed earlier a chart. And the reason why you're here explaining all this is because obviously the Fed and economists have a lot of interest in is private credit the next crisis. And again, you guys are kind of pointing this and saying, maybe look elsewhere. I don't know where the Fed should be looking for the next issue. Maybe it's right in front of us in the AI food chain. But what would you say to the retail person who's concerned about, you know, the credit quality of their investments?

18:04No, I think it's a great question. And if you look at the dynamics, I would argue that you want to be invested with firms that have a broad institutionally based investor ecosystem, right? You want to be with firms that have been on strategy for a long time, that have invested through the GFC, that have a long track record. But I'd also say the dynamic that I think you and I talked about this earlier, you want to be with firms that have long-term committed capital. I think one of the features in the wealth market and the retail market, which has been less discussed, I mean, everybody's talking about redemptions, which I understand, and that's been a big focus.

18:42But the reality is what prompted some of these problems is that those retail managers had to deploy their capital immediately. When the retail investor gave it to them, they had to find somewhere to put it. If an individual invests$10 ,000 in a private credit fund, in a retail private credit fund, that capital needed to go out right away. If you have a manager that's more institutionally driven, there's a lot more ability to manage those funds flows. And your institutional capital expects that it's going to take time. And I think there's a lot less pressure on managers like that. So we're 94 % institutional.

19:26I think that's a better place to be. Yeah. Well, Ken, you need to come join us in studio, Brian and I, on a day where we have more time. More time. If you don't mind, thanks for coming to the sidelines at this event. And we'll let you get back to it and really appreciate it. Great. And a slot of thought. Ken Kensell of Churchill. Brian, back to you. Who is welcome here in New Jersey anytime, Kelly. And we'll see you on Monday. Thank you. All right. On deck with new attacks around Hormuz. Just how high will ship insurance go? Or can you not even get ship insurance in that part of the world? The CEO of Axis is here on that and more next.

20:03Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. Hey, Fidelity. Can I get a second opinion on stocks in the Fidelity app? with fidelity it's easy to get an outside opinion from independent experts in a single score and then when you're ready trade u.s stocks and etfs with no commissions that's right i am always right investing involves risk including risk of loss zero dollar commission does not apply to customers designated by fidelity as a professional equity trader a limited number of etfs are subject to a service fee of 100 see details at fidelity.com slash commissions fidelity brokerage services LSE, member NYSE SIPC.

21:01Think GLP-1s are too expensive? On Rho, you can access FDA-approved GLP-1 weight loss treatment at your lowest possible price if you're covered. Start with Rho's free insurance checker. Just upload your insurance card to see if you're covered for certain GLP-1 shots. Whether you use insurance or pay cash, Rho helps you find an option that works best for you. Plus, Rho's membership plans help you save even more. See if you qualify at roe.co.health. Rx only for side effects of GLP-1 medications, including boxed warning. go to roe.co slash safety. Additional row membership be required. All right, let's talk energy because crude oil prices rising again.

21:36The paper contract now over 104 bucks per barrel. Some news, explosions were heard on some Iranian oil export areas as a number of potential attacks on ships being reported around Hormuz. This comes as the Houthis claim a new wave of attacks on civilian targets, including again, attacking airports in Saudi Arabia. And some oil and gas executives are now backing out of yet another conference, this one scheduled for early next week in Abu Dhabi, a conference. I was also scheduled to attend, but now will not. In other words, risk is rising, and risk protection is what your next guest focuses on and does very well.

22:14Vincent Tizio is CEO of Axis Capital and joins us now. Vincent, good to see you again. Nice to see you. Just to be very direct, I mean, if I'm a ship, in the Arabian slash Persian Gulf, and I'm going out of Hormuz, can I get insurance right now? You can. At what cost? Selectively. Cost, the last time we spoke, we talked about 30 % increases. I think it's probably more important to give you the context of pricing, right? The vessel itself, there's two ways to price the risk. There's the vessel and there's the cargo. Most Marine war underwriters are pricing the vessel. This is a function of the tonnage, the weightage of the vessel itself.

22:54Rates are escalating. 30 % is a minimum floor. There are estimates somewhere between 5 % and 12 % of the vessel cost itself. It's quite expensive. Are rates today higher than when you were here last? They are indeed. So they just keep going up. They are indeed. Is there a breaking point? We talk about demand destruction for the price of oil or gasoline. Is there demand destruction for ship owners with insurance? or are they going to pay it? They're going to pay you because they're passing it on. They are passing it on, but goods and services have to get through. And so will there be a break point?

23:28Time remains to be seen. We've seen other conflicts. Recall, people are still buying marine war in the Baltics. They're still buying it in other waterways, the Red Sea. It's a viable cover. It's a necessary cover. Ships are legitimately getting blown up, not just around Hormuz. It gets all the attention. It was a ship, what, three weeks ago off of Sochi, Russia? For sure. Somebody blew it up. It was literally the supertanker burned to the waterline. How risky is not just Hormuz, but Red Sea, to your point, and the Baltic with the Russia-Ukraine war? The risk varies by geography, waterway to be sure.

24:04But let's put some context. In the third quarter, there were nearly 2 ,000 vessels that we counted going through the strait. Against that— Sounds like a lot, but how does that relate to the past? There's about 45 to 50 ships that we understand that were hit. So think about the success rate. The U.S. Navy, I believe, cites a 97 % success rate. So this is highly targeted. It needs to be carefully underwritten, as we've discussed in the past. The ship vessel itself, its track record, the captain's track record, the goods and services on the vessel, the safety protocols that it brings, and understanding the environment of when to go.

24:42As you know, traversing through the straight six-hour journey could be shorter, could be longer. But that's when the most important exposure is under it. Listen, I know 2 % is not a big number. But when it comes to life or death, if somebody said to me, well, make that run, there's only a 2 % chance you're going to get blown up or hit or potentially sunk. That would make me nervous. Yeah. So ship owners are willing to pay right now. They're paying you. They're paying others to do it. are they buying six-hour insurance contracts for that run? The typical cover is seven to 14 days. The most acute part of the exposure, when they are most at risk, is traversing through the strait.

25:24And that was the hours that we were speaking about. When they turn off the, a lot of them, turning off the light, turning off the transponder. For certain. And we got to go, how critical, my father was in the Navy, I'm a little biased. My dad was a Navy guy for 11 years. How important is the U.S. Navy right now? Critical. and has created great assurance for the pass-through. There's no doubt about it. And the success rate would reveal that in the most statistical evidence way. Well, a lot of talk about what may not happen next week. So, Vincent, I may be on the phone with you soon. I appreciate it.

25:56Thank you. You have a good weekend. Enjoy. Thank you very much. All right. Coming up here on Power Lunch, more on the big tech stock sell-off. Look at some of these trades that are happening now. As we noted at the top of the show, Intel losing about one-third, actually a little bit more of its value, 31%. CoreWeave down about 11%. Dell, Nebius down over 12%. A lot of the tech stack being sold. And we are back with Seema Modi, who's got more news on a couple of these big moves. Stick around. All right, we got to talk about this tech stock sell-off. And if you are specifically an investor in Intel, you may want to cover your ears because Intel's on track for its worst day since 1974.

26:36$74. Intel losing nearly one-third of its value, although, again, it's still up big, about 75 % on the year. Context always key. So let's get more context, find out exactly what is going on with Intel and more. And for that, let's bring in Seema Modi. Seema, what a day. What a day, Brian. And what's so interesting is that Intel didn't really see this memory shock coming. We spoke to CFO David Zinsner, who told CBC that towards the end of summer and into September, Intel saw a pretty big fall off in PC demand due to higher cost of memory. He says it's made personal computers so expensive that it's hard in a constrained budget environment for all these CIOs to be able to buy more than they can afford.

27:16Now, as you know, memory prices have climbed about 100 to 200 percent over the last year. That's weighed on other results from IBM and Dell. And SK Hynek's CEO just this week said that memory shortage, the memory shortage will continue in his perspective through 2030, despite the additions to capacity from both SK Hynix and Micron. Now, there were a few bright spots. Intel foundry revenue up 68 percent, 58 percent year over year to 6.7 billion. Bernstein analysts also say the company's balance sheet is in a better shape, but acknowledges that Intel's broader turnaround is still in the early innings.

27:51The question now, Brian, is how long the inflationary part of the AI buildout overshadows Intel's progress. This CEO, Lipub Tan, didn't disclose new customers on chip manufacturing, but did suggest some new updates were coming. I also want to take a look at CoreWeave as we watch the sell-off take place now down about 11 percent. What was so interesting, Brian, it was on the verge of heading into positive territory for this week. But given the sell-off we're seeing across tech, it's now on pace for its fourth down week. And now we know earnings are out on November 10th. That will be a big moment for the company.

28:26All right, Seema Modi. Seema, there's a ton going on. We appreciate you're here. Thank you very much. Folks, it is not just Intel or CoreWeave. Some of the other big memory and semiconductor stocks also getting hammered today. Look at that. NVIDIA, Sandisk, Broadcom, Western Digital, all lower. Supermicro, Hewlett-Packard Enterprises, they are down as well. Apple is down, but it is off at session lows. That's ahead of Apple's fourth quarter earnings number after the bell on Monday. And Apple is still up more than 25 % this year. Let's bring in a guest to talk more about that. Mark Newman, managing director and senior analyst at Bernstein.

29:03And you sat down, and I love it when guests bring their own RBIs. I call them random but interesting. And that even though Apple's down a bit today, it is the only$5 trillion company left in the world. Is Apple kind of a haven for investors? It is right now. Should it be? I think it should be because they are not spending the$100 billion or so in CapEx a year that some of these other companies are. So they're somewhat protected from this AI trade. And so today this is a bit of a panic around the AI trade, and Apple is somewhat immune to that. So it really is seen as the defensive safe haven within tech.

29:46Well, this is really interesting, Mark, because Apple has taken its lumps for not investing enough in AI. Right? Well, they're not doing enough with AI and AI and AI. But you're saying that today Apple may be benefiting because it's not doing enough with AI. Right. That's absolutely the case. But I think the trade will flip back and people will start to get a bit more positive around AI. And the flip side will be the case for Apple. and Apple will not be as strong in those days. Why would a lack or a, not a lack of, a lower AI investment percentage, I guess that's the right way to put it, Mark, why would that be good if these market wobbles around AI continue?

30:32Well, for Apple, what it is, is they just have this huge free cashflow machine. They're continuously buying back stock. Earnings keep growing. Free cashflow keeps growing. They have this continuous growth mechanism that keeps going on. And there's no real risk to them if there's a bubble burst in AI. There's no risk. They've spent not much. Their capex last year was$13 billion. Their capex this year is like$11 billion. They're not spending that much. So therefore, not much downside risk if the AI bubble bursts. I think that's really what's going on here. I was going to rank it. People buy food, mortgage, rent, and then they pay their phone bill.

31:15I think I'm wrong. I think we've got to move the phone up to number two, right? I mean, they might pay the phone this bill more than they pay mortgage or rent because this is everything. Does Apple have the perfect moat? I think they do. I mean, I think they are, despite not spending anything in AI, they are the consumer gateway to AI. How are you going to use AI? It's mostly going to be on your phone. Sure. For now. You can use your PC, but in most cases, you're walking around, you want something easy, you want to talk to something, it's going to be your phone. And if you're talking about wearables, wearables will not have enough processing or battery power to be able to do much.

31:57Not yet. No, we're talking about decades until it can actually. You think so? I think it's a decade. Kelly and I think that the phone will be gone in five to ten years. No, that's not. If you want to replace the phone. Maybe we'll be gone in five or ten years. Then you're going to need a block of something. So you're going to need something to tether it to. You can't just do processing of power in your glasses or in your AirPods. It's going to have to tether to something. Why carry around two blocks? Just put it all in your phone. To be dragging a battery anvil around. Mark Newman of Bernstein, bullish on Apple.

32:30Apple, I don't want to say a bright spot. It's down, but it's holding up better. Mark, really appreciate your time. Thank you very much. Let's get now to Leslie Picker with a CNBC News update. Hey, Brian, a federal judge did not rule from the bench today on former FBI director James Comey's motion to dismiss a new criminal case against him. Prosecutors are alleging he violated the Espionage Act by leaking information in connection to a 2016 New York Times article. Arguments centered on the statute of limitations as the charges were brought exactly 10 years after the alleged misconduct. Comey denies the allegations.

33:09Canadian Prime Minister Mark Carney said today that he expects to finish negotiations with the EU in June that could make Canada the first ever associate member of the European Union. Questions arose over whether the deal would actually come together after it was left out of a joint declaration this week, launching a new economic and security alliance. And a federal appeals court today revived a verdict finding the NFL overcharged Sunday ticket subscribers and then ordered a new trial on damages. It reversed a lower court decision that originally tossed out the$4.7 billion award for consumers.

33:47Send it back to you. Maybe I'll get a refund. Leslie Picker, thank you very much. All right, coming up, our investigation, gamble with democracy going behind the scenes in both Kalshi and Pauly Market. Looks at exclusive data revealing unusual activity in prediction market contracts tied to election outcomes. You've got to watch it. It's an important story, and you can. You go to cnbc.com slash investigations. Coming up here on Power Lunch, though we are squarely focused on the stock market today, we do have little time for one special break, which, let's all admit it, we could all use today. and how the stock market does may determine a lot about how sales of some very fun boats, yachts, may do.

34:30We have that story next. It's time for a little bit of fun today. And what's more fun than a super yacht or somebody else's super yacht? But there's a problem. There's a lot of yachts. There's actually not enough space to dock all of them. But now investments in the marinas are picking up. Robert Frank, joining us for 4 Lauderdale. So, Robert, we all need a break today on this Inside Wealth Report. Show us a little fun. I will, Brian. And, you know, you talk about really, really, really high-class problems. Well, there are now over 210 ,000 yachts in the world and only 160 ,000 yacht parking spaces.

35:08And that mismatch has led to an investment boom in yacht marinas. So last year, BlackRock spent$5 billion to buy a marina company, which then spent another$1.5 billion recently to buy MarineMax. It's also led to a boom in real estate that are near marinas. So here in Fort Lauderdale, the Related Group is teaming up with a group to spend$2 billion on a development that's 40 acres that will include restaurants, retail, marinas for super yachts, condos, and a St. Regis hotel. Well, what you've seen specifically here in South Florida is there's been a scarcity of yachting destinations and marinas and slips.

35:51And so when you're able to combine irreplaceable real estate and a marina, you just have a winning formula right there. And part of that winning formula is that Fort Lauderdale is the yachting capital of the country. Brian, more than 2 ,000 super yachts come through here every year to get repairs, just to hang out. And now with these new developments, they'll have a place to park their super yacht as well as parking their real estate dollars. Now, for more on the yacht economy and the boom in super yachts that's being driven by a lot of tech wealth or whatever is left of it after today, you can sign up for the Inside Wealth newsletter at cbc.com slash inside wealth.

36:31Brian? Robert Frank, it's a nice break on a big down day. So, Robert, enjoy it. Thank you very much. All right. Up next. lighten up or load up on stocks right now? That is the question, and we'll get the answer next. All right, welcome back. Let's again check in on this big technology sell-off. You've got Intel down over 30 % today. That's 30 % today. Really the entire semiconductor and chip complex getting it hard, but that is absolutely not the only area of technology getting slammed and sold off today. Software names also selling off, along with some of the mega caps. But let's talk more about it because you want to buy low or lower and sell high.

37:13G-Squared Private Wealth Chief Investment Officer, Victoria Green, also a CNBC contributor, being joined by Piper Sandler's Chief Market Technician, Craig Johnson. Important day for both of you, Victoria. First off, are you doing any buying on a day like today? I am. I'm going shopping. And look, I know this is ugly and gross, but we're basically having a bear market in two days. I think the market is absorbing so much bad news. We have election angst. Is the Iran war starting again next year? And we didn't have great earnings at all the last two weeks from tech company. This is a hard reset lower.

37:45I would say unless you think AI is well and truly dead and not going to have any of this growth going forward, I would absolutely look up. And I did do some tactical buys. And now yesterday, and absolutely picked up a little bit more Intel today. Look, neither were perfect. Actually, now it's pretty good. Outlook wasn't great. Intel's was really messy. And I get that. We have some concerns about when that PC trough is going to be. is that first half of 27, maybe Q4. I think they also had some extraordinary items with their FabFire in Israel. And just I look at this and say, yes, Ugly, deserves a little bit of pain today, but I think a 30 % drop today is a bit overdone.

38:19And for me, I'm looking to buy. Well, for every seller, there is a buyer. So you have been or are thinking about buying Intel back today, Victoria. I just want to be clear. Yeah. I mean, I think you've really got to be looking at this and saying, look, AI is not dead. All of these companies are producing great revenue growth. Was it a bit of a disappointment on the outlook and the guidance and the revenue growth trajectory? It's not necessarily accelerating. Nobody this week except maybe Microsoft really crushed it on the tech side. So you're seeing everybody sell off from Sandisk to Seagate to NVIDIA to Avgo.

38:49It's a broad base. Everybody hates AI. Everybody still hates data centers and a lot of angst right now. But I don't think this trade is dead. So if I liked Intel before it fell 30 percent, granted, a little bit of a disappointment on the earnings side. I think I like it at a 30 % discount. Okay, Craig Johnson, I don't know if they hate it. I mean, maybe they love it a little bit less than they did. You're looking at just the charts. So do the charts tell you this is the start of something maybe a little bit bigger or, again, kind of a multi-day, multi-week drop followed by another bounce? Brian, there is no question.

39:24Just come back, take a look at the charts, look at the SMH, look at the SOX. Brian, you and I have had a lot of conversations, You know that AI has been leadership in this market. Semiconductor stocks had grown to 20 % of the total investable market. Technology is 40%. Those are historical extremes. And now you're very clearly on the charts, whether it's the SMH, the SOX, Intel, NVIDIA, you name it, you're making lower lows and lower highs. That's your basic definition of a downtrend. And while I do not agree that AI is, I mean, I agree AI is not dead. It's not going away. It's just transitioning into now a utilization of it rather than a build out from my perspective.

40:11And yes, technology is going to have more pain and downside. And that's why in our model portfolio, we've cut it back technology to 18 % versus 40 % for the market. And we've rotated into, for a while now, energy and healthcare. and that's where I think you're going to make money. Well, okay, and this is an important day because on this side of the, you know, listen, we've all been through, all three of us have been through this a lot and you have these market flush days where there's, you know, nine to one, decliners to advancers and everything goes down. That's not one of those, this is not one of those days.

40:45Technology is down big. The NASDAQ 100 is down more than 3%, Craig, but to your point, energy's up, consumer staples up, healthcare's up, five of the S &P 11 groups are actually higher. So how do we read today's market? Almost half the market is actually up, but the names that are huge, that are the big weights, they are down. Yeah, you're seeing a rotation. This is what people are rotating. They're taking money out of tech. They're rotating into energy, which could be a hedge against any additional conflict or escalation that could be happening. They're taking money out of tech. They're going into healthcare.

41:22And some of it could be going into financials to a degree too. But Brian, this market's got sort of out of skew, kind of out of whack. It's gotten so concentrated in tech. And again, rightly so do the AI trade. It's just gotten to be an extreme. And when we've seen extremes like this in the past, they tend to resolve themselves, but it tends to be painful. And that's sort of what you're getting right now unfolding. This is not done. Not done. So Victoria, I want you to comment on that because Craig is obviously concerned about technology at large. And I will quote the late great Barbara Mandrell, who's saying you were country when country wasn't cool.

41:57You were in energy before energy was cool. Are you still in and is still a buyer or owner of energy? Look, our dividend portfolio is doing great, right? And that's what he's pointing out. Values outperform growth by about a thousand basis points in October. The rotation is real, but I like to be a tactical buyer of wrecks like this. I look at this and say, this is a dislocation. It's an angsty market. Everybody's worried about everything. Think about what's been thrown at the market this week. You had a Bitcoin hack. You've got completely risk off. You have sell tech, you have sell AI, but we've been through this cycle before, whether it was DeepSeek or the SAS apocalypse, or, you know, all of a sudden tech's going to do everything to financials and nobody's going to park their money at banks anymore.

42:38We tend to have this panic overreaction, knee jerk. And I look at this and say, these companies are core for me. Yes, we're diversified. I think you should have some value. Brian, you and I have talked about being in refining, being in energy. You know, we have some things. So our portfolio is not necessarily overweight tech. But days like today in our core portfolio, I want to be a buyer of this because I think over the next 30, 60, 90 days, I think this will pay off for me. Do I expect it maybe to rebound Monday? Maybe not. If we have bad news over the weekend, we have to clear the election.

43:08but historically buying massive dislocations like this during periods of transformative technology is a good thing. If you bought through the deep seek rack, if you bought through SAS Apocalypse, if you bought some of those beaten down cybers or service companies, they were doing pretty well. And so I look at this and say, yes, don't go whole hog, don't lever up and buy some 5 ,000 % inverse ETF or whatever it is, but be prudent and take advantage of dislocations because often they pay off. How closely, if at all, Victoria, quickly, are you watching the midterm elections on Tuesday? Yeah, everybody's watching midterm elections on Tuesday, especially from Texas.

43:46It's going to be a tight race. I think there are some things that might not get called all the way. But if you believe any of the prediction markets, it's looking two-thirds, 70 percent likely. It's going to be a blue wave. Yeah. All right, Victoria Green, Craig Johnson. Good conversation, Craig. You're on the tape. You're noted that you remain concerned about technology reducing the weight in your model portfolio. Guys, thank you very much. Try to have a good weekend, but we're not done yet. We've got a little more. We've got two big stories to tell you right after the break here on Power Lunch.

44:12Stick around. All right, a couple of big things here before we turn it over to closing bell. All right, stock of the week to end the week. I want to take a look at Rivian. Rivian, a bit of a bright spot. It's only up 2%, but it's up today in a down tape. And Jeffries upgrading the EV maker, upgrading it to a buy from a hold. They kept their target at 17. They didn't raise the target, but that's still 48 % from yesterday's closing upside. Kind of a bright spot in a down year. The Rivian stock down about 40%. But today, an upgrade stock's up 2%. Today, some kind of a bottom. We don't know. We got an hour to go.

44:46We're going to say goodbye on Power Lunch. Have a great weekend. Hey, Fidelity. What's it cost to invest with the Fidelity app? Start with as little as$1 with no account fees or trade commissions on U.S. stocks and ETFs. Hmm, that's music to my ears. I can only talk.