10AM Hour: Stocks Rip on Back of Democratic Midterm Victories, Orlando Bravo on Election and Tech, AMD CEO on Data Center Demand 11/4/26

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1:18Orlando Bravo: In just a moment, we'll talk about what the power change means for the tech trade when we are joined by Toma Bravo founder and managing partner Orlando Bravo. He's here. Plus, why one policy expert says the election results mark a return to volatility rather than a clearing event for the market. And why the health care and financial sectors in particular could be heavily impacted. And we'll get to some big individual movers, including what AMD CEO Lisa Su just told us about the company's results and why CBS is making a move to break up. First, though, got some ISM services numbers crossing. Let's get to Steve Leesman with that.

1:51Orlando Bravo: Hey, Steve. Hey, Carl, this is just a modest miss. I would say a miss that doesn't matter very much. 54.5 is the number for ISM services in October, and that's against a forecast of 54.8, so just 0.3. Bottom line is the services sector remains above 50, shows growth in services, also shows growth in the economy. Business activity down just a little bit, but still at 53.8 versus 56.5. Looking at the new orders index, that strengthened at 59.9. Employment strengthened as well, 51.4. That's, again, the second month in a row above the expansion for employment of 50. The only area of concern is the area that's been the area of concern.

2:34Orlando Bravo: 73 on the prices paid index versus 74 in the primary. So down a tick, but still definitely an elevated level. Usually this number 60-ish is where you want to have it, where it has typically hovered. Looking at the bond market, a touch lower, 4.6 on the two-year. The 10 I saw hovering around 492. Not much change there. Quick headline from the Treasury Department this morning, the refunding announcement suggesting that after the next several quarters, they may rethink or think about changing the issuance schedule. The market is very attuned to that, but it's not happening for at least the next several quarters.

3:12Orlando Bravo: Quick take a look at the Fed funds probabilities up a touch in the wake of the election at 82 percent for for December and then around 60 percent for that second hike in March. Question as to whether or not a Democratic Congress maybe take some of the pressure that's come from the administration off of the Federal Reserve. Sarah. OK, kind of feels like a stretch. But thank you, Steve Leisman. Let's get more to the market action now as the Dow soars and the Nasdaq 100 swings more than 900 points from its overnight lows following sweeping Democratic victories as investors try to game out the implications for the AI trade and the tech trade overall.

3:53Orlando Bravo: Joining us now in a CNBC exclusive interview here at Post 9 is Toma Bravo, founder and managing director, managing partner, I should say, Orlando Bravo. Welcome back. It's great to have you.

4:03Lisa Su: Thanks for having me.

4:04Orlando Bravo: First, do you have any reflections about the decisive Democrat wins and what that might mean for the market overall, specifically tech?

4:12Lisa Su: Well, as a person, it was decisive. I stayed up last night watching it. It was dramatic. As a firm, we're not political, right? We just focus on trying to build our companies. I do hope in the field that we're in is that there's not a rush to regulating the model layer. Let competition run free. If you look at our 60 companies, we use frontier models. We use open weight models. In many cases, we're building our own models with proprietary data. And that innovation and competition is so important. Now, the danger is cybersecurity. That's why cyber stocks have rallied so much in the last six months as they should.

4:55Lisa Su: So focus on that. Focus on these things in the production environment, not in the lab environment. I think that's very, very important. And when you see these breaches all the time, I really implore you to ask the company or the vendors, what was your cybersecurity posture and what were you using? Not to go too early into, well, the agents that were programmed went rogue.

5:18Orlando Bravo: So is that what you're building in your portfolio? Because, I mean, the other question I was going to ask you, Orlando, is have you survived the SaaSpocalypse, right? This idea that AI was going to come for software, disrupt it, and that would be negative for private equity players like yourself that are holding a lot of software.

5:36Lisa Su: Completely. Look, there are two pieces of it. Our business is 40 percent cybersecurity, right? That deal that you spoke about, Proofpoint, Varonis, the combination is about 30 billion. It's a big, big bet by our firm that by creating the number one player in locking down your data, protecting your data, we can create a lot of value. I think we feel very good or externally validated as to where the cyber stocks are trading because we own the number one player in many segments. Agentic governance. If you want to shop, how do you identify who your agent is and who it's working for? All these great fields are very, very important.

6:13Lisa Su: And there's going to be new layers of that as well. Now, if you look at 60 % of our businesses in enterprise software, I really want to underscore these companies are services businesses. Their Warren Buffett fundamental value is in their network effect of collecting all the knowledge in a specific process or a specific segment and giving that knowledge back to 10 ,000 customers. Imagine if every customer had to do a solution by themselves. There'd be no economies of scale to it. Now, those companies need to move quickly to own the agentic layer. If not, that will become a threat. And we've been working really hard over the last two years to do that and to innovate.

6:52Orlando Bravo: Do you think a kill switch is possible from an engineering standpoint? And second question, do you think the labs eventually, the AI labs, will offer their own cyber products that could make some of the cybersecurity companies vulnerable?

7:07Lisa Su: Two phenomenal questions. First of all, a kill switch is possible because, once again, what is your cybersecurity posture? You have to protect yourself in many different ways. You look at data. Well, you have data protection. That's what Varonis and Proofpoint does. What's your sensitive data? You have to discover it. You have to lock it down. And you have 20 years of threat detection data to say, is there something wrong that I need to lock down again? Are there alarm rings? But then you look at the other side and what are agents doing? What are agents allowed to see? What are agents allowed to touch?

7:40Lisa Su: So you have many safe points to lock it down or sort of kill it or catch it early. Now, you know, I argue with people in Silicon Valley, early stage ventures. They go, investors, they go, well, these models do it differently. Of course they do. They do it super fast. Of course they do. But the threat area has multiplied. So you have to address that. And there's also new layers. to your question on will Enthropic, OpenAI, and the model companies own this. This is a question that not only touches cyber, it touches almost every company. And I give you the answer, and this is going to be right. The answer is they won't do everything.

8:19Lisa Su: They're great infrastructure companies. During the cloud era, the big risk was, why doesn't Google, Microsoft, and AWS that are hosting all these SaaS applications, why don't they own the whole environment? Well, you have different environments at each company. It's multi-cloud. It's multi-model. Companies have this web of transactional systems that are super complicated, that are many years old. So you need independent vendors to help solve that. Will they do something? Absolutely. And Google is big into cyber already. But depending on an infrastructure provider to do it all in a multi-model world, it will not, it will absolutely not happen.

8:58Lisa Su: I tell you another thing. The model companies are unbelievable infrastructure companies, but they will not own payroll, manufacturing, insurance, consumer, retail. These are services areas where you have to fit your solution to the needs of the customer. And that is very trying and very difficult in smaller markets. And those are the markets we play in.

9:17Orlando Bravo: I kind of, listening to you, Orlando, I wonder, though, if they don't do those things, do they commoditize themselves in some way at some point? Do we need to look at their business model differently in terms of whether they actually even have a moat at all?

9:27Lisa Su: That's the question, right? That's the$2 trillion question. Yeah, it is. You know, what's the value of providing this infrastructure? How competitive will it be? And do they have to move up the stack? They are moving up the stack. And I think that's a good thing. That's more competition. But once again, will they be, is it true? Have you ever found in history a domain expert in everything? That renaissance company of the world. And they'll probably pick really big markets and be big players. And it takes cyber. Our companies, we have about$10 billion of revenue from cyber. We compete against Microsoft in almost every category.

10:03Lisa Su: But in many categories, Microsoft only provides the security for Microsoft Stack, not for a multimodal world.

10:10Orlando Bravo: Yeah. Specific to you guys, the Verona's deal, you mentioned it. I think you did it at 53 times cash flow, eight times revenue, some pretty heady multiples there. What gave you the confidence? And does that accelerate the timetable for taking Proofpoint public or actually slow it down?

10:26Lisa Su: You're asking the questions that our investment committee was asking. So I really like it. First of all, it was a difficult decision because Proofpoint is doing very well. We own it at a really good multiple versus the comms. But our view is you always have to be building your company. So we kind of went in that direction. Second, by combining the two, we have the number one player in data cyber protection, and that has become the number one priority of chief security officers. Now, we did pay that big price, 100%, but part of our model is cost-cutting and synergies. So we'll be able to bring that to an unlevered free cash flow multiple that is more reasonable and hopefully below these great comps where they're trading.

11:09Lisa Su: And yes, we hope that that really accelerates the plans. by creating that kind of third alternative to the awesome CrowdStrike in Palo Alto that can go public, consolidate the industry and start from data and AI.

11:21Orlando Bravo: It raises the question, though, about exits from private equity in general. It feels like there's a huge backlog of investments that need to come out. I mean, is there a liquidity crisis?

11:31Lisa Su: There is. And that's the problem. So if I look at our portfolio, I would say, wow, the numbers are good. Our agentic strategies are good. We're moving them to this AI world. the network effects, the domain knowledge. How do we turn those assets into cash? And unfortunately, private equity is not the place to look. When we expose one of our companies to private equity buyers, this is the market now, you get 10 bids. Great. Add reasonable values for your business. All the bids look the same. I'll give you a billion dollars for a minority interest, 15 % rate guaranteed or one and a half X. And one of my partners, Seth, told me the other day, walking down the hall is, does anybody buy a company anymore?

12:12Lisa Su: These are kind of minority structured investments. So you have a world that's really bifurcating in private equity between people that buy the piece of paper. And they're great firms, and these are good pieces of paper. I don't think they'll put a lot of money to work with these structures because great companies won't take them. And you have the very few people, and we put ourselves in that category, that want to create value and want to own the whole company. For us to create liquidity, we have to get creative and work with corporates. And our business is looking a lot more like corporates that use capital correctly and move quickly, more than financial institutions, so to speak.

12:47Lisa Su: And it's happening now very, very quickly.

12:49Orlando Bravo: But can you actually get, I mean, some of these companies that were bought during, what, 2021, during the peak of the software valuations, can you really get that kind of value back?

12:57Lisa Su: You won't get the multiple back. Those multiples were crazy. And obviously, in hindsight, you talk about this apocalypse, It's been over since the summer because the thing is, every time one of the model companies introduces something, they all don't come crashing down. And actually, enterprise software, aside from cyber, it's trading at pretty healthy P multiples. What happens is when the P multiple is very high and they just don't outperform by enough, they kind of come crashing down. But you will not get the multiple of 2021 anymore. That's long gone. You just need to do what we're trying to do with Proofpoint and Varonis, build a bigger company, build more EBITDA, build more interesting AI solutions, and hopefully you earn it that way.

13:39Orlando Bravo: You also need to raise money for a new fund, conceivably, if you keep doing things like that. You did raise, what,$24 billion, but your last close, I think it was June of 25. I'm just curious, do you see yourself going back to the market, or does that pace of new fund slow over time, given the lack of opportunity?

13:57Lisa Su: David, we've been holding on to that cash like crazy. So we actually raised between our two vehicles,$30 billion in private equity. $30 billion, okay. And we have 90 % of it available. Now, it hasn't been all that we've been so thoughtful about where future valuations could go. We've been really spending so much time on making our portfolio AI-centric. And when you own the whole company, that takes a lot of time. We always say if the portfolio is good, everything is good. And if we could do that to our existing companies, then we can try to do that to new assets that we own. So we won't be in the market anytime soon and we're lucky for it.

14:37Orlando Bravo: What about the public valuations? I mean, you came on with us when everything was selling off and said there's a lot that looks cheap right now. What do you think about valuations at this point? And what's attractive? Is it a software company or is it an AI infrastructure company?

14:52Lisa Su: So that happened for about six months. And we had a lot of offers out there during that time. Unfortunately, we could not catch things at the bottom. People, these software companies were smart enough to know that their business was pretty healthy. And none of them would transact at the bottom. Where do we see the market now? Given that most of private equity is out of software when they should be in software and AI and is not buying the whole company, We have a huge pipeline, and we are so excited. Look, software has been doubted in my 30-year career four times. This is one of them. And the public market is finally getting it right, but the private market is way behind.

15:34Lisa Su: So we'll hopefully be able to strike on some good deals.

15:36Orlando Bravo: But not everybody is going to be a winner in software, right, from AI?

15:39Lisa Su: You know what the key thing is? People are looking for attributes. Tell me, okay, do you own the data? Is that proprietary? Are you a system of record? Are you a system of commerce for your company? Are you deterministic? All those things help you, but the key thing is leadership. You need to have the leadership at your companies, especially at the CEO level. Those founders are extremely valuable right now. Like our Dayforce founder has been coding HR payroll apps since 1988. They're way ahead on AI, we feel, than anybody else. So if you really have the leadership in place, they'll take the right risks with their customers to bring the authentic reality to their enterprise.

16:18Orlando Bravo: Orlando, it was great to hear from you.

16:20Lisa Su: Thanks for having me. I really enjoy it.

16:22Orlando Bravo: Yeah, we love getting the update on your portfolio and what you're thinking about. Tomo Bravo, founder and managing partner Orlando Bravo. Getting some breaking news out of Congress this morning. Let's get to Megan Casella. Morning, Megan. Carl, good morning. House Speaker Mike Johnson has been telling his colleagues this morning that he will not be running for House minority leader. That means we will see some reshuffling in the Republican leadership in the new Congress. Speaker Johnson also said that he spoke with President Trump this morning. Now we wait to see who might throw their hat in the ring for that position.

16:52Orlando Bravo: Steve Scalise, who's already in Republican leadership. Jim Jordan, those are two names being tossed around now as folks who might run for that House minority leader role in the new year. Now, we're also getting a lot of movement on the Democratic side in Congress as well. A lot of talk about what the legislative agenda might look like. the incoming finance chairman, Ron Wyden, put out a long statement on his priorities. He summed them up as affordability for us, accountability for them. I also bumped into the likely next House Speaker, Hakeem Jeffries, in our D.C. Bureau this morning, and I asked him this question of, with so much focus on oversight and investigation, would Democrats be focused on private companies as part of that?

17:31Orlando Bravo: He says those conversations will be happening over the coming weeks that they haven't decided yet exactly who they'll be targeting. But he said clearly things aren't going right for the American people. And he said capitalism is broken in the way in which it is being experienced by so many working class Americans and middle class Americans. After Jeffries was here, guys, the likely speaker, next speaker, Senate majority leader, Chuck Schumer was here as well. I asked him a similar question. He gave me a very simple answer, They're just you've got to go after the corruption. So as the dust is settling on Capitol Hill and we're starting to get a sense of what the legislative agenda might look like, that's at least where Democratic leadership is looking as of now, guys.

18:13Orlando Bravo: OK, that is certainly helpful. Thank you, Megan. Megan Kinsella in Washington. Let's talk more about the midterm elections and the impact on the market, what the street is saying about all this. Just to give you a status check, you know the numbers, the balance of power really shifting toward Democrats, especially in the Senate right now, 54 Dems to 44 Republicans with two outstanding races that haven't been called, Alaska and Mississippi. They're the numbers. So what does it mean for your money? Well, here's a good chart from Bank of America that shows what happens to the market when you have various combinations.

18:47Orlando Bravo: The good news here is that it's always positive, but the bad news is the least positive scenario is a Republican president and a Democrat-controlled Congress. That's all the way over on the left where you see the lowest returns in history. Interestingly, the best scenario here would be a Democratic president. That's all the way on the right. And then a split Congress. So that's where you hear about sort of gridlock is good, but not necessarily always if you're looking at the returns. I think the biggest issue, judging by what Wall Street is saying about all this, is the uncertainty over the data center buildout and the AI trade.

19:23Orlando Bravo: That's really the thing. I mean, that's when we really started to see Nasdaq futures moving last night when it looked like the Texas gubernatorial race was going to go in favor of a Democrat. Why? Just to give you a sense of it, we showed this yesterday, but almost 30 percent of planned U.S. data center capacity is happening in the state of Texas. So that's why it's a huge deal. Here are some of the measures that passed, as we showed. 41 data center measures across 10 states, 24 passed so far that was anti-data center. Now, here's some of the reaction from the street. Wolf Research, most strident anti-data center candidates are actually not trying to stop the development of data centers.

20:04Orlando Bravo: They're running on a platform of build it right rather than don't build it at all. That's a really glass half full and potentially true statement, which is they're not going to cut off data center building, but potentially regulate it more. And maybe the market can deal with that, even if it means a little bit more uncertainty. As Bank of America says, a slower build out isn't entirely a bad thing, such as front loaded AI CapEx wave is symptomatic of overinvestment. It means we face a greater risk of a hard landing down the line. So adding a bit of sand in the gears might actually benefit markets and the economy in the medium term.

20:35Orlando Bravo: The jury's still out. Well, I mean, and obviously we are going to be focused on Texas. And we talked about this earlier as well, the incoming governor. And it's not clear that a ban is exactly what's going to happen as opposed to potential changes in the way data centers are treated in terms of taxes and a number of other areas that might, to your point, Sarah, or their point, allow for continued build out, maybe at a slower rate or maybe simply with other things around it that therefore allow the community to feel better about it. Right, which is a little more uncertainty on the regulatory front.

21:07Orlando Bravo: But to this point on the bank, I forget who said it, Bank of America said maybe it's better. It contains the urge to just build, build, build, build, build. You know, I went back and looked at what the incoming governor, Hinojosa, has said about data centers. And she, I mean, look, it could change the economics to your point, higher development costs, fewer tax incentives, a little bit more difficult to get permitting and greater local opposition. But again, she wasn't running on we don't want data centers. She was running against Greg Abbott, saying that he was just giving out handouts, basically, and making it too easy.

21:39Orlando Bravo: So maybe delays, pressure on developers, higher financing, but not necessarily an end. Yeah. As we take a look at, in a market that obviously is doing quite well this morning with the Nasdaq, up some two and a half percent. Nonetheless, those names you're looking at are, oh, look at that, are, you didn't tell me I had What? I didn't see. This thing hanging down. I didn't see. Those names are getting hit, of course. They are the builders of data centers and or those that are putting everything in the data centers, the so-called neoclouds, as opposed to the metas and particularly the alphabets, the Amazons, and Microsofts of the world that either are going to be beneficiaries conceivably in some way and or perhaps spend less money.

22:24Orlando Bravo: Let's talk more about this post-election rally. Joining us, David Kelly, Chief Global Strategist, J.P. Morgan Asset Management. And right here, of course, CNBC Senior Markets Commentator, Mike Santoli. David, I'll start with you. Give me your big takeaways from last night. Well, obviously a landslide. And I think the reason the market is reacting so well this morning is because it removes uncertainty. There was, you know, if you think about it, there was real uncertainty as to how about Senate control. And if we'd had a very tight election, there might have been some, you know, some struggle in terms of political struggle.

22:57Orlando Bravo: So that's past us. I think that's one thing. And the second thing is that this divided government we're looking at right now, I think it probably means lower oil prices, less money for conflict in the Middle East. It probably means lower tariffs. There's a lot of pushback around the country against tariffs. Both of those are somewhat disinflationary. So moderation in growth, moderation in inflation, less inflation and less uncertainty. I think that's all helping the stock market move up today. Yeah. Mike, let me come to you on the stock market. I mean, just the market cap accretion for Alphabet up 5.5 percent, Amazon up 7 plus percent, Microsoft up 6 percent is astounding.

23:37Orlando Bravo: It is. Yeah. Is it what's behind it? I think you always have to go back to the initial conditions. What was the state of the market before we started getting these roads? One, you know, betting odds, 70 percent blue sweep. So the market is not completely taken by surprise on this. But you already have spent a month really beating down the entire data center trade, as well as the hyperscalers on some of the overspend concerns. So you've removed a lot of the sort of valuation and sentiment headwinds that you might otherwise have had. Take a look at the Nasdaq 100. I mentioned this earlier. Big tech was as oversold coming into this week as it was in late July and late March.

24:15Orlando Bravo: And it went into the election results on its 200-day moving average. It's almost like it was daring the circumstances to allow it to have a relief rally. So you have all of that in the mix. And I do agree there's something to this sentiment of a slowdown does probably privilege the deepest pockets, the ones who can take their time, which also happen to be these kind of high quality businesses that can lean on their on their core legacy operations. So all that does make sense. Sarah, you're an auto racing fan. It's like it's a restrictor plate race now. OK, there's a speed limit. Nobody can go up a certain level.

24:53Orlando Bravo: And it becomes about who's better position, who's who's able to maneuver. That's what happens with regulation. The biggest ones win. So that seems to be a big chunk of it. Now, I will say we've rallied right back to this level where it's kind of like the separation between a dead cat bounce and something more. Seventy seven hundred on the S &P. It's a 20 day average. All these things come into play. I don't know how much farther we can go if semis are going to sit this out because semis are sitting it out. And they're pretty much making new lows from July. Final point, the consumer relief you're seeing in the market.

25:23Orlando Bravo: It's trying to suggest that maybe we have the ingredients for a rebalancing of the economy away from data center spend. And things like home builders have started to outperform AI industrial plays. And you see this here. That's a six-month chart. And they've just immediately diverged. Yeah. Best day for the ITB since August 7th, I think. Yeah. Yeah. So rates help and then maybe you loosen up resources for non-data center construction. David, are there any implications for treasuries of the now Democrat Congress here? Because obviously fiscal concerns are top of mind and some of the consumer staples were rallying off of this on this idea that you wouldn't see as much in terms of cutbacks and snap benefits or other spending measures.

26:10Orlando Bravo: Well, I think the big threat to the budget was if we had another round of big fiscal stimulus. I mean, the president, we must remember, ran on a promise of$5 ,000 checks for every U.S. citizen, which would have been a huge budget buster. Now, I didn't really think that was going to go through, but even a more modest stimulus, I think, is now very unlikely because the Democrats would likely only agree to further fiscal stimulus if it was funded by higher taxes on the rich and corporations, which the Republicans won't agree to. So you've got this stalemate, this gridlock. The gridlock will probably do more to hold the budget in balance than one party government would have done.

26:49Orlando Bravo: So I think you do get a lower trajectory in that. And then also, again, I think there could be a lot of pushback in tariffs. I think around the country, particularly in rural areas, I think Republicans ran into a lot of opposition to tariffs. Now people know what tariffs are like. And so if you get a bipartisan move to try to push the administration to reduce tariffs or even possibly rest some of the control back to Congress to set tariffs. We have tariff relief that's, again, negative for inflation and it helps the treasuries. So overall, I think it's perfectly reasonable for treasuries to rally over this.

27:24Orlando Bravo: I don't know. I don't know that they ran necessarily on tariffs. And the president has made it clear that he's going to go ahead with them no matter what happens from the Supreme Court or Congress. I mean, I think the question is more for these Democrats that ran on affordability concerns and inflation. Is there anything they can possibly do legislative wise to alleviate that? Well, I think they'll also focus on health care and on restoring some Obamacare subsidies. I think that's going to be part of this story. But for a lot of these, I mean, remember, you've got a large number of Congress people now who never thought they'd be in Congress, but they got elected by the votes of people who hated cost of living issues.

28:04Orlando Bravo: Now, what can you concrete? You can't do anything concrete about the price of gasoline. But what you can do is if we bring down tariffs, well, that should help bring down inflation somewhat. So why not run on that? And that's something that I think they can actually get some bipartisan support on. So it may not have been the first issue for Democrats running, but the public is very much concerned about the affordability issue and reducing tariff rates would reduce some of these affordability concerns. So I think it is an issue which is sort of tailor made for Democrats who look forward to 2028 and not just reflect on 2026.

28:40Orlando Bravo: I mean, the other thing, Mike, is we don't know what he's going to do with the war in Iran if he's going to start that up again. And that's obviously going to be a big one for the markets. Oil's down today. Completely. Yeah. I mean, he doesn't need Congress. I don't want to like necessarily be too precise about what turned the market overnight, But it certainly came as the president, one, said that the New York Times would accept the results of the election. And two, he had previously just told the FT he's not going to escalate in Iran. So I think that didn't hurt. But, yeah, you obviously don't know what's going to happen from here.

29:08Orlando Bravo: I also think the market is going to be eager to say, OK, we repriced some things relative to the expected policy mix we're going to get right now based on how government is set up. Now we can just move on to other things, which is, do we have the makings of a fourth quarter rally after the market went sideways for five months? Can we even get beyond some of the big kind of policy driven things we've had to worry about for a while? I agree that it wasn't as if tariffs were front and center in terms of what Democrats ran on, except maybe in places like Iowa, where they turn things in Nebraska. But there is a sense out there that there were specific policy choices that made things more expensive.

29:45Orlando Bravo: Now, one of them was tariffs, one of them was Iran, and obviously diesel helping to push that storyline. And in theory, you're going to have a little bit of a pushback on those trends. OK. And, you know, the Obama subsidy is also actually an important point. Playing out in the market as well, guys, David, I'm glad you mentioned it. Likes of HCA health care, for example, up 7 percent on perhaps the possibility of more aid coming to citizens for their health care costs. David Kelly, thank you. Mike, of course, thank you as always. We're about 30 minutes into the hour. Three big movers we're watching today includes McDonald's jumping after an earnings beat, although revenue came up short.

30:24Orlando Bravo: Traffic at U.S. restaurants down. But CEO Chris Kempchinski saying domestic performance is getting better. Company leaning into value to bring back some consumers. Block shares are jumping double digits. Company lifts its profit outlook with Square and Cash App, both outperforming on the quarter. And then there's AMD moving higher on results. Data center revenue nearly doubles. Lisa Su joined the show earlier this morning and kind of laid out what the demand picture looks like after this Democratic victory in the midterms and those big wins in Texas. There is a intense need for more compute. And when we look at that, we are seeing a very strong order pipeline.

31:00Orlando Bravo: We are actually seeing the demand being higher than supply. But we were able to guide, for example, our data center business is going to grow 50 percent sequentially quarter on quarter into the fourth quarter. We have actually landed our first racks at our top customers, including Anthropic, OpenAI, Microsoft, Oracle, Meta. And these customers are seeing great performance out of our newest products. So, you know, what I look at is this is an opportunity to continue to expand. We see our business growing over 80 percent next year, which is a very significant number. It's over double of our long term model.

31:38Orlando Bravo: Stock was up 9 % last night, went briefly negative pre-market, now up about one, almost 2%, I guess. David, she did return to the idea a couple of times of big tech having to be a more active participant in the discussion around data center development around the country. Yeah, without a doubt. And that is something I think we're going to hear from any number of the leaders. And she certainly is one of them when it comes to technology needing to, and they've been saying this for some time, and need to better articulate the viewpoint, not just around the actual development of the physical data center, but also, as we've said, because it is the manifestation physically of AI for many people, it becomes a broader conversation, I think, Carl.

32:19Orlando Bravo: And on the PC, I mean, I guess that was widely understood, the correction after the Intel results. And I guess a small headwind, according to analysts for EPS at this point for AMD. Yeah, now they're much more levered to data center and that 97 % revenue growth than, say, Intel. Yeah. Talk about leverage to data center. Marvell and Lumena may have picked a bad week to announce their deal. I mean, first shareholders just were like, ugh. And now they've got this to deal with, of course, because they are, I mean, you know, Lumentum optical lasers into the data center. The whole idea of the tie-up is basically to be able to scale and sell into the data center in an even more meaningful way.

33:04Orlando Bravo: And I just note the incredible loss of value here. Now, some of this would have happened regardless, and they both might have moved in a similar direction as a result of what we're talking about this morning. That said, you've got shareholders on the Lumentum side who are like, my gosh, this thing's only worth$729, about$65 billion when it was announced. It was worth so much more. And by the way, we weren't happy with the premium being even paid then because this stock had a recent high of 11.43. You're not getting enough. And then on the other side, you've got Marvell shareholders who are saying, why are you buying a company that conceivably we see is potentially producing a commodity while in short supply now may not be when this deal gets approved, if it ever does, 18 months from now?

33:44Orlando Bravo: Yeah, there's the red concerns. And then I think the B of A downgrade yesterday at Marvell also said, they said nothing about large-scale M &A at their investor day not that long ago. Not that long ago at all. Where did this come from? Yes. And so there have been any number of questions. There are shareholder votes on both sides. They have not been scheduled. There are ways away. And even though we've oftentimes talked about situations like this and said, whoa, will they really get the vote? More often than not, they do. That said, we are coming off that deal with Element and Solstice. Remember that one?

34:13Orlando Bravo: Much smaller, but the market reaction was horrible and the company said, all right, forget it. That is unlikely to happen here, but we're keeping an eye on this because it is not often you see a deal with this size, get this poor a reaction. I mean, the timing, to your point, like wondering, is this, are we peak data construction, data center construction in this country? Is that what the, is that what the electorate just told us? And is it going to have to slow down? Seems like rough. I like how you acted out the emotions of both sides. That was good. You did? Yeah, very emotive. All right. After the break, why Raymond James says the Democrats sweeping victory in the midterms means a return to volatility versus a clearing event for the markets.

34:50Orlando Bravo: Plus, we'll get to what the options market is signaling about the energy trade, with bets on renewables and more traditional players going in opposite directions. Also, what the CEO of CBS told us as that stock falls after announcing plans to split off its pharmacy business. We'll be right back. Legacy credit scores only look at a brief snapshot in time, and that limited view often leaves millions of qualified credit seekers out of the picture. Vantage Score is changing that by modernizing credit scoring. Vantage Score uses 400 % more credit and alternative data to create a fuller picture of financial behavior, including trended credit data, rental payments, and timely utility payments.

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36:51Orlando Bravo: Time now for CNBC News update. Pippa Stevens has it for us. Morning, Pippa. Good morning, Sarah. New York's attorney general appointed a veteran federal prosecutor who oversaw the sex crimes case against Sean Diddy Combs to lead the criminal investigation into the alleged gang rape at Cornell University. Cornell alumna Jacqueline Kelly and her team will report to AG Letitia James, who Governor Kathy Hochul selected as special prosecutor for the case last month. Some of the defendants are fighting James' involvement over previous social media posts she made supporting the accuser. Israeli President Isaac Herzog accepted the election results today from last week's parliamentary vote.

37:27Orlando Bravo: He says he will soon begin consultations with party representatives on the formation of a new government. The election produced no clear winner. And Australian government lawyers say the country's world first ban on social media for children younger than 15 is necessary to protect developing brains. They are fighting two constitutional challenges in the Australia's highest court brought by Reddit and a Sydney rights based group, the Digital Freedom Project. A verdict is expected in the coming months. Carl. Thanks, Pippa Stevens. Stocks are surging on the heels of those key victories for Democrats overnight.

38:02Orlando Bravo: In fact, it's the best day for the Dow in about seven months. Our next guest sees market consequences ahead for defense and health care, implications for the financials. Joining us this morning, Raymond James, Washington policy analyst Ed Mills. Ed, appreciate the time today. Always good to see you. Likewise. I would love to get you on data centers. You do seem to think that this Texas governor win is a cat five storm for the data center trade. Yeah. Yeah, so the Democrats, Gina Hinojosa, has won the editorial race in Texas, worst Democrats to win since 1991. And Greg Abbott, the incumbent Republican, he put in place a data center moratorium that every investor that I talk to expected to be listed.

38:44Orlando Bravo: Now, Gina Hinojosa is going to be expected to put something much more concrete here. And as I talked to some folks in the industry, they said that's a Category 5 target hitting the data center straight. Now, is it just more money? Is it more kind of community benefits agreement? Is there an actual slowdown? Is some of the empty demands we thought was going to need to fund this and fulfill this? Is that going to go away? I think that we could be at FX peak if we actually see these data center moratoriums go in effect. And we're just starting the presidential election. Expect this to be a huge issue over the next two years.

39:23Orlando Bravo: And I hope you'll stay with us. We're going to take a moment to tweak some audio, try to get you back on the other side of a short break. Don't go anywhere. Yeah, and we're going to have a lot more on the energy impact here because we are seeing energy stocks sell off. Oil prices are lower, what the election means for that market. Also, what the options market is signaling about renewables versus legacy players. Plus, do not miss the CEO of Circle. He's coming up next hour. The company is just topping earnings estimates. We'll talk about the ripple effect of the recent Binance hack as well. We'll be right back.

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40:30Orlando Bravo: Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts. Hi, I'm Cindy Laufer, Cosentix lead detective in the new mystery series, Unpredictable Symptom Squad. My team and I are on a curious case to gather clues about plaque psoriasis and psoriatic arthritis and learn how Cosentix treats both and can help stop further joint damage in psoriatic arthritis. Cosentix Secukinumab is prescribed for adults with moderate to severe plaque psoriasis and adults with active psoriatic arthritis. Don't use if allergic to Cosentix.

41:09Orlando Bravo: Get checked for TB before starting. Increased risk of infections and lowered ability to fight them may occur, like TB or other serious bacterial, fungal, or viral infections. Some were fatal. Tell your doctor if you have an infection or symptoms like fevers, sweats, chills, muscle aches, or cough, had a vaccine or planned to, or if IBD symptoms develop or worsen. Serious allergic reactions and severe eczema-like skin reactions may occur. Learn more at 1-844-COSENTICS or cosentics.com. Don't let mysterious symptoms go unsolved. Talk to your doctor about Cosentics. The election leading to a split in the outlook for the energy trade.

41:44Orlando Bravo: Let's get to Oliver Rennick at the SIBO in Chicago with a look at what the options market is signaling. Oliver. Hey, Sarah, this is an extremely lively rally this morning with the S &P recovering Friday's sell-off in just a few hours and the VIX dropping more than three and a half points almost to four, which is the biggest one-day drop in vol since at least July. One linchpin for the move is crude oil, it looks like, and the message about the war in Iran. Energy stocks are down the most this morning, and options on the XLE sector ETF are more than three times the 30-day average. It's almost 60 % puts by volume and about evenly split in terms of total premium.

42:22Orlando Bravo: But when you drill down to trades that were likely initiated by buyers, bearish puts stand out among the big money. Note, the top trade in XLE is the 62.5 strike put expiring January 15th. So it's bearish, yes, but just two bucks away in two and a half months suggests if there is a rollover in crude oil, it might be a slow one. But look at solar stocks for the short-term action. They're going wild again today. Volume in the TAN ETF is on pace for 90 times the average. With almost 20 ,000 contracts traded this morning, 14 ,500 of the 17 ,000 are calls for solar in phase. Sunrun, they're all up big.

43:02Orlando Bravo: And the most popular trade in tan is the 48 strike call, betting on a 6 % rally through November 20th. So I'm sure for many crude oil stands out on their radar. But what's bad for black may be even better for green this morning, guys. Said Oliver. Thanks, Oliver Rennick, this morning. Joining us on the phone now, as we were talking earlier, Raymond James, Washington policy analyst Ed Mills, still with us, Ed. Appreciate your flexibility on this. We covered some data centers. I am curious whether you think some of the classic Dem trades, hospitals, health care, clean energy today make sense. I think they absolutely do.

43:38Orlando Bravo: What you're going to see is Democrats are going to have leverage next year. And we have two things we need to do. We need to raise the debt limit. We need to fund the government. And when we are doing that, Democrats are going to say we need to get some changes that were passed last year as part of the reconciliation bill, that one big, beautiful bill. They're going to say the cuts to Medicaid need to be reversed. The cuts to the SNAP benefits need to be reversed. You need to return some of those subsidies on Obamacare, and you're going to need to return some of those green energy provisions. Now, the key here is do Republicans try to preempt that leverage and raise the debt limit in the lame duck session?

44:13Orlando Bravo: They might try. I just don't think they have the votes right now. You do say we should take everything we think we know about lame duck presidencies and throw them out the window. What do you mean by that? Well, I think President Trump has broken the mold in terms of what you can do with executive power. And I don't think you look at him as a lame duck. It's more of a wounded bear. And we've seen in the last two years, most of the volatility out of D.C. is executive action. And we're going to see a return to that executive action. We're going to have funding fights. We're going to have geopolitical risk.

44:45Orlando Bravo: We're going to see him in his last two years trying to push the envelope on executive power. And the courts might be a check, but those take time. and investors are going to respond much faster than the courts can. On the data center issue, I mean, I realize that it's not good in terms of bullish for data center construction, Ed. But a lot of the takes are that, you know, even in Texas, they're not proposing an all-out ban on data centers. She's more just proposing more regulation, guardrails, perhaps a slowdown in permitting, fewer tax incentives, but not necessarily canceling whatever the 30 percent capacity that's coming online next next year, 30 percent of the U.S.

45:28Orlando Bravo: total. Excellent point. What we always say about Washington policy risk is it's never as bad as you fear, nor as good as you hope. The market's been pricing in good as you hope as it relates to data centers and AI regulation. I think especially as we move to this presidential election, this is going to be the election about Medicare for all and AI regulation. And I think that we're one event away from Congress feeling the need to pass national level regulation on AI. And at the local level, when you have a Democratic governor in Texas, a Democratic governor in Ohio, in pressure probably on other places like Pennsylvania, these data center moratoriums might not be overly restrictive now.

46:11Orlando Bravo: But let's see how some of this politics play out. And so instead of being a clearing event, this is a starting gun for more regulation. And some of the credit card names are lower today. Capital One's down 3%. We've already been around the block on proposed caps on APRs. I mean, does the situation get much more dramatic other than embarrassing hearings in front of Senate banking? Yeah, I think that is just a bit of an unwind trade. I don't think that there's regulatory risk that is material, especially in the credit card space. I think that you actually look at some of the biggest risk to credit cards had been this Credit Card Competition Act, which was sponsored by Senator Durbin, retired, Roger Marshall from Kansas, who is defeated.

46:52Orlando Bravo: That issue is actually now in forfin. I would argue over the next two years, it'd be much more concerning if I was a fintech company, a digital asset crypto company, because they have spent a lot of money trying to defeat Democrats that just won, and President Trump has been invested in those areas. So we'll have hearings, But I think it's going to be much more on the fintech side than the bank CEOs being the front and center here. Finally, Ed, I mean, this Mississippi race is unbelievably tight, we think. Alaska, we're still waiting on. Does the Senate math, does it much change if those two races come in blue?

47:30Orlando Bravo: It does. I think if you look towards 2028 and if there is a 56-seat majority, you're going to be saying, all right, What are the seven or six seats that Republicans can win in 2028 to win back a majority? So we look to 2028 and the odds of a Democratic sweep have just gone up dramatically. Million years between now and then. But when you look to the post-28 election, what happens to the filibuster? Are there reconciliation on taxes? Is there a bigger swing on regulation than expected? Are there going to be changes to D.C. and Puerto Rico and becoming states? those issues are going to be the most debated issues over these next two years, especially as we turn our attention to this presidential election.

48:15Orlando Bravo: A lot of cross-currents. We got to a few of them today, Ed. Please come back soon. Thanks. Ed Mills over at RayJay. Up next, CBS announcing this morning the split of its pharmacy business from the rest of the company. We'll tell you what the CEO told us about that move and why now. As I look at, CVS and Caremark came together in 2006. So 20 years have changed in terms of those businesses being together. And Aetna has been under the fold for eight years. So markets change and companies need to evolve with it. So I think what you see in the regulatory environment is clearly one of the things that we need to make sure we're navigating.

48:52Orlando Bravo: And we're actually positioning the company to be able to thrive, regardless of how these companies are being expected to operate in the states and at the federal level. That was CBS's help, CEO David Jordan. He joined us last hour. Of course, the company both announcing earnings this morning that appeared to have been pretty strong. And this plan to split into two companies, essentially taking Aetna and the PBM Caremark that he was referring to, having been bought by CBS back in 07 or so, separating that from the retail pharmacy business and creating two companies, both which would be investment grade.

49:27Orlando Bravo: Things like debt allocation have yet to be decided. Obviously, you've got to have boards of directors for both. He will be running the health care side of that, the Aetna side of that. And they will have new management as well that's been helping to run and turn around the CVS pharmacy side. But the market not loving it. Some questions here, Sarah, as well about dissynergies. Did not get to ask him about that during the time we had with him earlier. But there seems to be some concern around that. And then you've got to talk about respective multiples. You know, in terms of what you throw on a CVS standalone and what the comps might be there.

50:03Orlando Bravo: And obviously Aetna might be easier if you get a UNH multiple. You might be OK with that. But market right now sort of is taking a wait and see approach. Yeah. God, what was it, nine years ago when they bought Aetna? Yes. Remember that deal? It was 2018, I believe, actually, when they bought Aetna. And they've turned around. It was only a couple of years ago. And that actually was the answer to this question. that they had Goldman Sachs conduct a review for them as they had an activist in their stock. And the conclusion was, oh, these businesses are much better off together. But there have been regulatory changes, some pressure in the states about having a PBM aligned with a or owned by a drug store company.

50:42Orlando Bravo: And clearly that that seemed to be an impact here. It didn't give it a lot of articulation. But yeah, the Patients Before Monopolies Act, I guess, this bipartisan bill that was introduced by, I think, Elizabeth Warren a while ago. But maybe it's not a coincidence. And Josh Hawley, also a co-sponsor, I believe, as well. Right, bipartisan. So bipartisan, yeah. But I was just going to say, maybe the timing is not a coincidence that it is selling off at a time where the Democrats have regained control of Congress. And you might see more regulatory scrutiny on that part of the business. On the insurers.

51:09Orlando Bravo: I mean, UNH, though, to be fair, is down fractionally, you know, 0.3 % this morning. This not getting a great response. It could take as much as 15 to 18 months to actually get the deal done, Carl. Or I should say the spin done, tax-free spin. All opinions expressed by Squawk on the Street participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion.

51:46Orlando Bravo: Such opinions are based upon information Squawk on the Street participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Squawk on the Street disclaimer, please visit cnbc.com forward slash Squawk on the Street disclaimer. Traders don't need a prettier app. They need a better angle. Schwab's think-or-swim trading platforms were built for real traders like you. They have an insane amount of chart studies. I'm talking over 300 studies for virtually any strategy. They also have integrated risk management technology and nearly unlimited customization so you can shape the platform to fit the way you trade.

52:23Orlando Bravo: And when you do that, you can analyze trades from angles you won't find anywhere else. Go see what that looks like at schwab.com slash trading.